Bulk Under Pressure Until 2017: J. Lauritzen

J. Lauritzen posted a $29 million deficit for Q1 2015.

Jan Kastrup-Nielsen, CEO of J. Lauritzen, Tuesday told ShippingWatch that the fundamental dynamics of the bulk market will not change noticeably before early 2017.

He made the comment one day after J. Lauritzen published a deficit of $29 million for the first three months of 2015, while also lowering its full-year 2015 forecast to a deficit of between $50-100 million - which will push the company towards an accumulated five year deficit of $1-billion.

The CEO remarked, "We can't change the market, we have to adapt to it. And we're doing that continuously, just as we have in the past. We've sold ships before, and if it becomes necessary then we're prepared to do it again. We're confident that we'll get through the crisis and that J. Lauritzen will still exist in 10 years."

But Kastrup-Nielsen added that "We'll likely have to get to late 2016 or early 2017 before the market will have changed. The current challenge for everyone concerns when the dynamics will change, and who can manage until then."

Other Q1 2015 results suggest that the carrier has substantial financial strength to draw upon: cash and unused credit facilities were $256 million compared to $284 million at the end of 2014, while net interest bearing debt were $282 million, up from $268 million after 2014.

Kastrup-Nielsen said although J. Lauritzen has no specific plans to reduce employees or offices, "market developments will determine whether we need to do more than divest vessels."

The CEO's comment about the bulk market comes on the heels of Goldman Sachs last week saying that low bunker prices and a glut of ships will keep shipping freight rates weak for the rest of the decade or longer.