Core Insights - Scorpio Tankers Inc. is a significant player in the shipping industry, focusing on the transportation of refined petroleum products with a modern fleet of tankers [1] - The company has a Return on Invested Capital (ROIC) of 8.01%, which exceeds its Weighted Average Cost of Capital (WACC) of 6.19%, indicating positive returns for investors [2] - The competitive landscape includes companies like Teekay Tankers Ltd., Euronav N.V., DHT Holdings, Inc., International Seaways, Inc., and Ardmore Shipping Corporation [1] Financial Performance - Scorpio Tankers' ROIC to WACC ratio is 1.29, highlighting efficient capital utilization [2] - Teekay Tankers Ltd. leads the peer group with a ROIC of 13.72% and a WACC of 4.87%, resulting in a ROIC to WACC ratio of 2.82, indicating high efficiency [3] - Euronav N.V. and DHT Holdings, Inc. show strong capital efficiency with ROIC to WACC ratios of 2.58 and 2.80, respectively, positioning them as strong competitors [4] - International Seaways, Inc. and Ardmore Shipping Corporation have ROIC to WACC ratios of 2.07 and 1.88, respectively, indicating efficient capital utilization despite being lower than the top competitors [5]

Geopolitical Impact on Oil Trading - The Russian invasion of Ukraine has led to a significant shift in oil trading patterns, with Russia losing approximately 1.8 million barrels per day in the European export market but maintaining overall export levels by redirecting crude oil to India and China [513]. - Since November 2023, Houthi forces have executed over 100 attacks on vessels in the Red Sea, resulting in a drop of over 90% in vessel transits year-over-year through the Bab-el-Mandeb Strait, a critical maritime chokepoint [519]. - The Red Sea conflict has removed over 12% of fleet capacity in the container market, while the impact on dry bulk and crude oil tanker markets is limited to 1-4% [520]. Economic and Monetary Policy Changes - Inflation and rising energy prices due to geopolitical tensions are affecting operating expenses, with central banks shifting from tighter monetary policies to more accommodative stances by the second half of 2024 [522][523]. - The European Central Bank initiated a series of rate cuts in June 2024, reducing its key interest rates by 25 basis points multiple times, while the U.S. Federal Reserve cut rates by 50 basis points in September 2024, marking the first rate cut in over four years [523]. Vessel Valuation and Impairment - The company has revised the residual value of its vessels based on sustainability trends and the steel industry's commitment to carbon neutrality by 2050, impacting financial statements as of 2024 [534]. - The company estimates the scrap value per ton by considering the historical four-year scrap market rate average, which is updated annually [539]. - The carrying values of vessels may not represent their fair market values, and impairment tests are conducted to assess whether the carrying amount exceeds the recoverable amount [540]. - The company has determined that there were no indications of impairment for its vessels as of December 31, 2024, following a review of internal and external indicators [543]. - The recoverable amount of an asset or Cash Generating Unit (CGU) is assessed based on the greater of its fair value less cost of disposal and value-in-use, with future cash flows discounted to present value [545]. Fleet Composition and Changes - As of December 31, 2024, the total carrying value of the fleet is $2,783,068,000, an increase from $2,500,414,000 in 2023, reflecting a growth of approximately 11.3% [557]. - The fleet composition includes 31 tankers with a carrying value of $1,456,325,000, down from 39 tankers valued at $1,629,570,000 in 2023, indicating a reduction of about 10.6% in value [557]. - The company acquired CMB.TECH Enterprises in February 2024, significantly diversifying its fleet with various types of vessels, including crude oil tankers and container ships [556]. - The fleet development report shows a decrease in tanker vessels from 52 at the start of 2024 to 33 at the end, with 22 dispositions during the year [567]. - The company has 7 newbuildings on order as of December 31, 2024, compared to 5 in 2023, indicating a strategic focus on fleet expansion [567]. Vessel Sales and Acquisitions - The company sold the VLCC Alsace for $96.9 million, resulting in a net gain of $27.5 million, recognized upon delivery on January 14, 2025 [563]. - The company reported a total of 104.5 vessels at the end of the period, with 18 acquisitions and 23 dispositions during the reporting period [569]. - The company sold 11 VLCCs for a total of $2.35 billion, with the sale including vessels from 2016 to 2023 [618]. - The company sold three Suezmax vessels for a combined net sale price of $39.0 million, generating a capital gain of $71.1 million [622][623]. Financial Performance and Revenue - Total shipping revenues for the year ended December 31, 2024, were $1,625.9 million, a slight decrease of 0.3% compared to $1,630.9 million in 2023 [631]. - Voyage charter and pool revenues decreased by 36%, or $391.6 million, to $682.7 million in 2024, primarily due to a reduction in pool revenue [632]. - Time charter revenues increased by 60%, or $96.7 million, to $257.6 million in 2024, attributed to a higher number of vessels engaged in long-term time charters [633]. - Other operating income rose by 117%, or $27.3 million, to $50.7 million in 2024, mainly due to the sale of Euronav Ship Management Hellas and liquidated damages from vessel sales [634]. - Net gain on the sale of assets increased by 70%, or $262.6 million, to $635.0 million in 2024, compared to $372.4 million in 2023 [636]. Operating Expenses and Financial Position - Total vessel operating expenses decreased by 14%, or $31.4 million, to $199.6 million in 2024, primarily due to the sale of 24 VLCCs [639]. - General and administrative expenses increased by 24%, or $15.2 million, to $77.8 million in 2024, mainly due to the acquisition of CMB.TECH [640][641]. - Depreciation and amortization expenses decreased by 25%, or $55.0 million, to $166.0 million in 2024, attributed to the sale of vessels [643]. - As of December 31, 2024, cash and cash equivalents were $38.9 million, a significant decrease from $429.4 million in 2023 [653]. - Net cash from operating activities decreased to $459.1 million in 2024 from $837.4 million in 2023, indicating a significant decline in cash flow [657]. Debt and Financing - Total indebtedness increased to $2,622.3 million as of December 31, 2024, compared to $930.7 million in 2023, primarily due to the acquisition of CMB.TECH Enterprises [660]. - The company expects to finance its funding requirements through cash on hand, operating cash flow, and various debt financing options, including potential equity raises [661]. - Outstanding balances for the $1,290.0 million senior secured credit facility were $750.0 million in 2024, up from $415.7 million in 2023 [664]. - The company entered into a $182.5 million senior secured credit facility in September 2024, with an outstanding balance of $167.3 million as of December 31, 2024 [665]. - The company has a total interest-bearing debt of $2,635.9 million as of December 31, 2024, compared to $904.1 million in 2023 [662]. Compliance and Financial Ratios - The stockholders' equity to total assets ratio was reported at 30.5% as of December 31, 2024, indicating compliance with financial covenants [701]. - The company is in compliance with all covenants in its debt agreements as of December 31, 2024, and December 31, 2023 [713]. - The ratio of stockholders' equity to total assets must be at least 30%, with stockholders' equity not less than $375 million [715]. - The company has implemented measures such as posting additional collateral and negotiating amendments with lenders to manage leverage [706]. - A cross-default provision exists in certain credit facilities, meaning a default on one loan could trigger defaults on others [711].

Financial Performance - Total shipping income for the first half of 2024 reached $1,033,169, a significant increase of 42.5% compared to $724,948 in the same period of 2023[18]. - Profit for the period was $679,620, representing a 101.5% increase from $336,866 in the first half of 2023[20]. - Basic and diluted earnings per share increased to $3.43, up from $1.67 in the prior year, reflecting a growth of 105.4%[18]. - The profit before income tax for the total group was USD 683.98 million as of June 30, 2024, compared to USD 335.05 million for the same period in 2023[75]. - The company reported a result attributable to ordinary shares of USD 679.6 million for the six months ended June 30, 2024, compared to USD 336.9 million for the same period in 2023[130]. Assets and Liabilities - Total non-current assets increased to $2,887,806 thousand as of June 30, 2024, up from $1,787,543 thousand at December 31, 2023, representing a growth of 61.6%[15]. - Total assets reached $3,731,649 thousand, compared to $3,419,280 thousand at the end of 2023, indicating an increase of 9.1%[16]. - Equity attributable to owners of the Company fell to $1,226,680 thousand from $2,357,373 thousand, a decrease of 47.9%[16]. - Non-current liabilities surged to $1,890,937 thousand, up from $637,154 thousand, marking an increase of 196.5%[17]. - Current liabilities rose to $614,032 thousand from $424,753 thousand, reflecting a growth of 44.5%[17]. Cash Flow and Financing - Cash and cash equivalents decreased to $343,899 thousand from $429,370 thousand, a decline of 19.9%[16]. - The company reported a net cash from operating activities of $266,789, a decrease of 33.5% compared to $401,580 in the same period last year[29]. - The Company has a total of $1,212,215 thousand in bank loans, a substantial increase from $362,235 thousand, representing a growth of 234.5%[16]. - Total interest-bearing loans and borrowings as of June 30, 2024, were USD 2.4 billion, with new loans amounting to USD 1.37 billion during the first half of 2024[137]. - The total amount of bank loans as of June 30, 2024, was USD 2.34 billion, with various loans maturing between 2025 and 2038[140]. Investments and Acquisitions - Euronav acquired 100% of CMB.TECH NV for a total purchase price of USD 1.15 billion in cash[51]. - The total identifiable net assets acquired from CMB.TECH amounted to USD 356.0 million, with an adjustment of USD 797 million recognized in retained earnings due to the difference between consideration paid and identifiable net assets[196]. - Since the acquisition, CMB.TECH contributed revenue of USD 67.9 million and a gain of $13.7 million to Euronav's consolidated results for the six months ended June 30, 2024[197]. - The company recorded a capital gain of USD 372.7 million from the sale of 13 VLCC tankers delivered in 2024[78]. - The company incurred approximately USD 1.0 million in acquisition-related costs for the CMB.TECH transaction, which were expensed as incurred[198]. Operational Highlights - The Company reported a significant increase in vessels' value, with total vessels valued at $2,035,607 thousand, up from $1,629,570 thousand, a rise of 24.9%[15]. - The Company took delivery of the super-eco Newcastlemax Mineral France, with a deadweight of 210,000 dwt[64]. - The Company took delivery of the Windcat 57, the first hydrogen-powered CTV, deployed in Scotland[70]. - The average Time Charter Equivalent (TCE) rates for VLCCs decreased to USD 45,600/day in H1 2024 from USD 53,100/day in H1 2023[80]. - The Marine division generated revenue of USD 425.2 million for the six months ended June 30, 2024, a decrease from USD 688.1 million in the same period of 2023[80]. Dividends and Shareholder Returns - The company declared dividends totaling $887,571, significantly higher than $369,491 in the first half of 2023[26]. - A proposal for a cash distribution of USD 1.15 per share has been made, consisting of a dividend of USD 0.27 per share and a repayment from the share issue premium of USD 0.88 per share[126]. - Total dividends declared in the first six months of 2024 amounted to USD 887.6 million, with USD 903.3 million paid out during the same period[128]. - The full year dividend for 2023 was approved at USD 4.57 per share, consisting of a USD 0.27 cash dividend and a USD 4.30 share premium[127]. - Euronav owned 25,807,878 of its own shares as of June 30, 2024, an increase from 17,790,716 shares owned on December 31, 2023, with 8,017,162 shares purchased in the first half of 2024[125]. Compliance and Regulatory - The Company is focusing on new technology and environmental regulations compliance as part of its strategic initiatives[12]. - The Group has adopted all new and revised Standards and Interpretations issued by the IASB effective for the accounting year starting January 1, 2024[50]. - The Group has not applied any new IFRS requirements that are not yet effective as of June 30, 2024[50]. - The Group's hedging instruments have been measured at fair value, with effective changes recognized in other comprehensive income, reflecting the management of interest rate and foreign exchange risks[114]. - The Group's liquidity management strategy aims to ensure sufficient liquidity to meet financial obligations, with a diversified financing approach[166].

Group 1 - Investors in Euronav NV (EURN) should monitor the stock due to significant movements in the options market, particularly the Aug 16, 2024 $12.50 Call which has high implied volatility [1] - High implied volatility indicates that the market anticipates substantial movement in Euronav's stock, potentially due to an upcoming event that could lead to a significant rally or sell-off [4][5] - Euronav currently holds a Zacks Rank 3 (Hold) in the Transportation - Shipping industry, which is in the top 14% of the Zacks Industry Rank [7] Group 2 - Over the past 60 days, the Zacks Consensus Estimate for Euronav's current quarter earnings has decreased from 37 cents per share to 29 cents [7]

Global Oil Trade Impact - The Russian invasion of Ukraine has significantly impacted global oil trade, with Russia losing approximately 1.8 million barrels per day in the European export market but maintaining exports to India and China [491]. - The EU ban on Russian crude imports has led to the development of a "dark fleet" to facilitate Russian oil trade, which is expected to tighten fleet supply and benefit the international spot fleet [492][494]. - Nearly 10% of global seaborne crude oil transited the Bab-el-Mandeb strait last year, with 52% being Russian crude, and disruptions in this area are expected to increase ton-miles and positively affect freight rates [497]. Financial Performance - Total shipping revenues increased by 69%, or $664.9 million, to $1,630.9 million for the year ended December 31, 2023, compared to $966.0 million for 2022 [597]. - Voyage charter and pool revenues rose by 46%, or $336.9 million, to $1,074.2 million for the year ended December 31, 2023, driven by improved freight rates [598]. - Gains on disposal of vessels increased by 289%, or $276.6 million, to a net gain of $372.4 million for the year ended December 31, 2023, compared to a net gain of $95.8 million for 2022 [602]. - Total vessel operating expenses increased by 7%, or $14.9 million, to $231.0 million during the year ended December 31, 2023, primarily due to the acquisition of FSO Asia and FSO Africa [606]. - General and administrative expenses rose by 21%, or $10.8 million, to $62.5 million for the year ended December 31, 2023, compared to $51.7 million for 2022 [610]. - Finance income increased by 147%, or $40.0 million, to $67.2 million for the year ended December 31, 2023, compared to $27.1 million for 2022 [615]. Vessel Operations and Valuation - The company has reassessed the residual value of its vessels, changing it from nil to a value based on lightweight tonnage multiplied by forecast scrap value per ton [509][512]. - The useful economic life of vessels is estimated at 20 years, with FSO service vessels having an estimated life of 30 years, and contracts extended until 2032 [505][520]. - The average ballast time for vessels engaged in Russian oil trade is expected to increase, requiring more tonnage to move the same volume of cargo [495]. - The carrying value of VLCCs decreased from $2,229,373,000 in 2022 to $712,107,000 in 2023, while Suezmax values increased from $615,982,000 to $720,706,000 [533]. - The estimated future cash flows for vessels with market value declines are expected to exceed their carrying values, indicating no impairment required as of December 31, 2023 [532]. Fleet Development and Acquisitions - The company sold 24 VLCC tankers for a total of $2.35 billion, with 11 delivered before December 31, 2023, and 13 booked as assets held for sale with a total carrying value of $862.6 million [538]. - The company announced the purchase of two eco-VLCCs for a total of $179 million, enhancing its fleet with the latest generation vessels [549]. - The acquisition of the remaining 50% in TI Asia and TI Africa was completed, consolidating full ownership of the FSO platform [550]. - Two Suezmax newbuilding contracts were signed with Daehan Shipbuilding, with vessels scheduled for delivery in Q3 2024 [551]. - The company has 5 newbuildings on order as of December 31, 2023, down from 8 in 2022 [542]. Market Trends and Economic Factors - The global demand for oil transportation is significantly influenced by the recovery of the global economy post-COVID-19, impacting oil demand [686]. - There is a notable increase in crude oil exports from the US Gulf and Atlantic producers, primarily destined for China and India, leading to longer employment times for crude tankers [687]. - The freight markets have returned to positive territory, with a medium-term outlook indicating continued positive trends [687]. - The supply of tankers is affected by vessel deliveries, removals, and alternative employment, with potential for increased recycling in the near term [688]. Debt and Financing - Total indebtedness decreased from $1,696.3 million in 2022 to $930.7 million in 2023 [632]. - The company had $813.4 million in available committed secured revolving credit facilities as of December 31, 2023, compared to $671.3 million in 2022 [629]. - A new $1,290.0 million secured loan facility was established on November 7, 2023, to refinance 30 vessels and finance newbuilding projects [636]. - The company is required to maintain a Debt Service Cover Ratio of at least 1.1x in connection with its senior secured FSO loan of $150 million [651]. Shareholder Actions - The company plans to propose a distribution of $4.57 per share to shareholders at the Annual Shareholders' Meeting on May 16, 2024 [672]. - As of March 15, 2024, the company held 88.61% of the outstanding shares following a mandatory public takeover bid by CMB NV [671].

Financial Data and Key Metrics Changes - The net profit for Q2 2023 was $161.8 million, consistent with Q1 results, indicating stable financial performance [69] - The balance sheet leverage stood at 47.5%, and liquidity was boosted to $742 million through a new facility [69] - The Q2 dividend was set at $0.80 per share, reflecting the Board's confidence in the company's platform and the strength of the current tanker cycle [24][69] Business Line Data and Key Metrics Changes - The company added 3 new VLCCs and took delivery of a new Suezmax, with plans to add 4 more Suezmax vessels in the next 12 months [4] - The cash breakeven levels were reported at $16,000 for Suezmax and $19,000 for VLCC, with P&L breakeven at $18,000 and $23,000 respectively [32] Market Data and Key Metrics Changes - Oil demand forecasts have consistently grown over the past 9 to 10 months, supported by positive ton mile development [70] - Iran's production has ramped up to a 5-year high of around 1.5 million barrels per day, which could significantly impact tanker markets if allowed to export via commercial tonnage [71][26] Company Strategy and Development Direction - The company is positioned for further growth and is focused on strategic opportunities as they arise, while also delivering returns to shareholders through dividends [6] - The management emphasized a commitment to maintaining operational efficiency and controlling costs, particularly in light of recent legal expenses [13] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the tanker market's resilience, noting that the current year has defied typical seasonal trends with strong freight rates [77] - There is cautious optimism regarding the potential return of Iranian oil to the market, which could provide a significant boost to tanker demand [26][90] Other Important Information - The company is actively involved in the salvage operation of the FSO Safer off the Yemeni coast, showcasing its commitment to environmental responsibility [79] - The new Supervisory Board is seen as supportive and contributive, enhancing the company's strategic direction [39] Q&A Session Summary Question: What is the outlook for the payout ratio given the strong liquidity? - The payout ratio for Q2 was 100%, reflecting the Supervisory Board's confidence in the current market conditions, but future ratios will depend on ongoing assessments [28][82] Question: How does the company view the potential impact of Iranian oil exports? - The management highlighted that if Iran were to return to the market, it could unlock 1.5 million barrels per day of potential exports, significantly impacting the tanker market [90] Question: What is the company's strategy regarding fleet renewal? - The company plans to continue its strategy of selling older vessels and acquiring new builds, with a focus on Suezmaxes and VLCCs [109][121] Question: How is the new Supervisory Board involved in decision-making? - The management confirmed that there are no changes in strategy due to the new Board, and operations continue as usual while enjoying the current market upcycle [115]

Financial Data and Key Metrics Changes - The company reported a strong quarter with elevated freight market conditions, which is unusual for the first quarter as it typically sees a decline [40] - The capital base is robust with over $900 million in cash liquidity and leverage falling to just below 43% [57] - A total of $1.8 per share will be distributed to shareholders, including a final dividend of $1.1 for the full year 2022 and a Q1 dividend of $0.70 [56] Business Line Data and Key Metrics Changes - The order book for tankers is at a historically low level, below the replacement level of 5% [48] - Suezmax rates have increased significantly, with the highest rates recorded since 1990, driven by strong demand from China [55] - VLCC rates have softened in Q2, but both Suezmax and VLCC rates remain elevated compared to seasonal expectations [55] Market Data and Key Metrics Changes - The demand for oil has been volatile, particularly with China's reopening leading to increased purchases for economic recovery and stockpiling [50] - The divergence in performance between Suezmax and VLCC vessels is attributed to the ongoing Russia-Ukraine conflict, impacting trade dynamics [103] Company Strategy and Development Direction - The company is focused on returning cash generated from operations to shareholders while maintaining a strong balance sheet [67] - There is an emphasis on scrutinizing the market for new building opportunities, particularly in the Suezmax segment, due to the older average age of the fleet [80] - The company is cautious about ordering new vessels, considering the potential for residual value risk and the need for retrofitting to meet future regulations [119] Management's Comments on Operating Environment and Future Outlook - Management acknowledges short-term headwinds due to OPEC cuts and seasonal refinery maintenance, but remains optimistic about medium-term fundamentals [66] - The company believes that the current market cycle is supportive, with a multiyear up cycle expected [88] - There is a focus on strategic recovery in China, which is seen as a key driver for future demand [83] Other Important Information - The company is actively monitoring the dark fleet and its implications for the market, particularly in relation to Suezmax and Aframax vessels [16] - The arbitration process regarding pending legal matters is expected to take until late 2024 to resolve [25] Q&A Session Summary Question: Clarification on Board Composition - The board composition has changed with the appointment of new independent directors, maintaining a total of seven members [72] Question: Impact of OPEC Cuts on Demand - The impact of OPEC cuts is expected to be partially offset by increased tonne miles from substitution barrels, with an estimated 50% absorption of the cut [74] Question: Fleet Plans and M&A Opportunities - The company is not currently focused on M&A but is actively selling older vessels and considering new builds in the Suezmax segment [78][80] Question: Sentiment in the Shipping Market - The sentiment among charterers is opportunistic, with traders actively seeking arbitrage opportunities in a volatile market [112] Question: Residual Value Risk of New Orders - The company is cautious about residual value risk and is preparing for potential retrofitting of new vessels to mitigate this risk [119]

Geopolitical Impact - The Russian invasion of Ukraine has significantly impacted global oil trade, with Russian crude oil exports remaining broadly unchanged despite losing approximately 1.8 million barrels per day in the European market [540]. - The EU ban on Russian crude imports was formalized in December 2022, extending to refined products as of February 2023, affecting shipping operations and insurance coverage for vessels carrying Russian oil [540][541]. - The company has suspended operations with Russian customers, which previously represented an insignificant portion of its turnover [730]. Financial Performance - In 2022, total shipping revenues increased by 117%, or $520.9 million, to $966.0 million compared to $445.1 million in 2021 [634]. - Voyage charter and pool revenues rose by 112%, or $388.8 million, to $737.3 million for the year ended December 31, 2022, compared to $348.4 million in 2021 [635]. - Time charter revenues increased by 65%, or $46.1 million, to $117.4 million for the year ended December 31, 2022, compared to $71.3 million in 2021 [635]. - Gains on disposal of vessels/other tangible assets surged by 538%, or $81.1 million, to $96.2 million in 2022 compared to $15.1 million in 2021 [634]. - Net gain on the sale of assets increased by 536%, or $80.7 million, to $95.8 million in 2022 compared to $15.1 million in 2021 [641]. Operating Expenses - Elevated inflation and rising interest rates in the US and Eurozone are driving up operating expenses, potentially increasing the cost of capital for the company [547]. - Voyage expenses and commissions rose by 47%, or $56.4 million, to $(175.2) million for the year ended December 31, 2022, compared to $(118.8) million in 2021 [639]. - Total vessel operating expenses decreased by 2%, or $4.6 million, to $216.1 million in 2022 from $220.7 million in 2021 [644]. - General and administrative expenses rose by 60%, or $19.3 million, to $51.7 million in 2022 compared to $32.4 million in 2021, primarily due to legal fees related to potential merger discussions [650][651]. - Net finance expenses increased by 31%, or $25.3 million, to $105.9 million in 2022 compared to $80.6 million in 2021, mainly due to higher interest expenses on financial liabilities [657][658]. Fleet and Asset Management - The carrying value of the fleet as of December 31, 2022, was $3,076.4 million, an increase from $2,967.8 million in 2021 [580]. - The total number of vessels decreased from 64 in 2021 to 61 in 2022, with VLCCs decreasing from 42 to 39 [580]. - The company sold the Suezmax Cap Charles for $41.4 million, resulting in a net gain of $22.1 million recorded in Q1 2023 [587]. - The company has 8 newbuildings on order as of December 31, 2022, compared to 4 newbuildings on order in 2020 [589]. - The company acquired two eco-VLCCs for a total of $179 million in cash, which are the latest generation of ecotype VLCCs [599]. Market Trends - The global demand for oil transportation is recovering, with 2022 oil demand averaging 100.5 million barrels per day, an increase of 2.2 million barrels compared to 2021 [733]. - The tanker orderbook is at historically low levels, with the VLCC orderbook equal to 3% of the fleet and Suezmax orderbook equal to 2% of the current fleet [735]. - The medium-term outlook for freight markets is positive, driven by increased crude exports from the Atlantic basin to the Far East [734]. - The price of marine fuels has increased due to the self-sanctioning of Russian oil flows, negatively impacting the cost structure of vessels [730]. Sustainability and Future Outlook - The company is focused on sustainability, considering the steel industry's commitment to carbon neutrality by 2050, which may positively impact the price of scrap steel [558]. - The company anticipates a trend of increased recycling of older vessels due to regulatory requirements, with 15% of the VLCC fleet and 19% of the Suezmax fleet being 18+ years old [735]. - The company aims to enhance digital transformation efforts, focusing on AI-driven fuel consumption optimization and Robotics Process Automation (RPA) projects [614][623]. Debt and Financing - Cash and cash equivalents increased to $179.9 million as of December 31, 2022, from $152.5 million as of December 31, 2021 [667]. - Total indebtedness as of December 31, 2022, was $1,795.6 million, a slight decrease from $1,807.9 million as of December 31, 2021 [673]. - The company expects to finance its funding requirements through cash on hand, operating cash flow, and various debt financing options [675]. - The company completed a $200.0 million senior unsecured bond issuance on September 2, 2021, with a coupon of 6.25% and maturing in September 2026 [695].

Financial Performance - Euronav reported a full year revenue of USD 854.7 million for 2022, a significant increase from USD 419.8 million in 2021, representing a 103% year-over-year growth[17]. - The company achieved a profit of USD 203.3 million for the year, compared to a loss of USD 338.8 million in 2021, marking a substantial turnaround[23]. - Total shipping income for 2022 was $965,970,000, a significant increase of 117.5% compared to $445,093,000 in 2021[63]. - Profit for the period in 2022 was $203,251,000, a turnaround from a loss of $338,777,000 in 2021[65]. - Total comprehensive income for the period in 2022 was $234,532,000, compared to a comprehensive loss of $327,003,000 in 2021[65]. - Net cash from operating activities in 2022 was $255,553,000, a recovery from a cash outflow of $25,305,000 in 2021[69]. - Basic earnings per share for 2022 was $1.01, compared to a loss per share of $1.68 in 2021[63]. Fleet and Operations - The average daily time charter equivalent (TCE) rates for VLCC increased to USD 27,600 in 2022 from USD 11,300 in 2021, while Suezmax rates rose to USD 31,200 from USD 11,100[22]. - The average time charter rate for Suezmax vessels was USD 30,300 in 2022, slightly up from USD 29,800 in 2021, indicating stable demand[22]. - Euronav rejuvenated its VLCC fleet by purchasing two Eco-VLCCs for a total of USD 179 million and sold four older S-class VLCCs[33]. - The company contracted two new Suezmax vessels scheduled for delivery in Q3 2024, continuing its fleet renewal strategy[9]. - The company contracted two new Suezmax vessels for delivery in 2024, indicating future fleet expansion[42]. Financial Position - Euronav's total assets increased to USD 3.969 billion as of December 31, 2022, compared to USD 3.769 billion in 2021[61]. - Euronav's equity attributable to owners increased to USD 2.173 billion in 2022 from USD 1.961 billion in 2021[61]. - Euronav's cash and cash equivalents increased to USD 179.9 million in 2022 from USD 152.5 million in 2021[61]. - Cash and cash equivalents at the end of 2022 increased to $179,929,000 from $152,528,000 at the end of 2021[69]. - Euronav's bunker inventory decreased to USD 41.6 million in 2022 from USD 69 million in 2021[61]. Strategic Initiatives - Euronav plans to propose a final dividend of USD 1.10 per share, bringing the total return to shareholders for 2022 to USD 1.22, reflecting strong performance and a robust balance sheet[14][15]. - The company initiated arbitration proceedings against Frontline following the unilateral termination of a combination agreement, reflecting ongoing strategic maneuvers in the market[5]. - Euronav's sustainability-linked loan facility of USD 377 million represents 52% of the company's total financing, aligning with its goal to reduce CO2 emissions by 40% by 2030[8]. Market Conditions - The ongoing war between Russia and Ukraine has led to increased bunker fuel costs, impacting the company's cost structure[47]. - The average age of the global fleet of large tankers is at its highest in 20 years, with orderbooks at over 25-year lows, indicating a constrained supply environment[5]. Environmental and ESG Performance - The company was awarded a B score by the Carbon Disclosure Project for its climate action efforts[44]. - Euronav was positioned in the top quartile of Webber Research's ESG Scorecard, ranking 5th among 52 shipping companies[39]. Expenses and Financial Metrics - Total operating expenses decreased to $671,696,000 in 2022 from $726,666,000 in 2021, reflecting a reduction of 7.5%[63]. - Finance expenses increased to $133,009,000 in 2022 from $95,541,000 in 2021, representing an increase of 39.1%[63]. - The company reported gains on disposal of vessels and other tangible assets of $96,160,000 in 2022, compared to $15,068,000 in 2021[63]. - The weighted average number of shares (basic) increased slightly to 201,747,963 in 2022 from 201,677,981 in 2021[63].

Financial Data and Key Metrics Changes - The company reported a net profit of nearly $235 million for Q4 2022, significantly boosted by $62.6 million from asset sales, reflecting a continued fleet renewal program [83] - Leverage improved to 45%, driven by higher freight markets and proceeds from sales of older vessels [83] - The company indicated that TCE rates remain profitable and above medium-term averages despite a reset since November [89] Business Line Data and Key Metrics Changes - The tanker market recovery was attributed to seasonal patterns, sustainable oil supply from OPEC and non-OPEC, and repositioning of the world fleet ahead of the Russian crude embargo [89] - The company has rejuvenated its fleet over the last 18 months, taking in new tonnage and reducing older, higher-consuming ships [89] Market Data and Key Metrics Changes - The order book for new vessels is at a 40-year low, while the global fleet is at historical highs, indicating a constrained vessel supply situation [92] - The demand from China is expected to improve as COVID restrictions ease, which could positively impact the VLCC sector [84] Company Strategy and Development Direction - The company aims to continue its focus on fleet renewal and energy transition, with over half of its financing now coming from sustainability-linked sources [16] - Management believes in consolidation within the market and sees growth opportunities, emphasizing that bigger fleets can better service clients [29] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the Chinese economy and its impact on oil demand, expecting significant growth compared to previous quarters [22] - The company is focused on operational efficiency and has implemented digitalization platforms to optimize voyages and reduce fuel consumption [66] Other Important Information - The arbitration process regarding the combination agreement with Frontline is ongoing, with a decision expected soon, which may impact future capital distributions [12][89] - The company is cautious about making predictions regarding the arbitration outcome, emphasizing a constructive approach to resolving issues [95] Q&A Session All Questions and Answers Question: What are the different outcomes expected from the arbitration ruling? - Management indicated that the ruling will determine whether certain contractual clauses remain in place, affecting future capital distributions [100] Question: How does the company plan to balance dividends and share buybacks? - The company will maintain a balanced strategy between dividends and share buybacks, considering share price and outlook [100] Question: What is the expected impact of inflation on operational costs? - The company has budgeted for a 4% to 5% increase in operational costs, primarily due to rising crewing costs and technical expenses [112]