Frontline reports weak fourth quarter, but sanctions are improving tanker outlook
Net profits dropped to $66.7m from $118.4m seen in the year-ago period
Soft tanker conditions dragged Frontline’s fourth-quarter earnings lower, but the firm believes tighter sanctions could turn the market around in 2025
TANKER owner Frontline has seen its fourth-quarter earnings slip, but expects tougher sanctions to brighten the market outlook this year.
The John Fredriksen-controlled firm posted a net profit of $66.7m for October-December 2024, down from $118.4m in the same period of 2023. Revenue edged up 2.6% to $425.6m.
“The fourth quarter of 2024 came in unusually soft compared to previous years,” said chief executive Lars Barstad. “Global oil demand was up marginally as the year came to an end, but global seaborne exports slowed in the fourth quarter.”
Barstad noted that sanctioned oil trade, especially from Iran and Russia, hurt demand for the compliant fleet it operates, but the situation appears to have improved since the start of this year.
“For 2025 we have already seen broader sanctions with a wider scope, at the same time as key importers of exposed crude are diversifying away from the mentioned suppliers,” he said.
“Compliant fleet growth for the asset classes we deploy peaked a few years back, making the outlook very constructive, as Frontline sail into the new year with our cost-efficient operations and modern fleet.”
According to Frontline, average daily spot rates during the fourth quarter were $35,900 for very large crude carriers, $33,300 for suezmaxes, and $26,100 for long range two/aframax tankers.
The company has currently contracted 80% of its VLCC fleet for daily spot time charter equivalent earnings of $43,700, 77% of suezmaxes for $35,400 and 64% of LR2/aframaxes for $29,700.
It expects the spot TCEs for the full first quarter of 2025 to be lower than currently contracted, due to the impact of ballast days during the three months.
Frontline fully drew down a $512.1m sale-and-leaseback facility to refinance 10 suezmaxes, generating $101m in cash during the last quarter of 2024. It also sold its oldest suezmax for $48.5m.
On the financing side, the company entered new credit facilities totalling $239m to refinance debt on VLCCs and suezmaxes. This leaves Frontline with no loan maturities until end-2026.
Chief financial officer Inger Klemp said the deals “further strengthen our strong liquidity and reduce our borrowing costs and cash break even rates.”
Frontline declared a $0.20 per share dividend for the quarter.
