Frontline sees market worsening after quarterly loss
Frontline Ltd, the world's largest independent oil tanker operator, reported a bigger than forecast second-quarter loss and said it expected conditions to worsen as a glut of vessels keeps pressure on shipping rates, Reuters reports.
The sector bellwether said it would remain cautious until clearer signs of recovery could be seen in the tanker market, which has kept rates low worldwide as scores of vessels ordered before the 2008-2009 financial crisis continue to hit sea lanes at a time of tepid demand.
"Based on results achieved so far in the quarter and the current outlook, the board expects the operating result in the third quarter to be significantly worse than in the second quarter," the group said.
The market rate for very large crude carriers (VLCC) sailing between the Arabian Gulf and Japan in the second quarter, for instance, decreased from the first quarter as well as compared with the second quarter of last year.
At present, rates for VLCCs operating on the spot market indicate a loss of $3,000 per vessel per day in the third quarter.
Frontline, which went through a painful restructuring at the end of 2011 to save it from bankruptcy, said its quarterly net loss was $24.4 million, including impairments, while the average forecast was for a $3 million loss.
The company, which recorded a vessel impairment loss of $13.1 million in the second quarter, said it made an operating profit of $1.1 million compared with $25.4 million in the first three months.
"The numbers were a bit worse than expected, and their guidance is weak for Q3 and Q4," said Erik Folkeson, an analyst at First Securities.
"The market is very tough, there are too many boats in relation to available payloads. The market is in a difficult position and will continue to be for the rest of the year and most likely into next year," Folkeson said.
Frontline shares were down 1.8 percent by 0746 GMT compared with a flat Oslo benchmark index.