Due to the challenging freight market, Antwerp-based tanker owner and operator Euronav recorded a net loss of USD 28.1 million in the third quarter of 2017, compared to a net profit of USD 0.1 million in the same period a year earlier.
The company remained in the loss as it also posted a net loss of USD 24.2 million in the second quarter of 2017.
“Freight rates remained under sustained pressure in both the VLCC and Suezmax sectors during Q3 – particularly in August as seasonally low levels of cargo and new tonnage entering the market combined to drive rates to lowest levels since 2013,” Paddy Rodgers, CEO of Euronav, explained.
“Whilst there has been an encouraging recent uptick in scrapping activity and crude demand growth continued to see upgrades during the quarter, the delivery schedule of new vessels remains elevated into late 2018. 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 added.
During the third quarter, the company repaid all outstanding debt and associated liabilities on the FSO joint ventures at the conclusion of the original contract. The FSOs are now debt-free.
Also, there were stage payments associated with the construction of four Suezmax vessels at the Hyundai Heavy Industries (HHI) shipyards in South Korea and due for delivery during 2018. These vessel orders were accompanied by four seven-year time charter contracts.
The company said it retained around USD 735 million of liquidity as at the end of September 2017.
The USD 150 million unsecured bond launched earlier this year in May was listed on the Oslo Stock Exchange on October 23, 2017. This initial entry into debt capital markets is Euronav’s intention to diversify its funding structure.
“The outlook remains mixed. In August we stated that the sector is now entering a new phase of the cycle with stabilized prices for modern assets but uncertainty over, and pressure upon, freight rates. This remains the case. The duration of a challenging freight rate environment will remain dependent on the number of additional new build orders that are not needed by the market. Scrapping/fleet removal trends need to be extrapolated further before an inflection point can be reached,” the company said.
“Euronav has taken progressive action in recent quarters via sale & leaseback, corporate bond and bank financing activity to ensure it is well positioned to navigate the next stage of the tanker cycle – to be strategically opportunistic whilst remaining exposed to any potential upside from an improved freight rate environment,” Euronav concluded.
As of October 31, Euronav’s fleet comprises a total of 56 tankers, the company’s data shows.