Some highlights
- As expected, NORDEN generated solid operating earnings of USD 50 million in a weak market in the first quarter of 2012 against USD 62 million in the fourth quarter of 2011 and USD 48 million in the first quarter of 2011. This performance was a result of high coverage in Dry Cargo at levels significantly above the market and earnings in Tankers on par with the budget rates for 2012.
- In the first quarter, operating earnings (EBITDA) in the Dry Cargo Department were USD 40 million while operating earnings in Tankers were USD 12 million. Adjusted for non-recurring income, earnings in Tankers and Dry Cargo are up USD 7.5 million and USD 4.5 million, respectively, in the first quarter of the year compared to the same period last year.
- Cash flows from operations were USD 40 million in the first quarter of 2012.
- The operating profit (EBIT) before write-downs was USD 25 million (USD 30 million) in the first quarter, which was in line with expectations.
- The market values of vessels have dropped significantly during the quarter, and as a result, broker valuations of the Company's vessels were USD 361 million below the carrying amounts and costs of newbuildings at the end of March against USD 217 million at the beginning of the year. The Company has performed an impairment test and has concluded that there is a need for write-downs totalling USD 300 million. The write-downs do not affect operating earnings, cash flows or loan agreements, and NORDEN still holds a very strong financial position with an equity ratio of 85% and cash and securities of USD 450 million.
- As a consequence of declining vessel prices, total theoretical Net Asset Value (NAV) decreased to DKK 237 per share against DKK 258 at the beginning of the year. Total theoretical NAV is now on par with equity per share after write-downs.
- Coverage in Dry Cargo remains high at 81% for the rest of 2012, whereas the Tanker Department is positioned for increasing freight rates with only 20% coverage for the rest of 2012.
- NORDEN maintains its expectations for an EBITDA of USD 110-150 million. As a result of the write-down of vessels, depreciation for the year is reduced, and the expectations for EBIT before write-downs are therefore increased to USD 20-60 million.
President and CEO Carsten Mortensen says:
"We can only be pleased with the fact that NORDEN had a good start to 2012 and is improving operating earnings and cash flows in very difficult markets. We maintain our expectations for full-year operating earnings (EBITDA) of USD 110-150 million and have furthermore written down the fleet to carrying amounts, which are more in line with the estimated values. This is a natural step in light of the squeezed markets and decreasing vessel prices and reflects that NORDEN contracted vessels also in the high markets in 2007-08. On the other hand, the current low vessel prices create special opportunities for a financially strong shipping company such as NORDEN."
