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Fredriksen’s Golden Ocean Group Rises on Prospects of Dry Bulk Market Recovery

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February 19, 2013

Image: Golden Ocean Group

Golden Ocean Group Ltd. climbed to the highest level in almost two years in Oslo trading after the shipping company controlled by billionaire John Fredriksen signaled it’s expecting a recovery in the dry bulk market.

The Hamilton, Bermuda-based company gained as much as 6.8 percent to 6.46 kroner, the highest intraday level since May 10, 2011. Golden Ocean, mainly operating Capesize and Panamax-sized vessels, expects dry bulk volumes to expand 4.5 percent in 2013 and 6.7 percent in 2014, it said today in a presentation.

“We view the fourth-quarter report as positive, with both figures and news flow indicating that the company is preparing for a recovery of the dry bulk market,” RS Platou AS analyst Frode Morkedal said in an e-mailed statement. Golden Ocean “says it has presently no intention to secure long-term employment” for its fleet after this year, he said.

The company said in its fourth-quarter earnings today that its reliance on the market for immediate delivery will gradually grow from 2014 as conditions improve. The Baltic Dry Index, a measure of commodity shipping costs, averaged 920 last year, the lowest level since 1986, according to figures from the Baltic Exchange, the London-based publisher of freight rates.

Gold Ocean rose 3.5 percent to 6.26 kroner by 10:41 a.m. in Oslo. More than 1.65 million shares have been traded so far today, 95 percent of the three-month average daily volume.

It has gained 13 percent in the past year, giving Golden Ocean a market value of 2.8 billion kroner ($504 million.)

Fredriksen will keep investing in the ship industry that helped him build his fortune, he said in a Jan. 24 interview.

Golden Ocean is interested in buying second-hand modern vessels and newbuilds, as well as taking out long-term leases with purchase options, it said today. “Such opportunities may also include distressed corporate deals,” it said, adding that it’s currently in discussions over possible acquisitions.

The company reported fourth-quarter net income of $9.4 million, up from $6.3 million a year earlier and compared with the $9.2 million average of 13 analyst estimates compiled by Bloomberg. Total revenue fell 15 percent to $55.9 million.

– Alastair Reed, Copyright 2013 Bloomberg.

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