Frontline posts its best quarterly financial result in more than 14 years. Tanker shipowner has high expectations this year after the highest quarterly net income since 2008.
The top management of the company evaluates the results of the fourth quarter of 2022 and believes that it may be a preview of the years to come. John Fredriksen-led company also expects after the sale of the 2009-built VLCC “Front Eminence”, and the 2009-built Suezmax tanker “Front Balder”, to record a gain on sale of approximately $10.0 million and $2.0 million, respectively in the first quarter of 2023.
The company reported the highest quarterly net income since the second quarter of 2008 of $240.0 million, or $1.08 per basic and diluted share for the fourth quarter of 2022, in its fourth quarter and full year 2022 report.
Lars H. Barstad, Chief Executive Officer of Frontline Management, highlighted the fact that “with the Chinese demand returning in earnest, the VLCC market also kicked into action during the fourth quarter, and Frontline reaped the full benefits of its lean and efficient operations, with all asset classes generating solid shareholder returns.”
The CEO of the company mentioned that overall freight demand continues to be positively affected by expanding trade lanes caused by Russian sanctions, and the price cap on product exports that kicked in on the 5th of February.
The company has been active during the year 2022 with two fixed rate time charter-out contracts for two LR2/Aframax tankers to third parties on a three-year time charter, at a daily base rate of $31,500 and $34,500, respectively.
At the beginning of this year Frontline also took delivery of the two remaining VLCC newbuildings, Front Orkla and Front Tyne. Specifically, at the end of the year 2022 the company’s newbuilding program consisted of two scrubber-fitted VLCCs, Front Orkla and Front Tyne, which were delivered in January 2023.
The company also sold in January 2023 the 2009-built VLCC, Front Eminence, and the 2009-built Suezmax tanker, Front Balder, for gross proceeds of approximately $61.0 million and $39.5 million, respectively.
The vessels were delivered to new owners in January and February, respectively. After repayment of existing debt on the vessels, the transactions are expected to generate net cash proceeds of approximately $63.8 million, and the company expects to record a gain on sale of approximately $10.0 million and $2.0 million, respectively, in the first quarter of 2023, as the company reveals in its report.