RNS Number:6596P
Bergesen d.y. ASA
18 August 2000
BERGESEN D.Y. GROUP
First-half interim report 2000
1st half 2nd quarter Full year
INCOME STATEMENT 2000 1999 2000 1999 1999
(Unaudited figures in USD million)
Operating revenue 331.5 330.0 181.5 161.3 666.7
Voyage expenses -84.7 -87.1 -50.4 -47.1 -184.0
Other operating expenses -143.6 -152.8 -69.2 -75.1 -315.8
Gains (losses) on sale of
vessels 15.9 9.0 8.9 4.0 13.0
Provision for severance
payments -7.6 0.0 -7.6 0.0 0.0
Operating profit before
depreciation 111.5 99.1 63.2 43.1 179.9
Depreciation -51.5 -57.0 -25.5 -28.0 -110.0
Operating profit 60.0 42.1 37.7 15.1 69.9
Income from associated
companies -0.7 -3.2 -0.1 -1.9 -2.6
Dividend income 2.7 1.0 2.7 1.0 1.0
Gains on sale of securities 0.0 0.1 0.0 0.0 8.3
Write-down of shares -24.3 0.0 -24.3 0.0 0.0
Foreign exchange gains
(losses) -17.0 -7.0 -10.0 5.0 -7.0
Net interest expenses -11.2 -7.2 -6.6 -3.7 -16.5
Other financial items (net) -0.4 -0.5 -0.5 0.0 0.0
Gains (losses) on sale of
property 0.0 0.4 0.0 0.4 0.4
Profit before tax 9.1 25.7 -1.1 5.9 53.5
Tax - 0.1 0.0 -0.1 0.0 -1.7
Profit after tax 9.0 25.7 -1.2 5.9 51.9
Minority interests 0.0 -5.0 0.0 -3.0 -6.0
Majority interests 9.0 30.7 -1.2 8.9 57.9
Earnings per share 0.13 0.34 -0.02 0.08 0.70
Cash flow per share 0.86 1.09 0.35 0.45 2.18
Average number
of shares 70,019,056 75,759,661 70,019,056 75,759,661 74,109,273
BALANCE SHEET
(USD million, unaudited)
30/6/00 30/6/99 31/12/99 30/6/00 30/6/99 31/12/99
Vessels 1,485 1,499 1,445 Equity 1,421 1,522 1,427
Vessels
under
construction 195 14 36 Long-term liabilities 804 643 654
Other fixed
assets 107 79 97 Current liabilities 93 86 121
Other
current
assets 99 67 67
Liquid assets
/shares 432 592 557
Total
assets 2,318 2,251 2,202 Total liabilities 2,318 2,251 2,202
RESULTS
The second-quarter accounts include a provision of USD 7.6 million for severance
payments in connection with a change in the company's crewing policy. In a bid
to regain competitiveness and ensure a stable crewing solution, Bergesen has
decided to replace around 650 Norwegian and British seafaring personnel with
employees from other nations. This change is scheduled to be completed by the
end of 2002, after which it is expected to reduce operating expenses by around
USD 25 million annually, assuming a largely unchanged fleet.
Following this USD 7.6 million provision, the Bergesen Group recorded first-half
operating profit of USD 60.0 million, compared with USD 42.1 million in 1999,
and second-quarter operating profit of USD 37.7 million, compared with USD 15.1
million in 1999.
The first-half accounts include net financial expenses of USD 50.9 million,
including a USD 24.3 million write-down of the company's shares in Kvaerner
and USD 17.0 million in exchange rate losses. The company sold its stake in
Kvaerner during the third quarter, triggering a loss for accounting purposes
that has been included in the second-quarter accounts as a write-down charge.
The foreign exchange losses relate primarily to bank deposits and debtors
denominated in NOK and to forward currency contracts and currency options,
The USD appreciated from NOK 8.04 to NOK 8.57 and averaged NOK 8.49 during the
period.
Profit before tax came to USD 9.1 million, compared with USD 25.7 million in
1999, and profit after tax and minority interests was USD 9.0 million,
compared with USD 30.7 million in 1999.
VALUE-ADJUSTED EQUITY
Allowing for share buybacks and after the dividend of NOK 3.50 paid in May, the
Group's value adjusted equity before tax came to USD 22.88 (NOK 196) per share
at the end of the period, compared with USD 21.96 (NOK 176) at the beginning of
the year. This increase is attributable to cash flows during the period and a
substantial increase in the value of the tanker fleet and vessels under
construction. The value of the Group's other vessels fell.
The value of the Bergesen fleet in USD terms fell 0.4% during the period (gas
-6.0%, tankers +23.3%, dry bulk -0.5% and offshore -0. 1 %) to USD 1,643 million
(gas USD 954 million, tankers USD 522 million, dry bulk USD 116
million and offshore USD 51 million), including USD 81 million attributable
to minority interests in the gas fleet. The market value of vessels under
construction was USD 55 million over their book value. These market values
are based on the average estimates for charter-free vessels obtained from
three independent brokers.
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 on a full consolidation
basis with minority interests (subsidiary undertakings), using the equity
method (associated undertakings) and using the cost method (other minor
holdings).
The operation of the fleet ran smoothly during the second quarter. Four
vessels were dry-docked for scheduled maintenance.
Bergesen has entered into an agreement with Hyundai Heavy Industries on the
repair of the dry bulk carrier Berge Nord following problems with cracks in
her hull. The vessel docked at the beginning of July for structural
reinforcements and will spend approximately 45 days off-hire during the third
quarter.
BREAKDOWN BY FLEET - FIRST HALF (1/1/00-30/6/00)
IST HALF (1/1/00-30/6/00)
(Unaudited figures GAS TANKERS DRY BULK OFFSHORE TOTAL
in USD million) 2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
Operating revenue 166.9 174.8 104.1 109.8 26.8 22.6 14.4 4.0 312.2 311.2
Voyage expenses -34.0 -49.9 -32.6 -24.3 -8.9 -7.2 -4.2 -0.1 -79.7 -81.5
T/C (time charter)
income 132.9 124.9 71.5 85.5 37.9 15.4 10.2 3.9 232.5 229.7
Operating expenses -73.6 -80.3 -43.0 -49.9 -6.4 -6.8 -4.2 -4.4 -127.2 -141.4
Charter hire
expenses 0.0 0.0 0.0 0.0 -4.9 -2.1 0.0 0.0 -4.9 -2.1
Gains (losses) on
sale of vessels -0.4 0.0 17.3 8.5 0.0 0.0 0.0 0.0 16.9 8.5
Provision for
severance payments -5.3 0.0 -1.6 0.0 -0.1 0.0 0.0 0.0 -7.0 0.0
Operating profit
before
depreciation 53.6 44.6 44.2 44.1 6.5 6.5 6.0 -0.5 110.2 94.7
Depreciation -27.3 -28.6 -15.7 -19.6 -4.1 -4.0 -2.0 -1.6 -49.1 -53.8
Operating profit 26.3 16.0 28.5 24.5 2.4 2.5 4.0 -2.1 61.2 40.9
T/C income per day/
month*(USD '000) 480* 445* 20.5 21.2 19.9 18.7 - - 17.9 17.0
BREAKDOWN BY FLEET - SECOND QUARTER (1/4/00-30/6/00)
2ND QUARTER (1/4/00-30/6/00)
in USD million) GAS TANKERS DRY BULK OFFSHORE TOTAL
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
Operating revenue 86.7 87.6 62.3 50.0 14.7 10.9 7.6 2.4 171.3 150.9
Voyage expenses -19.9 -27.4 -19.1 -12.9 -4.7 -3.3 -2.3 -0.1 -46.0 -43.7
T/C (time charter)
income 66.8 60.2 43.2 37.1 10.0 7.6 5.3 2.3 125.3 107.2
Operating expenses -34.4 -39.1 -20.9 -24.5 -2.7 -3.6 -2.0 -1.3 -60.0 -68.5
Charter hire
expenses 0.0 0.0 0.0 0.0 -4.2 -1.0 0.0 0.0 -4.2 -1.0
Gains (losses) on
sale of vessels -0.4 0.0 9.1 4.2 0.0 0.0 0.0 0.0 8.7 4.2
Provision for
severance payments -5.3 0.0 -1.6 0.0 -0.1 0.0 0.0 0.0 -7.0 0.0
Operating profit
before depreciation 26.7 21.1 29.8 16.8 3.0 3.0 3.3 1.0 62.8 41.9
Depreciation -13.0 -14.3 -8.4 -9.2 -2.1 -2.0 -1.0 -0.8 -24.5 -26.3
Operating profit 13.7 6.8 21.4 7.6 0.9 1.0 2.3 0.2 38.3 15.6
T/C income per
day/month*(USD'000) 485* 435* 24.4 18.5 19.8 18.3 - - 19.2 15.9
The offshore fleet comprises such completely different classes of vessels that
reporting average TIC income is not appropriate.
GAS
The gas fleet recorded first-half operating profit of USD 26.3 million, compared
with USD 16.0 million in 1999. Earnings were lower than last year in the VLGC
segment but considerably higher in the other segments.
The spot market for VLGCs (over 70,000 cbm) featured reduced availability of
cargoes and much longer waiting times in the second quarter, with earnings being
undermined by competition from tonnage normally fixed on long-term charters.
Uncertainty among the players in the LPG market about contract prices from the
Middle East, which have been well above spot market prices, resulted in lower
trading activity.
An increase in domestic LPG production in China (based on refining imported oil)
led to local price pressure. Given the high contract prices from the Persian
Gulf, imports were therefore unprofitable at times and so reduced in volume.
Some Chinese players are expected to import lower volumes than last year.
As expected Saudi Arabia announced a reduction in contract sales of LPG to
Japanese and South Korean buyers following the start-up of its new
petrochemicals facility, which uses LPG as feedstock. Saudi LPG exports are
expected to drop by around 1 million tonnes to 12.5 million tonnes this year and
by a further 1.5 million tonnes next year, The shift in LPG trading patterns
towards increased exports from North and West Africa to the Far East to offset
reduced exports from the Persian Gulf has been slower than anticipated.
At the end of the second quarter Kuwaiti LPG exports were hit by a fire at one
of the country's facilities for the production of oil and associated gases, and
is not likely to recommence LPG exports before the end of August. This means a
cut in LPG exports of at lent 400,000 tonnes over a two month period, equivalent
to around ten VLGC loads.
The reduced availability of LPG cargoes has prompted free VLGC tonnage to seek
alternative employment in the market for clean petroleum products, which offers
significantly lower earnings than the LPG market oven though rates have been
higher than for a number of years.
One newbuild joined the world VLGC fleet during the second quarter and a further
three vessels are due to be delivered in the second half. The fleet consisted of
94 active vessels at the end of the period, with a further 12 on order.
Bergesen's VLGCs generated average T/C income of USD 585,000/month during the
first half, compared with USD 650,000/month in 1999. Charter cover for the rest
of the year stood at around 28% at the end of the period.
Four Japanese-owned vessels joined Bergesen's VLGC pool during the period, three
of them during the second quarter, to take the pool to 25 vessels in all.
Bergesen will take delivery of the first of two VLGC newbuilds from the Gdynia
yard in Poland in the second half of September this year, with the second
expected to follow in mid-January 2001.
The market for LGCs (50-60,000 cbm) rallied strongly in the second quarter and a
substantial proportion of the fleet came to be fixed on lime charters. Waiting
times for vessels sailing in the spot market have not deteriorated in the same
way as for VLGCs and the availability of both ammonia and LPG cargoes was good.
Earnings in the spot market had climbed to around USD 650,000/month excluding
waiting time by the end of the period.
Bergesen's LGCs generated avenge T/C income of USD 510,000/month during the
first half, compared with USD 400,000/month in 1999. Charter cover for the rest
of the year stood at around 45% at the end of the period.
During the second quarter Bergesen sold its 43% interest in the 1977-built
54,200 cbm LGC Hekabe as part of a long-term freight contract with a major
ammonia charterer, generating a capital loss for accounting purposes of USD 1.8
million (including minority interests of USD 0.2 million). The company also sold
the 1971-built 52,600 cbm LGC Havgast for scrap, generating a capital gain for
accounting purposes of USD 1.7 million (including minority interests of USD 0.7
million). This leaves the world LGC fleet at 25 vessels, of which 18 are sailing
in Bergesen's pool. No newbuilds are currently on order.
The spot market for MGCs (20-40,000 cbm) also featured high levels of activity
for all cargo types during the second quarter, with rates improving slightly on
the first. Indian LPG and ammonia imports employed a substantial number of
vessels in this segment.
High LPG prices in the USA have undermined the profitability of using LPG as the
raw material for ammonia production. resulting in the closure of local
production facilities with a combined annual capacity of 0.3-0.5 million
tonnes. Imports of ammonia from the Black Sea are therefore likely to hold at
their already high levels, having previously been expected to decline.
Bergesen's MGCs generated average T/C income of USD 485,000/month during the
first half, compared with USD 390,000/month in 1999.
One newbuild joined the world MGC fleet during the second quarter. Seven
vessels were on order at the end of the period, including three with ethylene
capacity. Two of these vessels were due for delivery later this year,
including one with ethylene capacity.
The market for the semirefrigerated Igloo and Handygas carriers (8-15,000 cbm)
participating in the chartering arrangement with A.P. Moller continued to
improve in the second quarter. The market for vessels with ethylene capacity was
particularly buoyant, with rates hitting their highest levels for several years.
An increase in shipments of ethylene and propylene from Asia to Europe employed
a large number of vessels. Capacity utilisation was boosted by many of the
vessels being forced to make a ballast voyage on the return leg after offloading
in Europe. The period saw a busy transatlantic market for butadiene from Europe
to the USA and the first shipment of butadiene from South Korea to the USA for
two years. The availability of VCM cargoes for export from the USA remained
limited, but the North Sea LPG market was stronger than it has been for several
years.
Bergesen's Handygas vessels generated average T/C income of USD 265,000/month
during the first half, compared with USD 220,000/month in 1999, while the
Igloo vessels generated average T/C income of U5D 335,000/month, compared
with USD 260,000/month in 1999.
In the 8-15,000 cbm segment, no newbuilds were delivered during the second
quarter and two vessels were on order at the end of the period, one for delivery
in each of the next two years. In the 6-8,000 cbm segment, one 7,500 cbm
newbuild was delivered during the second quarter and six vessels were on
order at the end of the period, including two for delivery this year.
Bergesen entered into a contract with Daewoo Heavy Industries in April on the
construction of a 138,000 cbm LNG carrier of the membrane type for delivery
in the first quarter of 2003 at a price of around USD 150 million. The vessel
has not been fixed on a charter as yet. Bergesen has an option to order a
further vessel for delivery in the second half of 2003.
TANKERS
Bergesen's VLCCs generated first-half operating profit of USD 28.5 million,
compared with USD 24.5 million in 1999. Average T/C income was USD 20,500/day
during the first half, compared with USD 21,200/day in 1999, and USD 24,400/day
in the second quarter.
The VLCC market rallied strongly in the second quarter following OPEC's decision
to lift its previous 1.7 mb/d quota reduction with effect from April
2000 and has continued to improve in the third quarter following OPEC's
decision to step up its output by a further 0.7 mb/d in July. According to
the IEA, OPEC (including Iraq) produced around 28 mb/d during the second
quarter, up 1.5 mb/d on the first. However, world output grew by just 1.2
mb/d during the period on account of a 0.3 mb/d drop in North Sea production
brought on by seasonal maintenance of production facilities and strikes.
Following a relatively long period of high oil prices there are now signs
that this is translating into slower growth in consumption. The IEA is
currently forecasting growth in world oil demand of 1.5% or 1.1 mb/d this
year, which is 0.7 mb/d less than it was anticipating four months ago. The
increase in OPEC production prompted stockpiling of around 1.1 mb/d during the
second quarter, which is normal for the season, but stocks remain low. OPEC
output is expected to be around 28.5 mb/d in the third quarter.
Charter rates in the spot market have rallied in the third quarter, and fixtures
have been made at about USD 80,000 per day for modem tonnage. Of Bergesen's
tanker fleet of 19 sailing vessels 10 vessels are employed in the spot market.
The second quarter saw Bergesen selling the 1979-built 268,112 dwt Berge Fister,
the 1978-built 267,401 dwt Berge Forest and its interest in the 1983-built
322.446 dwt Settebello, generating a total capital gain for accounting purposes
of USD 9.2 million.
In June the company exercised its options to order two 296,000 dwt VLCC
newbuilds from Hitachi at a price of around USD 70 million each. This means
that Bergesen has now ordered a total of eight vessels from the Hitachi yard
for delivery within June 2002. Two of the vessels were delivered during the
second quarter and another followed early in the third.
24 VLCC newbuilds joined the world fleet during the first half and a further
17 are due for delivery in the second. Interest in selling older vessels for
scrap has waned sharply on account of the stronger market, with 23 VLCCs
having been sold for scrap so far this year. A total of 81 VLCCs were on order
at the end of the period, equivalent to 19% of the existing fleet.
DRY BULK
Bergesen's dry bulkers generated first-half operating profit of USD 2.4 million,
compared with USD 2.5 million in 1999. Charter cover for the rest of the year
stood at around 90% at the end of the period. Average T/C income
was USD 19,900/day, compared with USD 18,700 in 1999.
To meet its contractual commitments, Bergesen was forced to hire in external
tonnage for a total of 142 vessel-days during the second quarter to replace
the Berge Nord and Berge Athene, which were both out of service for a period.
Bergesen has also had the Gargantua on a long-term charter running through to
December this year. This chartered tonnage generated an operating loss of USD
1.1 million during the first half after charter hire expenses of USD 4.9
million.
The market for large dry bulkers was rather variable during the second quarter
but picked up towards the end of the period due to a surge in iron ore and coal
fixtures. Spot rates for modern Capesize tonnage ended the period at around USD
19,000/day and 12-month time charter rates at around USD 17,000/day.
The second quarter again saw few older vessels being sold for scrap, with just
one Capesize vessel and one combined carrier reported sold. 11 Capesize
newbuilds were delivered during the quarter and a further 20 vessels of more
than 100,000 dwt are due to follow suit during the second half. The world
order book totalled 69 vessels at the end of the period, equivalent to 15% of
the existing fleet of Capesize vessels of more than 100,000 dwt.
OFFSHORE
The Berge Hugin continued to produce oil as scheduled during the second
quarter.
The conversion of the Berge Charlotte, now renamed the Sendje Berge, into an
FPSO unit is expected to be completed in October this year. After hookup and
commissioning first oil is expected primo December 2000, under a charter with
oil company Triton running for at least two years.
A similar project to convert the Berge Hus into an FPSO unit is due to begin
in the fourth quarter this year and be completed in May 2001. The vessel has
not been chartered as yet.
FINANCIAL INFORMATION
Bergesen had liquid assets (bank deposits, bonds, certificates and equities)
of USD 432.6 million at the end of the period.
In July the company sold its entire holding of Kvaerner shares and warrants for
NOK 1, 158 million, with both transfer and payment due to take place on 12
October. The sale has generated a capital gain of USD 9.4 million and an
associated foreign exchange loss of USD 33.7 million on account of the
appreciation of the USD since the shares were purchased. The sale has
therefore generated a net loss for accounting purposes of USD 24.3 million,
which has been included in the first-half accounts as a write-down charge.
Net interest expenses came to USD 11.2 million, compared with USD 7.2 million
in 1999. Interest bearing liabilities totalled USD 795.2 million at the end of
the period.
July saw Bergesen entering into an agreement with a group of Norwegian and
international banks on a USD 700 million loan facility, which will run for
seven years with no repayments for the first five.
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 offset when
calculating value-adjusted equity and per share figures. The annual general
meeting on 27 April 2000 resolved to cancel these shares, which is due to take
place at the end of August 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 moderate growth in shipping volumes.
Demand for tonnage is forecast to rise faster than volumes on account of
increasing shipping distances as trading patterns shift and the Asian growth
markets are forced to source a larger proportion of their imports west of Suez.
However, fleet growth over the next two years is expected to exceed this growth
in demand for tonnage.
The LGC segment is expected to perform better thanks to an unchanged fleet,
growth in LPG shipments from the Atlantic basin and a robust ammonia market
west of Suez.
Increased intra-Asian trade in ammonia may reduce the need for imports from the
Black Sea and impact negatively on demand in the MGC segment.
The world fleet of gas carriers with ethylene capacity is set to grow rapidly
over the next 12 months, with these new vessels largely expected to compete
with MGCs for LPG cargoes. Growth in LPG volumes for export from the North Sea
and a stronger petrochemicals market will help to offset this competition.
Bergesen's gas carriers of less than 20,000 cbm are expected to continue their
healthy progress.
The tanker market is expected to remain strong for the rest of this year and
next.
Trade in dry bulk commodities is forecast to grow faster than tonnage this year
and freight rates are likely to hold at high levels. A bulging order book
combined with limited scrapping of older tonnage is giving cause for concern
further ahead.
Thanks to the strong tanker market, Bergesen's operating profit is expected to
be substantially higher in the second half of the year than in the first.
Oslo, 17 August 2000
The board of Bergesen d.y. ASA
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