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The bankruptcy of Hanjin Shipping, which previously chartered eight Danaos vessels on long term charter agreements, has taken down the Greek owners‘ net income in 2016 by more than 11 %.

Adjusted net income for the fourth quarter of 2016 was 23.2 mill. $ compared to 47.2 mill. $ [ds_preview]for the three months ended December 31, 2015, a decrease of 50.8%. Adjusted net income of $140.9 mill. $ for the year ended December 31, 2016 compared to 159.5 mill. $ for the year ended December 31, 2015, a decrease of 11.7%.

Operating revenues amounted to 112.1 mill. $ for the three months ended December 31, 2016 compared to $143.3 mill. $ for the corresponding period in 2015, a decrease of 21.8%. Operating revenues for the year decreased 12.3% to 498.3 mill. $ compared to 567.9 mill. $ in the previous year.

Adjusted EBITDA was 75.9 mill. $ for 4Q 2016 compared to 105.7 mill. $ for 4Q 2015, a decrease of 28.2%. Adjusted EBITDA for the year ended December 31, 2016 was 350.6 mill. $ compared to 418.3 mill. $ for 2015, a decrease of 16.2%.

On September 1, 2016, Hanjin Shipping, formerly the charterer of eight of Danaos‘ vessels, filed for receivership with the Seoul Central District Court, which had a negative impact on the owners‘ operating results, contracted operating revenue and debt. Danaos recognized an impairment loss of 415.1 mill. $ for its vessels and 29.4 mill. $ impairment loss on securities.

Total contracted operating revenues were 2.1 billion $ as of December 31, 2016, with charters extending through 2028 and remaining average contracted charter duration of 6.6 years, weighted by aggregate contracted charter hire. Charter coverage is 92% for the next 12 months based on current operating revenues and 74% in terms of contracted operating days.

Danaos‘ CEO Dr. John Coustas commented: »Danaos‘ results for the fourth quarter of 2016 reflect the impact of the bankruptcy of Hanjin Shipping, which previously chartered eight of our vessels on long term charter party agreements representing approximately 20% of our fixed contracted revenue. These charter party agreements were terminated, and each of the chartered vessels were returned to us, as we have previously announced. The 24.0 mill. $ decrease in our adjusted net income is primarily the result of a 23.3 mill. $ decrease in operating revenues resulting from the Hanjin bankruptcy.«

He added: »During the fourth quarter, our fleet utilization decreased to 90.4% after the Hanjin charter cancellations. We have re-chartered five 3,400 TEU vessels on short term charters at market rates that reflect the prevailing weak chartering environment and managed to secure employment of up to 12 months starting from April 2017 for the remaining three 10,100 TEU vessels. Excluding the effect of these cancellations, our fleet utilization increased to 99.5% compared to 98.3% in the fourth quarter of 2015.«