2500
Views

Euronav Highlights Tanker Segment Strength with Strong Results and Outlook

Euronav tanker
Euronav highlighted the strength of the tanker segment (file photo)

Published Feb 1, 2024 3:06 PM by The Maritime Executive

 

Tanker operator Euronav reported strongly improved results for 2023 while highlighting that spot rates are on average up by nearly a quarter so far in 2024 as the energy industry responds to geopolitical tensions and strong demand for crude. At the same time, now fully under the control of the Saverys family, Euronav is rapidly moving forward to execute their vision for a green future.

“The fourth quarter has been a transformative one for Euronav,” said Alexander Saverys who became CEO of the company with the completion of the deal with John Fredriksen and Frontline to carve up the business and resolve the deadlock over management and strategic direction. They moved quickly having delivered all but one of the vessels sold to Frontline while also beginning to reshape the fleet and laying the plan to combine Euronav and CMB.TECH in 20024. “Euronav is quickly gearing up to become the reference is sustainable shipping,” said Saverys.

Announcing its preliminary 2023 results, the company supported the prevailing view that the tanker segment is at the beginning of a strong upcycle. Revenues for the year were up nearly 45 percent to $1.2 billion from $855 million in 2022. Profitability was up by four times from $203 million in 2022 to $862 million, including a $372 million gain from the sale and delivery of 23 of the 24 Suezmax tankers going to Frontline in the resolution agreement. The prior year they realized a smaller gain of $96 million from asset sales. Excluding the gains, profits for 2023 were up three-fold.

“Heightened geopolitical tensions, longer ton miles, and more oil on the water in transit provided a very supportive background during the quarter (Q4),” Euronav said in its analysis of the market. “These factors are supported by robust industry fundamentals regarding vessel supply, global fleet age, and positive year-on-year growth for crude consumption.”

The company reported that rates in the crude tanker segment “remain firm,” while saying Atlantic Basin production and exports are expected to increase. Further, they said the Red Sea turmoil has created questions if there will be a sufficient supply of tankers.

While average rates softened in the fourth quarter, for all of 2023 Euronav reports strong increases in the average spot rate for both its VLCC and Suezmax fleets. Further highlighting the strength in the market, they reported 2024 spot rates that are up more than 20 percent for the VLCC segment and 28 percent for the Suezman fleet.

The new management team is picking up on the efforts of the prior leadership and expanding the effort to reshape the company’s fleet. They reported having two ice-classed Suezmax tankers on order in China due in April and May 2026 which are already committed to long-term time charters to Valero. In addition, the new team added two more VLCCs to the order book bringing the total to four due in late 2026 and early 2027. Reflecting their vision, the VLCCs are being built ready to be powered by a dual-fuel diesel-ammonia engine.

They expect to complete the last of the deliveries of tankers to Frontline in March recording a further $372 million gain in the first quarter. In addition, as part of the fleet optimization efforts, they confirmed that the company has sold ULCC Oceania (441,561 dwt). The fleet now consists of 20 VLCCs and 21 Suezmax tankers.

While they acknowledge that rising geopolitical tensions in the Middle East have increased market volatility at the string of 2024, Euronav believes the fundamentals of the market are creating a strong outlook.