Frontline (FRO) Misses Q1 EPS by 28c, Revenues Beat

Frontline (NYSE: FRO) reported Q1 EPS of $0.04, $0.28 worse than the analyst estimate of $0.32. Revenue for the quarter came in at $194 million versus the consensus estimate of $184.43 million.

Highlights

• Net income of $28.9 million, or $0.15 per diluted share for the first quarter of 2021.
• Adjusted net income of $8.8 million, or $0.04 per diluted share for the first quarter of 2021.
• Reported total operating revenues of $194.0 million for the first quarter of 2021.
• Reported spot TCEs for VLCCs, Suezmax and LR2 tankers in the first quarter of 2021 were $19,000, $15,200 and $12,000 per day, respectively.
• For the second quarter of 2021, we estimate spot TCE on a load-to-discharge basis of $18,100 contracted for 70% of vessel days for VLCCs, $13,600 contracted for 63% of vessel days for Suezmax tankers and $14,200 contracted for 59% of vessel days for LR2 tankers. We expect the spot TCEs for the full second quarter of 2021 to be lower than the TCEs currently contracted, due to the impact of ballast days at the end of the second quarter as well as current freight rates.
• In March and April 2021, respectively, the Company took delivery of the LR2 newbuildings Front Fusion and Front Future.
• In May 2021, the Company entered into an agreement for the acquisition through resale of six latest generation ECO-type VLCC newbuilding contracts currently under construction at the HHI shipyard in South Korea. Five vessels will be delivered during 2022 starting in Q1 and the last vessel in Q1 2023.

Lars H. Barstad, Interim Chief Executive Officer of Frontline Management AS commented:

“Despite challenging market conditions during the first quarter of 2021, Frontline manages to deliver a solid result. This reflects our business model, with high focus on efficiency, quality, and cost throughout the organization. Frontline’s modern fleet allows for an agile approach to how we trade our ships, yielding returns above the key benchmarks. We are not out of the woods yet with regards to freight demand, and the recent Covid-19 situation in Asia is a concern. We are seeing promising oil demand figures from Europe, US, and China and OPEC, EIA, and IEA maintain their very firm demand growth expectations for the second half of 2021, but short-term the freight market continues to be challenged. We are very excited about our acquisition of six VLCCs being built at Hyundai Heavy Industries in Korea. These high-quality vessels will be delivered at a time when oil demand is expected to have normalized and the Global economy is running on full steam. The fundamentals of the tanker market remain firm, with an historic low order book and a significant part of the fleet challenged by tightening environmental regulations.”

For earnings history and earnings-related data on Frontline (FRO) click here.

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