OSLO (Bloomberg) ? Bermuda-registered Frontline Ltd., the world?s biggest oil-tanker company by capacity, said second-quarter profit fell 25 percent as freight rates dropped. The company?s shares rose because the decline was less than analysts estimated.

Net income slid to $127.5 million, or $1.70 a share, from $169.2 million, or $2.29, a year earlier, the company, which has offices on Par-la-Ville Road, said in a statement to the Oslo exchange yesterday. The median estimate of seven analysts surveyed by Bloomberg was for net income of $90 million. Sales fell to $332.4 million from $352.2 million, Frontline said.

?These are strong numbers,? said Finn Bjarke Petersen, an analyst at Nordea Securities in Copenhagen who recommends clients buy shares in Frontline. ?They obtained better rates than expected? for tankers that carry 2 million barrels of crude, the industry benchmark.

Frontline, controlled by Norwegian billionaire John Fredriksen, 61, last reported a decline in quarterly profit in the fourth quarter of 2002. Shipping rates fell in the past quarter as the world tanker fleet grew 3 percent from a year earlier and cargoes to the US declined, countering higher oil production by OPEC.

?We expect tanker rates to pick up on an increase in Chinese oil imports and as we go into the cold season,? said Oscar Spieler, chief executive officer of Frontline?s Oslo-based operations unit. ?We are heading into a period with higher oil consumption.?

The shares rose 12 kroner, or 4.4 percent, to close at 285.5 kroner in Oslo. More than 7 million shares were traded, 5.7 times the daily average during the past six months. The shares have gained 27 percent this year, valuing the company at 21.1 billion kroner ($3.2 billion). They rose as much as 8.4 percent to $44.07 in New York.

?Third-quarter earnings are probably higher than what you think,? Tom Jebsen, Frontline?s chief financial officer, said at a presentation today in Oslo attended by analysts and investors.

The Bloomberg Tanker Index of six shipping companies trading in the US has slipped 1.9 percent this year after rising 82 percent last year. Frontline will pay a dividend of $2 a share for the second quarter. The company expects to deliver ?strong results? and ?continued high dividend? for the rest of this year, Frontline said.

The company booked a gain of $17 million from selling a ship in the second quarter, compared with a loss of $469,000 a year earlier. Operating profit unexpectedly rose to $185.1 million from $180.3 million, more than the $147 million analysts expected.

A.P. Moeller-Maersk A/S, the world?s largest shipping company, is scheduled to announce first-half earnings tomorrow.

The Organisation of Petroleum Exporting Countries pumped an average of 29.96 million barrels a day in the quarter, up 4.5 percent from a year earlier, according to Bloomberg data.

The worldwide fleet of tankers loading 2 million barrels of oil or more stood at 456 vessels at the end of June, up from 443 units a year earlier, according to London-based shipbroker E.A. Gibson.

Daily earnings on Frontline?s 40 Very Large Crude Carriers, or VLCCs, fell 14 percent to $50,300 a day. Income from tankers half that size was $34,100 a day, down 7.1 percent. Frontline operates 35 million-barrel ships, known as Suezmax tankers because they are the biggest to navigate the Suez Canal with a full cargo on board.

The daily earnings are calculated after paying costs such as fuel and port fees.