Algoma Central Corporation recently reported its results for the three and six months ended June 30, 2023. Algoma reported revenues during the 2023 second quarter of $202,406, a 10% increase compared to the same period in 2022. Net earnings for the 2023 second quarter were $33,144 compared to $47,045 for the same period in 2022; earnings in 2022 included a $10,563 gain from the sale of Station Mall. The Company reported 2023 second quarter EBITDA of $65,204 compared to $61,412 for the same period in 2022. All amounts reported below are in thousands of Canadian dollars, except for per share data and where the context dictates otherwise.
 
"This year we have focused on driving long-term value for our stakeholders by optimizing our diversified growth, while maintaining our operating vigilance in changing markets," said Gregg Ruhl, President and CEO of Algoma. "Historically, we know shifting market demand and economic challenges have not stopped Algoma's progress, but instead made us think differently in order to adapt and effectively move our strategic plan forward. In the second quarter, we advanced several incremental growth investments demonstrating our ability to find and execute on attractive opportunities to deploy capital,” continued Mr. Ruhl.
 
Financial Highlights: Second Quarter 2023 Compared to 2022
 
  • Domestic Dry-Bulk segment revenue increased 27% to $126,584 compared to $99,288 in 2022, reflecting 17% higher volumes, which drove a 24% increase in revenue days. Operating earnings increased 53% to $32,806 compared to $21,504 for the prior year, mainly reflecting full fleet utilization this quarter, partially offset by higher operating costs.
  • Revenue for Product Tankers decreased 12% to $28,046 compared to $31,923 in 2022. This was mainly driven by higher off-hire days on two vessels which resulted in 7% fewer revenue days, and a decrease in fuel cost recovery. Segment operating earnings decreased to $1,078 compared to $3,683 in 2022, reflecting the higher off-hire days and increased operating costs.
  • Ocean Self-Unloaders segment revenue decreased 6% to $47,120 compared to $50,292 as a result of higher scheduled dry-dockings driving 8% fewer revenue days, and lower fuel pass through charges. Operating earnings decreased 28% to $8,003 compared to $11,139 in 2022, mainly as a result of dry-dockings and lower daily earning rates.
  • Global Short Sea Shipping segment equity earnings were $5,155 compared to $9,454 for the prior year; 2022 equity earnings include a $4,782 gain on the sale of two vessels; excluding this gain, earnings increased 10%. The higher earnings were driven by increased earnings in the cement fleet due to the larger fleet size this year and strong freight rates, partially offset by lower earnings in the mini-bulker and handy fleets as a result of a softening of freight rates and the smaller mini-bulker fleet this year.
2023 Business Outlook
 
Looking ahead to the second half of 2023, typical seasonal weakness in grain shipments and a soft market for export iron ore has led to a brief summer layup on one vessel in the Domestic Dry-Bulk segment. Full fleet utilization is expected to resume in August and continue through the balance of the year, driven by strong demand for vessel capacity. Recent weather conditions in the Canadian prairies have resulted in some uncertainty about the 2023 grain harvest; however, demand in other sectors is expected to offset any weakness in agricultural products. Customer demand in the Product Tanker segment is projected to remain steady in the second quarter, although energy markets remain volatile due to ongoing hostilities in Europe. While vessel utilization is expected to be robust, inflation is anticipated to continue to impact costs going forward.
 
In our international businesses, vessel supply at the Ocean Self-Unloader Pool level appears to be fairly well balanced for the remainder of the year, although three Algoma vessels will be dry-docked. The aggregate industry experienced an anticipated volume decline in the second quarter, and the sector is expected to continue facing challenges throughout the year; however, volumes in other sectors are projected to remain steady. In our Global Short Sea Shipping segment, we anticipate steady revenues from the cement fleet, with strong fleet utilization. Rate pressure resulting from ongoing global economic and geopolitical situations is expected to impact the segment. Rate levels in the mini-bulker and handy-size fleets are projected to be lower over the course of the year, though volumes and utilization are not expected to be affected.