Watch: This Is Why Biden’s $2 Trillion Infrastructure Plan Will Fail
In the United States, we have a problem that’s so BIG and obvious that even Elon Musk can’t see it. Our highways are broken, our streets are clogged with traffic,...
OSLO, May 30 (Reuters) – Frontline Ltd, the tanker arm of shipping tycoon John Fredriksen’s business empire, expects losses to widen in the second quarter and may struggle to repay a 2015 bond as the shipping crisis shows no sign of abating.
The global shipping sector has seen four years of crisis as vessels purchased in an order binge before 2008 hit the waters, creating overcapacity as demand remains anaemic.
“The board is of the opinion that the tanker market is massively oversupplied today and that it may take some time before a reasonable market balance is restored and sustained recovery of the tanker market occurs,” the group said on Thursday.
Frontline, which Fredriksen restructured last year to save from bankruptcy, said its first-quarter net loss totalled $19 million after a $7 million profit a year ago, beating expectations for a $34 million loss.
“Based on rates achieved so far in the second quarter, increased dry-docking costs in the second quarter and the current outlook, the board expects the operating result in the second quarter to be weaker than in the first quarter,” it said.
The company also repeated an earlier warning that unless the market recovers in the short term, and if it cannot raise additional equity or sell assets, it will not have the cash to repay a $225 million bond due in April 2015.
It said its total cash-cost breakeven for very large crude carriers was about $25,500 a day, above the first quarter’s time charter rate of $17,000, while for Suezmax tankers it was at $18,500, above the quarter’s $14,500.
Frontline shares fell 1.2 percent in early trade. (Editing by David Holmes)
(c) 2013 Thomson Reuters, Click For Restrictions
Join the 67,349 members that receive our newsletter.
Have a news tip? Let us know.