EURONAV ANNOUNCES THIRD QUARTER RESULTS 2017

HIGHLIGHTS
 

• Challenging freight market throughout quarter – toughest since Q3 2013
• Oversupply of tonnage and new vessel deliveries the key drivers
• Full listing of USD 150 million unsecured bond on Oslo Stock Exchange in October 
• Euronav founding partner of Global Maritime Forum, an important platform for the maritime spectrum - launched in September

 

ANTWERP, Belgium, 31 October 2017 – Euronav NV (NYSE: EURN & Euronext: EURN) (“Euronav” or the “Company”) today reported its non-audited financial results for the three months ended 30 September 2017.

 

Paddy Rodgers, CEO of Euronav said: “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. 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.”    

 

 

 

 

 

	The most important key figures (unaudited) are:
	(in thousands of USD)			First Semester 2017			Third Quarter 2017			Year-to-Date 2017			Year-to-Date 2016
	Revenue			290,591			104,799			395,390			537,984
	Other operating income			2,775			1,107			3,882			5,533
	Voyage expenses and commissions			(32,283)			(15,495)			(47,778)			(43,077)
	Vessel operating expenses			(78,488)			(37,987)			(116,475)			(122,838)
	Charter hire expenses			(15,485)			(7,844)			(23,329)			(14,794)
	General and administrative expenses			(22,351)			(10,781)			(33,132)			(32,634)
	Net gain (loss) on disposal of tangible assets			(21,007)			−			(21,007)			13,819
	Net gain (loss) on disposal of investments in equity accounted investees			−			−			−			(24,150)
	Depreciation			(115,573)			(57,872)			(173,445)			(168,585)
	Net finance expenses			(19,641)			(11,763)			(31,404)			(28,753)
	Share of profit (loss) of equity accounted investees			21,024			7,005			28,029			31,558
	Result before taxation			9,562			(28,831)			(19,269)			154,063
	Tax benefit (expense)			526			771			1,297			(301)
	Profit (loss) for the period			10,088			(28,060)			(17,972)			153,762
	Attributable to:    Owners of the company			10,088			(28,060)			(17,972)			153,762
	The contribution to the result is as follows:
	(in thousands of USD)			First Semester 2017			Third Quarter 2017			Year-to-Date 2017			Year-to-Date 2016
	Tankers			(10,921)			(35,063)			(45,984)			127,694
	FSO			21,009			7,003			28,012			26,068
	Result after taxation			10,088			(28,060)			(17,972)			153,762
	Information per share:
	(in USD per share)			First Semester 2017			Third Quarter 2017			Year-to-Date 2017			Year-to-Date 2016
	Weighted average number of shares (basic) *			158,166,534			158,166,534			158,166,534			158,294,412
	Result after taxation			0.06			(0.18)			(0.11)			0.97
* The number of shares issued on 30 September 2017 is 159,208,949.

 

 

 

	EBITDA reconciliation (unaudited):
	(in thousands of USD)			First Semester 2017			Third Quarter 2017			Year-to-Date 2017			Year-to-Date 2016
	Profit (loss) for the period			10,088			(28,060)			(17,972)			153,762
	+ Depreciation			115,573			57,872			173,445			168,585
	+ Net finance expenses			19,641			11,763			31,404			28,753
	+ Tax expense (benefit)			(526)			(771)			(1,297)			301
	EBITDA			144,776			40,804			185,580			351,401
	+ Depreciation equity accounted investees			8,961			4,555			13,516			18,998
	+ Net finance expenses equity accounted investees			643			200			843			2,691
	+ Tax expense (benefit) equity accounted investees			(2,564)			687			(1,877)			116
	Proportionate EBITDA			151,816			46,246			198,062			373,206
	Proportionate EBITDA per share:
	(in USD per share)			First Semester 2017			Third Quarter 2017			Year-to-Date 2017			Year-to-Date 2016
	Weighted average number of shares (basic) *			158,166,534			158,166,534			158,166,534			158,294,412
	Proportionate EBITDA			0.96			0.29			1.25			2.36
All figures have been prepared under IFRS as adopted by the EU (International Financial Reporting Standards) and have not been audited nor reviewed by the statutory auditor.

For the third quarter of 2017, the Company had a net loss of USD (28.1) million (third quarter 2016: net profit of USD 0.1 million) or USD (0.18) per share (third quarter 2016: USD 0.0 per share). Proportionate EBITDA (a non-IFRS measure) for the same period was USD 46.2 million (third quarter 2016: USD 74.6 million).

 

The average daily time charter equivalent rates (TCE, a non IFRS-measure) can be summarized as follows:

 

In USD per day	Third quarter 2017	Third quarter 2016
VLCC
Average spot rate (in TI pool)	18,875	27,100
Average time charter rate*	39,875	41,480
SUEZMAX
Average spot rate**	15,670	19,045
Average time charter rate*	21,210	21,575

*Including profit share where applicable

** Excluding technical offhire days

 

 

 

 

FINANCING

 

During the third quarter, the Company repaid all outstanding debt and associated liabilities (USD 30.2 million) on the FSO joint ventures at the conclusion of the original contract. The FSOs are now debt-free.  

 

Also, there were stage payments (USD 12.5 million) associated with the construction of four Suezmax vessels at the Hyundai shipyards in South Korea and due for delivery during 2018. These vessel orders were accompanied by four seven-year time charter contracts.

 

The Company 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 23 October 2017. This initial entry into debt capital markets reflects a desire to diversify our funding structure. The issuer of the bonds has chosen Norway as its home state for the purposes of the EU Transparency Directive as incorporated into the EEA Agreement. The prospectus for the issue is now posted on the Company website: www.euronav.com.

 

GLOBAL MARITIME FORUM

Last September the Global Maritime Forum was launched with Euronav as one of the fourteen founding partners. Global Maritime Forum is a new platform that strives to shape the future of global seaborne trade. The platform consists of high-level leaders from the entire maritime spectrum and aims to effect positive long-term change for the industry and for society. More information can be found on their website: www.globalmaritimeforum.org. 

TANKER MARKET

 

The challenging freight market during the third quarter came despite some encouraging signs with active scrapping of vessels returning (nine VLCCs scrapped plus one removed from fleet for FPSO project; six Suezmax scrapped during the third quarter) incentivized by a steel price at near three-year highs. This was supported by continued upgrades to crude oil demand with the IEA raising its forecast for 2017 from 1.2 mbpd to 1.6 mbpd over the course of the third quarter and U.S. crude exports again making further progress to record on average 933k bpd for the third quarter.

 

However, the VLCC order book continued to expand with thirteen new orders placed during the third quarter largely outpacing this re-emergence of sector discipline in scrapping. The expected seasonal low level of cargoes during the third quarter combined with thirteen new VLCC and fifteen new Suezmax deliveries during the quarter drove freight rates to low levels not seen since the third quarter of 2013 and approaching operating cost break-even levels.  

 

OPEC production cuts have recently been accompanied by more assertive and selective crude export reductions. Combining potential extension of production cuts to the end of 2018 and the recent rise in geopolitical concerns in specific oil producing regions (Kurdistan, Nigeria and Libya), could provide negative headwinds to ongoing crude oil supply.

 

OUTLOOK

 

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.

 

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.

 

So far in the fourth quarter of 2017, the Euronav VLCC fleet operated in the Tankers International Pool has earned about 26,000 USD and 45% of the available days have been fixed. Euronav’s Suezmax fleet trading on the spot market has earned about 16,000 USD per day on average with 56% of the available days fixed.  

 

 

CONFERENCE CALL

 

Euronav will host a conference call at 8 a.m. EDT / 1 p.m. CET on Tuesday 31 October 2017 to discuss the results for the quarter.

 

The call will be a webcast with an accompanying slideshow. You can find details of this conference call below and on the “Investor Relations” page of the Euronav website at http://investors.euronav.com.

 

Webcast Information
Event Type:	Audio webcast with user-controlled slide presentation
Event Date:	31 October 2017
Event Time:	8 a.m. EDT / 1 p.m. CET
Event Title:	“Q3 2017 Earnings Conference Call”
Event Site/URL:	http://services.choruscall.com/links/euronav171031J37dUXTm.html

 

Telephone participants may avoid any delays by pre-registering for the call using the following link to receive a special dial-in number and PIN conference call registration link: http://dpregister.com/10113431. Pre-registration fields of information to be gathered: name, company, email.

 

Telephone participants located in the U.S. who are unable to pre-register may dial in to +1-877-328-5501 on the day of the call. Others may use the international dial-in number +1-412-317-5471.

 

A replay of the call will be available until 7 November 2017, beginning at 10 a.m. EDT / 3 p.m. CET on 31 October 2017. Telephone participants located in the U.S. can dial +1-877-344-7529. Others can dial +1-412-317-0088. Please reference the conference number 10113431.

 

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Forward-Looking Statements

 

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe", "anticipate", "intends", "estimate", "forecast", "project", "plan", "potential", "may", "should", "expect", "pending" and similar expressions identify forward-looking statements.

 

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

 

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors. Please see our filings with the United States Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

 

 

 

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Contact:

Mr. Brian Gallagher – Euronav Investor Relations

Tel: +44 20 7870 0436

Email: IR@euronav.com

 

Announcement of fourth quarter results 2017: Thursday, 25 January 2018

Regulated information within the meaning of the Royal Decree of 14 November 2007.