Norden feels heat

Shares in Norden plunged on Wednesday as the Danish owner’s annual profit fell well short of expectations and a major shareholder readies a mass sell off.

The tanker and bulker outfit also warned of possible charter defaults and at least one analyst expressed scepticism about the Dane’s valuation of its fleet.

Investors were also braced for an “extremely challenging” dry-bulk market going forward while earnings for 2009 are set to come in greatly lower than last year’s sum.

Figures correct as at time of writing.

Although Norden’s net profit was “the best to date”, it still fell shy of the company’s most recent estimation in November by between about $33m and $93m.

This is likely to have been a contributory factor in the owner’s stock plunging around 17% in early trading on Wednesday to strike and early lead in the TradeWinds Shipping Index list of ‘Worst Performers’ (click here for more updated stock figures).

Shares could also have been affected by news that the Rasmussen group of Norway will sell off nearly half of its shares in Norden which “constitute an overvweight” of the Norwegian's total assets (click here to read related article in full).

Norden's fourth quarter weighed in with a negative net sum of $9.9m which went wildly against the consensus expectation of a $58m profit.

Norden also booked losses on charter defaults with one counterparty going bankrupt, a situation which will continue to have financial implications in the current year.

One Norway-based analyst commented: “We have previously highlighted the risk of counterparty failures in Norden, and continue to view Norden’s business model as highly vulnerable to counterparty risk.”

The analyst was also sceptical about how Norden arrived at its net asset value (NAV). Norden said its NAV – which includes charters and vessel purchase options - at the year’s end stood at DKK 287 per share, a 53% drop from the figure at the end of 2007. This was due to the “plunging dry-cargo market”, Norden said.

“We note that Norden in this estimate value a capesize at approximately $75m,” the analyst commented in a market note on Tuesday.

“This value includes charter contracts, but is still considerably higher than current prices of $48m for a five year old.

“We thus believe there is a lag in Norden’s reported theoretical NAV, and is not reflecting current values.”

For its part Norden said its valuations were "based on assessments by three independent brokers and sales agreements".

Norden also valued its owned post-panamaxes at around $46.5m each, its panamaxes at $32.75m each, handyamxes at $31.29m and handysizes at $24.67m.

For tankers it valued its owned medium-range (MR) units at $47.33m a piece and handysizes at $42.25m each.

Annual net profit hit $707.83m from sales of $4.25bn with profit from ship disposals of around $299m buoying the bottom line as costs ballooned (click here to read related article in full) .

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