Flex LNG, the Norwegian shipping company with a fleet of 13 vessels and several chartered to some of the largest market players, reported a halving of fourth-quarter net profits and forecast a challenging next two years for the sector with more ships in the global fleet.
“We see a somewhat more challenging freight market as there are more ships for delivery compared to the expected new export volumes,” said Øystein Kalleklev, Chief Executive of Flex LNG Management whose charterers include Cheniere of the US and UK major BP.
“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, which may increase to 71 years if all charterer’s options are extended,” Kalleklev explained.
Fuel savings
“Additionally, our 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,” the CEO added.
Flex earnings showed a halving of fourth-quarter net income to $19.39 million from $41.47M in the same three months of 2022.
Annual net profits dropped to $120.04M from $188.04M in the 2022. Vessel operating revenues in 2023 came to $371.02M versus $347.91M in the previous year.
“The increase is due to a higher proportion of our fleet on improved longer term fixed-rate contracts as well as a relatively stronger spot market compared to 2022,” said Kalleklev.
“This is offset by scheduled dry-dockings of the vessels ‘Flex Enterprise’, ‘Flex Endeavour,’ ‘Flex Ranger’ and ‘Flex Rainbow’ in 2023, resulting in 77 off-hire days,” the CEO said.
Vessel expenses for the fourth quarter came to $97.2M compared with $94.6M for the third quarter 2023.
Average Time Charter Equivalent (TCE) rates amounted to $81,114 per day for the fourth quarter versus $79,207 per day for the third quarter 2023.
Revenues
“We guided that our revenues would increase from $348M in 2022 to approximately $370M in 2023 and we delivered revenues of $371M in 2023, while revenues for the fourth quarter came in at $97.2M in line with quarterly guidance,” Kalleklev stated.
In an overview the LNG fright market, Flex noted that there were 630 live ships in the fleet at the end of 2023, with 210 steamers still in service.
“An additional 33 newbuilds were added to the fleet last year while 68 newbuild orders were placed, representing a significant decrease from the 145 orders in 2022 and 69 newbuilds are scheduled to be delivered in 2024, with seven uncommitted for long-term contracts,” Flex said.
Flex also stated that newbuild prices for the base specifications have “somewhat tapered off” from the peak of $265M, with ship brokers quoting $258M to 262M as of early February 2024.
