Frontline Ltd. - Preliminary Fourth Quarter and Financial Year 2009 Results
26-02-2010
Highlights
• Frontline reports net income attributable to the Company of $3.9 million and earnings per share of $0.05 for the fourth quarter of 2009.
• Frontline reports net income attributable to the Company of $102.7 million and earnings per share of $1.32 for the year ended December 31, 2009.
• Frontline announces a cash dividend of $0.25 per share for the fourth quarter of 2009.
• Frontline has paid cash dividends of $70.1 million or $0.90 per share in 2009.
• The first Suezmax newbuilding from Rongsheng, Northia, was delivered on January 5, 2010.
• Four out of the five Suezmax tankers chartered in from Eiger were redelivered during the fourth quarter. The last vessel will be redelivered end February 2010.
• Frontline purchased the VLCC Front Vista in February 2010 and sold it to a buyer who has secured a 10 year time charter with a state owned oil company at a gross rate of $43,500 per day during the entire charter period. The purchase price will be settled through instalments over a 10 year period.
Frontline agreed with Ship Finance in February 2010 to reduce the restricted cash supporting the charter obligations to Ship Finance by approximately $112 million and replace it with a Frontline guarantee for the payment of charter hire. Further, the parties have agreed a net upfront payment of charter hire less operating expenses of approximately $74 million, covering part of the payments due over the next six months. This solution will reduce Frontline's cash breakeven level for these vessels and improve Frontline's free cash balance by approximately $112 million during this period and will thereby substantially strengthen the Company's liquidity situation. The change of structure is expected to take effect from April 1, 2010.
Preliminary Fourth Quarter and Financial Year 2009 Results
The Board of Frontline Ltd. (the "Company" or "Frontline") announces net income attributable to the Company of $3.9 million for the fourth quarter of 2009, equivalent to earnings per share of $0.05 compared with a net loss attributable to the Company of $5.6 million for the third quarter of 2009, equivalent to loss per share of $0.07. The net loss attributable to the Company in the third quarter includes a gain of $3.1 million on the termination of the long term lease for the VLCC Front Duchess.
The reported earnings reflect a stronger spot market compared to the third quarter of 2009. The average daily time charter equivalents ("TCEs") earned in the spot and period market in the fourth quarter by the Company's VLCCs, Suezmax tankers and Suezmax OBO carriers were $33,200, $21,300 and $42,800, respectively, compared with $32,100, $15,900 and $42,200, respectively, in the third quarter. The spot earnings for the Company's double hull VLCCs and Suezmax tankers were $30,400 and $18,300 in the fourth quarter, compared to $26,800 and $12,800 in the third quarter. The Gemini Suezmax pool had spot earnings of $20,300 per day in the fourth quarter, compared to $14,866 per day in the third quarter.
Profit share expense of $5.7 million has been recorded in the fourth quarter as a result of the profit sharing agreement with Ship Finance International Limited ("Ship Finance") compared to $4.8 million in the third quarter. The total profit share expense to Ship Finance for 2009, which will be paid in the first quarter of 2010, was $33.0 million.
Ship operating expenses increased by $1.8 million compared to the third quarter due to an increase in dry docking costs of $2.9 million, which was partially offset by a small reduction in running costs.
Charterhire expenses decreased by $3.3 million in the fourth quarter compared with the third quarter due to the redelivery of four out of the five Suezmax tankers chartered in from Eiger during the fourth quarter.
Interest income was $5.7 million in the fourth quarter, of which $5.3 million relates to restricted deposits held by subsidiaries reported in Independent Tankers Corporation Limited ("ITCL"). Interest expense, net of capitalized interest, was $40.5 million in the fourth quarter of which $10.5 million relates to ITCL.
Frontline announces net income attributable to the Company of $102.7 million for the year ended December 31, 2009, equivalent to earnings per share of $1.32. The average TCEs earned in the spot and period market by the Company's VLCCs, Suezmax tankers, and Suezmax OBO carriers for the year ended December 31, 2009 were $38,300, $25,300 and $43,000, respectively, compared with $74,500, $55,200 and $43,500 for the year ended December 31, 2008.
As of December 31, 2009, the Company had total cash and cash equivalents of $582.6 million, which includes $500.0 million of restricted cash. Restricted cash includes $314.9 million relating to deposits in ITCL and $184.3 million in Frontline, which is restricted under the charter agreements with Ship Finance.
As of February 2010, the Company has average total cash cost breakeven rates on a TCE basis for VLCCs and Suezmax tankers of approximately $30,800 and $25,500, respectively.
Corporate
On February 25, 2010, the Board declared a dividend of $0.25 per share. The record date for the dividend is March 9, 2010, ex dividend date is March 5, 2010 and the dividend will be paid on or about March 30, 2010.
The full report is available in www.frontline.bm.
Frontline Ltd.