Euronav’s profit tumbles

Aug 11 2017


For the first half of 2017, Belgian tanker company Euronav recorded a greatly reduced net profit of $10.1 mill, compared with $153.7 mill in the 1H16.

For the second quarter of this year, the company posted a loss of $24.2 mill.

 

The 1H17 result includes a deferred tax benefit of $0.6 mill and also reflects a deferred tax benefit of $2.5 mill through equity accounted investees.

 

Proportionate EBITDA (a non-IFRS measure) for the same period was $151.8 mill, compared to $298.6 mill for 1H16 and $45.7 mill for 2Q17.  

 

Revenue for 1H17 was $291 mill, compared with $404.5 mill in 1H16 and revenue for 1Q17 was $126.4 mill.

 

CEO Paddy Rodgers, said: “Euronav made considerable progress during Q2. The confirmation of the extension of our five-year FSO contracts combined with an additional two seven-year time charters provide us with a robust and visible fixed income profile. Our balance sheet was further enhanced with a $150 mill unsecured bond offering during May. The board of directors and management believe these strengths should be reflected in our return to shareholders policy, which has now been upgraded to a minimum fixed annual dividend of $0.12 per share.

 

“The tanker cycle is positioned at an interesting intersection. Demand for oil saw upgrades during Q2 for both 2017 and 2018 (IEA), supply of oil remains abundant despite OPEC production cuts and modern asset prices appear to have stabilised. Tonne/miles were further boosted by US exports since the start of the year and sources of finance, primarily banks, continue to reduce.

 

“However, the key challenge for the tanker market is the concentration of deliveries of newbuildings in both the VLCC and Suezmax sectors over the next 18 months, which is putting pressure on the freight rate market.

 

“If the illness is low freight rates then the cure is low freight rates as that should drive scrapping activity. Until this inflection point is reached, Euronav retains substantial balance sheet capacity and fixed income visibility to navigate through such a period of lower freight rates and/or to take advantage of expansion opportunities. The duration of the challenging freight rate environment will be entirely dependent on the number of additional orders to build new ships that are not needed by the market,” he concluded.

 

Euronav’s VLCCs operating in the TI pool spot market earned an average of $34,843 per day in 1H17, compared with $54,156 per day in 1H16. Timechartered VLCCs averaged $41,300 per day, compared with $42,461 per day over the same periods. 

 

As for the company’s Suezmaxes, vessels operating on the spot market earned $20,508 per day, compared to $35,729 per day in 1H16, while on the timecharter market, average rates earned were $22,830 per day as against $29,307 per day in 1H16.

 



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