RNS Number:7377V
Bergesen d.y. ASA
10 May 2002
BERGESEN D.Y. GROUP
First-quarter interim report 2002
First quarter Full year
INCOME STATEMENT 2002 2001 2001
(Unaudited figures in USD million)
Operating revenue 154.0 238.9 767.7
Voyage expenses -39.5 -42.0 -171.4
T/C (time charter) income 114.5 197.0 596.3
Other operating expenses -71.9 -69.5 -277.2
Provision for severance payments 0.0 0.0 0.0
Gains on sale of vessels 10.4 7.2 63.3
Operating profit before depreciation 53.0 134.6 382.4
Depreciation -27.4 -30.3 -119.6
Write-down of vessels 0.0 0.0 -46.3
Operating profit 25.6 104.3 216.5
Interest income 2.9 5.6 19.9
Interest expenses -5.9 -12.8 -37.7
Losses on sale of securities 0.0 0.0 3.7
Write-down/reversion of shares 3.1 -6.7 -22.6
Foreign exchange gains/losses 4.5 -10.6 -5.8
Dividend income and other financial items 0.6 -0.1 1.6
Net financial items 5.2 -24.6 -40.9
Profit before tax 30.8 79.7 175.6
Tax -0.3 0.0 -1.1
Profit after tax 30.5 79.7 174.5
Minority interests 1.1 6.0 7.0
Profit after minority interests 29.4 73.7 167.5
Earnings per share 0.51 1.15 2.80
Cash flow per share 0.97 1.65 5.52
Average number of shares 59,622,056 63,955,558 62,256,759
BALANCE SHEET
(Unaudited figures in USD million) 31/03-02 31/03-01 31/12-01
ASSETS
Intangible fixed assets 2 1 1
Tangible fixed assets 1,787 2,011 1,794
Financial fixed assets 47 58 53
Total fixed assets 1,836 2,070 1,848
Inventories 14 13 13
Receivables 68 88 61
Investments 62 59 58
Bank deposits, cash etc 254 218 172
Total current assets 398 378 304
Total assets 2,234 2,448 2,152
31/03-02 31/03-01 31/12-01
EQUITY AND LIABILITIES
Paid-in capital 287 287 287
Retained earnings 1,117 1,099 1,088
Minority interests 56 70 59
Total equity 1,460 1,456 1,434
Provisions for liabilities 20 21 22
Other long-term liabilities 617 814 554
Current liabilities 137 157 142
Total liabilities and provisions 774 992 718
Total liabilities and equity 2,234 2,448 2,152
RESULTS
The Bergesen group generated first-quarter operating profit of USD 25.6 million,
substantially down on the USD 104.3 million recorded last year. These figures
include capital gains on the sale of vessels of USD 10.4 million in 2002 and USD
7.2 million in 2001.
Freight income on a T/C basis totalled USD 114.5 million, compared with USD
196.9 million in 2001.
The accounts show net financial income of USD 5.2 million after a USD 3.1
million reversal of previous write-downs of shares and net foreign exchange
gains of USD 4.5 million. The USD depreciated from NOK 9.01 to NOK 8.81 and
averaged NOK 8.91 during the period.
Profit before tax came to USD 30.8 million, compared with USD 79.7 million last
year.
The interim accounts have been prepared using the same accounting policies as
the annual accounts for 2001.
VALUATION
Bergesen has decided to stop reporting value-adjusted equity figures. The reason
for this is that, following its heavy investment in LNG shipping and offshore
production, the company will be generating a far greater proportion of its
future earnings from long-term contracts. The company also has a substantial
portfolio of long-term dry bulk contracts, and representative transactions that
can form the basis of an assessment of the likely saleable value of the
company's gas carriers are few and far between. In these circumstances,
value-adjusted equity figures based on shipbrokers' valuations of the vessels in
the fleet on a charter-free basis will be of limited relevance.
FLEET REPORT
The operation of the fleet was satisfactory during the first quarter. Besides
scheduled maintenance there was no significant technical off-hire in the fleet.
Six vessels were drydocked for periodic maintenance in the first quarter.
BREAKDOWN BY FLEET
FIRST QUARTER (1/1-31/3) GAS TANKERS DRY BULK OFFSHORE TOTAL
(Unaudited figures in USD million) 2002 2001 2002 2001 2002 2001 2002 2001 2002 2001
Operating revenue 84,9 118,1 38,3 92,4 16,4 14,8 14,4 13,6 154,0 238,9
Voyage expenses -22,0 -22,4 -12,2 -13,2 -4,7 -4,7 -0,6 -1,7 -39,5 -42,0
T/C (time charter) income 62,9 95,7 26,1 79,2 11,7 10,1 13,8 11,9 114,5 196,9
Operating expenses -41,5 -40,6 -17,0 -19,8 -4,0 -3,6 -6,4 -4,2 -68,9 -68,2
Charter hire expenses -0,9 0,0 0,0 0,0 -2,1 -1,3 0,0 0,0 -3,0 -1,3
Gains/losses on sale of vessels 0,0 7,2 10,4 0,0 0,0 0,0 0,0 0,0 10,4 7,2
Operating profit before depreciation 20,5 62,3 19,5 59,4 5,6 5,2 7,4 7,7 53,0 134,6
Depreciation -14,6 -14,7 -7,6 -9,6 -2,7 -2,3 -2,5 -3,7 -27,4 -30,3
Operating profit 5,9 47,6 11,9 49,8 2,9 2,9 4,9 4,0 25,6 104,3
Minority interests 1,1 5,1 0,0 0,0 0,0 0,0 0,1 0,0 1,2 5,1
T/C income per day/month* (USD 1,000) 409* 639* 17,2 44,2 20,3 22,0 - - 16,5 28,4
Average T/C income per unit is not reported for the offshore fleet.
GAS
The gas fleet generated first-quarter operating profit of USD 5.9 million,
compared with USD 47.7 million last year. Earnings were sharply down on last
year for the VLGCs, LGCs and MGCs and again weak for the Handygas and Igloo
vessels.
Bergesen's VLGCs (over 70,000 cbm) generated average T/C income of USD 409,800/
month, compared with USD 837,300/month last year. Charter cover for Bergesen's
VLGC pool for the rest of 2002 stood at 21% at the end of the period.
The first quarter results are marked by a continued large overcapacity of
vessels and modest LPG-exports from the Persian Gulf. However, shipping activity
in the LPG market rallied slightly at the beginning of the quarter. High LPG
stocks and low prices in the USA, coupled with high LPG prices in Saudi Arabia,
paved the way for spot fixtures from the Atlantic to the Far East, while exports
from the Persian Gulf fell back. This change in trading patterns led to an
increase in ton-miles and so higher capacity utilisation in the fleet but did
not result in any significant growth in rates. Activity then declined during the
rest of the quarter, with high LPG prices prompting Asian importers to draw down
their stocks.
Also in the first quarter, a considerable number of vessels were employed on
naphta trades. The market for naphtha and other clean petroleum products in Asia
was tight during the period. Slow demand for intermediate distillates resulted
in low capacity utilisation at Asian oil refineries and so limited local naphtha
production. Imports of naphtha from Europe and the Caribbean therefore increased
and imports from the Persian Gulf also held up well before falling back slightly
towards the end of the quarter due to a series of technical problems and lower
production margins. 12 of the 34 vessels in the VLGC pool were employed on
naphtha trades at the end of the quarter and three were without employment.
In February Bergesen agreed to purchase the 1987-built 78,500 cbm VLGC CO-OP
Sunrise at a cost of USD 26.75 million for delivery in the fourth quarter of
2002. The company has also agreed to charter two 82,500 cbm VLGC newbuilds at
fixed rates for a minimum of two years and a maximum of five years, with
purchase options throughout the period.
The world VLGC fleet consisted of 103 vessels at the end of the period. One
newbuild was delivered, and two vessels were reported sold for scrap during the
quarter while 12 newbuilds are on order. Two newbuilds are due to be delivered
in the second half of 2002 and a further eight in 2003.
Bergesen's LGCs (50-60,000 cbm) generated average T/C income of USD 427,300/
month, compared with USD 721,100/month last year. Charter cover for Bergesen's
LGC pool for the rest of 2002 stood at 43% at the end of the period.
The LGC market deteriorated towards the end of the quarter after slightly higher
levels of activity in January and February. The availability of both LPG and
ammonia cargoes fell back and waiting times between cargoes lengthened. US
prices for natural gas, the raw material for ammonia production, increased
towards the end of the period but this has yet to trigger any growth in ammonia
imports. Continued slack demand and low ammonia prices are making it less than
attractive for Russian exporters to ship products westwards.
Six of the vessels in the LGC pool were without employment at the end of the
quarter. Two vessels were sold for scrap during the period, leaving the world
LGC fleet at 21 vessels. Four newbuilds are on order: two for Bergesen and two
for its pool partner Solvang.
Bergesen's MGCs (20-40,000 cbm) generated average T/C income of USD 515,200/
month, compared with USD 579,500/month last year. Charter cover for Exmar's
midsize pool for the rest of 2002 stood at 59% at the end of the period.
Cargo availability for the MGC fleet picked up sharply at the beginning of the
quarter due to cold weather in Europe. A number of LPG cargoes were fixed on
voyages from the North Sea and Gulf of Mexico to the Mediterranean at good
rates. However, the ammonia market was quieter and most activity was confined to
Asia. High levels of output at the new ammonia facilities in Indonesia and
Malaysia resulted in lower imports from the Black Sea and so had a negative
impact on demand for tonnage in the form of a decrease in ton-miles. Towards the
end of the period there was also a drop in LPG shipments and rates came under
pressure.
The world MGC fleet consisted of 43 fully refrigerated and 13 semirefrigerated
vessels at the end of the period. One vessel was delivered and one vessel was
sold for scrap during the first quarter. Two fully refrigerated and two
semirefrigerated vessels were on order, of which four are due to be delivered
during the remainder of this year. Bergesen sold the 1972-built MGC Havjarl for
scrap in April, triggering a capital gain of around USD 1.4 million that will be
recognised in the second-quarter accounts.
Bergesen's Handygas vessels (12,000 cbm) generated average T/C income of USD
241,700/month, compared with USD 262,500/month last year, while its Igloo
vessels (8-15,000 cbm) generated average T/C income of USD 309,500/month,
compared with USD 337,500/month last year. Charter cover for Maersk's SkandiGas
pool for the rest of 2002 stood at 36% at the end of the period.
The market for semirefrigerated tonnage improved during the first quarter but
from very low levels. The start-up of new ethylene production capacity in the
Middle East, problems at a number of European ethylene plants and growing demand
for ethylene in Asia together resulted in growing activity. A short period of
cold weather in Europe at the beginning of the quarter translated into a busy
LPG market, which benefited this segment too. Rates fell back towards the end of
the quarter due to the seasonal drop in LPG activity.
One newbuild was delivered in the 8-15,000 cbm segment during the period and 11
were on order at the end of the period, excluding four pressure-type vessels. A
further six pressure-type and three semirefrigerated vessels were on order in
the 6-8,000 cbm segment.
LNG
At the end of the first quarter Bergesen finalised the agreement with Nigeria
LNG Ltd on the employment of four LNG carriers for a minimum of 20.5 years from
delivery. At the same time Bergesen entered into an agreement with Daewoo
Shipbuilding and Marine Engineering Co Ltd in South Korea on the construction of
these vessels, all of 140,500 cbm. In May, Bergesen entered into a preliminary
agreement with Sonatrach for employment of one LNG-carrier of 138.000 cbm for
minimum 20 years from delivery. The vessel was ordered at Daewoo in June 2001.
This means that Bergesen now has a series of seven large LNG newbuilds under
construction at Daewoo. Provided final agreement is concluded with Sonatrach,
all seven vessels are employmed for at least 20 years from delivery. The first
vessel is due to be delivered in the first quarter of 2003.
TANKERS
Bergesen's VLCC fleet generated first-quarter operating profit of USD 11.9
million, compared with USD 49.7 million last year. Average T/C income was USD
17,200/day, compared with USD 44,200/day last year. Charter cover for Bergesen's
VLCC fleet for the rest of 2002 stood at 37% at the end of the period.
The VLCC market continued to deteriorate during the period, slumping to a
historic low. The average spot rate was around USD 16,600/day for modern vessels
and USD 4,700/day for older turbine tonnage. The rate differences between old
and new tonnage are primarily caused by variations in fuel consumption. The high
fuel cost have further widened the gap.
The IEA's latest monthly report reveals slack demand for oil due to continued
low economic activity and high oil prices. Lower stockdraws than anticipated and
a mild winter in the northern hemisphere also served to undermine demand for oil
in the first quarter. World oil consumption averaged 76.3 mb/d, a drop of around
1% from 77.0 mb/d in 2001.
The first quarter brought strong growth in oil prices, fuelled partly by the
tense situation in the Middle East and the risk of retaliatory embargoes by a
number of OPEC nations, although only Iraq has acted so far, deciding to suspend
all oil exports (around 2 mb/d) in April. The troubled political situation in
Venezuela has also led to uncertainty and helped to push up oil prices. The
negative sentiment in the tanker market was exacerbated by uncertainty about
shipping volumes.
The tanker Berge Ingerid was sold for scrap in the first quarter, resulting in a
capital gain of USD 3.1 million. Bergesen took delivery of one newbuild from
Hitachi. The vessel was immediately delivered to its buyer, resulting in a
capital gain of USD 7.3 million for Bergesen. The last newbuild from Hitachi
will be delivered in the second quarter, and handed over to its buyer.
In March Bergesen agreed to purchase the ore/oil carrier "Tijuca" of 310,700
dwt, built in 1987 at a cost of USD 25.5 million. The carrier was delivered in
April 2002 and is now known as Berge Vik.
Nine VLCC newbuilds were delivered during the period, while no VLCCs were sold
for scrap and a further two were sold for conversion to FPSO duties. An
additional eight VLCCs are sold for scrap so far second quarter. 82 VLCCs were
on order at the end of the period, equivalent to 19.5% of the existing fleet. 34
of these are due to be delivered this year, of which seven have been delivered
already.
DRY BULK
Bergesen's dry bulk fleet generated first-quarter operating profit of USD 2.9
million, the same as last year. Average T/C income was USD 20,300/day, compared
with USD 22,000/day last year. Charter cover for 2002 is over 90%.
The market for large dry bulkers picked up during the first quarter thanks to
high imports of iron ore into China and Japan and growth in shipments of coal
from Australia and South Africa. Rising industrial output means that the world's
steel industry seems to be moving in the right direction after a difficult year
in 2001. However, the introduction of customs tariffs on steel imports into the
USA has increased uncertainty.
Spot rates for modern Capesize vessels ended the quarter at around USD 13,000/
day and one-year T/C rates at USD 15,000/day. Four Capesize bulk carriers and
three Capesize combined carriers were sold for scrap during the period while ten
newbuilds were delivered. 56 vessels of more than 80,000 dwt were on order at
the end of the period, equivalent to 10% of the existing Capesize fleet. 15 of
these are due to be delivered this year.
OFFSHORE
Bergesen's offshore fleet generated first-quarter operating profit of USD 4.9
million compared with USD 4.1 million last year.
The Sendje Ceiba arrived on the Ceiba field off Equatorial Guinea in mid-January
and went into production at the end of the month. The vessel features a
production capacity of 160,000 b/d and her conversion from VLCC to FPSO unit was
completed on time and on budget.
The Sendje Berge is now without employment after being replaced by the Sendje
Ceiba on the Ceiba field in mid-January. USD 3.8 million has been booked as
compensation from the charterer for the premature redelivery in the first
quarter. Correspondingly, Bergesen will book USD 3.2 million as compensation in
the second quarter. The conversion of the Berge Helene into a generic FPSO unit
is due to be completed in September 2002. There is still a great interest in
this type of floating production vessel.
FINANCIAL INFORMATION
Bergesen had liquid assets (bank deposits, bonds, certificates and equities) of
USD 316.2 million at the end of the period.
Interest expenses for the period came to USD 5.9 million, compared with USD 12.8
million last year. Additional interest charges of USD 1.6 million relating to
newbuilding contracts were capitalised during the period and included in the
cost of the vessels in question. Interest-bearing liabilities totalled USD 628.4
million at the end of the period.
USD 3.1 million of the previous write-downs of the company's equity holdings
(excluding its own shares) were reversed during the period to reflect the
increase in their market value.
The annual general meeting on 24 April 2002 resolved to cancel the 3,399,000
shares bought back by the company to leave it with a total of 59,622,056 shares
in issue (42,174,200 A-shares and 17,447,856 B-shares). The shares will formally
be cancelled following the expiry of the deadline for creditor objections in
August 2002. The annual general meeting also authorised the board to buy back up
to 10% of the company's remaining shares.
Bergesen's shares went ex-dividend on 25 April 2002 and a dividend of NOK 7 per
share will be paid to shareholders on 14 May 2002.
OUTLOOK
Economic indicators are now suggesting a gradual recovery in the US economy,
causing forecasts for both this year and next to be adjusted upwards
significantly. There now seems to be a consensus that US GDP will grow by 2.6%
this year, up from 0.9 percent anticipated in January. The rest of the global
economy is expected to lag somewhat behind North America, with the recovery not
kicking in until next year.
There is significant excess capacity in the VLGC market but rates may yet pick
up from their current low levels. LPG volumes are expected to be up on 2001, but
most of this growth is likely to come towards the end of the year. Some older
tonnage is also likely to be scrapped. Higher US natural gas prices could have a
positive impact on the product tanker market in the form of higher imports of
gas oil for use at power stations as a cheaper alternative to local natural gas.
This in turn could help VLGCs to find employment on naphtha trades by reducing
the competition from Aframax tonnage. High natural gas prices in the USA could
also lead to growth in ammonia imports as local production becomes unprofitable
and so improve the market for LGCs and MGCs.
The market for petrochemical gases is expected to rally due to higher capacity
utilisation in the petrochemical industry. However, the recovery is likely to be
limited in scope due to substantial excess tonnage and continued rapid fleet
growth.
The tanker market has improved slightly so far in the second quarter, but is
expected to remain under substantial pressure, due to subdued demand for oil and
production cuts by OPEC and other major producers. Scrapping activity is likely
to remain high but the tanker fleet is still expected to grow in 2002 due to
high newbuilding deliveries in all segments. The predicted upswing in the global
economy and an increase in OPEC oil exports are expected to help improve
earnings towards the end of the year.
OPEC's production quotas are expected to keep oil prices high and so promote
high levels of offshore exploration activity. Continued healthy growth in demand
for floating production solutions of the type offered by Bergesen is anticipated
but it may take time to find employment for the Sendje Berge and Berge Helene.
The Capesize bulker market is likely to deteriorate over the next few months.
The steel industry will need to cut its output to adjust to the customs tariffs
introduced by the Bush administration, which are due to apply for three years
but will gradually be reduced towards the end of the period.
The board expects the group's operating result for 2002 to be significantly down
on 2001.
CASH FLOW STATEMENT 31/03-2002 31/03-2001
(Unaudited figures in USD million)
Cash flow from operating activities 28.0 118.9
Cash flow from investing activities -9.8 -177.1
Cash flow from financing activities 64.0 -4.8
Net change in cash 82.2 -63.0
Cash at beginning of period 173.3 282.0
Cash at end of period 255.5 219.0
MOVEMENTS IN EQUITY 31/03-2002 31/03-2001
(Unaudited figures in USD million)
Equity at beginning of period 1.434 1.399
Net profit for the period 31 80
Share buybacks 0 -23
Distributed to minorities -5 0
Equity at end of period 1.460 1.456
Oslo, 7 May 2002
The board of Bergesen d.y. ASA
This information is provided by RNS
The company news service from the London Stock Exchange
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