Stolt-Nielsen Limited Continued strong performance in 2024 year-to-date, as we focus on our ‘Simply the Best’ strategy

Stolt-Nielsen Limited yesterday reported unaudited results for the third quarter and the nine months ending August 31, 2024. The Company reported a third- quarter net profit of $99.2 million with revenue of $732.8 million, compared with a net profit of $90.1 million with revenue of $694.4 million in the third quarter of 2023. The net profit for the first nine months of 2024 was $303.3 million with revenue of $2,181.3 million, compared with a net profit of $198.2 million, with revenue of $2,125.0 million in the first nine months of 2023. The prior year was negatively impacted by the MSC Flaminia loss provision of $155.0 million.

Highlights for the third quarter of 2024, compared with the third quarter of 2023, were:

•Stolt-Nielsen Limited (SNL) consolidated EBITDA1 of $215.2 million, up from $200.3 million.
•Earnings per share in the third quarter was $1.85, up from $1.68.
•Stolt Tankers reported operating profit of $107.1 million, up from $87.3 million.
•The STJS average time-charter equivalent (TCE) revenue for the quarter was $33,355 per operating day, up 17.3% from $28,429.
•Stolthaven Terminals reported operating profit of $27.4 million, up from $26.0 million.
•Stolt Tank Containers reported operating profit of $16.6 million, down from $23.9 million.
•Stolt Sea Farm reported an operating profit before fair value adjustment of biomass of
$8.7 million, up from $6.1 million.
•Stolt-Nielsen Gas reported an operating loss of $1.6 million, compared to a loss of $3.4 million.
•Corporate and Other reported an operating loss of $13.1 million compared to a loss of
$13.4 million.

Udo Lange, Chief Executive Officer of Stolt-Nielsen Limited, commented:

“I am pleased with our continued robust performance over the quarter, demonstrating the strong position our businesses enjoy in each of their respective market segments. EBITDA1 was again over $200 million and at near-record levels for the second consecutive quarter. Our liquid logistics operations have benefitted from strong tanker markets driven by firm spot rates due to transit restrictions in the Red Sea.

“Stolt Tankers has seen strong performance supported by firm markets. This has delivered a second consecutive quarter of record-high average time-charter equivalent (TCE) earnings, at $33,355. Events in the Red Sea continue to impact the shipping markets, as longer voyages consume additional capacity, driving freight rates and margins higher, despite a lower total cargo volume. Within our Stolthaven Terminals business, the previously communicated optimisation strategy is yielding results, driving up margins, as we continue to work to push utilisation levels up. Space constraints on container liners has limited shipment volumes for Stolt Tank Containers, but has positively impacted margins, albeit at lower levels than the prior year. At Stolt Sea Farm, good production, steady demand, and strong pricing have all contributed to an excellent operating result2 in the third quarter.”

Outlook

The long-term supply and demand fundamentals for the chemical tanker markets remain supportive, and we expect the product tanker market to firm through the end of this year, limiting the impact of swing tonnage. However, while third quarter TCE earnings were at record levels, the fourth quarter, whilst still strong, is expected to be lower. Cargoes booked at lower spot freight rates during the seasonally slower third quarter will negatively impact the fourth quarter average TCE. However, spot freight rates are expected to recover towards the end of the fourth quarter and into 2025. Headwinds from geopolitical events remain a risk for Stolt Tankers, however overall underlying freight rates are likely to remain firm for the foreseeable future, supported by a balanced tonnage supply and demand outlook.

Stolthaven Terminals continues to pursue margin optimisation. Although this has negatively impacted utilisation, it is yielding results with observable margin gains that will benefit 2025. We expect to see improvements in utilisation over the coming quarters, notwithstanding potential geopolitical headwinds.

The tank container market remains challenging. Although we saw an increase in transportation margins in the third quarter, margins out of Europe and spot freight rates from Asia are expected to soften in the near term. Stolt Tank Containers will continue its focus on maintaining margins while increasing volumes. As we approach 2025, container liner congestion and the impact from the International Longshoreman’s Association (ILA) strike will create some uncertainty on volumes in and out of the US.

At Stolt Sea Farm, fourth-quarter volumes are likely to remain stable overall, as biomass is built up ahead of the peak Christmas season in December, whilst prices are expected to hold steady at firm levels.

Additional events

In July 2024, the Company successfully completed a $450 million US Private Placement loan facility, secured by assets in the US and a SNL guarantee. The proceeds were used to repay $238.8 million of maturing debt and for general corporate purposes.

Independent director, Mr. Samuel Cooperman, retired from the Board in September 2024. Mr. Cooperman joined Stolt-Nielsen in 1974, and has had a distinguished career with the Company, holding numerous senior management positions, including Chairman and Chief Executive Officer of Stolt- Nielsen Transportation Group, before retiring from the Company in 2003. Mr Cooperman became a director in 2008 and served as Chairman from 2016 until 2023.

On September 19, 2024, subsequent to the quarter-end, the Company announced the listing on the Oslo Stock Exchange of the Company’s NOK 1.5 billion senior unsecured bonds issued in September and December 2023 with ISIN NO0013019026. The bonds have a coupon of 3-Month NIBOR + 3.15% per annum and a maturity date of September 26, 2028.

On October 1, 2024, Avenir LNG Limited, a company in which Stolt-Nielsen Gas (SNG) holds a 47.2% equity share, announced a strategic refocus of its business, including divesting its ownership of the storage terminal, HIGAS, to SNL, Golar LNG and Hoegh Evi. Avenir has also begun the process of seeking a listing on the Euronext Growth Oslo and plans to raise approximately $50.0 million in new equity, fully underwritten by SNL.

Debt, net of cash and cash equivalents, was $1,904.3 million as of August 31, 2024, compared with $1,974.7 million as of May 31, 2024. The decrease in net debt predominantly reflects the receipt of the US Private Placement facility amount, net of capital expenditures. Shareholders’ equity of SNL as of August 31, 2024, was $2,173.5 million, compared with $2,085.1 million as of May 31, 2024.

Net interest expense in the third quarter was $29.6 million compared with a third-quarter 2023 interest expense of $27.7 million. As of August 31, 2024, the Company had $336.7 million of cash and cash equivalents and $431.4 million of available and undrawn committed revolving credit lines. In comparison, on May 31, 2024, the Company had $115.1 million of cash and cash equivalents and $331.4 million of available and undrawn committed revolving credit lines.

Stolt Tankers: Strong performance continued with firm freight rates

Stolt Tankers reported third-quarter revenue of $455.6 million up from $422.3 million in the third quarter of 2023. Deep-sea revenue was down $4.2 million (1.2%), reflecting a 6.6% reduction in operating days, following the redelivery last year of eight Tufton ships.

Furthermore, the transit restrictions through the Red Sea caused lower volume across both COA and spot trades. These lower volumes were partially offset by a 23.2% increase in average freight rates since the same quarter last year. Bunker surcharge revenue increased by $6.3 million, reflecting an increase in the cost of bunker fuel.

As a result, the average deep-sea time-charter equivalent (TCE) revenue for the quarter wasN$33,355 per operating day, up 17.3% from $28,429 in the same quarter prior year. Regional revenue increased by $32.6 million compared to the same quarter in the prior year due to the establishment of the regional Asian Stolt NYK Asia Pacific Service (SNAPS)/ENEOS pool during the fourth quarter of 2023. As Stolt Tankers is the pool manager, this resulted in a full recognition of the pool’s revenue.

Stolt Tankers reported a third-quarter operating profit of $107.1 million, up from $87.3 million in the third quarter of 2023. The decrease in deep-sea revenue was more than offset by a reduction in port charges driven by the reduced transits through the Red Sea and Panama Canal. Increase in regional revenue, caused by the establishment of the SNAPS/ENEOS pool, was offset by the related increase in operating expenses due to the establishment of the pool3. The average price of bunkers consumed was up from $558 to $595 per tonne. Owning expenses were up 1.1%, mainly due to higher maintenance and consumable expenses. Equity income from joint ventures was up by $4.7 million, reflecting the stronger performance of the deep-sea and SNAPS/ENEOS fleets.

Stolthaven Terminals: Optimisation strategy on track, performance driven by strong storage rates Stolthaven Terminals reported third-quarter revenue of $76.8 million, up from $74.7 million in the third quarter of 2023, driven by higher storage rates, higher ancillary revenue and added capacity, partly offset by lower utilisation. Average utilisation at wholly owned terminals in the third quarter was 90.0%, down from 96.8% in the third quarter of 2023, as Stolthaven continued to optimise its portfolio to improve margins. The normalisation of utilisation rates at Stolthaven towards the levels seen in the prior year is expected to continue through 2025.

Stolthaven reported a third-quarter operating profit of $27.4 million, up from $26.0 million in the third quarter of 2023, reflecting the ongoing higher storage rates. While operating expenses at wholly owned terminals were flat, administrative and general expense was marginally up, reflecting annual inflation increases, and depreciation increased due to an increase in operating assets. Equity income from joint ventures was marginally up compared to the same quarter last year.

Stolt Tank Containers: Focus on margin improvement

Stolt Tank Containers (STC) reported third-quarter revenue of $166.8 million, marginally up from $166.4 million in the third quarter of 2023. An increase in ocean freight rates arising from space constraints with carriers, combined with higher shipment volumes, was offset by a decrease in demurrage revenue.

STC reported a third-quarter operating profit of $16.6 million, a decline from $23.9 million in the third quarter of 2023, due to lower transportation margins and reduced demurrage revenue, partly offset by an increase in shipments. Transportation margins reduced, driven by higher carrier freight costs.

The International Longshoreman’s Association (ILA) strike will create some uncertainty on volumes in and out of the USA. The overall impact on future STC results will depend on the length of the strike and the timing of the resolution of related port delays.

Stolt Sea Farm: Good production, steady demand, and strong pricing Stolt Sea Farm (SSF) reported third-quarter revenue of $33.6 million, up from $31.0 million in the same quarter of 2023. Sales prices for both turbot and sole improved since the third quarter of 2023. Volume of sole sold increased by 5.9%, while turbot sales volume decreased by 5.8% compared with the same quarter last year.

SSF reported a third-quarter operating profit of $8.7 million before fair value adjustment of biomass, up from $6.1 million in the third quarter of 2023. Production costs for both turbot and sole continue to

be impacted by inflationary pressures on both energy and feed costs, however improved production yield in sole continues to offset the cost increase. Administrative and general expenses are higher year- on-year, due to increased publicity and marketing efforts. The fair value adjustment of biomass resulted in a negative variance of $6.8 million compared with the third quarter of 2023 driven by turbot, with lower IFRS sales prices, lower biomass, and higher production costs.

Stolt Investments

Stolt-Nielsen holds equity and debt investments in Odfjell SE, Golar LNG Limited, Ganesh Benzoplast Limited and the Kingfish Company N.V. and a joint venture investment in and advances to Avenir. At quarter-end, these investments had a book value of $313.3 million. During the quarter, SNL recorded an equity loss from Avenir of $1.6 million. Avenir is reported within Stolt-Nielsen Gas (SNG), which also holds the investment in Golar. On October 1, 2024, Avenir announced a strategic refocus of its business and capital raise to expand its fleet, as well as a potential listing on the Euronext Growth Oslo.

Full Report

Source: Stolt-Nielsen Limited