Spot Market Strategy Recovery Will Boost Globus Maritime’s Revenues Moving Forward

Globus Maritime Limited, a dry bulk shipping company, today reported its unaudited consolidated financial results for the second quarter and six-month period ended June 30, 2023.

Revenue

• $7.8 million in Q2 2023
• $16.4 million in H1 2023

Net income/(loss)

• $1.2 million net loss in Q2 2023
• $1.4 million net income in H1 2023

Adjusted EBITDA

• $0.9 million in Q2 2023
• $2.2 million in H1 2023

Time Charter Equivalent

• $8,244 per day in Q2 2023
• $8,518 per day in H1 2023

Current Fleet Profile

As of the date of this press release, Globus’ subsidiaries own and operate seven dry bulk carriers, consisting of two Supramax, one Panamax and four Kamsarmax.

Current Fleet Deployment

All our vessels are currently operating on short-term time charters (“on spot”).

Management Commentary

“During the second quarter and for the majority of the first half of the year the market was soft in the industry. In the second quarter the market rates were affected by various seasonal, geopolitical and economic factors. This had rates dip below $10,000 per day and stayed at these levels for some time.

Fortunately, the market has picked up since then and day rates have now attained much healthier and comfortable levels. We mostly employ our vessels in the spot market and even our period deals have a spot market exposure through links to the relative vessel indices; this allows us to reap benefits instantly when the market picks up, albeit it could also expose us to risks during market downturns. Additionally, during the quarter, we had some ballasting and repositioning trips.

Earlier in the year we announced the sale of m/v Sun Globe, Sky Globe and Star Globe. The Sun Globe and Sky Globe have been delivered to their new owners and we expect the Star Globe to be delivered shortly, within the month as has been communicated already, subject to customary closing conditions. We plan to replace these three vessels with the delivery of our first 3 ultramax newbuildings in 2024.

The Company is always evaluating transactions and ways to expand the fleet and footprint in the market. We are very keen on modern, ‘eco’ and/or scrubber fitted quality vessels which are drawing significant interest and competition from buyers; modern vessel sale candidates are scarce with the price pushed upwards usually. Notwithstanding that the Company is continuously scanning the market for such attractive candidates that may carry a good price.

The Company is regularly evaluating and searching for attractive financing opportunities, we are frequently exploring and trying to negotiate transactions that will be beneficial to the Company as well as to, the expansion and emission reduction strategy of our fleet.

We are constantly trying to develop new financing relationships, expand the spectrum and we are fortunate to have institutions supporting our Company and our cause.

But most importantly we are continuously evaluating various ways to enhance and build up value for our shareholders, the evaluation is always done strategically with our focus on the health of the Company, and its future. We remain committed in our expansion plans, the efficiency and carbon footprint of our fleet and the further enhancement of shareholder value.”

Recent Developments

Contract for new building vessels

On April 29, 2022, the Company signed a contract for the construction and purchase of one fuel efficient bulk carrier of about 64,000 dwt. The vessel will be built at Nihon Shipyard Co. in Japan and is scheduled to be delivered during the first half of 2024. The total consideration for the construction of the vessel is approximately $37.5 million, which the Company intends to finance with a combination of debt and equity. In May 2022 the Company paid the 1st instalment of $7.4 million and in March 2023 paid the 2nd instalment of $3.7 million.

On May 13, 2022, the Company signed two contracts for the construction and purchase of two fuel efficient bulk carrier of about 64,000 dwt each. The sister vessels will be built at Nantong COSCO KHI Ship Engineering Co. in China with the first one scheduled to be delivered during the third quarter of 2024 and the second one scheduled during the fourth quarter of 2024. The total consideration for the construction of both vessels is approximately $70.3 million, which the Company intends to finance with a combination of debt and equity. In May 2022 the Company paid the 1st instalment of $13.8 million and in November 2022 paid the 2nd instalment of $6.9 million for both vessels under construction.

On August 18, 2023, the Company signed two contracts for the construction and purchase of two fuel efficient bulk carrier of about 64,000 dwt each. The two vessels will be built at a reputable shipyard in Japan and are scheduled to be delivered during the second half of 2026. The total consideration for the construction of both vessels is approximately $75.5 million, which the Company intends to finance with a combination of debt and equity. In August 2023 the Company paid the 1st instalment of $7.5 million for both vessels under construction.

Debt financing

In August 2022, the Company reached an agreement with First Citizens Bank & Trust Company (formerly known as CIT Bank N.A.) for a deed of accession, amendment and restatement of the “CIT loan facility” (as referred at 2021 Annual Report) by the accession of an additional borrower in order to increase the loan facility from a total of $34.25 million to $52.25 million, by a top up loan amount of $18 million for the purpose of financing vessel Orion Globe and for general corporate and working capital purposes of all the borrowers and Globus. The CIT loan facility (including the new top up loan amount) is now further secured by a first preferred mortgage over the vessel Orion Globe. Furthermore, the benchmark rate was amended from LIBOR to SOFR and the applicable margin from 3.75% to 3.35% for the whole CIT loan facility.

In August 2023, the Company reached an agreement with First Citizens Bank & Trust Company (formerly known as CIT Bank N.A.) for a deed of accession, amendment and restatement of the CIT loan facility by the accession of an additional borrower in order to increase the loan facility from a total of $52.25 million to $77.25 million, by a top up loan amount of $25 million for the purpose of financing vessels Diamond Globe and Power Globe and for general corporate and working capital purposes of all the borrowers and Globus. The CIT loan facility (including the new top up loan amount) is now further secured by a first preferred mortgage over the vessels Diamond Globe and Power Globe. Furthermore, the applicable margin was amended from 3.35% to 2.70 % for the whole CIT loan facility. On August 10, 2023, the Company drew down $25 million.

Sale of vessel

On March 6, 2023, the Company, through a wholly owned subsidiary, entered into an agreement to sell the 2007-built Sun Globe for a gross price of $14.1 million (absolute amount), before commissions, to an unaffiliated third party. The vessel was delivered to its new owners in June 2023.

On August 11, 2023, the Company, through a wholly owned subsidiary, entered into an agreement to sell the 2009-built Sky Globe for a gross price of $10.7 million (absolute amount), before commissions, to an unaffiliated third party. The vessel was delivered to its new owners on September 7, 2023. The Company expects to recognize a gain of approximately $2.2 million (absolute amount) as a result of the sale, which will be classified in the income statement component of the consolidated statement of comprehensive income.

On August 16, 2023, the Company, through a wholly owned subsidiary, entered into an agreement to sell the 2010-built Star Globe for a gross price of $11.2 million (absolute amount), before commissions, to an unaffiliated third party, which sale is subject to standard closing conditions. The vessel is expected to be delivered to its new owners within September 2023. The Company expects to recognize a gain of approximately $1.6 million (absolute amount) as a result of the sale, which will be classified in the income statement component of the consolidated statement of comprehensive income.

Receipt of Nasdaq Notice of Deficiency

On July 14, 2023, the Company received written notification from The Nasdaq Stock Market dated July 12, 2023, indicating that because the closing bid price of our common stock for the last 30 consecutive business days was below $1.00 per share, we no longer meet the minimum bid price continued listing requirement for the Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5450(a)(1). Pursuant to Nasdaq Listing Rules, the applicable grace period to regain compliance was 180 days, or until January 8, 2024. The Company intends to monitor the closing bid price of its common stock between now and January 8, 2024 and is considering its options, including a potential reverse stock split, in order to regain compliance with the Nasdaq Capital Market minimum bid price requirement. The Company can cure this deficiency if the closing bid price of its common stock is $1.00 per share or higher for at least ten consecutive business days during the grace period. In the event the Company does not regain compliance within the 180-day grace period, and it meets all other listing standards and requirements it may be eligible for an additional 180-day grace period. The Company intends to cure the deficiency within the prescribed grace period. During this time, the Company’s common stock will continue to be listed and trade on the Nasdaq Capital Market.

Conflicts

The conflict between Russia and Ukraine, which commenced in February 2022, has disrupted supply chains and caused instability and significant volatility in the global economy. Much uncertainty remains regarding the global impact of the conflict in Ukraine, and it is possible that such instability, uncertainty and resulting volatility could significantly increase the costs of the Company and adversely affect its business, including the ability to secure charters and financing on attractive terms, and as a result, adversely affect the Company’s business, financial condition, results of operation and cash flows. Currently there is no direct effect on the Company’s operations.

Second quarter of the year 2023 compared to the second quarter of the year 2022

Net loss for the second quarter of the year 2023 amounted to $1.2 million or $0.06 basic loss per share based on 20,582,301 weighted average number of shares compared to net income of $11 million or $0.53 basic income per share based on 20,582,301 weighted average number of shares for the same period last year.

Revenue

During the three-month period ended June 30, 2023, and 2022, our Revenues reached $7.8 million and $19.1 million, respectively. The 59% decrease in Revenues was mainly attributed to the decrease in the average time charter rates achieved by our vessels during the second quarter of 2023 compared to the same period in 2022. Daily Time Charter Equivalent rate (TCE) for the second quarter of 2023 was $8,244 per vessel per day against $22,837 per vessel per day during the same period in 2022 corresponding to a decrease of 64%.

First half of the year 2023 compared to the first half of the year 2022

Net income for the six-month period ended June 30, 2023 amounted to $1.4 million or $0.07 basic income per share based on 20,582,301 weighted average number of shares, compared to $23.1 million for the same period last year or $1.12 basic income per share based on 20,582,301 weighted average number of shares.

Revenue

During the six-month period ended June 30, 2023 and 2022, our Revenues reached $16.4 million and $37.6 million, respectively. The 56% decrease in Revenues was mainly attributed to the decrease in the average time charter rates achieved by our vessels during the six-month period ended June 30, 2023, compared to the same period in 2022. Daily Time Charter Equivalent rate (TCE) for the six-month period of 2023 was $8,518 per vessel per day against $23,238 per vessel per day during the same period in 2022, corresponding to a decrease of 63%, which is attributed to the worse conditions throughout the bulk market for the first half of 2023.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under IFRS. Some of these limitations are:

• Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
• Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our debt;
• Adjusted EBITDA does not reflect changes in or cash requirements for our working capital needs; and
• Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business.

Full Report

Source: Globus Maritime Limited