Seanergy financial results impacted by ‘series of negative events’

Seanergy-Maritime

Seanergy Maritime Holdings Corp. announced its financial results for the second quarter and six months ended June 30, 2019.

For the quarter ended June 30, 2019, the Company generated net revenues of $18.8 million, a 12% increase compared to the second quarter of 2018 despite the Company’s fleet having been reduced by one unit compared to the same quarter of 2018. The daily TCE of the fleet for the second quarter of 2019 was $9,104 per ship per day, up 3% from $8,859 in the second quarter of 2018. The average daily OPEX of the fleet for the quarter was $5,015, marking an improvement of 4% from $5,242 in the second quarter of 2018.

For the six-month period ended June 30, 2019, net revenues were $34.8 million, as compared to $38.1 million in the first half of 2018. EBITDA for the first half of 2019 was $2.2 million, compared to EBITDA of $6.5 million in the same period of 2018. The daily TCE of the fleet for the first half of 2019 was $8,368 per ship per day, compared to $10.272 in the first half of 2018. The average daily OPEX of the fleet was $4,923, reflecting a 5% improvement against the respective period of 2018. As of June 30, 2019, cash and cash equivalents, including restricted cash, were $12.9 million.

Since the beginning of the third quarter of 2019, 62% of our fleet available days have been fixed at a daily TCE of approximately $23,800 per ship per day, marking an increase of 184% as compared to the fleet average TCE rate of $8,368 in the first half of 2019.

Stamatis Tsantanis, the Company’s Chairman and Chief Executive Officer, stated:

“Our results for the second quarter and first half of 2019 were materially affected by a series of negative events that had a severe impact in the Capesize segment. Most importantly the freight market was affected by the dam accident in the Brumadinho mine of Brazil, which caused the sharp reduction of the Brazilian iron ore exports from an average of 7.5 million tons per week to a low point of 2.5 million tons in April. In addition, tropical cyclones in Australia also affected negatively the seaborne iron ore trade. Lastly, the decrease in the availability of iron ore in the market, resulted in the sharp increase of the price of the product from approx. $70 per ton to approx. $120 per ton and in fewer cargo shipments with lower vessel utilization. The Baltic Capesize Index (‘BCI’) plummeted from 1,987 points in the beginning of the year to a low of 92 points in April.

We are very pleased, however, to see a sharp reversal of these factors since the end of May 2019. Firstly, the Brazilian weekly iron ore exports have stabilized to the pre-accident levels of about 7.5 million tons per week bringing back a significant quantity of high-grade product to the long-haul voyages. Moreover, an increased portion of the global capesize fleet is currently undergoing drydocks for scrubber installations and other retrofits. This is expected to intensify in the coming months as we move towards January 1, 2020 when the IMO 2020 sulphur cap will be implemented. As a result, the BCI soared from its April lows to a multiyear high of 4,438 points in July.

Seanergy was well placed to capture the upturn, based on index-linked employment for part of the fleet and favorably positioned spot vessels. Looking ahead, we expect that the aforementioned favorable developments on the demand and the supply fronts, will contribute towards a sustainably healthy market.

In response to the adverse market conditions of the first half of the year, we took timely measures to enhance our liquidity and preserve the Company’s cash flow. In May 2019 we successfully priced a $20.5 million follow-on offering and concurrent private placement. In addition, we obtained $9.5 million in commitments under two new loan facilities and rescheduled $3.3m in principal payments due in 2019 under certain of our loan facilities. These actions improved our cash flow by approximately $33 million.

Concerning our capital expenditure and vessel upgrade schedule, we are pleased to announce the completion of the concurrent scrubber and ballast water treatment system installations on the M/V Lordship, which took place next to the vessel’s special survey. The M/V Lordship is about to commence on a 3 to 4-year index linked charter with a major European utilities company. The scrubber installation on the M/V Partnership is currently ongoing while the M/V Leadership is undergoing her scheduled survey and dry-docking in the same yard. Upon completion of the upgrade program in November, five scrubbers and three ballast water treatment systems will be installed on our vessels, increasing the valuation of the fleet and the Company’s NAV by approximately $12.5 million.

As a final note, we are optimistic about the prospects of the Capesize market based on the favorable supply-demand fundamentals and believe that our Company is well positioned to benefit from a sustained recovery as well as from seasonal spikes based on our advantageous employment arrangements and concise approach towards IMO 2020.”

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