Frontline reports net income of $98.8 million and earnings per share of $1.32 for the third quarter of 2006.
Frontline reports nine month results of $381.4 million and earnings per share of $5.10.
Frontline announces a cash dividend of $2.50 per share.
Third Quarter and Nine Months Results
The Board of Frontline Ltd. (the "Company" or "Frontline") announces net income of $98.8 million for the third quarter of 2006, equivalent to earnings per share of $1.32. Operating income for the quarter was $184.7 million compared to $144.9 million in the second quarter. This reflects the strengthening of the market in the third quarter. The average daily time charter equivalents ("TCEs") earned in the spot and period market by the Company's VLCCs, Suezmax tankers and Suezmax OBO carriers were $59,800, $40,000 and $30,800 respectively compared with $50,600, $30,600 and $30,100 respectively in the second quarter. The income shows a continued differential in earnings between single and double hull tonnage particularly in the Suezmax segment. It also reflects the drydocking of seven vessels in the quarter creating approximately 311 days in lost income. The operating cost continued at above normal level linked to the fact that the drydocking were expensed in the quarter.
Interest income was $11.0 million in the quarter, of which $6.2 million relates to restricted deposits held by subsidiaries reported in Independent Tankers Corporation ("ITC"). The Company recorded interest expense of $50.2 million in the third quarter of which $15.0 million relates to ITC.
The total for other financial items in the third quarter was a loss of $10.1 million compared to a gain of $3.7 million in the second quarter. Valuation losses of $16.4 million were recorded in interest rate swaps, all of which relates to Ship Finance International Limited ("Ship Finance"), in the third quarter compared to gains of $2.9 million in the second quarter. As at September 30, 2006, the Company had interest rate swaps with a total notional principal of $740.4 million, all of which relates to Ship Finance. The valuation of freight future agreements to market value has resulted in a loss of $2.0 million compared to a loss of $5.2 million in the second quarter.
During the third quarter, the Company sold its entire holding in General Maritime Corporation ("Genmar") for a net gain of $9.8 million.
Frontline announces net income of $381.4 million for the nine months ended September 30, 2006, equivalent to earnings per share of $5.10. The average TCEs earned in the spot and period market by the Company's VLCCs, Suezmax tankers, and Suezmax OBO carriers for the nine month period ended September 30, 2006 were $61,200, $40,100 and $30,900, respectively.
As at September 30, 2006, the Company had total cash and cash equivalents of $715.3 million which includes $31.6 million in Ship Finance and $604.5 million of restricted cash. Restricted cash includes $314.5 million relating to deposits in ITC and $274.4 million in Frontline Shipping Limited and Frontline Shipping II Limited.
The payment of a dividend in excess of the net income result, is mainly compensated by the sale of assets completed in the fourth quarter.
As of November 2006, the Company has cash breakeven rates on a TCE basis for VLCCs and Suezmaxes of $29,966 and $22,600 respectively.