Higher tanker rates help Euronav to a profit

Apr 28 2014

Leading Antwerp-based tanker owner and operator Euronav reported an increased turnover of just over $106 mill for the first quarter of this year, compared with $78.3 mill in 1Q13.

EBITDA for 1Q14 was $47.3 mill, compared with $29.2 mill for 1Q13. The result after tax was a profit of $1.4 mill, compared with a loss of $10.7 mill in 1Q13.

The tanker division slashed its losses from $17.8 mill to $5.9 mill in 1Q14 from 1Q13 , while the FSO sector remained at a steady $7.3 mill in 1Q14.

Euronav aslo explained that it had applied the new accounting standards IFRS 10 and IFRS 11 as of 1st January, 2014.

As a result, the consolidation method applied to joint ventures has changed. Consequently, all the joint ventures in which the Company has a 50% interest have been and will be accounted for, using the equity method and reported in the income statement under the line: ‘Share of profit (loss) of equity accounted investees.’

If the company would have continued to apply the proportionate consolidation method for its joint ventures for 1Q14, the EBITDA would have been $64.1 mill (1Q13: $44.4 mill), while the result after taxation would have remained the same, Euronav said.

During the 1Q14, the average daily TCE for Euronav’s VLCCs operating in the spot market was $34,777 per day, while the average Suezmax timecharter rate was $27,350 and the company’s spot Suezmaxes averaged $26,800 per day.

In April 2014, a purchase option to buy the VLCC ‘Olympia’ (built 2008) and the the 2009-built VLCC ‘Antarctica’ was exercised for an aggregate purchase price of $178 mill of which $20 mill had been received as an option fee deductible from the purchase price back in January 2011.

Euronav said that it expected to take delivery of the ‘Olympia’ in September 2014 and the ‘Antarctica’ in January 2015, respectively. Both vessels will remain employed under their current timecharter contract until their respective delivery.

The sale will result in an estimated combined capital loss of $6.5 mill, which will be recorded in the second quarter of 2014.

The company also took delivery of two of the 15 Maersk Tankers’ VLCCs in 1Q14 and expects to take delivery of 12 of the remaining vessels during the first half of 2014 and the final vessel in the first half of 2015.

So far in the 2Q14, the company’s VLCCs operating in the Tankers International pool has earned on average $26,100 per day and 31% of the available days have been fixed. At the same time, the company’s Suezmax fleet trading on the spot market has earned on average $16,850 per day and 51% of the available spot days have been fixed.

Going forward, Euronav said that the market is expected to be volatile and the fleet size in both the VLCC and Suezmax sector is expected to grow marginally, as fewer newbuildings are expected to be delivered in the next 18 to 24 months.

A more balanced tonnage list coupled with increased tonne/miles should help to further improve the state of the tanker market for the rest of 2014 and 2015, the company said.

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