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Stolt-Nielsen: Somewhat stronger figures than we predicted

Posted on February 8, 2023

Stolt-Nielsen posted its 4Q (September-November) report this morning and the results came in somewhat stronger than we expected. The guidance for 2023 was for a continuing strengthening for the tanker markets, flat Terminals and a reduction for Tank Containers, while the contract renewing situation is mixed with the average rate increasing by 30%, but 16% customers not agreeing. Overall, we will have mixed adjustments our estimates, but any significant changes are unlikely.

Figures somewhat higher than we predicted

As we were suggesting, this has been the third very solid quarter in a row for Stolt-Nielsen with us being even too conservative. With in-line revenues of USD 732.5m the company managed the costs better than we predicted and reported EBITDA of USD 198m vs. USD 192m our expectations. The somewhat stronger results moved throughout the profit and loss statement and the adjusted EPS beat our estimates by 8%.

Mixed contract renewable story

The fourth quarter is the peak contract renewal season with about 55% of total contracts up for negotiations. While the average increase on the renewed contracts was communicated to be approximately 30%, but as much as around 16% of the contract portfolio was not renewed as eventually some of the customers were not prepared to accept the increases.

Guidance for the segments for 2023

With little to no growth in the global chemical tanker fleet in the next few years, and newbuilding orders not available for delivery prior to 2026, Stolt-Nielsen expects continued strengthening of chemical tanker markets. The company also expects a flat performance for Terminals YoY, while the Tank Containers should return to pre-2022 historical earnings, which should imply a significant drop YoY. Therefore, we will have mixed changes to our estimates.

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