Solvang ASA 1st quarter report 2014
15.05.2014Shipping activities yielded NOK 15.7 million in Q1 2014, where NOK 14.7 million came from the ship-owning companies (equity method), compared to NOK 10.7 million during the same period in 2013, where the ship-owning companies contributed with NOK 10 million. The result before tax for Q1 2014 was NOK 16.9 million compared to NOK 24.3 million in Q1 2013, which included NOK 14 million in gain on sale of equity shares. The increased earnings from the shipping activities come from significantly higher income in the VLGC segment, as well as a strong LGC market.
In the ethylene segment, low export volumes from the Middle East continued in 2014, but the Solvang fleet, which is now released from contractual obligations in the Middle East, could take considerable advantage of the arbitrage opportunities arising from low volumes from the Middle East. In this case in the form of several ethylene cargoes from Europe to Asia, where our 17,000 cbm vessels have been very well suited, but positioning costs reduced earnings below satisfactory level.
Solvang's share of revenues on time charter basis was NOK 53.2 million in Q1 2014, up by NOK 9.3 million from the same period in 2013, mainly due to better rates for the VLGC and LGC segments, partially offset by lower income from ethylene.
The Baltic Index for VLGC, which started the quarter on a downward trend, but picked up considerably towards the end of the quarter, reached an average level of USD 57/ton, up from USD 41/ton in Q1 2013.
Contract coverage for the fully refrigerated VLGC and LGC ships is 98% for 2014, with only one ship becoming available towards the end of 2014. Ethylene tonnage operates mainly in the spot market.
VLGC 82k-84k cbm
The LPG export volume out of the Arabian Gulf is a central driver for this market, together with the increasing export out of U.S. As mentioned, rates fell slightly in the first quarter based on lower U.S. exports due to cold weather and higher internal consumption. But by the end of February, exports increased significantly and resulted in a new Baltic Index rate record at USD 88.75/ton, and further into April it reached USD 137.5/ton, equivalent to USD 3.79 million on timecharter basis. The average freight rate for the Baltic Index for Q1 was USD 57/ton, equivalent to USD 950,000 per month on timecharter basis, up from USD 41/ton in the same period in 2013, equivalent to just USD 350,000 per month on timecharter basis.
Panamax VLGC 75k cbm
LGC 60k cbm
Ethylene 12-17k cbm
Transactions with related parties follow the guidelines set within the code. The Group's principal broker for sale & purchase is Inge Steensland AS. There are also parallel investments made with companies controlled by the Steensland family. All transactions comply with market terms.
The Solvang Group has completed one scheduled classification docking in the first quarter of 2014. For 2014 there are a total of two scheduled classification dockings.
Stavanger, 15 May 2014
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.
Making Heavy Fuel Oil Clean
Exhaust gas recirculation (EGR) combined with previous measures reduces NOx emissions from heavy fuel oil by up to 80 % in a typical LPG tanker. The concept is a potential game changer for Norwegian domestic shipping.
The greenest and most fuel efficient VLGC ever
Solvang’s new-builds (84k cbm) at Hyundai Heavy Industries are two of the most fuel efficient LPG carriers ever built, in addition they are some of the world’s largest ships for transporting liquefied petroleum gas.