Tanker companies report higher earnings

Tanker companies report higher earnings    Three tanker companies reported improved second quarter results, due to stronger market conditions, but an analyst who follows the industry noted some rate weakening in the current quarter.
   * TOP Tankers, an Athens based company whose shares are listed on Nasdaq, said Friday it had net profit of $5.8 million in its second quarter ended June 30, compared to a net loss of $6.8 million in the same period in 2006.
   Voyage revenue for the most recent quarter improved to $75 million from $69.9 million in the second quarter of 2006.
   Evangelos J. Pistiolis, chief executive officer, said the company benefited from “improved market conditions, especially in the Suezmax sector. The average Suezmax daily spot rate on a TCE (time charter equivalent) basis was $42,106 in the second quarter of 2007, as compared to $40,314 in the second quarter of 2006. He said the company’s daily time charter equivalent rate rose to $39,840 in the second quarter of 2007 as compared to $37,031 in the second quarter of 2006.
   The company said utilization of its fleet rose to 91.8 percent in the quarter compared to 86.4 percent in the second quarter of 2006.
   The company also said it had reacquired four Suezmax tankers that will benefit its results going forward.
   On June 30, TOP had a fleet of 23 owned and leased ships as compared to 27 vessels a year earlier.
   * Athens-based Tsakos Energy Navigation, listed on the New York Stock Exchange, reported second quarter net profit of $37.5 million, up from $33 million in the year-earlier quarter.
   Second quarter revenue improved to $107 million from $80 million in the same 2006 period.
   The company had an average of 42.3 vessels deployed during the quarter, up from 33.9 in the same period a year earlier. Fleet utilization was 97.6 percent, compared with 96.8 percent in the second quarter of 2006. Time charter equivalent revenues climbed to an average of $30,021 from $28,557.
   Discussing the outlook for the tanker business, Tsakos noted that freight rates for both crude and product tankers are in line with 2006 levels despite the strong influx of newly built tankers, which is above historical levels. High numbers of new tankers are expected to be delivered through 2010, it added.
   But the company noted about 25 percent of the world tanker fleet is still of single-hull design with limited trading prospects as a 2010 deadline from the International Maritime Organization for the phase-out of single-hull tankers approaches.
   Conversion of those single hull tankers to floating production and storage units and conversion of tankers into dry bulk carriers could further restrict shipyard capacity for building new tankers until 2011. It also noted that high steel prices may making scrapping some tankers attractive.
   The company also received delivery of its first LNG carrier in the quarter.
   * Bahamas-based tanker operator Teekay Corp., also listed on the New York Stock Exchange, said its second quarter profit nearly quadrupled to $78.4 million from $20.4 million in the 2006 quarter.
   Revenue climbed to $578 million from $423 million.
   Teekay said that a consortium in which it had a one-third interest has signed a letter of intent to charter four new LNG carriers to a project in Angola being developed by Chevron, Sonangol, BP and Total.
   Urs Dur, a shipping analyst at Lazard Capital Markets, called Teekay’s results “solid,” but said revenues “were below expectations due to a weaker-than-expected tanker market.”
   While advising investors to hold the stock, Dur said a weak third quarter looms, “with Teekay’s Aframaxes averaging $27,000/day, down from an average $32,000/day” in the second quarter.
   While Teekay did not reveal the current rate for Suezmax tankers, Dur said, “Suezmaxes globally are earning less than $30,000/day, down from an average of $50,000/day” in the second quarter.
   Up to 30 percent of Teekay’s fleet is exposed to the conventional spot tanker market. It appears that if the market weakness persists through the third quarter, it could have a negative impact on the value of the company’s shares in the near term, he added.