Belships ASA : Report 4 quarter 2011


Belships’ operating income in the 4th quarter of 2011 was USD 7,002,000 (4th quarter of 2010: USD 5,253,000), with an EBITDA of USD 1,905,000 (USD 905,000). The company recorded an operating profit of USD 488,000 (USD 63,000), while the result for the 4th quarter of 2011 overall was   USD 208,000 (  USD 502,000). The result for 2011 as a whole was   USD 1,227,000 (USD 2,280,000). Last year’s figures include profits on sales of USD 3.2 million.

The accounts for the 4th quarter of 2011 have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim reports are consistent with the principles as used in the annual accounts. The interim accounts have been prepared in accordance with International Financial Reporting Standards (IFRS).


The dry bulk carrier market kept up reasonably well in the 4th quarter, particularly the Capesize segment, at around USD 30,000 per day. Spot rates for Panamax and Supramax fell from around USD 16,000 per day to around USD 12,000 per day over the period. Spot rates fell dramatically in January 2012, for Capesize in particular, and the Baltic Dry Index bottomed out on 3 February at USD 5,250 per day for Capesize, USD 5,500 per day for Panamax and USD 6,350 per day for Supramax. These are the lowest spot rates we have seen since 1986. Values have weakened in line with rates, especially in Capesize, where five year old ships  are priced at a 22% discount compared with a new build. Supramax has fallen rather less, and according to the Baltic S&P Index, five year old ships are priced at USD 23.5 million. 


The M/S Belnor, M/S Belstar and M/S Belocean, which was delivered in the 1st quarter of 2011, have all entered on 10-year charter parties with Canpotex of Canada. Canpotex is the world’s largest potash exporter – a fertiliser product which is imported in large quantities by China, India and Brazil, etc. The net T/C rate is USD 16,000 per day. The M/T Belaia is chartered to J. Lauritzen AS of Denmark until March 2014 at a rate of USD 13,000 per day less 1.25% commission. We still have an option to buy and options to extend the charter for 1+1+1 year, i.e. from March 2014 onwards.

All ships have been sailing  with minimal offhire. Technical management of tonnage owned is handled by Belships Management (Singapore). The operating costs of the M/S Belocean are slightly over budget due to extraordinary costs in connection with the acquisition in March. Operating costs for the other ships are  according to budget. 


As at 31 December, the group’s liquid reserves stood at USD 14.7 million, as against USD 14.9 million as at 30 September 2011. The company’s mortgage debt was USD 58.2 million as at 31 December, and was reduced USD 1.3 million in the 4th quarter. 

Belships redeemed NOK 1.9 million of the company’s bond loan in January 2012,  and the company now holds 20% of this. Outstanding bond loans to external lenders amount to NOK 59.9 million, and are due for payment in 2012 and 2013. The bond loan is FX-hedged against USD. 

We have conducted impairment tests on the company’s assets in accordance with IAS 36, valuing the ships based on observable market values and charter parties as signed. Based on these internal valuations, there is no need for impairment at present. At the end of the 4th quarter, book value per share was NOK 13.13, while the book equity ratio was 42%. 


 We expect to see improvement of freight rates once activity picks up beyond the spring. R. S. Platou says the dry bulk cargo fleet will increase by 12.1% in 2012, while demand will increase 8.9%. That means reduced  utilization rate and ships will continue to sail at reduced speeds. Things look brighter in 2013, however, with fleet growth at 7.3% and demand up 9.5%. 

Belships’ ships are sailing on long-term charter parties for reputable counterparties, so the company’s income and cash flow are not vulnerable to short-term fluctuations in the freight market. The fixed charter parties  represent a future income of USD 155 million. 

The focus  going forward will be  to develop Belships ASA as a tonnage provider of modern bulk ships to counterparties with low credit risks, aimed at building up a portfolio of ships and charter parties giving rolling residual value exposure. There will be many opportunities to acquire quality tonnage in 2012, and we are working actively on new projects. 

Oslo, 16 February 2012