RNS Number:8323T
Bergesen d.y. ASA
9 November 2000
BERGESEN D. Y. GROUP
Nine-month interim report 2000
Nine months Third Quarter Full Year
2000 1999 2000 1999 1999
INCOME STATEMENT
(Unaudited figures in
USD million)
Operating revenue 526.0 497.5 194.5 167.5 666.7
Voyage expenses -130.3 -138.4 -45.6 -51.3 -184.0
Other operating expenses -216.4 -230.5 -72.8 -77.7 -315.8
Gains on sale of vessels 15.7 13.0 -0.2 4.0 13.0
Provision for severance
payments -7.6 0.0 0.0 0.0 0.0
Operating profit before
depreciation 187.4 141.6 75.9 42.5 179.9
Depreciation -76.9 -83.0 -25.4 -26.0 -110.0
Operating profit 110.5 58.6 50.5 16.5 69.9
Income from associated
companies -0.8 -1.6 0.0 1.7 -2.6
Dividend income 3.1 1.0 0.3 0.0 1.0
Gains on sale on securities 2.1 0.1 2.1 0.0 8.3
Write-down of shares -24.3 0.0 0.0 0.0 0.0
Foreign exchange gains -53.1 -6.0 -36.1 1.0 -7.0
Net interest expenses -16.0 -11.4 -4.7 -4.2 -16.5
Other financial items -0.2 -0.3 0.1 0.1 0.0
Gains on sale of property 0.9 0.4 0.9 0.0 0.4
Profit before tax 22.2 40.8 13.1 15.1 53.5
Tax 0.9 0.0 1.0 0.0 -1.7
Profit after tax 23.1 40.8 14.1 15.1 51.9
Minority interests 3.0 -5.0 3.0 0.0 -6.0
Majority interests 20.1 45.8 11.1 15.1 57.9
Earnings per share 0.33 0.54 0.20 0.20 0.70
Cash flow per share 1.43 1.63 0.56 0.55 2.18
Average number of
shares 70,019,056 75,335,626 70,019,056 74,560,731 74,109,273
BALANCE SHEET
(USD million, unaudited)
30/9/00 30/9/99 31/12/99
Vessels 1,531 1,476 1,445
Vessels under construction 203 19 36
Other fixed assets 103 85 97
Other current assets 211 72 67
Liquid assets/shares 295 551 557
Total assets 2,343 2,203 2,202
30/9/00 30/9/99 31/12/99
Equity 1,436 1,465 1,427
Long-term liabilities 797 645 654
Current liabilities 110 93 121
Total liabilities 2,343 2,203 2,202
RESULTS
The Bergesen group recorded nine-month operating profit of USD 110,5 million,
compared with USD 58.6 million in 1999, and third-quarter operating profit USD
50,5 million, compared with USD 16.5 million in 1999.
The nine-month accounts include net financial expenses of USD 89,2 million,
including a USD 24.3 million write-down of the company's shares in Kvaerner and
USD 53,1 million in foreign exchange losses. The foreign exchange losses are
caused by the strong appreciation of the USD, from NOK 8.04 at the beginning of
the year to NOK 9.16 by the end of the third quarter. The average exchange rate
over the period was NOK 8.65. A considerable part of the company's operating
expenses are nominated in NOK. This currency exposure is secured by holding
bank deposits in NOK and by buying NOK under forward currency contracts and
currency options. The company sold its shares in Kvaerner during the third
quarter, triggering a loss for accounting purposes of USD 24.3 million that was
included in the second-quarter accounts as a write-down charge. Settlement for
the shares is due for receival in December 2000. The balance sheet item other
current assets of USD 211 million as per 30.09.2000 includes such a receivable
of USD 113 million (nominated in NOK).
Profit before tax came to USD 22.2 million, compared to USD 40.8 million in
1999, and profit after tax was USD 23,1 million, compared with USD 40.8 million
in 1999.
VALUE-ADJUSTED EQUITY
The group's value-adjusted equity before tax was USD 24.58 (NOK 225) per share
at the end of the period, compared with USD 21,90 (NOK 176) at the beginning of
the year (before the payment of dividends). 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 Bergesen fleet in USD terms climbed 2.3% during the period (gas
- 7.7%, tankers +38%, dry bulk +0.3% and offshore +2.4%) to USD 1,816 million
(gas USD 942 million, tankers USD 659 million, dry bulk USD 117 million and
offshore USD 98 million), including USD 79 million attributable to minority
interests in the gas fleet. The market value of vessels under construction was
USD 90 million over their book value. These market values are based on the
average estimates for charter-free vessels obtained from three independent
brokers. Due to the special features of the offshore vessels, it has been
necessary to take into account the company's own value estimates for these
vessels.
FLEET REPORT
Due to persistent cracking problems, the drybulk vessel Berge Nord (220.353 dwt,
built 1997) went to repair yard for hull reinforcement works in the third
quarter. The vessel's construction yard has accepted to cover a substantial
part of the costs involved. USD 1.4 million has been expenced in the accounts
per 30.09.2000, representing Bergesen's share of the costs. The vessel has
spent about 75 days off-hire up to 30.09.2000, of which about 45 days in the
third quarter.
Classification work on the main engine of the 1991-built 57,200 cbm LGC-vessel
Helice during a scheduled dry-docking in Portugal revealed cracks in the main
engine's bedplate. It has been agreed with the vessel's insurers that the
bedplate should be replaced, and the repair work is due to be completed in
mid-November.
Operation of the rest of the fleet ran smoothly during the third quarter. A
total of ten vessels were dry-docked for scheduled maintenance, compared with
nine in the first half of the year.
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).
BREAKDOWN BY FLEET - FIRST NINE MONTHS (1/1/00 - 30/09/00)
FIRST NINE MONTHS (1/1-30/9)
(Unaudited figures in USD million)
GAS TANKERS DRY BULK OFFSHORE TOTAL
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
Operating
revenue 252.0 267.5 184.7 155.3 42.7 35.3 21.7 14.3 501.1 472.4
Voyage
expenses -53.5 -78.2 -51.4 -36.5 -13.2 -11.0 -6.6 -4.2 -124.7 -129.9
T/C (time
charter)
income 198.5 189.3 133.3 118.8 29.5 24.3 15.1 10.1 376.4 342.5
Operating
income -112.4 -119.8 -63.7 -75.3 -10.9 -10.4 -6.4 -7.8 -193.4 -213.3
Charter
hire
expenses 0.0 0.0 0.0 0.0 -10.4 -3.9 0.0 0.0 -10.4 -3.9
Gains on
sale
of vessels -0.4 0.0 17.2 12.5 0.0 0.0 0.0 0.0 16.8 12.5
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 80.4 69.5 85.2 56.0 8.1 10.0 8.7 2.3 182.4 137.8
Depreciation -40.3 -42.9 -24.3 -27.7 -6.1 -6.0 -3.0 -2.4 -73.7 -79.0
Operating
profit 40.1 26.6 60.9 28.3 2.0 4.0 5.7 -0.1 108.7 58.8
T/C income
per day/
month*
(USD '000) 480* 455* 25.5 19.9 20.7 19.2 - - 19.2 16.9
BREAKDOWN BY FLEET - THIRD QUARTER (1/7-30/9)
THIRD QUARTER (1/7-30/9)
(Unaudited figures in
USD million)
GAS TANKERS DRY BULK OFFSHORE TOTAL
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
Operating
revenue 85.2 92.7 80.6 45.4 15.8 12.6 7.3 10.3 188.9 161.0
Voyage
expenses -19.5 -28.3 -18.9 -12.1 -4.2 -3.7 -2.4 -4.1 -45.0 -48.2
T/C (time
charter)
income 65.7 64.4 61.7 33.3 11.6 8.9 4.9 6.2 143.9 112.8
Operating
expenses -38.8 -39.5 -20.6 -25.4 -4.6 -3.5 -2.2 -3.4 -66.2 -71.8
Charter
hire
expenses 0.0 0.0 0.0 0.0 -5.5 -1.8 0.0 0.0 -5.5 -1.8
Gains on
sale
of vessels 0.0 0.0 -0.1 4.0 0.0 0.0 0.0 0.0 -0.1 4.0
Provision
for
severance
payments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Operating
profit
before
depreciation 26.9 24.9 41.0 11.9 1.5 3.6 2.7 2.8 72.1 43.2
Depreciation -13.0 -14.3 -8.6 -8.1 -2.0 -2.0 -1.0 -0.8 -24.6 -25.2
Operating
profit 13.9 10.6 32.4 3.8 -0.5 1.6 1.7 2.0 47.5 18.0
T/C income
per day/
month*
(USD '000) 480* 460* 35.3 17.3 22.1 20.1 - - 21.9 16.7
The average T/C income per vessel is not reported for the offshore fleet
GAS
The gas fleet recorded nine-month operating profit of USD 40,1 million, compared
with USD 26.6 million last year. Earnings were lower than last year in the VLGC
segment but consistently higher in other segments.
The spot market for VLGCs (over 70,000 cbm) was subdued during the third
quarter, with limited availability of LPG cargoes and long waiting times,
especially in August. VLGCs sail mainly on LPG trades from the Persian Gulf to
the Far East. The drop in Saudi LPG exports has yet to result in the
anticipated increase in LPG exports from the Atlantic basin to the Far East.
This is mainly because China has cut back its LPG imports, which had been
expected to grow, and instead opted to step up its oil imports quite
considerably and meet a high proportion of its LPG needs by refining this
imported oil at domestic refineries. Fixtures on LPG trades from the Persian
Gulf to Western destinations boosted capacity utilisation towards the end of the
third quarter on account of the longer voyages involved and so reduced the
number of idle vessels. Some vessels found alternative employment in the market
for clean petroleum products, which was better than for some time. There is
still idle tonnage in the pool and attempts will be made to employ additional
vessels in this market in the future.
Bergesen's VLGCs generated average T/C income of USD 570,000/month during the
first three quarters, compared with USD 655,000/month during same period last
year. Contract coverage at the end of the period stood at 56% for the rest of
this year and 13% for next year.
Four vessels have joined the world VLGC fleet so far this year and a further one
is due to follow suit during fourth quarter. The world fleet consists of 97
vessels, with a further 12 on order. One vessel left Bergesen's VLGC pool in the
third quarter, and the pool now comprises 24 vessels. Bergesen's two newbuilds
from the Gdynia yard in Poland will join the pool upon delivery. The first
vessel will be delivered slightly late in November 2000, and the second is due
to follow in January 2001.
The market for LGCs (50-60,000 cbm) remained buoyant throughout the third
quarter. The availability of both LPG and ammonia cargoes was good and waiting
times were short. Despite higher ammonia production in Trinidad, which sells
mostly to the North American market, exports of ammonia from the Black Sea to
North America held up well. This was due to the closure of old ammonia plants in
North America that used natural gas as their raw material and became
unprofitable as the price of natural gas began to soar. The growing number of
VLGCs on Western trades has yet to have any negative impact on earnings in the
LGC segment. Bergesen's LGC pool fixed vessels on time charters running for up
to 12 months at around USD 750,000/month.
Bergesen's LGCs generated average T/C income of USD 525,000/month during the
first three quarters, compared with USD 425,000/month last year. Contract
coverage at the end of the period stood at 51% for the rest of this year and
27% for next year. Altogether 18 vessels are sailing in Bergesen's pool and one
more vessel will join the pool towards the end of the year. No newbuilds are
currently on order.
The market for MGCs (20-40,000 cbm) featured lower levels of activity at the
start of the third quarter but picked up in August and remained strong for the
rest of the period. Here too the availability of both LPG and ammonia cargoes
was good and waiting times were short.
Bergesen's MGCs generated average T/C income of USD 480,000/month during the
first three quarters, compared with USD 400,000/month last year. Contract
coverage at the end of the period stood at 59% for the rest of this year and 39%
for next year.
Two newbuilds joined the world MGC fleet during the third quarter and six
vessels were on order at the end of the period. One vessel with ethylene
capacity is due to be delivered during the fourth quarter.
The market for the semirefrigerated Igloo and Handygas carriers (8- 15,000 cbm)
participating in the chartering arrangement with A.P. Moller weakened towards
the end of the third quarter. The high levels of ethylene and propylene activity
on trades from Asia to Europe seen during the summer months gradually died down
as product prices in Asia and Europe evened out. There were some fixtures on
ethylene and propylene trades from the USA and Mexico to Europe and butadiene
trades from Europe to the USA. Limited access to petrochemical cargoes forced
vessels to seek employment in the LPG and chemical market to reduce waiting
times.
Bergesen's Handygas vessels generated average T/C income of USD 280,000/month
during the first three quarters, compared with USD 220,000/month last year,
while the Igloo vessels generated average T/C income of USD 345,000/month,
compared with USD 260,000/month last year.
No newbuilds were delivered in the 8-15,000 cbm segment during the third quarter
but eight vessels were on order at the end of the period. Six vessels were on
order in the 6-8,000 cbm segment.
TANKERS
Bergesen's tanker generated nine-month operating profit of USD 60,9 million,
compared with USD 28.3 million last year. Average T/C income was USD 25,500/day,
compared with USD 19,900/day last year. At the end of the third quarter,
Bergesen had seven vessels employed on contracts of more than one year
remaining running time.
The tanker market was buoyant throughout the third quarter, with fixtures
peaking in late July and early August when, on a T/C basis, spot market rates
for modern vessels hit USD 70,000/day and rates for one-off fixtures to
Southeast Asia topped USD 100,000/day. Activity then dropped off in the second
half of August and early September, with rates falling slightly to around USD
50,000/day for modern tonnage, before rallying again in September to push rates
back to the levels seen at the start of the quarter. The market has firmed
further in October/November, and T/C-rates have been reported above USD 110.000
per day for modern tonnage and USD 70-80.000 per day for tonnage built in the
1970'ies.
OPEC decided at its meeting in September to step up its oil output by 0.8
mb/d to 26.2 mb/d (excluding Iraq) with effect from 1 October, with this
increase split pro rata between member countries. Provisional production
figures for September suggest total OPEC output of 29 mb/d (including 2.9
mb/d in Iraq) and so it seems that most of the increase announced was already
put into action in September. It is uncertain how much extra oil the OPEC
nations will actually produce as a result of the September decision. Overall,
OPEC output hit its highest levels since the 1970s during the third quarter.
Despite these high output figures and signs of demand slackening, OECD
figures for the first two months of the third quarter suggest stockpiling
of just 0.6 mb/d.
Bergesen took delivery of the Berge Fuji, the third of a series of eight
VLCCs from the Hitachi yard, at the beginning of July.
36 VLCC newbuilds joined the world fleet during the first nine months, 24
older vessels were sold for scrap and another three were sold for conversion
to FPSO's, before the buoyant market put a complete stop to demolition
activity. A total of 88 VLCCs are now on order, equivalent to about 20% of
the existing fleet. Seven of these are due to be delivered during the fourth
quarter.
Proposals for new international rules on phasing out old single-hulled
tankers in response to the Erica disaster off France last December were tabled
at a meeting of the UNs International Maritime Organisation at the beginning
of October. It is intended that IMO shall make a final decision on the matter
in April 2001, in order for the new rules to apply from 2002. According to
present rules, these vessels shall be phased out at the age of 30 years, but
many vessels are phased out at the age of 25 years. The proposed new rules
will imply a maximum age limit of 28-29 years for vessels built in the mid
1970'ies, and a gradual reduction to about 20 years for vessels built in the
mid 1980'ies. The proposals will have the effect that about 25% of the
existing VLCC fleet has to be phased out within the end of 2004. The effect
for Bergesen will be that altogether 11 vessels are facing a reduced maximum
age limit. Only one vessel will have an age limit below 25 years, while the
average age limit for the other ten vessels will be about 27.5 years.
DRY BULK
Bergesen's dry bulkers generated nine-month operating profit of USD 2.0 million,
compared with USD 4.0 million last year. The negative impact is mainly caused
by the repairs of Berge Nord explained above and expenses related to hire of
substitute tonnage during the repair period. Average T/C income was USD 20,700
per day, compared with USD 19,200 per day last year. Contract coverage for the
remaining of this year and next year stands at about 80%.
Charter hire expenses for tonnage hired in amount to USD 10.4 million for the
first three quarters of the year, including the vessel Gargantua, which has been
hired in on a long term basis, with redelivery in December 2000. The net
result from tonnage hired in shows a loss of USD 2.2 million during the
period.
The market for large dry bulk carriers rallied during the third quarter.
World steel production has continued to grow rapidly, with crude steel output
for the first nine months up 11% on last year. Even higher growth has been
seen in iron ore cargoes, with imports into Japan, China and South Korea
rising fastest. Shipments of energy coal and metallurgical coal are also
showing healthy growth.
Spot rates for modern Capesize tonnage were around USD 20,000 per day at the
end of the period and 12-month T/C rates were being reported at USD 19,000
per day. There was again limited demolition activity in the third quarter,
with just one Capesize vessel and four combined carriers being reported sold
for scrap. Nine newbuilds were delivered during the same period and a further
seven vessels over 100,000 dwt are due to follow during the fourth quarter.
The world order book consisted of 61 vessels at the end of the period,
equivalent to 12% of the existing fleet of Capesize vessels over 100,000 dwt.
OFFSHORE
Operating profit for the offshore segment reached USD 5.7 million after
three quarters, compared to a negative operating profit of USD 0.1 million last
year. Production on the Berge Hugin is running to schedule and high oil prices
have boosted earnings. The turbine tanker Berge Charlotte has been renamed the
Sendje Berge and her conversion to an FPSO unit is now complete. The vessel is
now heading for an oilfield off Equatorial Guinea, where she will be anchored
and hooked up. Production start up has been somewhat delayed, but is expected to
occur towards the end of the year.
FINANCIAL INFORMATION
Bergesen had liquid assets (bank deposits, bands, certificates and equities)
of USD 295 million at the end of the period. This is exclusive of a receivable
of USD 113 million being settlement for the Kvaerner shares, which is included
in other current assets of USD 211 million.
Net interest expenses came to USD 16.0 million, compared with USD 11.4
million last year. Interest bearing liabilities totalled USD 789 million at the
end of the period.
According to the original sales agreement for the Kvaerner shares, Aker
Maritime were to take over the shares and settle the purchase money within 12
October 2000. This deadline has been extended to 19 December 2000 to allow
time for the EU to approve Aker Maritime's acquisition. Bergesen's receivable
is secured by a bank guarantee.
Bergesen's holdings of its own shares were cancelled in August. The holding
represented 7.6% of the total number of shares in the company, consisting of
4,176,205 A-shares and 1,564,400 B-shares. This leaves the company with a
share capital of NOK 175,047,640 divided into 70,019,056 shares, each with a
nominal value NOK 2.50, of which 48,922,210 are A-shares and 21,096,846 are B
shares.
The general meeting has authorised the board to let the company buy back up
to 10% of outstanding shares of the company.
OUTLOOK
The outlook for the VLGC market is one of moderate growth in shipping
volumes. Despite a shift in trading patterns in favour of longer voyages,
growth in the world fleet over the next two to three years is expected to
outstrip growth in demand for tonnage and may therefore result in a period of
continued poor earnings. The outlook for the LGC and MGC segments has not
changed notably in the last quarter and so they are still believed likely to
outperform the VLGC segment on the strength of more controlled tonnage
growth, higher activity on LPG trades from the Atlantic basin and an increase
in ammonia shipments.
The fleet of small semirefrigerated gas carriers with ethylene capacity is set
to grow substantially towards 2003. On a short term basis it is expected that
the market will suffer from overcapacity of tonnage. However, on a long term
basis, outlook for the petrochemical industry seems brighter, with a possible
gradual improvement of the freight market for petrochemical gases.
The tanker market is expected to remain buoyant despite high numbers of
newbuilds and a possible drop in the rate of growth in demand for oil in the
first half of next year. Any retaliatory action on the part of the Arab
nations - in particular Iraq - in the light of the tense situation that has
arisen in the Middle East may have major implications for oil exports.
Lower rates of growth in the world economy and industrial production are
expected to result in slower growth in demand for drybulk tonnage, and
increasing excess tonnage could put pressure on rates during the course of
next year. However, Bergesen has limited exposure to movements in the spot
market.
The delicate situation that has arisen between the Israelis and the
Palestinians has resulted in a major surge in oil prices. Should the
situation spiral out of control, oil prices may rapidly hit new heights
and jeopardise growth in the world economy.
Bergesen's operating profit is expected to be higher in the fourth quarter
than in the third.
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