Odfjell posts rise in FY and Q4 2017 bunker costs

Average bunker cost per tonne was up 10.6% in 2017.

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Updated on 16 Feb 2018 10:24 GMT

Shipping company and terminal operator Odfjell reports that its average bunker cost per tonne (including the effect from bunker adjustment clauses) during the whole of 2017 was $387, representing a year-on-year (YoY) increase of $37, or 10.6 percent, on the previous year's figure of $350 per tonne. Odfjell posted full-year net bunker costs of $152.8 million, which included $142.2 million in bunker purchases, with the rest comprising costs associated with fuel hedging and bunker clauses. 2017 bunker cost summary Q1: Total net bunker cost: $38.6m Bunker purchases: $35.8m Q2: Total net bunker cost: $37.3m Bunker purchases: $34.3m Q3: Total net bunker cost: $37.8m Bunker purchases: $34.1m Q4: Total net bunker cost: $39.1m Bunker purchases: $38.0m Fourth-quarter bunker costs Odfjell reported fourth-quarter (Q4) net bunker costs of $39.1 million, including $38.0 million in bunker purchases - a YoY rise of $5 million, or 14.7 percent. In a sequential, quarter-on-quarter (QoQ) comparison, the figure was up $1.3 million, or 3.4 percent. Fourth-quarter bunker averages The average bunker price paid by Odfjell's chemical tankers in Q4 was up compared to the previous three-month period. On average, the Norwegian firm says its chemical tanker fleet paid $347 per tonne in Q4, which was $13, or 3.9 percent, higher sequentially. Odfjell's average bunker cost of $398 per tonne (including the effect from bunker adjustment clauses) in Q4 represents an increase of $56, or 16.4 percent, YoY. In a sequential comparison with Q3, the mean bunker cost was up $15, or 3.9 percent. Hedging On the issue of risk, Odfjell said bunker clauses in contracts of affreightment (COAs) cover around 64 percent of its marine fuel exposure. Key financial results In its overall results, Odfjell posted a full-year (FY) net income of 82.7 million - 17.3 percent below the $100 million profit achieved in 2016. In Q4, Odfjell managed to more than double net income to $96.4 million, compared to $43.5 million during the prior-year period. The positive result follows two consecutive quarterly losses of $4.7 million and $10.5 million in Q2 and Q3 respectively. Commenting on the company's performance, Kristian Morch, CEO of Odfjell SE, remarked: "Our markets have remained challenging in 4Q, but Odfjell continues to make good progress. We have recently achieved our growth ambitions by renewing our fleet and participating in the consolidation in a capital efficient way, and we have at the same time strengthened our balance sheet through disposal of non-core assets." Odfjell said: "We expect the challenging markets to continue into 2018, but we also expect that 2018 will be a turning point due to improving fundamentals." The company added that it expects Q1 2018 time charter results to be "marginally better" than in Q4 2017, and Odfjell Terminals results in 2018 to be in line with 2017, but without the contribution from the divested Singapore terminal.