Frontline 2012 profit rises in Q2.

Commodity shipping firm Frontline 2012 posted a strong improvement in profit in the quarter ended 30 June 2013 due largely to gains from cancelled VLCC newbuilding contracts.

The John Fredriksen spin-off company recorded second quarter net profit of $37.9m compared to $6m in the same quarter of last year.


Revenue during the quarter was registered at $31m, down from $40.8m in the previous corresponding period.


Frontline 2012 received $94m in April in connection with the cancellation of its second newbuilding contract at China-based Jinhaiwan shipyard and recorded a gain of $30.3m, significantly boosting its bottomline.


In August, Frontline 2012 received $50.6m after it cancelled its third newbuilding contract at Jinhaiwan and expects to record a gain of approximately $27m in the third quarter. It also cancelled the fourth of its five VLCC newbuilding contracts at the Chinese yard due to excessive delay compared to the contractual delivery date.


“The company has cancelled four of the five newbuilding contracts at Jinhaiwan shipyard and has received a total refund of $144.6m, where $44.9m has been used to repay debt and $99.7m is cash to the company,” Frontline 2012 said.


Frontline 2012 operates a fleet consisting of six VLCCs and four suezmax tankers, and owns 61 newbuilding contracts, of which 30 are capesize bulkers. The majority of the new ships will be delivered in 2014 and 2015.


Looking ahead, Frontline 2012 is exploring alternatives to streamline the activities by breaking the company up in several new companies.


“This can include a dry bulk company, an LPG company and a crude/product company. One of the current ideas is to establish a low-levered, high-yielding dry bulk vehicle. The low ordering prices create a unique opportunity for such a vehicle,” Frontline 2012 said.

By Lee Hong Liang from  Singapore.

Source: www.seatrade-global.com

 

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