Belships recorded operating income of USD 30.3 million in the first half of the year: USD 16.2 million in the first quarter and USD 14.1 million in the second. The second quarter brought an increase in rates in all the segments in which Belships operates; the decrease in the company’s operating income was attributable to lower activity in Panmax bulk. Belships generated an operating result of USD -0.4 million in the second quarter, compared with USD 0.2 million in the first. The second-quarter result was reduced by USD 0.8 million in costs relating to a charterparty dispute for chartered in tonnage. Belships generated a pre-tax result of USD -0.8 million in the second quarter, compared with USD -1.3 million in the first. The company has two vessels financed in GBP and so the appreciation of the USD against the GBP in the second quarter enabled the company to recognise an exchange gain of USD 1.0 million.
The product carrier business generated an operating result of USD -0.1 million in the second quarter, compared with USD 0.2 million in the first. The second-quarter result includes the costs relating to the aforementioned charterparty dispute. The gas carrier business generated an operating result of USD 0.2 million in the second quarter, compared with USD -0.3 million in the first, while the Panmax/Capesize dry bulk business generated an operating result of USD -0.8 million in the second quarter, compared with USD 0.1 million in the first. The Handymax dry bulk business generated an operating result of USD 0.4 million in the second quarter, the same as in the first, and the ship management business recorded an zero operating result in the second quarter, also the same as in the first.
The dry bulk market was largely unchanged in the second quarter. The Handymax bulkers M/S Belnor and M/S Belstar continued on their time charters, with the former’s charter being extended to the end of the year at an unchanged rate.
The Capesize bulker Belmaj also continued on its charter, which runs until the autumn.
The Panmax operation Belships Trading performed poorly in the second quarter as anticipated due to freight contracts having been concluded in prior periods. This is expected to continue for the rest of the year if the dry bulk market remains relativly strong.
The product carrier market rallied in the second quarter. All our vessels operate in the spot market (other than the M/T Urai which is sailing on a bareboat charter) and so earnings improved.
Gibson Gas Tankers posted improved results in the second quarter. The M/S Ettrick’s time charter was extended by its Spanish charterer by one year at a rate of USD 205,000 per month from October, compared with USD 163,250 for the previous period. The 6,000 cbm vessels in the Veder pool also generated better earnings.
FINANCIAL POSITION AND OTHER MATTERS
Belships’ liquid assets increased from USD 8.5 million on 31 December 1999 to USD 12.2 million on 30 June 2000 and the mortgage debt dropped from USD 88.0 million to USD 85.7 million. Shareholders’ equity at the end of the quarter was equivalent to 23.1% of assets and USD 0.86 or NOK 7.65 per share excluding minority interests. Belships strengthened its equity base through a NOK 50 million rights issue in the second quarter. The total number of shares after this share issue is amounting to 24.483.000.
The estimated market value of the fleet at the end of the second quarter was USD 1.7 million above its book value, an improvement since April when its market value was USD 1.3 million above its book value.
We are expecting better results during the second half of the year on account of the higher earnings we are seeing, particularly in the product and gas carrier markets.
The final decision on the long-term freight contract the company has entered into is now expected shortly and will be of great importance to Belships.
Oslo, 21 August 2000
The Board of BELSHIPS ASA
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