Frontline 2Q Net Drops 46 Percent on Older Vessels

Wednesday, August 23, 2006
Frontline Ltd., the world's second- biggest oil tanker company, said second-quarter profit slumped a greater-than-expected 46 percent as earnings declined for its older 1 million-barrel tankers. Net income dropped to $68.6 million, or 92 cents a share, from $127.5 million, or $1.70, in the year-earlier period, Hamilton, Bermuda-based Frontline said today in a statement.

Frontline, led by Norwegian billionaire John Fredriksen, has failed to earn as much as rivals such as OMI Corp. and General Maritime Corp. from its 1 million-barrel ships, or suezmaxes, because almost half have single-layer hulls. Companies such as Total SA and Exxon Mobil Corp. have begun shunning such ships before an international ban, in favor of safer double-hull vessels.

Frontline's 26 suezmaxes earned about $16,000 a day less in the second quarter than Stamford, Connecticut-based OMI, the second-largest U.S.-based tanker owner, whose fleet is comprised entirely of double-hull vessels. That compares with a difference of about $8,000 a day last year.

Shares of OMI, which reported a 4.7 percent increase in suezmax freight rates for the second quarter, have climbed 24 percent this year. Shares of New York-based General Maritime, which recorded a 4.4 percent increase in rates, have gained 7 percent.

Frontline said it will look at other uses, such as oil storage, for its single-hull tankers, in order to extend their lives. Some, such as the Front Sunda, which suffered an explosion in the South China Sea in June, may be turned into a heavy-lift vessel to carry rigs and other offshore structures.

Daily earnings for Frontline's 41-strong fleet of 2 million-barrel tankers, known as very large crude carriers, or VLCCs, averaged $50,600 a day, down from $53,300 a day in the first quarter. Frontline said it brought forward maintenance programs into the second quarter because of a decline in freight rates. Six ships were placed into dry docks, meaning a total of 220 lost earning days in the period. Tanker spot rates, measured by the industry's Worldscale standard, averaged 71.92 Worldscale points for cargoes of about 260,000 tons from the Persian Gulf to Japan in the March-to-May period, according to the London-based Baltic Exchange. That's 16 percent less than a year earlier. Rates rose to a record 171.2 points on the route on Feb. 23 last year.

The March-to-May period is key for second-quarter earnings because bookings are typically accounted for a month later. Frontline and other shipping companies struggled to maintain freight rates in the second quarter as the amount of oil shipped remained unchanged and the fleet of ships grew. OPEC Production Frontline runs most of its ships in the spot market on single-voyage contracts, hauling crude for companies such as Exxon and BP Plc. Worldscale points are a percentage of a nominal rate, or flat rate, for a specific route. Flat rates, quoted in U.S. dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates. source: Bloomberg

Maritime Reporter March 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Euronav Posts 62% Core Profit Increase

Belgian crude oil shipping group Euronav on Wednesday unveiled a 62 percent rise in first-quarter core profit as daily rates for its fleet rebounded from last year.

CNR: Innovation Maintains US Naval Advantages

An interview with Rear Adm. Matt Klunder, U.S. Navy Chief of Naval Research What are your near term, mid-term and long term science and technology (S&T) objectives?

BIMCO: Positive Economic Developments Benefits Shipping

The recovery of the Eurozone continues as job creation returns across the region. The hiring of more staff indicates that manufacturing and service industries believes

Coast Guard

Resolve Maritime Academy to Host 'DC Olympics'

Resolve Maritime Academy informs it is to host the Damage Control (DC) Olympics as an annual event for officers and damage control crew of US Navy and US Coast

Coast Guard Pacific Area receives new commander

Vice Adm. Charles W. Ray relieved Vice Adm. Paul F. Zukunft as Commander, Coast Guard Pacific Area and Coast Guard Defense Forces West, in a change of command

Reminder Stresses Importance of Accurate Clearance Information

The Captain of the Port, New York-New Jersey, has issued a reminder about the importance of providing accurate clearance information, and warns that civil penalties

 
 
Maritime Contracts Maritime Security Maritime Standards Naval Architecture Navigation Salvage Ship Electronics Ship Repair Ship Simulators Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1099 sec (9 req/sec)