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.”
| The most important key figures (unaudited) are: | ||||||||||||||
| (in thousands of USD) | First quarter 2019 | Second quarter 2019 | First semester 2019 | First semester 2018 | ||||||||||
| Revenue | 232,589 | 169,347 | 401,936 | 202,748 | ||||||||||
| Other operating income | 2,039 | 1,121 | 3,160 | 2,133 | ||||||||||
| Voyage expenses and commissions | (37,625) | (36,876) | (74,501) | (46,277) | ||||||||||
| Vessel operating expenses | (54,401) | (52,974) | (107,375) | (78,870) | ||||||||||
| Charter hire expenses | − | − | − | (15,432) | ||||||||||
| General and administrative expenses | (19,675) | (16,701) | (36,376) | (31,150) | ||||||||||
| Net gain (loss) on disposal of tangible assets | (74) | 455 | 381 | 10,175 | ||||||||||
| Depreciation | (83,856) | (84,685) | (168,541) | (112,977) | ||||||||||
| Net finance expenses | (23,836) | (23,540) | (47,376) | (26,793) | ||||||||||
| Bargain purchase | − | − | − | 36,280 | ||||||||||
| Share of profit (loss) of equity accounted investees | 3,914 | 3,746 | 7,660 | 8,420 | ||||||||||
| Result before taxation | 19,075 | (40,107) | (21,032) | (51,743) | ||||||||||
| Tax benefit (expense) | 451 | 1,551 | 2,002 | 141 | ||||||||||
| Profit (loss) for the period | 19,526 | (38,556) | (19,030) | (51,602) | ||||||||||
| Attributable to: Owners of the company | 19,526 | (38,556) | (19,030) | (51,602) | ||||||||||
| The contribution to the result is as follows: | ||||||||||||||
| (in thousands of USD) | First quarter 2019 | Second quarter 2019 | First semester 2019 | First semester 2018 | ||||||||||
| Tankers | 15,611 | (42,301) | (26,690) | (60,026) | ||||||||||
| FSO | 3,915 | 3,745 | 7,660 | 8,424 | ||||||||||
| Result after taxation | 19,526 | (38,556) | (19,030) | (51,602) | ||||||||||
| Information per share: | ||||||||||||||
| (in USD per share) | First quarter 2019 | Second quarter 2019 | First semester 2019 | First semester 2018 | ||||||||||
| Weighted average number of shares (basic) * | 217,447,311 | 216,561,237 | 216,994,426 | 164,550,509 | ||||||||||
| Result after taxation | 0.09 | (0.18) | (0.09) | (0.31) | ||||||||||
| * The number of shares issued on 30 June 2019 is 220,024,713. | ||||||||||||||
| EBITDA reconciliation (unaudited): | |||||||||||||||
| (in thousands of USD) | First quarter 2019 | Second quarter 2019 | First semester 2019 | First semester 2018 | |||||||||||
| Profit (loss) for the period | 19,526 | (38,556) | (19,030) | (51,602) | |||||||||||
| + Net interest expenses | 21,033 | 20,379 | 41,412 | 26,197 | |||||||||||
| + Depreciation of tangible and intangible assets | 83,856 | 84,685 | 168,541 | 112,977 | |||||||||||
| + Income tax expense (benefit) | (451) | (1,551) | (2,002) | (141) | |||||||||||
| EBITDA (unaudited) | 123,964 | 64,957 | 188,921 | 87,431 | |||||||||||
| + Net interest expenses JV | 1,191 | 1,146 | 2,337 | 970 | |||||||||||
| + Depreciation of tangible and intangible assets JV | 4,456 | 4,505 | 8,961 | 8,961 | |||||||||||
| + Income tax expense (benefit) JV | 436 | 368 | 804 | 854 | |||||||||||
| Proportionate EBITDA | 130,047 | 70,976 | 201,023 | 98,216 | |||||||||||
| Proportionate EBITDA per share: | |||||||||||||||
| (in USD per share) | First quarter 2019 | Second quarter 2019 | First semester 2019 | First semester 2018 | |||||||||||
| Weighted average number of shares (basic) | 217,447,311 | 216,561,237 | 216,994,426 | 164,550,509 | |||||||||||
| Proportionate EBITDA | 0.60 | 0.33 | 0.60 | 0.60 | |||||||||||
| 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. | |||||||||||||||
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 | ||||
| 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 | ||||
| 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.
| 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.
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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
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