Tsakos Energy Navigation’s (TEN) solid contract coverage in 2009 is expected to keep the tanker owner in growth mode even during this adverse financial environment, although lower earnings are to be expected.
‘According to Credit Suisse analysts, 61 per cent of the company’s fleet is on time charter for this year, out of which 45 per cent is for its crude tanker fleet and 75 percent for its product tanker fleet. “However contract coverage drops to about 35 percent in 2010 (27% coverage for the crude fleet and 44% for product fleet)” says Credit Suisse in a recent report, warning that a lot of ships are rolling off contracts in 2009. Out of 24 product tankers that TEN operates 10 of them or 40% are scheduled to come off charter, while another 38%, or 8 crude tankers (from a total of 21) will follow the same path this year. Credit Suisse has lowered its earnings per share estimate for 2009 to $2.50 from a previous of $3.24, in order to reflect the analysts’ prediction for tanker rate growth during 2009. That is because the investment bank expects crude tanker spot rates to be 30%-40% lower than 2008, with supply outstripping demand. “Our 2009 average crude tanker spot rates are $40,000 per day for VLCCs, $35,000 per day for Suezmaxes and $29,000 per day for Aframaxes. Also, we expect product tanker rates down 10% – 20% year on year” said Credit Suisse.