Norden Q2 misses forecast as freight rates fall

Danish shipper D/S Norden reported a steeper-than-forecast drop in operating profit for the second quarter, hit by falling freight rates, though its CEO said he expected some recovery for the sector this year.The dry-bulk and tanker shipping group maintained its guidance for lower 2011 results as it posted earnings before interest and tax (EBIT) of $21.1 million in the three months to end-June, down from $86.5 million a year earlier.The result missed an average estimate of $26.1 million in a Reuters poll of analysts whose EBIT forecasts ranged from $17.0 million to $50.0 million. “The result was much better than expected in tankers and slightly weaker in bulkers,” Nordea Markets said in a note to clients, adding that second-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) was ahead of its estimate but below consensus. Shares in Norden fell 4.12 per cent by 0903 GMT, underperforming a 2.19 per cent drop in the Copenhagen bourse’s bluechip index.“We believe the tanker market will recover a bit (this year),” Chief Executive Carsten Mortensen told Reuters. “Dry bulk continues to be somewhat challenging.”“We are in a traditional low cycle, and we have sailed rather satisfactorily through the first half of the year and now are in a low season for product tankers, and we think that will pick up a bit as the year progresses,” Mortensen said.Mortensen said that the Norden dry-bulk fleet’s 94 per cent contract coverage for this year means it is shielded from swings in the market.“Expectations for the profit for the year remain unchanged,” Norden said in its report, reiterating its guidance for 2011 EBITDA of $135 million to $175 million and EBIT between $55 million and $95 million.Norden posted EBITDA of $239.6 million and EBIT of $222.5 million for 2010. The dry-bulk market remained on a downward trend in the second quarter, with the Baltic Dry Index dropping 8 per cent, taking the index’s decrease to 20 per cent for the first half, Norden said.The product tanker market in the quarter was mainly driven by exports from the US Gulf and strong demand in South America and Africa, the company said. From / Gulf Today