Hong Kong-listed dry bulk specialist may not have managed to turn an interim profit for the first six months of 2017, but the company drew close enough to gain confidence that the long dry bulk night is nearing its end.
So confident in fact that it took the opportunity to boost the fleet to over 100 vessels with the purchase of a supramax and two handysize ships this year. The Pacific Basin fleet is now valued at around $1bn.
In hard figures, Pacific Basin posted net losses of $12m, compared to $49.8m during first half 2016, of the back of revenues of $702.9m, up from $488.4m previously. Driving the improved balance sheet was a reduction in losses in the company’s core dry bulk business – $6.3m so far this year, compared to $60.4m for the same period last year.
“Dry bulk freight rates in the first half of 2017 were markedly improved compared to the same period last year, albeit from an historically low base. In this better but still challenging trading environment, we generated a much improved underlying loss of $6.7m and EBITDA of $56.6m,” said chief executive Mats Berglund.
Pacific Basin’s management claim that conditions are still less than ideal. A shrinking orderbook was favourable. However cutbacks in scrapping negated the emptier shipyards. This view was reflected in the company’s forecast prospects.
“We believe the worst of the current dry bulk market cycle is behind us. However, the market improvement year-on-year was from a very low base, and more time, scrapping and limited ordering are required for a more normal market balance to be sustained.”
Pacific Basin continues to anticipate a tightening of supply and a consequential boost in the market as a result of the need for the industry to comply with extraordinarily expensive regulation including the introduction of low sulphur fuel requirements in 2020 and the recently deferred ballast water treatment regulations for extant vessels.