MONACO - Scorpio Tankers Inc . (NYSE:STNG) has announced agreements for the sale of two mid-range (MR) product tankers and a new time charter-out agreement. The two vessels, named STI San Antonio and STI Texas City, both built in 2014 and equipped with scrubbers, are being sold for $42.5 million each. The transactions are expected to be finalized in the fourth quarter of 2024.
In addition to the sales, Scorpio Tankers disclosed a three-year time charter-out agreement for the MR product tanker STI Jardins, which was built in 2018 and does not have a scrubber fitted. The charter rate is set at $29,550 per day, with an oil major as the charterer. The commencement of this charter is anticipated to occur in the third or fourth quarter of 2024.
Scorpio Tankers, a global provider of marine transportation for petroleum products, currently owns or lease finances a fleet of 104 product tankers. This fleet comprises 39 Long Range 2 (LR2) tankers, 51 MR tankers, and 14 Handymax tankers, averaging 8.5 years in age. The company has plans to sell four of its MR tankers, with the deals expected to close in the third and fourth quarters of 2024.
This news comes amid Scorpio Tankers' broader business strategy and market operations within the marine transportation industry. The company has emphasized that the forward-looking statements in the press release are based on assumptions subject to significant uncertainties. Scorpio Tankers has stated that it does not intend to update these forward-looking statements except as required by law.
The information presented in this article is based on a press release statement from Scorpio Tankers Inc. and is intended to provide a factual report on the company's recent business activities.
In other recent news, Scorpio Tankers Inc. reported strong financial results for the second quarter of 2024, with an adjusted EBITDA of $278 million and an adjusted net income of over $188 million. The company's strategic financial management led to a significant decrease in net debt, from $1.4 billion to approximately $700 million. In addition, Scorpio Tankers repurchased 1.4 million shares for $109 million and declared a quarterly dividend of $0.40 per share.
These recent developments point to a promising Q3 outlook with a spot rate average of $36,000 per day TCE, $10,000 higher than the previous year. The company anticipates continued strength in the product tanker market due to the interplay of demand, exports, and refinery system changes. Scorpio Tankers aims to further reduce debt and lower the daily cash break-even rates, with potential rates of $30,000 to $40,000 per day.
Despite some areas seeing weaker rates due to a quiet and volatile summer, the third quarter spot rates are significantly higher than the previous year, indicating a strong market. The company's financial strategy, which includes the conversion of a $225 million credit facility into a revolving credit facility, has positioned Scorpio Tankers for increased shareholder returns. The company is also considering increasing its time charter exposure and exploring new sectors in the future.
InvestingPro Insights
As Scorpio Tankers Inc. (NYSE:STNG) progresses with its strategic asset sales and charter agreements, key financial metrics and market performance offer insights into its current standing and future prospects. The company's aggressive share buyback program, as indicated by InvestingPro Tips, suggests a management team confident in the intrinsic value of the company. Furthermore, Scorpio Tankers boasts an impressive gross profit margin of 76.17%, which is reflective of its operational efficiency and pricing strength within the marine transportation sector.
InvestingPro Data highlights a market capitalization of approximately $3.57 billion, underscoring the company's significant presence in the industry. Coupled with this, Scorpio Tankers trades at a low earnings multiple, with a P/E ratio of 5.35 and an adjusted P/E ratio for the last twelve months as of Q2 2024 at 5.67. This valuation could attract investors looking for potentially undervalued opportunities. Additionally, the company has maintained its dividend payments for 12 consecutive years, providing a yield of 2.24% as of the latest data, which may appeal to income-focused investors.
While the company has seen a revenue decline of 17.56% over the last twelve months as of Q2 2024, it's important to note that the gross profit margins remain robust. Also, despite some analysts revising their earnings downwards for the upcoming period, the company is still predicted to remain profitable this year. For investors seeking more detailed analysis and additional InvestingPro Tips, there are currently 9 more tips available, which could provide further context on Scorpio Tankers' financial health and market position.
For a deeper dive into Scorpio Tankers' financials and market performance, investors can access a comprehensive suite of InvestingPro Tips at https://www.investing.com/pro/STNG.
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