Increased expenses hit Odfjell
Norwegian parcel tanker company Odfjell has reported an improved parcel tanker market in Q4 with timecharter results 8% higher than Q3 but high costs have hit the company keeping consolidated net profit to US$116m for the whole year, down from US$128m in 2006. . Operating result (EBIT) was US$156 million, compared to USD 170 million in 2005. The company notes: “Operating expenses as well as general and administrative expenses are higher in 2006 than in 2005, partly because our favourable multi-year currency hedging position came to an end in 2005.” On the antitrust cases Odfjell says: “At the end of 2006 we have settled antitrust issues with most of our major US based customers. We are continuing the dialogue with other customers. At this point in time it is not possible to estimate the total financial impact of future settlements, but such settlements have now peaked and we believe that they will not have a material impact upon future net result or cash flow. In 2006 the total effect on the net result from customer settlements was US$13m, accounted for as reduced revenue as compared with US$37m in 2005. Odfjell has continued to cooperate with the EU Commission with the objective of resolving the antitrust issue in Europe.”
Looking ahead the company says: “Forecasts for economic growth continue to indicate favourable world trade the next few years, in particular in Asia, but also in most other parts of the world. Demand for tanker transportation services as well as tank storage is believed to remain firm in the short and medium term. However, the world orderbook for tanker tonnage is rapidly growing. Despite new legislation and increasingly stricter customer requirements making older tonnage technically and commercially obsolete, the net tanker supply will be increasing also the next years. Contracts are being renewed at improving freight rates, reflecting the customers' expectations for increased activity and a tighter chemical tanker market, not least following the implementation of double-hull requirements for tanker tonnage as from January 1 2007. We believe this, combined with substantially lower bunker prices, will contribute to improve our net chemical tanker earnings. We also expect the tank terminal business to remain strong. All in all, we anticipate our 2007 operating results to improve compared to 2006.
