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Euronav Reports Strong Cash Flows After Locking In High VLCC Rates

Feb. 07, 2019 10:00 AM ETEuronav NV (EURN)9 Comments


  • Euronav generated almost $100M in operating cash flow in Q4.
  • The high charter rates continue into Q1 2019.
  • The company has started to buy back shares.
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Euronav (NYSE:EURN) remains one of my favorite oil shipping stocks, especially after the company positioned itself as a consolidator in what still is a relatively fragmented market. The recent acquisitions in the past several years were quite smart, and Euronav’s management seems to have a nose for finding and securing assets at attractive prices.

ChartData by YCharts

The past few years weren’t much fun for oil shipping companies, but as the charter rates got a nice boost in the fourth quarter of last year, Euronav should be able to carry some money to the bank in the current winter period, which is traditionally the best season for oil shipping companies.

The fourth quarter was good, and even much better than I expected in October

Euronav had been anticipating a turnaround on the oil shipping market for quite a while now, and the company is taking advantage of the strong daily charter rates, which are the highest in about two years fueled by a net reduction of VLCC vessels throughout 2018, a higher ton-mile ratio and a higher oil demand.

Source: Press release

The Q4 revenue more than doubled to just over $236M but due to the higher voyage expenses and commissions, interest payments and depreciation charges, Euronav was still barely able to book a net profit. Thanks to a one-time tax benefit, its net income was $97,000, compared to in excess of $19M in the fourth quarter last year.

Surprising? Yes and no. There were two one-time items that skewed the financial performance in both years. In Q4 of last year, Euronav reported a one-time $36.5M gain on an asset sale while it reported a $13.2M cost related to a bargain purchase in the most recent financial year. Adjusted for these results, Euronav would have reported a net loss of approximately $17M in

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This article was written by

The Investment Doctor profile picture
We zoom in on capital gains and dividend income in European small-caps
As I'm a long-term investor, I'll highlight some stockpicks which will have a 5-7 year investment horizon. As I strongly believe a portfolio should consist of a mixture of dividend-paying stocks and growth stocks, my articles will reflect my thoughts on this mixture.

Analyst’s Disclosure: I am/we are long EURN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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