Euronav’s Profit Drops in Year of Two Contrasting Halves

Following a year of robust fundamentals and aggravated seasonal trading patterns, the Antwerp-based shipping company Euronav reported a drop in its net profit to USD 204 million in 2016 from USD 350.3 million seen in 2015.

The company said that 2016 was a year of two contrasting halves as robust fundamentals drove strong market until June but increased vessel supply aggravated seasonal trading patterns until the fourth quarter of the year.

Amid such conditions, the company’s revenue for the period decreased to USD 684.3 million from USD 846.5 million reached a year earlier.

Although 2016 represented “a very active year” for Euronav, Paddy Rodgers, CEO of Euronav, said that freight rates were impacted negatively from June onwards by increased vessel supply, weak tanker owners sentiment and specific factors such as oil supply disruptions affecting the Suezmax segment.

During the fourth quarter of the year, the company’s profit halved to USD 50.2 million compared to a profit of USD 104.8 million seen in the same three-month period a year earlier. Euronav’s revenue for the quarter was also down to USD 146.2 million from USD 225.6 million reported in 2015.

Rodgers added that medium- and longer-term prospects for the tanker market “remain constructive, underpinned by a solid recurring demand for crude, structural change in financing likely to constrain future vessel supply growth and a likely acceleration in the retirement of older ships from 2017 onward encouraged by environmental legislation on ballast water treatment and sulfur emissions.”

“However, 2017 will, in our view, present a number of challenges: OPEC production cuts, concentrated delivery schedule of the order book and anemic owner confidence, which when combined, are all likely to produce a difficult rate environment for the next few quarters,” Rodgers said.