Frontline suffers $11 million loss
Bermudian-headquartered Frontline Ltd, a shipping company engaged primarily in the ownership and operation of oil tankers and product tankers, has reported a net loss of $11.1 million for fiscal year 2021 ($413 million profit in 2020).
The company reported net income of $19.8 million in the fourth quarter, which compares with a net loss of $33.2 million in the prior quarter and a net loss of $9.1 million in the fourth quarter of 2020.
The adjusted net loss attributable to the company was $4.8 million for the fourth quarter compared with an adjusted net loss of $35.9 million in the previous quarter.
The adjustments in the fourth quarter consisted of a $500,000 loss on marketable securities; a $1.3 million amortisation of acquired time charters; a $5.1 million gain on sale of vessels; a $5.3 million gain on derivatives; and the recognition of a distribution from Norwegian Shipowners' Mutual War Risk Insurance Association of $13.4 million, after tax.
The decrease in adjusted net loss from the previous quarter was driven by an increase in the company’s time charter equivalent (TCE) earnings from $64.3 million in the previous quarter to $95.3 million in the current quarter, due to higher TCE rates and a reduction in ship operating expenses of $3.7 million in the fourth quarter, partially offset by an increase in interest expense of $1.6 million and depreciation of $1.1 million.
Frontline reported total operating revenues of $213.5 million for the fourth quarter.
Lars H. Barstad, chief executive officer of Frontline Management AS, said: “The fourth quarter of the year offered tanker owners some relief. The seasonal uptick, as the northern hemisphere prepared for winter, did materialise, albeit to a modest degree. Rates appreciated firmly, but from decades-low levels.
“Frontline, with what we believe is an industry leading low-cost base, managed to capture the rising rates quickly, and as our fourth quarter numbers show, moved closer to cash-break even levels.
“Our company earnings differ positively from key benchmarks and even to some extent our peers. This again shows the value of running a modern fleet and a lean operational model with focus on efficiency in a challenging market. Frontline continues to offer our investors an effective exposure to the potential upside in the tanker market.
“As the year ended, global oil demand was estimated to have reached 101 million barrels per day, against the backdrop of low oil inventories, 20-year low tanker order books and an increasingly older fleet. Frontline continues to be very constructive for what’s to come this year as the world continues its volatile path to recovery.”