Rotterdam terminal cost weigh heavy on Odfjell

Odfjell has reported a $26 million loss in the second quarter as its bottom line was once again affected by its Rotterdam terminal.

The loss follows on from a $23 million loss in the first quarter 2014 and a $2 million loss in the second quarter 2013.

The group’s troubled Odfjell Terminals Rotterdam (OTR) suffered a $11.8 million reorganisation charge that the company says will improve the cost base at the terminal. The total negative EBITDA contribution from the Rotterdam terminal was $28.6 million, although progress was made at the terminal as it reached an agreement with unions to cut 100 jobs and set a wage freeze.

OTR has been the subject of ongoing concern with regards to safety; unreported leaks of large quantities of flammable material have been revealed by whistleblowers, inspections uncovered malfunctioning cooling and fire suppression systems, and maintenance backlogs on critical safety equipment. The terminal shut itself down in July 2012 to address its safety concerns.

Rotterdam aside, the terminal group had gross occupancy of 95% at the end of June, and the Charleston terminal and Antwerp expansions are both complete and operational.

Odfjell’s 50% interest in the tank terminals business returned a negative EBITDA of $10 million for the quarter, down from a positive contribution of $7 million in Q2 2013.

For its chemical tankers division EBITDA was down to $26.2 million for the quarter from $30 million in the same period last year. Aside from a strong performance in South America, regional trade weakened during the quarter as plant outages reduced volumes and tightened spot opportunities.

The company referred to port congestion as a “serious concern” for its tanker business.

Four vessels joined the company’s fleet during the quarter, bringing the total additions over the past 12 months to 12 ships, with two tankers disposed of at the end of last year.

During the quarter Odfjell signed an LPG joint venture with Breakwater Capital and Oakhill Advisors, as well as exercising four options for four LPG carriers to be built in China.