First Ship Lease Trust turns a profit of US$88,000 in Q4, FY2021 DPU up 16.7%

THE manager of First Ship Lease (FSL), in its interim consolidated financial statement issued on Thursday (Feb 3), reported a net profit of US$88,000 for the fourth quarter ended Dec 31, 2021.

This is an improvement from the net loss of US$2.2 million it reported a year ago. In Q4 2020, the trust reported an impairment on vessels of S$3.1 million.

Revenue in Q4 2021 fell 27.7 per cent year on year to US$4.9 million.

On the whole, financial year 2021 saw a net loss of US$1.5 million, compared with a net profit of US$6.2 million a year ago. Revenue for FY2021 fell 48.3 per cent to US$25 million.

The manager attributed last year's loss to the weak tanker market environment, which affected the trust's vessels operating in pools and the spot market; there were also non-cash impairments of US$2.7 million.

Distribution per unit for FY2021 was 3.5 US cents, compared with 3 US cents in the previous year.

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"While we have seen a slight improvement in freight rates for the tanker sizes relevant to the trust towards year-end and in January 2022, the winter season has disappointed with unsatisfactory freight rates so far weighing on our results," said the manager's chief executive Roger Woods.

However, he said the small profit in Q4 came from the majority of its vessels operating under fixed-rate period charters and the low leverage of its fleet.

With 8 vessels operating under fixed-rate period charters as at end-December, the trust has contracted revenue of US$28.6 million, which is more than double the net debt of US$13.2 million, following the closing of the refinancing of the recently acquired vessel Pelican Fisher in October 2021, the manager said.

This means the uncertainties surrounding the near-term tanker market environment primarily affect 3 vessels out of the 11 in the trust's portfolio, the manager said.

The manager added that it remains cautious in its near-term forecast for the tanker markets amid uncertainties from the Covid-19 pandemic.

"This would continue to impact essential demand factors for oil and oil products such as global aviation, as well as the timing and pace of an increase of oil production and a full market recovery to pre-pandemic levels," the manager said.

"The supply fundamentals show positive signs for the medium- and long-term as contracting of tanker newbuildings remains subdued amid technological uncertainties surrounding environmental regulations which, in combination with the ageing of the active fleet, is expected to provide supportive supply fundamentals in the medium-term," it added.