Flex LNG’s 2023 revenue climbs, net income down

Norwegian shipping firm Flex LNG, the owner of 13 liquefied natural gas carriers, reported higher revenue and lower net income in 2023.

The shipping firm controlled by billionaire John Fredriksen said on Wednesday that vessel operating revenues were $371 million for the January-December period, a rise of $23.1 million compared to $347.9 million in 2022.

Vessel operating revenues of $97.2 million for the fourth quarter of 2023 were almost flat compared to $97.9 million in the same quarter in 2022, while they rose compared to $94.6 million in the prior quarter.

On the other hand, the company’s 2023 net income of $120 million dropped $68 million compared to $188 million in 2022, while net incomed dropped to $19.4 million in the fourth quarter compared to $41.4 million in the same quarter last year and $45.1 million in the previous quarter.

Flex LNG noted it had higher expenses in the fourth quarter due to engine maintenance on its 2018 and 2019-built vessels, and recorded a net loss on derivatives of $11.6 million.

Average time charter equivalent (TCE) rate was $81,114 per day in the fourth quarter of 2023, and compares to $79,207 per day for the third quarter and $81,669 per day in the fourth quarter in 2022.

In 2023, the average rate was $79,500 per day.

Flex LNG a declared a dividend for the fourth quarter of $0.75 per share.

“Challenging” freight market

Flex LNG has 12 LNG carriers on fixed hire time charters, including to US LNG exporter Cheniere, and one ship, Flex Artemis, on a variable time charter.

Last month, Flex LNG secured a charter extension for its 2020-built 173,400-cbm LNG carrier, Flex Resolute.

The firm also said that the 2019-built 173,400-cbm, Flex Constellation, will be available for charter later this year after a trading house decided not to utilize its extension option.

Flex LNG’s backlog for its time charters is for an aggregate of 50 years, which may increase to 71 years with declaration of charterer’s options, it said.

“Over the next two years, we do see a somewhat more challenging freight market as there are more ships for delivery compared to the expected new export volumes,” CEO Øystein Kalleklev said.

“Hence, we think Flex LNG is very well positioned as we have 94 percent charter coverage for 2024 and 50 years minimum firm charter backlog,” he said.

Additionally, Flex LNG’s fleet consists entirely of large LNG carriers fitted with the most modern two-stroke propulsion system resulting in “significant” fuel savings compared to older generation tonnage, he said.

“Reduced fuel consumption is also good for the environment and with EU Emission Trading System coming into force from 2024, this further enhances the premium which our ships can achieve in the market given the costs associated with such carbon emissions,” the CEO said.

“Lastly, we have a very strong balance sheet where all the LNG carriers are financed with attractive long-term debt while our cash balance at year-end was a comfortable $411 million, giving us a high degree of financial flexibility,” Kalleklev said.

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