Tsakos Energy Navigation Ltd. (TEN) has reported net income of $237 million for the first half of 2023, nearly five times the same period in 2022, as strong tanker market conditions spurred by the war between Russia and Ukraine
“With tanker markets remaining strong, driven mainly by favorable supply and demand fundamentals and favorable trade dislocations caused by the continued war in Ukraine and with no signs of abating, TEN, in the first half of 2023, generated travel revenue of $482.7 million from $366.4 million in the equivalent period of 2022 or an increase of 32 percent,” the Athens-based energy company said in a statement of recent press.
Tsakos’ equivalent time charter rates, or daily earnings that represent round-trip expenses, rose to $40,182 per vessel per day in the January-June period, up 64% from the first half of last year.
The continued earnings momentum was also helped by sustained fleet utilization and lower operating expenses. “Overall, voyage expenses during the second quarter of 2023 fell approximately 38 percent from the second quarter of 2022 due to lower bunker costs, while total vessel operating expenses remained approximately at same levels as the second quarter of 2022, same as depreciation and amortization,” the New. the York-listed company said.
“Finance and interest costs during the second quarter of 2023, which continued to be impacted by high interest rates globally, were set at $24.3 million, which were also mitigated by income from interest that reached 4.1 million from just 0.2 million dollars in the same period in 2022.”
But while operating in a strong market, Tsakos said it sold eight of its older tankers in the first six months of 2023. It said the divestments took advantage of “historically high asset prices” and that revenue l ‘would help to acquire environmentally friendly replacements. Tsakos has 10 vessels under construction, two of which are expected to be delivered in the first quarter of 2026, according to the press release.
“Positive fleet performance and free cash generated from vessel sales resulted in TEN’s cash reserves increasing to $534.1 million as at 30 June 2023,” it said.
Total net cash generation from operating activities in the first half was $258.5 million.
Tsakos enters the second half with $534.09 million in cash, as well as $1.5 billion in pending revenue driven by new and extended leases with an average contract length of three years. It had $1.38 billion in bank debt as of June 30.
“Our major customers’ recent appetite for long-term business, particularly in the LNG and tanker segments, has given us the comfort to secure more than $1.5 billion in forward income and ensure continuity by providing healthy returns and higher dividends to our shareholders,” George Saroglou, president and chief operating officer of Tsakos, said in a statement.
Tsakos expects to return $30 million to common shareholders by 2023 in two semiannual payments of $0.3 per unit plus an additional special dividend of $0.4 per share, which together amount to $1 per share, according to the statement from press Earnings per share for the first half of 2023 were $7.34.
The company said it continues to redeem preferred stock to save on dividend payments. It said in its first-quarter report that it had scheduled a repurchase of a total of 3,517,061 Series D perpetual redeemable preferred shares accrued in July, worth nearly $87.93 million, from which expected to save $7.7 million in dividend payments. In its half-year report, Tsakos said: “In the third quarter of 2023, the company fully redeemed $88.0 million of its 8.75% Series D Cumulative Redeemable Perpetual Preferred Stock and 19.4 million of dollars of a privately placed perpetual preferred instrument, with a coupon of 7.50 percent, for a total of $107.4 million with an annual savings of more than $9.0 million.
“Including prior redemptions of Series B and Series C perpetual preferred stock and privately placed preferred instruments, the Company, in the aggregate, has redeemed a total of $211 million of preferred stock with an annual cash savings of about $18.0 million.”
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