Gearbulk IntegratedReport 2024 Paperturn - Flipbook - Page 40
GEARBULK
OUR OPERATING CONTEXT
EFFECTS OF
EXTERNAL FACTORS
Gearbulk operates in a dynamic environment shaped by global in昀氀uences,
economic conditions across our markets, and evolving trends within the
shipping segments in which we invest. While these external factors and risks
are beyond our direct control, we proactively analyse their potential impact
to identify opportunities, mitigate challenges and make informed decisions
that support long-term resilience and growth.
MACRO ECONOMIC INDICATORS IMPACTING OUR BUSINESS
Despite ongoing and escalating
geopolitical tensions, global economies have begun to recover. However,
the outlook remains uncertain, as
elevated in昀氀ation and high interest
rates persist, potentially impacting
our business value.
Outcomes
Key economic indicators are projected to show gradual
improvement in 2025. While the regions in which we operate
have strong economic foundations, ongoing geopolitical
tensions and persistent in昀氀ationary pressures could slow this
progress. Elevated interest rates and 昀氀uctuating in昀氀ation may
continue to drive higher costs, impacting our 昀椀nancial position
and overall business operations.
Our Strategic Response
Gearbulk has a robust risk management strategy to mitigate
Elevated in昀氀ation is expected to ease further in 2025
macroeconomic impacts. It maintains a diversi昀椀ed capital struc-
Global headline in昀氀ation is anticipated to decline from an annual
ture with long-term 昀椀nancing to counter high interest rates.
average of 4.1% in 2024 to 4.2% in 2025, according to the Inter-
Revenue stability is ensured through a balanced mix of short-,
national Monetary Fund (IMF). This slight decrease is primarily
medium-, and long-term COA contracts via Joint Ventures. Risk
attributed to the stabilisation of energy prices, an improved
management includes natural hedges and 昀椀nancial hedging
energy mix with reduced dependence on Russian gas and oil,
for interest rates, foreign exchange, and fuel oil. In response to
and the stabilisation of global supply chains. Additionally, weak-
economic challenges, the company is reviewing its debt struc-
er-than-expected economic activity and energy demand from
ture and exploring alternative 昀椀nancing for long-term resilience.
China have contributed to signi昀椀cant decreases in energy and
food prices, although food prices remain volatile.
Capitals Impacted
Interest rate levels remain elevated
High borrowing costs continue to signi昀椀cantly impact our
funding for expenditures and capital investments. While we
maintain a prudent hedging level of at least 50% of group
昀氀oating-rate debt, the unhedged portion is a昀昀ected by higher
interest rates. This elevated cost of debt also in昀氀uences various
昀椀nancial ratios and impacts our covenant requirements with
lenders. According to Trading Economics, interest rates in major
economies are projected to remain high, with the United States
and United Kingdom expected to maintain rates around 4.5%
and 4.75%, respectively, through February 2025.
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PART 2 – OUR BUSINESS IN CONTEXT
Financial
capital
Social and
relationship
capital
