Euronav NV: Fourth Quarter Results 2015

   ANTWERP, Belgium, January 28, 2016  —

HIGHLIGHTS

• EBITDA USD 160.6 million: highest quarterly result since Q3 2008
• Tanker fundamentals: remain healthy and look sustainable
• Ship sales: old vessels sold reducing average age of fleet

Euronav NV (NYSE: EURN & Euronext: EURN) (“Euronav” or the “Company”) today reported its non-audited financial results for the fourth quarter and full year 2015.

(Logo: http://photos.prnewswire.com/prnh/20150206/728388 )

Paddy Rodgers, CEO of Euronav said: “Recent capital market gyrations have oversold the crude tanker market which continues to be robust. With a lower oil price (it fell 18% during Q4 and further since year end) tanker freight nets back to higher results through a reduction in variable cost. Furthermore, one should expect additional stimulation of demand for crude and therefore for crude tankers over 2016. Current vessel supply is well spread over the next 3 years and should therefore be capable of being absorbed by the demand. The winter market started in Q4 with higher TCE averages than in any other quarter of 2015 and has even strengthened in Q1 2016. Consequently, management remains confident of further progress and committed to its policy of distributing 80% of net income excluding exceptional items such as gains on the disposal of vessels.”

   

    The most important key figures (unaudited) are:

                                           Fourth      Fourth        Full        Full
    in thousands of                       Quarter     Quarter        Year        Year
    USD                                      2015        2014        2015        2014

    Revenue                               225,644     144,866     846,507     473,985
    Other operating Income                  1,154       4,853       7,426      11,411
    Voyage expenses and commissions       (15,956)    (27,176)    (71,237)   (118,303)
    Vessel operating expenses             (38,812)    (37,000)   (153,718)   (124,089)
    Charter hire expenses                  (6,438)    (10,014)    (25,849)    (35,664)
    General and administrative expenses   (16,122)    (12,286)    (46,251)    (40,565)
    Net Gain (loss) on disposal of
    tangible assets                        11,165       4,345       5,300       5,706
    EBITDA                                160,635      67,588     562,178     172,481
    Depreciation                          (54,896)    (47,894)   (210,206)   (160,954)
    EBIT (result from operating
    activities)                           105,739      19,694     351,972      11,527
    Net finance expenses                   (9,809)    (37,458)    (47,640)    (93,353)
    Share of profit (loss) of
    equity accounted investees             13,335       7,992      51,407      30,286
    Result before taxation                109,266      (9,772)    355,739     (51,540)
    Tax Benefit (Expense)                  (4,602)      5,837      (5,633)      5,743
    Profit (loss) for the period          104,664      (3,935)    350,106     (45,797)
    Attributable to: Owners of the
                     company              104,664      (3,935)    350,106     (45,797)
                     Non-controlling
                     interests                  -           -           -           -

    The contribution to the result is as follows

                                           Fourth      Fourth        Full        Full
    in thousands of                       Quarter     Quarter        Year        Year
    USD                                      2015        2014        2015        2014

    Tankers                                96,503     (11,243)    317,152     (75,250)
    FSO                                     8,162       7,308      32,954      29,453
    result after taxation                 104,665      (3,935)    350,106     (45,797)

    Information per share:

                                           Fourth        Fourth         Full         Full
    in USD per                            Quarter       Quarter         Year         Year
    share                                    2015          2014         2015         2014

    Weighted average number of shares
    (basic)*                          158,628,151   129,300,666  155,872,171  116,539,018
    EBITDA                                   1.01          0.52         3.61         1.48
    EBIT (operating result)                  0.67          0.15         2.26         0.10
    Result after taxation                    0.66         (0.03)        2.25        (0.39)

All figures have been prepared under IFRS as adopted by the EU (International Financial Reporting Standards) and have not been audited nor reviewed by the statutory auditor.

* The number of shares outstanding on 31 December 2015 is 159,208,949.

The Company had a net profit of USD 104.7 million (fourth quarter 2014: net loss of USD -3.9 million) for the three months ended 31 December 2015 or USD 0.66 per share (fourth quarter 2014: USD -0.03 per share). EBITDA (a non IFRS-measure) for the fourth quarter 2015 was USD 160.6 million (fourth quarter 2014: USD 67.6 million). For the full year ending 31 December 2015, the preliminary net profit is USD 350.1 million (2014: USD -45.8 million) or USD 2.25 per share (2014: net loss of USD -0.39 per share).

If the Company had continued to apply the proportionate consolidation method for its joint ventures for the fourth quarter of 2015, the adjusted EBITDA (a non IFRS-measure) would have been USD 182.2 million (fourth quarter 2014: USD 84.5 million), the adjusted EBIT would have been USD 119.9 million (fourth quarter 2014: USD 29.3 million) and the profit for the period would have remained the same.

The average daily time charter equivalent rates (TCE, a non IFRS-measure) can be summarized as follows:

   
    In USD per day
                                       Fourth       Fourth         Full         Full
                                      quarter      quarter         year         year
                                         2015         2014         2015         2014
    VLCC
    Average spot rate (in TI pool)*    61,482       31,650       55,055       27,625
    Average time charter rate**        41,776       29,731       41,981       31,086
    SUEZMAX
    Average spot rate*                 41,596       24,248       41,686       23,382
    Average time-charter rate**        36,042       30,513       35,790       25,930

* Excluding technical offhire days

** Including profit share where applicable

EURONAV TANKER FLEET

On 11 November 2015 the Company sold the Suezmax Cap Laurent (1998 – 146,145 dwt), for USD 22.25 million. The vessel was wholly owned by Euronav and one of its four oldest Suezmaxes. The capital gain on that sale of USD 11.1 million was recorded in the fourth quarter. The vessel was delivered to its new owner on 26 November 2015.

On 15 January 2016 the Company sold the VLCC Famenne (2001 – 298,412 dwt), one of its two oldest VLCC vessels, for USD 38.4 million. The vessel is wholly owned by Euronav. The capital gain on that sale of about USD 13.8 million will be recorded at delivery which is expected in the first quarter of 2016.

On 26 January 2016 Euronav took delivery of the second vessel of four VLCCs which were acquired as resales of existing newbuilding contracts as announced on 16 June 2015: the VLCC Alice (2016 – 343,057 dwt).

CORPORATE

On 3 December 2015 Carl Steen was appointed Chairman of the Board of Directors of Euronav. This change is part of a process to further increase the independence and diversification of the Board as the Company has completed its migration to an independent public company with a highly liquid share and a wide shareholder base. As from that date, the Board of Directors comprises Carl Steen (Chairman), Daniel Bradshaw, Ludwig Criel, Alexandros Drouliscos, Anne-Hélène Monsellato, John Michael Radziwill, Paddy Rodgers, Ludovic Saverys, William (Bill) Thomson and Alice Wingfield Digby.

On the finance side, Euronav is fully funded in its current structure and retains a strong conviction that tanker markets are well balanced. The last two VLCCs to be delivered in March 2016 and May 2016 have a combined remaining capex of USD 130.6 million (as at 1 January 2016). With the vast majority of its fleet currently on the water, Euronav is ideally positioned to benefit from this positive freight market environment and will remain disciplined as good steward of shareholder capital.

DIVIDEND

The final audited results for the year 2015 and the final dividend will be announced at the end of March 2016. The dividend will then need to be approved at the subsequent Annual General Meeting of Shareholders in May.

SHARE BUY BACK

As reported on 26 January 2016, Euronav has bought back 500,000 shares at an average cost of EUR 9.5256 per share. The Board of Directors remains authorized to buy shares back. The extent to which it does and the timing of these purchases will depend upon a variety of factors, including market conditions, regulatory requirements and other corporate considerations.

TANKER MARKET

The fourth quarter saw the return of high volatility of freight rates. Such volatility occurs when the balance between demand and supply is very tight. This is a positive structure for tanker owners. This current market positioning looks sustainable and provides management with a positive outlook.

Demand for crude oil remains firm with current consensus (source: IEA) projecting around 1.2m bpd of additional demand of oil in 2016. Whilst this is lower than the 1.6m bpd delivered in 2015 it is worth noting that, at this stage last year, forecasts were set at 0.9m bpd for 2015. Since the OPEC meeting in early December and the setting of these projections, the oil price has fallen by more than a third. This could potentially bring additional demand to that already forecast.

Whilst the order book growth slowed dramatically since the end of Q3 for both VLCC and Suezmax sectors, the order book itself requires constant monitoring and assessment. This is a critical issue and Euronav would like to point out three thoughts. First, in 2016, the delivery schedule for VLCCs is heavily skewed toward the latter half of the year. Second, based on the current forecasted oil demand and scheduled deliveries of newbuildings, demand and supply are broadly in equilibrium and should remain so. Third, whilst scrapping is expected to be extremely modest when markets are strong, the average 20 year life for a crude tanker implies a natural level of attrition (5% per annum) in the global fleet.

The return of Iran to the global oil markets was confirmed with the lifting of certain sanctions on 17 January 2016. Whilst an important development, we believe it will take time for this impact to be properly felt. We expect the effect will largely be neutral to positive for the tanker sector for two reasons. First, it should be noted that half of the Iranian fleet (circa 40 VLCCs in total) continued to trade mostly to the Far East between 2012-2015. The part of the Iranian fleet (which is not too old) that effectively returns should therefore absorb the anticipated increase in Iranian crude production for export. Second, snapback provisions in the sanctions lifting agreement and other financial dollar based restrictions will take time to be lifted in full, implying full integration of Iran will be over a prolonged period.

The timing of the repeal of the USA crude export ban in December was unexpected but at the same time welcomed. Rather like the Iranian situation management’s view is that this development will add incremental ton-miles but will need time to take effect given the current lack of loading infrastructure required in the USA.

OUTLOOK

Typically, the fourth quarter is seasonally the strongest quarter during the tanker calendar year and 2015 proved this again. This reflects the strong fundamentals that underpin the crude tanker sector currently and which Euronav believes has structural support to drive the market for several years.

So far in the first quarter of 2016 the Euronav VLCC fleet operated in the Tankers International pool has earned about USD 75,000 per day and 46% of the available days have been fixed. Euronav’s Suezmaxes trading on the spot market have earned about USD 41,000 per day on average with 47% of the available days fixed for the first quarter.

Euronav is well positioned to benefit from the strong tanker industry fundamentals in place. An established dividend distribution policy maximizes returns to shareholders backed by an active approach toward fleet portfolio management and provides the group with a discipline for future growth opportunities.

With a constructive structure of crude oil demand, supported by oil prices at twelve year lows and a manageable vessel supply pipeline, Euronav believes that the outlook remains positive for the tanker sector. Euronav now has 56 vessels on the water with two VLCCs to be delivered by May 2016. With its fleet fully financed, Euronav has no funding requirements going forward and is supported by a proven management team, strict capital discipline and an established dividend distribution policy.