RSS Reports

9 month report 2008

Thu, 23 Oct 2008 15:01:00 GMT

President's View

Our business activities during the third quarter were stable and generated a profit and cash flow somewhat better than planned.

The operating result was SEK 22.6 million. This was our best quarter since the first quarter of 2005. Cash flow (EBITDA) after nine months is SEK 2.78 per share.
All the vessels in our fleet are signed to fixed time charter contracts and we have financing on favourable terms for the remainder of the newbuilding program. We thus have a stable platform and resources for new investments. This is especially important in these times of financial instability and nervousness in the financial markets.

The state of the financial market has now resulted in downward price adjustments for, in principle, all forms of financial investments. This also applies to our holdings, which are calculated at their market value on each accounting date and the effect included in the income statement.

At the end of the quarter, the value of our shareholding in Arlington Tankers had fallen about 25% compared with the beginning of the year and has since fallen a further 30%. This change in value is recorded directly to equity.

As mentioned in the previous interim report, the board of Arlington Tankers has proposed a merger with the US shipping company General Maritime. The companies have not yet made a final detailed proposal public. Shareholder meetings, which will vote on the proposal, will be held at the beginning of December at the earliest. We are continuing our evaluation of the proposed deal.

Even if the tanker markets so far do not seem to have been affected to any appreciable extent by the crisis in the financial markets, a general downturn in the so-called real economy will, of course, also affect this market in the form of lower demand.
A concrete example of the direct impact on shipping is that many shipping companies do not have the financing in place for their newbuilding orders and the lack of a functioning loan market could then result in difficulties in taking delivery of the vessels from the shipyards. This could provide business opportunities.

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6 Month Report 2008

Wed, 13 Aug 2008 08:15:00 GMT

President's View

With the first half of 2008 now behind us, I note that our business activities have by and large proceeded according to plan. Our product tanker fleet has generated revenues somewhat over expectations, despite at times a very weak freightmarket, thanks to our fixed contracts with guaranteed minimum freight rates. Operationally, our product tankers have also performed well.

Our net financial result continues to be positive. Financial investments have generated the return anticipated and, thanks to our conservative investment policy, the nervous financial markets have had a negligible impact on their value. Interest expenses continue to be low.

Our cash flow and result met expectations and the forecast for the full year remains unchanged, SEK 70 million. However, crew costs as well as operating and maintenance costs are a growing challenge. Costs in the first and second quarters were more or less at the same level, but salaries, spare parts and equipment are exposed to inflationary pressure. It is worth noting that Concordia Maritime is not affected by the high oil prices in the form of increased fuel costs. In time-charter contracts, it is customary that customers pay these costs.

3 Month Report 2008

Thu, 24 Apr 2008 14:00:00 GMT

President's View

During the period, the company’s activities proceeded smoothly and in line with expectations. All the vessels are signed to time charter contracts. These contracts generated higher revenues than in the open market for the third consecutive quarter. The product tanker segment generated an EBITDA*) of USD 7.0 (5.2) million in the first quarter.

The product tanker market continues to be weak, primarily due to a surplus of tonnage. The product tanker fleet is expected to continue to increase in size during the rest of 2008 as well as in 2009 and this will probably continue to exert downward pressure on freight rates. This market scenario has been anticipated by the company and was one of the main reasons for the company signing long-term contracts at an early stage.

The company’s large-tanker segment is proceeding according to plan and the vessels are performing well. As is the case in the product tanker segment, these vessels are signed to time-charter contracts. In the first quarter, the large-tanker segment generated an EBITDA of USD -0.4 (-2.8) million.

Final Accounts 2007

Tue, 19 Feb 2008 15:00:00 GMT

President’s views

The construction of the new fleet of P-MAX tankers proceeded fully according to plan in 2007. The P-MAX tanker Stena Perros, which is no. 6 in the series of ten vessels, was delivered at the beginning of December and directly entered its 5-year charter with TOTAL. The tanker was delivered two months earlier than originally planned.

Both shipbuilding prices and second-hand prices of product tanker tonnage continue to be high. The market value of the existing fleet is currently estimated by us to exceed its book value by at least USD 125 million.

The management and operation of the P-MAX tankers functioned smoothly during the year and generated a cash flow of USD 23.1.

It is worth pointing out that all of the company’s delivered vessels are signed to charters with a guaranteed minimum income. Some of the charters include profit-sharing clauses. Despite a weak market in the fourth quarter, with only minimum income related to profit sharing, an EBITDA 1 of USD 5.3 million was generated in the segment.

The weakening market in the fourth quarter shows little sign of improvement and the average freight rates in 2008 are expected to be below the rates in 2007.

In 2008, Concordia Maritime expects to generate an EBITDA *) of approx. USD 26 million for all the company's activities and a ewsult before tax of approx. USD 11 million.

9 Month Report 2007

Fri, 19 Oct 2007 15:00:00 GMT

President’s views

During the third quarter, business activities proceeded according to plan. A total of USD 4.8 million EBITDA was generated during the third quarter with a total of USD 12.1 million EBITDA accumulated so far in 2007.

The P-MAX tanker Stena President, which is no. 5 in the series, was delivered at the end of September and entered her 10-year time charter with Argo Shipping. The next newbuilding is the Stena Perros, which is expected to be delivered in December, about two months earlier than originally planned.

We will thus begin 2008 with a fleet of six P-MAX tankers in service, all with employment secured in the form of long-term charters. These vessels, together with other activities, are expected to generate, as mentioned before, an EBITDA of USD 30-38 million.

During the third quarter, the tanker markets were very weak, in fact lower than they have been for several years. Although a seasonal downturn had been anticipated, it was larger than we have seen in previous years and so far, there has been no upswing to speak of prior to the winter season. However, the market is expected to firm during the remainder of the year and this forms the basis of our forecast of SEK 65 million. It is important to point out that Concordia Maritime is only affected to a small extent by a weak market since all its vessels are signed to long-term charters with fixed income. The result is affected to some extent by the market levels since some of the charters include profit-sharing clauses, i.e. in a strong market, a portion of the income over and above the base freight rate accrue to us.

6 Month Report 2007

Tue, 14 Aug 2007 09:00:00 GMT

President's views

The product tanker market was strong throughout the first half of 2007. For Concordia Maritime, this means that the product tanker segment generated a strong cash flow, which exceeded expectations. The demand for crude oil and refined products has remained at a high level throughout the world. Low petrol stocks in the US and the subsequent need for imports have, for example, resulted in at times very high freight rates for transatlantic voyages.

The market seems to be absorbing the large number of new vessels delivered. Both shipbuilding prices and prices on the second-hand market for tankers continue to be high. This means that the value of the vessels in our newbuilding series so far delivered, four P-MAX tankers and a 50% share of two Panamax tankers, exceeds their book value by a healthy margin.

Despite the healthy figures reported for the product tanker segment, we have lowered our full-year forecast from SEK 80 million to SEK 65 million, primarily as a result of the costs in conjunction with the repairs made to the large tanker Stena Vision. This vessel re-entered service on 24 June and is functioning well. The repairs required were both complex and time-consuming.

Another P-MAX tanker has been chartered to the French oil and energy company TOTAL. The vessel, the Stena Progress, is number 7 in the series and will be delivered from the shipyard at the end of 2009. The charter runs for five years, until the end of 2014. At the same time, the charters for the sister ships Stena Paris and Stena Provence were each extended for a further two years. This agreement and the cash flows it will generate will create the conditions for additional investments and expansion.

The first P-MAX tanker was delivered in December, 2005, and in the relatively short time since then, this ship design has proved to be very successful in the market and on different trades. TOTAL has now time-chartered four vessels in the series. We are proud of this collaboration and regard it as proof of the strength of the max concept in general and the P-MAX design in particular.

Together with Stena, we are working on additional projects within the framework of the max concept; these include the so-called B-MAX tanker. This vessel will be optimised for service in the Baltic Sea. A B-MAX tanker will be able to transport as much cargo as two standard tankers today. This is good, not only in terms of transport economy but also from the perspective of safety. Traffic intensity and crowded shipping lanes mean that the potential risks are greater than the amount of oil transported in each individual tanker. Moreover, since the B-MAX tanker would be built completely in accordance with the max concept, i.e. double safety, double steering gear, double main engines, etc., it will be very suitable for operation in these waters.

To summarise – the large tanker Stena Vision has re-entered service. The product tanker segment, with the P-MAX tankers, is performing well and the value of our assets is good.

Until we can present new investments, existing profitable contracts and good cash flows will ensure the continued stable development of the company.

3 Month Report 2007

Thu, 26 Apr 2007 14:00:00 GMT

President's views

A strong product tanker market in the first quarter, particularly in the case of transatlantic traffic, made its mark on the result for our product tankers, which generated an EBITDA of SEK 40 million (corresponding to USD 5.7 million). In January and February, respectively, we took delivery of the Panamax tankers Stena Poseidon and Palva, which have now entered their 10-year charter with Neste Oil.

Both newbuilding prices and the prices of second-hand tonnage are stable. Based on prices at present, the market value of our existing vessels is about 50% higher than their book value.

In the large tanker segment, the dispute between Concordia Maritime and Halliburton group concerning the sale of a vessel in 2000 has been settled following an agreement between the two parties. According to the terms of the agreement, neither party will appeal the decision of the court last year. The agreement regulates the settlement of legal expenses and interest payments. In the settlement, our share of the legal expenses was larger than had been assumed in the annual accounts for 2006.

Repairs of the Stena Vision’s reduction gear have been delayed. This is due to the lengthy and complex manufacturing process as regards the replacement parts required. The vessel should be fully operational by the end of May.

All in all, as a result of the two items mentioned above, SEK 17.6 million has been charged to the large tanker segment. However, the good result generated by the product tankers means that our forecast for 2007 of a result before tax of sek 80 million still stands.

Final Accounts 2006

Thu, 15 Feb 2007 14:00:00 GMT

President's view

Summary of 2006
In 2006, the company’s business activities developed well. Four P-MAX tankers have now been delivered. These vessels have exceeded our customers’ expectations. During the year, we placed an order for a further four vessels of this type. This means that the P-MAX fleet consists of ten vessels — four delivered and six on order.

With the signing of an additional charter agreement with TOTAL at the beginning of the year, six of the P-MAX vessels will have employment fixed for five years or more following their delivery. TOTAL’s decision to charter a third P-MAX tanker is particularly encouraging in view of the fact that these vessels were developed in close cooperation with the company.

In May, the reduction gear on the chartered VLCC Stena Vision broke down. The costs amounting to approx. SEK 10 million, mainly in the form of deductibles, have been charged to the profit as Concordia Maritime has an undertaking relating to the operation of the vessel entered into in conjunction with its sale to Arlington Tankers in 2004. It is anticipated that it will be some months before the vessel is once more deployed in regular traffic.

The dispute between Concordia Maritime and Halliburton originating from the sale of a vessel in 2000 has now finally been settled. The court’s decision meant that the buyers was granted 1/3 of the original claime. Since previously made reservations does not cover the full amount payable the operating result is charged with an additional SEK 30 million. At the time of writing, it has not been decided whether or not an appeal will be lodged.

Accordingly, approx. SEK 92 million of the profit for the year of SEK 52.5 million before tax was generated by our new tonnage together with financial income. Items of a non-recurring nature amounting to approx. SEK 40 million have been included in the VLCC operating segment.

Events in 2007
The Panamax tanker Stena Poseidon, built in a joint venture with Neste Shipping, was delivered on 17 January, 2007 and simultaneously entered into her ten year charter.

The future
The P-MAX tankers delivered so far generated an EBITDA (earnings before interest, tax, depreciation and amortisation) of about USD 15 million during the year. A further two P-MAX vessels will be delivered at the end of 2007/beginning of 2008.

9 Month Report 2006

Thu, 19 Oct 2006 14:00:00 GMT

Summary of business activities

Product tankers
During the year, the sister ships Stena Paris and Stena Provence have been in service with the French oil and energy company TOTAL. Both tankers are chartered to TOTAL for five years.

Following her delivery, the Stena Primorsk entered a 10-year charter with the Russian company Argo Shipping Ltd*.

The Stena Performance entered a 5-year charter with the US oil company Hess Corporation after delivery.

At the end of the third quarter, Concordia Maritime ordered a further two tankers in the P-MAX series for delivery in 2010. A total of ten P-MAX tankers have now been ordered, including four this year. So far, these four vessels have not been chartered.

The product tanker segment also includes the two icestrengthened Panamax tankers, which have been ordered in a joint venture with Neste Shipping. These vessels will be chartered to Neste Oil for ten years.

The newbuilding projects are proceeding according to plan. Delivery of the first Panamax tanker, the Stena Poseidon is planned for the last quarter of 2006.

Large tankers/VLCC

Concordia Maritime has time-chartered the two V-MAX VLCCs Stena Vision and Stena Victory from Arlington Tankers Ltd. since November, 2004. The charters expire at the end of 2009 after which the company has options on three 1-year extensions.

These two vessels have been on charter to the US oil company Sunoco since 2001. During the second quarter, 2-year time charter contracts were signed for the two V-MAX tankers with Litasco, a subsidiary of the Russian oil company Lukoil. The vessels will enter the new charters when their current charters with the US oil company Sunoco expire at the end of 2007. This means that Concordia Maritime has secured employment for the two V-MAX tankers until the end of 2009 when the time charter with Arlington Tankers expires.

Work on repairing the Stena Vision's reduction gear is progressing. During the third quarter, the vessel was employed as floating oil storage facility as well as undertaking a short voyage. Costs relating to the reduction gear were charged to the second quarter result.

The result for the segment increased approx. SEK 2 million as a result of insurance indemnity relating to minor engine damage in 2005.

As a result of the sale in 2004 of the V-MAX tankers to Arlington Tankers, Concordia Maritime has an undertaking relating to the operation of these vessels. The provisions made for this undertaking did not cover the actual costs during the period, largely as a result of the reduction gear damage and dry-dockings during the second quarter.

6 Month Report 2006

Thu, 10 Aug 2006 14:00:00 GMT

Summary of business activities

Product tankers
During the year, Stena Paris and Stena Provence, have been employed by the French oil and energy company TOTAL. Both vessels are signed to TOTAL on 5-year time charters.

In mid-May, Concordia Maritime took delivery of the third P-MAX tanker, Stena Primorsk. The vessel is on a 10-year time charter to the Russian logistics company Progetra. Read more about Stena Primorsk and her naming ceremony in Stockholm here.

The fourth P-MAX tanker, Stena Performance, was delivered at the end of June and has been chartered for five years to the US oil company Amerada Hess Corporation.

The product tanker segment also includes the two ice-strengthened Panamax tankers, which have been ordered in a joint venture with Neste Shipping. These vessels have been chartered to Neste Oil for ten years.

The newbuilding projects are proceeding according to plan. Delivery of the first Panamax tanker, Stena Poseidon, is planned for the last quarter of 2006.

Large tankers/VLCC
Since november 2004 Concordia Maritime has time-chartered from Arlington Tankers LTD the two V-MAX VLCCs Stena Vision and Stena Victory. The charters expire at the end of 2009 after which the company has options on three 1-year extensions. These two vessels have been on charter to the US oil company Sunoco since 2001.

During the second quarter, two-year time charter contracts and one-year option were signed for the two V-MAX tankers with Litasco, a subsidiary of the Russian oil company Lukoil. The vessels will enter the new charters when their current charters with Sunoco expires at the end of 2007. This means that Concordia Maritime has secured employment for the two V-MAX tankers until the end of 2009 when the time charter with Arlington Tankers LTD expires.

In conjunction with the scheduled dry-docking of Stena Vision, the tanker’s reduction gear was found to be damaged. Repairs, including the manufacture of new parts, will take several months. During this period, Stena Vision will not be sailing for Sunoco. During the second quarter, the vessel was unemployed for 28 days, 13 of which were covered by insurance. At present, the vessel is employed as a floating oil storage facility in the Arabian Gulf while awaiting the delivery of necessary engine parts. The result of the segment has been affected negative by approximately MSEK -10 in regards to loss of hire, deductibles and reparation costs.

The sister vessel Stena Victory was also dry-docked according to plan during the period.

As a result of the sale in 2004 of the V-MAX tankers to Arlington Tankers, Concordia Maritime has an undertaking relating to the daily operation of these vessels. The provisions made for this undertaking did not cover the actual costs and affected the result with approximately SEK -2 million.