But if I knew how to manage my portfolio safer and smarter than most hedge fund managers, I could realistically grow my wealth.
Must-know: Shipping industry conditions and prospects
Looking ahead, market prospects appear to be positive. A record grains season is expected. Also, the corn crop is expected to reach one billion tons. This will increase ship trade demand. Recent political developments in Indonesia will likely resume Safe Bulkers’ non-ferrous metal exports. This will restore trading activity in the Pacific.
For Panamax, the market is following a similar pattern as 2013. The average YTD charter stands at ~$8,100. It was $7,500 for the same period in 2013. Safe Bulkers is following lean operations and a low breakeven point. As a result, it will be the first company to make money when the market recovers.
The capital expenditures for the newly acquired 13 newbuild vessels—to be delivered through 2017—amounted to $351.9 million. Of the total amount, $37.7 million was scheduled to be paid in 2014, $162.6 million in 2015, $130.7 million in 2016, and $20.9 million in 2017.
Safe Bulkers’ management believes that it doesn’t want to over leverage the company. It wants to maintain a controlled debt level of ~50%. Also, it doesn’t want to issue shares at this point and dilute shareholders.
Safe Bulkers’ financing policy indicates comfortable leverage. It’s in compliance with financial covenants. It has a strong balance sheet that ensures financial flexibility.
Net income for 2Q14 recorded a significant slump of 91% to $2.1 million, or $0.01 per share—compared to $24.6 million, or $0.32 per share, in 2Q13. Earnings before interest, taxes, depreciation, and amortization (or EBITDA) for the quarter also plunged to $15.1 million from $36.1 million during the same quarter last year.
During the quarter, Safe Bulkers operated 31 vessels with a time charter equivalent rate of $11,642—compared to 26 vessels with time charter equivalent rate of $17,116 during 2Q13. The weighted average time charter equivalent of the Baltic Panamax (or BPI) and Baltic Capesize (or BCI) indices stood at $6,846 for 2Q14.
During 2013, ~21.7 million deadweight tons (or dwt) were scrapped. In the first half of 2014, ~7.4 million tons were scrapped—this is ~27% of the newbuild vessels that entered the market this year.
Safe Bulkers Inc. is a holding company. Its provides marine dry bulk transportation services internationally. It transports bulk cargoes—particularly coal, grain, and iron ore—along worldwide shipping routes.
July new home sales, as reported by the Census Bureau and the Department of Housing and Urban Development, decreased 2.4% from June.
The 7.5% year-over-year gain resembles the gains we saw during the bubble years. Month-over-month basis, the increase was only 1.0%—still pretty decent.
The National Association of Realtors (or NAR) reports existing home sales once a month. The seasonally adjusted number reports completed transactions in single-family homes, condominiums, townhomes, and co-ops.
Analysts use the information to anticipate the future production for homebuilders, the future demand for raw materials, and labor costs.
Homebuilder earnings season is over. The builders generally increased their top lines by raising prices, not by selling more units. If anything, a typical report would be a 12% increase in ASPs (average selling prices) and a 10% drop in deliveries.
BHP’s outlook seems to be positive considering the productivity and cost control measures that the company has initiated. With fewer assets to manage, BHP Billiton (BHP) should be able to improve productivity quicker. The company is targeting at least $3.5 billion of sustainable, productivity-led gains by the end of fiscal year 2017
BHP Billiton (BHP) is a major worldwide producer of aluminium, manganese alloy, and nickel. Alumina production increased by 6%. Aluminium production was flat year-over-year (or YoY). Manganese ore production declined by 3%. Nickel production declined by 7% YoY.
Copper production increased by a modest 2% year-over-year (or YoY) to 1.7 million tons. Record mining rates were achieved at Olympic Dam—increasing by 11% YoY. The company predicts that copper production will increase by 5% to 1.8 million tons in FY15.
Metallurgical coal production increased by 20% year-over-year (or YoY) in fiscal year 2014 (or FY14). This record production includes the first production from Caval Ridge’s hard coking coal project. The project delivered three months ahead of schedule. It was also under budget.
Total petroleum production increased by 4% in fiscal year 2014 (or FY14). However, the highlight was the increase in liquids production. It was supported by a 73% increase in Onshore U.S. liquid volumes and nearly doubled production at Atlantis. This is important to note because liquid volumes are more profitable.
Iron ore is BHP’s largest division. It contributes to ~32% of revenues and 52% of earnings before interest and taxes (or EBIT) for fiscal year 2014 (or FY14). Western Australian Iron Ore (or WAIO) achieved its14th consecutive annual production record with 204 million tons.