Belgium´s tanker company Euronav has repor[ds_preview]ted a drop in profits during the first half o the year. The third quarter is expected to be »challenging«.
For the first half of 2016 the Company had a net result of USD 153.7 million or USD 0.97 per share (first half 2015: USD 173.2 million and USD 1.13 per share). Proportionate EBITDA for the same period was USD 298.6 million (first half 2015: USD 316.1 million).
The release stated the third quarter to be challenging. The seasonality impacting freight rates would have been exacerbated by the persistence of additional short term disruptive factors such as oil production outages in West Africa and new tonnage added to the global fleet. Whilst the underlying fundamentals for the medium and longer term crude tanker markets remain constructive Euronav anticipates that the current market conditions will impact the fourth quarter.
Paddy Rodgers, CEO of Euronav said: »We are delighted to announce the acquisition of two new high specification VLCC ex yard resale vessels for USD 84.5m each. The tanker market is at an important stage in its evolution with asset prices at historically low levels primarily as a result of limited access to financing becoming increasingly selective and favoring industrial players like Euronav. This phase provides an opportunity for Euronav to add shipping days at low cost in a disciplined manner without issuance of new shares or excessive additional leverage. This is a good opportunity to be acquisitive and act in the best interests of the business and the long term investors.«
Euronav elaborated on the current »return to shareholders« policy, adopted in April, pursuant to which it is intended to distribute to the shareholders 80% of the annual net consolidated profit (excluding exceptional items such as gains on the disposal of vessels). »Notwithstanding the adoption of this policy, our Board of Directors‘ primary obligation remains to act in the best interest of the Company and in doing so our Board of Directors always considers alternatives for use of cash that might otherwise be distributed as dividends«, it was said.
This might include the purchase of own shares, the accelerated amortization of debt or the acquisition of vessels which are considered at that time to be accretive to shareholders‘ value. Dividends, if any, will be paid in two instalments: first as an interim dividend, then as a balance payment corresponding to the final dividend and the interim dividend payout ratio may typically be more conservative than the yearly payout of 80% of net consolidated profit.
»Pursuant to this policy set out above and considering the acquisition of two additional VLCCs and the limited share buybacks that occurred in the first half of the year, our Board of Directors has approved an interim dividend for the first semester of USD 0.55 per share.«
The Euronav Board and management seeks to re-invest the capital base of the Company and therefore excludes capital gains when assessing net income available for distribution. Consequently the Board considered the net income figure to be USD 140 million (EPS USD 0.88 per share) for the first semester from which it has approved an interim dividend of USD 0.55 per share. »The Board is therefore deploying retained earnings to partially finance the new acquisitions and maintain liquidity and leverage ratios in line with sound business practice«, Euronav added.
