Copenhagen-listed Norden says the charge relates to “onerous” dry charters signed between three and six years ago which will not prove profitable. The details were released as part of a profit warning, in which the company revealed it is heading for a deeper loss in 2014 than it had feared as $230 million. On a day when the battered Baltic Dry Index ironically read 911, Norden explained the provision was made after management reassessed its view of the dry market.
NORDEN said “Management has concluded that the market for the next few years will not improve to the extent previously assumed but, in the near term, be closer to current forward rates in the market. The long-term outlook remains unchanged in line with the historical averages which have previously been applied.”
According to RS Platou Markets, FFAs presently suggest capesize rates of $13,000 daily in 2015. Panamax and supramax futures suggest spot income of $7,900 and $8,800 per day respectively next year.
The profit warning comes just over a year after Norden opted to boost its spot market exposure amid widespread expectation of a market improvement.
Today the shipowner said its full year core operating loss will land at between $230m and $290m following the provision. This compares with the breakeven to negative $60m figure in its previous guidance.
NORDEN presently has 161 bulkers on its books, with its greatest exposure in the panamax and supramax markets, where it has 54 and 58 ships. It has 27 newbuildings on its balance sheet.