Stolt-Nielsen: Results in line with expectations

Stolt-Nielsen posted its 2Q (March-May) report this morning with the main metrics in line with our expectations. Solid results were led by the main Chemical Tanker division, which is expected to deliver strong results going forward as well. The outlook communicated by the company seems decent with no surprises on both ends for all the segments. Thus, we are likely to keep our Hold recommendation intact with no major changes in our estimates.

Results in line with our expectations
This morning we saw another strong quarterly figures from Stolt-Nielsen. Higher spot freight rates due to ongoing transit restrictions in the Red Sea resulted in record-high average TCE earnings of USD 32,862/d. Terminals remained stable and solid, while Tank Container shipment volume continued to increase to a record almost 42 thousand shipments, although, with declining margins. Sea Farm’s USD 8.2m in EBIT was driven by firming prices for both turbot and sole. Overall, USD 134.7m EBIT was very much in line with our expected USD 133.5m, while the bottom line even beat our projections.

Outlook: TCE earnings +2-4% in 2Q

The transit restriction in the Red Sea is still ongoing and this will add up to higher Chemical Tanker rates at least for 3Q24. Stolt-Nielsen guided the average TCE earnings to increase by 2-4%. The Terminals will have a one-time short need of freeing up the tanks to accommodate new business, which will impact the results negatively in the short term, but, hopefully, will improve the Terminal performance in the long run. Stolt Tank Containers continue to see firming demand out of the Americas and Southeast Asia, with China exports also picking up, while the focus now stands on trying to push up the margins. High energy and feed costs are expected to continue to impact production costs for Stolt Sea Farm, but the prices should remain steady and the sales should continue to grow. Overall, the outlook points for more of a stable situation rather than the growth period and we are likely to keep our Hold recommendation for SNI stock as well with limited changes to our estimates.
Source: Norne Research