Stolt-Nielsen Limited (Oslo Børs: SNI) today reported unaudited results for the second quarter ended May 31, 2018. Net profit attributable to shareholders in the second quarter was $9.5 million, with revenue of $541.0 million, compared with a net profit of $38.7 million, with revenue of $515.3 million, in the first quarter of 2018. Net profit attributable to shareholders for the first six months was $48.3 million, with revenue of $1,056.3 million, compared with $30.8 million, with revenue of $976.5 million in the first half of 2017. Highlights for the second quarter of 2018, compared with the first quarter of 2018, were:

– The Company's second-quarter results included an $11.8 million impairment taken on two bitumen ships, reflecting the weak market conditions. First-quarter results benefited from tax-related one-time gains of $24.9 million from the lowering of the US federal
corporate income tax rate, and $8.2 million from a Stolthaven joint venture.

– Stolt Tankers reported an operating profit of $26.5 million, which included a $9.2 million gain on bunker hedges, compared with first-quarter results of $10.9 million, which included a bunker hedge loss of $0.3 million.

– The Stolt Tankers Joint Service Sailed-in Time-Charter Index was 0.59, compared with 0.57 in the prior quarter.
– Stolthaven Terminals reported an operating profit of $20.2 million, down from $25.9 million. As noted above, the prior quarter reflected the impact of an $8.2 million gain from a reduction in deferred tax liabilities in a joint venture. Excluding one-time items, operating income was flat.

– Stolt Tank Containers reported an operating profit of $18.8 million, up from $16.2 million, as shipments grew by 7.6%.

– Stolt Sea Farm reported an operating profit of $3.9 million, down from $5.5 million in the first quarter, or $2.4 million versus $2.2 million before the fair value adjustment of inventories.

– Corporate and Other reported an operating loss of $20.9 million, compared with a loss of $3.6 million in the prior period. The loss in the second quarter reflected the $11.8 million impairment related to two bitumen ships, losses on bitumen trading, and higher administrative and general expenses.

Commenting on the Company's results, Niels G. Stolt-Nielsen, Chief Executive Officer of Stolt-Nielsen Limited, said: “SNL's underlying operating results in the second quarter remained largely in line with our expectations. At Stolt Tankers, we have thus far successfully compensated for rising bunker prices through the bunker hedge programme, but rising bunker fuel costs continue to eat into tanker earnings, as spot rates have not yet fully responded to the increased cost ofbunkers. At Stolthaven, excluding one-offs, operating results were flat. Stolt Tank Containers reported another strong quarter with solid underlying demand driving an increase in shipments.

Stolt Sea Farm's performance continued to benefit from rising turbot prices, although caviar volumes remained below our expectations.”

“Our outlook remains fundamentally unchanged. The chemical tanker market appears to have bottomed out, but rising bunker prices will continue to have a negative impact on earnings until spot freight rates begin to reflect the higher cost base. At Stolthaven Terminals, gradual improvements in performance are expected to continue, driven by higher utilisation and operational enhancements. At Stolt Tank Containers, the outlook remains positive as global tank container demand continues to grow, the seasonal summer slowdown notwithstanding. For Stolt Sea Farm, continued overall improvement is anticipated, driven by both firming turbot prices and efforts to expand the markets for our products.”

On April 19, the Company announced that all agenda items were approved, and all nominated Directors were elected at Stolt-Nielsen Limited's Annual General Meeting of shareholders in Bermuda. The final dividend for 2017 of $0.25 per Common Share as recommended by the Board of Directors on February 7, 2018 was approved and paid on May 9, 2018 to shareholders of record as of April 26, 2018. Through June 14, SNL had purchased 979,035 shares under the Company's current share buyback programme at an average price of NOK 112.85 per share, for a total spend of approximately $13.8 million, leaving approximately $14.4 million available for further purchases. The Company plans to resume its buy-back programme on July 9, 2018.

SNL Performance Summary and Results

Debt, net of cash and cash equivalents, was $2,427.5 million as of May 31, 2018, compared with $2,447.9 million as of February 28, 2018.

Equity attributable to shareholders of SNL as of May 31, 2018 was $1,519.1 million, compared with $1,559.7 million as of February 28, 2018.

Net interest expense in the second quarter was $33.9 million, compared with $34.6 million in the first quarter. SNL had $80.0 million of cash and $197.1 million of available and undrawn committed overdraft facilities as of May 31, 2018.

Segment Information

Stolt Tankers
Stolt Tankers reported second-quarter revenue of $308.6 million, up from $295.1 million in the first quarter. The total volume of cargo carried increased by 3.5% in the second quarter – driven mainly by a 2.7% increase in deep-sea operating days – while average freight rates slipped by 0.9%. Deep-sea revenue increased by $10.5 million in the second quarter, reflecting a 7.5% increase in COA volume, while COA rates declined by 2.7% due to product mix. Deep-sea spot volume fell by 4.7%, while freight rates rose by 3.1%. Regional fleet revenue increased by $3.0 million, or 6.0%, in the second quarter, as market conditions remained firm. Revenue growth for the quarter also reflected a $1.8 million increase in demurrage revenue, due to high congestion levels in northwest European ports. During the quarter, the last of Stolt Tankers' newbuildings was delivered from Hudong-Zhonghua Shipbuilding to SNL's joint venture, NYK Stolt Tankers. Stolt Tankers reported a second-quarter operating profit of $26.5 million, compared with $10.9 million in the first quarter, in part reflecting a $7.1 million improvement in trading results due to the increase in operating days. Results for the second quarter also reflected a gain of $9.2 million in bunker hedges, compared with a loss of $0.3 million in the first quarter. Bunker costs increased by $1.1 million in the second quarter – largely offset by bunker surcharges – as the average price of intermediate fuel oil consumed rose by 3.3% to $382 per tonne from $369 per tonne in the first quarter. Profits from joint ventures increased by $0.7 million in the second quarter. Two ships were sold in the quarter resulting in a net loss of $0.8 million.

Stolthaven Terminals
Stolthaven Terminals reported second-quarter revenue of $63.9 million, compared with $62.5 million in the first quarter. Storage and throughput revenue was essentially unchanged in the second quarter. Utilisation edged upward to 90.2% from 88.5% in the first quarter, mainly reflecting improvements in Houston, New Orleans and Singapore, and stable overall demand for chemicals worldwide.

Stolthaven reported a second-quarter operating profit of $20.2 million, down from $25.9 million in the first quarter. Equity income from the Company's joint-venture terminals decreased by $7.1 million in the second quarter, mainly reflecting the $8.2 million of additional first-quarter equity income resulting from a reduction of deferred tax liabilities at the Company's joint-venture terminal in Antwerp. Second-quarter results were positively impacted by a $1.6 million one-time cancellation fee charged to a customer at the Antwerp terminal.

Stolt Tank Containers (STC)
Stolt Tank Containers reported second-quarter operating revenue of $143.2 million, up from
$132.5 million in the first quarter, driven by a 7.6% increase in total shipments, reflecting the strength of the market. While utilisation was up slightly in the quarter, revenue per shipment was essentially unchanged. Demurrage revenue rose by 21.5% over the seasonally low first quarter, reflecting in part the increased use of tank containers for inventory storage by customers worldwide. STC continued to augment its fleet in the second quarter, with additions of both chemical and food-grade tanks resulting in a 3.9% expansion of the fleet to more than 38,000 tank containers.

STC reported second-quarter operating income of $18.8 million, up from $16.2 million in the first quarter. STC's results reflect the continued growth of the highly competitive global tank container market.

Stolt Sea Farm (SSF)
Stolt Sea Farm reported second-quarter operating revenue of $24.4 million, compared with $23.7 million in the first quarter. Revenue from turbot sales rose by 4.9% in the quarter, as higher prices offset a modest decline in the total volume of turbot sold. Sole revenue was also up, as prices firmed but volume was flat. Caviar revenue declined in the quarter and volume was flat. SSF reported a second-quarter operating profit of $3.9 million, down from $5.5 million in the first quarter. The accounting for inventories at fair value had a positive impact of $1.5 million in the second quarter, compared with a positive impact of $3.3 million in the first quarter.

Stolt-Nielsen Gas (SNG)
SNG continues to focus on the development of small-scale LNG storage and distribution supply chains to serve locations lacking access to natural gas pipelines. Stolt-Nielsen LNG has two 7,500 cbm LNG carriers on order at Keppel Singmarine with expected delivery during the second and third quarters of 2019.

Source: Stolt-Nielsen Limited