1
Q2 2013 Results
August 28, 2013
2
MATTERS DISCUSSED IN THIS DOCUMENT MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. THE PRIVATE SECURITIES LITIGATION REFORM
A...
3
Agenda
■ Second Quarter 2013 Highlights and
Transactions
■ Financial Review
■ Newbuildings
■ Market Update
■ Outlook
■ Q...
4
Highlights and Transactions
Second Quarter 2013
■ Frontline records a vessel impairment loss of
$81.3 million.
■ Redeliv...
5
Financial Highlights
Q2 - 2013 results
■ Net loss : $120.3m, equivalent to loss per share of
$1.54
■ Impairment loss of ...
6
Income Statement
Financial Review
2012 2013 CONDENSED CONSOLIDATED INCOME STATEMENTS 2013 2012
Apr-Jun Apr-Jun (in thous...
7
Income on time charter basis
Financial Review
0
20 000
40 000
60 000
80 000
100 000
120 000
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q...
8
Ship operating expenses/Off-hire
Financial Review
 Tentative drydock schedule/no. of vessels
– Q3-2013: Two Suezmax tan...
9
Balance Sheet
Financial Review
Balance sheet
(in $ million) 2013 2013 2012
Jun 30 Mar 31 Dec 31
Cash 84 109 138
Restrict...
10
Cash Cost Breakeven
Comments to B/E rates:
 Included in cash B/E rates are: BB hire, opex , interest and admin. expens...
11
Newbuilding Overview
■ Total newbuilding program as of June 30, 2013:
– Two Suezmax tankers
– Remaining installments to...
12
Frontline Fleet
Incl. vessels on commercial management & ITCL, excl. newbuildings
Total: 48
As per xx August DH: Double...
13
Frontline Fleet
Corporate Overview
DH 20 7 % 40 000 20 5 % 40 400
DH 7 9
Newbuildings 2
VLCC DH 6 50 % 6 20 %
Suezmax D...
14
Earnings & Market Factors
Q2 – Average Market earnings / Marex
■ VLCC (TD3) : $ 8,000/day (Q1-13: $1,250/day)
■ Suezmax...
15
VLCC Fleet
Market Update
Source: Fearnleys August 2013
Delivery Schedule
Fleet
Current fleet & Orderbook
Current Fleet ...
16
Suezmax Fleet
Market Update
Source: Fearnleys August 2013
Delivery Schedule
Fleet
Current fleet & Orderbook
Current Fle...
17
Rates
TC MARKET
Source: Clarksons
Market Update
NEWBUILDING
18
Outlook
General
■ Periods of increased volatility but not lasting long
enough to sufficiently increase earnings
■ Weste...
19
Questions?
Upcoming SlideShare
Loading in …5
×

Frontline Q2 2013 results presentation

658 views

Published on

Published in: Business, Economy & Finance
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
658
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Frontline Q2 2013 results presentation

  1. 1. 1 Q2 2013 Results August 28, 2013
  2. 2. 2 MATTERS DISCUSSED IN THIS DOCUMENT MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES SAFE HARBOR PROTECTIONS FOR FORWARD-LOOKING STATEMENTS IN ORDER TO ENCOURAGE COMPANIES TO PROVIDE PROSPECTIVE INFORMATION ABOUT THEIR BUSINESS. FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING PLANS, OBJECTIVES, GOALS, STRATEGIES, FUTURE EVENTS OR PERFORMANCE, AND UNDERLYING ASSUMPTIONS AND OTHER STATEMENTS, WHICH ARE OTHER THAN STATEMENTS OF HISTORICAL FACTS. FRONTLINE DESIRES TO TAKE ADVANTAGE OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND IS INCLUDING THIS CAUTIONARY STATEMENT IN CONNECTION WITH THIS SAFE HARBOR LEGISLATION. THE WORDS “BELIEVE,” “ANTICIPATE,” “INTENDS,” “ESTIMATE,” “FORECAST,” “PROJECT,” “PLAN,” “POTENTIAL,” “WILL,” “MAY,” “SHOULD,” “EXPECT” “PENDING” AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS IN THIS DOCUMENT ARE BASED UPON VARIOUS ASSUMPTIONS, MANY OF WHICH ARE BASED, IN TURN, UPON FURTHER ASSUMPTIONS, INCLUDING WITHOUT LIMITATION, MANAGEMENT'S EXAMINATION OF HISTORICAL OPERATING TRENDS, DATA CONTAINED IN FRONTLINE’S RECORDS AND OTHER DATA AVAILABLE FROM THIRD PARTIES. ALTHOUGH FRONTLINE BELIEVES THAT THESE ASSUMPTIONS WERE REASONABLE WHEN MADE, BECAUSE THESE ASSUMPTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT AND ARE BEYOND FRONTLINE’S CONTROL, YOU CANNOT BE ASSURED THAT FRONTLINE WILL ACHIEVE OR ACCOMPLISH THESE EXPECTATIONS, BELIEFS OR PROJECTIONS. FRONTLINE UNDERTAKES NO DUTY TO UPDATE ANY FORWARD-LOOKING STATEMENT TO CONFORM THE STATEMENT TO ACTUAL RESULTS OR CHANGES IN EXPECTATIONS. IMPORTANT FACTORS THAT, IN FRONTLINE’S VIEW, COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT LIMITATION: THE STRENGTH OF WORLD ECONOMIES AND CURRENCIES, GENERAL MARKET CONDITIONS, INCLUDING FLUCTUATIONS IN CHARTERHIRE RATES AND VESSEL VALUES, CHANGES IN DEMAND IN THE TANKER MARKET, INCLUDING BUT NOT LIMITED TO CHANGES IN OPEC'S PETROLEUM PRODUCTION LEVELS AND WORLD WIDE OIL CONSUMPTION AND STORAGE, CHANGES IN FRONTLINE’S OPERATING EXPENSES, INCLUDING BUNKER PRICES, DRYDOCKING AND INSURANCE COSTS, THE MARKET FOR FRONTLINE’S VESSELS, AVAILABILITY OF FINANCING AND REFINANCING, ABILITY TO COMPLY WITH COVENANTS IN SUCH FINANCING ARRANGEMENTS, FAILURE OF COUNTERPARTIES TO FULLY PERFORM THEIR CONTRACTS WITH US, CHANGES IN GOVERNMENTAL RULES AND REGULATIONS OR ACTIONS TAKEN BY REGULATORY AUTHORITIES, POTENTIAL LIABILITY FROM PENDING OR FUTURE LITIGATION, GENERAL DOMESTIC AND INTERNATIONAL POLITICAL CONDITIONS, POTENTIAL DISRUPTION OF SHIPPING ROUTES DUE TO ACCIDENTS OR POLITICAL EVENTS, VESSEL BREAKDOWNS, INSTANCES OF OFF-HIRE AND OTHER IMPORTANT FACTORS. FOR A MORE COMPLETE DISCUSSION OF THESE AND OTHER RISKS AND UNCERTAINTIES ASSOCIATED WITH FRONTLINE’S BUSINESS, PLEASE REFER TO FRONTLINE’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING, BUT NOT LIMITED TO, ITS ANNUAL REPORT ON FORM 20-F. THIS PRESENTATION IS NOT AN OFFER TO PURCHASE OR SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE OR SELL, ANY SECURITIES OF FRONTLINE. Forward looking statements
  3. 3. 3 Agenda ■ Second Quarter 2013 Highlights and Transactions ■ Financial Review ■ Newbuildings ■ Market Update ■ Outlook ■ Q & A
  4. 4. 4 Highlights and Transactions Second Quarter 2013 ■ Frontline records a vessel impairment loss of $81.3 million. ■ Redelivered the chartered-in VLCC DHT EAGLE in May. ■ At a Special General Meeting in May, our shareholders approved a decrease in the par value of our ordinary shares from $2.50 to $1.00 effective May 14, 2013. ■ Announced an at-the-market (ATM) offering in June ■ Issued 985,054 new ordinary shares in June and July under the ATM program.
  5. 5. 5 Financial Highlights Q2 - 2013 results ■ Net loss : $120.3m, equivalent to loss per share of $1.54 ■ Impairment loss of $81.3m ■ Net loss (ex impairment loss): $39m, equivalent to loss per share of $0.50 1H - 2013 results ■ Net loss : $139m, equivalent to loss per share of $1.79 ■ Net loss (ex impairment loss): $57.7m, equivalent to loss per share of $0.74 No dividend declared in Q2-2013 Share price NYSE August 27, 2013: $2.96 – Market cap: $233m Second Quarter 2013 -1.54 -0.24 -1.06 -0.21 -0.63 -0.31 0.09 -1.80 -1.60 -1.40 -1.20 -1.00 -0.80 -0.60 -0.40 -0.20 0.00 0.20 Q2 Q1 FY Q4 Q3 Q2 Q1 2013 2012 EPS ($) EPS ($) -120.3 -18.8 -82.8 -16.6 -49.0 -24.3 7.2 -140 -120 -100 -80 -60 -40 -20 0 20 40 60 Q2 Q1 FY Q4 Q3 Q2 Q1 2013 2012 Net Income/loss ex sales ($million) Sales profit/loss ($million)
  6. 6. 6 Income Statement Financial Review 2012 2013 CONDENSED CONSOLIDATED INCOME STATEMENTS 2013 2012 Apr-Jun Apr-Jun (in thousands of $) Jan-Jun Jan-Jun 163,728 121,222 Total operating revenues 247,125 312,981 5,135 521 Gain on sale of assets and amortization of deferred gains 9,732 16,085 66,263 74,236 Voyage expenses and commission 144,386 123,816 31,576 32,787 Ship operating expenses 59,664 57,304 14,839 (304) Contingent rental (income) expense (606) 26,845 10,102 203 Charter hire expenses 4,176 22,219 8,039 7,325 Administrative expenses 15,756 16,363 - 81,324 Impairment loss on vessels 81,324 - 26,679 26,227 Depreciation 52,339 53,564 157,498 221,798 Total operating expenses 357,039 300,111 11,365 (100,055) Net operating (loss) income (100,182) 28,955 30 36 Interest income 69 50 (23,688) (22,908) Interest expense (45,526) (47,713) 422 2,298 Share of results from associated companies 6,979 259 (38) (55) Foreign currency exchange (loss) gain (110) 21 (2,164) - Mark to market loss on derivatives (585) (1,206) - - Gain on redemption of debt - 4,600 301 324 Other non-operating items 606 582 (13,772) (120,360) Net loss before tax and noncontrolling interest (138,749) (14,452) (77) (94) Taxes (191) (162) (13,849) (120,454) Net loss from continuing operations (138,940) (14,614) (10,553) (481) Net loss from discontinued operations (1,030) (2,985) (24,402) (120,935) Net loss (139,970) (17,599) 56 658 Net loss attributable to noncontrolling interest 938 428 (24,346) (120,277) Net loss attributable to Frontline Ltd. (139,032) (17,171) $(0.31) $(1.54) Basic loss per share attributable to Frontline Ltd. $(1.79) $(0.22)
  7. 7. 7 Income on time charter basis Financial Review 0 20 000 40 000 60 000 80 000 100 000 120 000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 TCE VLCC ($/day) TCE SUEZMAX ($/day) $/day YTD Q2 Q1 FY Q4 Q3 Q2 Q1 VLCC Spot DH 12 900 11 200 14 600 22 400 18 500 13 300 31 500 25 400 VLCC w hole fleet 15 600 14 100 17 000 22 200 19 300 12 300 31 000 25 600 Suezmax Spot DH 14 100 13 800 14 500 15 200 14 000 10 500 16 200 19 500 OBO 13 300 - 13 300 33 600 35 100 33 700 28 100 37 800 2013 2012
  8. 8. 8 Ship operating expenses/Off-hire Financial Review  Tentative drydock schedule/no. of vessels – Q3-2013: Two Suezmax tankers  The increase in OPEX from Q1 refers mainly to more drydockings. * Includes one overlapping vessel from Q1 12 500 9 900 10 400 9 700 11 800 11 100 9 000 6 000 7 000 8 000 9 000 10 000 11 000 12 000 13 000 Q2 Q1 FY Q4 Q3 Q2 Q1 2013 2012 Total fleet opex ($/day) 4 1 10 1 4 5 0 0 2 4 6 8 10 12 Q2 Q1 FY Q4 Q3 Q2 Q1 2013 2012 Number of vessels drydocked 208 157 368 42 144 141 41 0 50 100 150 200 250 300 350 400 Q2 Q1 FY Q4 Q3 Q2 Q1 2013 2012 Off hire (days) *
  9. 9. 9 Balance Sheet Financial Review Balance sheet (in $ million) 2013 2013 2012 Jun 30 Mar 31 Dec 31 Cash 84 109 138 Restricted cash 76 71 88 Other Current assets 137 126 167 Long term assets: Vessels 1 039 1 147 1 176 Newbuildings 28 28 27 Other long term assets 105 103 93 Total assets 1 468 1 584 1 688 Current liabilities 130 124 187 Long term liabilities 1 346 1 347 1 370 Noncontrolling interest 11 11 11 Frontline Ltd. stockholders' equity -19 101 120 Total liabilities and stockholders' equity 1 468 1 584 1 688
  10. 10. 10 Cash Cost Breakeven Comments to B/E rates:  Included in cash B/E rates are: BB hire, opex , interest and admin. expenses  B/E rates exclude capex. and ITCL vessels Estimated Cash cost breakeven rates for the remainder of 2013 ($/day) VLCC 25,000 Suezmax 19,000 Financial Review
  11. 11. 11 Newbuilding Overview ■ Total newbuilding program as of June 30, 2013: – Two Suezmax tankers – Remaining installments to be paid approx. $87.9m Newbuilding
  12. 12. 12 Frontline Fleet Incl. vessels on commercial management & ITCL, excl. newbuildings Total: 48 As per xx August DH: Double Hull Corporate Overview VLCC DH 32 Suezmax DH 16
  13. 13. 13 Frontline Fleet Corporate Overview DH 20 7 % 40 000 20 5 % 40 400 DH 7 9 Newbuildings 2 VLCC DH 6 50 % 6 20 % Suezmax DH 3 100 % 3 100 % VLCC DH 6 6 Suezmax DH 6 6 Total Fleet (ex. Newbuildings) 48 50 Total Fleet (ex. Newbuildings, ITCL, Com Mgt) 27 5 % 40 000 29 3 % 40 400 Total Fleet (ex. Newbuildings, ITCL incl. Com Mgt) 39 3 % 41 2 % - The average TC coverage percentage is based on estimated total trading days 2014 No. of vessels Av. TC Coverage Av. Net TC ($/day) No. of vessels Av. TC Coverage (whole year) Av. Net TC ($/day) VLCC ITCL 2013 Com Mgt Suezmax
  14. 14. 14 Earnings & Market Factors Q2 – Average Market earnings / Marex ■ VLCC (TD3) : $ 8,000/day (Q1-13: $1,250/day) ■ Suezmax (TD5) : $11,500/day (Q1-13: $12,500/day) The Market: ■ Global refinery throughput remained low until April due to spring maintenance and seasonally low demand before increasing ■ According to IEA demand increased by 0.5 mb/d in Q2 compared to Q1 ■ Global refinery crude demand surged by 3.1 mb/d in June, its highest monthly increase on record ■ IEA expects oil demand to accelerate by 1.1 mb/d y/y in 2014 to compared to 0.9mb/d y/y increase in 2013 ■ Ten VLCC newbuilding and six Suezmax were delivered during the quarter ■ Five VLCC and no Suezmaxes were removed during the quarter ■ Increased AG activity supported VLCC freight rates during the second half of the quarter ■ Increased activity at west Africa and narrowing WTI/Brent spread supported Suezmax rates Market Update Source: MAREX, IEA, Clarksons 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 45 000 50 000 55 000 60 000 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec $/day VLCC Q2 2012 2013 Ave 2009 - 2013 0 5 000 10 000 15 000 20 000 25 000 30 000 35 000 40 000 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec $/day SUEZMAX Q1 2013 2012 Ave 2009 - 2013
  15. 15. 15 VLCC Fleet Market Update Source: Fearnleys August 2013 Delivery Schedule Fleet Current fleet & Orderbook Current Fleet 639 57 DH Fleet 624 25 SH (DS, DB, SS) Fleet 15 Estimated deliveries 2013 16 Delivered 2013 Orderbook
  16. 16. 16 Suezmax Fleet Market Update Source: Fearnleys August 2013 Delivery Schedule Fleet Current fleet & Orderbook Current Fleet 448 Orderbook 39 DH Fleet 443 Delivered 2013 18 SH (DS, DB, SS) Fleet 5 Estimated deliveries 2013 14
  17. 17. 17 Rates TC MARKET Source: Clarksons Market Update NEWBUILDING
  18. 18. 18 Outlook General ■ Periods of increased volatility but not lasting long enough to sufficiently increase earnings ■ Western VLCC demand remains disappointing making triangulation trade challenging ■ Last year with extensive newbuilding deliveries ■ No scrapping despite a low market ■ 1999 was the first year with a substantial newbuilding deliveries which means many vessels will turn 15 years in 2014 and less preferable by larger charterers – 29 VLCCS built in 1999, total 85 ships before 1999 or 13% Market Update Frontline ■ Fleet reduced to core fleet (long term leased in tonnage) ■ Will seriously consider the investment we have to make in vessels which are more than 15 years old in order to take the vessels through special survey ■ Frontline has two vessels coming up for special survey in the second part of this year ■ Continued cost cutting - Focus on speed and consumption - Keep slim management ■ Monitoring the situation and looking for opportunities to restructure the balance sheet and improve the Company’s financial position
  19. 19. 19 Questions?

×