Euronav reports third quarter results 2010

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

19 Oct 2010

The executive committee of Euronav NV yesterday reported its financial results for the three months ended 30th September 2010. The company had a net loss of USD -11.9 million (third quarter 2009: USD -21 million) or USD -0.24 (third quarter 2009: USD -0.42) per share, for the third quarter 2010. EBITDA for the same period was USD 50.7 million (third quarter 2009: USD 35.7 million).
For the third quarter 2010: the average daily time charter equivalent rates (TCE) obtained by the company’s VLCC fleet in the Tankers International pool was approximately USD 30,900 per day (third quarter 2009: USD 23,100 per day). The time charter equivalent earnings of the Euronav Suezmax fleet fixed on long term time charters, including profit shares when applicable, was USD 28,000 per day (third quarter 2009: USD 29,300 per day) and the average daily TCE rates obtained by the Suezmax spot fleet was approximately USD 12,000 per day.
In the third quarter, Euronav took the decision to leave some of its Suezmaxes idle for an equivalent aggregate of 76 days. The rates being offered in the market were so low that employing a vessel on medium to long length voyages added no value. The forgone revenue could be easily regained by employing the ships later at even a marginally higher rate. “I do not understand other owners employing their vessels sailing on round trip voyages with all attendant liabilities at rates that pay no more or even less than the expenses of the voyage” said Paddy Rodgers CEO of Euronav.
The result of the third quarter is positively affected by the revaluation at marked-to-market levels of non cash items such as hedge instruments on interest rates for a total of USD 2.5 millions. It has to be noted however that the interest rate swap (IRS) agreement which is related to the FSO Africa loan does not longer qualify as a hedge instrument under IFRS and will therefore be marked-to-market directly in the profit and loss accounts as from this publication of results.
Euronav fleet
On 12 October 2010, the company has delivered its oldest double hulled VLCC tanker, the TI Creation (1998 – 298,324 dwt), to its new owner.
The company fixed its Suezmax vessels Cap Leon (2003 – 159,048 dwt) and Cap Laurent (1998 – 146,646 dwt) on time charter contract to Valero for a period of 36 and 42 months respectively.
Tanker market
Since the end of the second quarter, the freight market for seaborne transportation of crude oil has been very volatile but in a low range of freight rates. This can mainly be explained by two factors in particular, a much lower amount of VLCCs being used as floating storage and changes in trading patterns especially for crude oil moving to the Far East. These two factors have led to the current overhang of available tonnage in the market affecting both VLCC and Suezmax freight rates.  
Outlook
Since the beginning of 2010 the global oil demand rebounded a strong 2.6% and, according to IEA, oil demand is set to grow by 2%-3% yearly between 2011 and 2015. This increase in demand has been mainly supported by fast growing economies such as Asia, Middle East and Latin America. The increase in demand of crude oil and, as a result the potential increase in demand of transportation should gradually absorb the newbuildings entering the market in 2011 and 2012.
 So far in the fourth quarter, Euronav VLCC fleet operated in the tankers International pool has earned USD 18,250 per day and 42% of the available days have been fixed. These rates remain low for this time of the year. However the market should rebound as the winter season usually triggers an increase in demand for crude oil.
Management remains cautious in respect of the outlook for the rest of the year and for 2011.

Source: Euronav