Scorpio Bulkers has started paying dividends after logging a reduced loss for the third quarter.
The company will make a quarterly cash dividend payment of $0.02 per share, which was met by an upgrade from analysts at Fearnley Securities.
Noah Parquette, an analyst at JP Morgan, says the dividend and a $50m share repurchase programme both reflect management’s confidence in a market recovery.
Scorpio Bulkers clears the way for dividend payments
He says the dividend has arrived more quickly than anticipated and within just one quarter of the company “normalizing relations with its banks”.
Amit Mehrotra, an analyst at Deutsche Bank has been critical of any potential for dividends this early in the recovery phase for dry bulk.
However he says the payment is relatively small in the context of Scorpio’s capital and cost structure, equating to just over $300 per day per ship on an annual basis.
“So while we disagree with this allocation of capital, it’s too small to offset positive drivers of equity value—namely asset value and rate recovery and modest re-leveraging of the balance sheet for acquisitions at the right time in the cycle,” he said.
It came as Scorpio reported a net loss of $10.7m in the three months to 30 September, against $21.3m in the same period of 2016. Revenue was up to $38.6m from $23.93m last year.
Earnings per share of $0.13 were in line with Wall Street expectations.
Analysts at Clarksons Platou Securities note it marks the sixth quarter in a row in which the company has reported improved results.
Chairman and CEO Emanuele Lauro said he was pleased with steady quarter-on-quarter improvements in rates and the resulting positive cash flow generated from operations.
“We believe that current market rates are sustainable and will continue to improve through 2018,” he added.
“As a result, we are excited to initiate a quarterly dividend, which is a reflection of our confidence in our company’s financial strength and cash flow generation and the markets in which we operate.”
Scorpio also said it has now taken delivery of a 63,000-dwt chartered-in bulker newbuilding called Ocean Phoenix Tree.
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It agreed to take the ship in the second quarter at $10,125 per day for two years, but did not reveal the name.
The deal can be extended for another year at $10,885 per day by Scorpio.
The vessel is owned by Big Fame Shipping of Hong Kong. Clarksons lists it as part of the fleet of Far East Leasing of Shanghai.
As of 20 October, Scorpio had $48.8m in cash and cash equivalents, plus $79m available to draw down under the existing $409m credit facility.
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Gary Dixon and Andy Pierce