CAPE TOWN - The coronavirus had disrupted demand and trading patterns for both the drybulk and product tanker markets, Grindrod Shipping Holdngs chief executive Martyn Wade said on Wednesday.
The disruptions had shown the high degree of interdependence of all regions and industries, he said at the release of the financial results yesterday.
Grindrod Shipping Holdings has reported a $35.4 million loss for the year ended December 31. The loss was impacted by $14.3m of non-cash impairment charges.
“We look to the positive fundamentals of both the drybulk and product tanker sectors which are expected to take effect once the current crisis dissipates,” he said.
He said operations in the second half of 2019 were stronger than the first half, reflecting stronger dry bulk and product tanker markets.
“In this context, we continued to outperform the relevant drybulk industry benchmarks by about $660/day and $2 540/day for our handysize and supramax/ultramax fleet, respectively.”
On the tanker side, he said rates increased marginally on average relative to the first half, with the market starting the period lower than the first half before strengthening significantly in the final months and continuing into the new year.
An additional 33.25 percent of the ordinary and preferred equity interest in the IVS Bulk Joint Venture was signed this month for $44.1m, taking Grindro’s interest to 66.7 percent.
The acquisition was financed with cash on hand and new debt, with no equity dilution to our shareholders.
The 12 vessels of IVS Bulk were modern Japanese built dry bulk carriers that complemented Grindrod’s cargo operations, and IVS would be consolidated in the results going forward.
“The IVS Bulk transaction represents the culmination of our efforts since listing in June 2018 to streamline our corporate and financial structure by reducing the number of unconsolidated joint ventures,” he said.
“We have reduced the number of unconsolidated vessels from 19 in the lead-up to our listing, to just one,” he said.
A low dr ybulk orderbook, coupled with shipyard delays, had contained fleet supply, while there seemed to be steady demand for minor bulks, which were the key cargoes for Grindrod Shipping’s vessels.
“We also anticipate the product tanker market to remain healthy given an expected boost in demand as the result of the growth in refining capacity and the dislocation between refiners and end users, coupled with a historic low orderbook.”
In August and September 2019, Grindrod took delivery of the IVS Okudogo and IVS Prestwick, respectively, both owned ultramax eco newbuildings built in Japan.
In September,a financing arrangement was completed with a Japanese ship-owner relating to the 2011-built handysize vessel IVS Kinglet for a cash amount of $12.5 million. The transaction generated net proceeds of $6.1 million after settling the debt associated with the vessel.
In November 2019, we completed a similar financing arrangement with a Japanese ship-owner relating to the 2011-built handysize vessel IVS Magpie for a cash amount of $10.3m.The transaction generated net proceeds of $5.3m after settling the debt associated with the vessel.