Pacific Basin Shipping Limited, one of the world’s leading dry bulk shipping companies, Friday announced the results of the Company and its subsidiaries (collectively the “Group”) for the year ended 31 December 2024.
Stable Financial Results
Mr. Martin Fruergaard, CEO of Pacific Basin, said:
“In 2024, we generated an underlying profit of US$114.1 million, a net profit of US$131.7 million and EBITDA of US$333.4 million, yielding a return on equity of 7% and basic EPS of HK19.9 cents.
The seasonal ups and downs that typically characterise the dry bulk market were largely flattened out by geopolitical and climate-related events, making it challenging to capture the full value of the market.
Our large core business generated a contribution of US$178.4 million before overheads.
Our average
Handysize and Supramax daily TCE earnings outperformed average Handysize (BHSI 38k dwt tonnage-adjusted) and Supramax (BSI 58k dwt) indices by US$1,720 per day and US$710 per day respectively, illustrating the challenges we had in 2024 to optimally position our Supramax fleet and maintain a high Supramax outperformance.
Our operating activity contributed US$17.4 million before overheads, generating a margin of US$630 per day over 27,610 operating days, with Supramax particularly undermined by the impact of geopolitical events on the freight market. Our operating activity continued to grow with operating days increasing 18% year on year.
Our overheads and vessel operating expenses remain well controlled and sector leading – and are back to pre-Covid levels. Reducing our debt and utilising interest rate swaps to limit our exposure to variable interest rate debt has helped us to mitigate increases in finance costs in a higher interest rate environment.
We are alert and prepared for geopolitical uncertainties and dry bulk market challenges in 2025, we remain positive overall about our sector’s fundamentals in the longer term, we continue to generate a healthy cash flow and remain financially strong, and we can be proud of the good progress we have been making in delivering on our strategy and priorities.”
Mr. Martin Fruergaard continued:
“In view of our sound cash generation, the Board recommends a final dividend of HK5.1 cents per share which, combined with the HK4.1 cents per share interim dividend distributed in August 2024, represents 50% of our net profit for the full year excluding vessel disposal gains, which is in line with our dividend policy.
In April 2024, we announced a share buyback programme which we completed in December 2024 following our repurchase and cancellation of 138 million shares over seven months for an aggregate consideration of about US$40 million. Through dividends and the share buyback programme, we have committed to distribute an aggregate amount of about US$101 million in value to our shareholders for 2024, equivalent to about 83% of our 2024 net profit, excluding vessel disposal gains.
In view of the continued share discount to the market value of our assets, the Board has approved a new share buyback programme of up to US$40 million in 2025.
Investing in our Future Fleet
In November 2024, we contracted for four dual-fuel Ultramax newbuilding low-emission vessels (LEVs) that are expected to deliver in 2028 and 2029 and will be able to operate on green methanol as well as sustainable biodiesel and conventional fuel oil, offering the fuel flexibility to comply, optimise and compete in what will be an increasingly challenging regulatory environment and market. They are also of the most fuel-efficient design, which will be a critical benefit given the higher fuel costs ahead.
With this newbuilding order, we are also enhancing growth optionality for Pacific Basin, enabling fleet renewal and growth through additional LEV newbuilding orders and/or long-term charters of newbuildings with purchase options, and/or acquiring high-quality modern
1.Average number of short-term and index-linked vessels operated in December 2024
2.Supramax vessels in excess of 60,000 dwt are generally referred to as Ultramaxes
3.The Company owns one Capsize vessel which is chartered out on a long-term bareboat charter second-hand vessels, while selling older and less efficient vessels.
Shipping Market Volatiltity Expected to Return in 2025
Oceanbolt data shows global seaborne tonne-mile trade in dry bulk commodities grew by approximately 6% year on year in 2024, supported by robust Chinese demand for iron ore, coal and minor bulks, as well as global demand for Chinese steel. China sourcing from further distances, coupled with disruptions in the Panama and Suez canals, also contributed to the increase in overall tonne- mile demand. Global minor bulk demand increased by about 9% in 2024, supported most notably by robust Chinese imports of bauxite and forest products, as well as Chinese exports of steel products.
Global dry bulk net fleet growth remained steady at 3% in 2024. Net fleet growth in the minor bulk vessel segments accelerated to 4.1%, driven by an 18% increase year on year in Handysize and Supramax newbuilding deliveries, whereas Capesize and Panamax deliveries decreased. Scrapping of the total dry bulk fleet decreased by almost a third year on year on the back of improved and steady freight rates, with deletions (mainly in the Supramax and Panamax segments) totalling only 3.8 million dwt or 0.4% of the existing global dry bulk fleet.
Global economic growth is expected to remain at a stable yet underwhelming 3.3% in 2025 and 2026 amid divergent growth paths and elevated policy uncertainty, according to the International Monetary Fund. Inflation, interest rates and tariffs are also all likely to continue to undermine dry bulk trade growth, which Clarkson’s forecasts at 1.3% for the year. The geopolitical turbulence of last year will continue in 2025, amplified by the uncertainty of what may come out of the new US administration. But while more tariffs and protectionist policies may undermine trade, unforeseen shocks, disruption and other changes in the geopolitical landscape can equally support tonne-mile demand for shipping. We expect to see some volatility return to the dry bulk shipping market in 2025.
We are prepared for the unexpected, are watching closely for evolving geopolitical and shipping market developments, and will leverage the agility of our business model to react accordingly. We will continue to take a disciplined approach to our fleet renewal investments and disposals, and hope that increased volatility in 2025 will create opportunities for us to invest in our business.
In the longer term, we remain positive about our dry bulk sector due to a steady demand outlook for dry bulk commodities, the age profile of the global Handysize/Supramax fleet, the increasing pressure (and cost) of decarbonisation regulations on conventionally- fuelled vessels and the tight availability of newbuilding shipyard capacity.
We wish to continue to renew and grow our owned fleet in a disciplined way that prepares us for a low-carbon future. Turbulent global developments will likely drive volatility in our market and, in turn, present opportunities for us to grow through the disciplined acquisition of high-quality modern second-hand vessels, while also selling older and less efficient vessels. We intend also to renew our fleet through additional LEV newbuilding orders and/or long-term charters of newbuildings with purchase options. We are also continuously looking for accretive M&A opportunities where the strategic and cultural fit is compelling. The growth optionality we enjoy is a valuable advantage.
Other strategic priorities in 2025 are to increase our focus on fuel procurement including developing our priority access to green fuels (green methanol and sustainable biodiesel), to accelerate our optimisation drive, and to enhance our performance management approach and culture.
Through these strategic priorities, we will strive to enhance our platform for sustainable growth and delivery of attractive and market- leading total shareholder returns.
We are alert and prepared for uncertainties, challenges and opportunities in 2025. Fortunately, we remain financially strong and can weather periods of uncertainty and lower earnings while still making disciplined counter-cyclical investments that will underpin our growth and competitiveness for many years to come.”
Source: Pacific Basin
