(Bloomberg) Frontline Ltd., the world?s second- largest oil-tanker company, may post a fifth consecutive drop in quarterly profit as increased debt and falling returns from the company?s older ships weigh on earnings.

Net income probably slipped 28 percent to $91.3 million, or $1.22 a share, in the three months to June 30, from $127.5 million, or $1.70 a share, a year earlier, according to the median average of seven analysts surveyed by Bloomberg. The company is scheduled to report earnings today.

Frontline?s profit has sputtered as about a quarter of the company?s ageing, less-lucrative single-hull ships, earned less amid falling freight markets.

At the same time, the Bermuda-based company?s debt has doubled in the past five years as it increases borrowing to buy new ships.

?Frontline has a large part of single-hulls, so the rates are lower than the market,? said Rikard Vabo, an analyst at Fearnley Fonds in Oslo. ?Frontline has the highest gearing, so it makes the highest gain or loss.?

Shares of Frontline have gained five percent this year, giving the company a market value of 19.8 billion kroner ($3.2 billion). Shares in the company rose 2 kroner, 0.8 percent, to 264.5 kroner as of 10:50 a.m. in Oslo today.

Shipping companies such as Frontline earned $35,870 a day for vessels known as very large crude carriers, or VLCCs, between March and May, down from $43,621 a day last year, according London-based shipbroker Simpson, Spence & Young Ltd.

Such tankers hold about 2 million barrels of oil. The March-to- May period is key for second-quarter earnings because bookings are typically accounted for a month later.

About a third of Frontline?s tankers have a single layer of steel separating their cargoes from the sea, giving them a greater risk of spillage than double-hull vessels.

Single-hull ships hauling oil on the benchmark route from the Middle East to Asia earned 18 percent less than double-hull carriers last week, according to Oslo-based shipbroker Fearnleys AS.

Frontline, in which billionaire John Fredriksen, 62, owns a 35 percent stake through Hemen Holdings Inc., operates 41 VLCCs, the main vessels for shipping Middle East oil, according to the company?s Web site. Ten have single hulls.

Double-hull VLCCs earned $99,700 last week, compared with $81,500 for single hull ships, according to Fearnleys.

Frontline?s million-barrel tankers, called suezmaxes, of which nearly half are single hulled, probably earned $33,000 a day on average in the second quarter, according to Frode Morkedal, an analyst at Pareto Securities in Oslo.

General Maritime Corp., based in New York, and Bermuda-based Nordic American Tanker Shipping Ltd., which own double-hull suezmaxes, earned about $37,000 a day, Morkedal said.

Net debt at Frontline has climbed to $3.07 billion as of December last year, up from $1.5 billion at the end of 2001, as the company ordered new vessels. Debt repayments were $216 million last year while sales were $1.5 billion. Frontline said June 27 it ordered four VLCCs for an undisclosed amount from Jiangnan Shipyard Group Co. of China for delivery in 2010 and 2011. Such vessels cost about $124 million, according to Fearnleys.

Profit fell 20 percent to $219 million in the first quarter from a year earlier. It dropped 73 percent, 47 percent, and 25 percent in the preceding three quarters.

Production from the Organisation of Petroleum Exporting Countries, including Iraq, fell 1 percent to average 29.7 million barrels a day during the quarter, according to Bloomberg data, cutting the amount of oil shipped from OPEC countries.

Global Fleet

At the same time, the global fleet of VLCCs rose four percent to 480 as of June 30, compared with 461 ships a year earlier, according to Simpson, Spence.

The number of suezmaxes, the biggest tankers than can pass through the Suez Canal, increased 6.6 percent to 337 tankers, according to Simpson, Spence, compared with 316 ships a year earlier. Frontline owns 26 suezmaxes, of which 12 are single- hulled.

Frontline runs most of its ships in the spot market on single-voyage contracts, hauling crude for companies such as Exxon Mobil Corp. and BP Plc.

Teekay Shipping Corp., the world?s biggest tanker company by market value, said August 2 second- quarter profit fell 80 percent as falling rates cut profit.

Income from tanker bookings typically appears in a shipowner?s accounts a month after the booking is made, with oil companies paying a daily sum to owners once the ship has set sail with the cargo.