Golden Ocean Posts Q1 Beat

Golden Ocean Group (GOGL) shares were off 1% pre-market Wednesday although the dry bulk shipping company reported it swung to a Q1 net profit of $0.12 per share from a net loss of $0.17 per share in the prior year period. The Street estimate called for earnings of $0.03 per share.

Revenue less voyage expenses and commissions was $119.1 million, up from $55.5 million reported for the same period last year. The Street estimate was for revenue of $101 million.

“Charter rates achieved in Q1 of 2018 reflect a strong start to the year. This comes on top of solid period rates for both Capesize and ice class Panamax vessels,” the company said.

“With a fully delivered fleet of 78 vessels and a strong cash position covering all near-term liquidity requirements, the development in market rates is the most important factor for the company near-term. The start of Q2 was weaker for the Capesize market and this will impact Q2 results. During the quarter, the company fixed out a few more vessels on period charters at increasing rates, and may continue to do so on an opportunistic basis should rates improve further.”

“The impact of sulphur emissions regulations starting in 2020 will be felt across the whole shipping fleet, and the competitive advantage of fuel efficient vessels is expected to increase. The company is well-positioned with a large, modern fleet and will seek to further optimize its fleet through both vessel sales and acquisitions.”

“Fleet utilization in the market has continued to improve as previously expected. Although short term rate volatility is significant, as demonstrated by a sharp drop in rates last month, average rates are steadily increasing. The market outlook appears positive for tonne-mile demand growth on the back of positive trends in the global economy. The risk on the demand side is primarily related to a slowdown in the global economy and steel production in particular. The number of newbuilding orders reported is slowing, and this remains the most important factor for a prolonged positive rate environment.”

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