How Euronav’s Costs and Earnings Fared in 2Q17
Euronav’s 1H17 costs
Euronav’s (EURN) central cash costs include voyage expenses and vessel operating expenses. In the first half of 2017, Euronav’s vessel operating expenses made up ~27% of its total operating expenses, while its voyage expenses represented 11% of its total operating expenses.
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Euronav’s vessel operating expenses rose to ~$39.6 million in 2Q17, compared with ~$38.8 million in 1Q17 and $41.7 million in 2Q16. Below are a few key takeaways:
- Euronav’s vessel operating expenses rose, and its revenue fell, which had a negative impact on its expense-to-revenue ratio. The ratio rose to 31% in 2Q17, compared with 24% in the previous quarter and 22% in 2Q16.
- Euronav’s voyage expenses were ~$16.1 million in 2Q17, compared with ~$16.2 million in 1Q17 and $13.5 million in 2Q16.
- Euronav’s depreciation expenses account for almost 40% of its total operating expenses. This makes it important to assess the company’s EBITDA (earnings before interest, tax, depreciation, and amortization) more than its net profit.
Tanker peers Euronav, Frontline (FRO), Nordic American Tankers (NAT), Tsakos Energy Navigation (TNP), Teekay Tankers (TNK), and DHT Holdings (DHT) are capital-intensive, and they incur huge depreciation expenses.
In 2Q17, Euronav’s EBITDA was lower than in 1Q17 and 2Q16. The company recorded EBITDA of $43 million in 2Q17, compared with $101 million in 1Q17 and $106 million in 2Q16. But we should also consider the following:
- Euronav’s EBITDA was 59% lower year-over-year in 2Q17.
- Euronav’s EBITDA margin fell to 34% in 2Q17—compared with 61% in 1Q17 and 55% in 2Q16.