Danaos earnings sink 54.7% in Q2 2017

The independent containership owner’s net income for the quarter fell 54.7 percent year-over-year to $20.2 million, resulting from the effects of South Korean ocean carrier Hanjin filing for insolvency in the third quarter of last year.    Danaos Corp., a Greek independent containership owner, recorded a net income of $20.2 million for the second quarter of 2017, tumbling 54.7 percent year-over-year as the company felt the effects from Hanjin filing for insolvency in the third quarter of 2016.
   Earnings per share totaled $0.18, down from $0.41 per share for the second quarter of 2016. Meanwhile, operating revenues for the quarter fell 16.9 percent year-over-year to $113.9 million, largely due to the loss of revenues from cancelled charters with Hanjin for eight vessels. These vessels were re-chartered at lower rates, and in some cases, underwent off hire time in the 2017 period.
   Danaos “is in breach of certain financial covenants as a result of the Hanjin bankruptcy,” Danaos CEO Dr. John Coustas said. “We are currently engaged in discussions with our lenders regarding refinancing substantially all of our debt maturing in 2018.
   “These discussions encompass potential amendments to the associated financial covenants that have been breached,” he added. “In the meantime, we continue to generate positive cash flows from our operations and currently are in a position to service all our operational obligations as well as all scheduled principal amortization and interest payments under the original terms of our debt agreements.”
   Looking ahead, Coustas said that consolidation in the liner industry along with legacy newbuilding orders for large vessels still to be delivered is expected to maintain pressure on charter rates for a considerable amount of time.
   “Danaos continues to have low near term exposure to the weak spot market with charter coverage of 87 percent for the next 12 months based on current operating revenues and 66 percent in terms of contracted operating days,” he said.
   Danaos has a fleet of 59 containerships with an aggregate capacity of 352,600 TEUs, including four vessels owned by joint venture Gemini Shipholdings Corp.