Results per 1st Quarter 2003

Belships recorded an operating income of USD 9,906,000 (first quarter 2002: USD 5,040,000) and an operating result of USD 756,000 (USD 741,000) in the first quarter of 2003. The operating result for the period includes gains of USD 0.5 million from the sale of the shares in Belobo Shipping Ltd., and the operating result for the same period the previous year included gains of USD 1.8 million from the sale of the shares in Pelican AS. The underlying trend for the results for the company’s ongoing operation is therefore considerably improved. Apart from the general upturn in the market for dry bulk and product carriers, the increase in operating income is due to 50 per cent of Elkem Chartering AS being acquired in the fourth quarter of 2002.
In the first quarter the post-tax result was USD 410,000 (USD -136,000). The minority interests in Gibson Tankers accounted for -394,000 (USD -517,000) of the result, making Belships’ share USD 804,000 (USD 381,000).
The product carrier business generated an operating result of USD 1,158,000 (USD 177,000) in the first quarter, the increase primarily due to improvements in the market. In addition, and as previously mentioned, gains on sales of shares totalling USD 0.5 million were realised in the period.
In the first quarter the gas carrier business reported an operating result of USD -752,000 (USD -986,000) due to the continuance of the difficult market conditions from last year into 2003 and operational problems with some of the ships.
The operating result for dry bulk totalled USD 486,000 (USD -146,000) for the quarter and is due to a strong market.
The ship management business generated an operating result of USD 107,000 (USD 89,000).
The market for product carriers was strong in the first quarter mainly caused by increased demand as a result of the war in Iraq, but also due to large amounts of scrapping that took place in 2002 which resulted in almost zero growth in the fleet, despite significant deliveries of newbuildings. Our interests in the OBO ships, M/S Belgreeting and M/S Belguardian, were sold in the first quarter but the ships will continue to be commercially operated by Belships for the time being. M/T Belgrace sailed in the spot market at good rates.
The strong growth in China continues to push the dry bulk market upwards. Both the transatlantic operations and handymax operations in Elkem Chartering contributed to the positive results. M/S Belnor operated in the spot market at good rates. The capesize ship, M/S Belmaj, increased its earnings during the first months of the year. The pool operation in Belgium led by Bocimar returned a profit in the first quarter.
The small gas carrier market showed a marked increase over the winter, but whether this is a seasonal improvement or a sign of a trend is unclear. All of the Gibson Gas Carriers (GGT) ships are now contracted out on timecharters. The rates do not give satisfactory results, but represent a significant improvement compared with the previous year. The debt servicing for 2003 has been readjusted to fit the expected cash flow.
Belships strengthened its financial position in the first quarter through positive results development and the sale of its shares in Belobo Shipping Ltd., which gave a liquidity contribution of approximately USD 2.5 million, all of which will go towards reduction of Belships ASA’s debts.
As at 31 March 2003 liquid assets totalled USD 4.8 million compared with USD 5.5 million at the end of 2002. Mortgage debt in the quarter was reduced by USD 2.7 million to USD 54.0 million as at 31 March. Shareholders’ equity at the end of the period was equivalent to 26.6 per cent of assets or NOK 5.13 per share excluding minority interests.
Broker’s estimates for some of the group’s ships were still lower than the book value. Based on estimates of discounted future cash flows for the ships, the company did not find it necessary to write down any of the ships.
The end of the war in Iraq with an at least initial positive result, reduced uncertainty in the global financial picture, but it will also considerably reduce the demand for product carriers. We therefore expect a reduction in rates for this type of tonnage.
The market for dry cargo ships looks positive in the short term, but the outbreak of SARS in China may have negative consequences.
The sale of M/S Belmaj, the capesize ship (25 per cent owner interest), for delivery in the second quarter will give an accounting loss of USD 400,000.
A previously mentioned it is uncertain how the gas market will develop, but little new tonnage will be delivered in the near future and therefore the decisive factor will be how the demand for LPG and industrial gases develops.
Oslo, 6 May 2003