Euronav bleeds red ink

Euronav reported a staggering third-quarter loss Tuesday as market turmoil ripped rates tied to its largest tankers.

The Belgian owner posted a net loss of $40.5m in the three months to 30 September versus a deficit of $11.9m in the comparable period a year prior.

The result amounted to $0.81 in lost earnings per share (EPS), $0.57 worse than the EPS loss posted in the third-quarter of 2010.

A $2.3m gain from hedging instruments did little to help earnings before interest, taxes, depreciation and amoritisation (Ebitda) which fell to $17.6m from $50.7m as the owner’s floating storage division suffered a $2.5m hit on interest rate swaps.

(click HERE to read the earnings report in full)

Rate averages

Euronav said the daily time charter equivalent rate (TCE) averages at its VLCC stable slipped from $30,900 in the third quarter of 2010 to $11,500 in the latest reporting period.

Suezmaxes, which secured a TCE average of $28,000 12 months ago, watched rates drop to $26,000 on average. The combined performance of both segments amounted to a spot rate average of $15,100 per day, a 20% improvement year-on year.

In today's earnings report, the company addressed the ongoing plague of excess tonnage in the tanker market and cited the anticipated delivery of another 30 VLCCs and 16 suezmaxes by year end as problematic.

Management commentary and outlook

“The oversupply of vessels is set to continue to dominate the market if all of the ships are delivered notwithstanding the reduced dollar lending capacity of ship financing banks," it told investors.

Euronav torpedoed reports that claim slow steaming has had an impact on the market but also offered insight into the factors it believes could help jumpstart a recovery.

“The most likely triggers for a rebalancing of the market are the scrapping of older tonnage or the postponing/cancelling of newbuildings which may come about as a result of a lack of available ship financing,” it said.

In Euronav’s year-end outlook, it said VLCCs operating in the Tankers International pool have earned around $7,500 per day on average with 45% of available fleet days fixed.

“These rates remain extremely low for this time of year,” the owner noted.

The company’s suezmax fleet continued to outperform VLCCs as ships in the spot market raked in day rate averages of $15,000 with 28% of available days fixed for the fourth quarter of this year.

Led by chief executive Patrick Rodgers, Euronav, whose shares trade on NYSE Euronext Brussels, controls a fleet of 11 VLCCs, 20 suezmaxes and a pair of floating storage and offloading vessels.

It also has five tankers under construction, of which two are tied to a joint venture.

As TradeWinds has reported, the owner postponed the delivery of three newbuildings on order at South Korea’s Samsung Heavy Industries earlier this year. One is expected to hit the water by the end of 2011 while the remainder are due in the first half of 2012.

Many equity analysts follow Euronav’s earnings because it is often the first tanker owner to file quarterly financials. The results offer insight into rates that are likely to be shared by some of its peers.

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