HOUSTON, Nov. 5, 2002 (PRIMEZONE) -- Odfjell (Other OTC:ODJLY):
-- Slightly lower net result in third quarter compared to first half -- Significant reduction in earnings from Global Trade compared to same period last year, partly due to higher bunker cost -- Satisfactory results from the tank terminal activities -- Continued low interest rates -- Weakening USD gave currency profit and higher deferred taxes
On August 26, 2002 BOW EAGLE was involved in a fatal accident where four people lost their lives. The Board wishes to express its deepest condolences to the families of the deceased.
Results
Odfjell's consolidated net result after tax was USD 31 million for the first nine months of 2002 compared to a result of USD 53 million in the same period in 2001. The freight levels in the third quarter 2002 reflect a softer chemical tanker market compared to the first half 2002. Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the first nine months of 2002 were USD 117 million, compared to USD 158 million for the same period in 2001. Operating result (EBIT) was USD 53 million, compared to USD 100 million in the first nine months of 2001, including then sales gain of USD 3.5 million.
Operating expenses as well as general and administrative expenses were higher than in the same period last year, mainly due to a weaker USD and the incorporation of our 50% share of the new tank terminal in Singapore. Net interest expenses for the first nine months of 2002 were USD 21 million compared to USD 31 million in the same period of 2001, a reduction due to lower interest rates.
The average USD/NOK exchange rate for the period was 8.21 compared to 9.01 for the first nine months of 2001. The USD/NOK rate weakened substantially from 9.01 at year-end 2001 to 7.47 at September 30, 2002. The USD weakening positively impacted our currency hedging portfolio and cash balances in NOK, but increased our non-USD costs expressed in USD. The currency gain in the period was USD 10 million compared to a cost of USD 11 million the same period last year. This gain is partly offset by higher voyage, operating as well as general and administrative expenses. The currency gain lead also to higher deferred taxes, primarily related to unrealised currency gain on net USD-debt in the NOK accounts.
Third quarter 2002 net result was USD 10 million compared to USD 6 million in the first quarter and USD 16 million in the second quarter this year.
Business Segments
Global Trade
EBITDA for the first nine months of 2002 was USD 75 million compared to USD 116 million in the first nine months of 2001. Operating profit (EBIT) was USD 31 million in the first nine months of 2002 compared to USD 76 million in the first nine months of 2001 (including, then a sales gain of USD 3.5 million.). Lower freight rates and volumes lead to time-charter income expressed in USD per day being 18% lower than in the first nine months of 2001. The time-charter income was 9% lower in the third quarter 2002 compared to the second quarter 2002, partly due to an average bunker price of USD 156 per ton in the third quarter. The average price of bunkers in the first nine months of 2002 was USD 140 per ton, compared to USD 130 per ton the previous year. Operating expenses on a comparable fleet basis were 5% higher in the first nine months of 2002 than in 2001 caused by a weaker USD.
Odfjell's four newbuilding contracts with Stocznia Szczecinska Porta Holding S.A. in Poland were cancelled due to the yard being declared bankrupt on July 29, 2002. Predelivery payments and interest thereon have been refunded to us. The Polish government has established a new yard, Stocznia Szczecinska Nowa, and on October 24, 2002 Odfjell made an agreement to acquire the first two ships in the original series of newbuildings. The ships will be delivered in April and October 2003 at terms basically the same as the original contracts.
On June 28, 2002, we took delivery of the 37.500 tdw. newbuilding Bow Chain from Kleven Floroe AS.
Regional trade
EBITDA for the first nine months of 2002 was USD 11 million compared to USD 12 million in the same period last year. EBIT for the first nine months of 2002 was USD 5 million compared to USD 6 million in the same period last year.
During the year Odfjell Asia increased its fleet by three ships to now fourteen.
Tank Terminals
EBITDA for the first nine months of 2002 was USD 27 million, similar to the first nine months of 2001. EBIT for the first nine months of 2002 was USD 16 million compared to USD 17 million during the same period last year.
The EBITDA of Odfjell Terminals (Houston) was USD 13 million compared to USD 12 million for the first nine months of 2001. Odfjell Terminals (Rotterdam) showed a reduction in EBITDA from USD 14 million for the first nine months of 2001 to USD 10 million for the first nine months of 2002. Our share of the terminal in Singapore and the two terminals in China made an EBITDA of USD 4 million.
Earlier this year Odfjell agreed with Korea Petrochemical Industry Company (KPIC) to acquire a majority portion of their chemical tank terminal under construction in Onsan, Korea. The Joint-Venture agreement with KPIC was signed October 31, 2002 and made Odfjell a 50% shareholder in what has now become Odfjell Terminals (Korea) Co .Ltd.
Tank Containers
EBITDA for the first nine months of 2002 was USD 4 million compared to USD 2 million in the first nine months of 2001. EBIT for the first nine months of 2002 was USD 1 million compared to a breakeven level in the first nine months of 2001.
Key Figures
Return on total assets was 4.9%, the return on capital employed (ROCE) was 5.5% and the return on equity was 7.8% in the first nine months of 2002. Return on the market capitalisation as per September 30, 2002 was 13.4%, caused by the share trading at a discount to book value.
Earnings per share amounted to USD 1.39 (NOK 11.40) in the first nine months of 2002 compared to USD 2.09 (NOK 18.47) in the first nine months of 2001. Cash flow per share was USD 4.23 (NOK 34.72) compared to USD 4.51 (NOK 39.88).
As per September 30, 2002 the Price/Earnings ratio (P/E) was 7.7 and the Price/Cashflow ratio was 2.5. Based on book value per share the EV/EBITDA multiple is 8.2 while, based on market value per share as 30 September 2002, the EV/EBITDA multiple is 6.7. Interest coverage ratio (EBITDA/Net interest expenses) improved to 5.7 for the first nine months of 2002 compared to 5.0 for the first nine months of 2001.
Finance
Cash and bonds as of September 30, 2002 were USD 225 million compared to USD 213 million as of December 31, 2001. Additionally, undrawn credit facilities equalled USD 38 million as per September 30, 2002 compared to USD 33 million as per year-end 2001.
Interest bearing debt decreased from USD 960 million as per yearend 2001 to USD 954 million per September 30, 2002. Net interest bearing debt was USD 729 million as per September 30, 2002. The equity ratio was 34% as per September 30, 2002 and the current ratio was 3.9.
M/T Bow Chain, delivered in June 2002, the newbuilding Kleven 144 and one of the newbuildings from Poland to be delivered in 2003 are financed under a long-term lease facility.
Shareholder Information
At the end of the first nine months of 2002 the Odfjell Ashares were trading at NOK 107, down 20.7% from NOK 135 as per December 31, 2001. The Bshares were trading at NOK 105 at the end of September 2002, a decrease of 21.6% from NOK 134 at year-end 2001. Dividend of NOK 8 per share was paid to the shareholders in May 2002.
By way of comparison, the Oslo Stock Exchange benchmark index decreased by 33.8% and the transportation index fell by 30.7% during the period. The Ashares traded between NOK 99.50 and NOK 163 during the first nine months of 2002 whilst the Bshares traded between NOK 101 and NOK 157.
The Annual General Meeting held April 29, 2002 decided a dividend of NOK 8 per share for 2001, equal to NOK 182.9 million (USD 20.3 million).
During the first nine months of 2002 we acquired 413,710 Ashares at an average price of NOK 116.65 per share and 762,600 B-shares at an average price of NOK 115.64 per share, representing 5.1% of the total shares in the company.
Since January 1, 2002 we have had a market maker agreement with Pareto Securities ASA.
Prospects
World economic growth in 2002 is still low, particularly in the OECD area. There is still uncertainty as to the length of the current downturn and its impact on the chemical tanker industry. For the fourth quarter of 2002 we expect a net result about on par with the average result for the first nine months of 2002. At this junction we expect a 2003 financial performance similar to that of 2002.
THE BOARD OF DIRECTORS OF ODFJELL ASA
Additional information about Odfjell is available at: www.odfjell.com
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