TEN outperforms spot market by 38%

Sep 13 2019

For the first half of this year, TEN reported gross revenues of $291 mill - 17% higher than recorded for 1H18.

Net income was $11.5 mill, compared to a loss of $21.5 mill in the first six months of 2018 - a $33 mill positive swing.

Operating income totalled $46.8 mill in 1H19, a near five-fold increase over the equivalent period in 2018, while adjusted EBITDA rose to $120 mill, 43% higher than 1H18, TEN said.

The daily TCE rate per vessel was $20,418, a 17% increase over the equivalent period last year and substantially higher than the average spot market rates for 1H19.

Daily operating expenses per vessel remained well under $7,800.

During the first six months of 2019, TEN continued its policy of expanding its strategic alliances by adding four new vessels with long term employment to a major US operator and two vessels to its existing joint venture with a South American entity.

For the second quarter of this year, TEN earned net income of $0.3 mill, a $10 mill improvement from the $9.6 mill loss recorded in 2Q18, despite the market softness. This followed a strong first quarter, due to continued refinery maintenance, high inventories, excess vessel capacity and oil production cuts.

Adjusted EBITDA increased to $55.8 mill, some 32% higher than 2Q18, helping to boost cash reserves, which stood at $193 mill at the end of June, 2019, TEN said.

Operating income amounted to $19 mill, a five-fold increase, compared to the second quarter of 2018.

Strong fleet utilisation of 96.6% generated gross revenues of $144 mill during 2Q19, 16% higher than in the second quarter of 2018. Around $90 mill of this revenue, was from timecharter hire, including profit shares, which covered TEN’s cash costs.

Revenues from vessels operating in the spot market were $21 mill higher.

As seasonally soft part of the cycle is exited, positive events, including increased US crude oil exports that lead to increases in tonne/mile demand and ultimately reductions in vessel supply, the impact of the IMO2020 regulations, which should facilitate an accelerated departure of older tonnage from the competitive fleet and the historically low orderbook, as well as the impact of refineries returning from maintenance, create a springboard for a healthy market going forward, TEN said.

The company is positioning its fleet to take advantage of this upturn by having adequate vessels in the spot market, which together with those on profit sharing arrangements could provide additional revenue increase. The primary model of having enough vessels on secured revenue contracts to cover the entire fleet’s expenses remains intact, the company said.

TEN’s chartering policy enabled it to outperform the spot market by 38% and maintain profitability.

On the growth front, the company’s newbuilding programme progressed as planned. The first of two Aframaxes on long-term contracts to a major US end user is expected to be delivered in October, 2019, with the second in January, 2020. Expanding TEN’s presence in the developing natural gas sector, the company signed a contract for the construction of an additional LNGC with an option for one more, at competitive prices.

“With gross fleet revenues up $41 mill higher than the end of the second quarter last year, with an equivalent number of vessels, we feel confident that the market is on its way to a healthy recovery and comfortable that our fleet has the capacity to capture market upturns as they develop,” George Saroglou, TEN COO commented. “TEN is well prepared to take advantage of the positive fundamentals as they unfold and expects such momentum to be translated in increased profits and eventually in a higher share price.”


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