What to Know before Frontline's 2Q17 Results

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Part 2
What to Know before Frontline's 2Q17 Results PART 2 OF 4

Frontline’s 2Q17 Revenue Expected to Fall 45%

Revenue estimates

Wall Street analysts estimate net revenue of $104.3 million for Frontline (FRO) in 2Q17. This compares to $177 million in the previous quarter and $191 million in 2Q16 and would be a 45.6% fall YoY (year-over-year) but a 41% fall quarter-over-quarter.

Frontline&#8217;s 2Q17 Revenue Expected to Fall 45%

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Long-term estimates

In 3Q17, analysts expect a further drop in revenue to $95 million. In 2017—especially in the second quarter—the crude tanker industry has faced headwinds. A free fall in tanker rates was experienced, especially due to an increase in the supply of crude tankers.

The fleet has grown by 3.5% since the start of the year and is almost 6.5% higher YoY. Along with this, OPEC’s (Organization of the Petroleum Exporting Countries) oil production cut also proved negative for the crude tanker industry.

Due to weak spot rates, Frontline’s revenues are expected to take a hit in 2017. Analysts estimate fiscal 2017 revenues for Frontline to be $522 million—30.7% lower than 2016’s revenue of $754 million.

Revenue sources

Frontline earns its revenue through the operation of 55 vessels. This includes 22 VLCCs (very large crude carriers), 16 Suezmax tankers, 15 LR2-Aframax tankers, and one MR (medium-range) vessel.

The company operates its vessels in the spot market as well as in the time charter market.

Peer revenues

Most of the crude tanker companies have already released their 2Q17 earnings. Below are the revenue performances of Frontline’s peers:

  • Teekay Tankers (TNK) posted revenue of $89.4 million in 2Q17, down from $139 million in 2Q16.
  • Euronav (EURN) posted 2Q17 revenue of $126 million, down from $189 million in 2Q16.
  • DHT Holdings’ (DHT) 2Q17 revenue of $59 million represents a fall from $83 million in 2Q16.
  • Nordic American Tankers’ (NAT) 2Q17 revenue of $39 million was a fall from from $61 million in 2Q16.

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