RNS Number:6029I
Bergesen d.y. ASA
16 August 2001
BERGESEN D.Y. GROUP
First-half interim report 2001
First half Second quarter Full year
INCOME STATEMENT 2001 2000 2001 2000 2000
(Unaudited figures in USD million)
Operating revenue 447.2 331.5 208.2 181.5 737.1
Voyage expenses -88.1 -85.0 -46.2 -48.9 -180.0
T/C (time charter) income 359.1 246.5 162.0 132.6 557.1
Other operating expenses -140.0 -143.3 -70.3 -70.7 -278.8
Provision for severance
payments 0.0 -7.6 0.0 -7.6 -4.9
Gains/losses on sale of
vessels 19.2 15.9 12.0 8.9 18.9
Operating profit before
depreciation 238.3 111.5 103.7 63.2 292.3
Depreciation -61.3 -51.5 -31.0 -25.5 -103.8
Operating profit 177.0 60.0 72.7 37.7 188.5
Interest income 11.2 10.4 5.6 4.7 24.0
Interest expenses -23.9 -21.6 -11.1 -11.3 -40.9
Gains/losses on sale of
securities -0.1 0.0 -0.1 0.0 -22.7
Write-down of shares -10.3 -24.3 -3.6 -24.3 0.0
Foreign exchange gains/losses -12.0 -17.0 -1.4 -10.0 -38.3
Dividend income and other
financial items 1.8 1.6 1.8 2.1 1.9
Gains/losses on sale of
property 0.0 0.0 0.0 0.0 3.9
Profit before tax 143.7 9.1 63.9 -1.1 116.4
Tax -0.5 -0.1 -0.5 -0.1 0.4
Profit after tax 143.2 9.0 63.4 -1.2 116.8
Minority interests 7.2 2.5 2.2 3.1 6.2
Profit after minority
interests 136.0 6.5 61.2 -4.3 110.6
Earnings per share 2.26 0.13 1.01 -0.02 1.68
Cash flow per share 3.22 0.86 1.50 0.35 3.17
Average number of shares 63,485,725 70,019,056 63,021,056 70,019,056 69,689,936
BALANCE SHEET
(Unaudited figures in USD million) 30/6/01 30/6/00 31/12/00
ASSETS
Intangible fixed assets 1 1 1
Vessels 1,830 1,485 1,678
Vessels under construction 155 195 167
Other tangible fixed assets 45 48 47
Financial fixed assets 58 58 50
Total fixed assets 2,089 1,787 1,943
Inventories 14 15 14
Receivables 59 84 91
Investments 57 197 66
Bank deposits, cash etc 235 235 281
Total current assets 365 531 452
Total assets 2,454 2,318 2,395
30/6/01 30/6/00 31/12/00
EQUITY AND LIABILITIES
Paid-in capital 287 289 287
Retained earnings 1,163 1,074 1,049
Minority interests 63 58 63
Total equity 1,513 1,421 1,399
Provisions for liabilities 21 23 21
Other long-term liabilities 811 781 819
Current liabilities 109 93 156
Total liabilities and provisions 941 897 996
Total liabilities and equity 2,454 2,318 2,395
RESULTS
The Bergesen group recorded first-half operating profit of USD 177.0 million, a
major increase from USD 60.0 million last year. This year's figure includes
capital gains of USD 19.2 million on the sale of vessels, compared with USD 15.9
million last year. Operating profit for the second quarter was USD 72.7 million,
compared with USD 37.7 million last year.
The fleet generated T/C income of USD 359.1 million, compared with USD 246.5
million last year.
The accounts show net financial expenses of USD 33.3 million, including foreign
exchange losses of USD 12.0 million resulting primarily from the appreciation of
the USD, which climbed from NOK 8.85 to NOK 9.30 and averaged NOK 9.03 during
the period.
Profit before tax came to USD 143.7 million, compared with USD 9.1 million last
year.
The accounts for the first half of 2001 have been prepared using the same
accounting policies as the annual accounts for the year 2000.
VALUE-ADJUSTED EQUITY
Allowing for share buybacks, the group's value-adjusted equity before tax was
USD 27.91 (NOK 260) per share at the end of the period (after the distribution
of a dividend of NOK 5 in May), compared with USD 27.10 (NOK 240) at the
beginning of the year (before the distribution of this dividend).
The value of the Bergesen fleet in USD terms fell 5.1% during the period (gas
-4.4%, tankers -6.3%, dry bulk -6.4% and offshore -3.2%) to USD 2,051 million
(gas USD 999 million, tankers USD 807 million, dry bulk USD 118 million and
offshore USD 127 million), including USD 72 million attributable to minority
interests. The market value of vessels under construction was USD 54 million
over their book value. These market values are based on the average estimates
for charter-free vessels obtained from three independent brokers, except for the
offshore fleet where the company's own estimates have also had to be used on
account of the vessels' high degree of specialisation. Vessels sold but not yet
handed over have been valued at the price for which they were sold.
FLEET REPORT
An engine room fire on board one of the Handygas vessels in May caused serious
damage to the vessel's electrical equipment but no injuries. Otherwise the
operation of the fleet was satisfactory during the second quarter. Ten vessels
were dry-docked for scheduled maintenance. The VLCCs Berge Borg and Berge Chief
were taken through their fifth special survey and will now operate with a
reduced capacity in line with the hydrostatic balanced loading (HBL) principle.
BREAKDOWN BY FLEET
FIRST HALF (1/1-30/6) GAS TANKERS DRY BULK OFFSHORE TOTAL
(Unaudited figures in
USD million) 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000
Operating revenue 222.0 183.1 167.4 107.2 30.0 26.8 27.8 14.4 447.2 331.5
Voyage expenses -46.7 -38.1 -28.2 -33.8 -9.6 -8.9 -3.6 -4.2 -88.1 -85.0
T/C (time charter)
income 175.3 145.0 139.2 73.4 20.4 17.9 24.2 10.2 359.1 246.5
Operating expenses -80.7 -82.5 -41.3 -45.1 -6.8 -6.5 -8.3 -4.3 -137.1 -138.4
Charter hire
expenses 0.0 0.0 0.0 0.0 -2.9 -4.9 0.0 0.0 -2.9 -4.9
Provision for
severance payments 0.0 -5.9 0.0 -1.6 0.0 -0.1 0.0 0.0 0.0 -7.6
Gains/losses on
sale of vessels 7.2 -0.1 12.0 16.0 0.0 0.0 0.0 0.0 19.2 15.9
Operating profit
before 101.8 56.5 109.9 42.7 10.7 6.4 15.9 5.9 238.3 111.5
Depreciation -29.6 -29.2 -19.7 -16.3 -4.6 -4.0 -7.4 -2.0 -61.3 -51.5
Operating profit 72.2 27.3 90.2 26.4 6.1 2.4 8.5 3.9 177.0 60.0
Minority interests 7.9 3.2 0.0 0.2 0.0 0.0 0.1 0.0 8.0 3.4
T/C income per
day/month* (USD) 587* 484* 37.8 20.2 21.9 16.5 - - 25.6 17.9
SECOND QUARTER(1/4-30/6) GAS TANKERS DRY BULK OFFSHORE TOTAL
(Unaudited figures
in USD million) 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000
Operating revenue 103.9 94.9 75.0 64.3 15.1 14.7 14.2 7.6 208.2 181.5
Voyage expenses -24.3 -22.2 -15.0 -19.7 -4.9 -4.7 -2.0 -2.3 -46.2 -48.9
T/C (time charter)
income 79.6 72.7 60.0 44.6 10.2 10.0 12.2 5.3 162.0 132.6
Operating expenses -40.1 -39.2 -21.4 -22.4 -3.2 -2.8 -4.1 -2.1 -68.8 -66.5
Charter hire
expenses 0.0 0.0 0.0 0.0 -1.5 -4.2 0.0 0.0 -1.5 -4.2
Provision for
severance payments 0.0 -5.9 0.0 -1.6 0.0 -0.1 0.0 0.0 0.0 -7.6
Gains/losses on
sale of vessels 0.0 -0.1 12.0 9.0 0.0 0.0 0.0 0.0 12.0 8.9
Operating profit
before 39.5 27.5 50.6 29.6 5.5 2.9 8.1 3.2 103.7 63.2
Depreciation -14.9 -13.8 -10.1 -8.7 -2.3 -2.0 -3.7 -1.0 -31.0 -25.5
Operating profit 24.6 13.7 40.5 20.9 3.2 0.9 4.4 2.2 72.7 37.7
Minority interests 2.8 2.4 0.0 0.5 0.0 0.0 0.1 0.0 2.9 2.9
T/C income per
day/month* (USD) 533* 493* 31.7 24.5 21.8 19.8 - - 22.9 19.2
Average T/C income per unit is not reported for the offshore fleet.
GAS
The gas fleet generated first-half operating profit of USD 72.2 million,
compared with USD 27.3 million last year. Earnings were higher than last year in
the VLGC, LGC and MGC segments but unchanged for the Igloo and Handygas vessels.
Bergesen's VLGCs (over 70,000 cbm) generated average T/C income of USD
730,000/month, compared with USD 585,000/month last year. Charter cover at the
end of the period stood at 47% for the second half of this year and 13% for next
year.
The spot market for VLGCs was weak during the second quarter. Saudi Arabian LPG
exports were around 1 million tonnes down on the first half of last year due to
an increase in local consumption at new petrochemical facilities, which impacted
primarily on exports to Asia. The Asian market had been expected to step up
imports from the Atlantic basin to compensate for this shortfall but only a
minor increase materialised due to subdued demand in the Asian market. Total LPG
imports to the three largest Asian importers (Japan, South Korea and China) were
0.7 million tonnes down on the first half of last year.
Activity in the freight market for clean petroleum products fell back during the
second quarter and undermined rates. Bergesen's VLGC pool had seven vessels
employed in this market at the end of the period.
Four newbuilds were delivered during the period to leave the world VLGC fleet at
102 vessels, with four more due to follow during the second half. Orders for two
newbuilds were placed during the second quarter and so the world order book
stood at 12 vessels at the end of the period.
Bergesen's LGCs (50-60,000 cbm) recorded average T/C income of USD
680,000/month, compared with USD 545,000/month last year. Charter cover at the
end of the period stood at 57% for the second half of this year and 34% for next
year.
The LGC market remained strong during the second quarter, with good availability
of both LPG and ammonia cargoes. However, the ammonia market has been volatile
in recent months as weak demand and stockpiling in the USA put pressure on
prices and led to reduced capacity utilisation at local production facilities.
The low prices also resulted in lower exports from Russia.
US LPG imports have fluctuated widely so far this year. Substantial volumes were
imported during the first quarter and the beginning of the second. Stocks then
built up as demand from the petrochemical industry and refineries weakened,
causing demand for imported LPG to fall back. By June US LPG prices had dropped
so far due to heavy stockpiling that some was being reexported to Brazil and the
Far East. Meanwhile Algeria had to find new markets for some of its LPG output
due to economic problems and dwindling demand in Turkey, which boosted demand
for tonnage.
The world LGC fleet consisted of 25 vessels at the end of the period. Bergesen
and its pool partner Solvang exercised options during the second quarter to
order a further 59,200 cbm gas carrier each from Kawasaki Heavy Industries in
Japan for delivery in 2003, so bringing the world order book up to four vessels
at the end of the period: two for Bergesen and two for Solvang.
Bergesen's MGCs (20-40,000 cbm) generated average T/C income of USD
550,000/month, compared with USD 480,000/month last year.
The availability of cargoes was good during the second quarter and there was
little waiting time between cargoes. Most activity in the spot market centred on
the Atlantic basin. LPG activity was consistently high while ammonia activity
was more volatile.
The world MGC fleet consisted of 45 vessels at the end of the period, with no
newbuilds due to be delivered this year. Four vessels were on order at the end
of the period: three for delivery in 2002 and one in 2003.
Bergesen's Handygas vessels (12,000 cbm) generated average T/C income of USD
265,000/month, which was the same as last year, while its Igloo vessels
(8-15,000 cbm) recorded average T/C income of USD 330,000/month, compared with
USD 340,000/month last year.
The spot market for the Igloo and Handygas carriers was quiet during the second
quarter. Most LPG activity was in the North Sea, while activity in the
petrochemicals market was dominated by contractual shipments of ethylene and
propylene from Saudi Arabia to Europe and Asia.
No newbuilds were delivered during the period. Nine vessels were on order in the
8-15,000 cbm segment at the end of the period and a further 12 vessels in the
6-8,000 cbm segment.
Bergesen entered into an agreement during the second quarter on the employment
of its second LNG newbuild from Daewoo for a minimum of 20 years from delivery.
The charterer, Cabot LNG, also has an option to extend the charter by up to nine
years. An equivalent agreement has already been entered into with Cabot LNG on
the employment of Bergesen's first LNG newbuild from Daewoo. The two 138,000 cbm
vessels are due to be delivered in the first and third quarters of 2003. Cabot
LNG's sister company Distrigas has a 49% stake in the first newbuild.
Bergesen also exercised an option during the second quarter to order a third
138,000 cbm LNG newbuild from Daewoo for delivery in the third quarter of 2004
at a price of around USD 160 million. The vessel has yet to be fixed on a
charter. Bergesen also holds an option to order a fourth LNG newbuild from
Daewoo for delivery in 2005.
TANKERS
Bergesen's VLCC fleet generated first-half operating profit of USD 90.2 million,
compared with USD 26.4 million last year. Average T/C income was USD 37,800/day,
compared with USD 20,200/day last year.
The VLCC market deteriorated appreciably during the second quarter in response
to lower oil production and weaker demand. The average spot rate during the
quarter was USD 32,600/day for modern vessels and USD 18,500/day for older
turbine tankers.
OPEC's quota reductions of 2.5 mb/d since February and almost 4 mb/d since the
fourth quarter last year have triggered a sharp drop in demand for tanker
tonnage. Most of the production cuts have come in the Middle East and so hit the
VLCC fleet hardest. In addition Iraq suspended its exports of 2 mb/d for a
couple of weeks in June when the UN was reconsidering its trade sanctions. Total
OPEC production is estimated to have been around 25.5 mb/d in June. OPEC decided
in July to cut output by a further 1 mb/d with effect from 1 September due to
lower oil prices on the world market.
The IEA's forecasts suggest that world oil consumption will grow by a mere 0.46
mb/d or 0.6% in 2001. Consumption is being hampered by slow economic growth in
North America, Japan and Europe but growth in demand for oil is also much weaker
than anticipated outside the OECD. Many developing nations have been battling
with a combination of high oil prices and a strong USD for some time now.
11 VLCC newbuilds were delivered during the period. The scrapping of older
tonnage picked up as the market deteriorated: 12 VLCCs have been sold for scrap
so far this year, ten of them during the second quarter. A further six vessels
have been sold for conversion to FPSO duties. A total of 87 vessels, equivalent
to 20% of the existing fleet, were on order at the end of the period, including
18 due to be delivered during the second half of this year.
Bergesen sold the 2001-built 296,000 dwt Berge Kyoto during the second quarter
for a capital gain of USD 12 million for accounting purposes. The group has also
entered into agreements to sell the Berge Ariake, Berge Sakura, Berge Ichiban
and Berge Tokyo and the newbuilding contracts for a further two 296,000 dwt
VLCCs. The buyer will take over the four existing vessels during the third
quarter of this year while the two newbuilds are due to be delivered from the
yard during the first quarter of 2002. The sale of these vessels will trigger a
total capital gain of around USD 70 million for accounting purposes, of which
around USD 57 million will be recognised during the third quarter of this year
and the remainder in 2002. These transactions mean that Bergesen has now sold
seven of the series of eight VLCC newbuilds ordered from the Hitachi yard in
Japan last year. The condition of charter's approval has not yet been lifted for
one of the vessels (Berge Tokyo). This will clearified within short time.
DRY BULK
Bergesen's dry bulk fleet generated first-half operating profit of USD 6.1
million, compared with USD 2.4 million last year. Average T/C income was USD
21,900/day, compared with USD 16,500/day last year. Charter cover at the end of
the period stood at around 90% for both the second half of this year and next
year. The Gargantua was returned to its owners at the end of July.
The market for large dry bulkers was relatively stable during the second quarter
but rates began to fall sharply in mid-July. World steel production has
stagnated, with total output for the first five months no higher than last year.
The world dry bulk fleet grew by 2.8% during the period due to high newbuilding
deliveries and limited scrapping of older tonnage. So far this year 13 Capesize
newbuilds have been delivered and eight Capesize vessels have been sold for
scrap, and a further 18 newbuilds over 100,000 dwt are due to be delivered
during the second half. The world order book at the end of the period stood at
60 vessels, equivalent to around 11% of the existing Capesize fleet over 100,000
dwt.
OFFSHORE
Bergesen's offshore fleet generated first-half operating profit of USD 8.5
million, compared with USD 3.9 million last year.
Production on board all units ran to schedule during the second quarter. The
conversion of the VLCC Berge Hus into an FPSO unit began at the Jurong yard in
Singapore during January and is due to be completed by the end of the year. The
vessel looks likely to be chartered by Triton Energy for a period of at least
four years with a six-year extension option to take over from the Sendje Berge,
which is producing oil off West Africa. The Berge Hus will feature greater
production capacity than the Sendje Berge, which will switch to a one-year
charter for early production on another of Triton Energy's oilfields off West
Africa, also with a six-year extension option.
It has been decided to convert the VLCC Berge Helene into an FPSO unit. The
vessel was laid up at the beginning of May 2001 to be prepared for the
conversion work, which is expected to commence in the third quarter for
completion in the summer of 2002.
Bergesen entered into a provisional agreement in mid-July on the sale of its
stake in the FPSO unit Berge Hugin. Bergesen's partner in the vessel and the
owners of her topside facilities have entered into equivalent agreements on the
sale of their interests in the vessel. The sale will also cover the owners'
joint operating company Pierce Production Company. The deadline for the final
sale agreement is 1 September 2001, with the handover due to take place in
September/October 2001. The sale will generate a capital gain for Bergesen of
around USD 1 million for accounting purposes and will streamline Bergesen's
offshore business, giving it a clear focus on generic solutions for the West
African market.
FINANCIAL INFORMATION
Bergesen had liquid assets (bank deposits, bonds, certificates and equities) of
USD 292 million at the end of the period. A dividend of NOK 5 per share was paid
to shareholders on 11 May 2001.
Net interest expenses for the period came to USD 12.7 million, compared with USD
11.2 million last year. Additional interest charges of USD 2.6 million relating
to newbuilding contracts were capitalised and included in the cost of the
vessels in question. Interest-bearing liabilities totalled USD 821 million at
the end of the period.
Although the market value of the company's equity holdings in NOK terms is
higher than its cost, a write-down was required on account of the appreciation
of the USD since the shares were acquired. The company's portfolio (excluding
its own shares) were written down by USD 10.3 million during the period to
reflect their market value.
Bergesen held around 10% of its own shares at the end of the period. This
holding has been eliminated when calculating value-adjusted equity and per-share
data. The annual general meeting on 25 April 2001 resolved to cancel the
company's holdings of its own shares and this has been done after the expiration
of second quarter. The annual general meeting also authorised the board to buy
back up to 10% of the company's remaining shares.
OUTLOOK
The economic outlook has deteriorated in recent months. The rate of growth in
North America and Europe has been falling and the Japanese economy is still
struggling to recover after a long period of stagnation. The economies of
Southeast Asia and Latin America are also showing clear signs of a slowdown or
stagnation.
The VLGC market is expected to see a drop of around 1% in total LPG shipping
volumes this year coupled with growth in the VLGC fleet, while shipping volumes
are forecast to grow next year. A shortage of refinery capacity in the USA and a
still buoyant market for large product tankers will continue to provide
employment for VLGCs in the market for clean petroleum products. The outlook for
the LGC and MGC segments is brighter due to the better availability of cargoes
in the Atlantic basin and no short-term fleet growth. The drop in spot prices
for natural gas in recent months has created uncertainty about US ammonia
production: lower prices make it more attractive to produce locally rather than
import, so continued low spot prices during the autumn and winter would have a
negative impact on import volumes.
Some improvement in the market for petrochemical gases is anticipated but the
outlook is more uncertain in the light of the global slowdown.
The VLCC market is expected to rally during the second half of the year, albeit
not as strongly as previously anticipated. OPEC output is expected to total
around 27 mb/d in the third quarter, up around 0.5 mb/d on the second. Assuming
that demand for oil rallies sufficiently to keep oil prices within OPEC's target
interval, there may be scope for further increases in output in the fourth
quarter.
The board expects the group to generate a smaller operating profit in the second
half of the year than in the first but to report a substantially higher
operating profit for the year as a whole than last year.
CASH FLOW STATEMENT 1/1-30/6/01 1/1-30/6/00
(Unaudited figures in USD million)
Cash flow from operating activities 211.7 55.6
Cash flow from investing activities -213.6 -288.4
Cash flow from financing activities -43.5 119.0
Net change in cash -45.4 -113.8
Cash at beginning of period 282.0 350.8
Cash at end of period 236.6 237.0
MOVEMENTS IN EQUITY 1/1-30/6/01 1/1-30/6/00
(Unaudited figures in USD million)
Equity at beginning of period 1,399 1,423
Net profit for the period 143 9
Share buybacks -23
Sale proceeds to minority interests -6 -11
Equity at end of period 1,513 1,421
Oslo, 15 August 2001
The board of Bergesen d.y. ASA
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