The Norwegian shipping group reports its best quarterly result since 2008. CEO comments surprising purchase of shares in chemical tanker carrier Odfjell.
Stolt-Nielsen has just presented its finest quarterly result in 14 years with a net profit of USD 52.3m for the first three months of 2022, according to a financial news release with unaudited results.
In the same release, Chief Executive Niels G. Stolt-Nielsen comments on the attention-grabbing purchase of 5 percent of the A-shares in the shipping group’s Norwegian competitor Odfjell.
”On March 7th we announced the purchase of 5 percent of the A-shares in Odfjell SE. This investment is driven by our belief in the chemical tanker industry and a pending recovery,” says the CEO of the Norwegian shipping group.
”Our investment has naturally prompted speculation about a potential merger between Stolt Tankers and Odfjell Tankers. I have previously spoken out about the need for consolidation in the chemical tanker industry and still strongly believe it is the best way to make our industry environmentally and economically sustainable,” he continues.
So far, Odfjell has rejected the need for consolidation but finds itself in an uncertain situation as its chief executive for the last seven years, Kristian Mørch, has recently announced his departure.
Mørch is not quitting due to the merger speculations but because he and his family wish to move back to Copenhagen.
Large profit
The speculation comes at a time when Stolt-Nielsen – atypically for the season – boasts an unusually high profit. The shipping group reports a net profit for the first quarter of 2022 of USD 52.3m from revenue of USD 606.2m. Last quarter, the group’s profit came to USD 35m.
”Typically the first quarter of the year is the seasonally weakest quarter for our businesses. However, this year the first quarter showed no signs of weakness as we posted our strongest quarterly results since 2008, with Stolt Tank Containers leading the way with record earnings,” says Niels G. Stolt-Nielsen.
Stolt Tank Containers’ operating profit for Q1 was USD 40m, and the CEO expects the container business to see a record year in 2022.
Stolt-Nielsen reports progress in most of its divisions, with Stolt Tankers earning USD 25m against USD 19.2m in last year’s final quarter – a positive sign for the group’s core market, which otherwise saw a weak 2021.
The improvements come at a time of unpredictability in the world, which is also addressed by Niels G. Stolt-Nielsen in the release.
”Just as we thought life would go back to normal after the pandemic, war breaks out in Ukraine. The central banks are raising interest rates, trying to curb inflation. Oil and gas prices are skyrocketing and a new outbreak of Covid is lurking in China,” he states, adding that he cannot ”imagine a more difficult environment to give a quarterly guidance.”
