Belships ASA : Rapport 1. kvartal 2016


·             Operating income of USD 6.0 m (Q4 2015: USD 5.9 m)
·             EBITDA of USD 2.5 m (USD 2.2 m)
·             Net result of USD -16.5 m (USD -20.0 m)
·             Impairment of the fleet included with USD -13.8 m (USD -19.9 m)
·             All vessels operating normally – modern fleet – average age 4 years
·             Contract coverage 100% for delivered vessels – USD 75 million fixed charter
·             Belocean fixed for 10-15 months to Cargill
·             Belisland delivered 15 March and fixed to Canpotex for a period of 5 years


First quarter 2016 results

Belships operating income in 1st quarter 2016 was USD 6.0 million (Q4 2015: USD 5.9 million), while EBITDA amounted to USD 2.5 million (USD 2.2 million). The Group’s operating result amounted to USD -14.9 million (USD -19.1 million), while total comprehensive income for 1st quarter 2016 was USD -16.5 million (USD -20.0 million). Operating result is negatively impacted with a loss amounting to USD 2.3 million relating to the sale and leaseback on M/S Belisland and a provision for an unfavourable timecharter contract.

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, book value of the fleet has been reduced by USD 13.8 million in the 1st quarter, in addition to ordinary depreciation of USD 1.3 million.


Fleet status

M/S Belstar, M/S Belnor and M/S Belocean have (until mid February) 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. M/S Belforest was delivered to Cargill ex yard in September for a 10-14 month period at charter rate of around USD 8,000 per day. M/S Belisland was delivered to Canpotex ex yard on 15 March and entered the 5 years c/p at USD 17,300 per day at the expense of M/S Belocean being redelivered. In February M/S Belocean was fixed to Cargill for 10-15 month period at a charter rate of around USD 4,000 per day.

All ships have sailed without significant off-hire, and operating expenses for 1st quarter 2016 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’ remaining newbuilding program with Imabari Shipbuilding in Japan includes one 63.000 dwt eco-design Ultramax bulk carrier on a long-term lease agreement incl. purchase option. In March it was agreed to delay the delivery from Q1 2017 until January 2018.


Financial and corporate matters

As per 31 March the Group’s cash totaled USD 11.4 million compared to USD 8.0 million as per 31 December 2015.

The mortgage debt balance as per 31 March was USD 40.0 million. Net lease obligation as at 31 March was USD 45.9 mill. In addition Belships has a long-term loan facility of SGD 2 million, secured by the lease agreement for our Singapore office.

The ship values dropped significantly during the quarter. In order to avoid breach of loan covenants, Belships received an adjusted waiver from ship mortgage lender in March 2016. Main revised terms in the waiver period until 1 January 2017 are as follows: No minimum value requirement, minimum free cash USD 3,5 million, restricted cash deposit USD 4,0 million, and on-demand guarantee from main shareholder of USD 5 million.

Hedging the Group’s interest exposure is considered on an ongoing basis. The hedging level of interest rate exposure is currently around 85% (leases excluded). The long-term interest rate is still at a historical low level.    

At the end of the 1st quarter of 2016, the book value per share amounted to NOK 3.25 (USD 0.39), while the equity ratio was 16.5%. Added value related to the long-term charterparty for M/S Belocean amounting to USD 12.6 million is not included in the balance sheet. Value adjusted equity is assessed to be 25% (NOK 5.46 per share).


Market highlights

The Capesize-index ended the first quarter at USD 2,518 per day, whereas the Panamax-index ended at USD 4,008 per day. The Supramax-index ended the quarter at USD 4,981 per day. As per today the Cape index stands at USD 9,170 per day, Panamax-index at USD 5,618 per day and Supramax-index at USD 5,987 per day.

In Q1 2016 China’s import of iron ore ended at 242m tons, which is all-time high. At the same time the scrapping activity has been record high, with 15m dwt being recycled. This has pushed market values and freight rates up for all sizes, despite the high number of new ships traditionally delivered during Q1. 

International iron ore prices have increased to approx USD 60/ton as a result of the growing demand from China. It is still believed that China will be forced to shut down loss-making domestic production and import more of its iron ore, helping to absorb some of the tonnage overcapacity. This will be of vital importance for the Capesize segment. The smaller sized vessels could benefit from a growing Chinese exports of steel products and imports of minor bulks like bauxite, fertilizer, soya beans and grains.



Belships is concentrating 100% on the dry bulk market, with 5 x Supramax/Ultramax in service. In addition we will take delivery of a 63,000 dwt Ultramax from Imabari Shipbuilding in January 2018 for long term lease incl. purchase option.



Seasonally adjusted, iron ore imports to China is expected to reach more than 1bn tons, as Q1 is typically weaker due to low construction activity. This translates into a ton-mile demand growth of approx 2%.

New vessel ordering is now down to almost zero and the high scrapping activity continues, although, presumably, at a slower pace than during Q1. Many analysts believe the scrapping this year will end around 50m dwt, which, if so, will balance out the expected deliveries of new vessels during 2016.  A possible scenario is therefore zero-growth for the supply side.

Belships vessels are chartered out on fixed rates to reputable counterparts, representing a future nominal gross hire of USD 75 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, 28 April 2016



Questions should be directed to:
Ulrich Müller, CEO
+47 22 52 76 15

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