Algoma reports second quarter financial results

(Posted on 05/08/24)

Algoma Central Corporation has reported its results for the three and six months ended June 30, 2024. Algoma reported second quarter revenues of $180,968, an 11% decrease compared to the same period in 2023. Net earnings for the 2024 second quarter were $17,464 compared to net earnings of $33,144 for the same period in 2023. Algoma is a global provider of marine transportation that owns and operates dry and liquid bulk carriers, serving markets throughout the Great Lakes - St. Lawrence Seaway and internationally.

"Algoma encountered a challenging second quarter, but there are encouraging indications that volumes and margins will improve in the second half of the year," said Gregg Ruhl, President and CEO of Algoma Central Corporation. "The Domestic Dry-Bulk segment is facing lowered salt volumes due to a string of mild winters, and a reduction in demand for construction materials. Looking ahead, we see potential for a large grain crop in 2024, and domestic iron ore volumes are expected to increase, leading to the deployment of three additional vessels that are currently in temporary lay-up. Our international fleets, including our ocean self-unloaders, have been performing well with rates holding steady. As we approach our 125^th anniversary on August 11^th, I am reminded of the strength, resiliency, and longevity of this company. Through the peaks and valleys, Algoma consistently succeeds and maintains its reputation as the marine carrier of choice," concluded Mr. Ruhl.

Financial highlights include:

Domestic Dry-Bulk segment revenue decreased 18% to $103,931 compared to $126,584 in 2023, as lower volumes drove a 21% decrease in revenue days. Operating earnings decreased 51% to $15,924 compared to $32,806 in 2023.

Revenue for Product Tankers increased 20% to $33,600 compared to $28,046 in 2023, driven by higher rates on new vessels and an 8% increase in revenue days. The segment had an operating loss of $1,604 compared to earnings of $1,078 in 2023, reflecting higher costs to prepare the fleet for full deployment in the second half of 2024, including increased costs to bring one vessel into Canadian service and additional crew onboarding and training.

Ocean Self-Unloaders segment revenue decreased 9% to $42,818 compared to $47,120. Revenue for 2024 has returned to normal levels after 2023 revenues reflected a higher pro-rata share of the Pool as a result of unplanned outages affecting non-Algoma-owned vessels. Operating earnings decreased 21% to $6,361 compared to $8,003 in 2023.

Global Short Sea Shipping segment equity earnings increased 19% to $6,156 compared to $5,155 for the prior year. Higher earnings were driven by steady rates and an increase in vessels in the cement fleet. Earnings for 2024 include a $812 gain on the sale of a vessel.

During the first quarter of 2023, the Algoma Hansa and the Algonorth were sold, resulting in a $4,588 gain that is reflected in the 2023 year-to-date earnings.

In a statement, the company said, “Looking ahead in the Domestic Dry-Bulk segment, we expect a continued soft demand for de-icing salt for the balance of the year. Weaker prices for export iron ore and construction raw materials are also expected to continue to constrain cargo volumes. There are positive indicators that domestic iron ore volumes will improve and a strong seasonal increase in grain shipments is expected due to improved soil moisture levels creating the potential for a large 2024 grain crop, leading to the deployment of three additional vessels that are currently in temporary lay-up.

In the Ocean Self-Unloaders segment, vessel utilization is expected to improve for the second half of 2024 with substantially fewer dry-dockings compared to 2023. Volumes are expected to improve modestly for the remainder of the year. Two out of the three newbuild kamsarmax-based ocean self-unloader orders are scheduled to begin construction this year.”

In our Global Short Sea Shipping segment, we anticipate continued steady earnings from the cement fleet, as these assets are primarily employed on longer-term time charter contracts. The handy-size and mini-bulker fleets are expected to perform well for the remainder of the year and we do not foresee any negative impact on volumes and utilization from ongoing global economic and geopolitical issues.”