Golden Ocean Group Ltd (NASDAQ:GOGL) Still Afloat After Earnings Call

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Golden Ocean Group Ltd (NASDAQ:GOGL) shares advanced 13.03% to $0.76 on Friday, recovering from its selloff after the company’s earnings call.

Golden Ocean Group Ltd (NASDAQ:GOGL) shares are trading in a 52-week range of $0.51 to $4.63. The company has a market cap of $464.90 million at 535.14 million shares outstanding. It reported a net loss of $68.2 million for the first quarter of the year, comprised of  $26.7 million in mark-to-market losses on impairments, and other one-offs.

According to CFO Per Heiberg, these large impairments aren’t expected to recur in coming quarters so there is limited downside for Golden Ocean Group Ltd (NASDAQ:GOGL) moving forward. For the first quarter, net revenue is down by $14.7 million compared to the December 2015 quarter, influenced by sales of various vessels.

CEO Birgitte Vartdal also explained that the first quarter was a tough one for the industry, primarily due to an oversupplied market, which was the worst in the Baltic dry index history. Vartdal discussed the impact of weakening global growth to steel demand, showing a graph of 2015 GDP growth when steel consumption was flat in comparison to negative demand at lower growth levels.

Weaker revenues were also attributed to lower transportation of iron ore, which had a sharp drop at the end of the year. For some analysts, steel and iron ore demand are expected to stay at their current levels, pending a pickup in global demand and growth. In particular, the company is dependent on demand from China, which is one of the top consumers of raw materials. In addition, local production of these steel products is picking up so there’s less need for shipments.

Golden Ocean Group Limited, formerly Knightsbridge Shipping Limited, is an international dry bulk shipping company engaged in the shipping of dry bulk cargo.  It owns and operates a fleet of dry bulk carrier vessels shipping products like ores, coal, grains and fertilizers.

 

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