FSL: Clausius picks sectors with “promising fundamentals”

 

Singapore: Product tankers, chemical tankers, LPG carriers and car carriers have “promising fundamentals”, according to Philip Clausius, president and ceo of Singapore’s First Ship Lease Trust Management (FSL).
 
Clausius reckons that the shipping industry is “close” to the bottom of the downturn. However, in a more sombre tone, he warned: “Given how prolonged this downturn has been and the financial pressures faced by many shipping companies, we expect to see more restructurings take place in the near term.”
 
These restructurings have already hit FSL hard. An especially brutal final quarter saw FSL notch up an $8.4m loss for 2012, on the back of revenue slipping 4.2%. The annual results were released to the Singapore Stock Exchange on Monday. Three tankers were taken back by Berlian Laju Tankers and charters were slashed on a pair of Torm ships, leading to a big dent in revenues for the final three months of the year. 
 
In terms of lessons learnt from this harsh time for the industry, Clausius said: “It has reminded us that shipping is largely a sub-investment grade industry and that heretofore first class charterers can end up in financial restructuring, or worse, bankruptcy in only a matter of a few years.”
 
FSL has a diversified portfolio of 25 vessels consisting of containerships, tankers and dry bulk carriers. The trust has no vessels on order and thus far has only acquired vessels that were already in the water.
 
FSL’s strategy, Clausius said, is to maintain a base portfolio and a smaller tactical portfolio. FSL will continue to maintain a base portfolio that aims to generate stable and predictable long-term revenue and cash flow through substantially fixed rate bareboat leases. The idea behind the smaller tactical portfolio is to give FSL the flexibility to expose some of its vessels to upturn opportunities depending on market conditions.
 
Clausius is confident that leasing has a strong future. “In general,” he said, “with European banks reining in their shipping portfolios and some completely exiting the market, we believe that more shipping companies will consider leasing as an alternative form of financing.” [24/01/13]
 

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