Our core dry bulk business generated a net loss of US$87.6 million (2015: net loss US$34.7 million) in a record weak year
for dry bulk shipping. In the challenging market conditions, we generated daily earnings that outperformed the BHSI and BSI
indices and continued to maintain good control of our vessel operating costs.
DRY BULK OPERATING PERFORMANCE
|Dry Bulk operating performance before overheads
|Dry Bulk net loss
Dry Bulk vessel net book value
||In our tabulated figures, positive changes represent
an improving result and negative changes represent
a worsening result.
OUR DRY BULK CARGO VOLUMES IN 2016
KEY PERFORMANCE INDICATORS
Performance vs Market
Our 34% and 14% outperformance in 2016 compared to spot market indices reflects the value of our fleet scale and
cargo book, and our ability to optimise cargo combinations and match the right ships with the right cargoes to maximise
our utilisation and vessel earnings.
We generated Handysize daily earnings of US$6,630 with daily costs of US$7,320 on 47,590 revenue days. Our
Handysize earnings were under pressure in the historically weak market resulting in a negative Handysize contribution
despite our strong premium.
Our Supramax business generated a smaller loss than Handysize, benefitting in the weak market from its larger
proportion of short-term inward chartered ships.
As part of our business model, we charter in vessels for short periods for combination with cargoes with the aim
of making a margin irrespective of whether the market is high or low. In low markets as in 2016, these short-term
positions generally lower our reported TCE earnings while in fact making a valuable positive contribution. If we
exclude the vessel days attributable to these short-term operated ships and factor their positive margin into the
TCE results of our core owned and long-term fleet, then our restated 2016 Handysize and Supramax daily earnings
would improve to US$6,720 on 41,220 days and US$7,940 on 14,230 days respectively.
We operated an average of 130 Handysize and 81 Supramax ships resulting in an 8% reduction and 27% increase in our
Handysize and Supramax revenue days respectively.
Our Handysize capacity has reduced as we redelivered expiring medium and long-term chartered vessels to gradually
lower our charter-in costs, relying instead on our growing fleet of owned ships and low-cost shorter-term and index-linked
Future Earnings and Cargo Cover
We have covered 44% and 71% of our 39,950 Handysize and 15,970 Supramax revenue days currently contracted for
2017 at US$8,200 and US$8,680 per day net respectively.
(Cargo cover excludes revenue days related to inward-chartered vessels on variable, index-linked rates)
While ship operators such as ourselves typically face significant exposure to the spot market, our contract cover
provides a degree of earnings visibility.