PRESS RELEASE
Regulated information
Tuesday 30 October 2018-8.00 a.m. CET
EURONAV ANNOUNCES THIRD QUARTER RESULTS 2018
HIGHLIGHTS
Seasonal improvement in Q4 so far pushing VLCC rates ahead of expectation
Return of OPEC production bringing increased cargoes
Demand resilient in face of higher oil prices and vessel supply
Iranian supply chain dislocation to provide sustained boost for tanker market
Full fleet integration of Gener8 complete
ANTWERP, Belgium, October 30, 2018-Euronav NV(NYSE: EURN&Euronext: EURN)("Euronav" or the "Company") today reported its non-audited financial results for the third quarter of 2018 ended September 30, 2018.
Paddy Rodgers, CEO of Euronav said: "The direction of travel for the large tanker market has changed from going sideways to up. Demand for and supply of crude has continued to improve as OPEC production has increased and the dislocation from Iranian sanctions has boosted and will continue to boost commercial tanker operators. Whilst the VLCC delivery schedule will remain high over the next 12 months, active recycling activity has kept net fleet growth negative so far year to date.
An accretive expansion of over 40% of our fleet size via the Gener8 merger has positioned Euronav with one of the most modern, efficient large tanker fleets accompanied by the strongest balance sheet including $677m of liquidity. This leaves us ideally levered to an upgrade on improving tanker cycle fundamentals through 2019 but also further anticipated positive developments from regulatorychanges to shipping markets from the application of IMO 2020."
PRESS RELEASE
Regulated information
Tuesday 30 October 2018-8.00 a.m. CET
The most important key figures (unaudited) are:
(in thousands of USD) |
Revenue |
Other operating income |
Voyage expenses and commissions |
Vessel operating expenses |
Charter hire expenses |
General and administrative expenses |
Net gain (loss) on disposal of tangible assets |
Depreciation |
Net finance expenses |
Bargain purchase |
Share of profit (loss) of equity accounted investees |
Result before taxation |
Tax benefit (expense) |
Profit (loss) for the period |
First | Third | |||
Semester | Quarter | Year-to- | Year-to- | |
2018 | 2018 | Date 2018 | Date 2017 | |
202,748 | 161,169 | 363,917 | 395,390 | |
2,133 | 1,405 | 3,538 | 3,882 | |
(46,277) | (50,647) | (96,924) | (47,778) | |
(78,870) | (53,110) | (131,980) | (116,475) | |
(15,432) | (7,838) | (23,270) | (23,329) | |
(31,150) | (19,105) | (50,255) | (33,132) | |
10,175 | 8,927 | 19,102 | (21,007) | |
(112,977) | (79,233) | (192,210) | (173,445) | |
(26,793) | (23,768) | (50,561) | (31,404) | |
36,280 | (19) | 36,261 | − | |
8,420 | 3,873 | 12,293 | 28,029 | |
(51,743) | (58,346) | (110,089) | (19,269) | |
141 | (401) | (260) | 1,297 | |
(51,602) | (58,747) | (110,349) | (17,972) | |
(51,602) | (58,747) | (110,349) | (17,972) | |
The contribution to the result is as follows: | ||||
First | Third | |||
(in thousands of USD) | Semester | Quarter | Year-to- | Year-to- |
2018 | 2018 | Date 2018 | Date 2017 | |
Tankers | (60,026) | (62,620) | (122,646) | (45,984) |
FSO | 8,424 | 3,873 | 12,297 | 28,012 |
Result after taxation | (51,602) | (58,747) | (110,349) | (17,972) |
Information per share: | ||||
First | Third | |||
(in USD per share) | Semester | Quarter | Year-to- | Year-to- |
2018 | 2018 | Date 2018 | Date 2017 | |
Weighted average number of shares (basic) * | 164,550,509 | 218,982,298 | 182,893,823 | 158,166,534 |
Result after taxation | (0.31) | (0.27) | (0.60) | (0.11) |
Attributable to:
Owners of the company
* The number of shares issued on 30 September 2018 is 220,024,713.
PRESS RELEASE
Regulated information
Tuesday 30 October 2018-8.00 a.m. CET
EBITDA reconciliation (unaudited):
First | Third | |||
(in thousands of USD) | Semester | Quarter | Year-to- | Year-to- |
2018 | 2018 | Date 2018 | Date 2017 | |
Profit (loss) for the period | (51,602) | (58,747) | (110,349) | (17,972) |
+ Depreciation | 112,977 | 79,233 | 192,210 | 173,445 |
+ Net finance expenses | 26,793 | 23,768 | 50,561 | 31,404 |
+ Tax expense (benefit) | (141) | 401 | 260 | (1,297) |
EBITDA | 88,027 | 44,655 | 132,682 | 185,580 |
+ Depreciation equity accounted investees | 8,961 | 4,555 | 13,516 | 13,516 |
+ Net finance expenses equity accounted investees | 975 | 1,342 | 2,317 | 843 |
+ Tax expense (benefit) equity accounted investees | 855 | 389 | 1,244 | (1,877) |
Proportionate EBITDA | 98,818 | 50,941 | 149,759 | 198,062 |
Proportionate EBITDA per share: | ||||
First | Third | |||
(in USD per share) | Semester | Quarter | Year-to- | Year-to- |
2018 | 2018 | Date 2018 | Date 2017 | |
Weighted average number of shares (basic) | 164,550,509 | 218,982,298 | 182,893,823 | 158,166,534 |
Proportionate EBITDA | 0.60 | 0.23 | 0.82 | 1.25 |
All figures, except for Proportionate EBITDA, have been prepared under IFRS as adopted by the EU (International Financial ReportingStandards) and have not been audited nor reviewed by the statutory auditor.
For the third quarter of 2018 the Company had a net loss of USD -58.7 million or USD - 0.31 per share (third quarter of 2017: net loss of USD 28 million or USD 0.18 per share). Proportionate EBITDA (a non-IFRS measure) for the same period was USD 50.9 million (third quarter of 2017: USD 46.2 million).
PRESS RELEASE
Regulated information
Tuesday 30 October 2018-8.00 a.m. CET
The average daily time charter equivalent rates (TCE, a non IFRS-measure) can be summarized as follows:
In USD per day | Third quarter2018 | Third quarter2017 |
VLCC | ||
Average spot rate (in TI pool)* | 17,773 | 18,875 |
Average rate**timecharter | 31,374 | 39,875 |
SUEZMAX | ||
Average spot rate*** | 14,919 | 15,670 |
Average rate**timecharter | 29,624 | 21,210 |
*Euronav owned ships in TI Pool **Including profit share where applicable *** Excluding technical offhire days
PREPARATION FOR IMO 2020
The Gener8 merger was an important part of our wider IMO 2020 preparation as the transaction substantially improved the fuel consumption dynamics of our VLCC fleet by reducing average age of this fleet by 25% and giving us the youngest VLCC fleet in the quoted tanker sector.
Potential installation of exhaust gas cleaning systems or "scrubbers"
Euronav has 3 areas of concern when assessing scrubber installation on its fleet and continues to thoroughly investigate each of them.
1.Upfront capital investment of $5m per VLCC with very low visibility on returns
Installing scrubbers requires an upfront capital investment today with virtually no visibility of a return on capital. Promoters of scrubbers have used MGO as a proxy for the price of compliant fuel. Some refiners including Sinochem have recently confirmed that they will sell clean compliant fuel at a price likely to be half the difference between dirty HFO and MGO. So the investment case now has half the returns being promoted and it is still 14 months before implementation and nothing suggests this price gap will not further narrow in that time.
2.Risk of pollution from scrubbers and operational concerns
Open-loop scrubbers (OLS) use seawater brought on board to remove sulphur from exhaust gases, but the wastewater produced contains a toxic cocktail of sulphuric acid
PRESS RELEASE
Regulated information
Tuesday 30 October 2018-8.00 a.m. CET
constituents, polycyclic aromatic hydrocarbons and heavy metals which are pumped into the open ocean, essentially transferring pollution from air to sea.
(a)Pollution risks
Putting sulphur back into the sea reduces its natural buffering capacityUnknown cumulative impact of increasing sulphur content in world's oceansLikely increase in ocean acidity over time
OLS use increases CO2 emissions, cheaper fuel will incentivize owners to speed up the use of OLS
(b)Operational risks
Additional capex and opex costs of operation
Unproven application of this technology in a large volume tanker environment Known risk of corrosion
Attention needed to mitigate safety/operational risks which are still quite uncertain
(c)Lack of scrutiny over technology
Scrubber waste water disposal never been systematically investigated No valid or long term data available
Cumulative impact on sensitive or congested sea lanes unknown
(d)Future regulatory risks
Court of public opinion yet to be fully tested on OLS Risk of action by Port or Flag states
Increasing application of rising CSR standards by investors & fuel producers
Promoters of this technology argue that the open oceans dilute waste water, rendering it harmless. But the solution to pollution is not dilution. Like plastic contamination over theyears, we don't know what the cumulative effect of this waste water will be or how it willinteract with existing seaborne pollutants, particularly in congested sea-lanes like the English Channel, Malacca Straits or Baltic Sea.
3.Implementation and Enforcement regime
Breaches of current emissions standards are on the rise in their existing environmental control zones (ECA). So far flag states appear ill-equipped to ensure regulatory compliance. Installing a scrubber enables regulatory compliance with the continued use of non-compliant high sulphur fuel. But weak regulatory oversight means non-compliance in the open sea, whether through breakdown or malfeasance, cannot be effectively controlled.
Conclusion
Euronav wholeheartedly embraces the IMO 2020 regulations-we want to adopt the directive properly, universally and without delay. Refiners and oil producers have
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Euronav NV published this content on 30 October 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 30 October 2018 08:06:04 UTC