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Goodbulk Ltd. Reports Fourth Quarter Net Profit of $10.9 Million

GoodBulk Ltd., a leading owner and operator of dry bulk vessels, yesterday announced its financial results for the fourth quarter of 2019.

4th Quarter Highlights
• Generated $10.9 million of net profit resulting in earnings per share (EPS) of $0.36. EBITDA for the period was $31.3 million.
• Earned an average gross Time Charter Equivalent rate (TCE) of $21,142 per day on our Capesize vessels and $11,725 per day on our Panamax vessel.
• Averaged direct vessel operating expenses for the period of $5,528 per vessel per day.
• Ended the period with a cash balance of $47.0 million.

Recent Developments
• Declared its eighth consecutive regular quarterly cash dividend of $1.00 per common share, resulting in cumulative dividend distribution of $3.46 per share, or 31.45% of the price of the Company’s March 2017 Norwegian OTC initial offering.

• As of 19 February 2020, GoodBulk has fixed 78% of itsfirst quarter 2020 Capesize days at $13,544 per vessel per day (equivalent to reported gross TCE).

• On 10 January 2020, the Company entered into an agreement to sell the M/V Aquacarrier, a 2011 built Capesize vessel of 175,935 DWT built in Jinhai (China) to a third party for net consideration of $17.6 million. The vessel was delivered to its new owners on 28 January 2020.

• On 22 January 2020, the Company entered into an agreement to sell the M/V Aquajoy, a 2003 built Capesize vessel of 171,009 DWT built in Sasebo (Japan) to a separate third party for net consideration $10.8 million with an expected delivery date do its new owners in May 2020.

• In January 2020 the Company extended the maturity of M/V Aquabridge and M/V Aquavoyageurs loan tranches, having original expiration date in January and July 2020, respectively. The maturity date was extended to March 2023; all other terms under the loan facility remained unchanged.

GoodBulk is a leading owner of dry bulk vessels executing a strategy combining low financial leverage with active portfolio management to optimize operational leverage to the dry bulk freight market. This strategy has resulted in GoodBulk announcing its eleventh consecutive profitable quarter, with $10.9 million of net profit ($0.36 per share) on revenue and other income of $68.0 million, for the quarter ended December 31, 2019. The Company’s strict financial discipline resulted in industry leading general and administrative expenses of $425 per vessel per day; pure cash G&A were at $272 per vessel per day. As a result, the Board of Directors approved a cash dividend of $1.00 per share.

Market Commentary
For the quarter ending 31 December 2019, the Baltic Capesize Index averaged $22,185 per day, 40.2% above $15,829 per day for the same period 2018 and 24.5% below $29,365 per day for the quarter ending 2 30 September 2019. During the fourth quarter of the year Brazil’s iron ore exports fell to 89 million tonnes, down 9 million tonnes from the previous quarter negatively impacting the Capesize market via the loss of important tonne miles.

China also drastically reduced its coal imports during the fourth quarter as a result of strict import quotas resulting in imports totaling 49 million tonnes compared to 96 million tonnes in the previous quarter. Brazil’s iron ore exports continued to be heavily impacted during January and February 2020 as a result of heavy rain in the iron ore rich Brazilian state of Minas Gerais where rainfall in Belo Horizonte was the strongest in over 100 years. The annual cyclone season in West Australia, where most of the country’s iron ore comes from, is also disrupting shipments. These events have pushed the Capesize market down to 2016 lows and are currently below operating expenses.

Capesize rates in January 2020 averaged $7,563 per day, 46.4% below January 2019. The deteriorating rate environment has resulted in an increase in Capesize vessel demolitions which now stand at nine vessels year to date, an increase over the five reported demolished in January and February 2019. We expect the low rate environment combined with the continued implementation of regulations requiring significant capital expenditures will continue to push more owners to recycle older tonnage resulting in increased scrapping. The first quarter is historically a seasonally weak period for dry bulk shipping rates.

This year the addition of the novel coronavirus outbreak in China is adding a new level of complexity as it is expected to negatively impact Chinese domestic demand and the necessary restrictions on logistics and the movement of people put in place to slow the spread of the virus will hurt raw material flows and consumption at a time when demand post Chinese New Year should be seeing a rebound. The normalization of the economy will be key to the improvement in the dry cargo market which is always one of the first to feel changes in global trade.

Overall, however, once the spread of the virus comes under control, the Chinese government’s measures to prop up infrastructure projects via giving local governments access to the bond market is expected to support iron ore demand later in the year. Although we do not expect 2020 Capesize rates to match 2019’s average of $18,025 per day, we believe the market will see a significant improvement as we approach the third quarter 2020.
Full Report

Source: GoodBulk Ltd.

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