Stolt-Nielsen posted its 1Q (December-February) report this morning and the results came in better than expected. The company managed to renew its contracts at favourable rates. Further, all segments have been holding firm on their own. Overall, another solid quarter that should maintain the confidence in the company.

Revenues as expected, but profitability again higher than predicted

This has been the fourth strong quarter in a row for Stolt-Nielsen where the results have outperformed our expectations. While the 1Q is usually the seasonally weakest quarter, Stolt-Nielsen improved on the prior quarter results as the impact of contract renewals began to reflect on earnings. Terminal results improved due to high utilisation, even with the volumes down slightly. Revenues came in as expected, but the adjusted EPS beat our estimates by 32%.

Contract renewed at favourable rates

In the 1Q, Stolt Tankers had achieved an average rate increase on contract renewals of ~50%, a significant improvement over the fourth quarter’s 30% rate increase. While some contracts were not renewed, the company has managed to gather similar contract volumes in the spot market, where even higher rates were achieved.

Segments holding up well, 2023 is expected to be firm

A supportive supply/demand balance is expected in the chemical tanker in the following years, which should bolster expectations. Higher storage rates were seen for the Stolthaven Terminals due to tightness in the global storage market, further, an increase in inquiries indicates solid demand for the rest of 2023. However, the very firm tank container market is expected to move towards normalized market conditions.
Source: Norne Research