Belships ASA : Report 4th quarter 2014


·             Operating income of USD 5.5 m (USD 6.7 m)
·             EBITDA of USD 2.4 m (USD 2.3 m)
·             Net result of USD 0.4 m (USD 0.7 m)
·             All vessels operating normally – modern fleet – average age 4.7 years.
·             Contract coverage 100% for delivered vessels – USD 97 million fixed charter backlog.


Fourth quarter 2014 results   

Belships operating income in 4th quarter 2014 was USD 5,484,000 (Q4 2013: USD 6,680,000), while EBITDA amounted to USD 2,414,000 (USD 2,344,000). The decrease in operating income is mainly related to M/T Belaia, which was redelivered in the beginning of March 2014. The Group’s operating result amounted to USD 1,227,000 (USD 1,315,000), while total comprehensive income for 4th quarter 2014 was USD 319,000 (USD 693,000). Total comprehensive income for 2014 was USD -1,700,000 (USD -157,000). The decrease in comprehensive income is mainly explained by impairment of ship values and increase in ship operating expenses.

The accounts for 4th quarter of 2014 have been prepared in accordance with IAS 34 Interim Financial Reporting and are consistent with the principles applied in the annual accounts for 2013 and relevant changes to IFRS effective from 1 January 2014. The interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU.


Fleet status

M/S Belnor, M/S Belstar and M/S Belocean have 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. Net time charter rate is USD 16,000 per day, which is a favorable rate in the present market.

 All ships have sailed without significant off-hire, and operating expenses for 4th quarter 2014 are close to budget. Technical management of owned ships is handled by Belships Management (Singapore) with a fleet of 20 ships under technical management.


Newbuilding program

Belships newbuilding program with Imabari Shipbuilding in Japan includes 2 x 61.000 dwt eco-design Supramax bulk carriers for delivery in September 2015 and 2nd quarter 2016. In addition Belships has signed a long-term lease agreement incl. purchase option for a slightly larger sister vessel with delivery 1st quarter 2017. 


Financial and corporate matters

31 December the Group’s cash totaled USD 8.1 million compared to USD 7.8 million as per 30 September 2014.

The mortgage debt balance as at 31 December was USD 46.3 million and was reduced by USD 1.3 million during the quarter. Remaining newbuilding commitment amounts to USD 42.4 million. All payments in 2014 have been financed by the Group’s surplus liquidity.

In August 2011 Belships entered into an interest rate swap agreement with 2 years forward start at 2.2% with a remaining duration of 3.5 years covering USD 20 million, reducing by USD 5 million per year. Hedging the Group’s interest exposure is considered on an ongoing basis. The long-term interest rate has decreased significantly the recent months. Belships expects only a modest increase in the interest rate level for the coming 3-5 years. The hedging level of interest rate exposure is currently around 24%.   

At the end of the 4th quarter of 2014, the book value per share amounted to NOK 10.33, while the equity ratio was 56.8%.


Market highlights

The predicted Q4 rally started towards end of October but culminated only two weeks later. Capesize-index peaked at USD 27,000/day, whereas Panamax- and Supramax-index went up to around USD 9,300-9,900/day.

The Capesize-index ended the fourth quarter at USD 4,910 per day, whereas the Panamax-index ended at USD 6,953 per day. The Supramax-index ended the quarter at USD 9,383 per day. As per today the Cape index stands at USD 6,739/day, Panamax-index at USD 3,748/day and Supramax-index at USD 5,311/day. These indices are very close to all-time low levels. The valuation of a 5-year old Supramax is approximately USD 20 million according to the Baltic Exchange S&P assessment.

With freight rates so depressed, there is strong pressure on asset prices in all dry bulk sectors. Buyers turn their attention to Japanese tonnage, adding pressure to asset prices for Chinese built tonnage. Another factor is the recent strengthening of USD against JPY, leading to more sales candidates from Japanese owners.

Chinese steam coal imports dropped sharply in 2014 to an annualized pace of just 135 million tons, the lowest level in more than three years. Most of this decline has come from Indonesian supplies, hitting the Panamax segment in particular. The Chinese government last year introduced a ban on dirty coal as part of China’s environmentally friendly agenda.  Coal will still be important for China, where new technologies for cleaner burning is required to generate sufficient power, due to difficulties related to replacing coal as a power source.

In 2014 Chinese iron ore imports amounted to 932 million tons, or approx. 14% higher compared to the year before. The ton-mile growth was not as high since a significant part of Chinese iron ore import was sourced from Australia, rather than Brazil.



Belships is concentrating 100% on the dry bulk market, with 3 x 58,000 dwt Supramax in service and 3 x Supramax newbuildings under construction by Imabari Shipbuilding in Japan for delivery from September 2015 until 1st quarter 2017. The newbuildings will be actively marketed for long-term employment at a time closer to delivery, but Belships is in preliminary discussions with a few carefully selected charterers.



Typically low steel demand during winter in China has continued to erode iron ore and steel prices with spot iron ore for delivery to China closing this week at around USD 62/ton. Demand and prices for iron ore and steel will remain low until activity picks up after Chinese New Year towards the end of February.

With increased capacity of iron ore from Australia and Brazil, the international iron ore prices have dropped more than 50% over the last 12 months. China will be encouraged to continue the import rather than exploit their domestic resources with low FE content. 

Lately Belships has seen an increased activity in conversions of capesize newbuilding contracts to LR 1 tankers, and scrapping of older tonnage has also picked up considerably. Both these factors will contribute positively towards a better market balance going forward. Most importantly, new ordering of bulk carriers has more or less come to a complete stop.

With international crude oil prices moving up again, the bunker price will follow in tandem. This will underpin the attractiveness of fuel efficient eco design newbuildings. 

Belships’ vessels are chartered out long-term on a fixed rate to a reputable counterpart, and short term market fluctuations will therefore not affect the Group’s cash flow. The charter parties represent a future nominal gross hire of USD 97 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, 12 February 2015



Questions should be directed to CEO Ulrich Müller, phone no. +47 22 52 76 15

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