While robust fundamentals drove a strong market until June, increased vessel supply aggravated seasonal trading patterns until Q4. In its 2017 outlook Euronav sees challenges from the peak of new vessel supply and production cuts.
Revenue in the fourth quarter of 2016 was 146.3 m[ds_preview]ill. $, compared to 225.6 mill. in the corresponding period of 2015. Full year revenue for 2016 was down to 684.3 mill. $ from 846.5 mill. in in 2015.
Profit in the last three months of 2016 was 50.3 mill. $, compared to 104.9 mill. in the corresponding period of 2015. Full year profit for 2016 amounted to 204 mill. $, down from 350.3 mill. in in 2015.
Paddy Rodgers, CEO of Euronav said: »2016 represented a very active year for Euronav during which we delivered a number of accomplishments. Firstly, the award for our FSO project for a further five years starting the third quarter of 2017, subject to successful negotiations and the signing of the final service contracts. Secondly, we took the opportunity to further focus our activities by consolidating our last tanker joint venture arrangements related to one VLCC and four Suezmaxes (of which we now fully own one VLCC and two Suezmax vessels). Thirdly, we continued to grow the Company by acquiring two VLCC resales, financed internally through our balance sheet which in turn was strengthened via a sale & leaseback transaction and the signing of a new finance facility. Lastly, we secured a long-term charter with Valero Energy Inc. for two Suezmax vessels starting in 2018 which will be served by two Ice-class new buildings ordered during the year.«
»2017 will present a number of challenges«
According to Rodgers, freight rates were impacted negatively from June onwards by increased vessel supply, weak tanker owners sentiment and specific factors such as oil supply disruptions affecting the Suezmax segment.
Medium- and longer-term prospects for the tanker market remain constructive, underpinned by a solid recurring demand for crude, structural change in financing likely to constrain future vessel supply growth and a likely acceleration in the retirement of older ships from 2017 onward encouraged by environmental legislation on ballast water treatment and sulfur emissions, Rodgers thinks.
»However, 2017 will, in our view, present a number of challenges: OPEC production cuts, concentrated delivery schedule of the order book and anemic owner confidence, which when combined, are all likely to produce a difficult rate environment for the next few quarters,« he added.
