FINANCIAL PERFORMANCE
Belships recorded operating income of USD 7,606,000 (2000: USD 14,066,000) in the second quarter of 2001. Operating income for the first six months totalled USD 23,601,000 (USD 30,328,000). The company’s operating profit in the second quarter was USD 725,000 (USD -421,000), while operating profit for the first six months was USD 3,381,000 (USD -266,000). The fall in operating income in the second quarter compared with the first quarter is due primarily to reduced activity in the company’s Panmax operation. Profit performance essentially reflects the general market trends.
The second-quarter net result totalled USD -530,000 (USD -837,000), while the net result for the first six months was USD 1,168,000 (USD -2,142,000).
SEGMENTAL RESULTS
The product carrier business generated an operating profit of USD 636,000 (USD -116,000) in the second quarter. Operating profit for the first six months totalled USD 2,650,000 (USD 109,000). This six-month result include, as previously reported, a capital gain of USD 595,000 on the first-quarter sale of the M/T Urai.
The gas carrier business recorded an operating profit of USD 70,000 (USD 223,000) in the second quarter, while the operating result for the first six months was USD 831,000 (USD -40,000).
The Panmax/Capesize bulk business generated an operating result of USD -155,000 (USD -780,000) in the second quarter, with an operating result for the first six months of USD -209,000 (USD -706,000).
The Handymax bulk business, which now consists solely of the M/S Belnor, recorded a second-quarter operating profit of USD 259,000 (USD 445,000), and an operating profit of USD 426,000 (USD 820,000) for the first six months.
The ship management business recorded an operating profit of USD 95,000 (USD -11,000) for the second quarter and an operating profit of USD 85,000 (USD -29,000) for the first six months.
OPERATIONS
The M/S Belgallantry continued on its time charter in the second quarter, while the two other OBO carriers and the M/T Belgrace operated in the spot market. The scheduled dry-docking of the M/S Belgreeting was brought forward to the second quarter for technical reasons, resulting in the vessel being off-hire for 23 days. The Belgrace was also off-hire for 7 days because of dry-docking.
At Gibson Gas Tankers, the 3,200 cbm vessels continued on their time charters, while the 6,000 cbm vessels operated in the pool managed by the Dutch company A. Veder.
The Panmax operation Belships Trading carried out its previous commitments on both the shipping and cargo sides, but no new contracts were signed during the second quarter.
The M/S Belmaj sailed in the Capsize pool managed by Belgian company Bocimar throughout the period, while the M/S Belnor continued on its time charter.
FINANCIAL POSITION AND OTHER MATTERS
Belships has financed its fleet entirely in USD and all loan contracts have been entered into with short-term interest periods. As a consequence, Belships continued to benefit throughout the second quarter from the current fall in interest rates. The company is keeping under consideration the option to enter interest rate hedging contracts.
At 30 June, Belships’ liquid assets had risen to USD 11.3 million from USD 11.1 million at the end of the first quarter, and mortgage debt was cut by USD 1.2 million during the second quarter to USD 66.6 million at 30 June. Shareholders’ equity at 30 June was equivalent to 28% of assets or NOK 8.08 per share excluding minority interests.
The fleet’s estimated market value is USD 2.5 million under book value. Based on the company’s accounting principles, it is not considered necessary to reduce the ships book value.
In second quarter Belships participated in a share issue in the oilcompany Pelican AS. Belships shareholding remained unchanged at 10.4% after the share issue. Pelican AS has experienced a positive development in 2001.
OUTLOOK
The product carrier market weakened in the second quarter and there is considerable uncertainty as to whether this represents a downturn from the positive developments seen in this segment.
Trends in the gas carrier market were also negative and the third-quarter results are expected to be poorer than for the first two quarters.
The dry bulk market is showing a weakening trend, caused by substantial deliveries of new tonnage as well as falling demand. We expect the market for this type of vessel to continue along these lines.
Oslo, 20th August 2001
The Board of BELSHIPS ASA