The company said that its net loss at the end of the quarter stood at USD 22.9 million, compared to a net loss of USD 58.7 million seen in the same period a year earlier.
Proportionate EBITDA for the same period was USD 96.8 million, up from USD 50.7 million reported in the third quarter of 2018.
The company explained that the quarterly result was affected by two non-cash items representing a total of USD 6.7 million, namely a USD 5.5 million of swaps amortization acceleration as Euronav refinanced the last Gener8 inherited facility and lost the qualification for hedge accounting, and USD 1.4 million of deferred tax assets related to the sale of the V.K. Eddie.
Freight rate development during the third quarter was lower than anticipated as the refinery maintenance program was longer and more pronounced than forecast. However, some counter seasonal strength in the large tanker markets reflected that the supply and demand balance were tighter than the average rate printed in the quarter.
“Recent freight rates levels are demonstrating that our markets are thinly balanced and that any disruption can have a dramatic impact. Catalysts such as sanctions and geopolitical events may be temporary factors; the market fundamentals and IMO 2020 implications, however, have gradually rebalanced the supply and demand and those factors form a good base for a sustainable cyclical upturn,” Hugo De Stoop, CEO of Euronav, said.
“Moreover, Euronav should benefit from it fully as we only have one dry dock for 2019 and 90% of our trading fleet is currently exposed to the spot market. In terms of shareholder benefits, Euronav will be able to align and repatriate cashflows to shareholders more quickly than in the past via quarterly dividends starting in the course of 2020.”
Fundamentals have been supportive for the freight market for VLCCs during 2019, reflected in the counter seasonal rallies seen in earlier this calendar year in February and July. The recent rally in freight prices has been driven by a number of events – some are permanent and some are temporary, the company informed.
The very strong move in freight rates during October was driven in by four key factors, including IMO 2020 that pushed some 20 to 30 vessels to be tied up storing fuel oil, Saudi outages that caused more diversification of crude buying in Far East which ties up more capacity, a series of short-term factors such as potential restrictions for certain tonnage, as well as the number of VLCCs that are scheduled to go to the yard in November and especially in December. However, the current rate environment may incentivize owners to delay their retrofit program to the first or the second quarter of 2020, which is positive as it will extend in time any global fleet capacity shortage.
As part of its financial report, the company also said that it appointed a new Chief Financial Officer, Lieve Logghe. She will succeed Hugo De Stoop who took the role as CEO. Lieve Logghe will be a member of the Executive Committee.