If you live by the sword, chances are pretty good that you will die by the sword.
During the third quarter of this year, shipping rates were not especially strong. In fact, the average spot rate for Suezmax ships during the quarter (as reported by Imarex, a freight derivative exchange) was all of $24,677 -- well below the $32,654 average seen in the second quarter of this year and also well below the year-ago level of $55,742 per day.
As you might imagine, then, Nordic American's financial performance was not quite as robust as it has been. Net voyage revenue was down 20% from the prior quarter (though up 11% annually), and net income was down more than half on both a sequential and annual comparison. As a result, the dividend for the quarter will be $0.60 per share -- the lowest level in almost two full years.
On a more positive note, rates are picking up. As I suggested might be the case after Hurricane Katrina hit, tanker rates picked up in September and the Imarex Suezmax spot rate on Oct. 7 was reportedly $53,033. Seasonally higher rates, coupled with the fact that Nordic American will be bringing a newly acquired tanker into service in November, should make for a better fourth quarter. Then again, spot rates can be fickle and volatile, so we won't know until we know.
There is no shortage of tanker plays in the market, ranging from large players like TeekayShipping
For more Takes from the high seas:
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).