President's views
Concordia Maritime’s result after tax for the third quarter amounted to SEK 20.1 (17.7) million, while EBITDA was USD 10.9 (7.5) million. Market development in tanker shipping remained weak. The freight rates for the time-charter contracts for our 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. Concordia Maritime’s result after tax for the third quarter amounted to SEK 20.1 (17.7) million, while EBITD Awas USD 10.9 (7.5) million. Market development in tanker shipping remained weak. The freight rates for the time-charter contracts for our 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, the Stena Performance and Stena Provence entered into the open market with our partner Stena Weco. On average, the vessels generated income of approx. USD 9,000 per day. After their redelivery from previous customers, the vessels have been positioned to adapt to Stena Weco’s cargo system. The positioning voyages have meant a loss of income, although this has been offset by compensation from Total in connection with the early redelivery of Stena Provence.
During the quarter, two of our jointly owned vessels, Stena Poseidon and Palva, sailed the Northeast Passage between Murmansk in Russia and the Pacific Ocean for the first time. The voyage, done by our J/V-partner Neste Oil, took 20 days to complete, which is about half the time using the normal route through the Suez Canal. The vessels were escorted by a Russian nuclear-powered icebreaker and local pilots. Ice conditions along the route place high demands on both ships and crews.
Future prospects
Tanker shipping is currently going through a testing time. The big challenge for the market as a whole remains to achieve a better balance between supply and demand for transportation of oil and petroleum products.
The imbalance was even greater during the period, with declining rates in all segments. The largest decline was within the crude oil segment, above all for VLCCs, where direct costs are now sometimes exceeding income. In the MR segment, rates also fell, although not as dramatically.
Consequently, we stand by our earlier assessment. 2011 will be another weak year, while 2012 and, in particular, 2013, show good prospects for a market in better balance for the MR-segment. Growth in the world tanker fleet is expected to decline during the current year, particularly in the area of product tankers.
Our financial position continues to be stable, with capacity for further investments if the right business opportunities arise. Larger part of the fleet will also be chartered on fixed contracts during 2012 but we already have two vessels operating on the spot market. And we are working continuously on making our ships as competitive and flexible in the market as possible. As part of this work, Stena Provence will be converted to an IMO III vessel in the fourth quarter. The conversion means the vessel will also be able to transport vegetable oils. Transportation of vegetable oils is currently a niche segment of the tanker market. Stena Performance and Stena Premium have already qualified for IMO III classification.
Unchanged forecast for 2011
Our assessment remains unchanged, 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.