Q2 2024 Dampskibsselskabet Norden A/S Earnings Call Transcript
Key Points
- Dampskibsselskabet Norden AS (DPBSF) achieved a net profit of $46 million in Q2, aligning with expectations and reflecting a 21% return on invested capital over the last 12 months.
- The company has a strong position in the structurally positive asset market, with a low order book, limited shipyard capacity, and an aging global fleet.
- Investments in own vessels and a portfolio of purchase options provide significant value upside.
- The acquisition of Norlat Shipping is expected to contribute high-quality earnings, supporting strategic growth ambitions in freight services and trading.
- Dampskibsselskabet Norden AS (DPBSF) has achieved a 15% reduction in emissions from a 2022 baseline, demonstrating strong progress in sustainability efforts.
- The freight services and trading (FST) segment reported a net loss of $18 million due to higher charter costs related to cargo commitments.
- Current market conditions are described as an 'owner's market,' with high asset prices and charter costs, making it challenging to achieve strong margins.
- There is a moderate positive outlook for dry cargo, with concerns about demand being front-loaded into China, potentially affecting future quarters.
- The tanker market is experiencing some weakness, attributed to seasonality and the switching of crude tankers into product transportation, impacting demand.
- Shareholder returns have been slightly down over the last 12 months, despite strong long-term returns, indicating short-term challenges.
It seems that we are reconnected and I hand over the word to Jan Rindbo who will take us with the first slide.
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Thank you very much. Let me start with the business highlights. We had a second quarter performance in line with expectations in market conditions that were closely linked to geopolitical events, especially around the Red Sea situation.
The financial results were impacted by the temporarily lower margins in the dry cargo activities in freight services and trading, while positive earnings and cash flow generated from tanker activities and coverage in assets and logistics added positively to the results.
We continue to see a very positive structurally asset market where we have a low order book, limited available shipyard capacity and an aging global fleet. And Norden is strongly positioned towards this with the investments that we have made in own vessels and an extensive declarable
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