April 2021 | Profit sharing is always mentioned in connection with the Green Ship Token of the Hamburg shipping company Vogemann, but what is the real potential behind it? In our indicative break-even analysis we calculate how quickly such profit sharing can be achieved and how lucrative it can turn out to be.
Profit sharing as an attractive variable – and clear motivation
Profit sharing is a real benefit that comes on top of the 8 percent interest that the Green Ship Token already offers. This is not only due to the additional return, but also to the additional motivation of the Vogemann management to act profit-oriented: In case of corresponding economic success, the profits will be divided equally between the issuer and the investors. In other words, if Vogemann earns 12 percent, the company shares the remaining 4 percent with its investors after deducting the interest of 8 percent.What management would not try to achieve the best possible result in such a constellation?
Basis 1: The cost structure
Let us start with the costs incurred in connection with the operation of a ship – in this case: a Handysize Bulker. We assume a commissioning period of four years. A ship will of course sail for longer, but in this case four years is a realistic period, as Vogemann is expected to sell the ships at a profit after this period.
This includes the
- Operational Expenditures (Opex), i.e. running costs for fuel, personnel, energy, etc.
- Inspection costs (Trockendock): A ship also has to be inspected regularly. We have converted these costs.
- Administration: This includes admin and management costs.
These costs vary annually.
In addition, there are costs from financing:
- Interest (Zinsen)
- Loan repayment (Kreditilgung)
- Commission
- Dividend payment (Dividendenzahlung)
Except for the expenses for redemption and dividend payment, these costs also vary.
Basis 2: The charter rates
We contrast this with the income, i.e. the charter rates. We assume that charter rates increase annually, starting at 12,000 US dollars/day up to 15,000 US dollars/day. For orientation: The charter rates are currently at 16,300 US dollars and have increased by 60 percent since January 2021 (as of 22 April 2021). So we are working with realistic figures here.
As can be seen from the chart, break-even is already reached in the first year at 11,308 US dollars. The share that flows into profit sharing is therefore 692 US dollars.
This changes exponentially in the coming years as charter rates increase. In year 4, with a projected charter of US$15,000, we are already at a share of US$3,513.
How do the assumptions of rising charter rates come about?
There are three main reasons for this:
- Bulkers transport commodities that are needed worldwide. Even in times of pandemics, forest products, grain, steel, ores & Co are needed. So we see a demand here that is by no means declining and will very probably increase as a result of the rising economic growth in the manufacturing industry.
- Environmentally friendly bulkers like the Green Dolphins from Vogemann already achieve significantly higher charter rates than the vast majority of corresponding ships. They save 30 to 50 percent fuel compared to an average bulker of their class. This leads to an annual cost reduction of around 600,000 US dollars. Moreover, due to their low emission values, they can travel at undiminished speed, whereas ships with worse initial values have to massively reduce their speed in order to save CO2.
- The third reason is based on supply and demand: more than 570 of the world’s total of around 3,800 Handysize bulkers in the global fleet are 20 years old and older. They will be scrapped in the coming years. Another 1,400 in the 10 to 20 year age categories are also wobbly candidates. They would have to be urgently refitted to meet the upcoming environmental protection requirements of the International Maritime Organisation. Is that profitable? Hardly. There is a threat of a shortage on the market, which will not be compensated by far by the low orders for newbuildings.
You see: There are numerous reasons to invest in the green future of shipping. Secure your interest and your share of profit sharing today! Investing in the Green Ship Token is possible from as little as 1,000 US dollars.
