Management Discussion and Analysis Report
Crude Segment in the Crude segment, Asyad Shipping ' s performance remained aligned with the budgeted expectations. This outcome was mainly restrained by higher-than-anticipated financing costs and the ongoing impact of rising interest rates on loans. Asyad shipping crude desk chartered in 2 Suezmax and 1 Aframax at competitive rates and time charter-out the ships with a margin as a measure to mitigate the global market volatility, geopolitical tensions, and fluctuations in oil prices. The total time chartered-in fleet is 4 Suezmax’s, 2 Aframax’s and all the time chartered-in fleet was time chartered-out to secure revenue. Additionally, Asyad Shipping and Shell exercised the option to extend the Contract of Affreightment (COA) for 12 months until September 2025, with plans to work on renewing the COA in 2025. Asyad Shipping also signed a Letter of Intent (LOI) with Shell to collaborate on future expansion, particularly for VLCCs and coated Aframax vessels. Furthermore, in December 2023, 3 VLCCs (Fida, Saham, and Sifah) were sold and delivered to Sinokor, with Asyad Shipping now overseeing their technical management on Sinokor ' s behalf. The contract stipulates a minimum duration of one year but does not specify an expiry date. This arrangement provides Asyad Shipping with a steady stream of management fees and strengthens its relationship with Sinokor, enhancing its long-term growth potential in the market. Dry Bulk Segment The Dry Bulk segment demonstrated strong resilience in 2024, while the results are slightly below the initial budgeted forecast, it is important to note that the shortfall was largely due to the delay in the planned acquisition of five dry bulk vessels, which had been planned to generate additional revenue. A sudden surge in asset prices led to the cancellation of this acquisition, which in turn had an impact on the expected revenue targets. Despite this setback, the segment still managed to achieve a solid performance, benefiting from the high performance of its chartered ships. Key strategic initiatives have positioned Asyad Shipping for long-term success. A notable achievement was the delivery of the long-term (5 year) chartered Kamsarmax vessel, MV.Ain Al Kasfa, in July, which strengthened the fleet and boosted operational capabilities. Additionally, the Singapore office continued effectively to manage an average of 25 ships, including two long- term chartered ships, ensuring smooth operations and strong market presence. The renewal of Bahri COA was also instrumental in reinforcing Asyad Shipping ' s market position and ensuring stability. These efforts have set a solid foundation for sustaining growth and progress in the Dry Bulk segment, with a positive outlook for the future.
LNG Segment The LNG segment concluded 2024 with a strong bottom-line contribution, which slightly falling short of the budgeted target by just 5.52%, still represents a commendable performance. The slight variance from the budget is primarily attributed to the inherent challenges of relying on the Consumer Price Index (CPI) for budget estimations, as the CPI is based on forecasts that are naturally subject to fluctuations. While this minor discrepancy reflects the complexities involved in projecting economic variables, it does not overshadow the segment’s overall strong financial results. Despite this, the segment delivered strong performance in terms of its operational capabilities and contract renewals. One significant milestone was the 6-month extension of the Ibri LNG contract with Gunvor, which came with an increased rate of 15.79%, as well as The Adam LNG contract extension with Gunvor for a 4-year firm period plus +1 +1-year options at a lucrative rate. Asyad Shipping also finalized the Time-Charter Party with Oman LNG in July 2024, for the time charter of the two new build LNG vessels for 8.5 years commencing from delivery. Furthermore, the Sohar LNG contract is in the process of being extended with ADNOC L&S for a 9-month period starting in September 2025. The LNG segment continues to provide a stable source of revenue and remains a vital component of Asyad Shipping’s diversified portfolio. Asyad Line 2024 was a significant year for Asyad Line (ASL), marked by a strong financial performance despite operational challenges. ASL achieved a strong throughput performance in 2024, surpassing the budgeted throughput by 19.2%. The company concluded the year exceeding the projected net profit by an impressive 131.2%. This performance was achieved through a combination of strategic actions aimed at mitigating the losses from 2023. Vessels were redelivered, and services were terminated to stem further losses, while the Red Sea instability Caused disruption in maritime traffic, impacting asset prices and ocean freight rates, though not at the levels seen during the COVID-19 pandemic. In 2024, ASL commenced operations with a fleet of 9 vessels, but by the end of the year, the fleet was reduced to 5 vessels, with only 3 remaining under ASL ' s direct control and operation. This significant reduction in carrying capacity led to a decrease in the volume of TEUs carried, but the company achieved a 5% increase in revenue compared to 2023, excluding income from chartered vessels. The improvement was driven by a strategic shift in cargo composition and a focus on new markets. ASL increased its Carrier Operated Containers (COC) from 27% in 2023 to 52% in 2024, while also boosting the average COC rate by 84% compared to the previous year. A more regular and robust presence in China, Thailand, Vietnam, and Indonesia, along with the restart of the Red Sea service, contributed significantly to the much-improved results in 2024. ASL also benefited from two vessels chartered out to strong counterparts at favorable rates: Wadi Bani Khalid continued its charter to ONE, and Gregos was fixed mid-year to CMA CGM.
20 | Asyad Shipping Annual Report 2024
Asyad Shipping Annual Report 2024 | 21
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