Belgium-based shipping company Euronav ended the second quarter of this year with a net loss, driven by a longer than expected freight rate weakness.
The company suffered a net loss of USD 38.5 million in Q2 2019, compared to a profit of USD 19.5 million seen in Q1 2019.
Revenues amounted to USD 169.3 million in the second quarter of this year, against USD 232.6 million recorded a quarter earlier.
As explained, longer than anticipated refinery maintenance, front end loaded vessel supply and maintained OPEC production cuts all contributed to downward pressures on freight rates over the past three months and at the start of Q3.
“Our thesis for 2019 always anticipated freight rate weakness to start during the second quarter as larger and longer than usual refinery maintenance programs ahead of IMO 2020, OPEC production cuts and heavy delivery newbuilding schedule would exacerbate seasonal lower cargo volumes,” Hugo De Stoop, CEO of Euronav, commented.
“This has been the case but we are disappointed not to have seen a recovery in the rates yet,” De Stoop added.
On August 5, Euronav delivered its oldest vessel, the VLCC VK Eddie to an undisclosed buyer. The vessel will be converted into an FPSO and Euronav will record a capital gain on the sale of around USD 14.4 million.
In June, the company’s subsidiary Euronav Luxembourg completed a tap issue of USD 50 million under its existing senior unsecured bonds. The tap issue was priced at 101% of par value. The outstanding amount after the tap issue will be USD 200 million.
Also in June, Euronav became a founding supporter of the Poseidon Principles, a global framework for assessing and disclosing the climate alignment of financial institutions’ shipping
Commenting on the prospects for the coming period, De Stoop said they give encouragement for Q4 as refinery production is anticipated to return to higher levels ahead of IMO sulphur cap that will be introduced in January 2020. US crude export growth continues as well.
What is more, the disruptions around the preparation for IMO 2020 and in particular from VLCC/Suezmax vessels voluntarily exiting the trading fleet in order to retrofit scrubbers should reduce vessel supply during a period of seasonal demand strength, according to Euronav.
“We remain constructive on freight rate recovery in the fourth quarter, based on continued US crude export volume growth and IMO 2020 preparation and its related induced reductions to vessel supply,” Euronav CEO concluded.
Euronav’s owned and operated fleet consists of two ULCCs, 42 VLCCs, 25 Suezmaxes and two FSO vessels — both owned in 50%-50% joint venture.