Capital Product Partners LP (CPLP) reported an 86% increase in revenue for the second quarter of 2022, while net income (excluding the gain on the sale of a ship in 2021) jumped 104% to 20.4 million.
As the shipping company states in a related announcement, during the second quarter, which ended on June 30, 2022, the company continued to record strong upward performance in all financial indicators compared to the corresponding period of 2021.
The company’s total revenue in Q2 2022 rose 86% to $74 million from $39.8 million in Q2 2021, while net profit for the period rose to $20.4 million .dollars, compared to $10.0 million for the corresponding period last year, recording an increase of 104%, (excluding the one-time gain of $25.4 million from the successful sale of the M/V CMA CGM Magdalena in May 2021).
Commenting on the company’s performance for the period, Mr. Gerasimos Kalogiratos, CEO of CPLP, said:
“We are very pleased that in the second quarter of 2022 the company continued to deliver strong financial performance compared to the second quarter of 2021, mainly as a result of our entry into the marine LNG market in the second half of last year. At the same time, we remain committed to our fleet renewal strategy and in this context we have successfully completed the sale of M/V Archimidis & M/V Agamemnon, while strengthening our growth prospects with the acquisition of three new eco-friendly container ships of 13,278 TEU capacity, in which hybrid technology sulfur dioxide purification systems have been installed, as well as with the acquisition of another latest generation LNG ship, with a transport capacity of 174,000 cubic meters – ships which are already under long-term charter.
The recent successful issuance of a new joint bond loan on the Athens Capital Market, the second within twelve months, with a fixed interest rate of 4.40% for seven years, demonstrates the company’s ability to raise new capital and provides us with additional financial flexibility for further growth in a rising interest rate environment . Returning capital to our shareholders remains a priority for CPLP as we continue to invest strategically in green shipping.”
2nd Quarter 2022 results overview
The 86% increase in revenue was mainly due to a net increase in the average number of vessels in the company’s fleet by 27%, following the acquisition of a total of six new generation LNG vessels in the second half of 2021, which contributed to total revenue of 38.1 million in the second quarter of 2022.
Total operating expenses for the quarter were $40.9 million, compared to $25.6 million in the second quarter of 2021 primarily due to an increase in fleet size to 21 vessels during the period, as well as increased vessel depreciation costs.
As of June 30, 2022, total cash was $34.5 million and includes $10.6 million of restricted cash as a minimum liquidity requirement under the company’s financing arrangements.
Following Q2 2022 results, the company will distribute a dividend of $0.15 per common share.
Important events for the development course of CPLP
New $597.5m investment program to acquire one LNG carrier and three containerships
In June 2022, the company announced that it is proceeding with the acquisition of the under construction LNG Carrier “Asterix I”, with a transport capacity of 174,000 cubic meters of the latest generation X-DF type, which is expected to be delivered in January 2023. The vessel is already on a long-term time charter , for five years, from Hartree Partners Power & Gas Company (UK) with the possibility of extending the agreement until January 2032.
With the addition of “Asterix I” early next year, CPLP’s fleet will have a total of 7 latest generation X-DF type LNG vessels with a total carrying capacity of 1,218,000 cubic meters, thus significantly increasing the company’s footprint in the dynamic market maritime transportation of liquefied natural gas.
Also, the company is proceeding with the acquisition of three new eco-friendly container ships, with a carrying capacity of 13,278 TEU each, with dual-fuel engines and a sulfur dioxide cleaning system (scrubber). These are the “Manzanillo Express”, “Itajai Express” and “Buenaventura Express” which are under construction and scheduled to be delivered in October 2022, January 2023 and May 2023 respectively. They have secured long-term charters from Hapag Lloyd Aktiengesellshaft for 10 years, which together with charter extension rights, expire between October 2038 and May 2039.
CPLP’s high-end fleet currently (July 2022) stands at 19 vessels and upon completion of the $597.5 million development investment program between October 2022 and May 2023, the fleet is expected to grow to 23 vessels, consisting of 7 last generation vessels transporting liquefied natural gas (‘LNG’), 15 container vessels and 1 dry cargo vessel.
Issuance of Bonds on the Athens Stock Exchange
In July 2022, the Company, through its wholly-owned subsidiary, CPLP Shipping Holdings PLC, issued bonds of €100.0 million, 7-year maturity, with a coupon of 4.40%, payable semi-annually. The raised funds will be used to strengthen the fleet as well as to serve other financial needs of the company.
Sale of M/V Archimidis & M/V Agamemnon
On July 6, 2022 and July 28, 2022, the sale of M/V Archimidis & M/V Agamemnon was completed, yielding gross proceeds of approximately $102.0 million after repayment of outstanding debt. The Company recorded an accounting gain from the sale of the vessels of $49.5 million.
Update on the International Shipping Market
Container Transport Market
The container market experienced exceptional conditions in the second quarter of this year, with freight and charter rates hitting all-time highs and almost doubling year-on-year despite the slight deceleration seen recently.
The order book is at 27.8% of the total fleet, up 1.3% from the previous quarter, while sales of vessels for recycling remain at historic lows.
Analysts estimate that there will be some market normalization in the face of potential economic turbulence in the medium to long term, however in the short term, severe disruption in the supply chain, limited capacity availability and expectations that the disruptions will be slow to ease, keep the forecast for specific market positive for the coming months.
LNG Ship Charter Market
Prices in the LNG charter market have been unusually bullish for most of the second quarter of the year. This trend is mainly due to the focus on energy security combined with increased natural gas prices, as many charterers opted for the security of long-term charters.
The LNG vessel order book is at 39.8% of the total fleet with 54 new orders during the second quarter of 2022. The current newbuild price has increased to $240 million.
According to analyst estimates, LNG vessels equipped with two-stroke engines achieve an annual freight rate of $165,000 per day. In the second quarter of the year, a total of 72 LNG vessels entered medium and long-term charters.
The outlook for the LNG market appears positive overall, with the push for energy security (especially in Europe) as a result of the Russia-Ukraine war contributing to strong global demand for LNG and accelerating investment in liquefaction and regasification infrastructure.
Source: Capital
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