Belships ASA – Report 3rd quarter 2020



  • Operating income of USD 43.3 million (Q3 2019: USD 31.7m)
  • EBITDA of USD 5.9m (USD 8.1m)
  • Net result of USD -4.2m (USD 0.3m)
  • Net TCE per ship of USD 9 067 per day versus BSI index of USD 9 435 net per day
  • 75 per cent of remaining ship days in 2020 are booked at USD 9 000 net per day
  • All financing secured till May 2024 onwards after refinancing of SOFIE VICTORY
  • Imabari newbuilding delivery amended from Q4 2020 to Q1 2021
  • Belships regarded as leading within corporate governance by Danske Bank and on course for delivering emission cuts in line with industry ambitions for 2030
  • Commercial platform expanded – Lighthouse Navigation
  • 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 9 067 net per day versus BSI index of USD 9 435 net per day for the same period. Average net TCE per ship in the last twelve months amounted to USD 9 263 versus BSI index of USD 7 783 net per day for the same period, representing an outperformance of the BSI index of 19 per cent.

Our long-term outperformance of the BSI index is due to the portfolio of period charter coverage and outsized spot earnings earned by our subsidiary Lighthouse Navigation. The inherent lag in our business means that when the spot markets fall, our outperformance will tend to be higher. Oppositely, when the markets rise rapidly our performance will tend to lag on a short-term basis.

Approximately 30 per cent of remaining ship days in the next four quarters are booked at about USD 10 000 net per day. About 75 per cent of available days in Q4 have been booked at about USD 9 000 net per day.

BELINDA and BELNIPPON (time-chartered vessel) were drydocked in the quarter. The remaining fleet sailed without significant off-hire in the quarter.

BELFAST, an Ultramax newbuilding of 64 000 dwt currently under construction has been amended to deliver January/February 2021 instead of December 2020.

Belships’ fleet modernisation is set to continue with the delivery of newbuildings BELFAST and BELMAR scheduled for delivery during 2021. Belships’ fleet continues to increase and improve with only modest cash investments, signalling the competitive advantage Belships has in sourcing ship finance. Taking into consideration the recent nine acquisitions and two divested vessels at a net cash effect of about USD 3m. The Japanese Ultramax bulk carriers entering the fleet represent the highest quality and lowest fuel consumption available in the market today.

Commercial platform
Lighthouse Navigation has expanded its commercial platform with new offices established in Singapore, Melbourne and most recently Oslo. The aim of this expansion is to further enhance the vessels earning capability and to generate profits around cargo trading opportunities in the market. We expect this part of our business to expand further during 2021.

Belships is regarded as a market leader in corporate governance. Belships is also well placed and on course to deliver emission cuts in line with industry ambitions for 2030. A new carbon footprint study and review has been initiated with leading classification society DNVGL with the aim to monitor performance and identify areas for improvement. With continued fleet modernisation we expect to produce positive results.

Financial and corporate matters
At the end of the quarter, cash and cash equivalents was USD 35.5m, while mortgage debt was USD 142.7m. During the quarter, the loan agreement related to the vessel SOFIE VICTORY was amended in order to prolong the maturity and reduce the loan margin. The group’s mortgage debt now comprises two loan facilities, both with a margin of 275 basis points above LIBOR and maturity in Q2 2024.

Net leasing obligation at the end of the quarter was USD 143.9m. Leasing liabilities have been calculated under the assumption that Belships will exercise its options to acquire all seven Ultramax bulk carriers on bareboat charter, whereas we have assumed that the company will not exercise the purchase options on time-chartered vessels BELNIPPON and BELFUJI. Belships has no contractual obligation to acquire any of its leased vessels.

At the end of the quarter, book value per share amounted to NOK 6.21 (USD 0.65), corresponding to an equity ratio of 32 per cent.

Market highlights
In the third quarter we observed a significant improvement in the spot rates with the Baltic Supramax 58 index averaging USD 9 435 net per day. This is compared to an average of USD 5 210 net per day in the second quarter evidencing a strong rebound since the outbreak of COVID-19.

As some economies began to reopen, demand rebounded from historical lows, with September being the first month showing positive year-on-year growth since the COVID-19 outbreak. Total Supramax shipment volumes came in at 261.3 million metric tons for the quarter, which marked a 9.6 per cent increase from 238.5 million metric tons in Q2. Of the main commodity groups, minor bulks and iron ore made the strongest recovery, growing by about 14 per cent. Seasonal grain shipments also increased markedly by 11 per cent, whereas steels grew by 2.2 per cent.

According to Fearnleys, new vessel deliveries dropped to 26 in Q3 from 43 in the previous quarter, which marked the lowest number of deliveries last two years. The orderbook delivery schedule for next year predict deliveries will be 25 per cent lower than this year, with 115 vessels scheduled for 2021 against 150 vessels this year. In 2022, just 28 vessels are currently scheduled for delivery, which would be the lowest number of deliveries since 2000. In relative terms, we are heading towards the lowest rate of supply growth in almost 30 years. The publicly quoted orderbook indicates fleet growth will drop to about 2 per cent by the end of next year (from currently 4.5 per cent) and in 2022 it will drop further to about 0.5 per cent. There will be changes to this outlook for fleet growth as the amount of newbuilding orders being placed over the next 6-9 months are uncertain and it is also normal that 10-20 per cent of the orderbook ends up being cancelled, deferred or simply incorrect. However, we expect very few newbuilding orders as lack of conviction for fuel and propulsion systems will restrain ordering activity in the near term.

The Baltic exchange Supramax index in October averaged USD 10 202 net per day. Freight Forward Agreements (FFA) currently indicate a market for Supramax and Ultramax of about USD 9 400 and 10 400 per day for the remaining part of the year. The softer sentiment in the market during the recent weeks can to some extent be attributed to weak demand outside China, reduced iron ore and coal demand towards the end of the year coupled with usual seasonal slowdown approaching in January and February.

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 which will help the fleet reach higher utilisation levels in a stronger market. We are therefore more optimistic in terms of market prospects, with the main downside risks to our outlook being short term potential lockdowns and year-end import reductions. Belships has a significant part of the fleet contractually covered for the next two 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 an owner and operator of geared bulk carriers, through quality of operations and target accretive growth opportunities.

11 November 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