Categories Earnings, Energy

Frontline swings to profit in Q1, beats estimates

Frontline Ltd. (FRO), which engages in the seaborne transportation of crude oil and oil products, swung to a profit in the first quarter of 2019 from a loss last year, helped by higher revenues as well as a narrower other operating loss. The results exceeded analysts’ expectations.

Net income attributable to the company was $40.03 million or $0.24 per basic share, compared to a loss of $13.64 million or $0.08 per basic share in the previous year quarter.

Excluding certain non-cash items, earnings were $45.5 million or $0.27 per basic share for the first quarter of 2019. The non-cash items consisted of a loss on derivatives and an unrealized loss on marketable securities.

Total operating revenues surged by 40.5% to $238.28 million. The reported spot average daily time charter equivalent for very large crude carriers, Suezmax tankers and LR2/Aframax tankers in the first quarter were $35,700, $28,200, and $24,000, respectively. As of March 31, 2019, the company’s fleet consisted of 62 vessels, with an aggregate capacity of about 11.9 million DWT.

Also read: ExxonMobil Q1 earnings report

Following a strong start of the year, crude oil tanker rates weakened significantly in recent months due to elevated levels of refinery maintenance, decrease in oil supply and a number of new buildings delivering. However, a market improvement is expected in the second half of the year as refinery capacity returns and oil volumes return to the markets.

Crude oil demand forecasts remained healthy and largely unchanged since the start of the year. In particular, demand from China and India remains robust, more than offsetting weaker demand growth from Europe. Concerns exist, however, about the sustainability of demand growth in a rising oil price environment and the impact of global trade tensions and tariffs on growth also remains to be seen.

In particular, market analysts expect incremental crude demand to be generated by upcoming IMO 2020 regulations as increased inputs will be required to meet the new demand for low sulfur fuels.

Shares of Frontline ended Wednesday’s regular session up 6.14% at $8.99 on the NYSE. Following the earnings release, the stock inched down over 1% in the pre-market session.

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