Frontline shares dive 12% on profit slump

Investing.com -- Frontline's (OL:FRO ) (NYSE:FRO ) stock price took dropping over 12%, following its third-quarter 2024 financial results. 

The company reported a year-over-year decrease in net profit for the quarter, with net income falling to $60.5 million, compared to $187.6 million in the same period of 2023. 

This marks a near 70% drop in profitability, despite an increase in total revenues, which rose to $490.3 million in Q3, from $377 million in Q3 2023.

The profit fall was partly attributed to a substantial rise in operating expenses, which grew by 31.6% year-over-year, reaching $345.6 million from $262.7 million in the same quarter last year. 

This increase was driven by higher voyage expenses and ship operating costs, alongside increased depreciation charges. 

Additionally, voyage expenses and commissions jumped from $145.1 million to $195.0 million, reflecting the intensifying challenges within the tanker market and changes in trade dynamics.

“We continue to sail in a troubled geopolitical landscape and with lower year-on-year demand in Asia, and especially China, the tanker markets have yet to experience the seasonal upswing into winter,” said Frontline's chief executive, Lars H. Barstad.

Additionally, the company's Chief Financial Officer, Inger M. Klemp mentioned the company’s ongoing efforts to optimize its capital structure, including the refinancing of debt and sale of older vessels. 

Despite these measures, rising costs underlined the difficulties of maintaining margins in a volatile market environment.

Frontline also made operational adjustments, including the sale of one of its older Suezmax tankers during the quarter, which provided net cash proceeds of $36.5 million but underscored its reliance on asset rotation for financial stability. 

Meanwhile, the company continued to manage its debt effectively, fully repaying a shareholder loan and a senior unsecured revolving credit facility during the quarter.

Source: Investing.com