Odfjell: Spot-on results, but somewhat of a gloomy mood

Odfjell posted slightly weaker results QoQ after the record 2Q on Tuesday evening, but this was in line with the previous guidance and expected by us. Overall, our estimates were spot on the figures throughout all the segments. The next quarter is guided strong, yet, somewhat weaker QoQ due to a slowdown in the spot markets for the tankers. Terminals should be stable. Prior the report, the stock fell, but -11% just after the report seems overdramatic, in our view, whereas our Buy recommendation is reiterated with a NOK 170/sh (NOK 190/sh previously) Target Price.

The estimates cannot get closer than this

Odfjell delivered another solid financial result in 3Q24, somewhat below record levels from the previous quarter, but this was just as guided. EBITDA of USD 132m, EBIT of USD 90m and USD 71m bottom line were all very close to our estimated figures. Volumes were stable in the third quarter, with lower COA nominations offset by higher spot volume. Swing tonnage also increased somewhat leading to lower rates. Terminals were steady as usual.

4Q should be somewhat weaker

Clean and chemical tanker markets have recently been affected by “the summer lull” combined with crude tankers switching to clean to escape the effects of weaker oil demand in China and reduced West African exports. Overall, the macroeconomic sentiment remains mixed with the possible geopolitical escalations in the Middle east, uncertainty within China’s stimulus packages and growing chemical tanker orderbook. The company expects the market to pick up towards the end of the year, where the development for product tankers and swing tonnage will be key. Increased production volumes from OPEC+ potentially from early 1Q25 will likely have a positive effect. 4Q24 was guided to be strong, but below 3Q24 due to weaker spot markets. We estimate around USD 125m EBITDA in 4Q24 and slightly less than USD 500m EBITDA for FY25 and seem to be in line with the consensus. The share dropped dramatically after the results and, in our view, such a weakness is somewhat unjustified. Thus, Buy is reiterated, although at a lower NOK 170/sh TP.

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Source: Norne Research