Belships ASA – Report 2nd quarter 2020



  • Operating income of USD 28.6 million (Q2 2019: USD 29.6m)
  • EBITDA of USD 1.9m (USD 8.0m)
  • Net result of USD -14.6m (USD 0.1m). Net result includes non-cash impairment of USD 4.9m total for the four oldest vessels in the fleet
  • Net TCE earnings per ship of USD 6 927 per day versus BSI index of USD 5 210 net per day
  • Realised FFA gains equivalent to USD 1 117 net per vessel day resulting in total outperformance of the Baltic Supramax market index of 54 per cent
  • 60 per cent of remaining ship days in 2020 are booked at USD 9 600 net per day
  • Taken delivery of BELHAVEN and issued shares
  • Modern fleet of 23 vessels with an average age of 5 years including newbuildings

Fleet status
Time charter earnings per ship in the quarter were recorded at USD 6 927 net per day versus BSI index of USD 5 210 net per day for the same period. In addition, FFA gains equivalent to USD 1 117 net per vessel day (USD 2.0m) were realised resulting in a total outperformance of the Baltic Supramax market index of 54 per cent. Outperformance of the BSI index is due to the portfolio of period charter coverage and outsized spot earnings achieved by our subsidiary Lighthouse Navigation.

About 60 per cent of remaining ship days in 2020 are booked at USD 9 600 net per day. About 90 per cent of available days in Q3 have been booked at about USD 9 000 net per day and about 40 per cent in Q4 are booked at about USD 11 000 net per day.

BELSOUTH and BELNOR were drydocked in the quarter. BELFORT underwent repairs in mid-April and resumed full operating at the end of the month.

The remaining fleet sailed without significant off-hire in the quarter.

Vessel transactions
In May, Belships took delivery of BELHAVEN, a 63 000 dwt Ultramax from Japanese Owners. The vessel was built in 2017 by Imabari shipyard and delivered after having passed its dry-docking survey. The purchase price of USD 24.5m was settled by issuing new shares equivalent to 50 per cent at a subscription price of NOK 7.15 per share (USD/NOK 9.31), and the remaining in cash. Belships utilised 60 per cent financing of the purchase price, resulting in a positive cash effect of about USD 2.45 million. BELHAVEN is currently fixed for about 11-13 months time charter at about USD 12 200 per day net.

The recent vessel transactions signal the competitive advantage Belships has in sourcing ship finance. Belships’ fleet continues to increase and improve with only modest cash investments. Taking into consideration nine acquisitions and two divested vessels over the past 12 months the net cash effect is about USD 3m. The Japanese Ultramax bulk carriers entering the fleet represent the highest quality and lowest fuel consumption available in the market today.

Financial and corporate matters
At the end of the quarter, cash and cash equivalents was USD 34.4m. Mortgage debt was USD 143.7m, while net lease obligation was USD 141.9m.

Belships recorded an impairment loss of USD 4.9m in the quarter. The impairment relates to the four oldest vessels in the fleet.

During January and February, Belships hedged some of its spot exposure by selling FFA contracts maturing from Q2 2020 to Q1 2021. A majority of the contracts were realised in the second quarter, generating a cash effect of USD 2.0m. At the end of the quarter, the remaining FFA portfolio comprised 450 days at an average rate of USD 9 400 per day.

As part of the consideration for BELHAVEN and based on the authorisation granted by the Annual General Meeting on 14 May 2020, the Board of directors resolved to increase the Company’s share capital by the issuance of 15,950,699 new shares to the sellers. Following the registration of the share capital increase with the Norwegian Register of Business Enterprises, the Company’s share capital was increased to NOK 456,350,808, divided by 228,175,404 shares, each with a par value of NOK 2.
At the end of the quarter, book value per share amounted to NOK 6.55 (USD 0.67), corresponding to an equity ratio of 34 per cent.

Market highlights
In the second quarter, the Baltic Supramax 58 index averaged USD 5 210 net per day, with the market still reeling from the continued outbreak of COVID-19. Demand was hampered by global lockdowns and a widespread and historic slump in economic activity. On the supply side, scrapping virtually came to halt as travel bans and restrictions hindered any meaningful recycling of older vessels, so even though spot rates plummeted the net increase in the supply of vessels came in above projections.

Falling fuel oil bunkers also contributed to increased sailing speeds and ballasting in the quarter. In sum, the impact and consequences from COVID-19 eliminated the seasonal upturn usually experienced earlier in the second quarter.

However, the market started showing signs of bottoming out during April and May, and since then volumes have recovered as economies gradually reopened. In July, total shipment volume was 92 million tons – a new all-time high. The volume recovery was broad based and included all commodity sub-groups by varying degrees.  Towards the end of June, the spot rates and short term FFA contracts picked up traction and expectations for a healthier market post-summer were evident.

In July, we have observed a significant improvement in the spot rates, with average rates in July climbing above USD 9 000 per day for the first time in 2020 and as per mid-August now stand at USD 10 500. Freight Forward Agreements (FFA) currently indicate a market for Supramaxes and Ultramaxes of around USD 10 500 and 11 500 per day for the remaining part of the year.

As we mentioned in our previous report, whilst total volumes shipped has rebounded, the supply side has needed to adjust in order to sustain a recovery in rates. The publicly quoted orderbook for our segment now stands at 5 per cent – historically low – and we expect this to lay the foundation for a potentially strong market in 2021. Furthermore, the average sailing speeds have increased by 5-7 per cent which will also help the fleet reach its true utilisation level in a stronger market. Going forward we are therefore more optimistic in terms of market prospects, with the main downside risks to our outlook being a potential new round of lockdowns and year-end import reductions. Consequently, Belships has a significant part of the fleet contractually covered for the next three quarters.

Belships has a uniform and modern fleet of 23 Supramax/Ultramax bulk carriers whereof nine of our vessels are financed with purchase option agreements. This creates substantial upside and flexibility to capitalise on a potential recovery towards historical averages for vessel values in the future. We are focused on maintaining a solid balance sheet and liquidity position. Our strategy is to continue developing Belships as a fully integrated owner and operator of geared bulk carriers, through quality of operations and target accretive growth opportunities.

21 August 2020

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