Starbulk Widens Losses, Delays Newbuildings

Star Bulk in Q3 2015 incurred an operating loss of $30.7 million

In the wake of ongoing weakness in the dry bulk market, along with dry docking costs negatively affecting its third quarter 2015 results, Star Bulk Carriers Corp. has announced it has widened its losses to -$147.17 million for the first nine months of 2015.

In its third quarter 2015 financial statement, Star Bulk in Q3 2015 incurred an operating loss of $30.7 million compared to an operating income of $1.3 million for Q3 2014.

The loss was blamed partly on an increase in fleet size (which also boosted Q3 2015 operating expenses to $29.4 million compared to $15.1 million for the same time last year) and lower charterhire rates for dry bulk carrier vessels.

These same factors were cited for Star Bulk's operating loss for the nine months ended September 30, 2015 of $121.4 million, compared to operating income of $1.3 million for the same period in 2014.

In noting that his company's Q3 2015 net revenues were $49.1 million, Petros Pappas, chief executive officer of Star Bulk, remarked that "The weak dry bulk market conditions have impacted our top line, while our operating results were affected by dry docking costs of $6.2 million."

He added that "Our bottom line has been affected by non-cash losses of $12.5 million related to the sale of three of our on-the-water vessels, as well as the reassignment of one lease agreement to a third party."

On the OPEX side, Star Bulk's average daily operating expenses per vessel for Q3 2015 were $4,237, a 12 percent reduction compared to the same time period last year.

Pappas said, "We expect further reduction in our average daily operating expenses upon completion of our newbuilding program in 2016, without compromising the high quality and safety standards of our operations."

The CEO explained that on the capex side of operations, Star Bulk recently agreed to defer the delivery of four newbuilding vessels from the fourth quarter of 2015 to 2016, "preserving our strong liquidity position and increasing their resale value."

He added that "We have managed to defer $464 million of capital expenditures from 2015 to 2016 and delay vessel deliveries by a total of 105 months, or 5.2 months per vessel on average at no additional cost."

Dovetailing these deferrals is Star Bulk's previously announced agreement to reduce the final purchase price of certain newbuilding vessels by an aggregate $25.8 million.

Still, Star Bulk's strategies have failed to impress the financial market: MFI, which reported Star Bulk's price target has been lowered to $1 from the pervious $3, also pointed out that the company's shares have dropped 86.48 percent in the past 52 weeks.

In September, despite its cost savings efforts, Star Bulk reported a $105.2 million net loss in the first six months of 2015.