FRNT - Second Quarter and Six Months 2012 Results
(Thomson Reuters ONE) -
Highlights
* Frontline 2012 reports net income of $6.0 million and earnings per share of
$0.05 for the second quarter of 2012.
* Frontline 2012 reports net income of $8.4 million and earnings per share of
$0.08 for the six months ended June 30, 2012.
* Frontline 2012 completes a private placement of 56 million new ordinary
shares raising $210 million in gross proceeds.
* Frontline 2012 concludes an agreement to acquire 16 newbuilding contracts
and eight fixed price option contracts for vessels within the crude oil and
petroleum product markets with a contract value of $578 million.
* Frontline 2012 concludes newbuilding contracts for two 83,000 Cbm LPG
Carriers at a total contractual value of $127 million. Furthermore, the
Company has secured four fixed price optional contracts at a total
contractual value of $254 million.
Introduction
Frontline 2012 Ltd. (the "Company" or "Frontline 2012") is a commodity shipping
company incorporated in Bermuda on December 12, 2011, which owns a total of ten
crude oil tankers, 23 newbuilding contracts and twelve fixed price option
contracts within the crude oil, petroleum product and LPG (Liquefied Petroleum
Gas) markets. The Company's sailing fleet is one of the youngest in the industry
and currently consists of six very large crude carriers, or VLCCs, and four
Suezmax tankers, operating in the spot and the period markets. The largest
shareholder is Hemen Holding Ltd. ("Hemen") with a shareholding of approximately
51 percent.
Second Quarter and Six Months 2012 Results
Frontline 2012 announces net income of $6.0 million and earnings per share of
$0.05 for the second quarter of 2012. Frontline 2012 announces net income of
$8.4 million and earnings per share of $0.08 for the six months ended June
30, 2012.
The average daily time charter equivalents ("TCEs") earned in the spot and
period market in the second quarter by the Company's VLCCs and Suezmax tankers
were $32,700 and $17,600, respectively, compared with $27,900 and $21,200,
respectively, in the preceding quarter. The spot earnings for the Company's VLCC
and Suezmax tankers were $34,800 and $17,600, respectively, compared with
$28,000 and $21,200, respectively, in the preceding quarter.
As of June 30, 2012, the Company had cash and cash equivalents of $219.2
million.
The Company has prepaid bank debt installments for the year 2012 in exchange for
a one year payment holiday in 2013. Following this the estimated daily cash cost
break even rates for VLCCs and Suezmax tankers for the remainder of 2012 are
approximately $14,800 and $13,700, respectively.
Newbuilding Program
In May 2012, the Company concluded an agreement to acquire 16 newbuilding
contracts and eight fixed price option contracts. These newbuilding contracts
are within the crude oil and petroleum product markets and were arranged,
financed and entered into by the Company's major shareholder Hemen, at a
contract value of $578 million. Hemen will remain responsible for the
performance guarantees towards the yards on these contracts.
In August 2012, the Company concluded newbuilding contracts for two 83,000 Cbm
LPG Carriers ("VLGCs") at a total contractual value of $127 million. The
deliveries of the vessels are expected to take place in 2014. Furthermore, the
Company has secured four fixed price optional contracts at a total contractual
value of $254 million. The deliveries of the optional vessels are expected to
take place in 2014 and 2015. Hemen will be responsible for the performance
guarantees towards the yard on these contracts.
As of August 28, 2012, the Company's newbuilding program comprised 16
newbuildings within the crude oil and petroleum product markets with a
contractual value of $578 million, two VLGCs with a contractual value of $127
million and five VLCC tankers with a contractual value of $525 million. Total
installments of $325.5 million have been paid and the remaining installments to
be paid as of August 28, 2012 amount to $904.5 million.
Corporate
In May 2012, the Company completed a private placement of 56 million new
ordinary shares of $2.00 par value at a subscription price of $3.75, raising
$210 million in gross proceeds. The proceeds from the private placement will be
used to fund the purchase of the abovementioned 16 newbuilding contracts and
also to finance further growth.
156,000,000 ordinary shares were outstanding as of June 30, 2012, and the
weighted average number of shares outstanding for the quarter was 118,666,667.
The Market
Crude
The market rate for a VLCC trading on a standard 'TD3' voyage between the
Arabian Gulf and Japan in the second quarter of 2012 was WS 55, representing a
decrease of approximately WS 1 point from the first quarter of 2012 and a
decrease of approximately WS 3 points from the second quarter of 2011. Present
market indications are approximately negative $3,000/day in the third quarter of
2012.
The market rate for a Suezmax trading on a standard 'TD5' voyage between West
Africa and Philadelphia in the second quarter of 2012 was WS 72.9, representing
a decrease of approximately WS 9.3 points from the first quarter of 2012 and an
increase of WS 3.8 points from the second quarter of 2011. Current market
indications are approximately $10,000/day in the third quarter of 2012.
Bunkers at Fujairah averaged $662/mt in the second quarter of 2012 compared to
$730/mt in the first quarter of 2012. Bunker prices varied between a low of
$663/mt on June 22 and a high of $739/mt at the beginning of the quarter. The
International Energy Agency's ("IEA") August 2012 report stated an OPEC oil
production, including Iraq, of 31.4 million barrels per day (mb/d) in June and
July 2012. This was an increase of 55 kb/d compared to the first quarter of
2012.
The IEA estimates that world oil demand averaged 88.8 mb/d in the second quarter
of 2012, which is a decrease of 600,000 barrels compared to previous quarter and
the IEA estimates that world oil demand will average approximately 89.6 mb/d in
2012, representing an increase of 0.3 percent or 0.3 mb/d from 2011. 2013 demand
is expected to be 90.5 mb/d with non-OECD demand exceeding OECD, a trend that is
unlikely to be reversed.
The VLCC fleet totalled 610 vessels at the end of the second quarter of 2012, up
from 598 vessels at the end of the previous quarter. 12 VLCCs were delivered
during the quarter, none removed. The order book counted 95 vessels at the end
of the second quarter, down from 111 orders from the previous quarter. The
current order book represents approximately 16 percent of the VLCC fleet.
According to Fearnleys, the single hull fleet currently stands unchanged at 23
vessels.
The Suezmax fleet counts 468 vessels at the end of the second quarter, up from
451 vessels at the end of the previous quarter. 17 vessels were delivered during
the quarter whilst none were removed. The order book counted 79 vessels at the
end of the second quarter, down from 96 vessels at the end of the previous
quarter. No new orders were placed during the quarter and the current order book
now represents 17 percent of the total fleet. According to Fearnleys, the single
hull fleet stands unchanged at nine vessels.
Product
According to the IEA, global distillate demand continues to look strong through
2013 despite recent weakness, as the construction and manufacturing sectors
gradually becomes more robust. Global gas/diesel oil demand is set to rise by
260 kb/d in 2012 and by 345 kb/d in 2013 to 26.6 mb/d. Jet/Kerosene demand is
forecast to rise by 60kb/d in 2013 to 6.5 mb/d.
Considerable growth in Asia and Oceania, caused by post-tsunami additions to
Japan (fuel oil and "other products") and the robust expansion that continues to
be seen in Korea, balance out modest declines elsewhere. Gas/diesel oil proved
to be the strongest products, as a result of strong industrial demand in many
nations, notably Korea and Australia. OECD Pacific plus Pacific saw a 5.8
percent year-on-year growth in June.
In Europe, on the other hand, the product demand remains relatively bleak
reflecting the ailing state of the economic backdrop. Gasoline remains one of
the worst performing products, down 3.3 percent in June to 2.1 mb/d, a
consequence of record unemployment rates.
The MR fleet totalled 1,504 vessels at the end of the second quarter of 2012, up
from 1,495 vessels at the end of the previous quarter. The orderbook counted
150 vessels at the end of the second quarter, which represents approximately 10
percent of the MR fleet. The LR2 fleet totalled 214 vessels at the end of the
second quarter of 2012, up from 212 vessels at the end of the previous quarter.
The order book counted 12 vessels at the end of the second quarter. The, current
order book represents approximately 5.6 percent of the LR2 fleet.
LPG
According to Clarksons, the general trend of growing Asian demand is expected to
be the bedrock of trade growth in the coming years. Japan, the largest LPG
importer in the world, recorded a small growth in imported volumes for the third
consecutive year in 2011. However, the volumes remain significantly lower than
the levels reported in the middle of last decade as imports of 15MT have dropped
to 12.4MT in 2011. Other Asian importers have lately experienced a more
significant growth in trade with China reporting 6.7 percent year-on-year growth
and an increase in South Korean imports of 5.6 percent in 2011. Export growth in
the Americas continues apace, as a result of the shale gas revolution in the US.
EIA shows that US exports of LPG grew by 12.7 percent in 2011. Significant
transatlantic shipments to North West Europe were of particular note, along with
continued volumes moving to Caribbean/South American destinations. A strong
petrochemical industry in emerging markets and North America is likely to
support LPG (up 165 kb/d in 2012 and 185 kb/d in 2013).
The VLGC fleet (60,000+ Cbm) totalled 143 vessels at the end of the second
quarter of 2012, unaltered from the previous quarter. The order book counted 18
vessels at the end of the second quarter, which represents 12.6 percent of the
VLGC fleet.
Strategy and Outlook
The Company's strategy is to create the global leading commodity shipping
company within three years with activities in all commodity shipping markets
hereunder crude oil / petroleum products, dry bulk and LPG tankers based on
modern, high quality environmental friendly and fuel efficient tonnage.
We currently see newbuilding prices in several markets at historically low
levels, close to or in some cases even lower than the shipyards all-in
construction cost. This creates an attractive risk / reward balance and
interesting opportunities. The dramatic differential in fuel efficiency between
the next newbuilding generation and the existing fleet further highlights this
opportunity.
Following the recent acquisition of two VLGC newbuilding contracts and four
fixed price optional contracts, the Company's activities are expanded to include
the commodity shipping markets crude oil, petroleum products and LPG. The high
growth in LPG production, combined with a low newbuilding orderbook and historic
low new building prices for fuel efficient tonnage creates a unique opportunity
to enter this market.
The Board sees a challenging supply / demand situation for several of the
commodity shipping markets. This is particularly the case for the crude oil
tanker market as a consequence of the combined VLCC and Suezmax fleet increasing
by approximately 98 percent between 2004 and 2012 without a similar increase in
demand.
Frontline 2012's current operating fleet consist of VLCCs and Suezmaxes and
based on the current outlook for the crude tanker market the Board expects the
operating result in the third quarter to be weaker than in the second quarter.
Frontline 2012 is currently in discussions regarding a further increase of the
newbuilding program and will continue to pursue its target to create the global
leading commodity shipping company. This will limit the dividend capacity in the
short term. The ambition is to change this over time as the market improves and
the company develops. The Company will have a strong focus on maximizing return
on equity and Frontline 2012 will to a certain extent use debt to optimize the
return. The Board is confident that Frontline 2012 through aggressive expansion
of economically efficient tonnage in the presently distressed market can create
an advantage which over time can be converted into a superior long term return
to our shareholders from cash flow as well as asset appreciation.
Forward Looking Statements
This press release contains forward looking statements. These statements are
based upon various assumptions, many of which are based, in turn, upon further
assumptions, including Frontline Ltd's management's examination of historical
operating trends. Although Frontline Ltd believes that these assumptions were
reasonable when made, because assumptions are inherently subject to significant
uncertainties and contingencies which are difficult or impossible to predict and
are beyond its control, Frontline 2012 cannot give assurance that it will
achieve or accomplish these expectations, beliefs or intentions.
Important factors that, in the Company's view, could cause actual results to
differ materially from those discussed in this press release include the
strength of world economies and currencies, general market conditions including
fluctuations in charter hire rates and vessel values, changes in demand in the
tanker market as a result of changes in OPEC's petroleum production levels and
world wide oil consumption and storage, changes in the Company's operating
expenses including bunker prices, dry-docking and insurance costs, changes in
governmental rules and regulations or actions taken by regulatory authorities,
potential liability from pending or future litigation, general domestic and
international political conditions, potential disruption of shipping routes due
to accidents or political events, and other important factors described from
time to time in the reports filed by the Company with the United States
Securities and Exchange Commission.
The full report is available for download in the link enclosed.
The Board of Directors
Frontline 2012 Ltd.
Hamilton, Bermuda
August 28, 2012
Questions should be directed to:
Jens Martin Jensen: Chief Executive Officer, Frontline Management AS
+47 23 11 40 99
Inger M. Klemp: Chief Financial Officer, Frontline Management AS
+47 23 11 40 76
2nd quarter 2012 results :
http://hugin.info/150498/R/1636898/526151.pdf
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Frontline 2012 Ltd. via Thomson Reuters ONE
[HUG#1636898]
Datum: 29.08.2012 - 08:53 Uhr
Sprache: Deutsch
News-ID 178503
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