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D/S Norden said on Thursday that its cost-saving programme and focus on fuel efficiency will continue after this year.

The Danish owner-operator set up a fuel efficiency team at the start of 2013 and, since then, the company has implemented a number of measures that have helped it to reduce its annual bunker bill.

Norden says its cost-cutting initiative to ensure annual savings of $20 million within a three-year period by year-end 2017 is "on track". By the end of the second quarter (Q2) of 2017, the company says it managed to realize annual savings of $18.1 million.

Earlier this year, Norden stated that it had managed to slash its bunker fuel costs by $24.9 million between 2014 and 2016 thanks to the fuel efficiency measures it has put in place.

At the end of 2016, Norden's ships were 10 percent more efficient than three years earlier. The long-term chartered vessels had increased their efficiency by 5.4 percent, while the short-term chartered vessels had improved theirs by 1.3 percent.

Financial results

In its financial results, posted on Thursday, Norden recorded a year-on-year (YoY) increase in H1 costs of $237.7 million, or 40.7 percent, to $822.0 million, as revenue rose by $231.7 million, or 38 percent, to $839.7 million.

In its result for the period, Norden recorded a H1 loss of $2.6 million, which was a YoY improvement of 86 percent on the $19.4 loss of H1 2016.

For Q2, the loss was $3.3 million, which was $20.7 million, or 86 percent, better than last year's $24.0 million loss.

Bunker hedging

As of January 1, 2017, Norden says it has designated financial contracts for bunker purchases as cash flow hedging of highly probable future bunker purchases.

The bunker hedging contracts that are entered into by the firm are contracts with listed Rotterdam and Singapore spot prices as the underlying price.

Norden's actual bunker purchases take place in ports around the world, but the company notes that indices in a selection of the ports it uses "show very high correlation between price changes in the respective ports and the two reference ports"; hence the company considers the hedging strategy to be "effective".

As of June 30, 2017, outstanding hedging contains 229,236 metric tonnes for the period 2017-2024.

In Norden's vessel operating costs, fair value adjustments of bunker hedging of $-3.6 million have been recognized.