Belships

Quarterly Report • Nov 14, 2024

Belships ASA: Report 3rd quarter 2024

Belships ASA: Report 3rd quarter 2024

SOLID RESULT AND DIVIDEND AMIDST INCREASED MARKET UNCERTAINTY

HIGHLIGHTS

* EBITDA of USD 27.0m including USD 1.5m from Norwegian Bulk Carriers

* Net result of USD 19.3m

* Declared dividend of NOK 0.50 per share, in addition to the extraordinary

dividend of NOK 1.00 per share paid in October

* Sold two debt-free Supramax vessels (2016-built) for a total of USD 56.6m

with a book gain of USD 6.5m

* First newbuilding BELGRACE was delivered in September and entered a contract

of about 18 months at USD 16 500 gross per day

* TCE of USD 16 724 gross per day for owned fleet

* 80 per cent of ship days in Q4 2024 are fixed at USD 16 200 gross per day

* 37 per cent of ship days in the next four quarters are fixed at USD 16 200

gross per day

* Cash breakeven for 2024 of about USD 10 900 per day per vessel

* Uniform fleet of 42x Ultramax vessels including 12x newbuildings

Subsequent events

Belships has expanded its newbuilding program with one new 64 000 dwt Ultramax

bulk carrier which will be delivered during the second half of 2027. The vessel

is leased on similar terms as other lease agreements previously announced, and

Belships is not required to make any down payments for this vessel.

USD 8.3m of bank debt has been voluntarily repaid in November, reducing

outstanding bank debt to USD 81.0m. After this, no instalments are due before

Financial results commentary

Belships reports a net result of USD 19.3m compared to USD 18.9m in the previous

quarter. The result in both quarters included extraordinary book gains of about

USD 6m, which relates to the sale of BELTIDE and BELFRIEND in this quarter and

the reorganisation of the operating business in the previous quarter.

Time charter equivalent earnings (TCE) in the quarter were USD 16 724 gross per

vessel per day. In comparison, the comparable Baltic Exchange index for Ultramax

vessels (BSI-63) averaged USD

16 591 gross per day.

Ship operating expenses amounted to USD 5 514 per vessel per day compared to USD

5 391 per vessel per day year-to-date. The increase in operating expenses is

primarily due to a higher number of crew changes in the quarter.

Transactions

BELFRIEND (2016) and BELTIDE (2016) were delivered to their new owners in July

and August. A gain of USD 6.5m has been realised. After these sales Belships'

fleet consists solely of modern Ultramax bulk carriers.

Following the reorganisation of our operating business, USD 10m cash as part

consideration was received in July. A further cash consideration of USD 4m will

be received within Q2 2025.

Fleet status

One vessel was drydocked in the quarter. The remaining fleet sailed without

significant off-hire with a total of 2 613 on-hire vessel days in the quarter.

Belships' vessels are not transiting the Red Sea nor the Black Sea, and none of

our vessels have been involved in any related incidents.

Contract coverage   Q4 2024 Q1 2025 Q2 2025 Q3 2025

Fixed-rate contracts   80% 41% 15% 14%

Average fixed-rate (USD/day)   16 200 16 300 15 900 15 900

Index-linked contracts   15% 31% 22% 18%

Open/Uncontracted   5% 28% 63% 68%

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100% 100% 100% 100%

Belships currently has 10x vessels chartered out on, index-linked, contracts on

varying durations, at an average premium of 103 per cent to the corresponding

Baltic index for Ultramax vessels (BSI-63). Belships has the option to convert

any portion of the remaining period to a fixed rate, based on the prevailing FFA

curve at any given time.

Cash breakeven for 2024 is about USD 10 900 per vessel per day. This includes

OPEX, interest and amortisation, G&A and drydocking expenditures.

Newbuildings

Japanese-design 64 000 dwt Ultramax bulk carriers

One further newbuilding agreement has been entered into, to be named BELCARGO.

Updated delivery schedule:

BELFORTUNE    expected delivery Q4 2025

BELFOX                expected delivery Q4 2025

BELFUTURE       expected delivery Q2 2026

BELAVANTI         expected delivery Q4 2026

BELTEMPO         expected delivery Q4 2026

BELROSSO         expected delivery Q1 2027

BELSTAR             expected delivery Q3 2027

BELCARGO         expected delivery Q3 2027 (new)

BELVICTORY      expected delivery Q3 2027

BELNOR              expected delivery Q1 2028

BELOCEAN         expected delivery Q3 2028

BELFRIEND        expected delivery Q3 2028

All vessels are leased on time charter for periods up to a maximum of 7 to 10

years from delivery, with purchase options around current market levels. There

is no obligation to purchase any of the vessels. Cash breakeven for the vessels

upon delivery is about USD 14 300 per day on average. Belships is not using any

equity, therefore this newbuilding program will not have any impact on cash and

dividend capacity during the construction period.

The Japanese-design bulk carriers entering the fleet represent the highest

quality and lowest fuel consumption available in the market today and will

contribute to further reduce Belships' carbon emissions on an intensity-basis.

Operating business

Norwegian Bulk Carriers (NBC) recorded an EBITDA of USD 1.5m for the quarter.

Despite the challenging market conditions NBC continues to contribute to

Belships' profitability and dividend capacity.

The average EBITDA per quarter in the last five years for Norwegian Bulk

Carriers has been USD 2.5m.

Sustainability

Belships aims for high standards in corporate governance and is well placed to

deliver emission cuts in line with industry ambitions for 2030. Belships

publishes a sustainability report on an annual basis (ESG Report) reflecting our

commitment to transparency and efforts to meet investor and stakeholder

expectations.

Belships was ranked in the top quartile in the Webber Research Report: 2024 ESG

Scorecard. The research report aims to identify where each company ranks against

its listed peers within the shipping industry.

Financial and corporate matters

At the end of the quarter, cash and cash equivalents totalled USD 153.6m, whilst

interest bearing bank debt amounted to USD 89.3m.

Leasing liabilities at the end of the quarter amounted to USD 475.0m, details on

a per-vessel basis can be found in disclosure 4 of the financial statement.

All leased vessels are calculated with the assumption that purchase options to

acquire the vessels will be exercised. However, Belships has no obligation to

acquire any of the leased vessels.

All lease agreements have fixed interest rates for the entire duration of the

contracts and all purchase options are denominated in USD.

At the end of the quarter, book value per share amounted to NOK 12.01 (USD

1.14), corresponding to a book equity ratio of 33 per cent. Value-adjusted

equity is significantly higher.

Dividend policy

Belships ASA aims to distribute quarterly cash dividends targeting about 50 per

cent of net result adjusted for non-recurring items. Other surplus cash flow may

be used for accelerated amortisation of debt, share buy-backs or vessel

acquisitions considered to be accretive to shareholders' value.

Dividend payments

Based on the financial result in Q3 2024 the Board declared a dividend payment

of NOK 0.50 per share (USD 11.4m in total) equivalent to 59 per cent of the net

result.

In addition, an extraordinary dividend of NOK 1.00 per share was paid out in

October.

This brings the total dividends paid out since Q2 2021 to NOK 11.35 per share.

Market highlights

In the third quarter, the Baltic index for Ultramax vessels (BSI-63) averaged

USD 16 591 per day - down from USD 17 065 per day in the preceding quarter. This

new Ultramax index will replace the Baltic Supramax Index (BSI-58) which

averaged USD 14 542 per day in the same quarter.

According to Fearnleys, preliminary estimates for Q3 2024 shipment volumes were

283 million tonnes, down from the all-time high of 289 million tonnes in Q2

2024. Comparing with the same quarter last year, volumes of steel products and

other minor bulks were higher, whereas iron ore, coal, fertilizers, and grains

saw year-on-year declines.

Port congestion, as measured by the average waiting time in port for ships to

discharge, fell slightly compared to the second quarter. However, waiting time

in port for ships to load increased by as much as the waiting time in discharge

ports fell. The total average voyage duration was similar to that of the second

quarter staying at comparable levels. Average vessel speeds remain relatively

low, this seems to follow a trend over the past several years of decreasing

normal sailing speeds.

46x Supra/Ultramax vessels were delivered in the third quarter of 2024, compared

to 48x vessels in the second quarter, according to Fearnleys. 36x vessels remain

to be delivered in 2024. The number of ships delivered per quarter compares to

an existing fleet of Supra/Ultramax vessels on the water today of about 4 100 in

total. Fleet growth has increased slightly in the last months, to 4.2 per cent.

This rate of fleet growth can be expected to increase towards 5.0 per cent in

2025, then decrease again in 2026 and 2027. The total dry bulk orderbook to

existing fleet ratio stands at just below 10.0 per cent, which is still at

historical lows.

Relatively low newbuilding activity for dry bulk continues, as higher prices,

full orderbooks, and continued high demand for other vessel segments dictate the

position with shipyards. Lack of conviction and alternatives for fuel and

propulsion systems also appear to restrain new orders to some extent.

Available delivery positions with reputable shipyards appear increasingly

distant, with some new orders being reported in 2027 and 2028. A potential lead

time of four years for a bulk carrier is unprecedented.

Outlook

The average spot market rate for Ultramax vessels according to the Baltic

Exchange is currently at about USD 13 000, displaying a weak trend in October

and November. The FFA market (Forward Freight Agreements) currently indicates a

market average of around USD 14 000 for the next twelve months. Ship values have

showed softer development in the fourth quarter. Modern and economical vessels

continue to be in higher demand than older vintages.

Belships has fixed-rate contract coverage for 80 per cent of ship days in Q4

2024 at about USD

16 200 per day, and 37 per cent of ship days in the next four quarters at about

USD 16 200 per day. All period contracts are fixed with highly reputable and

recognised charterers.

Belships financing has been secured for many years ahead, and most of the debt

is with fixed interest rates significantly below current market levels. Belships

is therefore able to combine meaningful leverage with a low cash breakeven.

There is significant inherent value in the lease agreements, which also includes

the newbuilding program.

With 12x Ultramax newbuildings under construction for delivery between 2025 and

2028, Belships will be taking delivery of new vessels whilst the orderbook and

the rate of supply growth approaches the lowest levels in 30 years. We believe

the best way for Belships to approach the green shift is to own and operate the

most efficient vessels currently available, with a financing structure that

gives unparalleled optionality and flexibility.

Over the next four years, Belships has a very flexible position where the

company can decide to either utilise the newbuilding program for growth, or as

replacement for existing tonnage. In case of the latter, this would potentially

free up substantial capital.

We are focused on financial discipline and returning capital to our

shareholders. A competitive return for our shareholders is to be obtained

through an increase in the value of the company's shares and the payment of

dividends, as measured by the total return.

Based on Belships' current contract coverage and market expectations, we expect

to generate free cash flow and continue to pay quarterly dividends.

14 November 2024

THE BOARD OF BELSHIPS ASA

For further information, please contact Lars Christian Skarsgård, Belships CEO,

phone +47 977 68 061 or e-mail LCS@belships.no (mailto:LCS@belships.no)

This information is subject to the disclosure requirements pursuant to Section

5-12 the Norwegian Securities Trading Act