Oslo-listed liquefied natural gas (LNG) shipper Hoegh LNG reported third-quarter earnings below expectations on Wednesday and said its market could remain challenging for the next two to three years due to an oversupply of vessels.
Hoegh, which operates LNG carriers and regasification units, said its results were squeezed by one-off costs and start-up challenges for a floating regasification unit.
The firm made a loss before interest, taxes, depreciation and amortisation of $3.9 million, compared to a profit of $1.3 million a year ago, and below expectations for a $10.4 million profit. Its net loss widened to $16.3 million in the third quarter from a net loss of $2.8 million a year earlier.
"Close to 40 percent of the LNG carriers with delivery in 2014 do not have a contract, and the short term-market for LNG carriers is consequently expected to remain oversupplied until 2016-2017," the company said in a statement.
"The current order book for LNG carriers is 125 vessels, representing 35 percent of the world LNG carrier fleet, and approximately 25 percent of these LNG carriers are without a firm contract."
However, the market for regasification units looks better as only four uncommitted vessels are under order at yards around the world, while there are around 30 gas projects in the pipeline.
Hoegh, which recently agreed to operate regasification units in Lithuania and Egypt, said it was looking to order further regasification units over the next several years.