After three record-weak quarters, the market took an upward turn towards the end of the year. The development was largely due to increased transport demand as a result of OPEC, the United States and Russia gradually increasing oil production. In addition, increased phasing-out of older vessels also contributed to a generally better balance between supply and demand.
Just as expected, 2018 was a weak year – both for the market and for Concordia Maritime. For the full year 2018, result before tax excluding impairment was SEK –181.9 (–186.5) million and EBITDA amounted to SEK 56.8 (51.3) million, corresponding to USD 6.5 (6.0) million. Result before tax for the fourth quarter amounted to SEK –19.4 (–42.0) million. EBITDA was SEK 77.1 (10.1) million, corresponding to USD 8.9 (1.2) million. Delay effects due to previously signed charter contracts meant that, for our part, the market development in Q4 was not noticed until the end of the quarter.
Looking at the tanker market as a whole, 2018 began in a minor key and ended in a major. The first three quarters of the year were greatly affected by OPEC’s reduced production and the stock withdrawals in consuming countries that have been taking place since summer 2016. Overall, this resulted in reduced transport demand, which, in combination with extensive ship deliveries, led to low freight rates.
Since October, there has been a sharp rise in virtually all segments, with freight rates at levels we have not seen in several years. The upturn was mainly due to OPEC, the United States and Russia having gradually increased oil production since July.
Overall, we now have the market situation that we have long predicted. It should be pointed out that the market is still volatile, with relatively strong upward and downward fluctuations, but at a higher level than before.
Active work on the fleet
For our own part, the focus during the last year has been on having good cost control and continuing to adapt and position the fleet according to the current market conditions. We have continued to seek niche trades for our P-MAX vessels, where their unique properties are particularly beneficial. This strategy contributed to the product tanker fleet’s earnings for the year being significantly higher than the market average in the MR segment. In the Suezmax segment, we chose to participate in the chartering-in of four vessels at the beginning of the year. We sold the shares in the charters to Stena Bulk at the end of the year, thereby realising the increase in value that arose from an increasingly stronger market.
No serious incidents or accidents
Operationally, we continued to have an efficient and well-functioning operation. It is particularly pleasing to note that 2018 was another year in which there were no serious incidents or accidents on any of our vessels. This is now the fifth consecutive year that we have not had any accidents with lost workdays as a result.
Market outlook 2019
2019 has started considerably stronger than the previous year. Now, at the end of January, the rates have gone down, albeit from high levels. The decline in rates is due to the decision of OPEC and its allies to cut output by a total of about 1.2 million barrels of oil per day. The reduction is partly offset by increased US exports, but with refinery maintenance and newbuilding deliveries, it means that we expect lower levels in the first half of 2019 than during the December peak, but generally higher levels than in 2018. In the second half of the year, we expect the market to strengthen as a result of a renewed increase in production and moderate ship deliveries. Through our exposure to the spot market, we are well positioned to take advantage of the positive trend in the market. The year that has ended was challenging. We now look forward to tackling an exciting 2019.