Hong Kong’s Pacific Basin Shipping, a leading player in the minor bulks sector, netted US$465.1m net profit for the first six months of 2022, a record result for the company.
“In the first half of 2022, we generated our best interim results ever, producing an underlying profit of US$457.5m, a net profit of US$465.1m and an EBITDA of US$566.9m. This yielded an exceptionally strong return on equity of 48%, with basic EPS of HK74.5 cents,” declared CEO, Martin Fruergaard.
Company results benefited from significantly higher average TCE earnings compared to the same period last year, strong operating activity results, and a competitive cost structure. Pacific Basin continued to significantly outperform the market index rates, especially in our Supramax business, which delivered an exceptional performance over the period.
Global minor bulk loading volume grew approximately 9% in the first half compared to the same period last year. Construction materials were the main driver, in particular cement, clinker and aggregates where loadings were up 8% year on year. On the other hand, the global dry bulk fleet grew only 1.5% net during the half-year compared to 1.9% in the same period last year mainly due to slowing newbuilding deliveries. The global fleet of handysize and supramax vessels grew by 1.6%, which despite slowing global economic growth has helped to support higher rates over the period.
Mr Fruergaard said the company remains committed to a long-term strategy to grow its owned fleet of Supramax ships by acquiring high-quality, modern, second-hand vessels, and to sell our older and less-efficient Handysize ships and replace them with younger and larger Handysize vessels. During the period Pacific Basin sold five of older Handysize ships, while taking delivery of one Ultramax vessel purchased in 2021.
Offering a forward looking outlook Mr Fruergaard said:
“In light of a softening global economy, we expect dry bulk demand in the second half to moderate somewhat from recent highs but remain relatively firm mainly due to seasonal factors in the grain market, elevated coal demand for electricity production and continued investment in global infrastructure.
“Any revival of the Chinese economy is expected to be supported by domestic property construction, manufacturing and infrastructure spending as government policies are needed to drive growth in light of continuing Covid restrictions.
“Changes in trade flows caused by the conflict in Ukraine have positively impacted tonne-mile demand for some commodities to date, but we continue to monitor the impact that the conflict might have as we come close to the typical Black Sea grain export season.
“We believe uncertainty over new environmental regulations and the high cost of newbuildings, will continue to discourage any significant new ship ordering. According to Clarksons Research, current orderbook is at a 30-year low of just 7.2% of total fleet and new ordering is down 60% in the first half of 2022 compared to the same period last year. The low orderbook coupled with IMO regulations to reduce carbon intensity likely resulting in slower speeds and increased scrapping from 2024 onwards, bodes well for the long-term health of the dry bulk market,” he concluded.
