President's view
The company’s business operations and the market developed in line with expectations during the second quarter. Concordia Maritime’s result after tax amounted to SEK 17.9 (20.9) million, while EBITDA was USD 8.5 (7.7) million. The slightly lower EBITDA figure compared with the first quarter is a consequence of three ships in the fleet having undergone planned docking.
Comments on the result
The second quarter of 2011 continued largely as expected. The market remained generally weak and this was particularly noticeable towards the end of the quarter, when freight rates in all tanker market segments fell sharply. This was largely due to the continuing imbalance between supply and demand, a decline in American imports and general uncertainty regarding global economic development.
The freight rates for our own time-charter contracts for the P-MAX and panamax tankers continued to be much higher than the rates in the open market and generated an average of just over USD 20,000 per day.
During the quarter, three vessels, Stena Primorsk, Stena Performance and Stena Premium, were taken in for scheduled docking. This included five-year drydocking and upgrading of the latter two vessels to IMO III tankers. The conversion means the vessels are now able to transport vegetable oils. This will increase their flexibility in the market, which in turn may increase earnings potential. Transportation of vegetable oils is currently a niche segment of the tanker market, but may increase in importance as demand increases.
During the quarter we took delivery of Stena Premium, the tenth and last in the series of ordered P-MAX vessels. The redelivery of the suezmax tanker, which had been chartered together with Stena Bulk since May 2010, means that we are only active in the MR segment at present. In July, an agreement was reached with our customer.
Total for the early redelivery of one of the four vessels they charter from us, in return for compensation. We expect the vessel in question, Stena Provence, to be employed on the open market from August. Planning is underway to also upgrade this vessel to IMO III in autumn.
Future prospects
We stand by our earlier assessment that we can expect a slow and gradual improvement for the product tanker market from current levels. 2011 will probably be yet another weak year, while in 2012 and, in particular, 2013, the prospects for a market in balance are good. The big challenge for the market as a whole remains to achieve a better balance between supply and demand for the transportation of oil and petroleum products. In very simple terms, it could be said that demand for oil transport is high, but the supply of new tonnage has been even higher so far. Growth in the world tanker fleet is expected to decline during the current year, particularly in the area of product tankers. Our own financial position continues to be stable, with capacity for further investments if the right business opportunities arise.
Forecast for 2011
Our assessment is that Concordia Maritime will achieve a result before tax of USD 10–13 million, equivalent to SEK 65–85 million, in the 2011 financial year, depending on how the market develops.