LPG shipowner Avance Gas — a three-way venture between Norway’s Stolt-Nielsen, Saudi Arabia’s Sungas Holdings and Bermuda-based shipowner Frontline 2012 — made a profit of $6.1mn in the first quarter, compared with a $4.4mn loss a year earlier.
The reversal is largely down to improved fleet performance with the wider LPG shipping market making a strong start to this year. Avance recorded time-charter earnings (TCE) of $18.4mn across the quarter, up by $6.8mn year-on-year as rates soared. Its fleet averaged $34,499/d in earnings, double the $16,917/d average recorded in 2013. But Avance’s first-quarter results represent a $4.4mn fall from the previous quarter, although this is accounted for by a seasonal dip in LPG exports across the period.
Belgian shipping group Exmar recorded a $14.2mn profit in the first quarter, down from $65.8mn a year earlier. But last year’s figures were inflated by a $52.8mn capital gain on a 50pc sale of its midsize gas carrier (MGC) fleet to Teekay LNG. The sale saw the creation of Exmar LPG — an equal joint venture between the two. Discounting this, profits for the first quarter were approximately $1.2mn up year-on-year.
LPG activities generated $8mn in operating income in the first quarter, down from $56.2mn in 2013. But, with the fleet sale to Teekay LNG discounted, this equates to a $4.6mn year-on-year rise. This was buoyed in part by February’s sale of the Temse, a 1994-built MGC, which generated a $4.4mn capital gain. Exmar’s VLGC fleet saw earnings rise to $25,941/d on average, a $4,638/d increase year-on-year, while its MGC fleet recorded a $1,966/d rise in earnings year-on-year to $23,978/d.
Exmar is aiming to capitalise on the recent spike in VLGC shipping rates as it takes full control of the BW Tokyo from May onwards. Its MGC fleet, currently enjoying a stable and diversified coverage portfolio, is expected to renew its charter rates at increasing levels as the year progresses. And all of its pressurised LPG vessels are committed on a time-charter basis both east and west of Suez. Fleet coverage for Exmar’s VLGC, MGC and pressurized vessels for the balance of 2014 currently stand at approximately 30pc, 85pc and 80pc, respectively.
Avance retains a positive outlook, seeing no end to the recent favourable freight rates which it expects to continue to be buoyed by strong US export demand. It is anticipated to pursue expansion and consolidation opportunities in 2014, having netted approximately $100mn via an Oslo Stock Exchange initial public offering earlier this month.
With an eye on the second quarter, Avance expects its fleet utilisation rate to remain at 92-98pc. It forecasts yet further increases in its average TCE rates — with approximately $40,000/d the target for the second quarter. If realised, this would mark an approximate $5,000/d increase on first-quarter figures.
Avance’s VLGC fleet consists of six vessels on the water and a newbuilding programme of eight vessels on order at Shanghai’s Jiangnan Shipyard and due for delivery in October 2014-August 2015.
Exmar's MGC fleet consists of 14 vessels on the water and eight due for delivery in 2014-16 from Hyundai Heavy Industries and Hanjin Heavy Industries and Construction. It also retains options for four further vessels to be constructed by Hanjin due for 2016-17 delivery.
pw/jc
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