Solstad reports highest ever level of freight incomeNews // November 15, 2005
Solstad Offshore in Norway says freight income for the third quarter was the highest in the company’s history.
Total operating revenue for the quarter was NKr 356 million (NKr 218 million in 2004).
Cash flow from operations for the quarter was NKr 217 million (NKr 117 million in 2004).
As of 30th September 2005 the result before tax was NKr 318 million (including profit on sales of NKr 80 million) compared to NKr 43 million for the same period last year.
Operating revenue for the third quarter of 2005 was NKr 355.7 million which is NKr 138 million higher than last year. Total operating income for the first three quarters was NKr 1,033.6 million (including profit on sales of NKr 80 million) which is NKr 379.8 million higher than the previous year.
The increase in freight income alone accounted for 57 per cent of this increase and was mainly due to a significantly improved spot market during the first three quarters of 2005 compared with the same period in 2004.
The group’s fleet capacity has increased by approximately 12 per cent during this period. During the first three quarters the cash flow from operations (EBITDA) was NKr 527.2 million (excluding profit on sales and shares in associated/joint venture companies). Cash flow for the same period last year was NKr 271.4 million. EBITDA for the third quarter alone was NKr 217.2 million (NKr 117.4 million).
Following the gradually strengthening of the Dollar and the periodical strengthening of the Pound during the first nine months of the year, an unrealised currency loss of NKr 40.6 million was booked due to the adjustment of the group’s long-term liabilities in foreign currency. Furthermore, NKr 1.5 million was posted in realised currency gain tied to the increased value of the group’s currency deposits. After posting a currency loss of NKr 39 million (NKr 31 million), the group’s result before tax as was NKr 318 million (NKr 45.9 million).
The group’s net interest-bearing debt at the end of the third quarter of 2005 was NKr 2,856 million, an increase of NKr 125 million for this period. The increase in net-interest bearing debt is mainly due to the financing of the new build, Normand Aurora, which was delivered in September.
The group’s fleet has contract coverage of around 60 per cent for the remainder of 2005 based on the number of days and the contract coverage including options, is around 74 per cent. In 2006 contract coverage is currently around 42 per cent and 57 per cent respectively.
"The high activity in the petroleum related operations offshore as seen from earlier this year has continued also through third quarter of 2005. Driven by a stable and higher oil price, the increase in 2005 has been most noticeable within exploration and development. Together this has resulted in high levels of enquiries after vessels in all segments and satisfactory income levels. This implies that the market has been able to absorb the new builds that has entered the market during the last year," said Solstad.
"The market is expected to remain tight, though with potential volatility throughout the winter months in the North Sea. The company’s long-term, positive expectations of increased activity in the offshore industry are unchanged. The most important factor is the assumption that the oil price will remain at a high level. Expectations are particularly high regarding deep water projects (exploration and development) and maintenance of existing installations.