Scorpio Tankers Reduces Its Losses

CEO Emanuele Lauro says shifts in the refining landscape support more product tankers

Scorpio Tankers Inc. [NYSE:STNG] (Scorpio) reduced its losses for both the three months ended December 31, as well as the full 2012 calendar year, and the company said it continues to believe product tanker demand is on the rise, supporting its investment in new vessels.

"We continue to see confirmation of our longer-term thesis, that there will be significant increases in product tanker demand days as refining capacity inexorably shifts to more competitive locations," said CEO Emanuele Lauro.

"This shift is lengthening steaming distances, expanding the opportunity set for commodity traders, and solidifying the role of the product tanker as inexpensive and flexible storage as port infrastructure - both in the developed and developing world - is constrained."

Improvements

For the quarter, the company had a net loss of $4.9 million on revenues of $30.1 million, compared with a loss of $71.7 million and revenues of $22.6 million in the same period of the previous year.

For the full year, Scorpio lost $26.5 million on $115.4 million in revenues, versus a loss of $82.7 million and $82.1 million in revenues in 2011.

Lauro said the first quarter's results were affected by seasonal refinery turnarounds in the East and lower export volumes, but markets have been firm as U.S. Gulf exports have increased.

"Going forward, we expect improvement in volumes and rates as several major refineries resume production," he said.

The company has been focused on adding fuel-efficient newbuildings to its fleet, announcing eight new orders this month alone, and it now has 20 product tanker orders in its pipeline.

"Our new vessels are performing well, realizing the fuel savings we previously announced, and we are confident that our newbuilding program is well-timed," Lauro said.

"We see a very attractive competitive landscape to match our profile for growth."

Some have argued that companies' purchases of new fuel-efficient vessels are contributing to a continuing oversupply of capacity in the tanker market, although others in the industry, including shipping billionaire John Fredriksen, have said the product tanker market is poised for recovery.