Good day, ladies and gentlemen, and welcome to the Stott Nielsen Limited Fourth Quarter twenty sixteen Results Presentation and Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Niels Stott Nielsen. Please go ahead.
Good afternoon and good morning. Thank you for joining us here from Oslo for our fourth quarter's earnings release, fourth quarter twenty sixteen, results presentation. I will be referring to our presentation, which is now on our website. Together with me, as always, Jan Engelachten, CFO. We also have Jens Grunenhege, Senior Vice President of Finance and Krista Van Thiesen, Assistant General Counsel for Stoltbinsen.
Moving on to the agenda. We will go through the fourth quarter highlights, then I will go through each of the divisions. Jan will take you through financials, and then we will open up at the end for question and answers. Then Then if we move to Page five, the fourth quarter highlights. The operating profit for Stolt Tankers came in at 30.4%, that's down from 31,400,000.0 as the chemical tanker market weakened.
The JO acquisition was also closed in the fourth quarter on November 23. The terminal operating profit came in at $14,000,000 compared to $14,800,000 Results declined mainly due to lower equity income from our joint ventures and the number of onetime one off costs, and that was also partly offset by lower A and G from cost reduction initiatives. Lesser surprise from Stolt Tank Containers, the operating profit up to 15.1% compared to 10.7% in the previous quarter, reflecting a higher profit margin due to lower ocean freight and lower amount of repositionings. And also here, we had lower A and G from cost reduction initiatives. Stolt Sea Farm's operating profit before the fair value adjustment of inventories was $2,100,000 and that's up from $1,900,000 from the previous quarter, and that is a result of the increase in turbine prices.
Corporate and other operating loss, 10,000,000 compared to $6,700,000 and that is due to a one off cost of the transaction cost related of $2,200,000 related to the J O acquisition and also some provisions on some receivables at installed bitumen. That gave us a net profit for the quarter of $22,800,000 which compared to 22,200,000.0 very consistent with the previous quarter. Moving then on to Page six, where we do the net profit variances between the third quarter and the fourth quarter. In the fourth in the third quarter, we had 22,200,000.0 lower operating profit from tankers, lower terminal operating profit of 800,000.0 higher tank container of 4,400,000.0 higher from Stolt Sea Farm of almost $1,000,000 accrual for the doubtful receivable for Stolt Bitumen, GEO acquisition costs of $2,200,000 lower corporate costs and others of $1,600,000 compared to previous quarter, which brings us to $22,800,000 for the fourth quarter. Then moving on to Page seven, Stolt Tankers.
The operating revenue decreased by 2.5% from previous quarter, and that is mainly due to a reduction in deep sea volume and also freight rates as the market continued to soften. The average deep sea CUA rate invoiced increased by 1.6 due to cargo and trade mix. Spot rates saw a large drop of 21% in the quarter. Compared with prior quarter, 13% was due to weakening in the spot market and 8% was due to interregional short haul position fixtures demanding lower spot rates. We will talk more about the tanker market later.
The COAs that was renewed during the quarter was down by 4.1%. Now I repeat, this is on the contracts that we renewed. We lost some contracts, which we then decided not to defend because of dramatic competition from some of our competitors. But the contracts that we did renew, an average of 4.1% down. Moving to the operating profit variance between the third and the fourth quarter.
In the third quarter, we had $31,400,000 operating profit. We had a lower trading result of 11,600,000.0 Now we had the lower bunker cost, net of bunker surcharge, even though the bunker price has gone up, the because of the lower surcharge, so we didn't give as much money back to the customer because of the higher bunker price. Then we had a gain on the hedge of $3,900,000 higher than previous quarter, lower M and R of 2,400,000.0 gain on sale of assets of 2,100,000.0 lower depreciation of 1,300,000.0 and then lower equity income from our joint ventures of $1,000,000 and the lower A and G of $500,000 which brings us to $30,400,000 for the quarter. As I mentioned earlier, the even though the bunker prices, the average price of IFO consumed increased to $260 per ton, up from $230 in the third quarter, And the average price that we purchased increased to two seventy three tons from two forty five tons in the third quarter. As you can see, the net bunker cost our total bunker cost actually went down for the quarter by $1,900,000 and that is because the surcharge that we have been or the money that we have been given back under the bunker clauses is less this quarter as a result of the bunker prices going up.
We have a realized gain in the quarter of 2,400,000.0. For the fiscal year, we had a realized gain of EUR 2,400,000.0, and we have also an unrealized gain of EUR 5,400,000.0 of what is remaining of the paper hedge that we have. If we move to Page 10, STJAS or Stolt Tankers Joint Service Sailed in Time Charter Index, you can see here the dramatic drop in the last in the fourth quarter as result of the yes, lower freight rates. Deep sea market spot rate development, Page 11. Since the peak of the market, which was in late twenty fifteen, the spot specialty freight rates have dropped almost 20%, while the commodity rates have dropped 30%.
So a significant drop in the market. This is all very much influenced by the weak MR or product tank product market. When swing tonnage in that segment goes from carrying clean procurement products and coming into and carry commodity chemicals. The MR market has recovered from the fourth quarter flow, but the MR spot earnings remain lower than the chemical earnings. And therefore, we will think that tonnage will remain in our segment.
Spot freight rates appear to have bottomed out, but the significant chemical order book and the uncertainty of the MR market presents a challenge for a recovery in 2017. So we are repeating what we have said for several quarters is that we believe that chemical tanker market in 2017 will be a challenge because of the ships coming into our segment, the newbuildings, plus the MR market being under pressure will also influence our market. With few ships ordered recently and additional chemical production plants coming online in The U. S. And The Middle East, we expect or we hope that demand will catch up with supply in 2018.
And here, you can see what is represented in the red line is actually our spot rates. This is not the market, but this is what we have achieved. And you can see that in the fourth quarter, we saw a dramatic decline. And what I've said earlier is that the reason we made money in 2015 and also in 2016 was not really driven by increased volume increased freight rates, but it was driven by lower bunker prices, which is reflected here in the blue line. And in a perfect market, when the bunker prices go down, the spot market should, in reality, also go down.
But we didn't see that, and that's why we enjoyed a good market in 2015 and 2016. And I think that was very much driven by the customers were quite happy under our COAs when they received the surcharge, when they got the compensated under the bunker clause. But eventually, the market caught up. And now I see that the spot rates have declined more in line with what we see with the bunker prices. Our CEOA portfolio remains at 76%, which protects us from the impact of short term swings in the spot market.
Low spot rate ratio allows us to be more selective on the spot cargoes that we take on. But however, fourth quarter impacted by short haul repositioning fixtures at low spot rates. So in a weaker market with lower volume, you need to be more aggressive and you need to reposition your ship, unfortunately. And to be able to get any cargo cargo to reposition a ship to load the COA, for example, you need to be aggressive with the spot rates, and that was what happened in the fourth quarter. The spot market weakens thus the spot market weakness does impact the COA rates negotiations, but the change in COA rates is typically less than the change in spot rates.
So we are seeing even though the spot rates have dramatically declined, the rates that the COA renewals that we did, we had on average a four a little over 4% reduction in our COA rates. On Page 13, chemical tanker fleet and order book for the fourth quarter. The outstanding in our order book is now at 20.5 of existing fleet, out of which stainless steel tonnage accounts for 20.2%. So basically, of the tonnage remaining to be delivered is stainless steel tonnage. And this, again, is what we've been talking about.
There's a lot of tonnage coming in 2017, but a significant drop in 2018. So we are seeing that the volume under the contracts being nominated under the contracts are healthy. They are well, we are actually seeing a stop the fall in the spot rates. We're seeing increased activity. So the beginning of 2017 looks healthy.
However, the uncertainty or the impact of this order book being delivered in 2017 is, we believe, going to put a bit of pressure in this segment. The newbuildings. We have two ships that have been of the ships that we ordered from Hudong have been delivered. Then we have Stolt Integrity, which will be delivered in the first quarter of twenty seventeen. Then we have two ships in the second quarter and the last ship from that series in the third quarter of twenty seventeen.
We are fairly certain that, that timing will remain. Then after the acquisition of J. O, they have a joint venture with TRM. TRM sold their 50% stake to J. O.
Invest. So we have a joint fifty-fifty joint venture with J. O. Invest. And those that's eight ships, out of which two have been delivered.
This joint venture is fully financed, which Jan will talk about. We will have one ship in the first quarter, one in the second quarter, two in the third quarter and then the remaining two in the first quarter of twenty eighteen. JO Tanker update on integration. As I said, closing happened at the November. The transaction encompasses most of the JO organization, including four offices, 13 chemical tankers, out of which Stolt already had six of them on time charter.
And then it's the 50% of the joint venture, which owns the eight newbuildings that I just talked about. We estimate that the synergies are actually better than what we estimated when we did the investment decision, of approximately $8,000,000 per year, expected from savings on A and G through reduced headcounts and office closure and also through the IT, insurance, purchasing and operational efficiencies, etcetera.
The
integration process is progressing very well. Change of vessel legal ownership structure, flag and name change is ongoing, expected the completion in the second quarter of 'seventeen. The refinancing of JL debt progressing in line with flag and ownership change. I think Jan will talk about that a little. Commercial operation integration is already completed.
The technical and the crew management will transition over to salt tankers throughout 2017. So the ship operators and the ship brokers are already in our offices, but the technical management of the ships and their technical organization, that transition, we want to do in an orderly fashion. We would like to maintain our vetting and approvals with our major customers. So we're doing that in a more takes a little more time to complete. Moving then on to Stolthaven Terminals.
The revenues remained stable in the fourth quarter compared to the previous quarter despite a slight reduction in capacity. That's due to a small increase in utilization from 90.8% up to 91.8% and a marginal improvement in utility and other revenues. The reduction in capacity followed the cancellation of a contract in Houston and related write offs of the tanks and the planned closure of a small terminal in New Zealand. Cost saving initiatives are slowly starting to have impact, and that was reflected in cost per cubic meter. If we look at the operating profit variance, The third quarter was $14,800,000 high gross operating margin of 1,500,000.0 higher depreciation of 1,300,000.0 lower equity income from our joint venture of $1,900,000 and lower A and G, including impact from cost reduction in this year of $1,200,000 bringing it to $14,000,000 for the quarter.
Stolthaven terminals on Page 18. The average lease capacity for the consolidated terminals has increased with the biggest improvement in our New Orleans terminal. Houston continues its business optimization program, pursuing long term contracts to lock in revenue. We continue to focus on the ship to shore interface, which has been our strategy from the start, to reduce the ship time spent at port, with continued progress in Houston basis waiting time and tons per hour. So this is this does not only have impact for the terminal division, but has huge impact for our ships, so to reduce the waiting time on our ships.
Focus on completing the ongoing expansion products and make these commercially viable with further opportunities available. Customer contract review is ongoing to ensure commercial terms are aligned with the market. The full impact of all the action that we have been doing or they've been working on the 2016, you won't see until the full year 2017. So you will I think you will see a continued improvement from the Terminal division. Stolt Tank Containers.
Revenue was down 2.8% due to fewer shipments and lower utilization, but that was offset by higher demurrage revenue. The gross profit increased by 11% from previous quarter, and that's mainly driven by improved shipment margin driven by the lower freight rates that we were able to get from the container line and also less repositionings of empty containers. The A and G cost, down due to adjustment related in pension and postretirement medical plan. If we look at the variance analysis for the operating revenue between the two quarters, third quarter was $10,700,000 lower operating revenue of 3,300,000.0 but lower operating costs of 6,000,000 and lower A and G of 1,900,000.0 which brings it to 15,100,000.0 Seasonally weak demand drove shipment down. Market was reasonably balanced during the quarter with fuel grade shipments remaining strong.
We continue to remain aggressive on pricing to improve utilization and increase turns per tank. So we're willing to offer margin to increase the utilization or reduce price to increase the utilization of our fleet. We continue to focus on system development and implementation of global platforms that reduce expense, increase scale, the efficiency of operation and the effectiveness of sales. We will continue to develop our depot network around the world in strategic location in order to support our global operations. Focus on leasing tanks to meet future demand.
There are huge leasing opportunities out there that we are considering at very competitive pricing. Margin deterioration has slowed, and we believe that we have actually bottomed out, if not maybe started to bounce slightly up again. So actually, in the first quarter or the first month of twenty seventeen, remember, our fiscal year ended in the November, we see we saw healthy movements both in December and in the beginning of this year. So this business has been extremely profitable for Salt Basin. The margins have been phenomenal.
The returns on this business has been above 20%. It's not natural to believe that, that could continue forever. So we have seen increased competition develop over the last six to seven years. However, even with the lower profits that we're getting from this business, it's still the most profitable business that our group is in. And we believe actually that we have reached the bottom.
Stolt Sea Farm, very quickly. The price for Turbot continued to improve during the quarter. The average salt price was flat for fourth quarter compared to the third quarter, but volume down marginally by 2%. We still have an issue with the growth that we are able to achieve in Iceland. Caviar volume down during the quarter, but price was down reflecting sales of cheaper grade of caviar.
Fair value adjustment of inventory at a gain of 0.6, flat results compared to third quarter. I'll just skip this. The operating profit for the third quarter was 2.5%. It ended up 2.7 in the previous quarter. If we then move to Stolt Nielsen Gas, nothing nothing has really changed here.
We will continue to focus on developing small scale shipping and storage of LNG. We have not made any commitments. Yet, we have ordered ships, but they are still on subject. What we are working on and we are making nice progress on is to build up off take agreement on the locations that we're working on. And when we have sufficient off take commitment from our customers, we will take an investment decision to order ships and also to build a terminal.
But as it stands right now, we have not made the commitment to build the two ships that we have on subs. Moving on to financials. I wish you a Happy New Year.
Thank you very much, Nils. Good afternoon and good morning to those on the line. I will, as I normally do, make some additional comments to the financials that we have released today and also give some guidance on some of the lines in the P and L for the next coming quarter. We have today also filed our interim accounts with the Oslo Stock Exchange, and that is for the three months and the full year ending November 3036. And all of this information you can also find on our website, the press release, the interim as well as this presentation that we have here.
Now if we now go to the net profit slide, Slide 26. You can see here profit before one offs for the quarter is SEK 55,000,000, down SEK 2,700,000.0. And that clearly reflects the slight deterioration in Tankers. This is before one off. So even in the terminals, there was a slight deterioration, mostly, as Nis mentioned, relating to the joint ventures we have.
And this was, if you will, offset by the improvements, the nice improvements that we saw on the Tank Companion side. Now if you look at the one offs and what we here call one offs, and we do it so that those of you follow us can get a better understanding for what is actually the underlying market doing relative to instead of the noise that some of activities represents. So when you look at in this fourth quarter, we had 1,900,000 in accelerated depreciation. What that refers to is the fact that in determining the residual value of the ships, we use an average of the last three, four years steel price. And as you know, that steel price has gone down.
And then we have to adjust the residual value. And certainly on ships that are have relatively few years to go before they will be recycled, there obviously will be a greater impact by when you write down the residual value, bring that down and then you have to increase the depreciation over a very short period of time. So this period in the fourth quarter, it was $1,900,000 but you can see that compares to $3,100,000 in the previous quarter. And that is now going down. So for next year, the quarterly figure to expect here is $1,400,000 Terminals accelerated depreciation refers to a couple of things that we did.
First of all, in Houston, we had a contract with a customer that came to an end, and we had to write off some of the assets that we had put into the some of the storage tanks since it's the end of the lease with that customer. And we also wrote off some IT systems because we were part of the Project Phoenix, as we call it, which is to bring that terminal in Houston back into much higher profitability. We had to write off some IT systems as we're bringing in new, more up to date and more effective automated systems. We also had a situation in New Zealand, where we wrote off some lease improvements, again, at the end of a lease determination of a lease period. So that was SEK 1,500,000.0.
Then we had impairment, Nis also mentioned, of €2,700,000 This was on receivables related to customers in Indonesia. They haven't been incurred necessarily, but they have been outstanding for a long very long period, extended period. And we have taken a $2,700,000 provision towards the collection. We already mentioned $2,200,000 of, call it, legal fees and other consulting fees tied to the acquisition of JL Tankers. Now offsetting this, and you've heard this mentioned couple of times already, is $5,600,000 of these are gains, if you will, pertaining to changes that we have done to our defined benefit plan and to our also medical plans for retirees.
It's $5,600,000 I'll talk a little bit more about it later on. Below the line interest reflects the new ship from China. It also reflects three ships that we bought. We had a Montbair boat charter. They are operating in our Caribbean service.
We terminated the bareboat and bought them, and they are now involved in that trade. And then that brings us down to 22,800,000.0 versus SEK 22,100,000.0, EBITDA SEK 110,000,000 versus SEK 112,000,000. So you can see clearly that there is a deterioration in the underlying performance overall. When you look at the full year, it's interesting to see certainly at the operating profit level how comparable these two years 2015 and 2016 were before again these one offs. And when you look at it, the main difference can be explained by these initiatives that we have taken to cut costs.
In U. S. In 2016, we booked a curtailment gain of $19,800,000 when we actually closed down our U. S. Defined benefit plan.
We took other steps as I mentioned for SEK 5,600,000.0 in this year, but that difference more or less explains the entire drop in the year end result. Sure what to do here, but this is Page 27. In terms of the balance sheet, shareholder equity, 1,380,000,000.00, that's down from $1,400,000,000 And most of that drop is you may recall that in November, we declared a dividend of $0.50 per share. That's reflected in the November 30 balance sheet and was paid in December. And against that, we also had a little bit of a drop in the CTA and that contributed in total to bring the equity down to 1,380,000,000.00 If you look at the debt, that is now 2,400,000,000.0.
It's basically up from SEK 1,900,000,000.0. So it's almost 500,000,000.0 up when you look at the from the third quarter to the fourth quarter. What is that made of? Well, it's made up, of course, the acquisition of JO Tankers. And we paid $275,000,000 for the equity on closing in November.
And in addition, we took on $190,000,000 of debt that was already in J O. And I'll come back to that a little bit more in detail. So $275,000,000 for the equity at that time and 190,000,000 of additional debt. You can see here that debt to tangible net worth, of course, went from 119,000,000 to $149,000,000 Limit there is two:one, so we're okay. EBITDA went also down from 4,500,000,000.0 to $4,080,000,000 But when you look at the liquidity post closing of the JO, we had $310,000,000 of unused committed lines, if you will, on our revolver.
We had $93,000,000 of cash and we had $77,000,000 of uncommitted lines. So altogether, $490,000,000 post the closing. Average interest rates actually came down to 4.3%, and that was from almost 4.6. Of course, this ties in with the fact that we now did repay the more expensive bond issue that we did midyear. And that was replaced by cheaper, if you will, bank financing at very attractive terms.
So that brought the average down. We do expect that the interest for the first quarter will be roughly $30,000,000 Now this is page or Slide 28. This is the JLT purchase price allocation. You'll find details also in our interim. And also, of course, this will be detailed in even further details in the annual report once we come out with that.
But here you have two sort of tables. One is the equity price calculation. You all know that we bought the company and it was valued at $575,000,000 That was the gross purchase price. We and that includes our share of the ships in the joint venture that had been formed but still to be delivered. Closing debt that was on the books of J O.
We went to the various banks, quite a number of them, just short of 20. And we agreed with them to actually leave the funding in place. And then our share of the joint venture debt of that of the ship that has been delivered is SEK 33,000,000. There was SEK 44,000,000 of cash and bonds, 33,000,000 cash and SEK 11,000,000 marketable securities, adding up to $40,000,000 And then, of course, with the newbuilding program, there was another $100,000,000 which was our share of the remaining ships. So that's how you get up to SEK $296,000,000.
We actually paid in on the twenty third SEK $275,000,000. So we have another SEK 21,000,000 to pay. But the reason for the 21,000,000 it's not the fact that the price has changed. It's just the fact that there was less debt in the company than what we had when we agreed the price with them. So therefore, because there's less debt that we take away, we have to pay the remaining to bring it all up to $5.75 On the other side, again, this is for maybe for the analysts mostly.
You can see here that out of the $575,000,000 we put we're putting on our balance sheet $380,000,000 of assets. We're putting $45,000,000 of cash and marketable securities. We're putting investments in Hassel IV, as it's called, the joint venture, 48,000,000. There's some working capital for 7,000,000 that then brings it up to $480,000,000 Then we're bringing on the $190,000,000 in debt for SEK $290,000,000 net, which leaves SEK 6,000,000 of goodwill that we will take into our balance sheet. So that's the accounting for the purchase.
And the second bullet point here, I think, also is important for you, including the joint venture as we take in delivery and will take delivery, as you saw on the previous slide, all through tail end of 2016 and then 2017 and then into 2018. So there will be a little bit of a buildup of the activity. But you can see here that including the joint ventures basis and equity method of accounting, we expect the EBITA in 2017 to be up by €62,000,000 As more and more ships are coming being delivered, we actually expect it to go to 78 sorry, that it will go up to actually SEK 80,000,000,000. And if we just look at the proportional consolidation method, the EBITDA in 2017 would be SEK 78,000,000. And it I'm sorry about that.
The SEK 78,000,000, if you will, compares to the SEK 62,000,000, if you compare the two ways of accounting. We will account for it on the basis of equity pickup. But the on the EBITDA, if you look at the value that's being generated, you can see that when all the ships are delivered in an effect in 2019, the EBITDA that we expect from this is $134,000,000 And you can put that in relations to the purchase price of $5.75 Next, cash flow. Cash flow from operation was a little bit down from SEK 90,000,000 to SEK 71,000,000, mostly because depreciation and amortization items were down, you see down by SEK 11,000,000. If you look then at the cash used in investing activities, of course, you see on this slide on page or Slide 29, you see SEK $275,000,000, which is what we paid for JO.
You see SEK 95,000,000 in other CapEx, which is progress payments towards the Chinese newbuildings. And it's also the purchase of the three ships we had on bareboat that we are now employing in the Caribbean trade. And there was also investments to the terminal, including to Houston as part of the Project Phoenix. So altogether, net cash we used for investing activities SEK $347,000,000. Increase in short term bank loans and the revolver was SEK $3.00 3,000,000, SEK $295,000,000 of that was to was drawn down on the revolver.
And out of the SEK $295,000,000, SEK 150,000,000 is what we used to pay the remaining part to JO. I said JO $275,000,000 We took up a loan for 125,000,000 We drew down on the revolver for 150,000,000 That's the $275,000,000 The rest or a significant part of the remaining amount that we used the revolver for was to prepay and part of a refinancing of a loan that we had outstanding, which was backed by six of our chemical tankers. We repaid that by $129,000,000 And then we by drawing down on the revolver. Then we refinanced our revolver. So, we put those additional ships in and increased actually, renegotiated, refinanced our revolver to bring it from roughly $450,000,000 to $650,000,000 that closed in October.
It's a six year facility. It has 40 ships in it. And it's I said it's six years. Then the rest here, but I can also just mention that was done with DNB, Nordea and Danske, just to give credit where credit is due. Then you also see here the SEK 139,000,000 that we drew down, that is a, call it, a bridge loan that we used to pay for the JO shares, the equity.
And then you can also see the €148,000,000 that we prepaid, that is the loan I was talking about SEK 129,000,000 that released the four ships. So that brings the cash provided down to SEK $294,000,000. And you can see it ended up with a cash balance at SEK 93,000,000 at the end of the year. The EBITDA, I'm not going to talk too much about. It clearly shows the EBITDA contraction in tankers terminals were slightly up and actually maintaining its level.
I think it was up by 1,000,000 Tank Containers, we clearly see the improvement there. And at a consolidated level, we're down by SEK 2,000,000, SEK $210,000,000 for the quarter. A and G, 49,000,000 down from 52,000,000 Most of this all of the businesses will get getting the benefit from some of these cost initiatives that I talked about earlier. Really what we're trying to do is to work our way out of our defined benefit pension plans and the liabilities that goes with those and those of you that are involved with these kind of pension plans, you'll see how volatile they are relative to the interest rate development and the mortality tables. And we have a plan to actually work our way out of the defined benefit plans.
And the benefits will these changes will benefit all of the businesses. And that's why you see in this fourth quarter that all of the businesses, tankers, terminals and tank containers are actually doing better than we forecasted and also better than the quarter. In here, you see the cost relating to JO acquisition. This, as I said, typically legal fees and other consulting fees for SEK 2,200,000.0. If you look at the guidance, it's SEK 56,000,000.
And out of the SEK 56,000,000, roughly 3,000,000 let's call it SEK 3,500,000.0 to 4,000,000 relates directly to the JO. These are additional people. These are offices that we pay for and that will be with us for a couple of quarters. Obviously, we are moving forward with the transition and the integration of J O as quickly as we can. But we are still paying for the offices and number of the people, and we're trying to reduce this, if you will, double amount as quickly as we can.
But you will see roughly SEK 3,500,000.0 to 4,000,000 per quarter going forward. Depreciation, not much really to say here. The main variance on the terminal side, I've already talked about accelerated depreciation in Houston and New Zealand. The updated guidance is €68,000,000 That's next quarter is, of course, the first quarter where we get the full impact of the fleet from that we took over from JO. JVs, this is Slide 33, down from 8.6% to 5.5%.
The tanker JVs, yes, there's a they are also affected by the slower market of tankers. That's down by SEK 1,000,000. And Stolt terminals, you can see here, almost all our JV terminals did worse than in the previous month. And in particular, there were a number of sort of onetime expenses in the joint venture we have in Antwerp with the Oil Tanking. Taxes, not much to say other than it's a we are finalizing and fine tuning tax estimate for the year.
So we went down by 600,000 or $700,000 Next Slide 34, also important. A lot of you have been concerned about our CapEx program and commitments going forward. The fourth quarter was $370,000,000, of which SEK $275,000,000 was JO. In 2017, the amount is SEK 408,000 sorry, $4.00 8,000,000, of which SEK $245,000,000. So more than half relates to the new buildings in China, the C38s.
And also, have the $21,000,000 that we have to pay for towards JO for the remaining payment there for the equity, as I mentioned this earlier. Overall, the commitment for the five year period is just under $600,000,000 And you can see tankers is almost half or a little bit less than half and Stolthaven Terminals, SEK $218,000,000, of which just under SEK 70,000,000 relates to Houston on its own and the improvements that we do there to the automation and the profitability, working very hard to get the costs down. I should also mention that out of the program for twenty seventeen, two thirty five million of the SEK $245,000,000 is already financed with Keksim. So if you look at the debt maturity profile, this is the next Slide 36. The blue, just regular principal payments scheduled principal payments, the green balloon payments.
And here we have two payments for 2017. One is for the terminal in Singapore. And that matures in the fourth quarter. And we're already working with the banks to renew and bring that up. It's going to be closer to $200,000,000 refinancing there.
And we expect to have that financing locked up and closed by before the summer. That's the summer here. In addition, it's the $125,000,000 bridge loan that we got for JO or in connection with that, that expires in basically November 23 in 2017. And we work on refinancing or actually just using our lines to pay off. So that's all I had.
Nits, if you want to take over.
Thank you, Jan. Just a few comments in regard to some of the projects that we're working on. We are, as we have mentioned earlier, considering separating out Stolt Tankers as a stand alone company. Today, the corporate structure, the company structure of Stolt Tankers is very much intertwined between tankage terminals and tank containers. So we have started the project, and we are considering proposing or we will be proposing to clean up that structure to make Stolt Tankers a clean subsidiary of Stolt Nielsen.
The reason that we're doing this is, of course, it's good to clean up the corporate structure every thirty years. But it also is to be able to if the opportunity arises to use Stolt Tankers as a vehicle as for further consolidation in the industry. Today, as you saw in the fourth quarter, we paid cash for JL, but I think there's plenty of room for further consolidation in our segment. So separating Outstold Tankers as a stand alone entity, we can use both cash and shares if opportunity arises. We are not doing this exercise to purely separate out and do an IPO.
No, it is really to prepare the company so that we have a share to do a merger, if possible, using shares or a combination of shares and cash. If the Board approves or if we think it's the right thing to do, it's, of course, a complicated or it's not complicated, but there's a lot of work that needs to be done. So it probably will take some time, probably half a year to have it ready and stand alone. It is the intention that Stolt Tankers will continue to be 100% owned by Stolt Nielsen, so there will be no need for to refinance the company in the short term. But if an opportunity should arise, where there's an acquisition or an opportunity to buy something or to merge, of course, then we will look at this in the form of cash and shares.
Maybe one of the conditions with the merging partner will be to do an IPO. And at that time, if the market conditions are correct, we will consider doing an IPO of Stolt Tankers. It's something that we are considering and hasn't been decided upon, but that's something that we've been working on and we'll consider. Again, this is to make a pure play chemical tanker company and to use the share to see if there are other companies that we could merge or acquire. The other part is, of course, you saw the balance sheet in Stoltknechten after we've done the JOD, has gone up to 1.5 to one, well within our covenants, but the debt level has increased.
So we are reviewing all of our businesses if there are non assets which are nonstrategic for us. So we are reviewing. And if we do identify anything, we will consider selling if there are attractive prices out there. So the takeaway, again, we delivered $113,000,000 profit for the year. We have consistently delivered profit since the financial crisis.
The major acquisition of JL, as we said, was completed, and we are pleasantly surprised of the synergies that we're able to get out of that business. So we have a strong performance in Tankers. The fundamentals remain strong in the terminal business, and we are seeing a clear turnaround. The weaker tank container results in a highly competitive market, but again, we think that the bottom has been reached. The earnings per share is above $2 for 2016.
The PE ratio is 7.7. Actually, the share price is down low, so it's actually higher. The PEEP to net asset the price to net asset value is 0.7. Some of the parts are still not reflected in the share price. And it's clear that if we do a separation of salt tankers and we do actually do an IPO, will kind of force the market to recognize.
I don't think that even the share price today recognize the value of tankers, which means that the share price is only you get to the rest of the businesses for free. The dividend yield is at 6%, basis $1 per share at $132 We have a strong relationship with our both with our lenders and our investors, which has helped us raise competitive funding for the group. And we have sufficient liquidity as you see. Even if we don't do anything and based on our conservative five year plan, I think you will see that the debt ratio the debt level will be coming dramatically quickly down in 2017 and 2018. And the last point, we have a diversified business portfolio of businesses.
And as it happened since the two thousand the financial crisis, we have been able to deliver profits even in a very challenging shipping market. That completes our presentation, and then we will open up now for questions. And we will start here in Oslo and then take any questions from the phone afterwards. And I will try to repeat the questions here in Oslo so that the people listening in can also hear the questions. Go ahead.
Any questions here? Yes. How do you feel your covenants and the JO transaction and acquisition impact potential growth in R and D? Good question. The question is the acquisition of JO, how will that impact our investment capacity pursuing our strategy in LNG?
And it's clear that we have a self imposed kind of limit of 1.5 to one, which we are at now. So and again, we are considering disposing or selling some of our nonstrategic assets. So at present time, we haven't made a commitment. Our towards a financial commitment or an investment commitment. However, the commitment towards the segment is there, but I think we have the flexibility with the timing.
And right now, until we get a firm offtake agreement or a sufficient offtake agreement, which is quite a challenge, we are we don't have to be in a position right now to make that investment decision. And I believe once we have to take the investment commitment, we will have a stronger balance sheet than we have today. But if you look at we have 20 terminals around the world. The strategy in our terminals has always been where we can create synergies between the ships and the terminals, so that we bring terminal customers to our ships and shipping terminals ship shipping customers to our terminal. And we have aggressively expanded the terminal business, as you know, over the last seven years.
Now if that synergy is not there and if it's it might be a nice terminal, but if it really doesn't fit into the core of our terminal strategy, that's something we will consider if the price is right.
The
JV decline was primarily driven by two things. The one that Jan talked about, the oil tanking, which was a one off settlement. And the other one is the Tianjin terminal driven by the explosion. So the fundamentals for the JVs are still healthy. That's why it's come down from 7% to 3.5%?
The contribution from the JV this quarter was driven by one offs. So there's no fundamental change in the terminals in the JV the two big JVs, one in Korea and in Antwerp. There's no fundamental change in the performance there. They were driven by one offs. Any other questions?
Yes? You should I would say you should expect once the contracts that the 4.2% comes into effect, you should see I wouldn't say a dramatic decline, but you should see a decline compared to last year. And we lost some contracts due to competition, which also will impact our results. We try not to give out the guidance because then I have to come with but I would say, as we have said again, that 2017 will be tougher than 2016, and I'm quite certain about that. Secondly, can you remind how many of
your terminals for safety and all are primarily three supply for Southern and Chemicals? Any one?
You're trying to figure out which one we will be considering. I would say that if you look at the major ports, we are not considering. If you look at small terminal to remote locations where our ships don't call, we would consider. I'll keep you posted. Any other questions?
You talked about the Mexico and well How much Mexico would import quarter tax? Yes. Now Restriction from the general. Yes. To needless to say, a trade war between The United States and other countries, China, the Brexit, if that turns out to we haven't seen the impact of Brexit yet because they haven't negotiated a deal.
So it is clear for a shipping company that is dependent upon international trade that, that will impact all shipping, all trade, which is, of course, a big concern. So let's hope that he quickly can renegotiate better deals with these countries, but that we don't see a trade war. I think that will impact all businesses regardless of shipping. Okay. There's no further questions here in Oslo.
Operator, could you ask if any of the people on the phone have any questions?
Yes, certainly. There are no questions at this time.
Thank you very much.
Are there any further questions here in Alstom?
Yes, one more question.
No,
because it regardless of what we do of spinning off, initially, it will be 100% owned by Stolt Tankers. It is always and it's good that you brought this up. It's always our intention to remain control of the company where Stolt Nielsen owns more than 50%, at least the scenarios that we're looking at now, which then means that we will still have the same strategy between tankers and terminals. How you calculate tangible net worth?
The tangible net worth would basically be shareholder equity and then we add back the CPAs. And in CPA, you have OCI. And since they are negative, you add them back.
So that brings it up to 1.5.
And if the you'll find the details in the interims.
Thank you very much. If there are no further questions, that completes the fourth quarter twenty sixteen earnings presentation. Thank you.
That will conclude today's conference call. Thank you for your participation. You may now