The tanker company’s results were held dow[ds_preview]n by weak summer demand, combined with the impact of Chinese production cutbacks and a weaker clean petroleum products (CPP) market. Stolthaven Terminals continued to see an improvement in operating results for the quarter.
Net profit attributable to shareholders in the third quarter was 22.2 mill. $, with revenue of 474.1 mill. $, compared with a net profit of $37.8 mill. $, with revenue of 478.9 mill. $, in the second quarter of 2016. Net profit attributable to shareholders for the first nine months was 90.3 mill. $, with revenue of $1,416.9 mill. $, compared with a net profit of 111.3 mill. $, and revenue of 1,489.1 mill. $, in the first nine months of 2015.
Stolt Tankers reported an operating profit of 31.4 mill. $, compared with 45.3 mill. $, reflecting lower deep-sea rates and reduced COA volume, and a loss on bunker hedges of 0.5 mill. $, compared with a gain of 6.5 mill. $ in the prior quarter.
The Stolt Tankers Joint Service Sailed-in Time-Charter Index decreased to 0.76 from 0.81. Stolthaven Terminals reported an operating profit of 14.8 mill. $, up from 13.8 mill. $, reflecting improved operating performance at its wholly owned terminals. Stolt Tank Containers‘ operating profit was unchanged at 10.7 mill. $, as marginally lower trading results were offset by higher income from joint ventures. Stolt Sea Farm‘s operating profit before fair value adjustment of inventories was 1.9 mill. $, up from 0.4 mill. $, as average prices for turbot and caviar continued to improve in the quarter. The fair value adjustment had a positive impact of 0.6 mill. $, compared with a positive impact of 3.0 mill. $ in the previous quarter. Corporate and Other reported an operating loss of $6.7 mill. $, compared with a loss of 3.9 mill. $, predominantly due to an increased accrual for profit sharing and long-term incentive plans, and an impairment of accounts receivable.
»We believe the decline in rates and the margin squeeze will soon bottom out«
CEO Niels G. Stolt-Nielsen commented: »Stolt-Nielsen‘s third-quarter results were mixed. Stolt Tankers‘ results were held down by weak summer demand, combined with the impact of Chinese production cutbacks and a weaker clean petroleum products (CPP) market, which pushed swing tonnage into the chemical tanker markets. As expected, the result was a reduction in volume with a corresponding softness in spot freight rates. Stolthaven Terminals continued to see an improvement in operating results for the quarter, reflecting both higher utilization and throughput volumes, as actions to enhance Stolthaven‘s performance continued to gradually take effect. At Stolt Tank Containers, while shipments were down this quarter, both margin per shipment and gross margins held up, indicating that the aggressive price competition in STC‘s markets may be easing up. Stolt Sea Farm‘s results strengthened as prices and volumes sold for turbot were up in the third quarter.«
»It is difficult to forecast what the year ahead may bring. Volume growth has not kept pace with supply-side growth, a situation made more acute by the recent influx of CPP swing tonnage. On the demand side, the weak return volumes from China and the Far East are likely to continue. At Stolthaven, ongoing actions to improve performance globally are steadily yielding sustainable results in line with our expectations. As we have said, while it will take time to achieve our objectives, the process now underway is moving in the right direction. Results at Stolt Tank Containers over the past year have been affected by intense price competition, as some operators have tried to secure market share by sacrificing profitability. We believe the decline in rates and the margin squeeze will soon bottom out. At Stolt Sea Farm, we are encouraged by the firming of turbot and caviar prices, and we continue to see progress at our sole farm in Iceland, where issues affecting the low growth of the fish are gradually being overcome.«
