FRONTLINE (FRO) has reported a 68.71 percent plunge in profit for the quarter ended Dec. 31, 2016. The company has earned $18.32 million, or $0.12 a share in the quarter, compared with $58.56 million, or $0.45 a share for the same period last year.
Revenue during the quarter grew 15.76 percent to $178.29 million from $154.02 million in the previous year period. Total expenses were 90 percent of quarterly revenues, up from 50.17 percent for the same period last year. That has resulted in a contraction of 3983 basis points in operating margin to 10 percent.
Operating income for the quarter was $17.83 million, compared with $76.75 million in the previous year period.
Robert Hvide Macleod, Chief Executive Officer of Frontline Management AS commented, "The improvement in crude tanker rates in the fourth quarter was attributable to seasonality as we approached winter in the Northern Hemisphere as well as a strong increase in OPEC volumes ahead of the implementation of production cuts. We remain of the opinion that 2017 will see pressure on freight rates as further newbuildings are delivered. As DHT's largest shareholder we are surprised that DHT's Board has declined our repeated attempts to discuss a business combination that we believe is clearly in the best interest of all shareholders. We continuously evaluate various ways to expand our fleet and are pleased to have acquired two VLCC resales at historically low prices without adding to the size of the global fleet. We continue to maintain our leading position in the tanker market, supported by our very low cash breakeven rates, large commercial scale and consistent access to capital. These are clear differentiators that the market has consistently ascribed value to."
Operating cash flow improves significantly
FRONTLINE has generated cash of $286.02 million from operating activities during the year, up 37.94 percent or $78.67 million, when compared with the last year.
The company has spent $396.75 million cash to meet investing activities during the year as against cash outgo of $459.28 million in the last year. It has incurred net capital expenditure of $405.78 million on net basis during the year, up 49.39 percent or $134.16 million from year ago.
Cash flow from financing activities was $48.62 million for the year, down 77.85 percent or $170.90 million, when compared with the last year.
Cash and cash equivalents stood at $202.40 million as on Dec. 31, 2016, down 23.48 percent or $62.12 million from $264.52 million on Dec. 31, 2015.
Debt moves up marginally
FRONTLINE has witnessed an increase in total debt over the last one year. It stood at $1,404.56 million as on Dec. 31, 2016, up 4.85 percent or $64.94 million from $1,339.62 million on Dec. 31, 2015. Interest coverage ratio deteriorated to 1.26 for the quarter from 9.24 for the same period last year.
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