Euronav’s 1Q16 EBITDA: Its Highest since 2008

An In-Depth Look at Euronav's 1Q16 and Beyond

(Continued from Prior Part)

Euronav’s costs

Euronav’s (EURN) central cash costs include vessel operating expenses and voyage expenses.

In 1Q16, the company’s vessel operating expenses were around 30% of its total operating expenses, while its voyage expenses represented 15% of its total operating expenses.

1Q16 costs

Euronav’s vessel operating expenses fell to $38,000 thousand in 1Q16, compared to $39,000 thousand in 4Q15. As the number of operating vessels in Euronav’s fleet has risen, so have vessel operating costs risen from last year’s $37,000 thousand. Below are a couple of key takeaways:

• Though EURN’s vessel operating costs have fallen compared to the previous quarter, its operating expenses-to-revenue ratio rose to 18% from last quarter’s 17.2%.

• The company’s voyage expenses fell to $11,000 thousand in 1Q16 from $16,000 thousand in the previous quarter.

• Tanker companies such as Euronav, Frontline (FRO), Teekay Tankers (TNK), Nordic American Tankers (NAT), Tsakos Energy Navigation (TNP), and DHT Holdings (DHT) have capital-intensive businesses that incur huge depreciation expenses. Euronav’s depreciation expenses constitute almost 40% of its total operating expenses, which is why it’s important to assess the company’s EBITDA (earnings before interest, tax, depreciation, and amortization) more than its net profit.

EBITDA

Euronav’s EBITDA rose compared to the previous year as well as the previous quarter, as can be seen in the above graph. The company recorded EBITDA of $163 million in 1Q16, its highest first-quarter EBITDA since 2008. Its EBITDA also rose by 24% compared to the corresponding period last year. Consider the following:

• Compared to 4Q15, Euronav’s EBITDA rose by 2%.

• Euronav’s EBITDA margin rose to 76% in 1Q16 compared to the previous quarter’s 58% and the previous year’s 64%.

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Continue to Next Part

Browse this series on Market Realist:

• Part 1 - Euronav’s Stock Rose following Its 1Q16 Earnings Beat

• Part 2 - Euronav Discusses Short- to Medium-Term Tanker Industry Outlook

• Part 3 - Euronav Posts Higher Revenue despite Falling Tanker Rates