Lower earnings hit International Seaways

Aug 11 2017

Mainly driven by lower TCE revenues, US-based tanker owner, International Seaways (INSW), suffered a net loss of $11.6 mill in the second quarter of 2017, compared to net income of $30.5 mill posted in the same period a year earlier.

In 2Q17, TCE revenues declined to $69.3 mill from $101 mill recorded in 2Q16.

TCE revenues for the crude tankers segment were $45.7 mill for the quarter, against $66.5 mill in 2Q16. This decrease resulted primarily from significantly lower average rates in the VLCC, Aframax and Panamax sectors and fewer revenue days in the Panamax sector, resulting from an increase in drydocking days.

TCE revenues for the product carriers segment were $23.5 mill for the quarter, compared to $34.4 mill in 2Q16. This fall was again primarily due to a decline in average daily rates earned by the MR, LR1 and LR2 fleets, the company said.

Adjusted EBITDA was $31.8 mill for 2Q17, compared to $62.3 mill in the same period of 2016, also affected by lower daily rates.

“During the second quarter, we executed on our fleet growth and renewal strategy, enhanced our financial flexibility and strengthened the company’s position to optimise revenue through the current tanker cycle,” Lois Zabrocky, INSW’s’ president and CEO, said.

In 2Q17, INSW acquired two 2017-built Suezmax newbuildings, ’Seaways Hatteras’ and ‘Seaways Montauk’. Built at Hyundai Samho Heavy Industries, the ships were delivered to the company last month.

The company also signed an agreement to sell a 2001-built MR, which is expected to be finalised in the third quarter of this year.

“We also completed a $550 mill refinancing in the quarter, which was recently upsized to $600 mill. In addition to extending the company’s debt maturities, this successful refinancing enhances our ability to take advantage of compelling opportunities for shareholders,” Zabrocky added.

In addition, the company, formerly OSG’s international interest, increased its contracted cash flows in 2Q17 by signing two five-year contracts for its FSO joint ventures, which are expected to generate in excess of $180 mill of EBITDA for the company over the contract period.

“We are driven by a disciplined and balanced capital allocation strategy and enter the second half of 2017 with significant liquidity to continue to opportunistically grow and modernise our fleet. We also continue to maintain sizeable contracted cash flows, as well as upside to a market recovery in both the crude and product tanker sectors. We remain positive on crude tanker fundamentals in 2018 and continue to be encouraged by near-term prospects for a strengthening product tanker market,” Zabrocky concluded.  

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