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BERGESEN D.Y. GROUP
First-quarter interim report for 2003
INCOME STATEMENT First quarter Full year
(Unaudited figures in USD million) 2003 2002 2002
Operating revenue 166.3 154.0 583.8
Voyage expenses -43.5 -39.5 -169.3
T/C (Time Charter) income 122.8 114.5 414.5
Other operating expenses -82.6 -71.9 -310.7
Net gain on sale of vessels -0.6 10.4 28.6
Operating profit before 39.6 53.0 132.4
depreciation
Depreciation -28.9 -27.4 -106.9
Operating profit 10.7 25.6 25.5
Interest income 1.6 2.9 6.9
Interest expenses -7.6 -5.9 -18.9
Gains/losses on sale of securities 0.0 0.0 -0.7
Impairment charges of
shares/reversal of impairment -3.1 3.1 11.7
charges
Foreign exchange gains/losses 9.6 4.5 3.5
Dividend income and other 0.1 0.6 -0.8
financial items
Net financial items 0.6 5.2 1.7
Profit before tax 11.3 30.8 27.2
Tax -1.1 -0.3 -1.0
Profit after tax 10.2 30.5 26.2
Minority interests 0.5 1.1 2.0
Profit after minority interests 9.7 29.4 24.2
Earnings per share 0.18 0.51 0.45
Cash flow per share 0.68 3.17 2.27
Average number of shares 57 345 406 59 622 056 58 629 590
BALANCE SHEET
(Unaudited figures in USD million) 31/03-03 31/03-02 31/12-02
ASSETS
Intangible fixed assets 9 2 8
Tangible fixed assets 1 854 1 787 1 969
Financial fixed assets 59 47 62
Total fixed assets 1 922 1 836 2 039
Inventories 13 14 13
Receivables 99 68 98
Investments 59 62 61
Bank deposits, cash etc. 235 254 166
Total current assets 406 398 338
Total assets 2 328 2 234 2 377
EQUITY AND LIABILITIES
Paid-in capital 286 287 284
Retained earnings 1 020 1 117 1 012
Minority interests 47 56 51
Total equity 1 353 1 460 1 347
Provision for liabilities 30 20 30
Other long-term liabilities 783 617 833
Current liabilities 162 137 167
Total liabilities and provisions 975 774 1 030
Total liabilities and equity 2 328 2 234 2 377
INCOME STATEMENT First quarter Full year
(Unaudited figures in USD million) 2003 2002 2002
Operating revenue 166.3 154.0 583.8
Voyage expenses -43.5 -39.5 -169.3
T/C (Time Charter) income 122.8 114.5 414.5
Other operating expenses -82.6 -71.9 -310.7
Net gain on sale of vessels -0.6 10.4 28.6
Operating profit before 39.6 53.0 132.4
depreciation
Depreciation -28.9 -27.4 -106.9
Operating profit 10.7 25.6 25.5
Interest income 1.6 2.9 6.9
Interest expenses -7.6 -5.9 -18.9
Gains/losses on sale of securities 0.0 0.0 -0.7
Impairment charges of
shares/reversal of impairment -3.1 3.1 11.7
charges
Foreign exchange gains/losses 9.6 4.5 3.5
Dividend income and other 0.1 0.6 -0.8
financial items
Net financial items 0.6 5.2 1.7
Profit before tax 11.3 30.8 27.2
Tax -1.1 -0.3 -1.0
Profit after tax 10.2 30.5 26.2
Minority interests 0.5 1.1 2.0
Profit after minority interests 9.7 29.4 24.2
Earnings per share 0.18 0.51 0.45
Cash flow per share 0.68 3.17 2.27
Average number of shares 57 345 406 59 622 056 58 629 590
BALANCE SHEET
(Unaudited figures in USD million) 31/03-03 31/03-02 31/12-02
ASSETS
Intangible fixed assets 9 2 8
Tangible fixed assets 1 854 1 787 1 969
Financial fixed assets 59 47 62
Total fixed assets 1 922 1 836 2 039
Inventories 13 14 13
Receivables 99 68 98
Investments 59 62 61
Bank deposits, cash etc. 235 254 166
Total current assets 406 398 338
Total assets 2 328 2 234 2 377
EQUITY AND LIABILITIES
Paid-in capital 286 287 284
Retained earnings 1 020 1 117 1 012
Minority interests 47 56 51
Total equity 1 353 1 460 1 347
Provision for liabilities 30 20 30
Other long-term liabilities 783 617 833
Current liabilities 162 137 167
Total liabilities and provisions 975 774 1 030
Total liabilities and equity 2 328 2 234 2 377
RESULTS
The Bergesen group generated a first quarter operating profit of USD
10.7 million in 2003, down from USD 25.6 million last year. These
figures include a net loss on the sale of vessels of USD 0.6 million
compared to a gain of USD 10.4 million last year. Freight income on a
T/C basis totalled USD 122.8 million, compared with USD 114.5 million
in 2002.
Despite a strong tanker market, weak results in the other segments
caused the total operating profit to fall.
Operating expenses totalled USD 82.6 million, compared to USD 71.9
million in 2002. The USD appreciated from NOK 6.97 to NOK 7.29 over
the quarter. The first-quarter average USD/NOK exchange rate was
7.06, compared with 8.91 in 2002. The drop in the average USD
exchange rate contributed significantly to the increase in operating
expenses as a large proportion of these expenses are incurred in NOK.
The accounts show net financial income of USD 0.6 million after net
interest expenses of USD 6.0 million and net foreign exchange gains
of USD 9.6 million.
Profit before tax came to USD 11.3 million, down from USD 30.8
million last year. Profit after tax was USD 10.2 million, compared to
USD 30.5 million last year.
The accounts have been prepared using the same accounting principles
as in the annual accounts for 2002.
SHAREHOLDER SITUATION
On 7 April 2003, World Nordic Aps acquired 51.5% of the voting
A-shares and owned 26.9% of the non-voting B-shares of the company,
representing 44.3% of the total share capital. World Nordic Aps has
put forward a mandatory cash offer to buy all shares of the company
held by the other shareholders, in accordance with the Norwegian
Securities Trading Act, chapter 4. The offer period expires on 23 May
2003.
At the annual general meeting on 24 April 2003, a new board of
directors consisting of Helmut Sohmen (Chairman), Andreas Sohmen-Pao
(Vice Chairman), Michael J. Blakely, Morten Sig. Bergesen and Svein
Erik Amundsen was elected.
FLEET REPORT
The operation of the fleet was satisfactory during the first quarter
and there was no significant technical off-hire in the fleet beyond
scheduled maintenance. Seven vessels were dry-docked for scheduled
maintenance during the first quarter compared with six in 2002.
BREAKDOWN BY SEGMENT
First quarter GAS TANKERS DRY BULK OFFSHORE TOTAL
(1/1 - 31/3)
(Unaudited
figures in 2003 2002 2003 2002 2003 2002 2003 2002 2003 2002
USD million)
Operating 87.1 84.9 52.1 38.3 17.8 16.4 9.3 14.4 166.3 154.0
revenue
Voyage -21.9 -22.0 -13.1 -12.2 -7.9 -4.7 -0.6 -0.6 -43.5 -39.5
expenses
T/C (Time
Charter) 65.2 62.9 39.0 26.1 9.9 11.7 8.7 13.8 122.8 114.5
income
Operating -49.9 -41.5 -15.9 -17.0 -5.6 -4.0 -7.8 -6.4 -79.2 -68.9
expenses
Charter hire -3.4 -0.9 0.0 0.0 0.0 -2.1 0.0 0.0 -3.4 -3.0
expenses
Net gain on
sale of 1.5 0.0 -2.1 10.4 0.0 0.0 0.0 0.0 -0.6 10.4
vessels
Operating
profit before 13.4 20.5 21.0 19.5 4.3 5.6 0.9 7.4 39.6 53.0
depreciation
Depreciation -15.7 -14.6 -6.6 -7.6 -3.7 -2.7 -2.9 -2.5 -28.9 -27.4
Operating -2.3 5.9 14.4 11.9 0.6 2.9 -2.0 4.9 10.7 25.6
profit
Minority 0.0 1.1 0.0 0.0 0.0 0.0 0.0 0.1 0.4 1.2
interests
T/C income
per 438* 409* 32.7 17.2 16.8 20.3 - - 18.7 16.5
day/month* ($
1 000)
GAS
Bergesen's gas fleet generated a first-quarter operating loss of USD
2.3 million, compared with a profit of USD 5.9 million last year.
Earnings fell in all segments, except for the LGC-fleet, which
improved its earnings. LNG is reported as a new gas-segment from
first quarter 2003, following the delivery of the first
LNG-newbuilding from Daewoo.
Bergesen's LNG carrier Berge Boston was delivered from Daewoo on 23
January 2003. The vessel is from delivery employed on a 20-year
contract to Tractebel. Bergesen has a 51% ownership share in the
vessel, while the Belgian energy group Distrigas holds 49%. The
accounts include Bergesen's share of all income statement and balance
sheet items related to the joint venture (the proportional
consolidation method). The T/C rate shall be adjusted at regular
intervals to cover variations in operating expenses.
Bergesen has a further newbuilding program at Daewoo of six LNG
carriers, all employed for at least 20 years from delivery. Five of
them are to be fully owned by Bergesen, while one is to be owned 50%
by Bergesen and 50% by the Algerian oil and gas company Sonatrach.
One vessel is scheduled for delivery in June 2003, one in third
quarter 2004, three in 2005 and one in 2006. The charterer of four of
the vessels, Nigeria LNG Ltd., has an option to purchase the vessels
after five years from delivery, ten years, and every second year
thereafter in the entire charter period.
Bergesen's VLGCs (over 70,000 cbm) generated average T/C income of
USD 399,900/month, compared with USD 409,800/month in 2002. Charter
cover for Bergesen's VLGC pool for the rest of 2003 stood at 20% at
the end of the quarter. Despite an active CPP market, the earnings
suffered from a difficult LPG-market, high bunker prices, and more
idle time between cargoes.
At the beginning of the quarter, the activity in the LPG market
improved, thanks partly to a seasonal upswing due to cold weather and
favourable conditions for west-east arbitrage trade. However, as the
quarter progressed, LPG prices rose sharply in the Atlantic area, and
the important west-east arbitrage trade dried up completely as
traders' margins eroded. Also the LPG export out of the Arabian Gulf
suffered, due to high Saudi contract prices, reaching USD 385/tonnes
FOB. Japanese, Korean and Chinese spot buyers immediately cut back
purchases, and decided to draw on stocks. Idle VLGCs started to
accumulate in the AG, and earnings suffered from a considerable
increase in waiting time between cargoes. At the end of the quarter,
LPG prices came under pressure, but Asian buyers laid back, waiting
for further price cuts.
The freight market for clean petroleum products (CPP) was active in
most of the quarter. A shift to longer haul trades due to the strike
in Venezuela continued to support rates, as gasoline and gasoil were
shipped from Europe and the Baltic to the US. This tied up capacity
in the product tanker market, and provided chartering opportunities
for a number of VLGCs outfitted to carry CPP. A mid-quarter dip in
activity occurred as clean cargos were held back in the Arabian Gulf
in preparation for the upcoming war on Iraq. Rates obtained were much
stronger in the CPP-market than in the LPG-market, peaking at about
USD 800,000/month excluding waiting time. Bergesen's VLGC-pool had 11
vessels employed in the CPP-market at the end of the quarter.
The world VLGC-fleet consisted of 104 vessels at the end of the
quarter. Three newbuildings were delivered, while two vessels were
sold for scrap. Nine newbuildings were on order, of which five for
delivery in 2003, one in 2004 and three in 2005. Bergesen's VLGC pool
consists of 32 vessels, of which Bergesen owns 21.
Bergesen's LGCs (50-60,000 cbm) generated average T/C income of USD
556,700/month, compared with USD 427,300/month in 2002. All of the
vessels in the LGC pool were employed at the end of first quarter.
Charter cover for 2003 stood at 44% at the end of the quarter.
The LGCs performed better than the VLGCs throughout the first
quarter, due to a more balanced supply/demand situation for tonnage.
Shortfall of Venezuelan CPP shipments to the US provided trading
opportunities for substitute suppliers from more distant sources in
Europe and the Mediterranean. Slower LPG activity from the middle of
the quarter was compensated for by more long haul ammonia cargos.
Shipments of ammonia from Black Sea to US Gulf improved due to high
US natural gas prices and closures of more than half of the US
ammonia production capacity.
The world LGC fleet consisted of 21 vessels at the end of the
quarter. One newbuilding was delivered to Bergesen's pool-partner
Solvang, and entered the pool. Eight newbuildings were on order at
the end of the quarter, including two for Bergesen and two for
pool-partner Solvang. Three newbuildings are due to be delivered in
2003, two in 2004 and three in 2005.
Bergesen's MGCs (20-40,000 cbm) generated average T/C income of USD
492,500/month, compared with USD 515,200/month last year. The
MGC-fleet enjoyed an active ammonia-market. As the majority of the
vessels were employed in ammonia, tonnage supply for LPG-trading
became tight. This situation offered employment opportunities for
smaller, semi-refrigerated vessels, available in the market. A number
of cargoes were shipped cross Atlantic on such vessels, and prevented
an increase in freight rates for MGCs.
The world MGC fleet consisted at the end of the quarter of 42 fully
refrigerated and 16 semi-refrigerated vessels. The Bergesen owned
vessel Hesiod was sold for scrap in March. Four fully refrigerated
vessels and one semi-refrigerated vessel were on order at the end of
the quarter: two for delivery in 2003 and three in 2004. Five
additional newbuildings were contracted in April, of which two for
Bergesen, for delivery in fourth quarter 2005 and fourth quarter
2006, at a price of USD 41.4 million per vessel. Pool partners Exmar
and A.P. M�ller contracted one and two similar vessels respectively.
Bergesen's Handygas vessels (12,000 cbm) generated average T/C income
of USD 233,300/month compared with USD 241,700/month last year, while
the company's Igloo vessels (8-15,000 cbm) generated average T/C
income of USD 290,500/month in 2003, compared with USD 309,500/month
last year.
The market for semi-refrigerated vessels improved in the first
quarter, however from a low level. Activity in the transatlantic LPG
trade from Europe to the US picked up, as well as the intra-European
trade. Activity in the petrochemical sector was more mixed, starting
off in a positive mood, with a number of long distance shipments of
VCM from the US and Mexico to the Far East. The transatlantic trade
in propylene was active in January, but fell back by the middle of
the quarter. Longhaul shipments to Asia came to a halt as VCM and
propylene stock levels in the US became low.
Four newbuildings in the 8-15,000 cbm segment were delivered,
including three with ethylene capacity. Six semi-refrigerated vessels
with ethylene capacity and two vessels with pressure tanks were on
order at the end of the quarter. A further four semi-refrigerated
vessels were on order in the 6-8,000 cbm segment.
TANKERS
Bergesen's VLCC fleet generated an operating profit of USD 14.4
million in the first quarter, compared with USD 11.9 million last
year. The profit includes USD 2.1 million in net loss on sale of
vessels (gain of USD 10.4 million last year). Average T/C income was
USD 32,700/day, compared with USD 17,200/day last year. Bergesen took
one vessel through the fifth special survey, and sold two vessels.
The VLCC market continued to improve in the first quarter and peaked
at WS 120 in March. On new spot fixtures, modern vessels obtained an
average of USD 60 - 70,000/day, and old turbine tankers USD 25 -
35,000/day, excluding waiting time. The strength of the market can be
pinned down to continued cold weather and high seasonal demand in the
Northern Hemisphere, and a substantial rise in shipments out of the
Arabian Gulf to cover up shortfalls from Venezuela, Nigeria and Iraq.
The oil export from Venezuela suffered from a slow build-up of
production after the termination of the strike among oil workers,
while Nigerian export suffered from strike, social unrest and
production shutdowns. The Iraqi export came to a halt when the war
broke out, including the Iraqi export from the Ceyhan terminal in
Turkey. The shift to more longhaul trading pattern is the single most
important reason for the continued strength in the tanker market
during first quarter, as tonnage requirements rose in an already
tight tanker market. Bergesen's high contract coverage for its modern
vessels limited the benefit from the strong spot market, while its
turbine tankers enjoyed the strong spot market.
World oil consumption averaged 78.4 mb/d in first quarter,
considerably up from 76.6 mb/d in the same period last year, but down
by 0.4 mb/d from the fourth quarter 2002. Compared to the same period
last year, virtually all of the increase was registered in North
America and in Asia.
Over the same period, OPEC oil production rose by 1.8 mb/d from 24.9
mb/d in first quarter 2002 to 26.7 mb/d in first quarter this year.
Non-OPEC oil production rose by 1.2 mb/d from 47.8 mb/d to 49.0 mb/d
in the same period. Compared to fourth quarter 2002, OPEC and
non-OPEC crude production rose by 0.8 mb/d and 0.5 mb/d respectively.
By end of April, export-volumes from the Arabian Gulf had risen by
approximately 1 mb/d from fourth quarter 2002.
11 VLCC newbuildings were delivered in the first quarter. Four VLCCs
were sold for scrap, and a further two vessels were sold for
conversion to offshore units. 70 VLCCs were on order at the end of
the quarter, equivalent to 17% of the existing fleet. 27 vessels are
due to be delivered in 2003, 26 in 2004, 16 in 2005 and one in 2006.
DRY BULK
Bergesen's dry bulk fleet generated first quarter profit of USD 0.6
million, compared with USD 2.9 million last year. Average T/C income
was USD 16,800/day, compared with USD 20,300/day last year. Charter
cover for the rest of the year is in excess of 90%. The first quarter
T/C income is suffering from the underperformance by one vessel under
a long-term contract. Another vessel served 65 days during the
quarter under a low-return COA, being the backhaul employment of a
main COA. Two other vessels also performed backhaul voyages at low
earnings during the quarter. High bunker-prices had a negative
effect, as some of the contracts do not have bunker escalation
clauses.
The market for large dry bulk carriers lost momentum in the beginning
of the quarter as Far Eastern charterers' interest cooled off
momentarily, but recovered in February and March. The main driving
force behind the market improvement seems to be the relentless
increase in Chinese iron ore imports. Based on annualisation of first
quarter import data, 2003 imports could reach 140 million tonnes, up
from 112 million tonnes last year. Also Japanese iron ore imports
have increased so far this year.
Strong freight rates and narrow price margins appear to curtail the
Australian steam coal shipments to the Asian markets. Korean
importers are being offered coal at more attractive CIF prices from
Indonesian and Chinese exporters, which have boosted exports
substantially so far this year.
Spot rates for modern capsize vessels ended the first quarter close
to USD 30,000/day, while 12-month T/C rates were around USD
20,000/day. Demolition sales have tumbled, with only one capesize dry
bulk vessel and one capesize combination carrier sold for scrap
during the first quarter. A total of seven newbuildings were
delivered. The order book counted 90 vessels at the end of the
quarter, equivalent to 14% of the existing fleet. 25 of these are due
to be delivered in 2003, 36 in 2004, 26 in 2005 and three in 2006.
OFFSHORE
Bergesen's offshore fleet generated a first-quarter operating loss of
USD 2.0 million, compared with a profit of USD 4.9 million last year.
Included in the latter figure was a compensation of USD 3.8 million
from a charterer for early termination of a contract. The first
quarter result is suffering from Berge Helene and Sendje Berge being
idle the entire quarter.
Sendje Ceiba continued its high levels of production regularity off
Equatorial Guinea in the first quarter. The conversion of Berge
Helene to a FPSO was completed in January 2003. The vessel has a
production capacity of 60,000 mb/d. Efforts to find employment for
this vessel and Sendje Berge are continuing. Tenders have been
submitted for two contracts, each for one vessel, expected to be
awarded in second quarter 2003. Both contracts would require
additional investments on the vessels, and would not generate any
revenues until 2004.
FINANCIAL INFORMATION
Bergesen had liquid assets (bank deposits, bonds, certificates and
equities) of USD 293.7 million at the end of the quarter.
Interest expenses came to USD 7.6 million, up from USD 5.9 million
last year. Additional interest charges of USD 2.4 million relating to
newbuilding contracts were capitalised and included in the cost of
the vessels in question. The group had total interest-bearing
liabilities of USD 793.1 million and net interest-bearing liabilities
USD 499.4 million at the end of the quarter.
The company's equity holdings were impaired by USD 3.1 million
(excluding its own shares) to market value.
The company's own shares, being 2,276,650 in total (2,031,500
A-shares and 245,150 B-shares), acquired in the second half of 2002,
will be cancelled at the Norwegian Register of Business Enterprises
in August 2003 as resolved by the annual general meeting on 24 April
2003. Excluding buybacks, the company has 57,345,406 shares in issue.
The dividend of NOK 7 per share will be distributed on 14 May 2003,
to those who were registered as shareholders as of 24 April 2003. The
share was traded excluding of dividend as from 25 April 2003.
OUTLOOK
Economic indicators have not changed notably over the last quarter.
The end of the war on Iraq has removed some uncertainty that could
improve the outlook for the US economy. The outlook for lower and
more stable oil prices should stimulate global economic activity.
However, the worries about the US trade and budget deficits remain.
Asia is suffering from the SARS virus and the negative effects are
hard to assess. Activity in the West European countries continues to
disappoint, and the recovery could take longer than expected.
The VLGC market has levelled off due to seasonal factors as
anticipated. The market is expected to remain weak through the third
quarter until the new build up in requirements ahead of the higher
demand winter season. Improvements are expected next year as LPG
volumes for exports are set to grow strongly, and more old vessels
are likely to be scrapped. Earnings in the LGC- and MGC segments are
expected to be more stable, due to a better balance between supply
and demand of tonnage, and higher charter coverage.
The market for semi-refrigerated gas carriers has been disappointing
in the last couple of months. Reduced availability of petrochemical
gases for export has reduced long haul trade, while activity in LPG
has slowed. The outlook is for a quiet summer market. In the longer
term the outlook is more optimistic, with the start up of new
petrochemical plants with exportable product. Asian countries are
expected to increase imports as demand continues to grow and local
plants are close to full utilization.
The VLCC market has performed well ahead of expectations for a
considerable period, helped by a notable shift to long haul trade,
stronger than expected demand due to cold winter weather and the
assistance of more strict rules and regulations applying to the
fleet. The near normalisation of oil production in Venezuela and in
Nigeria has already reduced the need for long haul imports from the
Middle East to Europe and to the US. So would also the expected
resumption of Iraqi production, including the export out of the
Ceyhan terminal in Turkey. The normalisation of the trading pattern
combined with slower seasonal demand and substantial newbuilding
deliveries is expected to put substantial pressure on tanker rates in
the coming months.
The outlook for the capesize market still seems promising. Continued
strong growth in shipments of iron ore and coal are anticipated.
However, a seasonal drop in activity is expected in the second and
third quarters.
The outlook for the West African offshore sector is considered
positive, with a sharp increase in the number of subsea wells to be
drilled over the next two years. This in turn should boost demand for
floating production solutions. The Sendje Berge and Berge Helene
FPSOs are temporarily unemployed, but final decisions are expected
within May for both the Oveng and the Okwori developments, where
Bergesen Offshore is shortlisted.
The board expects a higher operating profit in 2003 than in 2002, but
a significant improvement can not be expected until 2004.
CASH FLOW STATEMENT
(Unaudited figures in USD million) 31/03/03 31/03/02
Cash flow from operating activities 33.9 28.0
Cash flow from investing activities 91.0 -9.8
Cash flow from financing activities -55.8 64.0
Net change in cash 69.1 82.2
Cash at beginning of period 166.7 173.3
Cash at end of period 235.8 255.5
MOVEMENTS IN EQUITY
(Unaudited figures in USD million) 31/03/03 31/03/02
Equity at beginning of period 1 347 1 434
Net profit for the period 10 31
Share buybacks 0 0
Distributed to minorities -4 -5
Equity at end of period 1 353 1 460
Oslo, 12 May 2003
The board of Bergesen d.y. ASA
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