Nov. 9, 2009 (Hugin AS) --
3rd Quarter 2009 Results: http://hugin.info/201/R/1353507/327857.pdf
Hamilton, Bermuda, November 9, 2009
Introduction and Overview
On or about December 4th NAT will pay a dividend for the 49th
consecutive quarter since the first three vessels were delivered to
the Company in the autumn of 1997 when the Company commenced
operations. Since then a total of $39.89 per share has been paid in
dividend.
We believe that some salient points of this report are as follows:
* The 3rd quarter was down with a corresponding low dividend of
$0.10 per share because of a low freight market.
* There are signs of a positive development in the world economy
and the freight market for the 4th quarter has started on a
positive note compared with 3rd quarter.
* We announced yesterday our agreement to acquire vessel no. 18 -
which will increase the dividend capacity of the Company.
The low spot rates for suezmax tankers during 3Q09 resulted in a
lower dividend payment than in the 2Q09. In this environment, with a
spot market fleet, except for one vessel, the Company can be expected
to reap the benefits of a potential upswing in the tanker market more
or less immediately. The Imarex rates, giving an indication of the
level of the tanker market, were on average $13,000 per day during
3Q09. The Imarex rate for suezmaxes at the time of this report is
$17,846 per day. The average Imarex projected rates for November and
December are about $20,000 per day. It is indicated that the world
economy, as expressed by the GNP development, has bottomed out which
is positive for the tanker business. The Board is optimistic for the
future of the Company and the announcement to acquire vessel no. 18
is a confirmation of this view.
During 2009 NAT has acquired three vessels, and has entered into an
agreement to acquire the fourth, increasing the trading fleet by one
third - from 12 to 16 vessels - since the beginning of the year. The
acquisitions are accretive, increasing the dividend potential of the
Company. The acquisitions have improved our position relative to
competitors which have a tough time in coping with the consequences
of the international financial crisis. We have two newbuildings
coming next year, bringing the trading fleet to 18 vessels. We do
not plan to go to the market to raise capital for the vessels we now
have, the one to be delivered to us by end February 2010 and the two
newbuildings. From the end of 2008 and until August 2010 - a period
of 20 months - the total fleet will have grown from 12 to 18 vessels,
thereby increasing the dividend and earnings potential by 50%.
A full dividend payout policy and a strong balance sheet are central
components of the consistent and transparent strategy of NAT. As in
the past, in order to create value for shareholders, the fleet must
grow faster than the share count over time.
Typically, our dividend follows the level of the spot suezmax tanker
freight market. That is why our dividend is lower in 3Q09 than in
2Q09. However, our policy of paying dividends from operating cash
flow remains the same. Generally, when rates in the suezmax freight
market increase, our dividend can be expected to increase. Therefore,
the Company has the full upside associated with a market improvement.
Going forward, we expect that spot suezmax freight rates may
fluctuate in an unpredictable manner.
The present instability in the financial markets and the lower
freight markets are posing serious issues for debt laden shipping
companies. Some of them have suspended dividends or changed their
dividend policy and they have had to negotiate new terms with the
banks. NAT is staying its course in this environment - having no net
debt. We go forward with a view to retaining what we consider the
exceptionally strong financial situation of the Company - both in
absolute and relative terms - as we believe that is in the best
interests of our shareholders.
Our primary objective is to maximize total return[1] to our
shareholders, including maximizing our quarterly cash dividend.
The Company does not engage in any type of derivatives.
Other Highlights:
* Net income for 3Q09 was -$0.28 per share based on the weighted
average number of shares outstanding during the quarter of
42,204,904, compared to $0.00 per share for 2Q09. Net result from
ongoing operations was -$0.26 per share. To put this into
perspective, due to lower freight markets at the time, net income
was also below zero in 3Q07.
* In 3Q09 total off-hire (out of service) for the Company's fleet
was about 40 days of which planned off-hire was about 15 days.
There are no scheduled dry-dockings for any of the Company's
vessels until 2010 when one vessel is scheduled for dry-docking.
* In early October, the Company announced that it had agreed to
acquire a 2002-built double hull suezmax tanker. We expect to
take delivery of this vessel, to be named the Nordic Mistral, by
mid-November 2009. The Company announced yesterday that it has
agreed to acquire an additional 2002 built double hull suezmax
vessel which is expected to be delivered to us by the end of
February 2010. The two newbuildings of the Company are expected
to be delivered in May and August 2010, bringing the trading
fleet to 18 vessels.
Financial Information:
The Board has declared a dividend of $0.10 per share in respect of
3Q09. A dividend of $0.50 per share was declared for 2Q09. The amount
of dividends per share is above all a reflection of the level of the
spot tanker market during the relevant quarter and the number of
shares outstanding. The number of shares outstanding for the third
quarter of 2009 was 42,204,904 - the same number as of the date of
this release.
Net income for 3Q09 was -$11.8m, or -$0.28 per share (EPS) compared
to net income of -$0.1m, or $0.00 per share for 2Q09. One-time
charges and non-cash general and administrative items for 3Q09 equal
$0.02 and $0.03 per share, respectively. Therefore, result from
ongoing operations was -$0.26 per share.
