The terminals division of Odfjell has reported improved financial results in Q1 2021 compared to Q4 2020, despite two force majeure events.
The net result contribution to Odfjell as a whole from the Terminals division was US$0.2 million, compared to a loss of US$0.6 million in Q4 2020. EBIT rose to US$1.3 million compared to US$0.3 million in in Q$ 2020. Q4 2020 was negatively affected by a hydraulic oil fire in the power pack room at Odfjell Terminals Houston in the US in December 2020, which led to a force majeure which was only lifted late in January 2021. Winter Storm Uri brought exceptional freezing temperatures, snow and ice to Texas, US in February, and widespread impacts on the Houston petrochemical supply chain, and also resulted in a force majeure.
Odfjell says that the Houston terminal recovered quickly from both force majeure events and other terminals maintained normal operations throughout the quarter. Commercial occupancy of terminals stands at around 96%, with throughput and handlings also remaining at a similar level compared to Q4 2020. Stable operations in Europe have helped to offset the disruption in the US.
Some expansion and improvement work is ongoing, including the construction of an additional 35,000 m3 of stainless steel tank capacity at Noordnatie Odfjell Antwerp Terminals (NNOAT), which is on schedule and expected to be operational in 2022. At Odfjell Terminals US, including its terminals in Houston and Charleston, Odfjell has launched a digital transformation programme aimed at improving efficiency. However, work on Houston’s Bay 13 expansion project has been delayed due to the recent events, with the new tank pit now likely to be commissioned in 2023.
Odfjell as a whole has reported a difficult Q1 2021. EBIT fell to US$8 million from US$18 million in Q4 2020. The net result was a loss of US$16 million, compared to a loss of US$3 million in Q4 2020.
Winter Storm Uri caused disruptions in COA volumes, while a challenging clean petroleum products (CPP) market also affected the results. The company says that the temporary blocking of the Suez Canal only had a minor impact on operations.
‘The first quarter was impacted by a challenging chemical tanker market with disruptions in supply chains due to extraordinary weather conditions and COVID-19 together with a weak CPP market. Underlying fundamentals remain strong and we expect our markets to improve throughout the year. Following the end of the largest fleet renewal programme in the history of the company, we are now well positioned to generate improved free cash flow and strengthen our balance sheet. We expect to report improved results in 2Q21,’ says Odfjell CEO Kristian Mørch.