Odfjell Reports Net Result Boost in Third Quarter
Odfjell's third quarter 2008 net result was US $41 million, compared to US $23 million the same period last year. Following a strengthening of the US$ versus the NOK, the third quarter 2008 result included unrealized currency gains, however, of US $13 million, primarily related to the Norwegian retroactive tax burden. The first nine months 2008 consolidated net result after tax was US $82 million, compared to US $124 million first nine months 2007.
Earnings before interest, taxes, depreciation and amortization (EBITDA) first nine months 2008 were US $234 million, compared to US $252 million first nine months last year. The operating result (EBIT) was US $134 million first nine months 2008, compared to US $178 million the same period last year.
Operating expenses as well as general and administrative expenses so far were higher than in 2007, partly because of general price increases and the weak US$ earlier in the year. Net financial expenses first nine months 2008 were US $50 million, compared to US $45 million first nine months 2007. The increase is caused by higher net debt due to investments.
The average US$/NOK exchange rate first nine months 2008 was 5.27, compared to 6.00 last year. Against the NOK the US$ strengthened from 5.40 at year-end 2007 to 5.80 at September 30, 2008. Taxes first nine months 2008 were US $2 million compared to US $9 million first nine months 2007.
EBITDA first nine months 2008 for this segment was US $163 million, compared to US $198 million in 2007. The operating result (EBIT) was US $82 million first nine months 2008, compared to US $139 million last year. Time-charter result expressed in US$ per day decreased by about 5% first nine months 2008, compared to the same period last year, but increased this quarter by 10% compared to the previous quarter. The average cost
of bunkers third quarter 2008 was US $519 per ton (including compensation related to bunker escalation clauses), compared to US $486 per ton second quarter. Daily operating expenses on a comparable fleet basis were 8.6% higher first nine months 2008 than the full year 2007 figure.
The 33,000 dwt Japanese built stainless steel newbuilding, M/T Bow Sagami, was delivered to us on long-term timecharter in October 2008. Currently Odfjell has a newbuilding program of nine ships, including two ships on long term timecharter with purchase options. In September the parcel tanker M/T Bow Bahia (5,870 dwt/built
1996) was delivered to its new owners. The sale was part of a two-ship sale, which included the sistership M/T Multitank Bolognia, owned by our partner Ahrenkiel. The sale of the M/T Bow Bahia gave Odfjell a capital gain of about US $3 million.
Both ships were operating in our inter-European trade, as part of a fleet of nine tankers managed by Odfjell Ahrenkiel in Hamburg. The two ships that were sold will be replaced by 9,000 dwt stainless steel newbuildings on order with Chuan Dong Shipyard, China.
As reported earlier this year, Odfjell cancelled newbuilding contracts for up to twelve 45,000 dwt coated parcel tankers in Russia. The corresponding yard instalments have been refunded. Yard supervision and other owner's expenses in an amount of about USD 7 million is outstanding and still in the balance sheet. This amount forms part of our claim against the state owned yard (Sevmash) to compensate us for all costs and losses, on account of wilful misconduct, as well as massive yard contract breaches. Arbitration has been
initiated in Sweden, as provided for in the contract.
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