Stolt Tankers' sticky start

Stolt-Nielsen Ltd (SNL) has recorded an operating profit of $32.8m for the first quarter of its 2011 financial year, down 28 per cent on the prior quarter but up slightly on the $32.1m posted for the corresponding period in 2010. Net profit was $31.2m, up sharply from last year’s $18.7m. This was generated from group revenues of $458.7m, virtually flat on the figure for fourth quarter 2010 and up 7.4 per cent on the year earlier figure.

However, only the tank terminal and tank container business units were profitable. Stolt Tankers recorded an operating loss of $0.1m for the first quarter 2011, down from an $11.0m profit in fourth quarter 2010 and $3.0m in the first quarter of last year. This was despite revenue of $275.6m being “essentially unchanged” from the prior period. “Both deep-sea and regional freight revenues were down in the first quarter, resulting from lower utilisation,” says the company. “Lower freight revenue for the quarter was countered by higher demurrage revenue following substantial weather-related port delays in Houston, Rotterdam and certain ports in the Far East. Revenue for the quarter also reflected a $3.8 million increase in bunker surcharges, as unrest in a number of North African and Middle Eastern countries drove fuel prices higher.”

Niels G Stolt-Nielsen, CEO of SNL, was cautious in his comments on the figures. “The performance of Stolt Tankers was affected by the impact of higher bunker fuel prices, unusually severe weather-related delays and port congestion in a number of key ports,” he said. “While we continue to expect healthy performances from our terminal and tank container businesses, we repeat our outlook for the tanker market: we believe 2011 is going to be a more challenging year than 2010, and we do not expect any meaningful recovery until 2013. With our recent second-hand ship acquisitions we believe Stolt Tankers is well positioned to benefit from the eventual market recovery.”

Stolt-Nielsen Gas reported a first-quarter gain of $15.1m related to the previously announced sale of 50 per cent of Avance Gas to Sungas and the subsequent acquisition by Avance Gas of three very large gas carriers (VLGCs) from Sungas and related settlements. Market fundamentals were not good, though, and Avance Gas reported a first quarter loss of $1.6m reflecting continued weak market conditions, the impact of rising bunker fuel prices, and lengthy waiting times between voyages.

However, Stolt-Nielsen notes that conditions have improved since the end of the period. Avance Gas has, he says, “finally started seeing improvements in demand for shipment of LPG in VLGCs. Avance Gas operates five VLGCs and is well positioned to benefit from this increased demand, having four ships in the spot market.”

www.stolt-nielsen.com