Stolt-Nielsen posted its 3Q (June-August) report this morning with the main metrics very similar to what we saw three months ago and this is still at the top level indeed. Transit restrictions in the Red Sea were stated as one of the reasons for the solid performance, however, the fourth quarter is guided to be lower, although the rate recovery is supposed to be seen towards the end of 4Q24 and into 2025. As we had similarly modelled the case, we will not make significant changes to our estimates following the report.

Very similar figures QoQ
Continuous disruptions in the Red Sea still impacts the shipping markets as longer voyages drive freight rates and margins higher, despite a lower total cargo volume. This can be seen in yet another solid report from Stolt-Nielsen, although somewhat lower than we and consensus’ predicted, but still remaining at the very top with basically duplicating the solid 2Q24 results. Almost USD 100m at the bottom line for 7/8 of the last quarters (the single exception was due to one-off payments regarding Flaminia incident) is an impressive achievement.

Outlook: weaker 4Q
With the record-high TCE earnings in 3Q, the fourth quarter was guided somewhat weaker. Cargoes booked at lower spot freight rates during the seasonally slower third quarter will negatively impact the fourth quarter average TCE. However, spot freight rates are expected to recover towards the end of the fourth quarter and into 2025. The Tank Container market remains challenging with softer margins out of Europe and softer rates from Asia. Terminals and Sea Farm are expected to remain more or less stable.

We will make only limited changes to our estimates following the report, as we had already expected a somewhat slower 4Q24. There is a large uncertainty regarding global events, but the conflict in Israel seems to be escalating, which would keep the Red Sea transit closed and the rates elevated at least for the nearest future.
Source: Norne Research