Frontline Posts Mixed Q3 Amid Seasonal Tanker Headwinds And Geopolitical Challenges: Details

Frontline Plc FRO shares are down following mixed third-quarter results. Revenue rose 29.9% year-over-year to $490.4 million, surpassing the $361.42 million consensus.

Reported spot TCEs for VLCCs, Suezmax tankers, and LR2/Aframax tankers were $39,600 (vs. $42,500 last year), $39,900 (vs. $37,600 last year) and $36,000 (vs. $33,900 prior year) per day.

In the quarter, ballast days totaled 947 days for VLCCs, 331 days for Suezmax tankers, and 255 days for LR2/Aframax tankers.

Net operating income for the quarter improved to $144.81 million from $114.752 million a year ago. Adjusted EPS was $0.34 versus $0.36 a year ago, missing the consensus of $0.45.

Operating cash flow was $164.553 million in the third quarter, compared to $202.532 million in the same quarter a year ago. Frontline held cash and cash equivalents of $320.885 million as of the quarter end.

As of September 30, 2024, the company’s 82-vessel fleet (17.9M DWT) averages 6.4 years, with 46 scrubber-fitted Eco vessels. Six vessels (1 VLCC, 1 Suezmax, 4 LR2/Aframax) were on long-term charters over 12 months.

In October 2024, the company secured a $512.1 million sale-and-leaseback deal with CMB Financial for 10 Suezmax tankers.

Dividend: The company declared a dividend of $0.34 per share for the third quarter of 2024, payable on December 31, with a record date of December 11.

“The third quarter of 2024 performed in line with seasonal expectations, as oil demand slowed over the summer months and domestic demand by oil exporting countries in the Middle East increased. We continue to sail in a troubled geopolitical landscape and with lower year-on-year demand in Asia, and especially China, the tanker markets have yet to experience the seasonal upswing into winter. The increase in sanctioned oil trade and movement of illicit barrels have negatively impacted our trade environment,” commented Lars H. Barstad, Chief Executive Officer of Frontline Management AS.

Inger M. Klemp, Chief Financial Officer of Frontline Management AS, added, “In 2024 we have optimized the capital structure of the Company by refinancing debt of 36 vessels, which has extended maturities and improved margins, divesting eight older vessels and the subsequent repayment of the Hemen shareholder loan and the $275.0 million senior unsecured revolving credit facility with an affiliate of Hemen in an aggregate amount of $470.0 million.”

Outlook: Frontline expects the spot TCEs for the fourth quarter to be lower than the spot TCEs currently contracted due to the impact of ballast days during the quarter.

Price Action: FRO shares are trading lower by 7.03% at $16.81 premarket at the last check Wednesday.