Pacific Basin will focus on Handysize business
Prominent global dry bulk carrier Pacific Basin Shipping Limited (Pacific Basin) Thursday announced in its Annual Results for 2014 that it swung into the red during the year, from a profit making position the prior year.
The group made an underlying loss of $55.5 million and a loss attributable to shareholders of $285 million in 2014 off revenues of $1,718.5 million, which were slightly up on the prior year.
But the group said it had achieved positive EBITDA of $82 million during the year and that non-cash charges had "undermined results" for Pacific Basin, which had actually seen positive cash generation in a "very difficult market."
$130 million worth of non-cash impairments and provisions reflecting significant changes in dry bulk and bunker fuel markets
The group made a total of $130 million worth of non-cash impairments and provisions "reflecting significant changes in dry bulk and bunker fuel markets."
In addition, a $91 million in towage-related impairment and business disposal charges weighed on results.
But the group said it was looking to exit the towage business, most of which it has now sold.
Pacific Basin pointed to its balance sheet and a debt-to-equity ratio of 40:100, saying it remained in a strong position.
"Poor as these results are, it says much about our effective business model and competitive cost base that we remain EBITDA positive in these testing times and able to generate Handysize earnings that outperformed spot market rates by 28%," said CEO Mats Berglund.
Outlook Poor for 2015
Pacific Basin conceded that the dry bulk sector has made a "poor start to 2015 with Baltic Dry Index falling to its lowest since indices began in 1985 and a dysfunctional freight market in some regions."
We expect [the] weak market to continue in 2015
"We expect [the] weak market to continue in 2015 and take a cautious view on freight earnings outlook."
While fleet growth has slowed, said Pacific Basin, oversupply problems had not gone away and low bunker prices may exacerbate them by encouraging carriers to speed up.
The group said it had stopped buying ships in early 2014 after taking delivery of 33 second-hand ships purchased at historically low prices.
Its fleet now numbers 218 ships, of which 80 are owned, while an additional 18 owned and 14 chartered-in vessels are on order.
Last year, Berglund said he expected a recovery of the dry bulk sector in 2014 and 2015.