FAR - Results 3Q 2006

Wednesday, 08. November 2006 14:56



Farstad Shipping achieved an operating income of NOK 536.8 million
for the 3rd quarter. Compared with the 2nd quarter this year this
represent an increase of NOK 99.2 million due to a combination of a
very good market, increased number of vessels in the fleet and
favourable exchange rate development. The operating profit (EBIT) was
NOK 226.6 million. The profit after taxes was NOK 186.2 million.

Results for the 3rd quarter 2006
Farstad Shipping achieved an operating income of NOK 536.8 million
for the 3rd quarter (NOK 526.8 million inclusive profit from sale of
vessels of NOK 97.5 million in the 3rd quarter 2005). The operating
costs for the period were NOK 237.7 million (NOK 208.8 million).

The operating profit (EBIT) was NOK 226.6 million (NOK 244.7 million
inclusive sales profit) after depreciation of NOK 72.6 million (NOK
73.2 million). Net finance was negative NOK 36.8 million (negative
NOK 17.8 million). Currency gain of NOK 33.1 million is booked (NOK
43.0 million). Further an unrealized currency loss of NOK 33.5
million (loss of NOK 31.9 million) is booked due to the adjustment of
the company's long-term liabilities in foreign currency. The profit
after taxes was NOK 186.2 million (NOK 224.8 million inclusive sales
profit). The Group's cash flow*) for the period is NOK 295.9 million
compared to NOK 332.0 million inclusive sales profit for the same
period in 2005.

Results as per 30.09.2006
The operating income at 30.09 was NOK 1,391.4 million (NOK 1,334.3
million inclusive sales profit of 97.5 million). The operating costs
were NOK 689.9 million (NOK 639.6 million) and ordinary depreciations
NOK 209.1 million (NOK 211.6. million). The operating profit (EBIT)
was NOK 492.5 million (NOK 483.1 million inclusive sales profit of
97.5 million).

Net finance was negative NOK 74.0 million (negative NOK 134.6
million) following an unrealized currency gain of NOK 6.1 million
(loss NOK 208.3 million). A realized currency gain of NOK 22.6
million is booked during this year (NOK 163.2 million). The profit
after taxes was NOK 399.6 million (NOK 347.1 million). The Group's
cash flow*) for the period is NOK 621.4 million, compared to NOK
768.4 million inclusive sales profit for the same period in 2005.

*) Pre-tax profit + depreciation and deferred maintenance + change on
revaluation of long-term liabilities in foreign currency.

Financing and capital structure
In the balance sheet at 30.09.06, interest-bearing mortgage debt and
leasing liabilities together total NOK 4,049.7 million (NOK 3,842.1
million at 30.09.05). Of the company's debt 34.9% is in USD, 11.4% in
GBP, 48.9% in NOK, 2.0% in AUD and 2.8% in EUR. Interest-bearing
current assets at 30.09.06 were NOK 1,040.4 million (NOK 936.1
million).

The Group's booked equity at 30.09.06 was NOK 3,342.6 million (NOK
2,925.7 million) corresponding to NOK 85.71 (NOK 75.01) per share.
Equity ratio was 43.1% (41.0%).

Farstad Shipping obtains valuations of the fleet twice each year, as
at 30.06 and 31.12. Therefore no estimates are obtained at 30.09.06.
Based on the valuation of the vessels (charter-free) from 3
independent brokers in July, the value-adjusted equity capital per
share before tax was calculated at NOK 141.08. This gives a value
adjusted equity ratio of 55.5%.

The quarterly report has been prepared in accordance with today's
International Financial Reporting Standards (IFRS) and
interpretations, and the IAS 34 standard for quarterly reporting. The
accounting principles used are in accordance with principles used in
the last annual report.

The Fleet
AHTS Far Stream was delivered from Simek AS in the middle of July.
The vessel has since then traded the spot market in the North Sea.
AHTS Bos Turmalina (Farstad owns 50%) was delivered from the yard in
Brazil at the end of July and immediately started its 8 year
contract with Petrobras. Of the remaining fleet AHTS Far Scout has
been the only vessel without firm contract this period, and has been
able to gain from a record high spot market in the North Sea. At the
end of the quarter the company's fleet consisted of 47 vessels and 10
vessels under construction. An agreement was signed in October to
sell 2 older AHTS vessels for delivery in the first quarter 2007. A
contract was also signed for the building of 4 large AHTS for
delivery in 2009 and 2010.

The Market
The market for the supply vessel fleet is now very good. The rate
level has improved in all markets both for the AHTS and PSV. In the
North Sea there has been close to full utilization during the quarter
resulting in a record high rate level. The increased activity level
in the North Sea this year has particularly been important to
maintain the market balance and a high rate level for the PSV fleet.
There are presently approx. 20 more PSV vessels operating in the
North Sea compared with the same period last year. We are expecting a
correction in the market for PSV vessels as a consequence of the
large number of vessels still under construction (approx. 110 vessels
with DWT greater than 2000 DWT). The rate level for the AHTS fleet is
expected to be good also in the near future. However, if the number
of newbuilds continue to rise this might result in a temporary
unbalance in the market.

High oil prices, the oil companies increased focus on exploration and
the contracting of new rigs are positive for the demand of supply
vessels.

The contract coverage for the Farstad-fleet in 2007 is approx. 66%.


Shareholder matters
The company's share has during the quarter been traded between NOK
116.00 and NOK 133.50 and was NOK 117.50 at the end of the quarter.
The share price at 30.09.06 values the company to approx. NOK 4.6
billion. The number of shareholders is approx. 1,400. Foreign
shareholders own approx. 17% of the shares.


The Board of Directors


Contacts:
CEO Karl-Johan Bakken - tel. 90 10 56 97
CFO Torstein L. Stavseng - tel. 91 10 70 01



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Author:
Hugin
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