FRO - Preliminary Fourth Quarter and Financial Year 2010 Results
(Thomson Reuters ONE) -
Highlights
* Frontline reports net loss attributable to the Company of $11.8 million and
loss per share of $0.15 for the fourth quarter of 2010.
* Frontline reports net income attributable to the Company of $161.4 million
and earnings per share of $2.07 for the year ended December 31, 2010.
* Frontline announces a cash dividend of $0.10 per share for the fourth
quarter of 2010.
* In November 2010, the Company secured pre- and post-delivery financing in
the amount of $147 million representing 70 percent of the contract price for
the first two VLCCs to be delivered in 2012.
* In January 2011, Frontline sold its 2006-built VLCC Front Shanghai. The sale
proceeds were $91.24 million and after repayment of debt the sale generated
$31.5 million in cash. Frontline has in connection with the sale agreed to
charter back the vessel from the new owner. The duration of the time charter
is approximately two years at a rate of $35,000 per day. Delivery to the new
owners took place on January 26, 2011. The Company expects to record a gain
of approximately $6.2 million on delivery of the vessel. In addition, a gain
of $15.2 million will be recognized on a straight line basis over the period
of the time charter.
* In January 2011, Frontline sold all its shares in OSG. The sale generated
approximately $46.5 million in cash and the Company expects to record a loss
of approximately $3.3 million in the first quarter of 2011 in addition to a
loss of $9.4 million recorded in the fourth quarter of 2010 following a
market price adjustment of the shares.
* In February 2011, Frontline has agreed with Ship Finance to terminate the
long term charter parties between the companies for the single hull VLCCs
Front Highness and Front Ace and Ship Finance has simultaneously sold the
vessels to unrelated third parties. The termination of the charters is
expected to take place in March 2011. Ship Finance will make a compensation
payment to Frontline of approximately $5.8 million for the early termination
of the charters, which will be recorded in the first quarter of 2011.
Preliminary Fourth Quarter and Financial Year 2010 Results
The Board of Frontline Ltd. (the "Company" or "Frontline") announces a net loss
attributable to the Company of $11.8 million for the fourth quarter of 2010,
equivalent to a loss per share of $0.15, compared with net income attributable
to the Company of $12.3 million and earnings per share of $0.16 for the
preceding quarter. The loss attributable to the Company in the fourth quarter
includes non-operating losses of $5.2 million, which mainly relates to a loss of
$9.4 million following a market price adjustment of shares owned in Overseas
Shipholding Group Inc. ("OSG") partially offset by a gain of $3.6 million
(before minority interest) in Independent Tankers Corporation Limited ("ITCL")
arising on the termination of a funding agreement. The loss attributable to the
Company in the fourth quarter also includes a gain of $4.6 million relating to
the amortization of a deferred gain on three lease terminations. Net operating
income in the fourth quarter was $29.3 million compared with $48.4 million in
the preceding quarter. Net operating income and net income attributable to the
Company decreased primarily as a result of the weaker spot market.
The average daily time charter equivalents ("TCEs") earned in the spot and
period market in the fourth quarter by the Company's VLCCs, Suezmax tankers and
Suezmax OBO carriers were $24,700 (including single hull VLCCs), $16,500 and
$45,100, respectively, compared with $29,800, $18,200, and $48,600,
respectively, in the preceding quarter. The spot earnings for the Company's
double hull VLCCs and Suezmax vessels were $22,600 and $15,200, respectively, in
the fourth quarter compared with $30,000 and $15,700, respectively, in the third
quarter. The Gemini Suezmax pool had spot net earnings of $14,600 per day in the
fourth quarter compared with $17,500 per day in the third quarter. The Company's
double hull VLCCs, excluding the spot index related time charter vessels, had
spot earnings of $23,300 per day in the fourth quarter compared with $30,200 in
the third quarter.
Profit share expense of $2.0 million has been recorded in the fourth quarter as
a result of the profit sharing agreement with Ship Finance International Limited
("Ship Finance") compared to $5.8 million in the preceding quarter reflecting
the lower TCEs. The total profit share expense to Ship Finance for 2010, which
will be paid in the first quarter of 2011, was $30.6 million.
Ship operating expenses increased by $4.0 million compared with the preceding
quarter mainly due to an increase in dry docking costs of $3.3 million.
Frontline drydocked three vessels in the fourth quarter and two vessels in the
third quarter. Charter hire expenses decreased by $2.9 million in the fourth
quarter compared with the preceding quarter primarily due to a period of off
hire for one vessel due to a dry docking and a decrease in loss making voyage
provisions from the previous quarter.
Interest income was $2.7 million in the fourth quarter, of which $2.6 million
relates to restricted deposits held by subsidiaries reported in ITCL. Interest
expense, net of capitalized interest, was $37.7 million in the fourth quarter of
which $7.5 million relates to ITCL.
Frontline announces net income attributable to the Company of $161.4 million for
the year ended December 31, 2010, equivalent to earnings per share of $2.07. The
average daily TCEs earned in the spot and period market in the year ended
December 31, 2010 by the Company's VLCCs, Suezmax tankers and Suezmax OBO
carriers were $35,900, $25,800 and $47,400, respectively, compared with $38,300,
$25,300 and $43,000, respectively, for the year ended December 31, 2009. The
spot earnings for the Company's double hull VLCCs and Suezmax vessels were
$36,800 and $24,300, respectively, in the year ended December 31, 2010. The
Company's double hull VLCCs excluding the spot index related time charter
vessels had spot earnings of $38,100 per day and the Gemini Suezmax pool had
spot net earnings of $24,900 per day in the year ended December 31, 2010.
As of December 31, 2010, the Company had total cash and cash equivalents of
$176.6 million and restricted cash of $244.1 million. Restricted cash includes
$181.6 million relating to deposits in ITCL and $62.0 million in Frontline,
which is restricted under the charter agreements with Ship Finance.
In February 2011, the Company has average total cash cost breakeven rates for
2011 on a TCE basis for VLCCs and Suezmax tankers of approximately $30,100 and
$24,500, respectively.
Fleet Development
In November 2010, Frontline extended the time-charter in agreements of Front
Chief, Front Commander and Front Crown (all 1999-built double hull VLCCs), for
one year from January 2011 at $26,500 per day per vessel.
In January 2011, Frontline sold its 2006-built VLCC Front Shanghai. The net sale
proceeds were $91.24 million and after repayment of debt the sale generated
$31.5 million in cash. Frontline has in connection with the sale agreed to
charter back the vessel from the new owner. The duration of the time charter is
approximately two years at a rate of $35,000 per day. Delivery to the new owners
and commencement of the time charter took place on January 26, 2011. The Company
expects to record a gain of approximately $6.2 million on delivery of the
vessel. In addition, a gain of $15.2 million will be recognized on a straight
line basis over the period of the time charter.
In January 2011, the chartered-in VLCC Desh Ujaala was re-delivered to the
owners.
In February 2011, Frontline agreed with Ship Finance to terminate the long term
charter parties between the companies for the single hull VLCCs Front Highness
and Front Ace and Ship Finance has simultaneously sold the vessels to unrelated
third parties. The termination of the charters is expected to take place in
March 2011. Ship Finance will make a compensation payment to Frontline of
approximately $5.8 million for the early termination of the charters, which will
be recorded in the first quarter of 2011.
Newbuilding Program
As of December 31, 2010, Frontline's newbuilding program comprised two Suezmax
tankers and five VLCCs, which constitute a contractual cost of $650 million.
Installments of $198.5 million have been made on the newbuildings and the
remaining installments to be paid as of December 31, 2010 amount to $451.5
million, with expected payments of approximately $106.9 million in 2011, $168.9
million in 2012 and $175.7 million in 2013.
In November 2010, the Company secured pre- and post-delivery financing in the
amount of $147 million representing 70 percent of the contract price for the
first two VLCCs to be delivered in 2012.
For the three remaining VLCCs and the two Suezmax tanker newbuildings to be
delivered between late 2012 and 2013, the Company has not yet established pre-
and post-delivery financing. Based on the recently secured financing for the
VLCCs we assume a 70 percent financing of current market values for these
newbuildings. On this basis, Frontline has already paid the equity investment
and the remaining newbuilding installments will be fully financed by bank debt.
Corporate
In October 2010, Frontline sold the 15.8 percent stake in Navig8 Limited and
received net proceeds of $19.8 million.
In January 2011, Frontline sold all its shares in OSG. The sale generated
approximately $46.5 million in cash and the Company expects to record a loss of
approximately $3.3 million in the first quarter of 2011 in addition to a loss of
$9.4 million recorded in the fourth quarter of 2010 following a market price
adjustment of the shares. The Board is very disappointed with the performance of
this investment and also with the way OSG has developed since the investment in
2008. The management of OSG has never opened for real discussions about
consolidation between Frontline and OSG. The decision to sell the shares was
taken after thorough evaluation of OSG's debt situation, mainly focusing on
OSG's sustainability and financing needs in case of a continued weak freight
market.
In February 2011, Frixos Savvides has for personal reasons decided to step down
from the Board. The Board will look for a replacement of Mr. Savvides.
On February 21, 2011, the Company's Board of Directors declared a dividend of
$0.10 per share. The record date for the dividend is March 9, 2011, ex dividend
date is March 7, 2011 and the dividend will be paid on or about March 23, 2011.
77,858,502 ordinary shares were outstanding as of December 31, 2010, and the
weighted average number of shares outstanding for the quarter was 77,858,502.
The Market
The market rate for a VLCC trading on a standard 'TD3' voyage between The
Arabian Gulf and Japan in the fourth quarter of 2010 was WS 58; equivalent to
$15,600/day; representing an increase of approximately WS 6 points or $2,400/day
from the third quarter of 2010 and an increase of WS 10 points from the fourth
quarter of 2009. Present market indications are approximately $22,000/day for
the first quarter of 2011.
The market rate for a Suezmax trading on a standard 'TD5' voyage between West
Africa and Philadelphia in the fourth quarter of 2010 was WS 93; equivalent to
approximately $21,700/day compared to approximately $14,000/day in the third
quarter. There was an increase of about WS 18 points from the third quarter
2010 and an increase of WS 23 points from the fourth quarter of 2009. Present
market indications are approximately $15,000/day in the first quarter of 2011.
Fujairah bunker prices averaged $488/mt in the fourth quarter of 2010 compared
to $444.5/mt in the third quarter of 2010; an increase of approximately $44/mt.
Bunker prices varied from a low of $462/mt mid October and a high of $512/mt at
the end of December. On February 18, 2011, the quoted bunker price in Fujairah
was 627/mt.
Philadelphia bunker prices averaged $503.5/mt in the fourth quarter, which was
an increase of $39/mt from the third quarter of 2010. Bunker prices varied from
a low of $475.5/mt at the end of October and a high of $527.5/mt at the end of
December. On February 18, 2011, the quoted bunker price in Philadelphia was
600/mt.
The International Energy Agency's ("IEA") February 2011 report stated an average
OPEC oil production, including Iraq, of 29.46 million barrels per day (mb/d)
during the fourth quarter of the year. This was an increase of 190,000 barrels
per day compared to the third quarter of 2010, and an increase of 500,000
barrels per day compared to the fourth quarter of 2009.
IEA further estimates that world oil demand averaged 89.3 mb/d in the fourth
quarter of 2010, representing an increase of approximately 680,000 barrels per
day compared to the third quarter of 2010, and approximately 3.4 mb/d from the
fourth quarter of 2009. Additionally, the IEA estimates that world oil demand
will average approximately 89.3 mb/d in 2011 representing an increase of 1.7
percent or approximately 1.5 mb/d from 2010.
The VLCC fleet totalled 547 vessels at the end of the fourth quarter of 2010, up
from 539 vessels at the end of the previous quarter. 11 VLCCs were delivered
during the quarter versus an estimated 17 at the beginning of the year. 54
vessels were delivered in 2010 versus an estimate of 67 deliveries, representing
19 percent slippage, and throughout 2011 the current estimate is 79 deliveries.
The orderbook counted 185 vessels at the end of the fourth quarter, down from
189 orders from the previous quarter. Seven new orders were placed during the
quarter and the current orderbook represents approximately 34 percent of the
VLCC fleet. During the quarter three vessels were removed from the trading fleet
for scrapping or conversion/storage purposes. According to Fearnleys the single
hull fleet now stands at 43 vessels.
The Suezmax fleet totalled 409 vessels at the end of the fourth quarter, up from
405 vessels at the end of the previous quarter. Six vessels were delivered
during the quarter versus an estimated 17 at the beginning of the year. 37
vessels were delivered in 2010 versus an estimate of 61 deliveries, representing
39 percent slippage, and throughout 2011 the current estimate is 63 deliveries.
The orderbook counted 146 vessels at the end of the quarter, down from 151
vessels at the end of the previous quarter. Two new orders were placed during
the quarter and the current orderbook now represents 36 percent of the total
fleet. During the quarter one newbuilding contract was cancelled two more
vessels were removed from the trading fleet. According to Fearnleys the single
hull fleet now stands at 14 vessels.
Strategy
We focus on maintaining our position as the leading operator of VLCC and Suezmax
tankers. By following a strategy of maintaining a certain fixed charter coverage
percentage for the double hull vessels, full fixed charter coverage for our
single hull vessels and a high fixed charter coverage percentage for the OBO
vessels, we provide downside protection in a weak tanker market as well as
preserving upside opportunities from the spot trading vessels in a strong tanker
market.
We maintain a lean organization and use outsourcing extensively to keep a low
cost basis and low cash cost breakeven rates. We emphasize maintaining high
financial flexibility and a strong balance sheet and are always looking for
enhancing shareholder value and maintaining a high quarterly dividend payout
ratio.
Outlook
IEA estimated in the February 2011 report that the global oil demand increased
by 680,000 b/d or 0.8 percent in the fourth quarter compared to the third
quarter. At the same time the tanker market experienced a higher growth in fleet
supply due to a high number of newbuilding deliveries and henceforth the
depressed tanker rates experienced in the third quarter also continued in the
fourth quarter. This development has also continued so far in the first quarter
of 2011, however with some improved trend in the VLCC market.
The International Monetary Fund forecasts world growth to rise by approximately
5.0 percent in 2010 and 4.4 percent in 2011, and the IEA projects an increase in
world's oil consumption in 2011 by 1.5 mb/d, compared to 2010, which indicates
strong long term oil demand.
The newbuilding orderbook includes a high number of expected vessel deliveries
in 2011 and 2012. However, the actual deliveries in 2010 have been significantly
lower than anticipated with 19 percent slippage in the VLCC segment and 39
percent in the Suezmax segment and this development is likely to be further
strengthened by the expected delays, slippage and cancellations of newbuilding
orders going forward. This combined with slow steaming, increased ton-mile
scenario and stricter oil major requirements could create a more positive fleet
utilization for both the VLCC and Suezmax tanker segments going forward.
In 2010, Frontline secured approximately $640 million in new capital, committed
new bank financing and release of restricted cash. The Company also re-
negotiated the newbuilding program and managed to reduce the program in 2009 and
2010 with net $476 million. Furthermore, sale of vessels and shares in 2011,
have generated additional $84 million in cash after repayment of debt.
The Company's newbuilding program contributes to renew the fleet and the vessels
will be delivered in the period 2012 to 2013. Assuming 70 percent debt financing
of current market values, Frontline has already paid the equity investment and
the remaining newbuilding instalments will be fully financed by bank debt.
The Board is not satisfied with reported earnings for the quarter. The poor
earnings are mainly a reflection of the weak global freight market. This
weakness might continue until the current large gap between supply and demand in
the tanker market narrows. Based on the Company's trading results achieved so
far in the first quarter, the Board expects the weak trend in the fourth quarter
results to be extended into the first quarter.
Frontline will in case of a continued challenging market situation focus on
having financial flexibility and a healthy balance sheet. Through such a
strategy the Company will be better positioned than peers to tolerate a
prolonged weak trend in the tanker market and be able to react to attractive
market opportunities that may occur.
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 management's examination of historical
operating trends. Although Frontline 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 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 Ltd.
Hamilton, Bermuda
February 21, 2011
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
This information is subject of the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
4th quarter 2010 results:
http://hugin.info/182/R/1491186/426841.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 Ltd. via Thomson Reuters ONE
[HUG#1491186]
Unternehmensinformation / Kurzprofil:
Datum: 22.02.2011 - 07:50 Uhr
Sprache: Deutsch
News-ID 51760
Anzahl Zeichen: 24047
contact information:
Town:
Hamilton
Kategorie:
Business News
Diese Pressemitteilung wurde bisher 161 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"FRO - Preliminary Fourth Quarter and Financial Year 2010 Results"
steht unter der journalistisch-redaktionellen Verantwortung von
Frontline Ltd. (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
