Euronav Slips into Loss

  • As Market Rates Put Pressure on Navios Acquisition

Antwerp-based tanker owner and operator Euronav NV ended the second quarter of 2017 with a net loss of USD 24.2 million, compared to a net profit of USD 34.3 million seen in the first quarter of the year.

The company’s revenue in the period decreased to USD 126.4 million from USD 164.1 million reported in the previous quarter.

For the first half of 2017 Euronav had a net profit of USD 10.1 million, significantly lower than the net profit of USD 153.7 million reported in the first half of 2016. The company’s revenue in the first six months of the year dropped to USD 290.5 million from USD 404.4 million seen in the corresponding period a year earlier.

“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,” Paddy Rodgers, CEO, said.

Rodgers added that the tanker cycle is “positioned at an interesting intersection.”  Demand for oil saw upgrades during the second quarter for both 2017 and 2018 (IEA), supply of oil remains abundant despite OPEC production cuts and modern asset prices appear to have stabilized.

“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,” Rodgers said.

According to Euronav, the tanker freight market may be more challenging in the near future than in the last ten quarters and as a result the company “may not generate semi-annual positive results.”

As a consequence, the company may not distribute significant interim or final dividends, or any dividends at all, Euronav informed.

Meanwhile, tanker owner and operator Navios Maritime Acquisition Corporation reported a 21.5% decrease in its revenue in the second quarter of 2017, mainly driven by a drop in the market rates.

The company’s revenue for the period stood at USD 58.5 million, as compared to USD 74.5 million seen in the same period of 2016. Net loss for the second quarter was at USD 64.4 million, against a net income of USD 12.1 million reported in the corresponding quarter a year earlier.

The time charter equivalent (TCE) rate was down to USD 17,491 for the three month period ended June 30, 2017, from USD 21,380 reported in the same period of 2016.

“The recent volatility in oil price and the continued uncertainty concerning commodity pricing have affected oil transportation. However, our chartering strategy of seeking long-term employment has insulated us somewhat,” Angeliki Frangou, Chairman and Chief Executive Officer of Navios Acquisition, said.

“We have earned above-market charter rates when spot rates were contracting and period employment was unavailable,” Frangou added.

Revenue for the six month period ended June 30, 2017 decreased by 20.6% to USD 122.9 million, as compared to USD 154.9 million for the same period of 2016. The company said that its net loss for the period reached USD 58.8 million, against a net income of USD 35.9 million reported in the first six months of 2016.

TCE rate decreased to USD 18,475 for the six month period ended June 30, 2017, from USD 22,055 for the six month period ended June 30, 2016.

World Maritime News