Diana Shipping 1Q16 Earnings Call Notes

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Diana Shipping’s (DSX) CEO Simeon Palios on Q1 2016 Results

Dry Bulk market unlikely to reach anywhere near the levels of earnings and asset prices seen eight years ago

“Even in the best case scenario, it is very unlikely that the bulk carrier market will reach anywhere near we have the levels of earnings and asset prices seen eight years ago.”

You’ve seen ship yards closing in China as government support diminishes

“Now, regards to the general question, the only thing we can say that we’ve seen at least in China something that you have for sure noticed as well that most of the private shipyards do not get much funding anymore from the state government on banks and therefore are silently closing one by one. And you have already seen quite a few shipyards closing which can only be a positive for the overall but this has already happened. There is still a few more to go but not much more.”

Ioannis Zafirakis

Raising equity would be a last resort

“We have stated many times that our model works together with our shareholders at good part of the market raising equities. Our model works if we treat our shareholders with the utmost respect. And therefore diluting them in this part of the cycle as a choice is something that we do not consider. Only out of necessity, we may consider something like this in the future, something that we haven’t — is not a level that we have reached to-date. It’s going to be our last resort. We will eliminate all the other possibilities before we do an equity offering. We know that if let’s say two years past from now and we’re still in the same bad market position et cetera is going to be probably more diluted, if we do an offering. But nevertheless, we have to do our best to avoid and offering period.”

We still need to see more scraping but we are getting to the bottom because no one feels prepared for what’s coming

“we still have a way to go as regards to scraping and laying up. We need more cleansing. One thing is for certain that we have reached the level where everyone and by everyone I mean every shipping company feels like is not very well prepared for what is coming. And this is for me the absolute bottom of the market. It’s a good thing that almost everyone is pessimistic about the market because the cleansing is going to happen.”

This is the absolute bottom

“today we are at this level in the market where nobody really thinks that he is well prepared for what is coming. So radically speaking, we need all the money that we have aside, in order to gain some more breathing space. We know very well but the name of the games, who have been today offense but nevertheless this is shipping and this is the absolute bottom and this is where nobody wants to be to play smart because seeing ahead you need all the dry powder in order to gain sometime. We are very, very fortunate that we manage to buy a lot of vessels at the lower part of the cycle. It has been always a case that not a lot of people buy out the absolute bottom.”