Norway’s Frontline benefits from oil supply glut
Operating profit at Norwegian tanker firm Frontline beat forecasts and the company said it expected earnings to improve further this year, benefiting from an oil glut that has pushed down prices of the commodity.
Once the world’s biggest crude tanker firm, Frontline has struggled for years despite a restructuring in 2012 but the current plentiful supply of oil has boosted demand for transport and storage, driving up tanker rates.
Shares in the company jumped 20 percent by 0915 GMT, while Oslo’s benchmark index was flat.
Frontline, the tanker arm of shipping tycoon John Fredriksen, said it was now confident it will be able to repay all of its convertible bond loan in April 2015, which would remove one of the firm’s biggest near-term financial burdens.
The firm had warned for quarters that it could struggle with the repayment, possibly forcing another restructuring.
“The target is to rebuild Frontline into a leading tanker company,” the firm said in a statement.
Frontline has reduced the outstanding balance on the convertible bond to $93.4 million from $190.0 million at the end of last September through buy backs and debt-for-equity swaps.
Oslo-listed Frontline’s operating profit rose to $48.9 million in the quarter from $20.4 million a year earlier, beating expectations for $17.7 million in a Reuters poll of analysts.
The company predicted further improvement in the first quarter of 2015 thanks to the continued positive development in the crude tanker market..
It booked a net loss of $13 million however, below expectations for a loss of $2.8 million due to one-off charges.
Fredriksen owns 26.48 percent of the shares through his investment vehicle Hemen Holding.
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