Financial / key figures
Grieg Star has a strong profitability track record and a solid balance sheet with a healthy equity ratio and with strong financial relations.
Both shipping segments, but particularly open hatch, had another tough year in 2017. While the over capacity of vessels in the dry bulk segment continued to weigh on supramax freight rates also in 2017, the earnings trend was positive through the entire year. For open hatch, however, previous years’ low markets, was still impacting 2017 earnings, as the shift between low and high market earnings is far more slow for an industrial segment where the process of contract renewal takes several years before giving full effect. On the positive note, was a further reduction of the vessels’ operating costs and a good result on the group’s financial investments, both delivering better than expected, as well as the positive results from both Grieg Green and Squamish Terminals.
Although the establishment of G2 Ocean took place well into the financial year (i.e. May 2nd), Grieg Star’s annual accounts have been restated for the entire of 2017, in order to reflect the actual situation going forward, where Grieg Star’s freight income is made up of an equivalent to net time charter hire received on its open hatch and dry bulk fleet3 . The 2017 figures are consequently, given the significant restructuring, not comparable to previous years’ accounts.
Total operating costs decreased in 2017, to USD 176.0m compared to USD 444.7m in 2016, mainly as a result of the new business setup. The vessels’ operating expenses, at USD 66.1m, which is now the single largest cost element in Grieg Star, decreased with USD 2.0m compared to 2016. As the number of ships managed was unchanged (at 33 vessels), the reduction in costs is the result of a combination of continued processes of working smarter and lowering costs without compromising on safety, as well as the ability to realize cost synergies from the new partnership with Gearbulk, enabling e.g. savings on procurement. The cost of hiring in vessels is reduced to USD 35.4m in 2017 vs. USD 50.3m in 2016, which is primarily due to accounting effects of the new commercial set up.
In total, Grieg Star’s result before tax ended at minus USD 30.6m in 2017 vs. minus USD 7.6m in 2016. The result after tax is minus USD 30.2m for 2017 (minus USD 11.8m in 2016).
See the whole annual report in the list to the right.