Half-yearly report 2013
30.08.2013Shipping activities yielded NOK 18.8 million in Q2 2013, where NOK 18 million came from the ship-owning companies (equity method), compared to NOK 7.8 million during the same period in 2012, where the ship-owning companies contributed with NOK 6.3 million. The result before tax for Q2 2013 was NOK 20.6 million compared to a loss of NOK 0.7 million during the same period in 2012. Improved results comes from better earnings in the ship-owning companies, mainly on positive impairment of interest swaps, as well as unrealized losses on market value adjustment of the securities portfolio in Q2 2012. The result from the shipping activities for first half of 2013 was NOK 29.5 million compared to NOK 18.9 million in same period 2012. Freight income was higher in the first half of 2013, but was offset by the completion of the 6 scheduled classification dockings. The main part of the increase comes from the market value adjustment of interest rate swaps, as well as a positive trend in operating costs. The result before tax for first half of 2013 was NOK 44.9 million compared to NOK 16.1million for same period in 2012.
The first half of 2013 ended on a positive trend, the outlook is still good for fully refrigerated LPG carriers, and the positive trend has continued in the third quarter.
On time charter basis Solvang’s share of freight earnings for second quarter 2013 were NOK 43.8 million, in line with same period in 2012. For the first half year 2013 freight earnings was NOK 87.8 million, compared to NOK 90 million the first half year in 2012, where improved freight earnings in some segments were offset by 6 scheduled classification dockings, giving about 130 ship-days without earnings.
The Baltic Index, which climbed considerably from the first quarter, had an average of USD 60/ton for second quarter, slightly down from the USD 63/ton average in second quarter 2012. The average for first half of 2013 was USD 51/ton, down from the average of USD 54/ton for the first half of 2012.
A continued low USD/NOK exchange rate together with high bunker prices had negative impact on the results.
Contract coverage for the fully refrigerated vessels, VLGC and LGC, are 98% for 2013, with only one ship coming available towards the end of the year. For 2014 contract coverage is as of now 85%, with three ships coming available during 2014.
Ethylene tonnage operates partly in the spot market and partly in servicing contract of affreightment volumes.
VLGC 82k-84k cbm
The LPG export volume out of the Arabian Gulf is a central driver for this market, along with the increasing export out of USA. Second quarter had a significant improvement in export volumes, mainly on increased volumes from Saudi Arabia, as well as start-up after maintenance shutdown in Qatar. This resulted in tight market balance, pushing the rates higher and has stayed high well into third quarter. The quarter ended with a Baltic Index average of USD 60/ton, the equivalent of USD 1050K per month in timecharter. The first half year of 2013, with an average of USD 51/ton, is the equivalent of USD 750K per month, waiting time excluded.
Panamax VLGC 75k cbm
LGC 60k cbm
The Solvang group’s security portfolio has a book value of NOK 17.8 mill as per 30.06.2013. Solvang is responsible for the management of the portfolio, with a conservative investment strategy. The security portfolio only had a minor negative market value adjustment of NOK -0.8 mill for end of second quarter 2013.
After the balance sheet date, Solvang terminated the joint venture agreement with Evergas for Evergas Solvang KS and operation of ethylene tonnage.
The reason for the dissolution is that a deadlock had occurred under the terms of the joint venture agreement, and the parties were unable to resolve the deadlock. Solvang therefore requested that the joint venture was dissolved. The parties agreed to continue as is until December 31, 2013 in order to fulfil all contractual obligations. Solvang will market and operate the ethylene tonnage through its subsidiary IGC.
Transactions with related parties are as per the guidelines set within the code. The Group's principal broker for sale & purchase is Inge Steensland AS. There are also parallel investments done with other companies within Steensland group. All transactions are done at market terms.
The Solvang Group has completed five scheduled classification docking in second quarter 2013. In 2013 there are 10 ships due for classification dockings.
Stavanger, 30 August 2013
Making Heavy Fuel Oil Clean
Exhaust gas recirculation (EGR) combined with previous measures reduces NOx emissions from heavy fuel oil by up to 80 % in a typical LPG tanker. The concept is a potential game changer for Norwegian domestic shipping.
The greenest and most fuel efficient VLGC ever
Solvang’s new-builds (84k cbm) at Hyundai Heavy Industries are two of the most fuel efficient LPG carriers ever built, in addition they are some of the world’s largest ships for transporting liquefied petroleum gas.