Shipping News - Frontline & Cosco
Published February 21, 2006
Frontline Q4 profit dives as shipping rates slide
(SINGAPORE) Frontline Ltd, the world's second-largest oil-tanker company, said fourth-quarter profit fell the most since 2002 and cut its dividend as an expansion in the global fleet reduced shipping rates.
Frontline's tanker: The next few months are going to be even more challenging
Net income declined 73 per cent to US$133.8 million from US$498.2 million a year earlier, Frontline said in a statement. It was the biggest drop since Q3 2002.
Sales slipped 34 per cent to US$430.4 million. The quarterly dividend was cut to US$1.50 a share, from US$3.50.
Frontline, led by Norwegian billionaire John Fredriksen, accepted lower freight rates as tanker supplies grew faster than oil output.
The shipowner runs most vessels on single-voyage contracts for companies such as Exxon Mobil Corp and BP Plc, making it more sensitive to rate changes than rivals.
'Frontline did pretty well considering the weakness in the tanker market,' said Bjorn Knutsen, an analyst at First Securities ASA in Oslo.
'The next few months are going to be even more challenging because of the seasonal downturn in oil demand as well as geopolitical risks.'
The world fleet of supertankers grew 5 per cent by capacity last year, cutting revenue for transporting oil from the Middle East to Asia by 52 per cent. 'We are very optimistic for rates in 2006 and they maybe close to or even better than in 2005,' Oscar Spieler, Frontline's CEO.
Frontline was expected to report profit of US$130 million, according to the median estimate in a Bloomberg News survey of seven analysts.
The global fleet of very large crude carriers, or VLCCs, totalled 474 tankers of 138.3 million deadweight tons at the end of last year, up 5 per cent by capacity from a year ago, according to London-based shipbroker Simpson, Spence & Young. Revenue for VLCCs operated by companies like Frontline averaged US$84,567 a day in the fourth quarter, compared with US$174,933 a year earlier, according to London-based Drewry Shipping Consultants Ltd.
The figure is for transporting crude from the Middle East to Japan, after shipowners have paid costs like fuel and port fees.
Daily output by the 11 members of the Opec averaged 30.1 million barrels of oil in Q4, according to Bloomberg data.
Frontline operates 42 VLCCs, each able to carry 2 million barrels of oil, and 35 suezmax tankers that can haul one million barrels each. Most of the ships are leased from Ship Finance International Inc, which Frontline spun off as a separate company in 2004.
Income from Frontline's VLCCs fell 41 per cent to US$65,800 a day in Q4, after deducting voyage-related costs. Such vessels need US$28,149 a day to break even.
Q4 net income was 81 per cent higher than the US$73.8 million earned in Q3.
Full-year profit totalled US$606.8 million, down from a record US$1 billion in 2004.
'The board expects to deliver strong results for Q1 as well as strong results and solid dividend payments for the full year,' the company said in the statement. 'The tanker market looks healthy.'
Frontline is diversifying from the tanker market to gain from demand for oil rigs and storage platforms. It will convert at least six of its suezmaxes into vessels that carry rigs and other offshore structures. Two vessels are scheduled for conversion by year-end. - Bloomberg
Published February 21, 2006
Cosco Container seeks US$466m loan for vessels
(HONG KONG/SINGAPORE) Cosco Container Lines Co Ltd, the biggest container shipping company in China, is seeking US$466 million to buy eight vessels, a banker who is involved in the deal said.
Bank of China Ltd, BNP Paribas SA, Bank of Tokyo-Mitsubishi UFJ Ltd, ING Groep NV and Societe Generale SA are arranging the 10-year loan, which will be secured by the ships, said the banker.
The arrangers are asking banks to help underwrite US$386 million of the loan on which Cosco Container will pay interest of 51.5 basis points, or 0.515 percentage point, over the London interbank offered rate.
Banks will be offered all-in pricing including fees of 55.3 basis points, the banker said. The remaining US$80 million will be provided by ING and Societe Generale. Banks are asked to respond with their commitments by March 16.
Shanghai-based Cosco Container owns more than 100 container ships with a total capacity of 250,000 20-foot standard containers, according to its website. The company is boosting its fleet even as container rates are estimated to drop by 6 per cent this year as an increase in shipping capacity outpaces demand, according to Drewry Shipping Consultants Ltd of London.
Cosco Container obtained a US$212 million loan in March last year with an interest margin of 60 basis points, according to data compiled by Bloomberg.
Three-month dollar Libor, an average of rates which is set daily by banks and used as a borrowing benchmark, is 4.77 per cent.
The company is planning a US$1 billion initial public offering of shares in Hong Kong this year. It has hired HSBC Holdings Plc and UBS AG to arrange the sale. - Bloomberg
Frontline Q4 profit dives as shipping rates slide
(SINGAPORE) Frontline Ltd, the world's second-largest oil-tanker company, said fourth-quarter profit fell the most since 2002 and cut its dividend as an expansion in the global fleet reduced shipping rates.
Frontline's tanker: The next few months are going to be even more challenging
Net income declined 73 per cent to US$133.8 million from US$498.2 million a year earlier, Frontline said in a statement. It was the biggest drop since Q3 2002.
Sales slipped 34 per cent to US$430.4 million. The quarterly dividend was cut to US$1.50 a share, from US$3.50.
Frontline, led by Norwegian billionaire John Fredriksen, accepted lower freight rates as tanker supplies grew faster than oil output.
The shipowner runs most vessels on single-voyage contracts for companies such as Exxon Mobil Corp and BP Plc, making it more sensitive to rate changes than rivals.
'Frontline did pretty well considering the weakness in the tanker market,' said Bjorn Knutsen, an analyst at First Securities ASA in Oslo.
'The next few months are going to be even more challenging because of the seasonal downturn in oil demand as well as geopolitical risks.'
The world fleet of supertankers grew 5 per cent by capacity last year, cutting revenue for transporting oil from the Middle East to Asia by 52 per cent. 'We are very optimistic for rates in 2006 and they maybe close to or even better than in 2005,' Oscar Spieler, Frontline's CEO.
Frontline was expected to report profit of US$130 million, according to the median estimate in a Bloomberg News survey of seven analysts.
The global fleet of very large crude carriers, or VLCCs, totalled 474 tankers of 138.3 million deadweight tons at the end of last year, up 5 per cent by capacity from a year ago, according to London-based shipbroker Simpson, Spence & Young. Revenue for VLCCs operated by companies like Frontline averaged US$84,567 a day in the fourth quarter, compared with US$174,933 a year earlier, according to London-based Drewry Shipping Consultants Ltd.
The figure is for transporting crude from the Middle East to Japan, after shipowners have paid costs like fuel and port fees.
Daily output by the 11 members of the Opec averaged 30.1 million barrels of oil in Q4, according to Bloomberg data.
Frontline operates 42 VLCCs, each able to carry 2 million barrels of oil, and 35 suezmax tankers that can haul one million barrels each. Most of the ships are leased from Ship Finance International Inc, which Frontline spun off as a separate company in 2004.
Income from Frontline's VLCCs fell 41 per cent to US$65,800 a day in Q4, after deducting voyage-related costs. Such vessels need US$28,149 a day to break even.
Q4 net income was 81 per cent higher than the US$73.8 million earned in Q3.
Full-year profit totalled US$606.8 million, down from a record US$1 billion in 2004.
'The board expects to deliver strong results for Q1 as well as strong results and solid dividend payments for the full year,' the company said in the statement. 'The tanker market looks healthy.'
Frontline is diversifying from the tanker market to gain from demand for oil rigs and storage platforms. It will convert at least six of its suezmaxes into vessels that carry rigs and other offshore structures. Two vessels are scheduled for conversion by year-end. - Bloomberg
Published February 21, 2006
Cosco Container seeks US$466m loan for vessels
(HONG KONG/SINGAPORE) Cosco Container Lines Co Ltd, the biggest container shipping company in China, is seeking US$466 million to buy eight vessels, a banker who is involved in the deal said.
Bank of China Ltd, BNP Paribas SA, Bank of Tokyo-Mitsubishi UFJ Ltd, ING Groep NV and Societe Generale SA are arranging the 10-year loan, which will be secured by the ships, said the banker.
The arrangers are asking banks to help underwrite US$386 million of the loan on which Cosco Container will pay interest of 51.5 basis points, or 0.515 percentage point, over the London interbank offered rate.
Banks will be offered all-in pricing including fees of 55.3 basis points, the banker said. The remaining US$80 million will be provided by ING and Societe Generale. Banks are asked to respond with their commitments by March 16.
Shanghai-based Cosco Container owns more than 100 container ships with a total capacity of 250,000 20-foot standard containers, according to its website. The company is boosting its fleet even as container rates are estimated to drop by 6 per cent this year as an increase in shipping capacity outpaces demand, according to Drewry Shipping Consultants Ltd of London.
Cosco Container obtained a US$212 million loan in March last year with an interest margin of 60 basis points, according to data compiled by Bloomberg.
Three-month dollar Libor, an average of rates which is set daily by banks and used as a borrowing benchmark, is 4.77 per cent.
The company is planning a US$1 billion initial public offering of shares in Hong Kong this year. It has hired HSBC Holdings Plc and UBS AG to arrange the sale. - Bloomberg
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