Golden Ocean Group Limited, a dry bulk shipping company created through a merger of former Knightsbridge Shipping Limited and Golden Ocean, reported a net loss of USD 15.3 million and a loss per share of USD 0.18 for the first quarter of 2015.
The company explained that the earnings in the first quarter were hit by idle vessels and vessels being delivered from yard with expensive bunkers and start-up costs, in addition to dissapointing situation in the bulker sector.
The average daily time charter equivalent (TCE) earned by the Capesize vessels in the first quarter dropped to USD 3,100 from USD 13,200 in the preceding quarter.
Golden Ocean group has recorded a vessel impairment loss of USD 141 million during the quarter, which relates to five vessels (KSL China, Battersea, Belgravia, Golden Future and Golden Zhejiang), which the company agreed to sell to, and lease back, from Ship Finance in April 2015.
The company added that the merger has not had an impact on the results of operations in the Q1 of 2015, except for the bargain purchase gain, as it was completed at the end of the quarter.
Cash and cash equivalents increased by USD 143.1 million in the first quarter.
“Subsequent to March 31, 2015, we have reached agreements with several of our yards to delay the delivery dates of 19 newbuildings by 79 months in aggregate. These changes resulted in an increase in newbuilding commitments of USD 1.1 million such that we are committed to make newbuilding installments of USD 936.6 million with expected payments of USD 330.7 million, USD 471.4 million and USD 134.5 million in 2015, 2016 and 2017, respectively, ” the company said.
As the dry bulk market has remained weak so far in the second quarter; the company expects its revenues to remain low in the second quarter.
The company added that the lengthy arbitration process against Jinhaiwan came to an end during April and that Golden Ocean has received full refund for all of the nine contracts, including interest in the amount of USD 40.5 million.
“Future earnings will continue to correlate with the spot market as long as the majority of our fleet is employed in the spot market and on index linked time charter contracts. The dry bulk market, which went from bad to worse during the first four months of the year, finally appears to have some much needed structural changes in the sector.
“Scrapping has outpaced newbuilding deliveries so far in 2015 both for Capesizes and for vessels smaller than 40,000 dwt. Conversions of dry bulk new buildings to tankers or containers have been achieved wherever possible and negligible numbers of new orders have been placed. In spite of this, it will be challenging for the sector in the coming months, which should lead to opportunities for those companies with stamina and a decent balance sheet,” the company said in its predictions for the market outlook.