Euronav falls in the final

Euronav turned heads Tuesday after racking up a fourth-quarter deficit that was deeper than many forecasters had feared.

The Belgian tanker operator reported a net loss of $31.0m, or $0.62 per share, for the final leg of 2012 versus $50.6m worth of red ink in the comparable period 12 months ago.

Earnings before interest, taxes, depreciation and amortization (Ebitda) rose to $26.6m from $5.9m by 31 December but fell short of the $36.5m market consensus estimate generated equity analysts polled by Bloomberg.

Euronav’s fleet of VLCCs, which trade in the Tankers International pool, watched day rates fall to $12,800 from $14,200 in the fourth while its suezmax stable saw time charter and spot market averages slide to $20,200 and $8,500 from $25,500 and $15,750, respectively, year-on-year.

The daily levels failed to measure up to a forecast from researchers at DNB Markets (DNB), which had anticipated $0.41 in lost earnings per share based on a bet that the two tanker classes had achieved respective averages of around $13,000 and $10,000.

Euronav blamed the dip on what it described as weak demand fundamentals, increasing domestic US crude oil production and the continued inflow of new tonnage, which resulted in rates that failed to cover operating expenses for much of the autumn and winter.

“However, by December, the seasonal spike of the winter months materialised giving way to better freight rates in the first quarter of 2013,” the Antwerp-based operator added in its freshly minted earnings report.

Proceed with caution: Euronav looks at the year ahead

Looking forward, the shipowner said heightened economic stability in the US and Europe are key to a recovery in the tanker segment but continues to believe that China and the growth of other emerging nations will be the “driving force” behind a sustained uptick over time.

“There has already been a shift in the trading pattern of crude oil with increasing tonne miles compensating to some extent for the weak estimated demand growth and we anticipate this trend to continue in the coming years,” it told investors.

“For the tanker market this will mean a further increase in crude oil imported by China. The supply of ships must be reduced, and specifically the balance between the newbuildings due to be delivered this year and the scrapping of older ships is fundamental to a stronger rebound in the tanker market.”

Euronav described its 2013 outlook as “cautious” and said it will continue to apply measures to reduce fuel consumption on VLCCs and suezmaxes trading spot, a market where its ships were experiencing daily averages of $22,300 and $18,400, respectively, at the start of the this year.

In an earnings preview released earlier in the day, DNB noted that the group’s fourth-quarter report would offer a “strong indication” of archived spot rates for the period as it is typically the first publicly-traded tanker company to shed light on results.

Its analysts also reminded clients to heed warnings that asset sales and a refinancing drive may be on the horizon as they believe the company could run out of cash later this year.

While players from corners across the industry will turn to Euronav's results when attempting to predict the performance of peers that are due to report in the weeks to come, observers note the figures are particularly helpful to those trying to forecast the financials of partners in TI.

Late last month, the VLCC pool boasted 34 vessels and a membership roster that included Athenian Sea Carriers, Oak Maritime, Reederei Nord, Salamon AG and bankrupt US operator Overseas Shipholding Group (OSG).

Euronav, whose shares trade on NYSE Euronext Brussels, is led by chief executive Patrick Rodgers and headquartered in Antwerp where it oversees 35 crude carriers and a pair of floating storage and offloading units (FSOs). The duo is tied to a 50/50 joint venture with OSG.

The company had little to say about its offshore division in today's quarterly report but noted the wing, which more than doubled its annual contribution to the group's bottom line by the end of 2012, is still in the running for a tender connected to the Statoil Dagny FSO project after making it to the final selection round.

You can read Euronav's fourth-quarter earnings release in full by clicking on the link located under the Related Media section to the right of this article.