Euronav Steers Back to Black amid Strong Tanker Market

Belgium’s shipping company Euronav NV has reported a net profit of USD 104.7 million in its non-audited financial results for the fourth quarter of 2015 against a net loss of USD 3.9 million posted in the same period last year.

EBITDA for the fourth quarter 2015 was USD 160.6 million, also up from last year’s USD 67.6 million.

For the full year ending 31 December 2015, the preliminary net profit is USD 350.1 million, a major rebound from last year’s net loss of USD 45.8 million.

Paddy Rodgers, CEO of Euronav believes that one should expect additional stimulation of demand for crude and therefore for crude tankers over 2016.

“Current vessel supply is well spread over the next 3 years and should therefore be capable of being absorbed by the demand. The winter market started in Q4 with higher TCE averages than in any other quarter of 2015 and has even strengthened in Q1 2016. Consequently, management remains confident of further progress and committed to its policy of distributing 80% of net income excluding exceptional items such as gains on the disposal of vessels,” he explained.

On the finance side, Euronav said that it was fully funded in its current structure and retains a strong conviction that tanker markets are well balanced.

“With the vast majority of its fleet currently on the water, Euronav is ideally positioned to benefit from this positive freight market environment and will remain disciplined as good steward of shareholder capital,” the company said.

According to Euronav, the current market positioning looks sustainable and provides management with a positive outlook.

“Demand for crude oil remains firm with current consensus projecting around 1.2m bpd of additional demand of oil in 2016. Whilst this is lower than the 1.6m bpd delivered in 2015 it is worth noting that, at this stage last year, forecasts were set at 0.9m bpd for 2015,” Euronav added.

So far in the first quarter of 2016 the Euronav VLCC fleet operated in the Tankers International pool has earned about USD 75,000 per day and 46% of the available days have been fixed. Euronav’s Suezmaxes trading on the spot market have earned about USD 41,000 per day on average with 47% of the available days fixed for the first quarter, the company revealed.

Speaking of market developments, the company believes that the return of Iran to the global oil markets will largely be neutral to positive for the tanker sector for two reasons.

The company claims that first, it should be noted that half of the Iranian fleet (circa 40 VLCCs in total) continued to trade mostly to the Far East between 2012-2015. The part of the Iranian fleet (which is not too old) that effectively returns should therefore absorb the anticipated increase in Iranian crude production for export. Second, snapback provisions in the sanctions lifting agreement and other financial dollar based restrictions will take time to be lifted in full, implying full integration of Iran will be over a prolonged period.