Odfjell: Flat quarter with higher dry-docking

Odfjell posted another solid report yesterday evening, however, knowing that the fourth quarter is seasonally stronger, slightly weaker EBITDA and EBIT QoQ might seem less encouraging. Results were guided to increase slightly in 1Q24, while the longer-term chemical tanker supply/demand balance remains promising. We will make only limited changes to our estimates following the report, while our recommendation depends on the share reaction.

Higher dry-docking during the quarter

Time charter earnings of USD 182m were in line with 3Q and our estimates. While the fourth quarter is seasonally stronger, a higher number of vessels went through the previously planned dry-docking. The company confirmed that the spot rates firmed during the quarter, while COA rates were flat. EBITDA and EBIT came in somewhat below our and consensus’ projections, at USD 109m and USD 71m. The bottom line was USD 52m, same as 3Q23, but adjusted for non-recurring items it was USD 50m, compared to USD 49m in 3Q23 and vs. USD 49m our expectations.

1Q24 to show slightly higher earnings

4Q23 saw disruptions from a reduced number of transit slots at the Panama canal due to unusually dry weather, adding to the wars in Ukraine and Gaza. As we mentioned previously, the company will have to bear additional costs for rerouting already ongoing voyages, while the trips post mid-January will have their rates adjusted for an increased distance. Overall, the rates are expected to firm over the remainder of 1Q24 and, together with expected stronger underlying results from Terminals, the company guides for earnings to increase slightly in 1Q24. Longer-term situation remains solid with favourable chemical tanker supply/demand balance.

No major changes to estimates should follow the report, while the recommendation depends on the stock movement.
Source: Norne Research