Belships ASA : Report Q1 2019




·             Operating income of USD 31.1 million (Q1 2018: USD 20.5 m)

·             EBITDA of USD 10.1 m (USD 3.8 m)

·             Net result of USD 2.5 m (USD 0.7 m)

·             All ships operating normally – modern fleet – average age 7 years

·             USD 30.0 million fixed charter backlog

·             Efficient utilization and continued outperformance of spot market

·             Net earnings per ship of USD 11 359 per day vs net BSI index of 7 634

·             Lighthouse Navigation approx. net result USD 1.3 million – continues to generate positive net results in challenging markets.

·             New loan facility and accordion for growth at attractive terms

·             Cash breakeven below USD 5 000 per day for remaining open days next 12 months

·             87% of ship days in Q2 have been booked at ~USD 10 800

·             Concluded 3 vessels acquisitions with consideration paid partly in shares in April

·             Positive net cash effect of ~USD 1.8 mill for the three vessel acquisitions

·             Belships ASA contemplating a further equity issue and will conduct investor meetings



Vessel transactions

During April, Belships ASA announced the following acquisitions:

–              M/V Viola, a 58,700 dwt bulk carrier owned by Wenaas Shipping AS, acquired at a purchase price of USD 13 million, with 50 per cent to be paid in cash and the remainder to be paid through the issuance of 8 060 650 new Belships shares to the seller at an agreed price of NOK 7.00 per share.

–              M/V Sofie Victory, a 63 000 dwt bulk carrier owned by Sofie Victory AS, where Belships ASA will acquire 100 per cent of the shares in Sofie Victory AS at an agreed purchase price on an enterprise value basis of USD 24.15 million, to be adjusted for the actual transaction closing balance sheet items. The agreed transaction consideration includes the assumption of approx. USD 14 million of debt, USD 2 million to be paid in cash, and the remaining purchase price to be settled by the issuance of approx. 11 mill new Belships shares at an agreed price of NOK 7.00 per share. The vessel has an index-based time charter to ED&F Man Shipping Ltd until March 2021 with a floor rate of at USD 10 800 net per day.

–              M/V Sephora, a 55 600 dwt bulk carrier owned by Prospero Maritime Ltd, for a purchase price of USD 12 million, of which 50 per cent will be paid in cash and the remainder will be settled through the issuance of 7 405 114 new Belships shares at an agreed price of NOK 7.00 per share.

–              60 per cent financing of the M/V VIOLA and M/V SEPHORA has been approved under the accordion tranche of the new loan facility, hence these three transactions are expected to be net cash positive of about USD 3.3 mill.



Fleet status

Net earnings per ship was recorded at USD 11 359 per day versus net BSI index of net 7 634 per day for the same period. This outperformance of the index is due to the optimized portfolio of period charter coverage and outsized spot earnings.

Of the spot trading ships in the fleet, net earnings of USD 9 587 per day shows a premium of ~25% to the BSI spot index was achieved.

The integration of Lighthouse Navigation into Belships ASA has shown a competitive advantage in the operation and chartering of the company’s spot trading vessels.

M/V Belstar, M/V Belnor and M/V Belisland have continued the long-term contracts to Canpotex of Canada. The charter for M/V Belstar expires in June. M/V Belforest, M/V Belocean and M/V Belnippon are on time charter to Cargill.

In April the time charter for M/V Belnippon was extended to Cargill for 7-9 months at USD 10,900 net per day, and the time charter for M/V Belforest was also extended to Cargill for 11-13 months at USD 10,800 net per day.

In May, M/V Belsouth was fixed to Western Bulk Chartering for a period of 6-9 months which equates to USD 11,950 net per day for the remaining part of 2019. Together with the time charter to ED&F Man Shipping Ltd for M/V Sofie Victory, Belships ASA continues to build on the portfolio of reputable Charterers for the fleet.

Belships’ charter coverage represents a future nominal gross hire of around USD 30 million.

The remaining ships are operated in the spot market by Belships’ subsidiary Lighthouse Navigation in Bangkok. Lighthouse Navigation had on average 18 vessels on charter during Q1 2019, without taking into account the vessels owned by Belships ASA.

All ships have sailed without significant off-hire. The technical management for the ex-Lighthouse ships are in the process of being transferred to Belships Management (Singapore). Currently 6 ships are transferred and the remaining 3 ships will soon follow. Belships Management (Singapore) will soon have the technical management for 20 vessels, enhancing the earnings and contribute positively to the Group’s EBITDA growth.


Newbuilding program

Belships’ remaining newbuilding program with Imabari Shipbuilding in Japan consists of one 63 000 dwt eco-design Ultramax bulk carrier on a long-term T/C-in agreement incl. purchase option for delivery within first half 2020, hence no outstanding capital expenditure is due.


2020 Bunker differential hedge

As announced on May 10th, the Company has entered into agreement to hedge the price differential between compliant 0.5% sulphur fuel oil (VLSFO) and 3.5% sulphur fuel oil (HSFO), at USD 198 per ton for a quantity of 24,000 tons of bunkers with monthly settlements in 2020. The bunker price differential hedge reduces downside risks and represents an efficient alternative to costly installations of scrubbers, whilst retaining full utilization of the fleet and the flexibility to adjust the position as the market develops.


Financial and corporate matters

In March 2019 Belships secured a USD 140 million loan facility. The new loan is available in two tranches. An initial tranche of USD 110 replaces Belships’ existing loan and strengthens the Groups working capital in addition to an accordion tranche of USD 30 mill for fleet expansion. The loan has a margin of 275 basis points with the first downpayment in Q3 2020. Under this new financial framework, the Group will be cash positive (after opex, overhead and debt service) at a day rate below USD 5,000 for the remaining open ship days in the coming 12 months. The initial tranche is based on a loan-to-value ratio (LTV) of 55%, while the accordion tranche is based on an LTV of 60%.

As at 31 March the Group’s cash totaled USD 34.7 million. The mortgage debt as per 31 March was USD 105.2 million, while net lease obligation was USD 66.8 million. In addition Belships has a long-term loan facility of SGD 2 million, secured by the lease agreement for our Singapore office. The company is in compliance with all covenants.

Hedging the Group’s interest exposure on bank loan is considered on an ongoing basis. The hedging level of interest rate exposure is currently around 40%.

At the end of the Q1 2019, the book value per share amounted to NOK 6.20 (USD 0.72), while the equity ratio was 39.7 %.

With effect from 1 January 2019, Belships adopted IFRS 16 Leases. The new standard is following the modified retrospective approach, and does not require any restatement of comparative information. Lease liability reflecting future lease payments, right of use asset and interest expense on the lease liability are recognized and the right of use asset is depreciated. Straight-lining of deprecation and interest charges on the lease liability will result in a higher total charge to profit or loss in the initial periods, due to the unwinding of interest on the lease liability.


Market highlights

The dry bulk market was under pressure during Q1 with the BSI-58 index averaging USD 7 634 per day (net) for the quarter as a whole, down 33% from Q1 2018. After bottoming in early February, however, spot rates have slowly improved and more so on the activity in period time charters.

The market was severely affected by the tragic tailings dam breach in Brazil, which contributed to a reduction in seaborne iron ore trade Q1 (y/y), flat coal volumes, and weak grain volumes. Iron ore constitutes a relatively minor share of supramax volumes, hence the Supramax/Ultramax segment again performed better than the largest sized vessels during a downturn. Global steel production, however, increased by 3.1% y/y, indicating that the shortfall in seaborne trade to a large extent has been compensated through destocking, which would indicate that the effect could be temporary, and should lead to a future positive demand reaction driven by restocking. The growth in transportation of minor bulks evidenced last year has continued into 2019.

Despite soft markets, scrapping has been limited in the supra- and ultramax segment. Fleet growth year to date has been around 0.9% with 1.6 million dwt delivered, of which 0.3 million dwt delivered after quarter end. Only 6 vessels has been ordered during the quarter, supporting a continued historical low orderbook. Asset values for Supramax/Ultramax bulk carriers was slightly lower during the period but have recently stabilized. Fearnleys currently estimate the value of a 5 years old ultramax at USD 22m compared to USD 24m by the end of 2018.

General optimism is set for the remaining part of 2019, in addition to next year. This is due to the relatively low supply of new ships coupled with preparations for IMO 2020, and an expectation for increased slow steaming as a result thereof, potentially reducing the supply side further.



The Company will soon control a fleet of 19 dry bulk carriers and aims to enhance its earnings potential with a combination of charter backlog and spot exposure.

Belships’ strategy going forward is to grow accretively as a fully integrated shipowner and operator of geared bulk carriers. Through the three recent vessel acquisitions, where sellers have agreed to receive partial consideration in shares, Belships has demonstrated its ability to deliver on this strategy.

Belships expects that further “ships for shares” transactions may be available, and intends to pursue such transactions where accretive, but anticipates that growth may also be achieved through cash acquisitions of vessels and long-term vessel charters.

Following the three vessel acquisitions already announced and the associated proposed issuance of approximately 26 million shares, the company has increased the free float in the Belships share, as well as broadened the shareholder base. It is Belships’ intention to make further steps to increase shareholder base and improve liquidity in the share. Belships has therefore mandated Danske Bank, DNB, and Pareto Securities to arrange a series of investor meetings. Subject to, inter alia, market conditions, a smaller equity issue raising the equivalent of USD 15m may follow. Use of proceeds of the equity issue would be financing of the cash portion of further vessel acquisitions, as well as general corporate purposes.

23 May 2019



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 of the Norwegian Securities Trading Act.