09-11-2022 Genco Shipping delivers another profit, and fatter dividend, as expenses dip, By Joe Brady, TradeWinds
New York-listed Genco Shipping & Trading rolled to another profit in a softer third quarter and continued to build on its new high-payout dividend model. The John Wobensmith-led company is handing out a dividend of $0.78 per share, 56% higher than the $0.50 per share it managed in the second quarter and equivalent to a yield of 21%. Genco has now paid dividends of $2.74 per share over the last four quarters since implementing the model. The payout came as Genco reported adjusted net income of $42.7m, or $1 per share. This was down from $57.1m, or $1.36 per share, in the third quarter of 2021. Revenue declined to $136m from $155m in the third quarter of 2021, which Genco laid primarily to lower rates earned by its capesizes.
While solidly profitable, the result fell short of the Wall Street analyst consensus of $1.07 per share, with higher-than-expected operating expenses the main suspect. Genco was able to push those expenses down to $5,457 per day, lower than the prior quarter but higher than the $4,950 guidance it had provided to analysts. “During the third quarter, we generated strong earnings driven by our sixth consecutive quarter of TCE [time-charter equivalent rates] exceeding $20,000 per day together with lower expense levels,” Wobensmith said in the earnings statement. “Prudent cargo coverage taken during the second quarter resulted in significant benchmark freight outperformance during Q3 2022.”
The shipowner reported TCE rates of $23,624 fleet-wide, which was down from $28,800 in the second quarter. However, the previous quarter had been the second-highest rate for the company since 2010. Overall TCE was $29,287 in the third quarter of 2021.
Genco’s fleet wide TCE declined further to $20,451 with 77% of days fixed in the current quarter. But the figure is well above the roughly $13,500 current spot rate for both supramaxes and capesizes, Wobensmith said.
Genco’s ultramaxes and supramaxes were able to beat the Baltic Supramax Index by $7,000 a day in the third quarter. Its numbers were $19,762 for spot cargoes and $24,690 for period cover. This was even though Genco doesn’t have exhaust-gas scrubbers on ships of that size. “Prudent cargo coverage taken during the second quarter resulted in significant benchmark freight outperformance during Q3 2022,” Wobensmith said.
Genco has invested heavily in dry dockings and installation of energy-saving devices on its fleet within 2022 in preparation for the upcoming International Maritime Organization carbon-reduction rules. The figure was $41.1m for the year. But that has left it with little such work to do as the calendar flips to 2023, with only $5.7m budgeted for such work.