“Our partnership with Teekay LNG confirmed our strong position in the gas carrier industry and earnings for our gas carriers were overall in line with our expectations” says CEO Mads P. Zacho, adding that “global trade tensions together with problems affecting Brazilian iron ore exports negatively impacted dry cargo demand with larger freight rate declines for bulk carriers of all sizes, which in isolation negatively impacted our result for the first quarter”.
Highlights
• An agreement was reached with Teekay LNG Partners L.P. (Teekay LNG) implying that seven modern ethylene gas carriers, owned by Teekay LNG, would join Lauritzen Kosan’s pool of ethylene carriers starting 1 March 2019. With the addition of the Teekay fleet, which was completed early May 2019, the Lauritzen Kosan pool has cemented its position as a leading supplier of ethylene carrying capacity in the small gas carrier segment with a total of 21 units.
• Dry cargo markets were negatively impacted by the Brazilian mining incident in early 2019 and ongoing global trade tensions which caused larger freight rate declines across all dry bulk vessel sizes.
• A 5,900 cbm gas carrier was sold with delivery to the new owner in January 2019.
• J. Lauritzen together with other leading Danish shipping companies, industrial marine suppliers, research institutions and universities formed ShippingLab, a new Danish maritime research, development and innovation partnership focusing on digital ship operation and reduction of industry carbon footprint.
Business performance
In Q1, we decided to reduce the average number of controlled bulk carriers to 68 compared with 83 in Q1 2018. The average number of operated gas carriers reached 31, which was in line with Q1 2018.
The market for handysize bulk carriers was weak throughout Q1 and the handysize index ended approximately 30% below the level recorded one year ago. The market for small gas carriers saw a minor decline for ethylene and pressurised tonnage in Q1 compared with the same period in 2018, whereas the market for semi-refrigerated tonnage was up by 35% on last year.
Q1 EBITDA amounted to USDm 12.5 against USDm (6.2) in the same period 2018. The improvement was due to the adoption of the IFRS 16 accounting standards on leases as of 1 January 2019. The result amounted to USDm (16.9) against USDm (11.8) in same period 2018.
Assets and liabilities
Total assets amounted to USDm 642 compared to USDm 462 at year-end 2018. The increase was also impacted by IRFS16. Solvency ratio was 34%, compared to 51% year-end 2018.
Source: J. Lauritzen