Höegh Autoliners posts 73 pct Q3 profit jump
Höegh Autoliners’ net profit after tax soared to $92 million for the third quarter, rising 73 percent quarter-on-quarter on the back of continuous market repricing. The company reported a decrease in volumes of 4 percent quarter-on-quarter, however, the net rate increased to a new high level of $62.5 per CBM, edging up 1 percent.
The slight decrease in volumes was mainly due to capped capacity following the sale of two non-core vessels, while net rate improvement was a result of a good cargo mix and continuous repricing in several markets.
“This was yet another very strong quarter for Höegh Autoliners, delivering good results and positioning us well in the sector. The period was spiked by port congestions, trade route disruptions and cargo capacity shortages in the market, which our team handled professionally, with solid performance,” says Höegh Autoliners CEO Andreas Enger.
All Höegh Autoliners High & Heavy destination markets showed solid performance in the third quarter. Main factors supporting demand remained growing investments in sustainable energy and infrastructure, and need for inventory replenishment for the equipment suppliers.
Solid construction equipment sales in HA markets, coupled with low inventory levels, drove strong growth of core construction equipment shipments’ out of Asia, particularly from China.
Höegh Autoliners fleet efficiency up
A tight capacity market is expected to remain in the near term, with limited net fleet growth. Fleet efficiency has improved during the third quarter, with full vessels and limited use of space charters. However, there are still
operational disruptions driving the capacity tightness. Charter rates continue to increase for medium and large vessels.
The sale of two non-core vessels Höegh Maputo and Höegh Singapore concluded during the third quarter, resulting in a profit-sharing gain of $21 million. Both vessels were delivered to new owners in August/September.
The company also took decisive action to limit the exposure to the expensive charterhire market by exercising the purchase option for Höegh Tracer at a price of $53 million, well below the current market value of $96 million at the end of September 2022. The ownership of the vessel will be transferred to the company during first quarter of 2023.
The general market fundamentals remain very positive with a tight tonnage situation and repricing of cargo in most trade lines. There is still volatility when it comes to delays, port congestions and supply chain disruptions but this is easing somewhat.
The global situation with high inflation and fear for recession has so far not impacted the financial performance of Höegh Autoliners business but this is something the company is monitoring closely.
Most of the increase in bunker prices earlier this year is from third quarter covered by BAF and will not impact the results much going forward unless prices move drastically from current levels. The strong balance sheet in combination with current cash generation makes the company very resilient for a temporary setback if an eventual recession should impact volumes negatively.
The general market for Höegh Autoliners’ freight continues to be strong. Increasing freight rates in combination with lower bunker expenses are expected to give an increase in EBITDA in the fourth quarter compared to Q3.