Poor Market, Knightsbridge Merger Sees Golden Ocean Slide to $33.5 Million Loss

GOGL posted a $33.5 million loss in 2015's second quarter.

Ongoing dire conditions in the dry bulk sector and a merger with Knightsbridge Shipping Limited (Knightsbridge) have lead to Golden Ocean Group Limited (GOGL) Thursday announcing a second quarter net loss of $33.5 million, a further slide from the $15.3 million loss that it experienced in the first quarter of the year.

"The fall in earnings is primarily attributable to the continued poor market combined with an increase in the size of the fleet following the merger of Knightsbridge and the Former Golden Ocean on March 31, 2015," explained GOGL.

"The spot market in the second quarter of 2015 did not give owners of dry bulk vessels any relief. Rates ended up more or less at similar levels as in the pervious quarter and with limited volatility."

While the company says it is already suffering due to its large fleet, as of June 30, 2015, GOGL says it also had 23 vessels under construction, expecting to take delivery of three of the vessels in 2015, 12 vessels in 2016, and four vessels in 2017.

Four of the vessels have been sold, notes GOGL, who is set to receive net sales proceeds of $92.4 million in 2015, and $92.4 million in 2016, upon the vessels' delivery.

"The low utilization of the dry bulk fleet the first six months of the year has been due to demand issues rather than increased supply," observed GOGL.

Despite the currently unfavourable market climate, GOGL was upbeat in its future outlook, saying that its modern fleet and healthy balance sheet put it in a good position relative to most competitors.

In March, Knightsbridge said it would continue with its plans to merge with GOGL despite a weak outlook for the dry bulk sector in 2015.

In April, GOGL announced that due to a weak market it would be divesting a number of vessels from its Capesize fleet.