Danaos sees net income surge, revenues slip

Meanwhile, the Athens-based containership owner and chartering company struck a charter rate reduction deal with South Korean ocean carrier Hyundai Merchant Marine.    Danaos Corp. posted a net income of $44.6 million for the second quarter of 2016, a 17.3 percent year-over-year increase, according to the company’s most recent financial statements.
   However, the Athens-based containership owner and chartering company saw operating revenues slip 3.2 percent from the second quarter of 2015 to $137 million.
   For the first six months of 2016, Danaos’ net income surged 29.8 percent year-over-year to $88.8 million, while revenues fell 2 percent year-over-year to $274.5 million.
   Danaos attributed the revenues decline to the sale of the 4,651-TEU Federal in January, the re-chartering of certain vessels at lower rates and lower fleet utilization.
   During the first six months of the year, Danaos had 55 containerships and a fleet utilization of 95.7 percent, compared to the same period last year when the company had 56 containerships and a fleet utilization of 98.9 percent.
   “We anticipate the market environment to remain unchanged for the remainder of the year, over which we will also start to experience the effect of the expanded Panama Canal which will shift demand from panamax to post-panamax vessels,” Danaos CEO John Coustas said.
   “We are cautiously optimistic that market fundamentals will gradually begin to improve by the spring of 2017. A combination of anticipated improving world GDP growth and declining growth in the containership fleet will naturally begin to balance the market,” he said. “Additionally, there is an expectation that consolidation in the liner industry – through alliances or otherwise – will create stability and encourage freight rate discipline which will hopefully put an end to the losses the liner companies have been reporting over the last quarters.”
   Looking into the third quarter, on July 15, Danaos agreed to reduce charter rates for South Korean ocean carrier Hyundai Merchant Marine (HMM) by 20 percent until Dec. 31, 2019 in exchange for $39 million in debt notes maturing up to 2024 and 4.6 million common shares in HMM that are expected to be freely tradable on the Stock Market Division of the Korean Exchange.
   On the contrary, Seaspan reiterated last week it will not reduce charter shipping rates for South Korea’s Hanjin Shipping.
   “We’ve made it very clear. We’ll not entertain the rate reduction,” Seaspan CEO Gerry Wang said on a phone call with investment analysts last week. “We believe that is the violation of contract in the spirit of a major OECD country having $1.5 trillion of GDP with almost 50 percent driven, derived from exports. That is not a good action. We do not support that. We have never had such a situation before with any of our other customers and Hanjin Shipping has been the only one.”
   However, the exposure to Hanjin is very limited, since Seaspan only has three vessels on charter to Hanjin, whereas Danaos has 13 vessels on charter to HMM.