Norway-based shipping firm Flex LNG reported a rise in quarterly net income as it continued to grow its fleet.
Net income stood at $25.8 million, rising from the previous quarter of 3.8 million but also year-on-year when the firm reported a net income of $23.9 million.
In addition, vessel operating revenues of $67.4 million also increased year-on-year and doubled compared to the previous quarter of $33.1 million.
Furthermore, Flex LNG reported an average time charter equivalent rate of $73,712 per day for the October-December period. This compares to $46,569 per day in the third quarter and $94,000 per day for the fourth quarter of 2019.
With the recent fleet additions, Flex LNG’s operating fleet has grown to 12 vessels on the water, and the firm expects to take delivery of the last newbuilding, Flex Vigilant, in the second quarter.
Record spot LNG prices and European restocking
“During the last quarter of 2020 and into 2021, the LNG market improved markedly driven by strong demand from Asia due to a combination of cold weather and economic recovery, which resulted in a shortage of both LNG and ships to transport it,” Flex LNG’s chief Øystein Kalleklev said.
“LNG prices, which hit synchronized lows following the Covid-19 pandemic, rebounded with an 18 times price increase of Asian LNG from the low in April 2020 to the highs in January 2021, a remarkable turn-around,” he said.
However, with the pull from Asia and a relative cold start to 2021 in Northern Europe, gas inventories in Europe, which hit tank tops in the autumn, have been depleted, he said.
This has firmed up future gas prices, as companies would need to restock during spring and summer months, he said.
“Restocking demand, particularly in Europe, will mean more demand for flexible US cargoes during the summer, and we therefore do not expect a repeat of the flurry of US cargo cancellations which adversely affected the market in 2020,” the CEO said.
Kalleklev added that with an improved economic outlook, Flex LNG does not expect LNG exports to grow steadily in 2021, as the US is expected to produce close to capacity and this will also be positive for shipping demand.
Looking forward, the CEO also said Flex LNG expects revenues to grow from the fourth quarter to between $80 and $90 million in the first quarter of 2021.
“The stronger trading results reflects generally higher charter rates at the start of the year, as well as delivery of two newbuildings in January 2021,” he said.
“With improved financial performance and a strong balance sheet, we are therefore pleased to announce an increase of our quarterly dividend from $0.10 per share for the third quarter to $0.30 per share for the fourth quarter, which represents an attractive yield for our shareholders,” Kalleklev said.
Flex LNG’s chief financial officer Harald Gurvin has decided to leave the company with effect from March 31, 2021.
The company has appointed Knut Traaholt, a senior banker with Swedbank, to succeed Gurvin.
Traaholt will join the company during the second quarter 2021 and during this period, Gurvin will be available in an advisory capacity to the company in order to ensure a smooth transition, Flex LNG said.