Economies of scale have helped Bermudian-based Triton International Ltd benefit from stronger than expected demand for shipping containers.
In the second quarter its net income was $45.7 million, or 62 cents per share, compared with $34.6 million for the first three months of the year.
The company, which a year ago was formed by the merger of Triton Container International and TAL International Group, dominates the shipping container market.
During the second quarter it saw a 1.3 per cent increase in utilisation of its containers, to 97.1 per cent, and that figure has edged slightly higher since the end of June.
Stronger than expected global containerised trade growth this year has boosted revenue, and that trend is expected to continue during the third quarter.
Since Triton’s merger last July it has purchased 1.1 million TEU of new and sale-leaseback containers, enhancing its already considerable market reach at a time when some shipping lines and leasing companies have been unable to respond due to lingering financial challenges.
The company generated a $9.6 million gain from sales of used containers in the three months to the end of June. The market for used containers has rebounded this year in tandem with rising demand for container usage.
Triton’s adjusted pre-tax income was $58.8 million, up from $42.7 million in the first quarter, while adjusted net income was $47 million. Total leasing revenue for the quarter was $281.9 million, up about $16 million on the first three months of the year.
Brian Sondey, chief executive officer of Triton, said: “Market conditions remained strong in the second quarter and we continued to benefit from our industry-leading scale, cost structure, and operational capabilities. Our customers are indicating that global containerised trade growth has been stronger than expected this year, and industry forecasters have generally increased their growth projections for 2017 into the range of 5 per cent.
“In addition, the inventory of new and used containers remains extremely tight, especially for dry containers. New dry container prices have been fairly stable since March in the range of $2,100 to $2,200 for a 20-foot dry container, and market leasing rates for dry containers remain above our portfolio average rates. Used dry container sale prices continued to increase in the second quarter and are now above our accounting residual values.”
Mr Sondey said Triton’s financial and operational strength had allowed it to fill a supply gap in the market, mentioning its purchase of 1.1 million TEU of new and leaseback containers.
“Our ability to quickly and aggressively invest to meet the industry’s container needs plainly demonstrates to customers that Triton is uniquely capable of managing their most critical container requirements.”
Mr Sondey expects market condition to remain favourable at least until the end of the year, with the gap between supply and demand for containers remaining tight.
Disclosure: the author owns shares in Triton International.