July 30, 2004

Profits up at Odfjell

Despite its recent legal problems and two accidents involving chemical tanker explosions, Bergen, Norway, based shipowner Odfjell ASA today announced that its consolidated net result after tax was $56 million first half 2004, compared to $ 41 million first half 2003.

Time-charter results per day improved by 9% compared to first half 2003 and 10% compared to the full year 2003.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for first half 2004 were $104 million, up from $84 million first half 2003.

Operating result (EBIT), including a capital gain on assets, was $65 million in the first half 2004, compared to $39 million in the first half 2003.

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Operating expenses as well as general and administrative expenses were higher than first half 2003, mainly due to increased activity as well as a one time compensation of $1.2 million to the former CEO.

(The former CEO is Bjorn Sjaastad. He stepped down last month after taking a leave of absence related to his agreement to serve a U.S. jail term as part of a settlement of a U.S. antitrust case. Meantime, Odfjell says today that during the last quarter a lawsuit has been filed against Odfjell and others from the liquidated estate of O.N.E. Shipping for alleged antitrust violations that resulted in O.N.E. Shipping's liquidation. Furthermore, Hoyer-Odfjell USA Inc., a U.S. subsidiary of Hoyer-Odfjell BV in the Netherlands in which Odfjell owns 50%, has received a subpoena from the U.S. Department of Justice requesting documents with respect to the tank container industry.)

Net interest expenses for first half 2004 were $12 million, compared to USD 11 million first half 2003.

The $9 million capital gain on assets in the first half 2004 include insurance proceeds from the loss of M/T Bow Mariner (39,821 dwt./built 1982), the sale for demolition of M/T Bow Queen (32,363/1975) and the sale of M/T Bow Apollo (6,291/1981).

The average US$/NOK exchange rate for first half 2004 was 6.90, compared to 7.03 first half 2003. The US$ strengthened against the NOK from 6.68 at year-end 2003 to 6.95 at 30 June 2004. The currency gain, primarily from hedging, was $10 million, compared to $13 million the same period last year. Taxes were $6 million in first half 2004, compared to a $1 million tax credit in the first half 2003. The net result for the first half 2003 included extraordinary costs after tax of $2 million. The second quarter 2004 net result of $ 22 million compares with a net result of USD 23 million the second quarter 2003 and $34 million first quarter 2004. The first quarter 2004 included a capital gain on fixed assets of $9 million. The second quarter 2004 reflects high off-hire however as a consequence of more dry-dockings.

Business segments

Global trade

EBITDA for the first half 2004 was up 33% to $69 million, compared to $ 52 million the first half 2003. Operating profit (EBIT) doubled to $44 million first half 2004, compared to $ 22 million first half 2003. Improved market conditions led to time-charter income expressed in USD per day being about 9% higher in first half 2004, compared to first half 2003, and time- charter income increased by about 2% from the first to the second quarter 2004.

The average cost of bunkers first half 2004 was $161 per ton (including bunker clause compensations), compared to $153 last year. Operating expenses on a comparable fleet basis were 1% lower in first half 2004 than the full year 2003 figure.

At a price of $32 million en bloc the company has agreed to acquire two second-hand tankers from ChemLog Tankers Ltd. (a company related to ChemLog ApS), the M/T Fertility L (45,507 dwt./built 1987) and the M/T Fraternity L (45,507/1987). Since mid 2000 the two ships have been operating in the Odfjell pool of parcel tankers.

At the time of delivery to Odfjell, the ships will be renamed Bow Fertility and Bow Fraternity. This acquisition completes the process of consolidation of fleets following the Odfjell Seachem merger in 2000.

Regional trade

EBITDA for the first half 2004 was $ 7 million, stable from last year. EBIT for first half 2004 was $4 million, compared to $ 3 million first half 2003.

Tank terminals

EBITDA for the first half 2004 was $25 million, an improvement from $22 million the same period last year. EBIT for first half 2004 was $15 million, up from $13 million first half 2003. The EBITDA of Odfjell Terminals (Houston) was $9 million first half 2004, stable from last year. Odfjell Terminals (Rotterdam) showed an EBITDA of $12 million first half 2004, compared to $10 million first half 2003. Odfjell's share of the terminals in Onsan, Korea, Singapore and the two terminals in China made an EBITDA of$4 million.

On June 25, 2004 Odfjell signed a joint-venture agreement with the Garson Group of China to build a tank terminal in Jiangyin in China. The terminal will be strategically located on the south riverbank of the Yangtze river about two hours drive from Shanghai and about 12 hours by ship from the entrance of the Yangtze river, and serve as a public first-come-first serve ship/shore interfacing facility. The plan is to build a tank terminal with about 80.000 cbm. of initial storage capacity and two large berths, both of which can accommodate ships up to 50.000 dwt. The terminal will have ample land for expansion and additional smaller berths. The first phase development is estimated to cost about $ 30 million. Odfjell will own 55% of the joint- venture and the Garson Group will hold 45%.

Tank containers

EBITDA for first half 2004 was $2 million, compared to $ 3 million the same period last year. EBIT for first half 2004 was USD 1 million, compared to USD 2 million first half 2003.

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