Solvang ASA 2nd quarter report 2014
22.08.2014Shipping activities yielded NOK 33.7 million in Q2 2014, where NOK 29.9 million came from the ship-owning companies (equity method), compared to NOK 18.8 million during the same period in 2013, where the ship-owning companies contributed with NOK 18.0 million. The result before tax for Q2 2014 was NOK 34.3 million compared to NOK 20.6 million in Q2 2013. The increased earnings from the shipping activities comes mainly from substantially higher earnings in the VLGC segment (NOK 10 million), and reversal of previous periods write-down of ship values (NOK 12 million), somewhat offset by last year's positive effect of market valuation of interest rate swaps. For the first half of 2014 the shipping activities yielded NOK 49.4 million, compared to NOK 29.5 million in the same period last year. The increase comes from a very strong LPG market, both for VLGC and the LGC segment, as well as the reversal of previous periods write-down of ship values. Results before tax for the first half of 2014 was NOK 51.2 million compared to NOK 44.9 million in the same period in 2013, which had a positive one-off effect from realization of securities of NOK 15 million.
In the ethylene segment, the low export volumes from the Middle East continued throughout the second quarter, but the Solvang fleet 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.
Solvang's share of revenues on time charter basis was NOK 57.9 million in Q2 2014, up by NOK 14.1 million from the same period in 2013, mainly due to better rates for the VLGC and LGC segments. For the first half of 2014 the revenues on time charter basis was NOK 111.1 million, compared to NOK 87.8 million in the first half of 2013, where the increase comes from a strong LPG market, as well as the completion of 6 classification dockings during first half of 2013, which resulted in 130 ship-days without revenue.
The Baltic Index for VLGC has remained at a high level throughout the second quarter. The average level was USD 109/ton, up from USD 60/ton in Q2 2013. The average for the first half of 2014 was USD 83/ton, against USD 51/ton in the first half 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 climbed to historically high levels due to an active summer market, hence a new Baltic index rate record was set at USD 137/ton (USD 3.79 million). The average freight rate for the Baltic Index for Q2 was USD 109/ton (USD 2.8 million), up from USD 60/ton in the same period in 2013 (USD 1.09 million). The first half of 2014 had an average of USD 83/ton, equivalent to a monthly rate of USD 1.89 million less idle time.
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 had no scheduled classification docking in the second quarter of 2014. For 2014 there are a total of two scheduled classification dockings.
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.