RNS Number:5581Z
Bergesen d.y. ASA
27 February 2001
BERGESEN D.Y. GROUP
Fourth-quarter interim report and provisional results for 2000
Full year Fourth quarter
INCOME STATEMENT 2000 1999 1998 2000 1999
(USD million, unaudited)
Operating revenue 737.1 666.7 749.9 211.0 168.1
Voyage expenses -180.0 -189.6 -180.0 -49.6 -51.6
T/C (time charter) income 557.1 477.1 569.9 161.4 116.5
Other operating expenses -278.8 -310.1 -322.6 -62.4 -78.0
Provision for severance
payments -4.9 0.0 0.0 2.7 0.0
Gains/losses on sale of
vessels 18.9 12.5 12.8 3.2 0.0
Operating profit before
depreciation 292.3 179.5 260.1 104.9 38.5
Depreciation -103.8 -110.0 -115.0 -26.9 -27.0
Operating profit 188.5 69.5 145.1 78.0 11.5
Income from associated
companies -0.7 -2.6 -2.0 0.1 -1.0
Dividend income 3.1 1.0 7.0 0.0 0.0
Gains/losses on sale of
securities -22.7 8.3 -0.1 -0.5 8.4
Foreign exchange gains/
losses -38.3 -7.0 -9.7 14.8 -3.0
Net interest income/
expenses -16.9 -16.5 -26.0 -1.0 -5.1
Other financial items -0.5 0.0 -0.8 -0.2 0.3
Gains/losses on sale of
property 3.9 0.4 13.3 3.0 0.0
Profit before tax 116.4 53.1 126.8 94.2 11.1
Tax 0.4 -1.7 0.0 0.0 -1.6
Profit after tax 116.8 51.4 126.8 94.2 9.5
Minority interests 6.2 -4.5 2.0 2.8 -1.0
Majority interests 110.6 55.9 124.8 91.4 10.5
Earnings per share 1.68 0.70 1.67 1.42 0.13
Cash flow per share 3.17 2.18 3.19 1.81 0.52
Average number
of shares 69,689,936 74,109,273 75,759,661 68,709,729 70,614,739
BALANCE SHEET
(USD million, unaudited) 31/12/00 31/12/99 31/12/00 31/12/99
Vessels 1,678 1,445 Equity 1,399 1,427
Vessels under construction 167 36 Long-term liabilities 840 654
Other fixed assets 98 97 Current liabilities 156 121
Other current assets 105 67
Liquid assets/shares 347 557
Total assets 2,395 2,202 Total liabilities 2,395 2,202
RESULTS AND DIVIDENDS
The Bergesen group recorded full-year operating profit of USD 188.5 million,
compared with USD 69.5 million in 1999, and fourth-quarter operating profit of
USD 78.0 million, compared with USD 11.5 million in 1999.
The accounts show net financial expenses of USD 76.0 million, including capital
losses on shares of USD 22.7 million and foreign exchange losses of USD 38.3
million. The latter losses were due to the sharp rise in the USD, which
appreciated from NOK 8.04 to NOK 8.85 and averaged NOK 8.81 during the year. A
substantial proportion of the group's operating expenses are incurred in NOK
while its operating revenue is denominated exclusively in USD. Access to NOK to
cover these expenses is safeguarded by maintaining substantial NOK bank deposits
and purchasing NOK on forward and option contracts.
Profit before tax came to USD 116.4 million, compared with USD 53.1 million in
1999, and profit after tax was USD 116.8 million, compared with USD 51.4 million
in 1999. The board is proposing a dividend for the year of NOK 5.00 per share,
up from NOK 3.50 for 1999.
VALUE-ADJUSTED EQUITY
Allowing for share buybacks and including the provision for dividends, the
group's value-adjusted equity before tax was USD 27.10 (NOK 240) per share at
the end of the year, compared with USD 21.90 (NOK 176) at the beginning of the
year. This increase is attributable to a good cash flow from operating
activities, a substantial increase in the value of the VLCC fleet and vessels
under construction, and share buybacks.
The value of the Bergesen fleet in USD terms climbed 1.8% during the year (gas
-8.4%, tankers +40.6%, dry bulk -1.1% and offshore +3.2%) to USD 1,949 million
(gas USD 992 million, tankers USD 697 million, dry bulk USD 126 million and
offshore USD 134 million), including USD 78 million attributable to minority
interests. The market value of vessels under construction was USD 79 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 had to be used on account
of the vessels' high degree of specialisation.
FLEET REPORT
The operation of the fleet was satisfactory during the fourth quarter although
the dry-docking of a dry bulker had to be brought forward due to damage. 24
vessels were dry-docked for scheduled maintenance during the year, including
five during the fourth quarter, compared with 20 in 1999.
BREAKDOWN BY FLEET
A new Financial Reporting Act in Norway meant that in the fourth quarter of 1999
the company switched from accounting for all partly owned businesses using the
proportional consolidation method to full consolidation with minority interests
for subsidiaries, the equity method for associates, the proportional
consolidation method for joint ventures and the cost method for other minor
investments.
However, the segmental information in the fleet report continued to be
calculated and reported using the proportional consolidation method, such that
only the group's own interests in the vessels were included. However, from the
fourth quarter of the year 2000 the company has decided to report segmental
information on the same basis as the group accounts and so the figures in the
fleet report now tally with the figures for the group. Data for earlier periods
have been restated accordingly and the share of operating profit attributable to
minority shareholders is disclosed on a separate line.
FULL YEAR GAS TANKERS DRY BULK OFFSHORE TOTAL
(USD million,
unaudited) 2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
Operating
revenue 371.0 393.7 278.3 204.4 56.3 47.6 31.5 21.0 737.1 666.7
Voyage expenses-83.6 -114.4 -69.9 -53.8 -17.8 -15.0 -8.7 -6.4 -180.0 -189.6
T/C
(time charter)
income 287.4 279.3 208.4 150.6 38.5 32.6 22.8 14.6 557.1 477.1
Operating
expenses -159.8 -177.7 -82.9 -102.6 -14.2 -14.2 -9.2 -9.9 -266.1 -304.4
Provision for
severance
payments -4.1 0.0 -0.8 0.0 -0.0 0.0 -0.0 0.0 -4.9 0.0
Charter hire
expenses 0.0 -0.3 0.0 0.0 -12.7 -5.4 0.0 0.0 -12.7 -5.7
Gains/losses
on sale of
vessels 3.1 0.0 15.8 12.5 0.0 0.0 0.0 0.0 18.9 12.5
Operating profit
before
depreciation 126.6 101.3 140.5 60.5 11.6 13.0 13.6 4.7 292.3 179.5
Depreciation -57.1 -61.6 -33.7 -36.5 -8.1 -8.0 -4.9 -3.9 -103.8 -110.0
Operating
profit 69.5 39.7 106.8 24.0 3.5 5.0 8.7 0.8 188.5 69.5
Minority
interests 7.0 -0.9 0.2 -1.5 0.0 0.0 0.1 0.0 7.3 -2.4
T/C income
per day/month*
(USD 1,000) 484* 458* 29.3 18.8 20.6 19.0 - - 20.2 16.6
BREAKDOWN BY FLEET, FOURTH QUARTER (1/10/00-31/12/00)
FOURTH QUARTER
(1/10-31/12) GAS TANKERS DRY BULK OFFSHORE TOTAL
(USD million
unaudited) 2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
Operating
revenue 95.4 102.8 92.2 46.3 13.6 12.3 9.8 6.7 211.0 168.1
Voyage
expenses -23.9 -29.3 -18.9 -16.1 -4.6 -4.1 -2.2 -2.1 -49.6 -51.6
T/C (time
charter)
income 71.5 73.5 73.3 30.2 9.0 8.2 7.6 4.6 161.4 116.5
Operating
expenses -34.5 -44.9 -17.4 -25.5 -3.1 -3.8 -2.4 -2.0 -57.4 -76.2
Charter hire
expenses 0.0 -0.3 0.0 0.0 -2.3 -1.5 0.0 0.0 -2.3 -1.8
Gains/losses
on sale of
vessels 3.2 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.2 0.0
Operating profit
before
depreciation 40.2 28.3 55.9 4.7 3.6 2.9 5.2 2.6 104.9 38.5
Depreciation -14.1 -15.4 -8.8 -8.1 -2.1 -2.0 -1.9 -1.5 -26.9 -27.0
Operating
profit 26.1 12.9 47.1 -3.4 1.5 0.9 3.3 1.1 78.0 11.5
Minority
interests 2.3 0.5 0.0 -0.5 0.0 0.0 0.2 0.0 2.5 0.0
T/C income
per day/month*
(USD 1,000) 484* 482* 41.1 15.6 20.0 18.4 - - 23.4 16.3
Average T/C income per unit is not reported for the offshore fleet.
GAS
The gas fleet generated full-year operating profit of USD 69.5 million, compared
with USD 39.7 million in 1999, following improvements in all bar the VLGC
segment. Fourth-quarter operating profit was USD 26.1 million, compared with USD
12.9 million in 1999. Capital gains of USD 3.2 million were credited to the
accounts in the fourth quarter following the sale of a 49% stake in an LNG
newbuild as discussed below. 20 gas carriers were dry-docked during the year,
compared with 12 in 1999.
The spot market for VLGCs (over 70,000 cbm) picked up during the fourth quarter.
There was still little activity in the LPG market but the market for clean
petroleum products was extremely busy. A number of vessels were fixed for
naphtha cargoes at healthy rates and few vessels were unemployed by the end of
year. Activity in the market for clean petroleum products was fuelled by the
start-up of new facilities for the distillation of gas condensate in the
Emirates. Production at these plants is based on associated condensate recovered
as part of natural gas production in the region and has naphtha as one of its
end-products. Gas condensate is not covered by OPEC quotas, which apply to oil
and oil products only.
Bergesen's VLGC fleet generated average T/C income of USD 570,000/month during
the year, compared with USD 660,000/month in 1999. At the year-end, T/C rates in
the spot market for modern tonnage were around USD 900,000/month excluding
waiting time, while charter cover for 2001 stood at around 27% for Bergesen's
VLGC pool, which included not only Bergesen's own vessels but also six vessels
chartered in from outside, making a total of 25 ships.
Five newbuilds joined the world VLGC fleet during the year, with Bergesen taking
delivery of the first of two newbuilds from the Gdynia yard in Poland
mid-November. The world fleet consisted of 98 vessels at the year-end, with a
further 12 on order. Bergesen took delivery of the second VLGC newbuild from
Gdynia in mid-February 2001.
The market for LGCs (50-60,000 cbm) was buoyant throughout the fourth quarter,
with a busy ammonia and LPG market in the Atlantic basin ensuring high levels of
capacity utilisation. One contributing factor was the record-high natural gas
prices in the USA brought on by strong demand from electricity generators. US
natural gas prices more than quadrupled during the year, making local production
of ammonia from natural gas unprofitable and so leading to the closure of plants
with a combined production capacity of seven million tonnes of ammonia - the
equivalent of a 40% reduction. This triggered a surge in ammonia imports and
also an increase in LPG imports since less LPG was being separated from natural
gas before it was used to generate electricity.
Bergesen's LGC fleet generated average T/C income of USD 545,000/month during
the year, compared with USD 440,000/month in 1999. At the year-end, T/C rates in
the spot market were around USD 750,000/month excluding waiting time, while
charter cover for 2001 stood at around 40% for Bergesen's LGC pool, which
included not only Bergesen's own vessels but also six vessels chartered in from
outside, making a total of 19 ships. Bergesen has entered into an agreement on
the sale of a 43% interest in the 1978-built 54,200 cbm LGC Havkong as part of
the long-term employment of the vessel. This transaction will trigger a capital
gain of around USD 7 million during the first quarter of 2001 and will leave
Bergesen with a 43% stake in the vessel.
No newbuilds joined the world fleet of 25 LGCs during the year and no vessels
were on order at the year-end. Bergesen sold one vessel for scrap in May.
Furthermore, Bergesen entered into an agreement with Japan's Kawasaki Heavy
Industries in February 2001 on the construction of a new 59,200 cbm LGC for
delivery by 30 September 2003, with an option to order a second vessel for
delivery by the end of that year. One of Bergesen's gas partners Solvang ASA has
entered into an agreement with the yard to build one or two equivalent vessels.
The spot market for MGCs (20-40,000 cbm) continued to strengthen during the
fourth quarter. The ammonia market was busy throughout the period and LPG
activity picked up towards the end of the year. Waiting times gradually came
down and virtually the whole MGC fleet had been fixed by the year-end.
Bergesen's MGC fleet generated average T/C income of USD 475,000/month during
the year, compared with USD 405,000/month in 1999.
Six newbuilds (including five with ethylene capacity) joined the world MGC fleet
during the year but no vessels were sold for scrap. Five vessels were on order
at the year-end: one due to be delivered in 2001, three in 2002 and one in 2003.
The market for the Igloo and Handygas vessels (8-15,000 cbm) sailing in the A.P.
Moller pool for semirefrigerated vessels was subdued at the beginning of the
fourth quarter. Other than a few fixtures for ethylene travelling from Asia to
Europe and for ethylene and propylene from America to Europe, there was little
activity in the market for petrochemical cargoes. The market for butadiene from
Europe to the USA was weak throughout the quarter but the LPG market picked up
in November with an increase in shipments from the North Sea.
Bergesen's Handygas vessels generated average T/C income of USD 260,000/month
during the year, compared with USD 215,000/month in 1999, while its Igloo
vessels generated average T/C income of USD 325,000/month during the year,
compared with USD 260,000/month in 1999.
Seven vessels (including six with ethylene capacity) were on order in the
8-15,000 cbm segment at the year-end: two due to be delivered in 2001, four in
2002 and one in 2003. Seven vessels were on order in the 6-8,000 cbm segment:
four due to be delivered in 2001 and three in 2002.
Bergesen entered into an agreement with South Korea's Daewoo Heavy Industries
during the year on the construction of two 138,000 cbm membrane-type LNG
carriers for delivery in the first and second quarters of 2003 with a price tag
of around USD 150 million for the first vessel and USD 155 million for the
second. Distrigas, the gas arm of the Tractebel group, has acquired a 49% stake
in the first vessel, triggering a capital gain for Bergesen of USD 3.2 million
in the fourth quarter, while Cabot, another company in the Tractebel group, has
chartered the vessel for a minimum of 20 years from delivery with an option to
extend the charter by up to nine years. The Tractebel group is a major player in
the Atlantic LNG trade. The second LNG newbuild has yet to be chartered.
Bergesen's two smaller 30,000 cbm LNG carriers, the Century and Havfru, have
been fixed on time charters running until October 2007 and February 2003
respectively.
The world fleet of LNG carriers over 100,000 cbm consisted of 100 vessels at the
year-end, with a further 23 on order. The large number of major new LNG projects
currently being planned and developed, combined with sharp growth in demand for
natural gas, means that the outlook is bright for LNG carriers.
TANKERS
Bergesen's VLCC fleet generated full-year operating profit of USD 106.8 million,
compared with USD 24.0 million in 1999, and fourth-quarter operating profit of
USD 47.1 million, compared with a loss of USD 3.4 million in 1999. Average T/C
income was USD 29,300/day, compared with USD 18,800/day in 1999. Three VLCCs
were dry-docked during the year, compared with seven in 1999. One vessel was
taken through the 5th Special survey, at the age of 25.
Spot rates remained very high throughout the fourth quarter thanks to high
levels of oil production, especially in the OPEC countries. OPEC output hit
around 29.3 mb/d in October and November but fell back slightly in December
following a drop in exports from Iraq and, to some extent, Saudi Arabia.
Fourth-quarter OPEC production was around 3 mb/d higher in 2000 than in 1999,
with most of the increase attributable to the Middle East. Saudi Arabia is the
only OPEC country still to have significant excess production capacity.
The IEA estimates that world oil consumption grew by around 0.7 mb/d or 1.0%
during the year. This growth alone is not enough to explain the strong tanker
market. Another contributing factor is the estimated increase in world oil
stocks of around 1.2 mb/d during the year, following a reduction of around 0.7
mb/d in 1999. Changes in stocks have a direct impact on demand for tanker
tonnage and, coupled with the growth in demand and an increase in average
shipping distances, explains most, but far from all, of the growth in demand for
tonnage. Another important factor is that it has become harder to fix older
tonnage following the Erika disaster off France, resulting in longer waiting
times for older tonnage despite a tight tanker market. Consolidation on the
supply side, with the creation of pool schemes and greater concentration of
ownership, has also had a positive impact.
The strong tanker market meant that only one VLCC was sold for scrap during the
fourth quarter. The year as a whole saw 42 VLCC newbuilds being delivered while
25 older vessels were scrapped and a further three were sold for conversion into
FPSO units. 89 vessels were on order at the year-end, 32 of them for delivery in
2001.
Bergesen purchased a 1987-built 310,700 dwt combined oil/ore carrier in the
fourth quarter. Renamed the Berge Fjord, the vessel has operated in the oil spot
market since being taken over in November 2000.
DRY BULK
Bergesen's dry bulk fleet recorded full-year operating profit of USD 3.5
million, compared with USD 5.0 million in 1999. The drop is due primarily to the
repairs to the Berge Nord and the cost of chartering in replacement tonnage. The
fleet generated fourth-quarter operating profit of USD 1.5 million, compared
with USD 0.9 million in 1999. Average T/C income during the year was USD
20,600/day, compared with USD 19,000/day in 1999. One dry bulker was dry-docked
for scheduled maintenance, compared with none in 1999, and substantial repairs
and reinforcements were carried out on another. Charter cover for 2001 stood at
around 90% at the year-end.
Global trade in iron ore is estimated to have grown by around 10% in the year
2000 and global trade in coal by 6%. The market for Capesize vessels was strong
throughout the year, although growth in terms of ton-miles was not as high due
to changing trading patterns: an increasing proportion of Asian imports were
sourced from China and other Pacific Rim countries such as Indonesia and
Australia. Despite growth in the world Capesize fleet of around 6% during the
year, the strong growth in trade boosted capacity utilisation and pushed up
rates. T/C rates for modern Capesize vessels ended the year at around USD
19,500/day in the spot market and USD 16,500/day for 12-month time charters.
Just six Capesize vessels and five combined carriers of more than 100,000 dwt
were sold for scrap, while 34 newbuilds were delivered. 55 Capesize vessels over
100,000 dwt were on order at the year-end, including 30 due for delivery in
2001.
Bergesen purchased a 1986-built 200,700 dwt ore carrier in mid-December 2000 for
around USD 17 million. Renamed the Berge Shan, the vessel has been fixed on a
seven-year charter to a Chinese steelworks to transport iron ore from Australia
to China. This charter represents a breakthrough for Bergesen in the Chinese
market.
OFFSHORE
Established in 1999, Bergesen's offshore fleet consisted of three vessels in
production and one under conversion to FPSO-unit at the year-end. The fleet
generated full-year operating profit of USD 8.7 million, compared with USD 0.8
million in 1999.
Oil production on board the Berge Hugin on the Pierce field in the UK sector of
the North Sea ran to schedule without any major disruption, and the Berge Troll
continued to serve as a FPSO-unit for LPG off Angola.
The conversion of the Sendje Berge from VLCC to FPSO unit in Singapore was
completed in the fourth quarter and the vessel began a two-year charter to US
oil company Triton Energy on the Ceiba field off Equatorial Guinea in West
Africa in mid-November. The charterer has an option to extend the charter by up
to five years and also has an option to purchase the vessel at any time.
Boasting a daily output of around 60,000 barrels, she was originally converted
as a generic vessel. However, additional investment has been made at the request
of the charterer to adapt the vessel to the field in question as best possible.
This was achieved without any delays in the original schedule for the conversion
project.
The VLCC Berge Hus went into a Singapore yard for conversion into an FPSO unit
in January 2001, with this work due to be completed during the course of this
year. The vessel has yet to be chartered but the oil companies have shown
considerable interest in the project.
FINANCIAL INFORMATION
Bergesen had liquid assets (bank deposits, bonds, certificates and equities) of
USD 347 million at the year-end.
Net interest expenses for the year came to USD 16.9 million, compared with USD
16.5 million in 1999. Interest-bearing liabilities totalled USD 829 million at
the year-end.
Bergesen bought back 5,747,550 of its shares during the fourth quarter
(3,149,000 A-shares and 2,598,550 B-shares) at an average price of NOK 149.55
for the A-shares and NOK 137.21 for the B-shares, making a total price of NOK
827 million. This means that the company now holds 8.21% of its own shares. This
holding has been eliminated when calculating value-adjusted equity and per-share
data.
OUTLOOK
In the VLGC market, a substantial number of vessels are currently surplus to
requirements as far as the transportation of LPG is concerned but there is scope
for interesting alternative employment in the market for clean petroleum
products in the short term. Traditionally this opportunity has cropped up for
brief periods only and then at rates well below those for LPG trades, but
currently clean petroleum products are offering equal or better earnings than
LPG. However, this situation cannot be expected to last for more than a few
months. LPG volumes are expected to grow by around 3.5% in 2001 but a major
newbuilding programme means that the world fleet will expand by around 7%. Until
these new vessels are absorbed by the market, earnings will be on a par with
last year or only slightly higher.
In the LGC segment, 2001 is forecast to bring a repeat of the higher earnings
seen last year. Although US natural gas prices will come down from their current
giddy heights, continued high levels of activity in the ammonia market and
healthy growth in shipments of LPG from sources in the Atlantic basin are
predicted. Fleet growth in this segment is also limited.
The MGC market is forecast to strengthen thanks to higher activity and limited
fleet growth, and earnings for the Igloo and Handygas vessels in the A.P. Moller
pool are also expected to rise slightly.
Average earnings in the VLCC market are expected to be in line with last year
but rates may be volatile at times. The market will also be affected by the rate
of growth in the world economy and OPEC's production quotas - in January 2001
OPEC decided to cut its output by 1.5 mb/d with effect from February. The VLCC
fleet is expected to see net growth of around 2% during the year.
Given the slowdown in global economic activity and industrial production
forecast for 2001, growth in imports of the major bulk commodities is likely to
be below that in Capesize tonnage, which will be substantial and may therefore
put pressure on rates during the course of the year.
The major oil companies are planning to step up exploration and production on
the strength of high oil prices. This is expected to fuel demand for floating
production solutions off West Africa and in other areas with proven major oil
reserves and low recovery costs. This is the market that Bergesen intends to
exploit with its FPSO solutions.
Bergesen anticipates an increase in operating profit in 2001 thanks to continued
healthy earnings in the VLCC market and a strong VLGC market during the first
part of the year.
Oslo, 26 February 2001
The board of Bergesen d.y. ASA
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