From the first to the second quarter, the market for chemical tankers improved with freight rates expressed in USD per day increasing by 6.5%. Both quarters were negatively impacted by high bunker costs which were about USD 14 mill. higher than first half 1999. Mainly due to a strong USD, operating cost on a comparable fleet basis was about 10% lower than the average for 1999.
Odfjell Terminals (Baytank) had a positive result of USD 3.6 mill. (USD 4.3 mill.). Our 50% share of Hoyer-Odfjell realized a loss of USD 0.8 mill. (loss of USD 0.3 mill.). Since inception the tank container business has grown from operating about 2,300 to about 4,700 units in 18 months.
General and Administrative costs were on par with the corresponding period in 1999. Increase in depreciation cost was primarily caused by delivery of new vessels. Increased net financial cost was caused by a higher level of net debt, and by higher interest rates.
With consolidated reports in USD the accounts are now less influenced by currency fluctuations. The average NOK/USD exchange rate was 8.49 (7.72). Net currency gain amounted to USD 2 mill. (loss of USD 1 mill.).
LIQUIDITY AND FINANCING
Group liquid assets as of 30 June 2000 amounted to USD 217 mill. compared to USD 218 mill. as of 31 December 1999.
Long-term finance to cover 65% of Seachem investments as well as remaining two newbuildings at Kleven Florø has been arranged at satisfactory terms.
SHAREHOLDER INFORMATION
During the first six months of the year the price of the Odfjell A-share rose by 10%, from NOK 100 to NOK 110. The B-share increased from NOK 95 to NOK 105, an increase of 11%. The Oslo Stock Exchange shipping index fell by 1%.
Earnings per share for the first six months of the year were negative USD 0.37 (positive USD 0.69) and, cash flow per share was positive USD 0.98 (USD 1.94).
Though our stock repurchase program we have so far this year acquired 274,000 A-shares at an average price of NOK 126.30 per share and 641,600 B-shares at an average price of NOK 117.85 per share, at a total cost of NOK 110.2 mill., and now holds about 3.4% of total issued shares in the company.
UPDATE MAJOR TRANSACTIONS
Seachem
The agreement relating to the merger with Seachem was approved by the Odfjell General Assembly on 26 May 2000. The transaction is in the process of being implemented. In the second quarter 3,517,627 shares were issued at NOK 208 per share, equalling NOK 731.7 mill. in new equity, and the two first Seachem vessels were taken over. As of today NOK 1,001.9 mill. out of a total of NOK 1,024.8 mill. in new equity
has been received as against our issuing 4,817,022 shares. Eight vessels have so far been delivered, and the one remaining vessel will be delivered in the third quarter. The benefits of the Seachem transaction will start to be visible from the third quarter onwards.
Botlek Tank Terminal (BTT)
The shares in the terminal were taken over 19 June 2000 with financial effect from 1 February 2000. Consequently, the positive result from February to June 2000 has been applied towards reducing the investment amount. The investment in the terminal has consequently been reduced to about USD 66 mill. The name of the terminal has been changed to Odfjell Terminals (Rotterdam) B.V.
BTT is the largest product tank terminal in the Antwerp-Rotterdam-Amsterdam area, and the single largest such terminal in Europe. Rotterdam is the main transition and gateway port of the European petrochemical industry with world markets, and one of our main ports. BTT has about 300 storage tanks totalling 1,520,000 cbm. capacity, of which 700,000 cbm. is storage for chemicals and 820,000 cbm. is storage of mineral products. The terminal has also a distillation plant as well as a water treatment plant.
The BTT acquisition further emphasises our increased focus on integrated transportation solutions.
FLEET DEVELOPMENT
On 21 January 2000, we took delivery of M/T “BOW CENTURY” from Kleven Florø.
In the period June to mid August 2000 eight of the nine Seachem vessels have been transferred to our ownership. The 11 Seachem vessels to be time-chartered have all been delivered on a pool basis.
As previously advised and as part of the increased internationalisation of our business we have transferred 10 of our vessel to our subsidiary in Singapore.
PROSPECTS
The chemical tanker market improved in the second quarter partly due to improvements in the product tanker market. We expect the market to continue to strengthen during the balance of the year.
For next year we will see reduced growth in supply of new tonnage and, with the current healthy world economy the market is expected to improve further. Through the merger with Seachem and the acquisition of BTT the company has significantly strengthened its position as a total logistics service provider.
Bergen, 16 August 2000
The Board of Directors of Odfjell ASA
Odfjell is the leading player in the global market of transporting chemicals and related logistical services. After the merger with Seachem the fleet totals 90 vessels, trading both globally and regionally, of which 49 are owned by the group. Odfjell Tankers AS changed its name to Odfjell Seachem AS with effect from 22 June 2000. Odfjell additionally owns and operates tank terminals and tank containers. Priority has been given to further developing the company's integrated logistical services, both globally and regionally.
