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Euronav’s Revenue Fell 40%, Beat Estimates Easily

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Nov. 20 2020, Updated 3:49 p.m. ET

Negative revenue

Euronav (EURN) recorded revenue of $164 million in 1Q17—higher than $146.8 million in the last quarter. The crude tanker industry is characterized by seasonality, so comparing revenue YoY (year-over-year) makes more sense. Compared to revenue of $214 million in 1Q16, Euronav’s latest revenue was 40% lower YoY.

Reuters’ consensus estimate for 1Q17 was $156 million. The company beat the estimates easily.

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Revenue sources

Euronav’s revenue is impacted by tanker rates for VLCCs (very large crude carriers) and Suezmax vessels. The company operates 29 VLCCs, which make up 57.0% of its total fleet. The company operates its vessels in the fixed market as well as the spot market. DHT Holdings (DHT) primarily operates VLCCs. Nordic American Tankers (NAT) only operates Suezmax vessels. Teekay Tankers (TNK) and Tsakos Energy Navigation (TNP) have Suezmax vessels in their fleets.

Tanker industry

In 1Q17, freight rates were impacted negatively by a high level of vessel delivery. VLCC and Suezmax vessels combined, 27 VLCC equivalent capacity was added in the first quarter, according to Euronav. Also, OPEC’s agreement to cut production had a negative impact on the market. The negative trends were offset by the expansion of trade routes—exports out of the US to the Far East.

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Euronav’s tanker rates in 1Q17

Euronav earned a spot rate for its VLCC fleet of $40,528 per day—compared to $60,638 per day in 1Q16. The company’s Suezmax spot rate in 1Q17 was $41,147 per day—higher than $40,847 from 1Q16. In 1Q17, the company’s time charter rates earned for VLCC and Suezmax vessels were lower YoY.

What’s next?

Euronav stated that, so far in 2Q17, it has booked 42% of its VLCC spot rates at just above $32,000 per day. It has booked ~47% of its Suezmax spot rates at more than $22,000 per day.

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