FRO - Second Quarter and Six Months 2011 Results
(Thomson Reuters ONE) -
Highlights
* Frontline reports a net loss attributable to the Company of $35.2 million
and a loss per share of $0.45 for the second quarter of 2011.
* Frontline reports a net loss attributable to the Company of $19.8 million
and a loss per share of $0.25 for the first half of 2011.
* Frontline announces a cash dividend of $0.02 per share for the second
quarter of 2011.
* Frontline exercised its option to acquire the 2002-built VLCC Front Eagle
and sold the vessel to an unrelated third party for $67.0 million. The
vessel was delivered on May 27. A gain of $3.9 million was recognized in the
second quarter and a gain of $13.1 million will be recognized over the
remaining period of the two year time charter-in.
* Frontline terminated the long term charter parties for the OBO carriers
Front Leader and Front Breaker in April and May 2011, respectively. The
Company recorded losses of $9.3 million and $8.5 million, respectively, in
the second quarter.
* The chartered-in VLCC Kensington was re-delivered by Frontline on May
18, 2011.
Second Quarter and Six Months 2011 Results
The Board of Frontline Ltd. (the "Company" or "Frontline") announces a net loss
attributable to the Company of $35.2 million for the second quarter of 2011,
equivalent to a loss per share of $0.45, compared with net income attributable
to the Company of $15.5 million and earnings per share of $0.20 for the
preceding quarter. The net loss attributable to the Company in the second
quarter includes a loss on sale of assets and amortization of deferred gains of
$12.0 million, which comprises losses of $9.3 million and $8.5 million arising
on the termination of the long term charter parties for the OBO carriers Front
Leader and Front Breaker, respectively, partially offset by gains of $3.9
million and $2.0 million relating to the sales of Front Eagle and Front
Shanghai, respectively. The net income attributable to the Company in the
preceding quarter included a gain on sale of assets and amortization of deferred
gains of $13.2 million, which comprised a gain of $7.9 million on the sale of
Front Shanghai and a gain of $5.3 million on the termination of the Ticen Sun
and Front Ace charters. The net income attributable to the Company in the first
quarter also included non-operating gains of $8.1 million. This is mainly
related to a market value adjustment of $8.8 million to a funding agreement held
by the Golden State companies in Independent Tankers Corporation Limited
("ITCL") for which termination notice was given by the Golden State companies in
February 2011 and the amortization of a deferred gain of $3.1 million on the
sale of a newbuilding contract, which were partially offset by a loss of $3.3
million on the sale of the Company's shares in Overseas Shipholding Group Inc
("OSG").
The average daily time charter equivalents ("TCEs") earned in the spot and
period market in the second quarter by the Company's VLCCs, Suezmax tankers and
Suezmax OBO carriers were $26,100, $15,800 and $31,300, respectively, compared
with $28,600, $17,300 and $36,300, respectively, in the preceding quarter. The
spot earnings for the Company's double hull VLCCs and Suezmax vessels were
$23,900 and $14,500, respectively, in the second quarter compared with $27,400
and $16,000, respectively, in the first quarter. The Gemini Suezmax pool had
spot earnings of $16,200 per day in the second quarter compared to $17,700 per
day in the first quarter. The Company's double hull VLCCs excluding the spot
index time charter vessels had spot earnings of $25,700 per day in the second
quarter, compared with $28,200 in the first quarter.
Profit share expense of $0.2 million has been recorded in the second quarter as
a result of the profit sharing agreement with Ship Finance International Limited
("Ship Finance") compared to $2.3 million in the preceding quarter. Ship
operating expenses increased by $0.3 million compared with the preceding quarter
primarily as a result of an increase in drydocking costs of $2.3 million (three
vessels drydocked in the second quarter compared with two vessels in the
preceding quarter) partially offset by a decrease in running costs mainly due to
recent sales and lease terminations.
Charter hire expenses increased by $0.9 million in the second quarter compared
with the preceding quarter primarily due to an increase in the provision for
loss making voyages and charter hire for Front Shanghai and Front Eagle,
partially offset by a decrease in charter hire for Hampstead (due to off hire)
and Kensington (due to re-delivery on May 18).
Interest income in the second quarter of $1.5 million relates to restricted
deposits held by subsidiaries reported in ITCL. Interest expense, net of
capitalized interest, was $35.7 million in the second quarter of which $7.4
million relates to ITCL.
Frontline announces a net loss attributable to the Company of $19.8 million for
the six months ended June 30, 2011, equivalent to a loss per share of $0.25. The
average daily TCEs earned in the spot and period market in the six months ended
June 30, 2011 by the Company's VLCCs, Suezmax tankers and Suezmax OBO carriers
were $27,400, $16,500 and $34,000, respectively, compared with $46,000, $31,400
and $47,800, respectively, in the six months ended June 30, 2010. The spot
earnings for the Company's double hull VLCCs and Suezmax vessels were $25,600
and $15,200, respectively, in the six months ended June 30, 2011. The Gemini
Suezmax pool had spot earnings of $17,000 per day and the Company's double hull
VLCCs excluding the spot index time charter vessels had spot earnings of $27,000
per day, respectively, in the six months ended June 30, 2011.
As of June 30, 2011, the Company had total cash and cash equivalents of $173.2
million and restricted cash of $247.9 million. Restricted cash includes $188.5
million relating to deposits in ITCL and $58.0 million in Frontline, which is
restricted under the charter agreements with Ship Finance.
In August 2011, the Company has average total cash cost breakeven rates for the
remainder of 2011 on a TCE basis for VLCCs and Suezmax tankers of approximately
$29,800 and $24,800, respectively.
Fleet Development
In January 2011, the chartered-in VLCC Desh Ujaala was re-delivered to the
owners and the Company sold its 2006-built VLCC Front Shanghai. The net sale
proceeds for Front Shanghai were $91.24 million and after repayment of debt the
sale generated $31.5 million in cash. The Company agreed, in connection with the
sale, 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 recorded a gain of $9.9 million in the first half of 2011. In
addition, a gain of $11.8 million will be recognized on a straight line basis
over the remaining period of the time charter.
In February 2011, the Company agreed with Ship Finance to terminate the long
term charter parties between the companies for the single hull VLCCs Ticen Sun
(ex. Front Highness) and Front Ace and Ship Finance simultaneously sold the
vessels to unrelated third parties. The termination of the charters took place
in February and March 2011, respectively. Ship Finance made a compensation
payment to the Company of $5.3 million for the early termination of the
charters, which was recorded in the first quarter.
In March 2011, the Company exercised its option to acquire the 2002-built VLCC
Front Eagle and sold the vessel to an unrelated third party for $67.0 million.
The Company agreed, in connection with the sale, to charter back the vessel from
the new owner. The duration of the time charter is approximately two years at a
rate of $32,500 per day. Delivery to the new owners and commencement of the time
charter occurred on May 28, 2011. The Company recorded a gain of $3.9 million in
the second quarter. In addition, the Company expects to record a gain of
approximately $13.1 million over the remaining period of the two year time
charter-in.
In March 2011, the bareboat charter out contract for the single hull VLCC Front
Lady was extended until August 2013.
In April and May 2011, the Company agreed with Ship Finance to terminate the
long term charter parties between the companies for the OBO vessels Front Leader
and Front Breaker, respectively, and Ship Finance simultaneously sold the
vessels. The termination of the charter parties took place on April 12, 2011 and
May 26, 2011, respectively, and the Company made compensation payments to Ship
Finance of $7.7 million and $6.6 million, respectively, for the early
termination of the charter parties. The Company recorded losses of $9.3 million
and $8.5 million, respectively, in the second quarter of 2011.
The chartered-in VLCC Kensington was re-delivered to the owners on May 18, 2011.
Newbuilding Program
As of June 30, 2011, Frontline's newbuilding program comprised two Suezmax
tankers and five VLCCs, which constitute a contractual cost of $649.9 million.
Installments of $198.5 million have been made on the newbuildings and the
remaining installments to be paid as of June 30, 2011 amount to $451.4 million,
with expected payments of approximately $27.0 million in 2011, $175.7 million in
2012 and $248.7 million in 2013. Expected payments of $79.9 million and $73.0
million have been moved from this year into 2012 and from 2012 into 2013,
respectively, since the first quarter earnings release, as a result of an
expected delay of approximately four to five months in the VLCC newbuilding
program.
In November 2010, the Company secured pre- and post-delivery financing in the
amount of $147.0 million representing 70 percent of the contract price for the
first two VLCCs to be delivered in 2012. As of June 30, 2011 the facility was
undrawn.
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 secured financing for the two VLCCs
we assume a 70 percent financing of current market values for these
newbuildings. On the basis of these assumptions, Frontline has already paid 99
percent of the equity investment and the remaining newbuilding installments are
expected to be almost entirely financed by bank debt.
Corporate
In January 2011, Frontline sold all its shares in OSG. The sale generated
approximately $46.5 million in cash and the Company recorded a loss of $3.3
million in the first quarter in other non-operating items.
On April 11, 2011, the Company announced that it had approved a grant of
145,000 share options under the terms of the existing share option scheme. The
share options will have a five-year term and will vest equally one third each
year over a three-year vesting period. The strike price for the options has been
set to NOK 131.10 per share.
On August 25, 2011, the Company's Board of Directors declared a dividend of
$0.02 per share. The record date for the dividend is September 9, 2011, ex
dividend date is September 7, 2011 and the dividend will be paid on or about
September 26, 2011.
77,858,502 ordinary shares were outstanding as of June 30, 2011, and the
weighted average number of shares outstanding for the quarter was 77,858,502.
The Company reports vessel values provided from a broker panel on all loan
facilities to the banks each quarter. At June 30, 2011 we were in compliance
with the minimum value requirements on the vessels set in the loan agreements.
We were also in compliance with other covenants set in the loan agreements.
The full report is available for download in the link enclosed and from the
Company's website www.frontline.bm.
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 Board of Directors
Frontline Ltd.
Hamilton, Bermuda
August 25, 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.
2nd quarter 2011 results :
http://hugin.info/182/R/1541508/471634.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#1541508]
Unternehmensinformation / Kurzprofil:
Datum: 26.08.2011 - 07:55 Uhr
Sprache: Deutsch
News-ID 59575
Anzahl Zeichen: 16446
contact information:
Town:
Hamilton
Kategorie:
Business News
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