London - April 16, 2020
Stolt-Nielsen Limited (Oslo Børs: SNI) today reported unaudited results for the first quarter ended February 29, 2020. The Company reported a first-quarter net loss attributable to shareholders of $20.0 million, with revenue of $498.8 million, compared with a net profit attributable to shareholders of $5.9 million, with revenue of $497.5 million, in the fourth quarter of 2019.
Under International Financial Reporting Standards (IFRS), the coronavirus (COVID-19) pandemic is an event that triggers an impairment review of the Company’s balance sheet. However, the Company has been unable to quantify possible impairments of long-term assets, due to the difficulties in determining how the COVID-19 pandemic will evolve and the effects it may have, both on the value of the Company’s assets and on the Company’s ability to continue as a going concern.
At the end of the first quarter the Company had $519 million in available liquidity.
Highlights for the first quarter of 2020, compared with the fourth quarter of 2019, were:
• Stolt Tankers reported an operating profit of $4.7 million, down from $14.6 million, mainly reflecting increased costs related to the transition to low sulphur fuel mandated by IMO 2020, as well as scheduling issues arising from drydocking delays and the Stolt Groenland incident.
• The Stolt Tankers Joint Service Sailed-in Time-Charter Index was 0.50, down from 0.54, reflecting higher bunker costs.
• Stolthaven Terminals reported an operating profit of $18.9 million, up from $11.7 million, as the prior quarter included an impairment of $5.5 million.
• Stolt Tank Containers reported an operating profit of $6.7 million, down from $15.7 million, due to lower demurrage and ancillary revenue, along with higher ocean-freight costs not fully passed through to customers.
• Stolt Sea Farm reported an operating loss of $9.8 million, down from an operating profit of $1.7 million in the fourth quarter, reflecting a $12.0 million impairment of biomass value, due to a steep drop in market demand caused by the COVID-19 pandemic.
• Corporate and Other reported an operating loss of $2.6 million, compared with a profit of $4.2 million in the fourth quarter, mostly reflecting a profit sharing adjustment recorded in the fourth quarter.
Commenting on the Company’s results and outlook, Niels G. Stolt-Nielsen, Chief Executive Officer of Stolt-Nielsen Limited, said: “While the effects of the COVID-19 pandemic have substantially altered our outlook for 2020, Stolt-Nielsen Limited’s first-quarter results were only slightly impacted. The underlying recovery of chemical tanker markets that started in 2019 continued in the first quarter, with both higher spot rates and contracts renewed at an average increase of 4.74%. However, Stolt Tankers’ first-quarter results were negatively impacted by higher bunker costs resulting from the switchover to low-sulphur fuel, and delays due to scheduling issues arising from delays in drydocking associated with scrubber and waste water treatment installations. At Stolt Tank Containers, higher shipments and improved utilisation drove an increase in transportation revenue. However, this was more than offset by higher move-related costs due to the IMO 2020 low-sulphur fuel charges imposed by carriers and increased repositioning costs from the build-up of tank containers in China as a result of the extended Chinese New Year due to Covid-19. Stolthaven Terminals’ operational results were in line with expectations, as markets remained stable. Stolt Sea Farm, in contrast, was quickly impacted by the pandemic, due to widespread shutdowns of restaurants and hotels in SSF’s main markets in Spain and Italy, resulting in a significant write-off of biomass inventory value.
“As the pandemic has escalated in the six weeks since the end of our first quarter on February 29, the impact on our businesses—excluding SSF—has so far remained relatively modest. At Stolt Tankers, contract volumes remain relatively healthy and contract renewals continue with improved terms, though we are experiencing some port delays. Spot volumes in most markets, so far, have also been holding up. Stolthaven Terminals has seen an increase in enquiries for storage in most of its terminals, so utilisation is up, but throughput is slightly down. Stolt Tank Containers continues to see a robust market, reporting a record number of shipments in March and utilisation of 71%, the highest we have seen in recent years, while we are also seeing increased inquiries by customers to use containers as storage. However, we continue to have significant repositioning costs as a result of the rapidly changing trade flows.
“That said, I believe it is just a matter of time before we see a significant slowdown. Most economic analysts are now forecasting an imminent and deep global recession, which is likely to be accompanied by substantial reductions in manufacturing worldwide.
“The severity and duration of the expected recession are, obviously, impossible to predict. So, while we are hoping for the best, we are preparing for the worst. Actions include extensive measures to conserve cash and to reduce costs, while delaying or eliminating capital expenditures and projects across the full spectrum of our businesses. We have so far managed to find approximately $83 million of savings from capital expenditures and operating and administrative and general expenses, including that the Board of Directors has agreed to cut board fees by 50% and our senior management team has volunteered to take a salary cut of 20%, effective April 1. On the revenue side, we are diligently working to maintain our strong customer base by renewing contracts, while also aggressively pursuing new business and working closely with customers to create new solutions to help them adapt in this constantly changing environment.
“On a positive note, the Company had just over half a billion dollars in available liquidity at the end of the first quarter following the bond issue in early February, which will allow the Company to pay off its April bond maturity in cash and help us weather this storm. In addition, the Company has five unencumbered terminals that can be used to raise further liquidity so that we are in a position to repay the March 2021 bond should the bond market be closed.
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act
Stolt-Nielsen S.A. press release