May 20, 2020 / 6:15 AM / 8 days ago

Frontline Q1 profit at 12-year high, sees downward pressure amid oil cutback

OSLO, May 20 (Reuters) - Oil tanker firm Frontline reported on Wednesday a surge in first-quarter earnings, but warned of weaker rates for its vessels in the next quarter as demand for crude transport and storage capacity wanes.

Frontline’s net profit for January-March rose fourfold from a year-ago period to a 12-year high $165.3 million, lagging an average forecast of $185.7 million in a Refinitiv poll of analysts.

The Oslo-listed company’s share price spiked in March amid the collapse of a long-standing Saudi-Russian output limits, boosting demand for vessels, but lost steam in April when OPEC+ and other nations agreed to restrict supplies amid the coronavirus outbreak.

Although the company’s strong performance carried over into the second quarter, the outlook is less solid, Chief Executive Robert Hvide Macleod said in a statement.

“The tanker market has corrected downwards in recent weeks and faces pressure in the short term, both from production cuts and inventory draws, but we believe we are well positioned due to our strong balance sheet and low cost base,” he said.

Frontline will pay a dividend of $0.70 per share for the first quarter, up from $0.4 for the previous quarter.

The company resumed cash payments to shareholders last November following a two-year dry spell and has promised “significant” quarterly dividends. (Reporting by Terje Solsvik, Editing by Sherry Jacob-Phillips)

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