R E P O R T N D Q U A R T E R

Transcription

1 2 R E P O R T N D Q U A R T E R

2 Report 2 nd Quarter 2005 ODFJELL ASA CONSOLIDATED Continued strong parcel tanker market Time-charter rates more than 30% higher than first half 2004 EBITDA first half 2005 up 19% over same period last year to USD 133 million Antitrust settlements reduced the result by USD 24 million in the second quarter Very high ship bunkering cost Higher ship operating costs Odfjell ASA achieved ISO certification Proposed further dividend of NOK 2.50 per share Results The consolidated net result after tax was USD 68 million first half 2005, compared to USD 56 million first half The second quarter of 2005 includes provisions for antitrust settlements with customers of USD 24 million. Both the 2005 and 2004 figures include gain on sale of assets of USD 4 million. Time-charter rates per day first half 2005 improved by over 30% compared to the same period in Earnings before interest, taxes, depreciation and amortisation (EBITDA) for first half 2005 were USD 133 million, up from USD 112 million first half last year. The operating result (EBIT) was USD 84 million first half 2005, compared to USD 65 million the same period last year. Operating expenses were substantially higher than the same period last year. The increase was partly due to a higher number of owned ships and initial one-time costs related to the takeover of management of ships previously under external ship management. Operating expenses include a positive result from hedging of USD 7 million. General and administrative expenses were stable, including a positive result from hedging of USD 5 million. Net financial expenses first half 2005 were USD 12 million, compared to USD 3 million first half The average USD/NOK exchange rate first half 2005 was 6.34, compared to 6.90 last year. The USD strengthened against the NOK from 6.04 at year-end 2004 to 6.54 at 30 June The currency gain was reduced from USD 10 million first half last year to USD 1 million this year due to implementation of IFRS. The result of hedging is now included as part of the hedged exposure. Taxes were USD 4 million first half 2005 and USD 6 million first half The second quarter 2005 net result of USD 18 million compares with a net result of USD 50 million first quarter 2005, USD 5 million fourth quarter 2004, USD 29 million third quarter 2004 and USD 25 million second quarter The second quarter of 2005 includes provisions for antitrust settlements with customers of USD 24 million, while the fourth quarter 2004 included bonuses and antitrust provisions of altogether USD 32 million. Business Segments Parcel Tankers EBITDA first half 2005 for our parcel tankers strengthened to USD 109 million, compared to USD 85 million in 2004, despite a provision for antitrust settlements in the second quarter 2005 of USD 24 million. The operating result (EBIT) increased to USD 65 million first half 2005, compared to USD 47 million last year. Timecharter rates expressed in USD per day improved by over 30% first half 2005, compared to the same period last year, in line with time-charter earnings the first quarter The average cost of bunkers in first half 2005 was a record high at USD 205 per ton (including compensation related to bunker escalation clauses), compared to USD 161 last year. Operating expenses on a comparable fleet basis were 13% higher in first half 2005 than the full year 2004 figure. As a result of Odfjell s increased focus on ship management during 2005, we have moved more ships into own technical management from third party ship managers. This process will continue in the second half of In this connection, we have incurred one-time expenses for a general upgrade of certain ships in an amount of about USD 4 million first half of In addition, during the second quarter, we experienced technical problems on two ships where yard expenses and purchase of spare parts resulted in a total cost of USD 3.5 mill. The results also reflect high off-hire as a consequence of more drydockings. In July, Odfjell ASA received the ISO certification from DNV. This achievement is in line with our efforts towards protecting the environment. The certification covers ship management of chemical tankers including the branch office in Singapore.

3 M/T Bow Princess (32,362 dwt./built 1976) was sold for demolition in July. The gain on the sale was USD 1 million, which will be accounted for in the third quarter. We have further agreed to sell M/T Bow Sea (37,221 dwt./built 1978) to our 50/50 joint venture company Odfjell & Vapores (O&V) in Chile. The gain on the sale of the ship is about USD 3 million and will be accounted for when the ship is delivered to O&V, likely during third quarter. In the second quarter Odfjell took delivery of four 5,870 dwt. chemical tankers operated by Odfjell Ahrenkiel, Hamburg. The purchase price for these sister-ships was about USD 54 million enbloc. The 30,000 dwt M/T Bow Architect was delivered to us in the second quarter. We have entered into a further long-term time-charter of a 33,000 dwt newbuilding from other Japanese interests with delivery in The initial timecharter period is ten years, with our option to extend as well as to purchase. The ship will have 16 cargo tanks, all of stainless steel. A remaining eleven Japanese newbuildings under long-term contracts are still to be delivered. These ships will primarily replace older ships that will be retiring in the coming years. Tank Terminals EBITDA first half 2005 was USD 24 million, in line with last year. EBIT first half 2005 was USD 15 million, compared to USD 16 million last year. EBITDA of Odfjell Terminals (Rotterdam) was USD 11 million in first half 2005, compared to USD 12 million last year. Odfjell Terminals (Houston) showed an EBITDA of USD 8 million in first half 2005, compared to USD 9 million in Odfjell s share of the terminals in Onsan, Korea, Singapore and in China turned in an EBITDA of USD 5 million. In July, Odfjell signed an agreement with our partner Port Authority of Dalian ( PDA ) regarding the relocation of our terminal in Dalian, China. In this connection Odfjell will sell 14% of the shares in Odfjell Terminals (Dalian) to PDA thereby reducing our ownership to 50%. The sale is expected to be completed by December 2005 and will yield us a pre-tax gain of about USD 4 million, which will be accounted for in the fourth quarter The new terminal will consist of about 60,000 cbm of new tanks and about 50,000 cbm of tanks to be relocated from the existing terminal location. The new terminal will own two berths and have access to four more berths/jetties, which can accommodate vessels from 5,000 dwt to 50,000 dwt. The first phase of the new terminal (the new construction) will be completed by mid 2006 and the second phase (relocation of existing tanks) by last quarter Together with Oiltanking GmbH we concluded a joint venture agreement in the Sultanate of Oman with Oman Oil Company SAOC and Seven Seas Co. LLC for the establishment of a tank terminal company. Oman Oil Company SAOC is a commercial company 100 percent owned by the Government of the Sultanate of Oman, while Seven Seas Co. LLC, is an Omani privately held investment company. The new company will operate the liquid berthing facilities and plans to own and operate the storage facilities to be developed at the Port of Sohar in the Sultanate of Oman. The Port of Sohar is a major industrial complex being developed with the participation of major international and Omani companies. Key Figures Return on equity was 23.0% and return on total assets was 9.6%. Return on capital employed (ROCE) was 12.6% first half Earnings per share amounted to USD 0.78 (NOK 4.95) first half 2005, compared to USD 0.65 (NOK 4.47) in Cash flow per share was USD 1.40 (NOK 8.86), compared to USD 1.24 (NOK 8.53). As per 30 June 2005 the Price/Earnings ratio (P/E) was 10.6 and the Price/Cash flow ratio was 6.3. Based on book value the Enterprise Value (EV)/EBITDA multiple is 5.3 while, based upon market value as per 30 June 2005, the EV/EBITDA multiple was 8.4. Interest coverage ratio (EBITDA/Net interest expenses) stayed high in the first half 2005 at 10.8, compared to 8.8 the corresponding period last year. Finance Cash and bonds as of 30 June 2005 decreased to USD 221 million from USD 233 million as of 31 December Interest bearing debt increased from USD 1,026 million year-end 2004 to USD 1,055 million per 30 June The increase in net debt is due to investments in ships and yard instalments towards newbuildings. Net interest bearing debt was USD 834 million as per 30 June The equity ratio was 36% as per 31 June 2005 and the current ratio was 1.4. Shareholder Information Effective 6 May 2005, the company s class A- shares and class B-shares were split two for one. At the end of second quarter 2005 the A-shares were trading at NOK 124 (USD 18.95), up 17% compared to NOK 106 (USD 17.54) year-end The B-shares were trading at NOK 109 (USD 16.66) at the end of second quarter 2005, up

4 6% from NOK 103 (USD 17.04) year-end By way of comparison, the Oslo Stock Exchange benchmark index rose by 20% and both the marine index and the transportation index increased by 15% during the year. The market capitalisation of Odfjell was NOK 10.4 billion (USD 1.6 billion) as per 30 June In line with the dividend policy in place, the Board will call for an Extraordinary General Meeting, which will be held 10 October 2005, to distribute a further dividend of NOK 2.50 per share (USD 0.38), equal to NOK million (USD 33.2 million). Implementation of IFRS The financial statements for 2005 are prepared according to International Financial Reporting Standards (IFRS). In order to present comparable figures, the 2004 figures have been adjusted to IFRS. A comprehensive reconciliation between the IFRS-figures and Norwegian GAAP figures for 2004 has been presented in Odfjell's annual report for 2004 and can also be found on The IFRS standards IAS 32 "Financial instruments: disclosure and presentation" and IAS 39 "Financial instruments: recognition and measurement" was effective as from 1 January 2005 and was adopted by Odfjell from that date. In this respect we have documented hedge relationships and effectiveness between the derivative instruments and the hedged exposures, and we have designated each of the derivative instruments to exposures hedged. Upon initial application, all derivatives shall be stated in the balance sheet as either assets or liabilities measured at fair value. As part of the implementation of IAS 32 and 39, we will, as from 1 January 2005, account for the result of the hedging of currency as part of the hedged exposure (i.e. Operating and General and administration expenses) and not as currency gains/losses. The effect on implementation at 1 January 2005 was an increase in equity of USD 28 million and the effect as per 30 June 2005 is reduced to USD 10 million. Legal Matters We have previously reported about our actions related to the antitrust situation in the parcel tanker industry. Since the first quarter of 2005 we have settled antitrust issues with most of our major US based customers. Consequently, in the second quarter, we have made provisions in an amount of USD 24 million, accounted for as reduced revenue. Accident On 6 July 2005, after having completed discharge in Gresik, Indonesia and outbound to anchorage, the M/T NCC MADINAH, owned by National Chemical Carriers Ltd. of Saudi Arabia and operated commercially and managed by Odfjell, was involved in a collision with a smaller inbound Indonesian tanker. Both ships had pilot onboard. Most unfortunately, one person is still missing from the Indonesian tanker and four others were injured. The M/T NCC MADINAH suffered moderate structural damage in her bow area, but encountered no personnel injuries nor pollution. Prospects The world economy, helped by growth in the BRIC-countries (Brazil, Russia, India and China), continues to be reasonably strong. A sustained high oil price may however negatively impact the growth of the world economy. We believe recently introduced legislation from the European Union and from the International Maritime Organisation (IMO) will be favourable as regards the supply/demand balance of parcel tankers going forward. Furthermore, new-building orders have been relatively limited due to the fact that fewer yards are keen to build specialized chemical tankers, and those that are, quote significantly higher prices with long lead times. Accordingly, we expect reasonably strong parcel tanker markets the next few years as well as continued solid results from our tank terminal business. Volatile volumes and spot rates together with higher bunker prices could negatively affect the operating results in the last six months compared to the first six months. We still anticipate, however, continued strong results in Bergen, 24 August 2005 THE BOARD OF DIRECTORS OF ODFJELL ASA Odfjell is a leading company in the global market of transporting chemicals and other speciality bulk liquids as well as providing related logistical services. The fleet totals about 100 ships, trading both globally and regionally, of which 59 are owned by the group. Odfjell, including through its various subsidiaries and joint ventures, owns and operates parcel tankers and tank terminals.

5 ODFJELL GROUP Profit and Loss Statement Gross revenue Voyage expenses (75) (83) (84) (158) (170) (342) Time-charter expenses (39) (41) (40) (80) (82) (158) Operating expenses (48) (56) (45) (105) (88) (190) Gross result General and administrative expenses (16) (18) (17) (34) (34) (99) Operating result before depreciation and capital gain (loss) on fixed assets (EBITDA) Depreciation (26) (27) (26) (53) (51) (105) Capital gain (loss) on fixed assets 4 (0) Operating result (EBIT) Income from associates Interest income Interest expenses (7) (8) (7) (16) (14) (31) Other financial items (1) (0) (0) (1) (0) (1) Currency gains (losses) Net financial items (5) (7) (2) (12) (3) (10) Result before taxes and minority interests Taxes (3) (1) (3) (4) (6) (10) Result before minority interests Minority interests (0) (0) (0) (0) (0) (0) Net result Balance Sheet Intangible assets Ships Newbuilding contracts Tank terminals Tank containers Other fixed assets Investments in associates Other long-term receivables Total fixed assets Short-term receivables Bunkers and other inventories Bank deposits and marketable securities Total current assets Total assets Paid in equity Retained earnings Minority interests Total shareholders' equity Accrued liabilities Long-term debt Current portion of long-term debt Current liabilities Total liabilities Total liabilities and shareholders' equity

6 ODFJELL GROUP Key Figures*) Average number of shares (mill.) Earnings per share (USD) - basic/diluted Cash flow per share (USD) Basic/diluted equity per share (USD) Share price per A-share (USD) Financial Ratios Equity ratio 37.6% 35.6% 35.6% 35.6% 35.6% 34.6% Current ratio Return on total assets **) 11.2% 9.1% 7.2% 9.6% 7.8% 6.6% Return on equity **) 27.0% 20.4% 16.0% 23.0% 17.6% 14.4% Return on capital employed **) 15.1% 11.8% 8.5% 12.6% 9.2% 7.9% Debt repayment capability (Years) USD/NOK rate at period end Cash Flow Statement Net cash flow from operating activities Net cash flow from investing activities 2 (150) (41) (148) (89) (199) Net cash flow from financing activities 3 32 (29) 35 (1) 17 Effect on cash balances from currency exchange rate fluctuations (2) (1) (0) (3) (0) 3 Net change in cash balances 44 (55) (16) (12) 5 30 Opening cash balances Ending cash balances Segment Reporting Parcel Tankers Tank Terminals Tank Containers Total gross revenue Parcel Tankers Tank Terminals Tank Containers Total operating result before depreciation and capital gain (loss) on fixed assets (EBITDA) Parcel Tankers Tank Terminals Tank Containers Total operating result (EBIT) Shareholders' Equity Opening balances Net result for the period Financial instruments 18 (8) Changes in translation adjustments (3) (3) 0 (7) (2) 7 Approved dividend - (28) (19) (28) (19) (41) Ending balances Accounting Principles 2005 is the first year the accounts are reported in accordance with International Financial Reporting Standards (IFRS). For accounting principles we refer to the annual report for 2004 where the Norwegian generally accepted accounting principles (NGAAP) and the main changes from NGAAP to IFRS are described. IAS 32 and IAS 39, both relating to financial instruments, were adopted with no effect for comparative figures The periodic accounts are unaudited. *) Key figures have been adjusted to reflect share split, made effective from **) Return ratios are based on annualised results, except for non-recurring items that are included in the relevant period.

7 FLEET OVERVIEW YEAR STAINLESS NUMBER SHIP BUILT DWT CBM STEEL, CBM OF TANKS OWNED: Bow Sky Bow Spring * Bow Star * Bow Sun Bow Firda * Bow Chain * Bow Favour Bow Century Bow Fortune Bow Cecil * Bow Flora Bow Cardinal Bow Faith Bow Cedar Bow Fagus Bow Clipper Bow Flower Bow Sea Bow Hunter Bow Pioneer Bow Eagle Bow Viking Bow Fighter Bow Lancer Bow Heron Bow Cheetah Bow Leopard Bow Lion Bow Panther Bow Puma Bow Petros Bow Transporter Bow Lady Bow Peace Bow Power Bow Pride Bow Prima Bow Prosper Bow Fertility Bow Fraternity Bow Maasstad Bow Maasstroom Bow Maasslot Bow Master Bow Mate Bow Pilot Bow Sailor Bow Antisana Bow Gorgonilla Bow Balearia Bow Bracaria Bow Brasilia Bow Bahia Bow Andes (50 %) Bow Pacifico (50%) Owl Trader Angelim (50 %) Araucaria (50 %) Jatai (50 %, LPG) TIME-CHARTERED: NCC Jubail NCC Mekka NCC Riyad NCC Yamamah NCC Jizan NCC Jouf NCC Madinah NCC Asir

8 NCC Arar NCC Baha Bow Orion Bow Neptun Bow Saturn Bow Santos Bow Americas Bow Architect Brage Pacific Brage Atlantic Bow Andino Bow de Rich Bow Wallaby Bow de Feng Bow West Bow de Silver Bow de Jin Bow Asia Bow Singapore Bow Wave Bow Wind Jacaranda (50%) Aragas (50 %, LPG) Multitank Batavia Multitank Badenia Multitank Bolognia Multitank Britannia Number of ships: YARD DELIVERY DWT OWNER COMMENT ON ORDER: NB Szczecin - B588/III/5 9/ Odfjell NB Szczecin - B588/III/6 3/ Odfjell NB Szczecin - B588/III/7 9/ Odfjell NB Szczecin - B588/III/8 3/ Odfjell NB Szczecin - B588/III/9 10/ Odfjell Option NB Szczecin - B588/III/10 4/ Odfjell Option NB Sevmash #1 9/ Odfjell NB Sevmash #2 6/ Odfjell NB Sevmash #3 11/ Odfjell NB Sevmash #4 6/ Odfjell NB Sevmash #5 10/ Odfjell NB Sevmash #6 6/ Odfjell NB Sevmash #7 10/ Odfjell NB Sevmash #8 6/ Odfjell NB Fukuoka 8/ Time-charter NB Shin Kurishima 11/ Time-charter NB Kitanihon 3/ Time-charter NB Kitanihon 9/ Time-charter NB Kitanihon 11/ Time-charter NB Fukuoka 12/ Time-charter NB Shin Kurishima 6/ Time-charter NB Kitanihon 8/ Time-charter NB Kitanihon 10/ Time-charter NB Fukuoka 12/ Time-charter NB Shin Kurishima 6/ Time-charter NB Usuki 11/ Variable t/c NB Usuki 1/ Variable t/c NB Usuki 6/ Variable t/c NB Usuki 8/ Variable t/c Number of newbuildings: * Vessel beneficially owned through financial lease. TANK TERMINALS LOCATION SHARE CBM STEEL, CBM TANKS Odfjell Terminals (Rotterdam) BV Rotterdam, NL 100 % Odfjell Terminals (Houston) LP Houston, USA 100 % Odfjell Terminals (Dalian) Ltd Dalian, China 64 % Odfjell Terminals (Korea) Co Ltd Onsan, Korea 50 % Oiltanking Odfjell Terminal Singapore Ltd Singapore 50 % VOTTN Ltd (Ningbo) Ningbo, China 12.5 %

9 Foto: Helge Skodvin ODFJELL ASA Conrad Mohrsv. 29, P.O. Box 6101 Postterminalen 5892 Bergen, NORWAY Tel: Fax: Ent.no: