Belships ASA: Report 1st quarter 2022



  •  Operating income of USD 229.5m (USD 76.4m) 
  •  EBITDA of USD 60.5m (USD 14.7m) including USD 22.6m from Lighthouse Navigation
  •  Net result of USD 59.5m (USD 16.5m)
  •  Declared ordinary dividend of USD 26.2m (NOK 1.00 per share)
  •  Declared extraordinary dividend of USD 32.7m (NOK 1.25 per share)
  •  TCE of USD 25 466 gross per day for owned fleet
  •  Secured long term lease agreements for four vessels at competitive terms
  •  90 per cent of ship days in Q2 are booked at about USD 24 700 gross per day. 70 per cent of ship days in the next four quarters are booked at about USD 24 000 gross per day.
  •  Modern fleet of 29 vessels with an average age of 3.5 years and daily cash breakeven for 2022 of about USD 10 000 per vessel

Subsequent events
Belships has entered into agreements for the acquisition of two modern 64 000 dwt Ultramax bulk carriers built at Japanese shipyards in 2019 and 2020. The vessels are financed through time charter lease agreements for a fixed period of about 5 years with options to extend for a further 2 years. Cash breakeven for each vessel will be about USD 11 200 per day. Belships will pay a total of USD 12.0m as down payment upon delivery of the vessels. The agreements come with options to repurchase the vessels significantly below current market levels. There are no obligations to purchase the vessels at the end of the agreements. The agreements are conditional upon certain steps to be completed by the parties involved. Delivery of the vessels is expected within Q2 2022.

The vessels come with charter employment attached as follows:
About 2.5 years period time charter at a gross rate of USD 21 000 per day. The Charterer has an option for two additional years at USD 21 000 and USD 22 000 per day.
About 6 months remaining period of a legacy time charter contract at a gross rate of USD 13 600 per day.

Belships has declared an option to purchase the Ultramax bulk carrier BELNIPPON (2018). The strike price is significantly below current market levels. Conclusion is expected within Q3 2022.

Financial results commentary
Belships reports a net result of USD 59.5m for Q1 2022, compared to a net result of USD 16.5m for Q1 2021. The increase in net result is mainly caused by the improved freight market and Belships’ increased fleet. EBITDA contribution from Lighthouse Navigation was USD 22.6m in Q1 2022 compared to USD 3.5m in Q1 2021. The increase in EBITDA from Lighthouse Navigation is due to the expansion of the companies and increased margins from freight trading. Net freight revenue for owned vessels was USD 54.3m in Q1 2022 compared to USD 23.2m in Q1 2021. The increase in net freight revenue is driven by an increase in TCE on owned vessels from 12 802 in Q1 2021 to 25 466 in Q1 2022 and an increase in vessel days of about 20 per cent.
Ship operating expenses were USD 13.4m in Q1 2022 compared to USD 10.8m in Q1 2021. The increase is due to growth in active days of about 20 per cent, stemming from fleet expansion. Ship operating expenses include non-recurring takeover costs for vessels delivered in the quarter of USD 0.4m, and Covid-19 related crewing expenses of USD 1.4m.

Fleet status
Time charter equivalent (TCE) earnings per ship in the quarter was recorded at USD 25 466 gross per day versus BSI index of USD 25 155 gross per day for the same period. The inherent lag in our business means that when the spot markets fall, our outperformance will tend to be higher. Conversely, when the market rises, our performance will tend to lag on a short-term basis. It is also affected by a certain number of period time charter contracts which contribute to our contract coverage for 2022-2023.

    Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2  2023 Q3 2023
Contract coverage   90% 75% 69% 52% 40% 29%
TCE rate (USD/day)    24 758  23 486   23 617  23 716  23 432  23 260

BELTIGER was drydocked in the quarter, the remaining fleet sailed without significant off-hire with a total of 2 243 on-hire vessel days.

Ultramax newbuildings BELYAMATO and BELMONDO are expected to be delivered from Imabari Shipbuilding, Japan in November 2022 and January 2023.

Belships entered into agreements to sell and lease back BELLIGHT and BELFOREST on bareboat charters for 10 and 11.5 years, respectively. The lease agreements have fixed rates for the entire period with an average cost of capital of about 4.4 per cent. Delivery occurred in Q1 2022 and net cash effect was about USD 14.0m in total.

Belships agreed to a new USD 116m loan facility with drawdown in Q1 2022. Proceeds from the facility were used to repay all outstanding amounts under the existing credit facility with two vessels being left unencumbered. The new loan has a reduced margin of 225 basis points and a loan-to-value ratio of 55 per cent, with the first instalment in 2023 and final maturity in 2027. Lenders for the new loan facility are DNB Bank and Sparebank 1 SR-Bank. 

Belships entered into agreement to sell and lease back BELYAMATO. The bareboat charter is for 10 years. The lease agreement has a fixed rate for the entire period with an average cost of capital of 4.6 per cent. Belships paid a sum of USD 4.0m as down payment upon signing the agreement. 

Belships entered into agreement to sell and lease back BELMONDO, an Ultramax newbuilding which is scheduled for delivery in January 2023. The bareboat charter is for 10 years and comes with options to repurchase the vessel at below current market levels. There is no obligation to purchase the vessel at the end of the agreement. The rate is fixed for the entire period with an average cost of capital of 4.6 per cent. Belships has paid a sum of USD 4.5m as down payment upon signing the agreement. The agreement is conditional upon certain steps to be completed by the parties involved. Conclusion is expected within Q2 2022.

Belships’ fleet has increased and improved with only modest cash investments, signalling the competitive advantage Belships has in sourcing ship finance. The Japanese-designed bulk carriers entering the fleet represent the highest quality and lowest fuel consumption available in the market today.

Lighthouse Navigation
Lighthouse Navigation has delivered another strong result with EBITDA of USD 22.6m, continuing the performance from previous quarters. FFA gains of USD 3.5m bring the EBIT result to USD 25.6m.

Belships aims for the highest standards in corporate governance and is well placed to deliver emission cuts in line with industry ambitions for 2030. Belships recently published a comprehensive sustainability report for 2021 (ESG Report) reflecting our ongoing commitment to transparency and meeting investor and stakeholder expectations. 

Belships is compliant with the upcoming emission regulations from IMO in 2023 (EEXI) without additional CAPEX signalling the competitive advantage of Belships modern eco-fleet.

Financial and corporate matters 
At the end of the quarter, cash and cash equivalents totalled USD 161.2m, whilst interest bearing bank debt amounted to USD 114.5m.

Net leasing liability at the end of the quarter was USD 347.3m. Leasing liabilities have been calculated under the assumption that all purchase options to acquire Ultramax bulk carriers on bareboat charters will be exercised. All lease agreements have fixed interest rates for the entire duration of the charters. Belships have no contractual obligations to acquire any of its leased vessels.

At the end of the quarter, book value per share amounted to NOK 10.2 (USD 1.17), corresponding to a book equity ratio of 34 per cent. Value-adjusted equity is significantly higher.

Dividend policy 
Belships ASA aims to distribute quarterly cash dividends targeting about 50 per cent of net result adjusted for non-recurring items. Other surplus cash flow may be used for accelerated amortisation of debt, share buy-backs or vessel acquisitions considered to be accretive to shareholders’ value.

Dividend payment 
Based on the financial result in the first quarter 2022 the Board declared an ordinary dividend payment of USD 26.2m (NOK 1.00 per share) equivalent to about 55 per cent of net result adjusted for non-controlling interests. 

Furthermore, the Board declared an extraordinary dividend payment of USD 32.7m (NOK 1.25 per share) bringing the total dividend payments to USD 58.9m (NOK 2.25 per share).

Market highlights  
In the first quarter, the Baltic Supramax Index (BSI-58) averaged USD 25 155 per day – the highest start to a year since 2008. The first quarter is usually the weakest period, due to factors like the Chinese New Year and seasonally lower grain and iron ore shipments. In January, Indonesia implemented a coal export ban which lowered export volumes for some weeks. However, as these temporary and seasonal characteristics passed, the market regained strength and the BSI-58 climbed to USD 30 000 per day.   

Total Supramax shipment volumes ended at 237 million tons in Q1 2022, slightly down from 243 million tons in Q4 2021. However, considering the abovementioned seasonal factors, the decline was negligible. In April, shipment volumes rebounded, with 92 million tons shipped boding well for an upward trend into the second quarter. 

There were considerable variations in the demand growth for each commodity group in Q1 2022. Breakbulk and other minor bulks grew by 7 and 9 per cent, year on year, whereas coal and iron ore dropped by 22 and 52 per cent, respectively. The strong growth in minor bulk commodities reflect high rates of global industrial production, whereas the drop in coal was due to Indonesia’s export ban, and the drop in iron ore was due to lower demand from China as restrictive policies on steel output remained in place. The freight markets continue to underline the advantages of the versatile Supra/Ultramax segments compared to the rest of the dry bulk market.

Port congestion persisted throughout the quarter and the Chinese government’s policy to fight the COVID-19 pandemic gives reason to expect that reduced vessel sailing efficiency will continue to support a tight market balance. 

Changes in trade patterns stemming from sanctioned Russian commodities is likely to support ton-mile growth in the Supra/Ultramax segment. Average sailing distances for European coal imports may see an increase as Russian coal will be replaced by US, Colombian, South African, Indonesian and Australian coal. The secondary effect of this is that Russian coal exported from Baltic, Black Sea and Murmansk will have to be shipped to Asia. Such changes will probably be seen for other commodities as well, like steel products and possibly also grains. 

According to Fearnleys, 28 vessels were delivered in the first quarter, up from 21 vessels in the fourth quarter. 101 vessels remain on schedule for delivery this year. However, given the pace of deliveries year-to-date and considering that there are often order cancellations, slippage or even incorrectly reported orders, that number is likely too high. 

Relatively low newbuilding activity continued as the lack of conviction and alternatives for fuel and propulsion systems appear to restrain demand for ordering. Also, available delivery positions with shipyards appear to remain distant, from the very end of 2024 or later. Year-to-date, 24 vessels have been placed for order according to Fearnleys. For comparison, there were 112 vessels placed for order last year. 

Newbuilding prices steadily edge upwards as increased input costs as well as full orderbooks for container and gas vessels dictate the position with shipyards. Second-hand values have increased since the New Year, however current values still appear low in comparison with earnings. 

The Baltic Exchange Supramax index YTD 2022 has averaged about USD 26 000 per day with Ultramaxes earning an additional premium.

The sentiment in the Supra/Ultramax market remains strong and is expected to continue in the near term. Freight Forward Agreements (FFA) for Supramax currently indicate a market average of about USD 29 000 for the remaining part of the year, which is an increase of 10 per cent from our previous report. 

The supply side as observed from the number of deliveries and the publicly quoted orderbook for our segment is historically low. On the back of stable demand, we remain optimistic in terms of market prospects. 

The purpose of growth has been to increase profitability and the value and attractiveness of owning our shares. We are focused on capital discipline and returning capital to shareholders. A competitive return for our shareholders is to be obtained through increase in the value of the company’s shares and the payment of dividends, as measured by the total return. Since we announced a new dividend policy in Q2 2021, we have returned a total of USD 111.9m (NOK 4.10 per share) to shareholders.

Belships is well positioned to capitalise on a strong dry bulk market with a modern fleet of 29 Supra/Ultramax bulk carriers with an average age of 3.5 years and daily cash breakeven for 2022 of about USD 10 000 per vessel.

Lighthouse Navigation continues to deliver strong results and has had a good start to the second quarter. Based on Belships’ current contract coverage, we expect to generate significant free cash flow and continue to pay quarterly dividends as announced with our dividend policy. 

12 May 2022


For further information, please contact Lars Christian Skarsgård, Belships CEO, phone +47 977 68 061 or e-mail

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act