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Tanker market prospects are encouraging - International Seaways

Logistic News - Published on Thu, 14 Mar 2019

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International Seaways Inc, one of the largest tanker companies worldwide providing energy transportation services for crude oil and petroleum products in International Flag markets, reported results for the fourth quarter and full year 2018. Ms Lois K Zabrocky, International Seaways’ president and CEO, said that “2018 was an important year for us, as we executed on our stated strategy of disciplined capital allocation. We capitalized on attractive asset values at the bottom of the cycle, increasing the size and reducing the age profile of our fleet and enhancing our earnings power ahead of a market recovery without issuing equity. Our significant operating leverage to a market recovery was evident in the fourth quarter, as our cash flow and earnings immediately reflected the stronger rate environment and we returned to profitability. During the year, we also maintained our strong balance sheet, increasing total liquidity to $167.6 million and ending the year once again with one of the lowest net loan to value profiles in the sector.”

Ms Zabrocky continued, “We are encouraged by the strength of the tanker market in the fourth quarter and how the market is developing thus far in 2019. While the exact timing for a sustained recovery is not yet clear, we see optimistic signs to support a balanced market in the near term led by increasing exports out of the U.S. Gulf and sustained growth in global oil demand. In addition, we continue to expect the upcoming IMO 2020 regulations will boost demand for both crude and product tankers as overall crude volumes are set to increase and new trading patterns for petroleum products develop. Going forward, our priorities remain to provide safe, reliable service to energy customers, maintain strong corporate governance standards, and continue to effectively allocate capital for the benefit of shareholders.”

Net loss for the full year ended December 31, 2018 was $88.9 million, or $3.05 per diluted share, compared with net loss of $106.1 million, or $3.64 per diluted share, for the full year 2017. The 2017 results reflect $88.4 million in vessel impairment charges and $9.2 million of costs associated with the Company’s debt refinancing. During 2018, the loss from vessel operations decreased to $54.5 million from $107.9 million in 2017. This improvement resulted primarily from a decreased loss on disposal of vessels including impairments of $67.2 million and reductions in third-party debt modification fees, depreciation and amortization, and vessel expenses. The impacts of these items were partially offset by a decline in TCE revenues and an increase in charter hire expenses, which was principally attributable to increased activity in the Company’s Lightering business. In addition, there was a year-over-year decrease in equity in income of affiliated companies of $19.5 million and an increase in interest expense of $19.0 million.

Consolidated TCE revenues for the full year ended December 31, 2018 were $243.1 million, compared to $275.0 million for full year 2017. Shipping revenues for the full year ended December 31, 2018 were $270.4 million compared to $290.1 million for the prior full year.

The reduction in equity in income of affiliated companies was principally attributable to decreases in earnings from the two FSO joint ventures as charter rates in the five-year service contracts that commenced during the third quarter of 2017 are lower than the charter rates included in the service contracts under which the FSO joint ventures had previously operated. In addition, interest expense for the two FSO joint ventures increased in 2018 compared to 2017 as a result of drawdowns on debt facilities aggregating $220 million during April 2018. In addition, revenue generated by the LNG joint venture during 2018 was lower than revenue generated during 2017 as a result of offhire claims resulting from machinery damage on two of the joint venture’s vessels during 2018.

The increase in interest expense was primarily attributable to the impact of debt facilities entered into by the Company during the second quarter of 2018 in connection with the completion of acquisition of six VLCCs from Euronav NV, accounting for $12.8 million, with the higher average outstanding principal balances under the Company’s 2017 Credit Agreement than under the 2014 facility that it replaced late in the second quarter of 2017 and higher related interest rates accounting for the balance.

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Posted By : Ratan Singh on Thu, 14 Mar 2019
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