HAMILTON, Bermuda - SFL Corporation Ltd. (NYSE: NYSE:SFL), a global maritime asset company, has entered into new 5-year charter agreements for four 8,700 TEU container vessels, a move that is set to increase the company’s fixed rate charter backlog by approximately $240 million. The vessels, which have been under charter to A.P. Moller - Maersk since their construction in 2014-2015, were approaching the end of their current charter period set to expire in 2025.
The new charters will not only extend the employment of the vessels but also involve enhancements to increase their cargo capacity to 9,500 TEU and introduce new energy efficiency features. The total investment for these upgrades is estimated at around $20 million. These enhancements aim to optimize operational performance and reduce emissions, reflecting a collaborative effort with Maersk to benefit both parties and improve the vessels' marketability post-2030.
SFL's CEO, Ole B. Hjertaker, commented on the deal, emphasizing the customer-focused approach and the long-term benefits of having more attractive vessels for future employment. This agreement follows a series of acquisitions and charter extensions earlier in the year that have cumulatively added about $2 billion to SFL's fixed rate charter backlog.
SFL Corporation, known for its diversified fleet and consistent dividend payments since its NYSE listing in 2004, has a history of strategic growth and a portfolio that includes tankers, bulkers, container vessels, car carriers, and offshore drilling rigs. These new charters reinforce the company's commitment to maintaining a strong presence in the maritime industry and providing steady long-term returns.
In other recent news, SFL Corporation has made significant strides in its growth and financial performance. The company announced robust Q1 2024 results, with total charter revenues reaching $236 million, a 13% increase from the previous quarter. The company's EBITDA equivalent cash flow rose to approximately $152 million, and net income was reported at around $45 million. Additionally, SFL Corporation raised its quarterly dividend to $0.27 per share and noted a substantial charter backlog valued at approximately $3.6 billion.
In line with its growth strategy, SFL Corporation plans to add five new 16,800 TEU container vessels equipped with LNG dual-fuel propulsion to its fleet, representing an investment of about $1 billion. The vessels, scheduled for delivery in 2028, will be chartered for a minimum of 10 years to a leading liner company, contributing roughly $1.2 billion to SFL's charter backlog.
The company also recently acquired three new LR2 product tankers and two dual-fuel chemical carriers, and extended charters with Maersk Line.
The company's future outlook includes a focus on increasing dividends over time, exploring investment opportunities, and seeking long-term employment opportunities in the tanker market with robust counterparties.
InvestingPro Insights
As SFL Corporation Ltd. (NYSE: SFL) solidifies its position in the maritime industry with new charter agreements and vessel enhancements, key financial metrics and expert analysis from InvestingPro offer additional insights into the company's performance and potential. SFL's impressive gross profit margin stands at 61.87% for the last twelve months as of Q1 2024, showcasing the company's ability to manage its cost of sales effectively and sustain profitability. This is a significant figure that reflects the company's operational efficiency and could be a reassuring factor for investors looking at the long-term value of their investments.
Moreover, the company's commitment to shareholder returns is evident through its consistent dividend payments over the last 21 years, with a notable dividend yield of 7.92% as of the most recent data. This steady income stream is particularly attractive to income-focused investors and speaks to SFL's financial stability and disciplined capital allocation strategy.
InvestingPro Tips highlight that while SFL operates with a considerable debt burden, which could be a point of caution for risk-averse investors, the company's stock generally trades with low price volatility, suggesting a level of market stability. For those looking to delve deeper into SFL's financial health and future prospects, InvestingPro provides a comprehensive array of additional tips. As of now, there are 11 more InvestingPro Tips available, which can be accessed through InvestingPro's platform for a more thorough analysis.
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