Tanker Operator TEN Posts Higher Q3 Earnings Helped by China Oil Imports

Tanker fleet owner Tsakos Energy Navigation Ltd. (TEN) on Tuesday reported $100.1 million in adjusted EBITDA for the third quarter, up from $91.6 million for the same period last year as a lower price-induced increase in petroleum volumes headed to China boosted revenue.

“During the summer months of 2024, lower oil prices steered an upsurge in Chinese oil imports that facilitated stockpiling and acted as a catalyst for the recovery of tanker spot rates”, the Athens-based company said in a statement. “This resurgence also reinvigorated demand for secondhand tonnage, reinforcing market dynamics and bolstering overall sector performance.

“To this effect, TEN’s fleet, 43 percent of which operated under market-related contracts, generated over $200 million in revenue and achieved an operating income of $56.9 million in the third quarter of 2024, compared to $186.7 million and $53.0 million respectively for the same period in 2023”.

TCE per ship per day averaged over $32,500, up 3.8 percent year-on-year. Fleet utilization stood at 92.8 percent. Three vessels underwent scheduled dry dockings.

Operating activities generated $59.66 million in net cash, up from $44.57 million for the 2023 corresponding period.

However, net profit fell to $26.54 million for the July–September quarter compared to $31.23 million for the comparable period last year largely due to higher depreciation costs resulting from “the higher number and larger size of vessels in the fleet”. Earnings per share came at $0.67.

TEN closed lower by 4.88 percent at $18.9 on the New York Stock Exchange (NYSE) on Tuesday.

TEN paid down debt by $155.9 million in the first nine months of 2024. “[T]otal debt and other financial liabilities reached $1.8 billion, in line with the growth the fleet experienced from the same nine-month period in 2023, against a book value of $3 billion”, the company stated.

“Total finance costs for the first nine months of 2024 amounted to $87.4 million, mostly due to the continuing higher global interest rates and increased loans to support growth, compared to the 2023 equivalent period”.

TEN held $386 million in cash at the end of the third quarter. During the first nine months of 2024 cash drawdowns consisted of $258 million in common and preferred dividends, growth capital and the repurchase of two vessel lease options.

TEN declared $0.9 in dividends per common share, raising the total rate for 2024 to $1.5, up by half against last year’s distribution. “Since its listing on NYSE, TEN maintains an uninterrupted dividend distribution for both common and preferred shares, totaling $870 million”, it said.

Seeing a “promising” future for a “high-barrier-to-entry sector”, TEN is expanding its fleet with 21 ships acquired or contracted this year.

“In an environment where new vessel supply is at its lowest point for 30 years, tanker market prospects look promising for the near future”, it said. “This, in a backdrop of increasing global energy demand, allows companies with modern diversified fleets and versatile employment structures to capitalize on the increasing appetite of energy majors for long-term contracts at healthy and accretive rates.

“The absence of a clear direction on future environmental engine propulsion, coupled with longer ton miles, due to geopolitical events, add to the positive environment”.

While pursuing fleet growth, it also plans to sell older vessels “and in that way monetize the full value of the assets the current market environment is providing for”.

Currently TEN has 74 ships. It has 12 ships under construction and scheduled for delivery between 2025 and 2028.

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