Euronav’s profit falls

Mar 17 2017

Antwerp-based shipping company Euronav has reported a drop in net profit to $204 mill last year from $350.3 mill recorded in 2015.

The company’s 2016 revenue fell to $684.3 mill from $846.5 mill reported a year earlier.

For the fourth quarter of the year, the company’s profit halved to $50.2 mill, compared to $104.8 mill recorded in 4Q15. Euronav’s 4Q16 revenue also fell to $146.2 mill from $225.6 mill reported in 4Q15.

Paddy Rodgers, Euronav CEO, said: “2016 represented a very active year for Euronav during which we delivered a number of accomplishments. Firstly, the award for our FSO project for a further five years starting the third quarter of 2017, subject to successful negotiations and the signing of the final service contracts. Secondly, we took the opportunity to further focus our activities by consolidating our last tanker joint venture arrangements related to one VLCC and four Suezmaxes (of which we now fully own one VLCC and two Suezmax vessels). Thirdly, we continued to grow the company by acquiring two VLCC resales, financed internally through our balance sheet, which in turn was strengthened via a sale & leaseback transaction and the signing of a new finance facility. 

Lastly, we secured a long-term charter with Valero Energy for two Suezmax vessels starting in 2018, which will be served by two Ice Class newbuildings ordered during the year. 

Freight rates were impacted negatively from June onwards by increased vessel supply, weak tanker owners sentiment and specific factors, such as oil supply disruptions affecting the Suezmax segment. 

Medium and longer-term prospects for the tanker market remain constructive, underpinned by a solid recurring demand for crude, structural change in financing likely to constrain future vessel supply growth and a likely acceleration in the retirement of older ships from 2017 onward encouraged by environmental legislation on ballast water treatment and sulfur emissions. 

However, 2017 will, in our view, present a number of challenges: OPEC production cuts, concentrated delivery schedule of the orderbook and anemic owner confidence, which, when combined, are all likely to produce a difficult rate environment for the next few quarters.  

Euronav retains access to substantial liquidity and maintains a robust balance sheet in order to remain strategically opportunistic and to navigate potential short-term headwinds during periods of increased vessel supply whilst at the same time remaining exposed to any potential upside from an improved rate environment,he concluded.  

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