HIGHLIGHTS
- Anticipated Q2 seasonal freight rate weakness
- Large crude tanker market fundamentals constructive into the
winter
- Share buybacks total USD 27m (USD 0.12 per share) during first
half
- Dividend of USD 0.06 to be paid in October
ANTWERP, Belgium, 8 August 2019 – Euronav NV (NYSE: EURN
& Euronext: EURN) (“Euronav” or the “Company”) today
reported its non-audited financial results for the first semester
and second quarter of 2019 ended 30 June 2019.
Hugo De Stoop, CEO of Euronav said: “Our thesis for 2019 always
anticipated freight rate weakness to start during the second
quarter as larger and longer than usual refinery maintenance
programs ahead of IMO 2020, OPEC production cuts and heavy delivery
newbuilding schedule would exacerbate seasonal lower cargo volumes.
This has been the case but we are disappointed not to have seen a
recovery in the rates yet. Nevertheless, we remain constructive on
freight rate recovery in the fourth quarter, based on continued US
crude export volume growth and IMO 2020 preparation and its related
induced reductions to vessel
supply.”
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The most important key figures (unaudited)
are: |
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(in
thousands of USD) |
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First quarter 2019 |
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Second quarter 2019 |
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First semester 2019 |
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First semester 2018 |
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Revenue |
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232,589 |
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169,347 |
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401,936 |
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202,748 |
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Other
operating income |
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2,039 |
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1,121 |
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3,160 |
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2,133 |
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Voyage
expenses and commissions |
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(37,625) |
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(36,876) |
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(74,501) |
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(46,277) |
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Vessel
operating expenses |
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(54,401) |
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(52,974) |
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(107,375) |
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(78,870) |
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Charter
hire expenses |
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− |
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− |
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− |
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(15,432) |
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General
and administrative expenses |
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(19,675) |
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(16,701) |
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(36,376) |
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(31,150) |
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Net gain
(loss) on disposal of tangible assets |
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(74) |
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455 |
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381 |
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10,175 |
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Depreciation |
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(83,856) |
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(84,685) |
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(168,541) |
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(112,977) |
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Net
finance expenses |
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(23,836) |
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(23,540) |
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(47,376) |
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(26,793) |
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Bargain
purchase |
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− |
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− |
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− |
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36,280 |
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Share of profit (loss) of equity accounted investees |
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3,914 |
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3,746 |
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7,660 |
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8,420 |
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Result before taxation |
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19,075 |
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(40,107) |
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(21,032) |
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(51,743) |
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Tax benefit (expense) |
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451 |
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1,551 |
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2,002 |
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141 |
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Profit (loss) for the period |
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19,526 |
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(38,556) |
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(19,030) |
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(51,602) |
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Attributable to: Owners of the company |
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19,526 |
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(38,556) |
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(19,030) |
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(51,602) |
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The contribution to the result is as follows: |
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(in
thousands of USD) |
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First quarter 2019 |
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Second quarter 2019 |
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First semester 2019 |
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First semester 2018 |
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Tankers |
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15,611 |
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(42,301) |
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(26,690) |
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(60,026) |
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FSO |
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3,915 |
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3,745 |
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7,660 |
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8,424 |
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Result after taxation |
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19,526 |
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(38,556) |
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(19,030) |
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(51,602) |
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Information per share: |
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(in USD
per share) |
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First quarter 2019 |
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Second quarter 2019 |
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First semester 2019 |
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First semester 2018 |
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Weighted
average number of shares (basic) * |
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217,447,311 |
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216,561,237 |
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216,994,426 |
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164,550,509 |
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Result
after taxation |
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0.09 |
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(0.18) |
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(0.09) |
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(0.31) |
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* The
number of shares issued on 30 June 2019 is 220,024,713. |
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EBITDA reconciliation (unaudited): |
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(in
thousands of USD) |
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First quarter 2019 |
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Second quarter 2019 |
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First semester 2019 |
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First semester 2018 |
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Profit
(loss) for the period |
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19,526 |
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(38,556) |
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(19,030) |
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(51,602) |
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+ Net
interest expenses |
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21,033 |
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20,379 |
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41,412 |
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26,197 |
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+
Depreciation of tangible and intangible assets |
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83,856 |
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84,685 |
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168,541 |
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112,977 |
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+ Income
tax expense (benefit) |
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(451) |
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(1,551) |
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(2,002) |
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(141) |
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EBITDA (unaudited) |
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123,964 |
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64,957 |
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188,921 |
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87,431 |
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+ Net
interest expenses JV |
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1,191 |
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1,146 |
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2,337 |
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970 |
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+
Depreciation of tangible and intangible assets JV |
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4,456 |
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4,505 |
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8,961 |
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8,961 |
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+ Income
tax expense (benefit) JV |
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436 |
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368 |
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804 |
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854 |
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Proportionate EBITDA |
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130,047 |
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70,976 |
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201,023 |
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98,216 |
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Proportionate EBITDA per share: |
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(in USD
per share) |
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First quarter 2019 |
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Second quarter 2019 |
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First semester 2019 |
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First semester 2018 |
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Weighted
average number of shares (basic) |
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217,447,311 |
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216,561,237 |
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216,994,426 |
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164,550,509 |
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Proportionate EBITDA |
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0.60 |
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0.33 |
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0.60 |
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0.60 |
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All figures, except for the
EBITDA and the Proportionate EBITDA, 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. |
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For the first half of 2019, the Company had a net loss of USD
19.0 million or USD 0.09 per share (first half of 2018: a net loss
of USD 51.6 million or USD 0.31 per share). Proportionate EBITDA (a
non-IFRS measure) for the same period was USD 201.0 million (first
half of 2018: USD 98.2 million).
The average daily time charter equivalent rates
(TCE, a non IFRS-measure) can be summarized as
follows:
In USD per day |
Second quarter 2019 |
Second quarter 2018 |
First Semester 2019 |
First Semester 2018 |
VLCC |
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Average spot rate (in TI pool)* |
23,218 |
16,751 |
29,150 |
17,467 |
Average time charter rate** |
27,165 |
34,976 |
22,534 |
34,410 |
SUEZMAX |
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Average spot rate*** |
17,217 |
12,883 |
22,220 |
13,334 |
Average time charter rate** |
30,375 |
20,882 |
31,521 |
23,218 |
*Euronav owned ships in TI Pool (excluding technical offhire
days)
**Including profit share where applicable
*** Excluding technical offhire days
EURONAV TANKER FLEET, FINANCING AND ENVIRONMENTAL
INITIATIVE
On 5 August 2019 Euronav delivered its oldest vessel, the VLCC
VK Eddie (2005 – 305,261 dwt) to her new owners. The vessel will be
converted into an FPSO and therefore leave the worldwide trading
fleet. A capital gain on the sale of approximately USD 14.4 million
will be recorded during the current quarter.
On 14 June 2019 Euronav Luxembourg S.A., a wholly owned
subsidiary of Euronav NV successfully completed a tap issue of USD
50 million under its existing senior unsecured bonds (ISIN
NO0010793888). The bonds are guaranteed by Euronav NV, mature in
May 2022 and carry a coupon of 7.50%. The tap issue was priced at
101% of par value. The outstanding amount after the tap issue will
be USD 200 million.
On 18 June 2019 under the auspices of the Global Maritime Forum,
Euronav was announced as a founding supporter of the Poseidon
Principles, a global framework for assessing and disclosing the
climate alignment of financial institutions’ shipping portfolios.
The Poseidon Principles establish a common baseline to
quantitatively assess and disclose whether financial institutions’
lending portfolios are in line with adopted climate goals.
For further details on the launch of the initiative see
the following link:
www.poseidonprinciples.org/news/citi-societe-generale-dnb-and-other-leading-international-banks-promote-greener-global-shipping-through-new-principles
CAPITAL ALLOCATION
As part of its capital allocation strategy, Euronav has the
option of buying its own shares back should the Board and
Management believe that there is a substantial value disconnect
between the share price and the real value of the Company. This
return of capital is in addition to the fixed dividend of USD 0.12
per share paid each year.
The table below provides an overview of the share purchases
which the Company did in the fourth quarter of 2018 and the first
half of
2019.
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Total number of shares repurchased |
Average price paid per share (EUR) |
Average price paid per share (USD) |
Q4 2018 |
545,486 |
7.27 |
8.31 |
Q1 2019 |
2,132,643 |
7.75 |
8.75 |
Q2 2019 |
1,155,024 |
7.92 |
8.95 |
Total |
3,833,153 |
7.73 |
8.76 |
The above table shows that, over the past three quarters,
Euronav has returned USD 31 million from share buy backs equivalent
to USD 0.14 per share in addition to its fixed annual dividend
policy of USD 0.12 per share.
Euronav may continue to buy back its own shares
opportunistically. The extent to which it does and the timing of
these purchases, will depend upon a variety of factors, including
market conditions, regulatory requirements and other corporate
considerations.
The Company retained around USD 858 million of liquidity as at
the end of June 2019.
DIVIDEND FIRST HALF 2019
Management will propose to the board of Euronav to pay a cash
dividend of USD 0.06 per share in early October. This payment is
part of Euronav’s minimum fixed dividend policy of USD 0.12 per
year. The share will trade ex-dividend as from 26 September 2019
(record date 27 September 2019). The dividend to holders of Euronav
shares listed and tradeable on Euronext Brussels will be paid in
EUR at the USD/EUR exchange rate of the record date.
IMO 2020 PREPARATION
The switch required from 3.5% to 0.5% Sulphur content in the
fuel employed by the majority of shipping companies is one of the
most impactful pieces of regulation that shipping has had to
embrace and adopt. Euronav’s detailed plans and preparations are
well advanced for this new environment starting January 2020.
Euronav looks forward to providing more specific details on our
IMO 2020 preparations and our outlook for the introduction and
impact of this important regulatory change via a webinar and
presentation on 5 September 2019. More details on accessing this
webinar will be given nearer the time.
TANKER MARKET
Vessel supply is arguably the most important factor driving the
tanker sector. The restraint in ordering of large crude tankers
(VLCC and Suezmax) since the start of the year is welcomed and is
encouraging. Since early January only one VLCC order has been
confirmed with the rolling 12 month order flow for VLCC running at
six year lows.
We believe that the uncertainty around future propulsion systems
and the fuel they require in line with the long term greenhouse gas
(GHG) reduction set by the IMO for 2050 should contribute to
further ordering restraint.
Demand forecasts have weakened modestly over 2019 with the three
core agencies (IEA, EIA and OPEC) cutting 2019 demand growth
forecasts from 1.4m bpd to 1.2m bpd. It should be noted that this
remains above the long term trend growth average of 1.1m bpd (since
1990). Asset values continued to improve primarily in the second
hand market where prices for 5 and 10 year old VLCC and Suezmaxes
are back at Q1 2016 levels.
Clearly the decision by OPEC to extend their self-imposed
production cuts of 1.2m bpd to the end of Q1 2020 provides a
challenging background for the wider tanker market. At the same
time, US crude exports have continued to offset this negative trend
with Q2 posting another quarterly record high volume of oil
exported from the US.
The recent attacks on crude tanker tonnage in June and July in
the Arabian Gulf have naturally led to instability and increasing
risks in the region and Euronav has along with most of our peers
taken precautionary actions in order to protect our staff whose
safety remains our priority.
OUTLOOK
Our earnings report in April highlighted that the resilient Q1
freight market experienced would give way to some weakness during
the second quarter. This has proved to be the case. Refinery
maintenance (longer and deeper than anticipated), front end loaded
vessel supply (70% of VLCC equivalents due for calendar 2019
delivery were on the water by June) and maintained OPEC production
cuts all contributed to downward pressure on freight rates over the
past three months and at the start of Q3 which is disappointing as
we anticipated a rate recovery earlier.
However, prospects give encouragement for Q4, refinery
production is anticipated to return to higher levels for this
period ahead of IMO 2020’s introduction in January next year. US
crude export growth continues and the recent mark of 3.9m bpd in
June reflects that infrastructure bottlenecks are being overcome.
Finally, the disruptions around the preparation for IMO 2020 and in
particular from VLCC/Suezmax vessels voluntarily exiting the
trading fleet in order to retrofit scrubbers should reduce vessel
supply during a period of seasonal demand strength.
So far in the third quarter of 2019, the Euronav VLCC fleet
operated in the Tankers International Pool has earned about USD
20,600 per day and 65% of the available days have been fixed.
Euronav’s Suezmax fleet trading on the spot market has earned about
USD 15,800 per day on average with 58% of the available days
fixed.
CONFERENCE CALL
Euronav will host a conference call today at 8 a.m. EDT / 2 p.m.
CET today to discuss the results for the first half and second
quarter 2019.
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: |
8 August 2019 |
Event Time: |
8 a.m. EDT / 2 p.m. CET |
Event Title: |
“Q2 2019 Earnings Conference Call” |
Event Site/URL: |
https://services.choruscall.com/links/euronav190808qyQf2mX3.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/10133430. 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 15 August 2019,
beginning at 9 a.m. EDT / 3 p.m. CET on 8 August 2019. 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
10133430.
*
* *
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.
Contact:
Mr. Brian Gallagher – Head of IR and Executive Committee
member
Tel: +44 20 7870 0436
Email: IR@euronav.com
Announcement of Q3 2019 results: Tuesday
29 October 2019
About Euronav
Euronav is an independent tanker
company engaged in the ocean transportation and storage of crude
oil. The Company is headquartered in Antwerp, Belgium, and has
offices throughout Europe and Asia. Euronav is listed on Euronext
Brussels and on the NYSE under the symbol EURN. Euronav employs its
fleet both on the spot and period market. VLCCs on the spot market
are traded in the Tankers International pool of which Euronav is
one of the major partners. Euronav’s owned and operated fleet
consists of 2 ULCCs, 42 VLCCs, 25 Suezmaxes and 2 FSO vessels (both
owned in 50%-50% joint venture).
Regulated information within the meaning of the Royal
Decree of 14 November 2007
- 190808 - EURN Q2 2019 Earnings ENG
- 190808 - EURN Q2 2019 Earnings NL
Euronav NV (EU:EURN)
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