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| Summary 2004 was a very satisfactory year with a net profit of USD 200.6 million, up from USD 76.2 million in 2003 and the best result ever for JL. Return on invested capital was 62,3% (16.4% in 2003) and return on equity was 59% compared to 39% in 2003. With earnings before tax at USD 214.7 million, up from USD 41.2 million in 2003, Lauritzen Bulkers again had a significant influence on JL’s results as it did in 2003. Earnings were primarily driven by fleet strategy and developments in dry cargo bulk rates. Developments in the reefer and gas activities also had a positive impact on results. Lauritzen Tankers’ first year of operations focused on building up the business. There was a tax charge of USD (40.1) million compared to an income of USD 30.5 million in 2003, when deferred tax was revalued.  During 2004, JL controlled an average fleet of 155 vessels. Together with partners and associates the average controlled fleet amounted to a total of 239 vessels. At the end of the year, JL had 36 wholly owned vessels and 10 partly owned vessels.  41 ships in the fleet are on charter for periods exceeding 12 months. JL has purchase options on 11 bulk carriers and on four reefer vessels on long-term charter. In 2004, JL invested USD 143 million (2003: USD 77 million) in fleet expansion including: • Six bulk carriers • 13 pressurized gas carriers together with Exmar of which 11 were included in the joint purchase of Far East Shipping’s gas carrier business • One 45,000 dwt product tanker Divestments accounted for USD 67 million (USD 14 million in 2003), including: • Three Handysize bulk carriers all bought earlier in 2004 • Two wholly owned S/R gas carriers (one as a sale and lease back) and two vessels in the Lauritzen Kosan/Exmar joint venture purchased earlier in 2004. Total invested capital amounted to USD 371.8 million at year-end 2004 up from USD 308.1 million at year-end 2003. After year-end, two Handysize bulk carriers have been bought and three sold. Two wholly owned and three partly owned gas carriers, of which two were acquired in 2004, were also sold. Finally three reefer vessels were sold in a sale and lease back arrangement.  Further fleet expansion is expected in 2005 and in years to come: • One second hand Panamax bulk carrier to be delivered in April 2005 and one Handysize newbuilding to be delivered to the Lauritzen Bulkers / Island View Shipping joint venture in February 2005. Additional Handysize newbuildings will be delivered in 2006 and 2007 • One second hand reefer vessel to be delivered in April 2005 followed by another in April 2006 • A newbuilding programme for six (of which two were contracted early 2005) 8,000 m3 gas carriers with ethylene capacity, for delivery in 2006, 2007 and 2008. • Two MR product tankers have been taken on five and seven years charters respectively with deliveries in 2007 and 2008 As of 1 January 2004, LauritzenCool AB entered a tonnage sharing agreement with NYK Reefers and at the same time, NYK Reefers bought 50% of LauritzenCool Logistics. This collaboration has developed well since then and as from 1 January 2005, the two companies agreed a memorandum of understanding to create a 50:50 joint venture. This will see NYK acquiring 50 % of LauritzenCool AB and LauritzenCool AB taking over NYK Reefers’ commercial activities. The change will only have a minor effect on JL’s net results as JL’s ownership of vessels and time charter commitments continue with Lauritzen Reefers. 2004 saw further strengthening of JL’s overall market position and investment capacity. Supported by continued positive forecasts for the world economy, the outlook for 2005 is also positive. Although bulk rates are expected to decline during 2005, they are still expected to remain well above historic rates. The reefer and gas markets are expected to develop positively although increased rates within these markets will not be sufficient to offset the impact of lower bulk rates. Lauritzen Tankers in its second year of operations is expected to make a positive contribution to net earnings. The profit from sale of vessels will increase compared to 2004. Overall the result before tax for 2005 is also expected to be very satisfactory, however slightly below earnings in 2004. |