NAT CEO: Makes No Sense to Order New Ships at the Time

first_imgzoom Nordic American Tankers (NAT) will buy new vessels only when ‘the time is right’, the company’s Chairman & CEO, Herbjørn Hansson said, adding that NAT was constantly assessing vessels offered on the market.“Our management does not have a fee incentive to grow indiscriminately. Some companies engage in such practices but at NAT we have always felt such conduct causes a misalignment between management and shareholders,” Hansson explained.According to Hansson, NAT has a cash break-even level of less than $12,000 a day per ship, meaning that the company is highly cost efficient and that it solid balance sheet keeps interest payments to a minimum.“We are not concerned with discussions surrounding the age of some of our vessels. We are not in the business of constantly acquiring shiny new toys, because that really is not in the interest of shareholders. It is the difference between owning and maintaining a durable and dependable car and buying a new car every year just for the sake of showing off the latest model to your neighbors. Making money and generating returns, however, is what we always focus on,” NAT’s CEO adds.As explained, NAT could sell two or three older tankers and use the proceeds to buy a new shiny one, which may earn a little more in the spot market. However, the ending result is smaller fleet and less profit.“There is a point where the vessels become too costly to maintain or unattractive to customers, but that is not the reality we are dealing with. When considering an expansion, we always consider the expected lifetime return or unlevered IRR (Internal Rate of Return) of that ship. Sometimes markets are such that it would make sense to order a new ship from a shipyard, but that is not the situation we face today,” he concluded.NAT’s current fleet counts 26 vessels, including two newbuildings to be delivered in August this year and January 2017. 2015 was a great year for NAT, which claims it achieved the highest operating cash flow since it started in 1997, totaling in USD 212 million.last_img