GoodBulk Ltd. (“GoodBulk” or the “Company”) (N-OTC: BULK), a leading owner and operator of dry bulk vessels, announces its financial results for the fourth quarter of 2022.
Highlights
• For the year ended 31 December 2022, the Company reported revenues and net other operating income of $227.6 million and net income of $72.9 million generating EPS of $2.43 based on 29,962,416 weighted average number of shares outstanding.
• On 28 February 2023 the Board of Directors authorized the payment to Shareholders of $2.25 per share ($60.9 million) as dividend. Cumulative distributions will be at $15.34 per share, for a total of $452.9 million, amounting to 139.5% of the price of the Company's March 2017 Norwegian OTC offering and 153.4% of the price of the Company's initial December 2016 private placement fully repaying the original founders of the Company in cash plus a 53.4% return while still controlling 11 Capesize vessels with a leverage ratio at around 30%.
• On 10 January 2023, GoodBulk bought back 2,570,812 of its own shares, or 8.7% of the company, at a significant discount to NAV and later cancelled the shares making it an accretive transaction for shareholders.
• GoodBulk has benefited tremendously from its participation in Capesize Chartering Ltd. (“CCL”) via the CTH Capesize Revenue Sharing Agreement (“Capesize RSA”) as the company’s spot vessels outperformed the Baltic Capesize Index (BCI) by 14% in 2022, net of fees and differentials.
• Since the second quarter of 2022, the entire GoodBulk fleet has been open on the spot market; at the same time the Company took advantage of the most lucrative period in second hand assets since 2014 to monetize some of its investments. In 2022 GoodBulk sold nine vessels (eight Capesizes and one Panamax) and all of them have delivered to their new owners at the time of this release; the nine sales have generated $155.0 million in free cash and $67.0 million in profit from disposals. In 2023 so far GoodBulk has sold three Capesize vessels, all of which have delivered to their new owners generating $47.8 million in free cash and $4.4 million in profit from disposals.
GoodBulk is a leading owner of dry bulk vessels executing a strategy combining low financial leverage with active portfolio management to optimize operational leverage to the dry bulk freight market. This strategy has resulted in GoodBulk announcing a profitable quarter, with $11.9 million net profit ($0.40 per share). The Company’s strict financial discipline resulted in industry leading pure cash general and administrative expenses of $282 per vessel per day, which compares with $242 per vessel per day for the same period in 2021.
Market Commentary
For the quarter ending 31 December 2022, the Baltic Capesize Index averaged $14,906 per day, 65.0% below $42,645 per day for the same period 2021 and 8.8% above $13,695 per day for the quarter ending 30 September 2022. The Baltic Capesize Index averaged $16,177 per day in 2022, 51.5% below $33,333 per day in 2021. In the fourth quarter of 2022, the Capesize market was very volatile going from $16,924 per day at the beginning of October subsequently reaching lows of $9,000 per day followed peaks in the $20,000s per day and finally ending the quarter at $18,749 per day. During this period, the Baltic Panamax Index and the Baltic Supramax Index were on a downtrend closing the quarter 26% and 36% below where they opened at $13,813 per day and.$11,685 per day respectively. The most important factors behind the decline in freight rates have been the decline in major bulk (iron ore and coal) volumes to China, China’s zero Covid policy, less Brazilian iron ore exports, lower congestion, and negative news surrounding the global economic environment that negatively affected sentiment in the market.
This decline in rates continued into the first two months of 2023, i.e. a typical first quarter slowdown, but eventually bottomed out in the middle of February, with the main broad culprits being, less iron ore exports from Brazil, China’s Lunar New Year holidays and a slow recovery of the Chinese economy post lifting of Covid restrictions. Average rates across all segments have improved in February and March 2022, with Capesize rates seeing the largest bounce up, going from a low of $2,246 per day on 17 February to $12,851 per day at time of writing on 8 March 2023.
Currently, the outlook for 2023 is for an improving rate environment with expectations for a stronger second half of the year owing to the fleet undergoing the slowest growth in over 20 years, growth in the Chinese economy quickening to 5% from 3% in 2022 and stronger coal and grain trades mainly. We view the main risks to rates as being the following: uncertainty surrounding China’s economic recovery, continuing geopolitical tensions mainly Russia’s invasion of Ukraine which is a drag on commodity exports and heightened risk of recession following aggressive interest rate rises in US and Europe.
GoodBulk Ltd. press release