Financial analysis: Bond reviews − maritime sector

In my article of two weeks ago, I published a short overview of some of the main findings and financial metrics across a number of companies within the hospitality sector that emerge from the end of June deadline for bond issuers and their guarantors to publish their updated financial analysis summary (FAS).

There has been a large increase in issuers over recent years within the hospitality and real estate sectors and the various reports published some weeks ago provide interesting information, also allowing for a good comparative analysis.

Unfortunately, however, the situation in the maritime sector is different, with a very limited number of companies utilising the capital markets for their requirements.

Endo Finance plc, Mariner Finance plc and Virtu Finance plc are the three companies that operate strictly within the shipping and maritime sector.

Meanwhile, within the wider maritime logistics and related support-services, MedservRegis plc, Mediterranean Maritime Hub Finance plc, Grand Harbour Marina plc and AST Group plc are four other bond issuers that have tapped the bond market over the years.

Endo Finance plc is the finance vehicle of the Endo Group, consisting of Endo Ventures Ltd as the parent company and various other subsidiaries. The issuer had approached the market in 2019 with a €13.5 million bond issue at 4.5% but it now has a total of €25 million in bonds. In more recent years, the issuer placed two other bonds totalling €11.8 million at rates between 6% and 7.5% which, however, were not listed on the MSE.

During 2024, the Endo Group achieved record revenue of €18.1 million, primarily reflecting the first full year of earnings from two tankers acquired in 2023. Meanwhile, in August 2024, the group continued to streamline its fleet by selling one of its oldest vessels and acquiring a newer vessel. The higher revenue led to a surge in EBITDA to €4.7 million, with the interest cover improving to 1.8 times.

One of the industries at the centre of the country’s economic transformation

During the current financial year, the group expects to generate slightly lower revenue but EBITDA is forecast to grow by 15% to €5.4 million on lower one-off and extraordinary costs. This should result in a further improvement in the interest cover to 2.3 times. Meanwhile, the net debt-to-EBITDA ratio is also expected to strengthen to just over 5.6 times in 2025.

Mariner Finance plc has been among the companies with a very consistent positive performance over the years. During 2025, total revenues are expected to increase slightly to €20.7 million as the higher income from container services (+10.3% to €13.3 million) and cargo storage (+15.6% to €2.8 million) are expected to outweigh the decline in other service income (-18.3% to €4.2 million). EBITDA is expected to climb by 8.5% to €11.1 million as the company expects slightly lower net operating expenses.

With relatively unchanged finance costs at €2.5 million, the interest cover is forecasted to improve marginally to 4.4 times in 2024. Total debt is forecasted to remain at the €57 million level, mainly comprising the bonds in issue of just under €37 million and bank borrowings of €16 million.

Meanwhile, it is worth highlighting that the company’s assets comprise properties, plant and equipment of over €60 million, and loans receivable from its parent company of just over €41 million. Given the expected improvement in EBITDA in 2025, the net debt-to-EBITDA multiple is forecasted to improve to 5.1 times.

The bonds that had been issued by Virtu Finance plc in late 2017 are guaranteed by Virtu Maritime Ltd. The guarantor reported an exceptionally strong performance in 2024 with revenues jumping to €70.1 million and EBITDA of €30 million, compared to €17.3 million in the previous financial year. The surge in revenue and EBITDA is principally the result of exceptional one-off and unforeseen demand for the charter segment in 2024, with revenue rising by €13 million in this segment.

Meanwhile, the ‘ferry service, accommodation and excursions’ segment remains the most signifi­cant revenue stream. In view of the continued strong demand for passengers and vehicles on the Malta-Sicily route, revenue from this segment increased by 7.9% to €49.2 million. In view of a normalisation of charter revenue envisaged during 2025, revenues are expected to decrease by 20.0% to €56.1 million. Despite this, interest cover is still expected to remain elevated at 7.5 times in 2025.

Moreover, net debt is expected to continue to reduce to €47.6 million by the end of 2025. The company has been paying off significant amounts of bank borrowings over the years. In fact, the net debt-to-EBITDA multiple for FY2025 is anticipated to be only 2.6 times, which is a very strong indeed.

Virtu Ferries Ltd completed the acquisition of a strategically located site in Pozzallo aimed at creating a regional logistics infrastructure hub as part of a number of strategic initiatives aimed at maintaining and expanding its role as a key player in maritime transport between Sicily and Malta.

Within the ambits of the national initiative shaping Malta’s long-term development, labelled ‘Malta Vision 2050’, the shipping and maritime sector is one of the industries that is being placed at the centre of the country’s economic transformation.

In order to achieve the long-term objectives in this sector, the policy document clearly high­lights that the industry is set for strategic expansion, innovation and modernisation. The operators in this sector undoubtedly require additional funding to achieve the long-term goals within the policy document.

Although the capital markets do not feature at all in the ‘Malta Vision 2050’ document, it is high time that various stakeholders discuss the benefits that industry players within the shipping and maritime sector can achieve from accessing the capital markets. This would also provide additional depth to the capital markets, which is fundamental if Malta wishes to adopt the recommendations of the EU’s Savings and Investments Union (SIU).

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