New York-listed Scorpio braced investors for deeper than expected red ink in the fourth quarter last night, without offering an explanation for the miss.
It is set to report a loss of between $0.04 and $0.09 per share in the final three months of 2012, it said in a surprise announcement after the close of US trading.
This is worse than the $0.02 per share reversal Wall Street analysts had charted for the company.
Rikard Vabo of Fearnley Securities said: “We see this as a minor issue (product tanker rates picked up from late Nov/early Dec, probably impacts 1q13 more).
“We continue to see Scorpio as an attractive longer term play on a product tanker recovery, and believe the company’s large exposure to eco-design vessels (in total 18 eco-design MRs, incl. NBs) is very interesting.”
Doug Mavrinac of Jefferies is equally unfazed, suggesting the impact of an improved products market in the fourth quarter will show itself in Scorpio’s accounts during the first three months of 2013.
Mavrinac instead focuses on the three time charters Scorpio embedded in its profit warning.
Three of its newbuilds delivered between now and late April have been fixed at well-above market rates.
The STI Sapphire (built 2013), its sixth newbuilding, has just begun a time charter for up to 80 days at $20,750 per day.
Meanwhile, the seventh and eighth newbuildings, to be named STI Emerald and STI Beryl, are due to be handed over before the end of March and April respectively.
On delivery, both ships are expected to be employed on time charters of up to 120 days at $19,250 per day plus an adjustment based on actual fuel consumption.
Mavrinac says the contracts are evidence of further strengthening of products tanker rates.
He expects this trend to continue in the coming months “as US crude oil production is projected to increase a record 890,000 bpd in 2013 leading to increased levels of US refined product exports”.
Sam Margolin, the new man in the shipping chair at Dahlman Rose, is on the same page.
In a note to clients he said: “We are currently reviewing our model, but we are encouraged by the charter rates on STNG's newbuilds.
“We note the relatively strong supply/demand balance in the product tanker market, and STNG's potential for future growth should rates stabilize higher and asset values recover from multi-year lows."
Scorpio is forecast to book a profit of $0.15 per share in 2013, according to a consensus number included in the Jefferies report.
Its bottom line will rise further to $0.53 per share in 2014, the bank says.
