Belships ASA : Rapport 1. kvartal 2015


·             Operating income of USD 5.0 m (USD 6.1 m)
·             EBITDA of USD 2.2 m (USD 2.1 m)
·             Net result of USD -2.0 m (USD 0.3 m)
·             Impairment of ship values included with USD -2.2 m (USD 0.0 m)
·             All vessels operating normally – modern fleet – average age 4.4 years.
·             Contract coverage 100% for delivered vessels – USD 92 million fixed charter backlog.


First quarter 2015 results   

Belships operating income in 1st quarter 2015 was USD 5,013,000 (Q1 2014: USD 6,079,000), while EBITDA amounted to USD 2,213,000 (USD 2,121,000). The decrease in operating income is mainly related to M/T Belaia, which was redelivered in the beginning of March 2014 and dry-docking of M/S Belnor. The Group’s operating result amounted to USD -1,037,000 (USD 1,124,000), while total comprehensive income for 1st quarter 2015 was USD -1,986,000 (USD 295,000). The decrease in operating result is mainly explained by impairment of ships.

Impairment tests of the company’s assets were performed in accordance with IAS 36. The ships and charterparties are valued based on observable market values. Based on these valuations and assumptions, the ships’ book value has been adjusted by USD 2.2 million in the 1st quarter, in addition to ordinary depreciation of USD 1.1 million.

The accounts for 1st quarter of 2015 have been prepared in accordance with IAS 34 Interim Financial Reporting and are consistent with the principles applied in the annual accounts for 2014 and relevant changes to IFRS effective from 1 January 2015. The interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU.


Fleet status

M/S Belstar, M/S Belnor and M/S Belocean have continued the long-term contracts to Canpotex of Canada. Canpotex is one of the world’s largest exporters of potash, a fertilizer product imported in large volumes by countries such as China, India and Brazil. Net time charter rate is USD 16,000 per day, which is a favorable rate in the present market.

M/S Belnor was in drydock in March, after 5 years in service. Total off-hire inclusive deviation was 19 days. Otherwise the ships have sailed without significant off-hire, and operating expenses for 1st quarter 2015 are close to budget. Technical management is handled by Belships Management (Singapore) with a total fleet of 20 ships under technical management.


Newbuilding program

Belships newbuilding program with Imabari Shipbuilding in Japan includes 2 x 61.000 dwt eco-design Supramax bulk carriers for delivery in September 2015 and 2nd quarter 2016. In addition Belships has signed a long-term lease agreement incl. purchase option for a slightly larger sister vessel with delivery 1st quarter 2017. 


Financial and corporate matters

31 March the Group’s cash totaled USD 6.1 million compared to USD 8.1 million as per 31 December 2014.

The mortgage debt balance as at 31 March was USD 45.0 million and was reduced by USD 1.3 million during the quarter. Third instalment for the second newbuilding amounting to USD 2.8 million was paid in March and was financed by the Group’s surplus liquidity. Remaining newbuilding commitment amounts to USD 39.6 million. Belships has established a loan facility covering 70% of the lower of contract price and market value at the time of delivery. 70% of contract price equals remaining newbulding commitment.

In August 2011 Belships entered into an interest rate swap agreement with 2 years forward start at 2.2% with a remaining duration of 3.5 years covering USD 20 million, reducing by USD 5 million per year. Hedging the Group’s interest exposure is considered on an ongoing basis. The long-term interest rate is at a historical low level. Belships expects only a modest increase in the interest rate level for the coming 3-5 years. The hedging level of interest rate exposure is currently around 24%.   

At the end of the 1st quarter of 2015, the book value per share amounted to NOK 10.90, while the equity ratio was 55.8%.


Market highlights

The Capesize-index ended the first quarter at USD 4,415 per day, whereas the Panamax-index ended at USD 4,780 per day. The Supramax-index ended the quarter at USD 6,797 per day. As per today the Cape index stands at USD 4,532/day, Panamax-index at USD 5,246/day and Supramax-index at USD 6,533/day.

The dry bulk market is close to historical low levels after a long period of high fleet deliveries as well as weaker demand growth. This has resulted in a strong pressure on rates and asset prices in all dry bulk sectors. Buyers turn their attention to Japanese tonnage, adding pressure to asset prices for Chinese built tonnage. Another factor is the strengthening of USD against JPY, leading to more sales candidates from Japanese owners.

With rapidly declining iron ore prices Chinese domestic production has become unprofitable and can no longer compete with cheaper imports. China produced 206 million tons of iron ore in 2014, compared with 314 million tons in 2013. China’s 4,000 mines are mostly small-scale operation with higher production costs than the big four iron ore producers in Australia and Brazil. The likely effect for shipping is that China will import more of its iron ore, helping to absorb some of the tonnage overcapacity.

Chinese steam coal imports fell back sharply in 2014 as coal lost market share in the electricity mix. However, coal will still be important for China. Indian imports of coal will continue to grow and Marsoft predicts that the combined imports of China and India will bring about positive growth for the coal trade.



Belships is concentrating 100% on the dry bulk market, with 3 x 58,000 dwt Supramax in service and 3 x Supramax newbuildings under construction by Imabari Shipbuilding in Japan for delivery from September 2015 until 1st quarter 2017. The newbuildings will be actively marketed for long-term employment at a time closer to delivery, but Belships is in preliminary discussions with a few carefully selected charterers.



The supply side is quickly adjusting to lower demand and during first quarter approx. 9 million dwt of dry bulk tonnage has been scrapped, including 45 capesizes. We have also seen conversions of capesize contracts to tankers and container vessels, and increased slippage can be expected as many owners try to postpone deliveries. Fearnley Securities claims that 63% of the dry bulk orderbook is to be delivered from Chinese yards, out of which about 1/3 from private independent shipyards. Many yards are in a challenging situation with high working capital needs and no new orders.

Rates and ship values have fallen to historical low levels and are probably close or at bottom of the cycle. Current second hand prices offer a low cash break-even level for most ship types, and many ships are being inspected by prospective buyers.

Belships vessels are chartered out long-term on a fixed rate to a reputable counterpart, and short term market fluctuations will therefore not affect the Group’s cash flow. The charter parties represent a future nominal gross hire of USD 92 million.

Focus will be to further develop Belships as an owner/operator of modern bulk carriers to reputable counterparts. Our ambition is to build a portfolio of quality vessels and robust charter parties that will generate distributable cash flows.

Oslo, 7 May 2015



Questions should be directed to: 

Ulrich Müller, CEO
+47 22 52 76 15

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