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 Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter February 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Finance

Baltic Index Pauses at Record Low

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, ended flat on Thursday after declining for 12 straight sessions

Long Beach Sees Robust Container Growth

The Port of Long Beach kicked off 2016 by logging its seventh straight month of cargo increases, showing a 24.8 percent jump in container shipments over the same month last year.

Maersk Drilling Posts Record Profit

Maersk Drilling delivered the best result ever with a profit of USD 751m (USD 478m) in 2015 generating a ROIC of 9.3% (7.1%). The result was positively impacted

Coast Guard

42 People Rescued after Abandoning Ship off Hawaii

Forty-two people are safe after abandoning ship approximately 1,800 miles south of the Hawaiian Islands, Thursday, the U.S. Coast Guard reported.   Crewmembers

NTSB to Search for El Faro’s Voyage Data Recorder

Second search mission to sunken El Faro seeks to locate missing voyage data recorder   The National Transportation Safety Board (NTSB) said it will initiate a

NATO Launches Sea Mission Against People-Smugglers

NATO, EU mission to help target traffickers in Aegean Sea. NATO ships are on their way to the Aegean Sea to help Turkey and Greece crack down on criminal networks smuggling refugees into Europe,

 
 
Maritime Contracts Maritime Security Maritime Standards Navigation Offshore Oil Pod Propulsion Port Authority Salvage 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: 0.0796 sec (13 req/sec)