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Euronav NV$7.70($.05)(.65%)

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 Euronav NV: Third Quarter Results 2016
   Monday, October 31, 2016 4:25:00 AM ET

HIGHLIGHTS

-- Q3 seasonal freight rate weakness compounded by vessel supply factors

-- Acquisition and successfully deferred delivery into Q1 2017 of two newbuilding VLCC resales

-- Long term time charter (seven years) signed for two new Suezmax Ice Class vessels to be built

-- Outlook for Q4 encouraging; medium term positive for the crude tanker shipping segment

Euronav NV (EURN & ) ("Euronav" or the "Company") today reported its non-audited financial results for the three months ended 30 September 2016.

http://photos.prnewswire.com/prnvar/20150206/728388

Paddy Rodgers, CEO of Euronav said: "Freight rates were lower during the third quarter with anticipated seasonal weakness throughout the quarter compounded by higher levels of less favored vessel supply from several sources (returning dry dock, new builds, older tonnage) affecting tanker owners pricing behavior. This was exacerbated, in particular for Suezmax vessels, by dislocation from reduced Atlantic basin oil production negatively impacting on ton miles".

Freight rates have now improved, underpinned by seasonal trading patterns, continued demand from the Far East and boosted in the short term by cargo activity from the Arabian Gulf, which is at record levels. Euronav anticipates a regular seasonal pattern for the fourth quarter in terms of freight rates. Scheduled vessel supply however remains at elevated levels, which combined with no scrapping, will continue to present headwinds into 2017 for tanker operators.

Euronav retains access to substantial liquidity and maintains a robust balance sheet in order to remain strategically opportunistic to navigate potential short-term headwinds during periods of increased vessel supply whilst at the same time remaining exposed to any potential upside from an improved rate environment.

The most important key figures (unaudited) are:
         in thousands of USD                                    First Semester 2016   Third Quarter 2016   Year-to-Date        Year-to-Date
                                                                                                           2016                2015
         Revenue                                                404,450               133,534              537,984             620,863
         Other operating income                                 3,702                 1,831                5,533               6,272
                                                                                      --
         Voyage expenses and commissions                        (24,855)              (18,222)             (43,077)            (55,281)
         Vessel operating expenses                              (80,091)              (42,747)             (122,838)           (114,905)
         Charter hire expenses                                  (11,010)              (3,784)              (14,794)            (19,411)
         General and administrative expenses                    (21,721)              (10,913)             (32,634)            (30,130)
         Net gain (loss) on disposal of tangible assets         13,819                --                   13,819              (5,865)
         Net gain (loss) on disposal of investments in equity   (24,150)              --                   (24,150)            --
         accounted investees
         Depreciation                                           (109,497)             (59,088)             (168,585)           (155,310)
         Net finance expenses                                   (19,074)              (9,679)              (28,753)            (37,832)
         Share of profit (loss) of equity accounted investees   22,276                9,282                31,558              38,071
         Result before taxation                                 153,849               214                  154,063             246,472
         Tax benefit (expense)                                  (159)                 (142)                (301)               (1,031)
         Profit (loss) for the period                           153,690               72                   153,762             245,441
         Attributable to:    Owners of the company              153,690               72                   153,762             245,441
         The contribution to the result is as follows:
         in thousands of USD                                    First Semester 2016   Third Quarter 2016   Year-to-Date 2016   Year-to-Date 2015
         Tankers                                                136,458               (8,764)              127,694             220,650
         FSO                                                    17,232                8,836                26,068              24,791
         Result after taxation                                  153,690               72                   153,762             245,441
         Information per share:
         in USD per share                                       First Semester 2016   Third Quarter 2016   Year-to-Date 2016   Year-to-Date 2015
         Weighted average number of shares (basic) *            158,359,054           158,166,534          158,294,412         154,943,416
         Result after taxation                                  0.97                  0.00                 0.97                1.58
* The number of shares issued on 30 September 2016 is 159,208,949.
            EBITDA reconciliation (unaudited):
            in thousands of USD                                  First Semester 2016   Third Quarter 2016   Year-to-Date        Year-to-Date
                                                                                                            2016                2015
            Profit (loss) for the period                         153,690               72                   153,762             245,441
            + Depreciation                                       109,497               59,088               168,585             155,310
            + Net finance expenses                               19,074                9,679                28,753              37,832
            + Tax expense (benefit)                              159                   142                  301                 1,031
            EBITDA                                               282,420               68,981               351,401             439,614
            + Depreciation equity accounted investees            13,973                5,025                18,998              21,886
            + Net finance expenses equity accounted investees    2,210                 481                  2,691               4,322
            + Tax expense (benefit) equity accounted investees   --                    116                  116                 --
            Proportionate EBITDA                                 298,603               74,603               373,206             465,822
            Proportionate EBITDA per share:
            in USD per share                                     First Semester 2016   Third Quarter 2016   Year-to-Date 2016   Year-to-Date 2015
            Weighted average number of shares (basic) *          158,359,054           158,166,534          158,294,412         154,943,416
            Proportionate EBITDA                                 1.89                  0.47                 2.36                3.01
All figures have been prepared under IFRS as adopted by the EU (International Financial Reporting Standards) and have not been audited nor reviewed by the statutory auditor.

For the third quarter of 2016 the Company had a net profit of USD 0.1 million (third quarter 2015: USD 72.2 million) or USD 0.00 per share (third quarter 2015: USD 0.46 per share). Proportionate EBITDA (a non-IFRS measure) for the same period was USD 74.6 million (third quarter 2015: USD 149.7 million).

The average daily time charter equivalent rates (TCE, a non IFRS-measure) can be summarized as follows:

In USD per day                 Third quarter 2016 Third quarter 2015
VLCC
Average spot rate (in TI Pool) 27,100             52,368
Average time charter rate*     41,480             43,516
Suezmax
Average spot rate**            19,045             40,048
Average time charter rate*     21,576             30,944

* Including profit share where applicable

** Excluding technical offhire days

EURONAV TANKER FLEET

On 16 August 2016 Euronav entered into a binding agreement for the acquisition through resale of two VLCCs which are completing construction at Hyundai Heavy Industries for an aggregate purchase price of USD 169 million or USD 84.5 million per unit.

On 3 October 2016 Euronav signed two long-term time charter contracts of seven years each with Valero Energy Inc. for Suezmax vessels with specialized Ice Class 1C capability starting in 2018. In order to fulfil this contract, Euronav has ordered two high specification Ice Class Suezmax vessels from Hyundai Heavy Industries shipyard in South Korea. Delivery of these vessels is expected in early 2018 when each of the time charter contracts will begin.

On 13 October 2016 Euronav agreed with Hyundai Heavy Industries shipyard in South Korea to defer the delivery of the two VLCC ex-yard resale vessels it recently purchased to the first quarter of 2017. These vessels, previously expected to be delivered between October and November 2016, will now be delivered in January 2017.

On 27 October 2016 the VLCC KHK Vision (2007 - 305,749 dwt) that Euronav had on time-charter in was redelivered to its owner.

TANKER MARKET

Today, the global large tanker fleet includes 28 VLCCs and 23 Suezmaxes that are over 20 years old (the age at which Euronav depreciates vessel values to zero). Despite the age of such a large number of vessels, there has been virtually no scrapping since the start of 2015 (only two VLCCs and one Suezmax). A lack of vessel demolition during the consistently higher freight rate cycle experienced over the past two years was to be expected but this has created a portion of older tonnage within the global fleet, which has been disruptive in freight pricing. Other elements have also exacerbated increased vessel supply (reduced congestion, new build deliveries, dry dock ships re-entering fleet) in a seasonally weaker third quarter.

Demand for crude oil remains robust. The IEA forecasts 1.2m bpd of growth for both 2016 and 2017 respectively. Chinese requirement for crude remains constructive driven by four key drivers of lost domestic production, building of strategic reserves, the emergence of teapot refineries and the base effect of a large economy still growing.

All facets of the tanker shipping sector are adjusting to structural change in its financing with rationed capital from traditional sources (banks, family owners, government) and a higher cost of capital from new providers. This is reflected in a substantial slowdown in contracting activity with VLCC orders down 75% in the nine months to end September versus 2015 and Suezmax orders down 87% during the same period. On a comparable basis since 2008 ordering is down 61% and 77% respectively year-to-date.

Encouragingly, the limited order flow is being led by ship owners engaged in industrial replacement rather than speculative orders, with eight of the 14 orders for VLCCs year-to-date coming from owners with vessels between 15 to 20 years of age. Shipyards are also severely restricted in their financial flexibility and are entering a phase of rationalization. Having actively negotiated on two new vessels during the third quarter (backed by seven year time charter contracts and replacing current tonnage in 2018), Euronav anticipates limited new build asset price deflation from current levels as shipyards remain restricted in their flexibility. There should also be limited additional orders from potential buyers who are equally restricted in terms of access to capital.

We encourage investors to visit our website and access our presentations which are updated regularly at http://investors.euronav.com .

OUTLOOK

The Company believes that vessel supply in totality remains a manageable feature with the VLCC order book representing 16% of the fleet and 14% for Suezmaxes on an adjusted basis. However, the Company retains the view that there will be pockets of elevated supply which will impact freight pricing and owner sentiment during this winter season and into 2017. Ship owners have an obligation to retain discipline during such periods and focus on maximizing returns rather than rates of utilization.

The medium term structure for the tanker sector, however, remains encouraging, driven largely by an adjustment to increased environmental regulation and a permanent structure of limited availability and higher cost of capital. This is reflected in a more restricted vessel supply picture medium-term augmented by increasing capital discipline from owners.

So far in the fourth quarter of 2016, the Euronav VLCC fleet operated in the Tankers International Pool has earned about 23,958 USD and 56% of the available days have been fixed. Euronav’s Suezmax fleet trading on the spot market has earned about 19,569 USD per day on average with 57% of the available days fixed.

CONFERENCE CALL

Euronav will host a conference call at 9:30 a.m. EDT / 2:30 p.m. CET on Monday 31 October 2016 to discuss the results for the quarter.

The call will be a webcast with an accompanying slideshow. You can find details of this conference call below and on the "Investor Relations" page of the Euronav website at http://investors.euronav.com .

Webcast Information
Event Type:         Audio webcast with user-controlled slide presentation
Event Date:         31 October 2016
Event Time:         9:30 a.m. EDT / 2:30 p.m. CET
Event Title:        "Q3 2016 Earnings Conference Call"
Event Site/URL:     http://services.choruscall.com/links/euronav161031T2adKwOm.html 

Telephone participants may avoid any delays by pre-registering for the call using the following link to receive a special dial-in number and PIN conference call registration link: http://dpregister.com/10093867 . Pre-registration fields of information to be gathered: name, company, email.

Telephone participants located in the U.S. who are unable to pre-register may dial in to +1-877-328-5501 on the day of the call. Others may use the international dial-in number +1-412-317-5471.

A replay of the call will be available until 7 November 2016, beginning at 11:30 a.m. EDT / 4:30 p.m. CET on 31 October 2016. Telephone participants located in the U.S. can dial +1-877-344-7529. Others can dial +1-412-317-0088. Please reference the conference number 10093867.

Forward-Looking Statements

Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe", "anticipate", "intends", "estimate", "forecast", "project", "plan", "potential", "may", "should", "expect", "pending" and similar expressions identify forward-looking statements.

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the failure of counterparties to fully perform their contracts with us, the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand for tanker vessel capacity, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, the market for our vessels, availability of financing and refinancing, charter counterparty performance, ability to obtain financing and comply with covenants in such financing arrangements, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, vessels breakdowns and instances of off-hires and other factors. Please see our filings with the United States Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

Announcement of fourth quarter results 2016: Thursday, 26 January 2017

About Euronav

Euronav is an independent tanker company engaged in the ocean transportation and storage of crude oil. The Company is headquartered in Antwerp, Belgium, and has offices throughout Europe and Asia. Euronav is listed on Euronext Brussels and on the NYSE under the symbol EURN. Euronav employs its fleet both on the spot and period market. VLCCs on the spot market are traded in the Tankers International pool of which Euronav is one of the major partners. Euronav’s owned and operated fleet consists of 56 double hulled vessels being 1 V-Plus vessel, 29 VLCCs (of which 1 in 50%-50% joint venture), two VLCCs under construction which were recently acquired as resales of existing newbuilding contracts, 20 Suezmaxes, two Suezmaxes under construction and two FSO vessels (both owned in 50%-50% joint venture). The Company’s vessels mainly fly Belgian, Greek, French and Marshall Island flags.

Regulated information within the meaning of the Royal Decree of 14 November 2007.

Condensed consolidated statement of financial position
(in thousands of USD except per share amounts)
                                               September 30, 2016   December 31, 2015
ASSETS
Non-current assets
Vessels                                        2,543,585            2,288,036
Assets under construction                      72,075               93,890
Other tangible assets                          862                  1,048
Prepayments                                    5                    2
Intangible assets                              181                  238
Receivables                                    179,499              259,908
Investments in equity accounted investees      30,672               21,637
Deferred tax assets                            631                  935
Total non-current assets                       2,827,510            2,665,694
Current assets
Trade and other receivables                    153,972              219,080
Current tax assets                             133                  114
Cash and cash equivalents                      90,684               131,663
Non-current assets held for sale               --                   24,195
Total current assets                           244,789              375,052
TOTAL ASSETS                                   3,072,299            3,040,746
EQUITY and LIABILITIES
Equity
Share capital                                  173,046              173,046
Share premium                                  1,215,227            1,215,227
Translation reserve                            300                  (50)
Treasury shares                                (16,102)             (12,283)
Retained earnings                              465,053              529,809
Equity attributable to owners of the Company   1,837,524            1,905,749
Non-current liabilities
Bank loans                                     1,048,233            952,426
Other payables                                 561                  590
Employee benefits                              2,171                2,038
Provisions                                     73                   436
Total non-current liabilities                  1,051,038            955,490
Current liabilities
Trade and other payables                       95,487               79,078
Tax liabilities                                1                    1
Bank loans                                     88,125               100,022
Provisions                                     124                  406
Total current liabilities                      183,737              179,507
TOTAL EQUITY and LIABILITIES                   3,072,299            3,040,746
Condensed consolidated statement of profit and loss
(in thousands of USD except per share amounts)
                                                                          2016                     2015
                                                                          Jan. 1 - Sep. 30, 2016   Jan. 1 - Sep. 30, 2015
Shipping revenue
Revenue                                                                   537,984                  620,863
Gains on disposal of vessels/other tangible assets                        13,821                   2,137
Other operating income                                                    5,533                    6,272
Total shipping revenue                                                    557,338                  629,272
Operating expenses
Voyage expenses and commissions                                           (43,077)                 (55,281)
Vessel operating expenses                                                 (122,838)                (114,905)
Charter hire expenses                                                     (14,794)                 (19,411)
Loss on disposal of vessels/other tangible assets                         (2)                      (8,002)
Loss on disposal of investments in equity accounted investees             (24,150)                 --
Depreciation tangible assets                                              (168,510)                (155,286)
Depreciation intangible assets                                            (75)                     (24)
General and administrative expenses                                       (32,634)                 (30,130)
Total operating expenses                                                  (406,080)                (383,039)
RESULT FROM OPERATING ACTIVITIES                                          151,258                  246,233
Finance income                                                            3,465                    1,592
Finance expenses                                                          (32,218)                 (39,424)
Net finance expenses                                                      (28,753)                 (37,832)
Share of profit(loss) of equity accounted investees (net of income tax)   31,558                   38,071
PROFIT (LOSS) BEFORE INCOME TAX                                           154,063                  246,472
Income tax benefit (expense)                                              (301)                    (1,031)
PROFIT (LOSS) FOR THE PERIOD                                              153,762                  245,441
Attributable to:
Owners of the company                                                     153,762                  245,441
Basic earnings per share                                                  0.97                     1.58
Diluted earnings per share                                                0.97                     1.56
Weighted average number of shares (basic)                                 158,294,412              154,943,416
Weighted average number of shares (diluted)                               158,491,433              156,999,003
Condensed consolidated statement of comprehensive income
(in thousands of USD except per share amounts)
                                                                   2016                     2015
                                                                   Jan. 1 - Sep. 30, 2016   Jan. 1 - Sep. 30, 2015
Profit/(loss) for the period                                       153,762                  245,441
Other comprehensive income, net of tax
Items that will never be reclassified to profit or loss:
Remeasurements of the defined benefit liability (asset)            --                       --
Items that are or may be reclassified to profit or loss:
Foreign currency translation differences                           350                      (346)
Equity-accounted investees - share of other comprehensive income   925                      1,007
Other comprehensive income, net of tax                             1,275                    661
Total comprehensive income for the period                          155,037                  246,102
Attributable to:
Owners of the company                                              155,037                  246,102
Condensed consolidated statement of changes in equity
(in thousands of USD except per share amounts)
                                                   Share capital Share premium Translation reserve Hedging reserve Treasury shares Retained earnings Capital and          Other    Total equity
                                                                                                                                                     reserves
Balance at January 1, 2015                         142,441       941,770       379                 --              (46,062)        359,180           1,397,708            75,000   1,472,708
Profit (loss) for the period                       --            --            --                  --              --              245,441           245,441              --       245,441
Total other comprehensive income                   --            --            (346)               --              --              1,007             661                  --       661
Total comprehensive income                         --            --            (346)               --              --              246,448           246,102              --       246,102
Transactions with owners of the company
Issue of ordinary shares                           20,324        208,739       --                  --              --              (19,358)          209,705              --       209,705
Conversion perpetual convertible preferred equity  10,281        64,719        --                  --              --              --                75,000               (75,000) --
Dividends to equity holders                        --            --            --                  --              --              (138,001)         (138,001)            --       (138,001)
Treasury shares                                    --            --            --                  --              30,708          (23,158)          7,550                --       7,550
Equity-settled share-based payment                 --            --            --                  --              --              1,318             1,318                --       1,318
Total transactions with owners                     30,605        273,458       --                  --              30,708          (179,199)         155,572              (75,000) 80,572
Balance at September 30, 2015                      173,046       1,215,228     33                  --              (15,354)        426,429           1,799,382            --       1,799,382
                                                   Share capital Share premium Translation reserve Hedging reserve Treasury shares Retained earnings Capital and reserves Other    Total equity
Balance at January 1, 2016                         173,046       1,215,227     (50)                --              (12,283)        529,808           1,905,748            --       1,905,748
Profit (loss) for the period                       --            --            --                  --              --              153,762           153,762              --       153,762
Total other comprehensive income                   --            --            350                 --              --              925               1,275                --       1,275
Total comprehensive income                         --            --            350                 --              --              154,687           155,037              --       155,037
Transactions with owners of the company
Dividends to equity holders                        --            --            --                  --              --              (217,412)         (217,412)            --       (217,412)
Treasury shares                                    --            --            --                  --              (3,819)         (2,338)           (6,157)              --       (6,157)
Equity-settled share-based payment                 --            --            --                  --              --              308               308                  --       308
Total transactions with owners                     --            --            --                  --              (3,819)         (219,442)         (223,261)            --       (223,261)
Balance at September 30, 2016                      173,046       1,215,227     300                 --              (16,102)        465,053           1,837,524            --       1,837,524
Condensed consolidated statement of cash flows
(in thousands of USD except per share amounts)
                                                              2016                    2015
                                                              Jan. 1 - Sep. 30, 2016  Jan. 1 - Sep. 30, 2015
Cash flows from operating activities
Profit (loss) for the period                                          153,762         245,441
Adjustments for:                                                      176,136         162,504
Depreciation of tangible assets                                       168,510         155,286
Depreciation of intangible assets                                     75              24
Loss (gain) on disposal of investments in equity                      24,150          --
accounted investees
Provisions                                                            (584)           (781)
Tax (benefits)/expenses                                               301             1,031
Share of profit of equity-accounted investees, net of tax             (31,558)        (38,071)
Net finance expense                                                   28,753          37,831
(Gain)/loss on disposal of assets                                     (13,819)        5,866
Equity-settled share-based payment transactions                       308             1,318
Changes in working capital requirements                               59,031          (48,550)
Change in cash guarantees                                             79              (14)
Change in trade receivables                                           1,958           9,851
Change in accrued income                                              14,896          (12,211)
Change in deferred charges                                            (3,880)         4,791
Change in other receivables                                           55,836          (16,344)
Change in trade payables                                              (1,177)         169
Change in accrued payroll                                             (337)           (329)
Change in accrued expenses                                            (2,425)         (2,175)
Change in deferred income                                             (5,931)         5,544
Change in other payables                                              (118)           (37,832)
Change in provisions for employee benefits                            130             --
Income taxes paid during the period                                   (17)            93
Interest paid                                                         (25,010)        (42,189)
Interest received                                                     144             232
Dividends received from equity-accounted investees                    1,778           275
Net cash from (used in) operating activities                          365,824         317,806
Acquisition of vessels                                                (281,691)       (340,647)
Proceeds from the sale of vessels                                     38,016          91,065
Acquisition of other tangible assets                                  (154)           (8,267)
Acquisition of intangible assets                                      (18)            (188)
Proceeds from the sale of other (in)tangible assets                   --              72
Loans from (to) related parties                                       22,047          25,850
Proceeds from capital decreases in joint ventures                     3,737           1,500
Acquisition of subsidiaries, net of cash acquired                     (6,755)         --
Net cash from (used in) investing activities                          (224,818)       (230,615)
Proceeds from issue of share capital                                  --              229,061
Transaction costs related to issue of share capital                   --              (19,357)
(Purchase of) Proceeds from sale of treasury shares                   (6,157)         7,550
Proceeds from new borrowings                                          387,300         901,270
Repayment of borrowings                                               (367,960)       (1,161,312)
Transaction costs related to issue of loans and borrowings            --              (8,680)
Dividends paid                                                        (194,764)       (115,125)
Net cash from (used in) financing activities                          (181,581)       (166,593)
Net increase (decrease) in cash and cash equivalents                  (40,575)        (79,402)
Net cash and cash equivalents at the beginning of the period          131,663         254,086
Effect of changes in exchange rates                                   (404)           (1,242)
Net cash and cash equivalents at the end of the period                90,684          173,442

(Logo: http://photos.prnewswire.com/prnh/20150206/728388)

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/euronav-nv-third-quarter-results-2016-300353920.html

SOURCE Euronav NV

http://rt.prnewswire.com/rt.gif?NewsItemId=LN30089&Transmission_Id=201610310425PR_NEWS_USPR_____LN30089&DateId=20161031



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