OSLO, Norway, August 15, 2003 (PRIMEZONE) -- Odfjell (Other OTC:ODJLY):
* Net result after tax for the first half 2003 nearly doubled compared to the same period last year
* Time-charter earnings stable compared to preceding quarters
* High bunker cost
* Strong results from tank terminal activities
* Continued low interest rates
* Positive contribution from currency hedging
* Joint-venture with Ahrenkiel for inter European trade
Results
Odfjell's consolidated net result after tax was USD 41 million for the first half 2003 compared to USD 22 million in the same period in 2002. The freight levels remained stable during the first and second quarter 2003, but voyage costs were higher than in the same period last year due to high bunker cost. Earnings before interest, taxes, depreciation and amortisation (EBITDA) for the first half 2003 were USD 81 million slightly up from USD 79 million for the first half 2002. Operating result (EBIT) was USD 36 million in the first half 2003, compared to USD 37 million in the same period in 2002.
Operating expenses as well as general and administrative expenses were higher than in the same period in 2002, mainly due to a weaker USD, extraordinary legal costs of USD 2.6 million and the incorporation of our 50% share of the new tank terminal in Korea. As from first quarter 2003 we have reclassified certain items from cost reduction to revenue. The accounts for previous periods have been adjusted accordingly. The effect of this change has increased Revenue and General & Administration Expenses by USD 1.9 million in the first half of 2002.
Net interest expenses for the first half 2003 were USD 11 million compared to USD 14 million in the first half 2002, a reduction due to lower interest rates. The average USD/NOK exchange rate for the first half 2003 was 7.03 compared to 8.57 for the same period in 2002. The USD/NOK rate strengthened from 6.96 at year-end 2002 to 7.22 at 30 June 2003. Compared to 2002, the weaker average USD positively impacted our currency hedging portfolio, but increased our non-USD costs expressed in USD. The currency gain in the period was USD 13 million compared to USD 4 million the same period last year. Net taxes contributed positively by USD 2 million in the first half of 2003 due to reversal of currency gains on net USD-debt in the NOK-accounts caused by a stronger USD since year-end, and a restructuring of internal ownership of ships in the second quarter.
The second quarter 2003 net result of USD 23 million compares with a net result of USD 16 million in the second quarter 2002 and USD 18 million in the preceding quarter in 2003.
Business segments
Global trade
EBITDA for the first half 2003 was USD 49 million compared to USD 52 million the same period 2002. Operating profit (EBIT) was USD 19 million in the first half 2003 compared to USD 22 million in the first half 2002. Higher bunker cost lead to time-charter income expressed in USD per day being about 4% lower in the first half 2003 compared to the first half of 2002. The average price of bunkers in the first half 2003 was USD 153 per ton (incl. bunker clause compensations), compared to USD 125 per ton the same period the previous year. Operating expenses on a comparable fleet basis were 7% higher in the first half 2003 than in 2002, primarily caused by a weaker USD.
On 1 August 2003, we took delivery of the 39.900 dwt. newbuilding M/T Bow Sun from Stocznia Szczecinska Nowa, in Poland. Bow Sun is the first ship in a series of six to eight newbuildings from the Polish yard.
Regional trade
EBITDA for the first half 2003 was USD 7 million, the same as in the comparable period last year. EBIT for the first half 2003 was USD 3 million, also at the same level as the first half 2002.
Odfjell has signed a letter of intent with Christian F. Ahrenkiel GmbH & Co. KG of Hamburg, Germany, to establish a 50/50 joint-venture for marketing and operation of chemical tankers in inter European trade. The plan is for the joint-venture to become operational by year-end 2003.
Tank terminals
EBITDA for the first half 2003 was USD 22 million, an improvement from USD 18 million in the same period last year. EBIT for the first half 2003 was USD 13 million up from USD 10 million in the first half 2002.
The EBITDA of Odfjell Terminals (Houston) was USD 9 million for the first half 2003, in line with the same period in 2002. Odfjell Terminals (Rotterdam) showed an EBITDA of USD 10 million for the first half 2003 compared to USD 6 million in the same period in 2002. Our share of the terminals in Ulsan, Korea, in Singapore and the two terminals in China made an EBITDA of USD 3 million.
Tank containers
EBITDA for the first half 2003 was USD 3 million compared to USD 2 million for the same period last year. EBIT for the first half 2003 was USD 2 million compared to USD 1 million in the first half in 2002.
In line with industry practice the depreciation period for tank containers has been changed from 12 to 20 years as from 2003. This has a positive effect on the net result of USD 0.7 million for the first half 2003.
Key figures
Return on equity was 14.6%, return on total assets was 6.7% and return on capital employed (ROCE) was 5.8% in the first half 2003. Return on market capitalisation as per 30 June 2003 was 19.5%, caused by the share trading at a discount to book value.
Earnings per share amounted to USD 1.88 (NOK 13.19) in the first half 2003 compared to USD 0.94 (NOK 8.07) in the first half 2002. Cash flow per share was USD 3.93 (NOK 27.59) compared to USD 2.79 (NOK 23.93).
As per 30 June 2003 the Price/Earnings ratio (P/E) was 5.1 and the Price/Cash flow ratio was 2.5. Based on book value per share the Enterprise Value (EV)/EBITDA multiple is 7.8 while, based on market value per share as per 30 June 2003, the EV/EBITDA multiple is 6.8. Interest coverage ratio (EBITDA/Net interest expenses) improved in the first half 2003 to 7.4 compared to 5.4 the first half 2002.
Finance
Cash and bonds as of 30 June 2003 were reduced to USD 188 million compared to USD 230 million as of 31 December 2002. This as a consequence of repayment of debt during the first half 2003 of USD 107 million, payment of dividend of USD 24 million as well as investments in new buildings. In the second quarter 2003 new loans of USD 46 million were drawn. Interest bearing debt was reduced from USD 957 million as per year-end 2002 to USD 900 million per 30 June 2003. Net interest bearing debt was USD 712 million as per 30 June 2003. The equity ratio strengthened to 37% as per 30 June 2003 and the current ratio was 2.4.
Shareholder information
At 30 June 2003 the Odfjell A-shares were trading at NOK 139 (USD 19.3) up 26.4% from NOK 110 (USD 15.8) year-end 2002. The B-shares were trading at NOK 140 (USD 19.4) at 30 June 2003, up 27.3% from NOK 110 (USD 15.8) year-end 2002. By way of comparison, the Oslo Stock Exchange benchmark index rose 16.5% and the transportation index improved by 34.5% during the period. The A-shares traded between NOK 102 (USD 19.4) and NOK 144 (USD 19.9) during the period whilst the corresponding figures for the B-shares were NOK 102 (USD 19.4) and NOK 140 (USD 19.4).
The Annual General Meeting held 5 May 2003 decided a dividend of NOK 8 per share for 2002, equal to NOK 173.5 million (USD 23.8 million). The dividend was paid to the shareholders 20 May 2003.
Investigations by Competition Authorities
The Chemical Tanker Industry, including Odfjell, is still under investigation by the EU Commission and the US Department of Justice into possible breaches of relevant competition regulations. It is anticipated that this matter will still be ongoing for quite some time before any final conclusions are reached. We are fully cooperating with the authorities and are also conducting an internal investigation into the matter. Whilst the outcome of these investigations is pending the Board, in keeping with our corporate governance, has put in place a special Committee headed up by the Chairman. Any breaches of antitrust regulations in the EU and/or the US may lead to substantial penalties as well as potential civil lawsuits. Various lawsuits have been filed against Odfjell in the US. Applications have been made to the courts in the US to extend these lawsuits to "class actions" against Odfjell, Stolt-Nielsen, Tokyo Marine and JO Tankers.
Prospects
World economic growth is still low, particularly in the OECD area. There is still uncertainty as to the future development of the world economy and its impact on the chemical tanker industry. For the remaining half of 2003 we expect a result before extraordinary items and taxes in line with the result for the first half 2003.
Bergen, 15 August 2003
THE BOARD OF DIRECTORS
OF ODFJELL ASA http://reports.huginonline.com/913878/121613.pdf
Contact person: Espen Bjelland, Vice President IR, ph. +47 5527 4479 or +47 900 15570.
Additional information about Odfjell is available at: www.odfjell.com