EMEA News
Odfjell Slides to $32 million Loss, Expects to Lose Out on $57 Million Through Bunker Hedging in 2015
Odfjell SE (Odfjell) Wednesday reported for the first quarter of 2015 it slid to a loss of $32 million, while bunker hedging deals put in place last year will cost the company $57 million this year.
In outlining the Norwegian tanker and storage company's chemical tanker segment performance, Odfjell said that bunker hedging derivatives it had entered into last fall negatively impacted the first quarter result by $15 million.
In addition, it booked a $42 million unrealized loss on bunker hedging derivatives for the remainder of 2015, but noted it has no further bunker hedging derivatives in place after that.
The oil price collapse late last year meant that at the end of 2014, after the hedging deals were in place, bunker prices had plunged to lows not seen for several years.
Odfjell said the low prices, plus a weak Norwegian Krone, had "significantly" impacted the market value of its existing bunker hedging positions.
Overall Odfjell posted a loss of $32 million with earnings before interest, tax, depreciation, and amortization (EBITDA) of $35 million from total revenues of $260 million, compared to a $23 million loss and EBITDA of $17 million from revenues of $290 million for the same time period last year.
Chemical Tankers' EBITDA in Q1 2015 was $26 million, which adjusted for non-recurring items was $4 million higher than last quarter. EBITDA includes the negative impact of the bunker derivatives.
Odfjell's tank terminals business delivered an EBITDA of $9 million in the first quarter, up from $2 million in the previous quarter.
Although Odfjell reported its cost-cutting and efficiency programmes to be progressing as planned, the company says implementation of market initiatives related to fleet optimization and other improvement measures will take longer than expected.
"The goal is to implement improvement initiatives that will improve our net result by in excess of $100 million on a yearly basis within end of 2016, and we remain confident that we will deliver on this."
Nevertheless, Odfjell said as a result of measures taken to date as part of the cost-cutting programme, "the OPEX for the average fleet in first quarter has decreased by 12% compared with average OPEX for 2014."
Bunker prices also plagued Odfjell in 2014, when the company said its loss widened to $23 million in the first quarter of that year compared with $13 million in the same period the year prior.
