3Q 2014: Improving, but not yet sustainable

The chemical tankers EBITDA is USD 26 million, compared with USD 24 million in second quarter. The activity in the chemical tanker markets in third quarter was quite similar that of the previous period. Time-charter results were down by 3%. Towards the end of the quarter the CPP market improved, which we expect will positively affect also the chemical tanker sector. Lower oil prices have started to reduce our bunker costs, but the downward trend in prices for oil products also seems to hamper trade and the activity in general.

Odfjell's shareholding in the tank terminals business delivered an EBITDA of USD 4 million in the third quarter. With the exception of the tank terminals in Rotterdam and Charleston, the terminal results were positive and in line with previous quarter. 

The cost cutting and efficiency review was announced in May and fully mobilised as from July. Since then, the process has been organized through work streams focusing on operating expenses, G&A, bunkers and trade optimization. During the next two months all identified cost reductions will be subject to risk assessment and detailed planning. Implementation will take place as from January 2015. However, we will without delay continue implementing immediate cost saving and efficiency initiatives, related to reduced bunker consumption, trade optimization and selected cost items. The immediate initiatives are expected to bring an annualised bottom line effect in excess of USD 50 million when fully implemented.

We expect fourth quarter of 2014 to improve from the third quarter for our chemical tankers on a slightly stronger market, contract renewals, lower bunker costs and a reduced cost base. With regard to terminals, we expect improved results at Odfjell Terminals (Rotterdam) due to increased utilisation and a lower cost base. For the remainder of the terminals we expect a slight increase in earnings due to increase capacity.

Please find attached 3Q14 report and presentation. 

For more information please contact:
Jan A. Hammer, President/CEO Odfjell SE
Tel.: + 47 55 27 00 00 / E-mail: jan.hammer@odfjell.com

Terje Iversen, CFO Odfjell SE
Tel.: + 47 55 27 00 00 / E-mail: terje.iversen@odfjell.com