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Odfjell Sees Significant Earnings Upside for Its Chemical Tankers

Odfjell Sees Significant Earnings Upside for Its Chemical Tankers
Chemical tanker firm Odfjell sees significant upside potential to its earnings ahead as low-yielding contracts expire, new vessels are brought in and market rates for transporting chemicals recovers, it said on Tuesday.

In total, 18 of Odfjell’s ships come off time-charter (TC) contracts this year, out of a fleet of 83 vessels.

“We still have a positive margin on our TC vessels but some years ago we had a contribution of $40 million-$50 million … Today there isn’t much value in these TC contracts,” Chief Financial Officer Terje Iversen told investors on Tuesday.

“We are not in a rush to renew these contracts, we could live without these vessels,” he added.

In a high-case scenario, Odfjell estimated an annual positive impact on earnings before interest, tax, depreciation and amortisation (EBITDA) of $15 million if the vessels contracts are renewed.

A mid-level scenario would give a boost of $9 million.

Odfjell is due to take delivery of 11 newbuildings this year and next with significantly lower operating costs than its older vessels, the CEO added.

On top this, Iversen expects a gradually recovery of the chemical tanker market.

At 0920 GMT, Odfjell’s shares traded 12 percent higher for the day at 34.2 Norwegian crowns. It earlier hit a four-year high of 37.2 crowns. 

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