TEN reports revenue increase

Apr 05 2019

In the fourth quarter of 2018, TEN generated positive operating income of $26.3 mill and net income of $2.8 mill, before non-cash impairment charges.

This included a $10.8 mill non-cash bunker hedging charge.

Total gross revenues increased by 14.3% to $153.8 mill, compared to 4Q17, due to a much-improved crude tanker market, as global oil demand continued to strengthen and oil supplies, especially from the US, increased and the additions of new vessels to the global fleet slowed.

As a result, 33 tankers operating on spot-related charters during the quarter, including vessels on profit-sharing contracts, were able to generate increased freight income. In particular, eight suezmaxes on profit-sharing charters earned double the amount of the agreed minimum hire-rate.

These factors helped increase TEN’a average daily TCE per vessel by 17% to $21,439 in 4Q18.

In addition, the two LNGCs also earned higher rates in 4Q18 than in the same quarter of 2017. Since the beginning of 2019, the hire-rates for the LNGCs have increased substantially, the company claimed.

Adjusted EBITDA amounted to $66.3 mill, 25.3% higher than in 4Q17, with almost all of the vessels generating positive adjusted EBITDA. Compared to 3Q18, the fleet generated close to $26 mill more adjusted EBITDA, a 64% increase.

In line with TEN’s operating model, vessels on fixed term timecharters alone continued to generate enough gross revenue to cover the entire fleet’s operating, overhead and cash finance expenses while the spot vessels added a further $22 mill revenue, net of voyage expenses.

Fleet operating expenses, despite a larger number of vessels during the quarter, fell by 2.5% compared with 4Q17, helped by tight cost controls, lower insurance and lubricant expenses and a strengthening US dollar. On a per vessel basis, these expenses translated to $7,715 per day OPEX.

For the full year, TEN reported total voyage revenues of $529.9 mill, slightly higher than in 2017.

The first three quarters of last year saw a difficult market with healthier rates evident only in the fourth quarter, as the market at last benefited from a positive turnaround instigated by a fast declining orderbook, increased scrapping and a surge in US oil exports, which largely nullified the renewed OPEC production cuts.

In this challenging and unpredictable environment and, as a result of TEN’s solid employment strategy, the company generated $38.2 mill in operating income, before non-cash charges, and adjusted EBITDA of $190.7 mill for the year.

The average daily TCE rate per vessel per day was $18,226 with fleet utilisation again at a high 96.2%, as a result of TEN’s timecharter policy and the long-standing relationship with many high-end charterers worldwide.

TEN continued to retain strong cash liquidity with $220.5 mill on the balance sheet as at 31st December, 2018.

The company said that it continued its long-term repeat employment model having concluded its 30th timecharter in the last 15 months. Inclusive of the two recently announced LNGC fixtures, which are expected to generate cash inflows of about $60 mill, the minimum contracted revenue backlog of TEN currently stands at $1.2 bill.

Nine vessels with expiring timecharters in 2019 are already in negotiations for extensions at higher rates, reflecting today’s improved market prospects, the company said.

Five vessels, ‘Silia T’, ‘Bosporos’, ‘Byzantion’, ‘Salamina’ and ‘Selini’, have incurred non-cash impairment charges totalling $66 mill, as they have become potential candidates for sale.

In addition to replacement tonnage, management continues to actively explore investments in the LNG and shuttle tanker segments aiming at industrial opportunities with long accretive charters. Thus far this year, four contracts for Aframaxes Suezmaxes were concluded to major end-users.

George Saroglou, TEN COO, commented; “With global oil consumption on the rise, driven by Chinese and Indian demand, and the US becoming a leading force in global crude oil exports, freight rates should maintain their upward trajectory by the second half of 2019 and beyond. The low orderbook and the high scrapping levels spurred, to a large extent by the upcoming IMO 2020 regulations, will further support the market to attain higher profitability.

“As a result, vessels in spot and profit-sharing charters are expected to capture the firming freight market and solidify further the company’s bottom line. The increased appetite of major oil companies for long-term charters in the crude and product sectors, is a strong indicator of a sustainable improvement in market conditions going forward,” he concluded.


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