Western Bulk Chartering AS - Annual Report 2019
Today Western Bulk has published its 2019 Annual Report.
In February 2020 Western Bulk negotiated an early termination for legacy commitments in Chile. As this had a significant impact on assumptions for provisions made 31.12.2019, this has been incorporated in the final annual accounts for 2019. As a result, provisions have been reduced by USD 5.5 million compared to the preliminary annual accounts published on the 30th of January.
In 2019 the Group was struck by two unfortunate events; not foreseeing the magnitude of the sharp market fall at the start of the year and losses from legacy positions in Chile continuing to hamper results. This led to a loss after tax of USD -38.0 million, whereof USD -26.4 million is related to Chile and provisions for future losses. Excluding Chile and provisions, the Group posted a loss after tax of USD -11.6 million and EBITDA of USD -5.4 million.
Throughout the fourth quarter the size of the fleet was reduced to a low of 138 vessels to limit the risks related to the transition to the new IMO 2020 regulation, as well as an anticipation of a weak market in the first quarter of 2020. The compound effect of a weak market and the spread of the Coronavirus have therefore had limited overall impact on Western Bulk’s results for the first quarter of 2020. Some period vessels have seen losses due to a low Pacific market, but this has been outweighed by gains on cargo commitments covered by vessels in the spot market at lower rates. The volume of vessels has been kept at a low level with limited forward commitments in line with the strategy of emphasized focus on short term trading, allowing for a high degree of flexibility.
During the last year, the Company has taken vast steps to become more data driven and improve analytical capabilities. Building internal competence on the digital landscape is a key focus area and trading signals are being developed by combining multiple data sources. By utilizing and making existing and new data sources available in smarter and more efficient ways, Western Bulk aims to take advantage of both long-held domain knowledge and disruptive technologies whilst continuing being a leading dry bulk operator.
In addition, the company’s cost base has been subject to thorough scrutiny with several initiatives in place to realize an expected cost reduction of USD 4 million in 2020 compared to 2019. This is achieved by saving on administration expenses, optimizing vessel performance, time in port, purchases, renegotiations and general spending.
“When I joined Western Bulk on the 1st of July 2019, I found a Company with a strong commercial culture and the potential to create significant value. I believe this can be achieved by establishing a clearly defined commercial strategy, based on our competitive advantages and by being disciplined in the way we follow this strategy, states Hans Aasnæs, CEO of Western Bulk”.
Although the spread of the Coronavirus seems to have been brought more under control in Asia, the Pacific market is expected to remain under pressure in the first half due to excessive fleet supply and weak economic fundamentals. We see that the Atlantic market is at higher risk due to spread of the virus, as well as lower bunker prices reducing the costs of ballasting vessels towards the Atlantic basin. Despite the negative developments, higher fleet demolition and inefficiencies caused by congestions and delays at ports could lend some support to the market, and the market is expected to recover towards the second half of the year once the pandemic ends. Overall, Western Bulk has been well positioned for a weak market with several vessels redelivered and an overweight of cargo commitments, hence the low market has offered some opportunities. It is in the Western Bulk DNA to see opportunities and find solutions in a changing and volatile market. We are therefore cautiously optimistic for 2020 despite the dim market outlooks.
As approved by the Extraordinary General Meeting on 19 December 2019, the Company hereby invites the 149 largest shareholders in the Company that did not participate in the private placement in December 2019 (the "Eligible Shareholders") to participate in the offering of 1,581,403 offer shares in the Company at a subscription price of NOK 12,50 per offer share (the "Private Placement"). The Eligible Shareholders will be selected based on ownership as per 19 December 2019. The subscription period will take place from 23 March to 17 April. Each of the Eligible Shareholders will receive a letter with further information about the Private Placement.
For more information, please contact:
Hans Aasnæs, Chief Executive Officer Tel: +47 922 53957
About Western Bulk Chartering:
Western Bulk Chartering AS is a major dry bulk shipping operator. The company is privately owned by a group of about 225 shareholders. See www.westernbulk.com for more information. Western Bulk Chartering AS is registered on N-OTC.
This press release contains forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe,” “expect,” “anticipate,” “intends,” “estimate,” “will,” “may,” "continue," “should” and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Western Bulk Chartering believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements.
The information, opinions and forward-looking statements contained in this release speak only as at its date and are subject to change without notice Western Bulk Chartering disclaims any obligation to update and revise any forward-looking statements, whether as a result of new information, future events or otherwise.