d’Amico International Shipping: On the spot

d’Amico International Shipping: On the spot

Rome: In the second of a special three-part series on Italy’s top shipowner, Maritime CEO is back in Rome this Friday. With the last time charter-in contracts signed, d’Amico International Shipping (DIS) is now among the top five world tanker operators in terms of the number of vessels operated. As of today the fleet is made up by 53 tankers, but the target is to reach 60 soon.

“This growth, both in terms of owned and chartered tonnage, has allowed DIS to reach an historical high level for our company which we feel it will benefit our results in an improving market scenario,” says Marco Fiori, the firm’s ceo.

During the second half of 2014 the company has been seeking further growth by expanding also its time chartered-in fleet and, between July and early-November, DIS took delivery of 11 vessels (eight MRs and three handys), while two further time charertered-in handy vessels were delivered in mid-December. Such an increase in chartered tonnage allowed the company to take full advantage of the very strong Q4 charter market by deploying more ships in the spot market.

“Following a weaker than expected product tanker market in the first part of 2014, the scenario changed completely in the last quarter of the year, leading DIS to realize a very good operating performance in the fourth quarter of 2014,” explains Fiore adding that DIS daily average spot rate was $13,133 in the first nine months of 2014 and $15,076 in the fourth quarter.

“The Q4 2014 spot result represents our best spot performance since the first quarter of 2009. This was mainly the result of the decline in the crude oil price which increased refiners’ margins, driving up product volumes and therefore tonnage demand and rates. We can already anticipate that this positive market momentum has continued at the beginning of 2015,” Fiori says. In January the average freight daily rate for DIS on the spot market rose further to $18,500 and in February fell slightly but remained between $15,500 and $16,000. DIS’s fleet had a high ‘coverage ratio’ of 51% at an average daily rate of $14,765 in 2014, which mitigated the impact of the weak spot market during the first part of the year.

Nevertheless the company reported a loss of $5.4m in 2014 mainly due to unrealized valuation of bunker hedging. “Excluding such ‘mark to market’ financial impacts, our net result would be positive of about $0.4m for the full year 2014,” emphasizes Giovanni Barberis, CFO of d’Amico Group.

In 2014 DIS also had total capital expenditures of $194.8m, mainly in relation to its newbuilding plan. As of today DIS has ordered a total of 16 eco-design product tankers (10 MR and six handysize vessels), of which seven vessels were already delivered in 2014. This corresponds to an overall investment plan of approximately $490.7m and reaffirms the company’s strategy to modernise its fleet through eco newbuildings. Half of DIS’s newbuilding orderbook has already been fixed on long-term time charter contracts with two oil majors and a leading refining company.

“Apart from short-term market rallies, I am very confident on the perspectives of the product tanker industry in the medium and long term,” concludes Fiori. “I refer in particular to factors such as the US’s ever growing role as a net exporter of products and the increased refining capacity in the Middle and Far East which will both further expand the tonne/mile demand.”

Another positive event occurred in the past year for DIS was the sale of one of the oldest vessels (named Cielo di Parigi) which generated a capital gain of $6.5m on the balance sheet. The sale of some of DIS’s oldest ships is part of the company’s fleet renewal program.

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