The Board of Directors of d’Amico International Shipping S.A., a leading international marine transportation company operating in the product tanker market, yesterday examined and approved the Company’s half-year and second quarter 2024 consolidated financial results.
MANAGEMENT COMMENTARY
Carlos di Mottola, Chief Executive Officer of d’Amico International Shipping commented:
‘I am proud to report that DIS has achieved outstanding financial results for the first six months of 2024. We realized a net profit of US$122.9 million in H1 2024, compared with US$99.8 million in the same period last year. In Q2 2024, our net profit was of US$66.5 million, up from US$45.7 million in Q2 2023, an excellent result highlighting the strength of the product tanker market.
Our daily spot rate in H1 2024 was of US$41,404, a 21% increase from US$34,216 in H1 2023. This rate climbed further to US$44,949 in Q2 2024, marking a 42% rise relative to the same quarter of the previous year and corresponds to our highest quarterly spot result in history. Additionally, DIS successfully covered 41.9% of its employment days at an average daily TCE rate of US$28,016 in H1 2024, compared with a 26.2% coverage at an average rate of US$27,419 in H1 2023. Consequently, our total blended daily TCE (spot and time-charter) was of US$35,798 in H1 2024, up from US$32,434 in H1 2023, and reached US$37,698 in Q2 2024, compared with US$30,831 in the same quarter last year.
DIS is capitalizing on favorable conditions in the product tanker sector, driven by limited fleet growth, rising global oil trade, and trade disruptions. Attacks by Houthis in the Red Sea and Gulf of Aden have forced most operators, including DIS, to reroute vessels via the Cape of Good Hope, increasing average distances sailed. Furthermore, the war in Ukraine has impacted oil markets, with EU sanctions and the associated price cap on Russian exports, reshaping trade flows. Russian exports to the EU have decreased, while shipments to China, India, Turkey, and other regions have increased, resulting in longer sailing times.
Our industry is also benefiting from some structural long-term trends. The IEA projects global oil demand to rise by 1.0 mb/d in FY 2024. Global refinery throughput should instead rise by 0.9 mb/d to 83.4 mb/d this year, mainly in countries east of the Suez Canal. While China led refinery throughput growth in 2023, the Middle East (+0.5 mb/d), Africa (+0.2 mb/d), and other Asian countries excluding China (+0.2 mb/d) will drive the expansion this year. The rise in Middle Eastern throughput is due mainly to new capacity
which recently came online in Kuwait and Oman. This ongoing shift in refinery capacity to the Middle East and Asia, far from major consumption centers such as Europe, the USA, and Australia, should continue boosting ton-mile demand for product tankers.
The product tanker industry can also count on favorable tonnage supply dynamics. Although vessel orders have increased, market participants remain cautious about newbuilds due to rising costs, technological uncertainties, and limited shipyard availability, leading to delivery times often beyond 2027. Additionally, the global fleet is aging rapidly; as of June 2024, 13.5% of the MR and LR1 fleet (by deadweight tonnage) is over 20 years old, and 46.9% exceeds 15 years. Meanwhile, the current order book for these segments represents only 11.5% of the existing trading fleet.
In the first half of the year, DIS actively engaged in the sale and purchase market. We sold the MT Glenda Melanie, a 2010-built MR and the oldest vessel in our fleet, at an attractive price of US$27.4 million. In April 2024, we ordered four new LR1 vessels from a reputable Chinese shipyard, with expected delivery in the second half of 2027. These highly efficient and environmentally friendly vessels will significantly enhance our presence in the LR1 segment, which we expect to offer promising returns in the coming years. In June 2024, we also exercised a purchase option on the M/T Crimson Jade, a 2017-built MR, for US$31.0 million, approximately 30% below the vessel’s current market value.
Furthermore, we have leveraged the strong product tanker market to increase our fixed contract coverage, enhancing earnings visibility for the coming years. We successfully concluded two three-year time charter contracts at very profitable levels. Looking forward, we have already covered 37% of our available vessel days in H2 2024 at approximately US$27,500 per day and 19% of our available vessel days in FY 2025 at around US$24,650 per day.
Thanks to our strategic decisions, our remarkable financial strength, and the dedication and professionalism of our team, we are in an excellent position to generate compelling returns for our shareholders for the next several years.’
Federico Rosen, Chief Financial Officer of d’Amico International Shipping commented:
‘In the first half of 2024, DIS reported a robust net profit of US$122.9 million, a significant increase from US$99.8 million in the same period last year. In the second quarter alone, we achieved a net profit of US$66.5 million, compared with US$45.7 million in Q2 2023, underscoring our strong financial performance, bolstered by a thriving product tanker market.
Our EBITDA for H1 2024 reached US$161.1 million, up from US$142.7 million in the same period of the prior year. Operating cash flow stood instead at US$155.2 million in H1 2024, compared with US$173.0 million in H1 2023. The variance is primarily due to a US$34.0 million positive timing effect in working capital realized in H1 2023.
In the first half of 2024, we continued to strengthen our financial structure, thanks to a solid cash flow generation. As of June 2024, our net financial position (NFP) was of US$122.2 million, with cash and cash equivalents amounting to US$181.9 million, a significant decrease relative to the NFP of US$224.3 million at the end of 2023. Our leverage ratio, calculated as the NFP (excluding IFRS16 effects) to our fleet’s market value, also improved markedly to 9.1% at the end of H1 2024, down from 18.0% at the end of 2023 (72.9% at the end of 2018). Capitalizing on our strong liquidity and excellent credit rating, we reimbursed some of our more expensive bank loans and drew down some new facilities at significantly tighter margins.
As we report another quarter of remarkable achievements, we extend our heartfelt appreciation to our shareholders for their enduring support and trust. Together, we will continue to drive success and create lasting value, ensuring a bright future for our company and stakeholders alike.’
Source: d’Amico International Shipping S.A.