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Historically-low Tanker Rates Hurt Performance Shipping’s Second Quarter Financial Results

Performance Shipping Inc., a global shipping company specializing in the ownership of tanker vessels, Friday reported a net loss and net loss from continuing and discontinued operations attributable to common stockholders of $2.6 million for the second quarter of 2021, compared to net income and net income from continuing and discontinued operations attributable to common stockholders of $4.6 million for the same period in 2020. Loss per share, basic and diluted, for the second quarter of 2021 was $0.53, while earnings per share, basic and diluted, for the second quarter of 2020 was $0.94.

Voyage and time charter revenues from continuing and discontinued operations were $9.1 million ($4.0 million net of voyage expenses) for the second quarter of 2021, compared to $16.0 million ($11.8 million net of voyage expenses) for the same period in 2020. This decrease was mainly attributable to the decreased time-charter equivalent rates (TCE rates) achieved during the quarter as a result of the depressed market conditions. Fleetwide, the average time charter equivalent rate for the second quarter of 2021 was $9,728, compared with an average rate of $26,092 for the same period of 2020. During the second quarter of 2021, net cash used in operating activities of continuing and discontinued operations was $0.2 million, compared with net cash provided by operating activities of continuing and discontinued operations of $2.9 million for the second quarter of 2020.

Net loss from continuing and discontinued operations for the six-month period ended June 30, 2021 amounted to $5.5 million, compared to net income from continuing and discontinued operations of $5.9 million for the six-month period ended June 30, 2020. Net loss from continuing and discontinued operations attributable to common stockholders for the six-month period ended June 30, 2021 amounted to $5.5 million, and resulted in a loss per share, basic and diluted, of $1.10. Net income from continuing and discontinued operations attributable to common stockholders for the six-month period ended June 30, 2020 amounted to $7.4 million, including a one-time gain of $1.5 million derived from the repurchase of the Series C preferred shares, and resulted in earnings per common share, basic and diluted, of $1.55 and $1.51, respectively.

As of June 30, 2021, the Company’s number of shares issued and outstanding was 5,082,726.

During the second quarter of 2021 the Company became a signatory of BIMCO’s Gulf of Guinea Declaration to address the piracy issues in the Gulf of Guinea, one of the many ESG initiatives taken by the Company this year.

Commenting on the results of the second quarter of 2021, Mr. Andreas Michalopoulos, the Company’s Chief Executive Officer, stated:

“Spot charter rates during the second quarter of 2021 continued to remain at historically low levels as a result of marginal increases in crude oil and refined petroleum products production. Therefore, in accordance with our dividend policy, we will not declare a dividend for our Q2 2021 results from operations. We continue to expect weak spot charter rates to gradually recover as early as the fourth quarter of 2021, depending on developments pertaining to the COVID-19 pandemic. During the second quarter of 2021, we completed the special survey and ballast water treatment system installation on our M/T Briolette. We will take advantage of the weak market to complete similar work on our M/T P. Fos during the 3rd quarter, and M/T Blue Moon during the 4th quarter, following the completion of the existing time charter with Saudi Aramco.”

Tanker Market Update for the Second Quarter 2021:

Tanker fleet supply was 651.4 million dwt, up 0.6% from 647.6 million dwt from the previous quarter, and up 2.7% from Q2 2020 levels of 634.3 million dwt.

Tanker demand in billion tonne-miles is projected to increase by 3.8% in 2021, partially recovering from the lows experienced in 2020.

However, tanker demand is still projected to remain circa 4.0% below 2019 levels.

Tanker fleet supply in deadweight terms is estimated to grow by a moderate 1.7% in 2021.

Crude tanker fleet utilization was estimated at 80.0%, slightly up from 78.0% from the previous quarter and down from Q2 2020 levels of 88.0%.

Newbuilding tanker contracting of 4.8 million dwt in the second quarter resulted in the tanker orderbook remaining close to record low levels and representing 8.0% of the tanker fleet.

Daily spot charter rates for Aframax tankers averaged $7,648, down 27.3% from the previous quarter average of $10,527 and down 76.6% from the Q2 2020 average of $32,624.

The value of a 10-year-old Aframax tanker ended the second quarter at $26.0 million, up 10.6% from the previous quarter assessed value of $23.5 million, and at the same levels seen in Q2 2020.

The number of tankers occupied with floating storage (excluding dedicated storage) was 149 (23.0 million dwt), down 16.3% from 178 (28.6 million dwt) from the previous quarter and down 10.2% from Q2 2020 levels of 166 (29.2 million dwt).

Global oil consumption was 96.7 million bpd, up 2.4% from the previous quarter level of 94.5 million bpd, and up 14.0% from Q2 2020 levels of 84.8 million bpd.

Global oil production was 93.4 million bpd, up 1.3% from the previous quarter level of 92.2 million bpd and down 3.0% from Q2 2020 levels of 96.3 million bpd.

OECD commercial inventories were 2,863.9 million barrels, down 1.8% from the previous quarter level of 2,915.0 million barrels, and down 10.5% from Q2 2020 levels of 3,201.2 million barrels.

Novel Coronavirus Risks:

On March 11, 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where the Company conducts a large part of its operations, have implemented measures to combat the outbreak, such as quarantines, travel restrictions, and other emergency public health measures in an effort to contain the outbreak. Such measures have resulted in a significant reduction in global economic activity and extreme volatility in the global financial markets, which has reduced the global demand for oil and oil products, which the Company’s vessels transport. Despite the global gradual recovery from COVID-19, the Company continues to take proactive measures to ensure the health and wellness of its crew and onshore employees while maintaining effective business continuity and uninterrupted service to its customers. The overall impact of COVID-19 on the Company’s business, and the efficacy of any measures the Company takes in response to the challenges presented by the COVID-19 pandemic, will depend on how the outbreak further develops, the duration and extent of the restrictive measures that are associated with the pandemic and their impact on global economy and trade, which is still uncertain.

Performance Shipping Inc. is a global provider of shipping transportation services through its ownership of Aframax tankers. The Company’s current fleet is employed on spot voyages, time charters, and through pool arrangements.
Source: Performance Shipping

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