RNS Number:4731K
Bergesen d.y. ASA
12 May 2000
BERGESEN D.Y. GROUP
First-quarter interim report 2000
INCOME STATEMENT First quarter Full year
(Unaudited figures in USD million) 2000 1999 1999
Operating revenue 150.1 168.7 666.7
Operating expenses -108.8 -117.7 -499.8
Profit (loss) on sale of vessels 7.0 5.0 13.0
Operating profit before depreciation 48.3 56.0 179.9
Depreciation -26.0 -29.0 -110.0
Operating profit 22.3 27.0 69.9
Income from associated companies -0.6 -1.3 -2.6
Dividend income 0.0 0.0 1.0
Profit (loss) on sale of securities 0.0 0.0 8.3
Foreign exchange profit (loss) -7.0 -2.0 -7.0
Net interest expenses -4.6 -3.5 -16.5
Other financial items (net) 0.1 -0.4 0.0
Profit (loss) on sale of property 0.0 0.0 0.4
Profit before tax 10.2 19.8 53.5
Tax 0.0 0.0 -1.7
Profit after tax 10.2 19.8 51.9
Minority interests 0.0 -2.0 -6.0
Majority interests 10.2 21.8 57.9
Earnings per share (USD) 0.14 0.27 0.70
Cash flow per share (USD) 0.49 0.66 2.18
Average number of shares 70,019,056 75,759,661 74,109,273
BALANCE SHEET
(USD million, unaudited) 31/3-2000 31/3-99 31/12-99
Vessels 1,503 1,528 1,445
Vessels under construction 115 13 36
Other fixed assets 89 83 97
Other current assets 68 69 67
Liquid assets 553 550 557
Total assets 2,328 2,243 2,202
BALANCE SHEET
(USD million, unaudited) 31/3-2000 31/3-99 31/12-99
Equity 1,437 1,515 1,427
Long-term liabilities 765 627 654
Current liabilities 126 101 121
Total liabilities 2,328 2,243 2,202
RESULTS
With effect from the first quarter of this year Bergesen has switched to
reporting consolidated financial information in the USD. Since most of the
group's income, expenses, interest-bearing debt and fixed assets in the form of
ships are denominated in USD, financial reporting in that currency will reduce
the impact of fluctuations in the USD/NOK exchange rate on the group's results,
most notably in the case of receivables and liabilities denominated in USD. The
USD appreciated from NOK 8.04 to NOK 8.47 and averaged NOK 8.23 during the
period.
The Bergesen group recorded first-quarter operating profit of USD 22.3 million,
compared with USD 27.0 million in 1999. Net financial expenses amounted to USD
12.1 million, including USD 7.0 million in exchange loss, mainly attributable to
bank deposits/receivables denominated in NOK.
Profit before tax came to USD 10.2 million, compared with USD 19.8 million in
1999, and profit after tax and minority interests was USD 10.2 million, compared
with USD 21.8 million in 1999.
VALUE-ADJUSTED EQUITY
Allowing for share buybacks and including provisions for dividends, the group's
value-adjusted equity before tax came to USD 20,74 (NOK 176) per share at the
end of the period, compared with USD 21.86 (NOK 176) at the beginning of the
year. Vessel values in USD terms fell 2.3% during the period (gas -3.9%,
tankers +2.6%, dry bulk - 1.7% and offshore -1.2%). The value of the Bergesen
fleet was USD 1,494 million at the end of the quarter (gas USD 923 million,
tankers USD 401 millon, dry bulk USD 114 million and offshore USD 56 million),
compared to USD 1,443 million at the beginning of the year. The fleet's market
value is based on the average estimates for charter-free vessels obtained from
three independent brokers. Newbuilding contracts are valued at book value of
paid instalments.
FLEET REPORT
The figures in this fleet report reflect only Bergesen's own interests in the
vessels, accounted for on a proportional consolidation basis, also those vessels
and businesses included in the group accounts according to the equity method
(associated undertakings), according to the cost method (other minor holdings)
and according to the full consolidation basis with minority interests
(subsidiary undertakings).
The operation of the fleet ran smoothly during the period. Five vessels were
dry-docked for scheduled maintenance.
BREAKDOWN BY FLEET
1ST QUARTER (1/1/00-31/3/00) GAS TANKERS
(Unaudited figures in USD million) 2000 1999 2000 1999
Operating revenue 80.2 87.2 41.8 59.8
Voyage expenses -14.1 22.4 -13.5 -11.3
T/c (time charter) income 66.1 64.8 28.3 48.5
Operating expenses -39.2 -41.2 -22.1 -25.4
Charter hire expenses 0 0 0 0
Profit (loss) on sale of vessels 0 0 8.2 4.3
Operating profit before depreciation 26.9 23.6 14.4 27.4
Depreciation -14.3 -14.3 -7.3 -10.4
Operating profit 12.6 9.3 7.1 17.0
T/C income per day/month*(USD 1,000) 475* 465* 16.5 23.8
1ST QUARTER (1/1/00-31/3/00) DRY BULK OFFSHORE
(Unaudited figures in USD million) 2000 1999 2000 1999
Operating revenue 12.2 11.7 6.8 1.6
Voyage expenses -4.3 -3.9 -1.9 0
T/c (time charter) income 7.9 7.8 4.9 1.6
Operating expenses -3.6 -3.3 -2.2 -3.1
Charter hire expenses -0.7 -1.0 0 0
Profit (loss) on sale of vessels 0 0 0 0
Operating profit before depreciation 3.5 3.5 2.7 -1.6
Depreciation -2.0 -2.0 -1.0 -0.8
Operating profit 1.5 1.5 1.7 -2.4
T/C income per day/month*(USD 1,000) 19.1 19.1 - -
1ST QUARTER (1/1/00-31/3/00) TOTAL
(Unaudited figures in USD million) 2000 1999
Operating revenue 140.9 160.4
Voyage expenses -33.8 -37.7
T/c (time charter) income 107.2 122.7
Operating expenses -67.2 -73.0
Charter hire expenses -0.7 -1.0
Profit (loss) on sale of vessels 8.2 4.3
Operating profit before depreciation 47.4 52.9
Depreciation -24.6 -27.5
Operating profit 22.8 25.4
T/C income per day/month*(USD 1,000) 16.4 18.2
The offshore fleet comprises such different types of vessels that reporting
average T/C income is not appropriate.
GAS
The gas fleet recorded first-quarter operating profit of USD 12.6 million,
compared with USD 9.3 million in 1999. Earnings in the VLGC segment were lower
than in the same period last year, while earnings in the other segments were
higher.
March saw Bergesen ordering a 138,000 cbm LNG newbuild from Daewoo at a price of
around USD 150 million. The vessel is due to be delivered in the first quarter
of 2003 and has yet to be chartered. Bergesen has an option to order a second
vessel.
The spot market for VLGCs (over 70,000 cbm) featured considerable variations in
the availability of cargoes and demand for products. After a slow start in
January, the availability of cargoes recovered rapidly and all available
vessels were fixed. This surge in activity was brought on by colder weather in
Asia, the USA and Europe, coupled with low LPG stocks in the importing countries
and expectations of rising LPG prices in the wake of record-high oil prices.
Some vessels were being fixed at T/C-equivalent rates of USD 1,000,000/month
excluding waiting time, the highest levels seen since 1997. However, market
sentiment took a turn for the worse towards the end of the quarter as LPG prices
tumbled in both Asia and Europe and high contract prices outbound from the
Persian Gulf resulted in lower trading activity and drawing on stocks in Asia.
Spot market activity dropped back and earnings came under pressure, with
T/C-rates falling to around USD 675,000/month excluding waiting time for modern
vessels at the end of the quarter. In second quarter, a few good period
contracts have been concluded, in advance of an expected rebuilding of
LPG-stocks in Asia. Waiting time between voyages is still significant.
Charter cover for the rest of the year stood at around 22% at the end of the
quarter. The fleet generated average T/C income of USD 625,000/month during the
period, compared with USD 685,000/month in 1999.
There were no changes in the overall world VLGC fleet of 93 vessels during the
quarter and 11 VLGCs were on order at the end of the period. One vessel joined
Bergesen's pool and a further four are due to follow suit in the second quarter.
Including these vessels, the pool consists of 25 vessels.
The market for LGCs (50-60,000 cbm) was slightly more stable, but here too the
period featured waiting time between cargoes. Around a third of the fleet was
employed on ammonia trades, which offered better earnings than LPG trades.
Earnings in the spot market stood at just over USD 600,000/month excluding
waiting time at the end of the quarter. A few good period contracts have been
concluded also in this segment in second quarter.
Charter cover for the rest of the year stood at around 32% at the end of the
quarter. The fleet generated average T/C income of USD 465,000/month during the
period, compared with USD 450,000/month in 1999. There were no changes in the
overall world LGC fleet of 26 vessels during the period, although one former
Pemex vessel was remobilised after being laid up for several years, constituting
a net capacity increase. The vessel has joined the Bergesen LGC pool. In May,
Bergesen sold the 1971-built Havgast (of 52.400 cbm) for scrap. The sales profit
was about USD 1,7 million of which USD 0,7 million is attributable to the
vessel's minority shareholders. The pool thereby consists of 18 vessels.
The spot market for MGCs (20-40,000 cbm) featured healthy levels of activity
throughout the first quarter in terms of both LPG and ammonia, with most vessels
enjoying high levels of employment. An estimated 60% of the fleet was employed
on ammonia trades and 40% on LPG trades. The markets east of Suez have become
increasingly important for MGC tonnage and now account for around 50% of
employment in the segment. Previously the Atlantic basin was by far the most
important region for this class of vessel. Rates were higher than in the fourth
quarter of last year, fuelled primarily by long-distance shipments of ammonia
from the Black-Sea and LPG from the Middle East to India and other Asian
countries. Bergesen's vessels generated average T/C income of USD 475,000/month
during the period, compared with USD 405,000/month in 1999.
So far this year no newbuilds have been delivered and no vessels have been sold
for scrap. Seven vessels were on order at the end of the period, including five
with ethylene capacity. Four vessels are due for delivery this year.
The market for the semirefrigerated Igloo and Handygas carriers (8-15,000 cbm)
participating in chartering arrangement with A.P. Moller improved markedly in
the first quarter. Transatlantic shipments of ethylene and propylene from
America to Europe picked up on the strength of production problems and low
stocks in Europe. There were also shipments of ethylene and propylene from Asia
to Europe. High prices for oil-based raw materials used in ethylene production
in the USA led to an increase in the use of natural gas as a raw material, so
triggering a decrease in local butadiene production and, in turn, higher imports
from Europe where there is a major surplus of butadiene available for export.
The quarter also saw the first VCM shipment from the USA to Japan for some time.
There is now a shortage of VCM in several Asian countries, since the still
booming US economy is absorbing most local production and so limiting volumes
available for export.
Bergesen's Handygas vessels generated average T/C income of USD 230,000/month
during the period, compared with USD 215,000/month in 1999, while the Igloo
vessels generated average T/C income of USD 300,000/month, compared with USD
240,000/month in 1999.
One 6,000 cbm newbuild was delivered during the quarter. Two vessels were on
order in the 8-15,000 cbm segment at the end of the period, one for delivery in
each of the next two years. Five vessels were on order in the 6-8,000 cbm
segment, two for delivery this year and three from 2001 onwards.
TANKERS
In January Bergesen entered into a contract to purchase four 296,000 dwt tankers
under construction at the Hitachi Zosen yard in Japan. The first two were
delivered in March and April and the next two are due to be delivered in June
2000 and January 2001. In February Bergesen exercised its option to purchase a
further two VLCCs of the same size from the yard for delivery in March and May
2001. The total price for these six VLCCs is in the region of NOK 3.2 billion.
The combination of this investment in new tonnage and the scrapping of older
tankers equates to a major fleet modernisation programme.
The 1975-built 289,980 dwt Berge Big and 1973-built 284,552 dwt Berge Prince
were sold for scrap in January, triggering a capital gain for accounting
purposes of USD 7.0 million. Bergesen purchased a combined oil and ore carrier
at the end of the quarter, Berge Phoenix (291.000 tdw, built 1986), at USD 23
million. The vessel will not be employed in combination trades. For the time
being, she is serving as an oil carrier.
The VLCC fleet generated first-quarter operating profit of USD 7.1 million,
compared with USD 17.0 million in 1999. Average T/C income was USD 16,500/day,
compared with USD 23,900/day in 1999.
The first quarter began with spot market rates still in the doldrums on account
of low OPEC output and record-high oil prices. Historically low stocks and
correspondingly high prices for most oil products, including bunker fuels, meant
that a rise in the worldscale rates had only a minor impact on T/C rates.
However, spot rates rallied towards the end of the quarter on the strength of
indications that OPEC would be upping its output from April. OPEC duly decided
at the end of March to lift the 1.7 mb/d quota reduction introduced in February
1999. This is expected to result in a net increase in output of around 0.5 mb/d
based on estimated non-compliance of around 1.2 mb/d in March. Mexico and
Norway have also suggested that they will be stepping up production in April.
All in all, world oil supply is expected to rise by around 0.7-0.8 mb/d in the
second quarter. At the end of the quarter, t/c rates in the spot market were
about USD 27,000/day for modern vessels and USD 16,000/day for older turbine
tankers.
The tanker market has gained considerable momentum in April and May and the
bunker prices have fallen. The t/c rates in the spot market are now amounting
to USD 40,000 per day for modern vessels and USD 30,000 per day for older
vessels. Bergesen has fixed the three first newbuilds from Hitachi on period
contracts for at least two years, of which two are at market related rates.
15 VLCC newbuilds were delivered during the first quarter. Scrapping held at
high levels until the end of February but dropped in March as the spot market
rallied and the market outlook brightened.
16 VLCCs have been sold for scrap so far this year. A total of 80 VLCCs were on
order at the end of the period, equivalent to 19% of the existing fleet, of
which 29 vessels are due to be delivered during the remainder of this year.
Bergesen did not dry-dock any tankers during the period.
DRY BULK
Bergesen's dry bulk fleet generated first-quarter operating profit of USD 1.5
million, which is on a par with 1999. Charter cover for the rest of the year
stood at around 90% at the end of the quarter. Average T/C income was USD
19,100/day during the period, also on a par with 1999.
The market for large dry bulkers picked up during the first quarter, with spot
rates for modern Capesize tonnage ending the period at around USD 20,000/day and
12-month T/C rates at around USD 16,400/day.
The International Monetary Fund has just revised upwards its forecasts for the
global economy this year, and the outlook for the steel industry remains bright.
High oil prices are also making coal an attractive source of energy and so
boosting seaborne trade in coal.
One Capesize vessel and one combined carrier were scrapped during the first
quarter and five newbuilds were delivered. A further 29 vessels over 100,000
dwt are due to be delivered this year. The total world order book is 76
vessels, equivalent to 17% of the existing fleet.
Bergesen did not dry-dock any dry bulkers during the period.
OFFSHORE
The offshore fleet generated first-quarter operating profit of USD1.7 million,
compared with a loss of USD2.4 million in 1999.
The Berge Hugin continued to produce oil on the Pierce field in the UK Sector of
the North Sea as scheduled. The vessel's production capacity was increased from
45,000 to 65,000 bbl/day during the period.
The Berge Charlotte is currently being converted into an FPSO unit at the Jurong
yard in Singapore. This work is due to be completed in October 2000 when the
vessel will begin a charter with oil company Triton running for at least two
years.
It was also decided during the period to convert the Berge Hus into an FPSO
unit. The vessel is now being prepared for conversion at the Jurong yard once
the Berge Charlotte is complete.
FINANCIAL INFORMATION
Bergesen had liquid assets (bank deposits, bonds, certificates and equities) of
USD553 million at the end of the period. The market value of the company's
equities portfolio was USD34.5 million over book value, compared with USD81.7
million at the beginning of the year.
Net interest expenses totalled USD4.6 million, compared with USD3.5 million in
1999. Interest-bearing liabilities totalled USD770 million at the end of the
quarter.
Bergesen holds 4,176,205 of its own A-shares and 1,564,400 of its own B-shares,
equivalent to 7.6% of shares in issue. These holdings have been eliminated when
calculating value-adjusted equity and per-share figures. The annual general
meeting on 27 April 2000 resolved to cancel these shares and authorised the
board to buy back up to 10% of the company's remaining shares.
OUTLOOK
The outlook for the VLGC market is one of weak growth in shipping volumes.
Demand for tonnage is forecast to rise faster than volumes on account of
increasing shipping distances. Delivery of a large number of newbuilds over the
next two years is putting a damper on rate expectations. The LGC and MGC
segments are expected to perform somewhat better on account of fewer newbuilds
and growing LPG activity in the Atlantic basin. The prospects of volume growth
and more long-distance ammonia shipments are also expected to make a positive
contribution.
The ethylene fleet is set to expand rapidly in the next 12 months with the
delivery of five newbuilds. These vessels are expected largely to compete with
larger vessels for LPG cargoes. Growth in LPG volumes for export from the North
Sea could limit the impact of this increased competition. Also a gradually
improving petrochemical market will contribute positively to the
employment for the semirefrigerated vessels. Bergesen's gas carriers under
20,000 cbm participating in chartering arrangements with A.P. Moller are
expected to continue their healthy progress.
The VLCC market is expected to remain strong thanks to the lifting of OPEC's
production cuts and healthy growth in oil consumption. Slightly lower scrapping
activity is anticipated this year due to better earnings and greater
optimism.
Trade in bulk commodities is forecast to grow faster than tonnage growth this
year. Capesize rates are expected to continue their positive development.
Oslo, 11 May 2000
The Board of Bergesen d.y. ASA
END
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