Odfjell has announced its third quarter financial results, and is reporting a number of improvements.
The chemical tankers sector EBITDA stood at $26 million, compared with $24 million in the second quarter. Odfjell said activity in the chemical tanker markets in the third quarter was quite similar to that of the previous period.
Overall time-charter results were down by three percent. Towards the end of the quarter the CPP market improved, which Odfjell expect will positively affect the chemical tanker sector as well. Lower oil prices have started to reduce bunker costs, but the downward trend in prices for oil products also seems to cause issues for trade and activity in general.
Odfjell’s shareholding in the tank terminals business delivered an EBITDA of $4 million in the third quarter. With the exception of the tank terminals in Rotterdam and Charleston, terminal results were positive and in line with the previous quarter.
The cost cutting and efficiency review was announced in May and fully mobilised as from July. Since the company’s cost cutting and efficiency review in May 2014, Odfjell states that the process has been organised through work streams focusing on operating expenses, G&A, bunkers and trade optimisation.
“Over the next two months all identified cost reductions will be subject to risk assessment and detailed planning. Implementation will take place as from January 2015. However, we will without delay continue implementing immediate cost saving and efficiency initiatives, related to reduced bunker consumption, trade optimisation and selected cost items. The immediate initiatives are expected to bring an annualised bottom line effect in excess of $50 million when fully implemented."
The company says it expects the fourth quarter of 2014 to improve from the third quarter for the chemical tankers sector on a slightly stronger market, contract renewals, lower bunker costs and a reduced cost base. In addition Odfjell expects improved results at the Rotterdam terminal due to increased utilisation and a lower cost base. For the remainder of the terminals the company expects a slight increase in earnings due to increase capacity.