MONACO - Scorpio Tankers Inc . (NYSE:STNG), a global provider of marine transportation for petroleum products, has entered into agreements to sell five of its medium-range (MR) product tankers for a total of $179.1 million. The deals, involving four tankers built in 2012 and one from 2013, are expected to close by the third quarter of 2024.
The four ships built in 2012, namely STI Garnet, STI Onyx, STI Ruby, and STI Topaz, are being sold for a combined $142.5 million to three separate buyers. Notably, three of these vessels come equipped with scrubbers, devices designed to remove sulfur oxides from the ships' exhaust gases. The fifth tanker, the 2013-built STI Beryl, which does not have a scrubber installed, is under contract for $36.6 million.
Scorpio Tankers has confirmed that these vessels are unencumbered, meaning there will be no debt repayments tied to the sales. Following the completion of these transactions, the company's fleet will consist entirely of vessels constructed in 2014 or later.
The company's fleet currently comprises 108 product tankers, with an average age of 8.3 years, including 39 LR2 tankers, 55 MR tankers, and 14 Handymax tankers. Additionally, agreements are in place to sell another six MR tankers, with expected closure dates in the second or third quarter of 2024.
This news is based on a press release statement from Scorpio Tankers.
In other recent news, Scorpio Tankers has been making strides in its financial management and operational performance. The company is set to make a substantial loan prepayment of $223.6 million in June, which is expected to reduce daily cash break-even rates by approximately $3,500 in the first year following the prepayment. The company's recent activities also include the repurchase of vessels under various lease financings.
On the earnings front, Scorpio Tankers reported a 20% year-over-year increase in adjusted earnings per share (EPS) to $3.97 for the first quarter of 2024. This figure surpassed both BofA Securities' estimate of $3.81 and the consensus estimate of $3.70. The earnings beat was attributed to a lower number of drydock offhire days and less interest expenses than projected.
BofA Securities adjusted its stock price target for Scorpio Tankers, raising it to $82 from the previous target of $76, while maintaining a Neutral rating on the stock. The company's fleet time-charter equivalent (TCE) for the first quarter stood at $39,660 per day.
InvestingPro Insights
Scorpio Tankers Inc. (NYSE:STNG) has demonstrated a proactive approach to managing its fleet and capital, as evidenced by its recent agreements to sell older medium-range (MR) product tankers. This aligns with the company's strategy to modernize its fleet and optimize its asset base. In light of these developments, key metrics and insights from InvestingPro provide a broader context for evaluating the company's performance and market position.
The company's aggressive share buyback program, as highlighted by an InvestingPro Tip, underscores management's confidence in the company's value and its commitment to returning capital to shareholders. Additionally, the strong gross profit margins of 75.7% in the last twelve months as of Q1 2024, combined with an impressive operating income margin of 52.37%, reflect Scorpio Tankers' operational efficiency and its ability to generate significant earnings from its core activities.
Investors may also take note of the company's robust return over the last year, with a 1 Year Price Total Return of 85.04% as of the date provided, which may be indicative of the market's positive reception to the company's strategic decisions and operational performance. Furthermore, the company's dividend policy, having maintained payments for 12 consecutive years, suggests a stable and shareholder-friendly approach.
For those interested in further insights, there are additional InvestingPro Tips available that delve into the company's financial health, such as its liquidity position where liquid assets exceed short-term obligations, and its moderate level of debt. These factors contribute to the company's resilience and financial flexibility.
To explore more exclusive metrics and tips that could inform your investment decisions, consider visiting https://www.investing.com/pro/STNG. Plus, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With InvestingPro, you can access a total of 13 additional tips for Scorpio Tankers, providing a comprehensive analysis of the company's financial and market performance.
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