The Board of Directors of Frontline Ltd. have today reviewed and approved the Company's results for the third quarter of 1998.
Frontline has in the third quarter recorded the highest quarterly operating profit before depreciation ever achieved by the Company. The result is positively influenced by the increase of the fleet with an additional three units. Compared to the second quarter the third quarter showed a decrease in the daily TCE rates achieved. The competitive cost profile of the Company has been further improved, while the financing cost has increased as a function of increased borrowing related to the new vessels.
THIRD QUARTER AND NINE MONTH RESULTS
Frontline reports net income of $8.3 million for the third quarter of 1998, compared with $6.2 million for the third quarter of 1997. Earnings per share for the quarter were $0.18, (1997 -$0.18). The weighted average number of shares outstanding for the quarter and at September 30, 1998 was 46,106,860 (as at September 30, 1997 44,612,537 and for the quarter then ended - 34,822,037)
Earnings before interest, tax, depreciation, and amortisation for the quarter, including earnings from associated companies were $36.7 million, compared with $30.6 million for the comparable period. This increase reflects the increased size of the fleet, which helped to offset reductions in the TCEs earned across the fleet. The average daily TCEs earned by the VLCCs, Suezmax tankers, and OBO carriers were $34,200, $22,200 and $18,600, respectively, compared with $37,300, $23,300 and $27,000 in the third quarter of 1997. No vessels were drydocked in either period.
Average daily operating costs have continued to decrease across the fleet in the third quarter as further benefits of the cost reduction program are realised. Depreciation has decreased, both for the quarter and nine-month period, due to the change in the depreciation schedule for the fleet from 20 to 25 years.
Net other expenses for the quarter were $13.9 million (1997 - $9.3 million) which reflects the increased net debt primarily associated with the fleet expansion.
Net income for the nine months ended September 30, 1998 increased to $32.2 million from $8.2 million in the first nine months of 1997. Earnings per share for the period were $0.70, (1997 -$0.25) and the weighted average number of shares outstanding was 46,106,688 (1997 - 33,048,649).
For the first nine months of 1998, earnings before interest, tax, depreciation and amortisation, including earnings from associated companies were $104.3 million, compared with $79.2 million for the comparable period. The increase in earnings is attributable to the expanded fleet and improved trading results in the VLCC and Suezmax sectors. The average daily TCEs earned by the VLCCs, Suezmax tankers, and OBO carriers were $33,600, $24,300 and $23,200 compared with $29,300, $23,300 and $25,800. In addition, administrative expenses were reduced, the first nine months of 1997 were adversely affected by a non-recurring charge of $3.5 million incurred in connection with the change of domicile.
If the majority holding position in ICB had been consolidated into Frontline's accounts on an equity accounting basis, it would have increased EBITDA to approximately $134 million.
Net other expenses for the nine months were $34.3 million (1997 - $27.5 million). This increase reflects the increased level of debt as discussed above, offset by the ICB dividend received in the second quarter of 1998.