Tsakos Continues to Ride on War-Induced Rise in Shipping Rates

Tsakos Energy Navigation Ltd. (TEN) has reported $237 million in net income for the first half of 2023, up nearly fivefold from the same period in 2022 as strong tanker market conditions spurred by the Russia-Ukraine war remained.

"With tanker markets remaining strong, primarily spurred by favorable supply and demand fundamentals and favorable trade dislocations caused by the war in the Ukraine continuing and with no signs of abating, TEN, in the first half of 2023, generated voyage revenues of $482.7 million from $366.4 million in the equivalent period of 2022 or 32 percent higher", the Athens-based energy carrier said in a recent press release.

Tsakos' time charter equivalent rates, or daily revenue accounting for round-trip expenses, surged to $40,182 a vessel per day during the January-June period, up 64 percent against the first half of last year.

The continued earnings momentum also got help from sustained fleet utilization and lower operating expenses. "Overall, voyage expenses during the 2023 second quarter fell approximately 38 percent from the 2022 second quarter due to lower bunker costs while total vessel operating expenses remained at about the same levels as the 2022 second quarter, as did depreciation and amortization", the New York-listed company said.

"Interest and finance costs in the second quarter of 2023, continuing to be impacted by high interest rates globally, settled at $24.3 million, which was also mitigated by interest income reaching $4.1 million from just $0.2 million in the same period of 2022".

But while operating in a strong market, Tsakos said it sold eight of its older tankers during the first six months of 2023. It said the divestments took advantage of "historical high asset prices" and that proceeds would help it acquire environmentally friendly replacements. Tsakos has 10 vessels under construction, including two expected to be delivered in the first quarter of 2026, according to the media release.

"Positive fleet performance and the free cash generated by vessel sales, resulted in TEN’s cash reserves increasing to $534.1 million as at June 30, 2023", it said.

Total net cash generation from operating activities during the first half stood at $258.5 million.

Tsakos enters the second half with $534.09 million in cash, as well as a backlog revenue of $1.5 billion boosted by new and extended time charter contracts with an average contract duration of three years. It had $1.38 billion in bank debt as of June 30.

"The recent appetite from our major clients for accretive long-term business, particularly in the LNG and tanker segments, has given us the comfort to secure over $1.5 billion in forward revenues and ensure continuity in providing healthy returns and increased 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 for 2023 with two semi-annual payments of $0.3 per unit plus an additional special dividend of $0.4 per share, which collectively amount to $1 per share, according to the press release. Earnings per share for the first half of 2023 stood at $7.34.

The company said it continues to redeem preferred stocks to save on dividend payments. It said in its first quarter report a total of 3,517,061 Series D Cumulative Redeemable Perpetual Preferred Shares were scheduled for buyback July, valued nearly $87.93 million, from which it expected to save $7.7 million in dividend payments. In its half-year report Tsakos said, "In the third quarter of 2023 the Company redeemed in full $88.0 million of its publicly traded 8.75 percent Series D Cumulative Redeemable Perpetual Preferred Shares and $19.4 million of a privately placed perpetual preferred instrument, carrying a coupon of 7.50 percent, for a total of $107.4 million with annual cash savings of over $9.0 million.

"Inclusive of the prior redemptions of Series B and Series C Perpetual Preferred Shares and privately placed preferred instruments, the Company has, in aggregate, redeemed a total of $211 million of preferred shares with annual cash savings of about $18.0 million".

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