Scrubber Installation Costs Push Star Bulk into Red

first_imgzoomPetros Pappas, CEO of Star Bulk: Image Courtesy: Capital Link Greece-based shipping firm Star Bulk Carriers delivered a net loss in the first quarter of 2019 on the back of higher costs and off-hire days experienced in the first three months of the year.During a challenging and seasonally weak period of the year, which included around 300 off-hire days for scrubber installations, the company recorded a net loss of USD 5.3 million, against a net income of USD 9.9 million seen in the same period a year earlier.“By the end of May 2019 we are on track to have 40 vessels scrubber fitted. We expect to have a fully scrubber fitted fleet by January 2020. Because we expect 2020 to be a more profitable year, we want to maximize the operating days in 2020 and we thus bring forward to 2019 all our drydocks that would otherwise be due in 2020,” Petros Pappas, Chief Executive Officer of Star Bulk, said.“We expect to undergo 52 drydocks during this year mostly concurrent with scrubber installations which, in combination with 50 at sea installations, will reduce as much as possible our off hire time during 2019,” Pappas added.Our average TCE for the quarter, including realized freight and bunker hedging, was USD 11,192/day per vessel with 96.5% fleet utilization. The company currently has fixed a minimum of 76% of its second quarter of 2019 days at average TCE rates of USD 10,006 per day.“We continue being busy on the financing front, having drawn and agreed to refinance approximately USD 329 million of debt since the beginning of the year, reducing our average margin in these facilities by 217bps,” Pappas informed.Over the past nine months, the company said it had agreed to refinance around USD 1.04 billion creating savings of about USD 10 million annually in interest expense, or USD 250 per vessel day. Star Bulk has also drawn USD 22.4 million of scrubber financing with another USD 112.2 million in place to be drawn later in the year.Voyage revenues for the first quarter of 2019 increased to USD 166.5 million from USD 121.1 million in the first quarter of 2018. The TCE rate for the first quarter of 2019 was USD 10,624 compared to USD 12,586 for the first quarter of 2018 reflecting the weaker dry bulk market environment prevailing during the first quarter of 2019 compared to the same period in 2018.last_img