Frontline Outperforms Q4 Revenue Estimates; Strategic Asset Sales And Refinancing Bolster Financial Position

Frontline Plc FRO reported a fourth-quarter fiscal 2023 revenue decline of 21.8% year-over-year to $415 million, beating the consensus of $270.06 million.

The company’s reported spot TCEs for VLCCs, Suezmax tankers, and LR2/Aframax tankers were 42,300 (vs. 42,500 in Q3), 45,700 (vs. 37,600 in Q3) and 42,900 (vs. 33,900 in Q3) per day. 

The company expects the spot TCEs for the first quarter of 2024 to be lower than the TCEs currently contracted due to the impact of ballast days at the end of the fourth quarter.  

Net operating income for the quarter declined to $138.05 million from $245.407 million a year ago. Adjusted EPS was $0.46 versus $0.96 a year ago, in line with the consensus.

FRO’s operating cash flow was $100.49 million compared to $222.16 million a year ago. The company held cash and cash equivalents of $308.32 million as of December 31, 2023.

In the quarter, Frontline Ltd. sold its five oldest VLCCs (from 2009 and 2010) and an old Suezmax tanker (from 2010) for $335 million in total. The company is also refinancing eight Suezmax and 16 LR2 tankers, which are expected to bring in about $408 million in net cash.

These transactions, totaling roughly $646 million in proceeds, will enable Frontline to repay the Hemen shareholder loan and clear the $275 million credit facility used for an Acquisition.

“The continuous disruption in the Red Sea has caused West / East trading lanes to widen, which we believe benefits the larger vessel classes, offering economies of scale as oil and products move around the Cape of Good Hope,” commented Lars H. Barstad, Chief Executive Officer of Frontline Management AS.

As of December 31, 2023, the company’s fleet consisted of 76 vessels owned by the company (33 VLCCs, 25 Suezmax tankers, 18 LR2/Aframax tankers), with an aggregate capacity of approximately 15.9 million DWT.  

Dividend: The company declared a dividend of $0.37 per share for the quarter, payable on or about March 27, 2024. The record date for the dividend will be March 15, 2024.

Price Action: FRO shares are trading lower by 1.01% at $22.516 on the last check Thursday.