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Euronav's 2Q17 Results: What You Need to Know

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Part 3
Euronav's 2Q17 Results: What You Need to Know PART 3 OF 7

Dissecting Euronav’s 2Q17 Revenue

Negative revenue

Euronav (EURN) recorded revenues of $126 million in 2Q17—lower than the $164 million it recorded in 1Q17. But the crude tanker industry is characterized by seasonality, so comparing YoY (year-over-year) revenues makes more sense. Compared to its revenues of $189 million in 2Q16, Euronav’s latest revenue was 33% lower YoY.

Dissecting Euronav&#8217;s 2Q17 Revenue

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First half revenue

Euronav’s revenue for the first half of 2017 was $290 million—28% lower than the $404 million it recorded in the same period last year.

Revenue sources

Euronav’s revenue is impacted by tanker rates for VLCCs (very large crude carriers) and Suezmax vessels. The company operates its vessels in the fixed market as well as the spot market.

Tanker industry in 2Q17

The second quarter of 2017 was challenging due to two major headwinds. Cargo volumes decreased due to seasonal patterns, and many newbuild deliveries of VLCCs and Suezmax took place. The decrease in demand and the increase in supply negatively pressurized tanker rates.

The drop in tanker rates has affected not just Euronav but also its peers, including Frontline (FRO), Tsakos Energy Navigation (TNP), DHT Holdings (DHT), and Nordic American Tankers (NAT).

Euronav’s tanker rates in 2Q17

Euronav earned a spot rate for its VLCC fleet of $28,351 per day, compared with $48,864 per day in 2Q16. The company’s Suezmax spot rate in 2Q17 was $17,341 per day—lower than the $33,119 it saw in 2Q16. In 2Q17, the company’s time charter rates earned for VLCC and Suezmax vessels were also lower YoY.

What’s next?

In its 2Q17 conference call, Euronav stated that so far in 3Q17, it has booked 61% of its VLCC spot rates at around $20,000 per day. It has booked ~60% of its Suezmax spot rates at around $14,700 per day.

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