Odfjell posted 2Q22 figures yesterday evening and could have proceeded straight to celebrations, as this was the quarter to remember. The company previously guided stronger figures QoQ to be reported, but the results beat our consensus estimates significantly. With the strengthened chemical tanker market Odfjell expects to report continued strong results in 3Q and distribute USD 0.23/sh dividends. We will increase our estimates somewhat post the report seeing a stronger chemical tanker market than predicted.

Stronger chemical tanker market led to USD 50m+ EBIT

The chemical tanker market strengthened considerably into the second quarter, driven by reduced tonnage supply involving reduced competition from swing tonnage, reduced speed to tackle high bunker costs and supply imbalances between the eastern and western hemisphere, and this led to Odfjell Tankers’ strongest quarterly results in 15 years. Terminals were stable, thus the overall result was more than solid with revenues beating our expectations by 13% and USD 53m in EBIT (USD 38m predicted by us and USD 31m by consensus). The bottom line of USD 30m (USD 18m predicted by us) allowed the company to announce firs semi-annual dividends, based on the new dividend policy of USD 0.23/sh.

3Q to be in line with 2Q

Despite the typically seasonally softer summer market, the company guides for the strong results with timecharter earnings in 3Q to be in line with 2Q. On the broader scale, the economic downturn is anticipated to have only a limited impact to the chemical tanker tonnage as chemical demand has proven to be somewhat resilient over the years. The net fleet growth in 2023 and 2024 is expected to be 0.5% annually, compared to the tonne-mile demand growth of 4%, indicating a strong market for the chemical tankers.

We will increase our estimates somewhat following the strong report and the promising ST and LT view, while our recommendation is likely to be reiterated.

Agencies

Marex Media