Q2 2024 Frontline Plc Earnings Call Transcript
Key Points
- Frontline PLC (FRO) reported a profit of $187.6 million or $0.84 per share for Q2 2024, with an adjusted profit of $138.2 million or $0.62 per share.
- The company has strong liquidity with $567 million in cash and cash equivalents, including undrawn amounts of the senior unsecured revolving credit facility.
- Frontline PLC (FRO) completed its strategy of freeing up capital by deleveraging part of the existing fleet and divesting older vessels, enabling the repayment of $395 million in debt.
- The company secured long-term financing at highly attractive terms with a maturity of about eight years and improved margins by about 30 basis points on a weighted average basis.
- Frontline PLC (FRO) has no remaining newbuilding commitments and no meaningful debt maturity until 2027, providing financial stability.
- Q3 bookings came in somewhat short of market expectations, reflecting the volatility and seasonal lows in the market.
- The disposal of three VLCCs and two Suezmax tankers led to a decrease in TCE earnings by $12.4 million.
- Geopolitical risks linked to the Middle East and tightening sanctions against Russia are increasing, adding uncertainty to the market.
- The fleet average estimate for cash breakeven rates is approximately $35,700 per day, which is a significant operational cost.
- The market is experiencing a two-tier system with a growing divide between compliant and non-compliant (dark/gray) fleets, complicating market dynamics and potentially affecting future earnings.
Thank you for dialing into Frontline's quarterly earnings call for the second quarter of 2024 ended up very much in line with the first with volatility but ending up on a softer note as we entered the seasonal summer lows. Complications around war risks in the Middle East and tightening sanctions against Russia has regretfully becomes more and I will be touching on that later in the call.
It's important to remember, though, that we are at the seasonal lows, and we'd like to say that all shareholders have a very exciting fall ahead as from planned not have this number of potential moneymaking days going into the winter for decades.
Before I give the word to Inger, I'll run through our TCE numbers on slide 3 in the deck. In the second quarter of 2024 Frontline achieved $49,600 per day on our VLCC fleet, $45,600 per day on our Suezmax fleet and $53,100 per day from our LR2/Aframax fleet.
So far in the third quarter, 79% of our VLCC days are booked at $47,400, 85% of our Suezmax days are booked at $49
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