LONDON (Bloomberg) — Bermuda-based Frontline Ltd., the world's largest owner of supertankers, posted a bigger-than-expected 74 percent drop in fourth-quarter profit and cut its dividend as oil demand slumped and a gain from the sale of assets wasn't repeated.

Net income dropped to $51.5 million, or 66 cents a share, from $201 million, or $2.70, a year earlier, Frontline said yesterday in a statement. Frontline was expected to make $84.25 million, according to the median estimate of eight analysts surveyed by Bloomberg. Sales advanced 36 percent to $451.5 million.

"They need to preserve their cash," Martin Sommerseth Jaer, an analyst at Arctic Securities ASA in Oslo who recommends selling the stock, said before the statement was released.

Global oil demand fell for the first time in a quarter-century in 2008 as the US, Japan and Europe fell into simultaneous recessions. That spurred the Organisation of Petroleum Exporting Countries to rein in production, cutting the flow of cargoes for Frontline and other owners.

Frontline cut its fourth-quarter dividend to 25 cents a share from $2 a share a year earlier. The company previously said it aimed to pay out all of its profit in dividends.

"The board of Frontline is concerned that economical weakness could lead to lower oil demand than forecasted by the major agencies," Frontline said in the statement. "This will negatively impact the tanker market."

Frontline's earnings included a $28.4 million reduction in the value of its holding in Overseas Shipholding Group Inc.

Frontline said it may need to use operational earnings to pay for ships it ordered, temporarily reducing the shipping line's ability to pay dividends. The company said it needed $300 million in the third quarter, an amount that's been "somewhat reduced" because the firm arranged longer-term rentals.

The cost of shipping Saudi Arabian crude oil to Japan, the global benchmark, fell 29 percent to average 84.23 Worldscale points in the fourth quarter, compared with 117.42 points a year earlier. Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. The average is 52.02 points this year.

The company needs $32,100 a day to break even on each of its supertankers, and $25,200 a day for suezmax tankers that are about half the size.