Markets Under Pressure: FSL Trust Reports a $24.1M Charge
Posted by Greg Trauthwein
Thursday, August 3, 2017
Citing declining vessel values and "volatile industry conditions," FSL Trust Management Pte. Ltd., as trustee-manager of First Ship Lease Trust, announced the Trust has taken an impairment charge of $24.1 million on eight vessels, and consequently a net loss of $21.8 million in 2QFY17.
“Although the tanker and container markets remained under significant pressure in 2QFY17, our fleet continued to generate positive cashflows and the Trust has maintained its strong debt repayment momentum with over $60 million of debt repaid over the last 12 months," said Roger Woods, CEO of FSLTM, in a statement.
The Trust reported revenue of $20.9 million for 2QFY17, which is a reported year-on-year decrease of 17.4% compared to $25.3 million reported in 2QFY16. It said the decline in revenue is attributable to the dry-docking of two crude oil tankers in 2QFY17 and softening rates across all shipping markets, which weighed on earnings from LR2 tankers and container vessels.
Despite all, the Trust continued to register another quarter of positive cash generation, with net cash generated from operations of $11.3 million in 2QFY17. "We expect that difficult operating environment across all shipping sectors will persist in the near term, but we remain focused on optimizing the commercial deployment and operational performance of the fleet by securing quality contract cover through 2017 and beyond,” Woods said.