The containership owner and charterer recorded a loss of $139 million on revenues of $877.9 million for the full year of 2016.
Seaspan Corp., which owns containerships and charters them to liner companies, has slashed the dividend on its common shares by two-thirds after reporting a lower fourth quarter profit and a loss for the full year of 2016.
Seaspan had a profit of $1.4 million for the fourth quarter of 2016 on revenues of $213.2 million, down from a profit of $76.2 million for the fourth quarter of 2015 on revenues of $218.5 million.
For the full year of 2016, Seapan recorded a loss of $139 million on revenues of $877.9 million, compared with a profit of $199.4 million on revenues of $819 million for 2015.
The company announced it was reducing the dividend on its common stock to 12.5 cents per share from 37.5 cents per share. “While we have seen the industry take measures to manage vessel supply and are confident industry conditions will improve over time, after careful consideration, the Board of Directors has made the difficult decision to reduce the quarterly dividend on our common shares to $0.125 per share,” said Gerry Wang, chief executive officer, co-chairman and co-founder of Seaspan. “We believe this decision is in the long-term interests of our shareholders and will allow us to capitalize on industry weakness while maintaining a strong balance sheet.”
Seaspan attributed the decline in fourth quarter revenues largely to lower average charter rates for vessels that were on short-term charters, and an increase in unscheduled off-hire, primarily relating to ships being off-charter, which included three 10,000-TEU vessels previously chartered to Hanjin Shipping.
Seaspan also said that decrease was partially offset by the delivery of newbuilding vessels and the addition of two leased in vessels in 2016.
In 2016, Seaspan added five vessels on long-term contracts, which included:
• Two 14,000-TEU ships on a 10-year time-charter to Yang Ming;
• Two 10,000-TEU ships on an 8-year time-charter to MOL;
• And one 10,000-TEU ship on a 5-year time-charter to Maersk.
In December, Seaspan entered into an agreement to buy four 4,250-TEU ships and sold a 4,600-TEU ship for scrap. In October and November, the company sold four 4,800-TEU ships to MSC that it had on charter to the Geneva, Switzerland-based carrier for the past five years.
Seaspan implemented cost controls, which Wang said resulted in 2016 ship operating expenses per ownership day being 8.8 percent lower than in 2015.
The company also raised $660 million through the issue of common and preferred stock.
Wang said the company is “quite excited” by opportunities to take advantage of the downturn in the shipping business, noting that it was created during the Asian financial crisis about two decades ago, and that this was part of the reason for reducing its dividend.
Wang said the company’s preference is to buy new, larger ships.
These would include ships that may have been left by shipowners at shipyards, or ones that are under contract but whose owners are under financial distress. He said there might also be opportunities from major liner companies that want to sell and charter back ships, or from existing Chinese finance leasing companies that are restructuring.