President’s views
Result before tax for the full year amounted to SEK 76.3 million, which is in line with our forecast. Cash flow from operations, EBITDA, amounted to USD 37.3 million. Against the backcloth of very weak markets for tanker shipping in general, this was a relatively good year for Concordia Maritime. The earnings level on our fixed contracts was just over USD 20,000 per day, which is considerably higher than current market levels.
The vessels have performed well and we have not encountered any accidents or other incidents. We took redelivery of two vessels from long-term contracts during the year and they are now employed in the open market. The two vessels have also been upgraded to enable them to transport vegetable oils (IMO III classification).
Fourth quarter
The scheduled drydock, conversion to IMO III and the required positioning journeys had a negative impact on fleet income during the fourth quarter.
The loss in operating income during the quarter was largely offset by an insurance payment arising from damage to one of our former V-MAX-type VLCC vessels.
Result after tax amounted to SEK 25.9 (18.9) million, while EBITDA was USD 9.1 (8.3) million.
Future prospects
The imbalance between supply and demand continues in all tanker shipping segments. In the product tanker segment, growth in the fleet has slowed considerably, and many parameters relating to demand now appear positive. The expansion of refinery capacity in Asia and the increase in oil trade in South America and Africa are examples of factors that are creating new dynamics in transport flows. All in all, this leads us to expect a gradual improvement from the existing freight levels during 2012 and 2013.
Forecast
Our business is undergoing a change. Most of the vessels in the fleet are currently signed to charters, with relatively predictable earnings and cash flows. As the contracts expire and the ships start to be employed on the open market instead, the market’s overall development will have a greater impact on our earnings and cash flow.
We currently operate two vessels on the open market and two more will be redelivered to us in the fourth quarter of 2012.
Although we expect the market to strengthen during the year, we do not believe that freight rates will reach our average time charter rates, which are approx. USD 20,000 per day.
About 75 percent of the fleet’s total number of income days are still covered by contracts. However, given the fact that we have more vessels on the open market than in 2011, we expect a reduction in income and therefore a lower profit for 2012. We do not provide a forecast in absolute numbers.