1 January–31 December 2017

Total income, Q4: SEK 193.8 (278.5) million
Full year 2017: SEK 827.5 (1038.2) million
EBITDA, Q4: SEK 10.1 (108.4) million
Full year 2017: SEK 51.3 (319.9) million
Result before tax, Q4: SEK –42.0 (33.5) million
Full year 2017: SEK –660.2 (56.9) million
Result per share after tax, Q4: SEK –0.88 (0.72)
Full year 2017: SEK –13.83 (1.46)

Events in the fourth quarter

ECO MR vessel chartered on a 50% basis with Stena Bulk.
Contract signed to extend ECO MR vessel chartered on a 50% basis with Stena Bulk. The contract is for one year.
Another quarter without any lost time injuries, adding up to four years without LTI.
The Board will propose to the forthcoming AGM a dividend of SEK 0 (0.5) per share.

Events after the end of the quarter

Another two MR (ECO) vessels chartered in.

Key ratios

	Q4 (Oct–Dec)		Full year
	2017	2016	2017	2016
Total income, SEK million	193.8	278.5	827.5	1,038.2
EBITDA, SEK million	10.1	108.4	51.3	319.9
EBITDA, USD million	1.2	12.2	6.0	37.4
Operating result, SEK million	–32.9	47.5	–624.6	82.7
Result excluding impairment and tax, SEK million	–42.0	33.5	–186.5	56.9
Result before tax, SEK million	–42.0	33.5	–660.2	56.9
Result after tax, SEK million	–42.0	34.3	–660.2	69.5
Equity ratio, %	41	50	41	50
Return on equity, %	–41.7	3.6	–41.7	3.6
Available liquid funds, including unutilised credit facilities, SEK million	335.5	507.4	335.5	507.4
Result per share after tax, SEK	–0.88	0.72	–13.83	1.46
Equity per share, SEK	25.60	43.78	25.60	43.78
Lost-time injuries	0	0	0	0

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Kim Ullman

CEO, Concordia Maritime

Loss in 2017, but positive market outlook for the second half of 2018

As expected, 2017 was a weak year – for the market and for Concordia Maritime. The combination of reduced shipping volumes due to OPEC’s output cuts and extensive ship deliveries contributed to an imbalance – which in turn resulted in low rates in all tanker market segments.

For the full year 2017, result before tax excluding impairment was SEK –186.5 (56.9) million and EBITDA amounted to SEK 51.3 (319.9) million, corresponding to USD 6.0 (37.4) million. Result before tax for the fourth quarter amounted to SEK –42.0 (33.5) million. EBITDA was SEK 10.1 (108.4) million, corresponding to USD 1.2 (12.2) million.

Active work on the fleet

For our part, the year that has just ended was very much focused on adapting and positioning the fleet in line with the weak market, but also preparing for the upturn that we believe is coming in 2018. This work continued during the quarter with the chartering in of another MR (ECO) vessel. In January, after the end of the quarter, we then signed contracts for a further two MR (ECO) vessels. In parallel with the new contracts, we also extended the contracts for the currently chartered MR (ECO) vessels.

We have continued to identify niche trades for our P-MAX vessels, where their unique properties are particularly beneficial. This strategy contributed to their income for the year being about 25 percent higher than the market average in the MR segment. Six of the ten P-MAX tankers are employed on contracts up to and including summer 2018.

No incidents and continued reduction of environmental impact

As we look back on the year, it is pleasing to note that 2017 was another year in which there were no serious incidents or accidents on any of our vessels. We have also continued our efforts to reduce vessel-related environmental impacts. The major focus here is on reducing emissions into the sea and air. Overall carbon dioxide emissions fell by more than 8,220 mt and sulphur dioxide emissions by 68 mt in 2017.

Market outlook 2018

One of the main reasons for the weak market in recent years is an imbalance in terms of deliveries of new tankers and lower demand for transport of oil and oil products – as a result of OPEC’s reduced production and higher inventory levels in the consuming countries. Several factors point to a better balance during 2018.

Increased oil production and high demand. The return to normal production rates for OPEC and other oil-producing countries is expected to contribute to increased transport needs during the year. At the same time, global oil consumption is expected to increase by about 1.4 million barrels per day. All in all, this provides good incentives for increased demand for tanker transport with effect from summer 2018.
Reduced stock levels. Among the main reasons for the weak market in recent years are the extremely high stock levels that were built up during in 2015 and half of 2016. Use of stored oil then led to lower demand for tanker transportation. Stocks were also high in the beginning of 2017, but have fallen sharply since spring, as a result of OPEC’s output cuts. They are expected to have returned to normal levels by mid-2018.
Lower growth in the fleet. On the supply side, order books are relatively low and net growth in new MR vessels during 2018 is expected to be just 2 percent, compared with about 4.5 percent in 2017. In addition, even tougher environmental requirements, such as the Ballast Water Convention and the new Sulphur Directive on sulphur limits by 2020, will increase incentives for phasing out and scrapping older tankers.

Taking all this into account, we expect increased demand for tanker transport and a progressively more balanced and stronger market during the second half of 2018.