Scorpio Tankers (NYSE:STNG) used its fourth-quarter 2025 earnings call to emphasize what management described as a “transformative year” driven by debt reduction, higher liquidity, and a continued strengthening in product tanker market fundamentals. Executives highlighted a net cash balance sheet, lower cash break-evens, and an increase to the company’s quarterly dividend.
Quarterly and full-year results, plus balance sheet shift
Chief Executive Officer Emanuele Lauro said Scorpio Tankers generated $152 million of Adjusted EBITDA in Q4 and $568 million for the full year. The company also reported $344 million in IFRS net income for the year, according to Chief Financial Officer Chris Avella.
Avella said the company repaid $450 million in debt during the year, including a $154.6 million secured debt prepayment in Q4 across four credit facilities. He said that prepayment covered all scheduled principal amortization on existing bank debt for 2026 and 2027, and helped reduce cash break-even levels.
Dividend increase and capital allocation approach
Scorpio Tankers said it is raising its quarterly dividend to $0.45 per share, which Lauro described as a 12.5% year-over-year increase. In response to an analyst question about dividend policy, President Robert Bugbee said the company’s main premise is to grow the dividend through the cycle while keeping it sustainable, but that the timing of future changes would depend on multiple factors and would be reviewed regularly.
Bugbee also sought to address investor concerns about growing cash balances. He said the company has “absolutely zero acquisition thoughts of other companies, or competitors, or large fleets at all,” and emphasized Scorpio would not place a large vessel order impulsively. He described the fleet renewal strategy as “measured and conservative,” focused on arbitraging sales of older vessels and ordering newer vessels when pricing is attractive.
Liquidity, debt profile, and fleet renewal commitments
Avella said Scorpio had approximately $1.7 billion of liquidity as of the call date, consisting of $937 million in cash and $767 million in revolving credit availability.
He also outlined the company’s debt structure and upcoming repayment obligations:
- Scorpio’s last remaining lease financing obligation on one vessel with Ocean Yield was expected to be repaid before the end of the month.
- The remaining debt stack consists of secured bank debt and $200 million of five-year senior unsecured notes issued in January 2025, which Avella said were trading at around 103.
- With the exception of the final lease settlement, Avella said the company has no principal repayment obligations until 2028.
On fleet activity, management said the company sold 10 older vessels and entered into contracts to purchase 10 newbuildings. Avella said the total obligations under newbuilding contracts are “slightly over $700 million,” and that about 70% of installment payments are not due until 2027, 2028, and 2029. He added that the forward dry dock schedule is “light,” noting that special surveys were completed on over 70% of the fleet in the past two years.
During Q&A, Lauro and Bugbee said the company continues to engage opportunistically with inbound inquiries for potential vessel sales. Lauro said Scorpio is not working on anything “specifically on the buy side” at present, but does not exclude conservative substitution and renewal, consistent with prior quarters.
Market backdrop: strengthening rates, shifting trade, and constrained effective supply
Management said product tanker market conditions have improved for five consecutive quarters and that momentum has continued into Q1 2026. In the prepared remarks, the company cited spot rates of approximately $46,000 per day for LR2s and $38,000 per day for MRs.
James Doyle, head of corporate development and investor relations, highlighted what he described as three structural forces supporting the market: strong demand combined with refining capacity shifting farther from end consumers; constrained effective supply due to an aging fleet; and sanctions and geopolitics reshaping trade flows and tightening supply.
Doyle said global refined product demand is expected to increase by nearly one million barrels per day during the year, and that January seaborne refined product exports averaged 22.1 million barrels per day, up roughly one million barrels per day year-over-year. He added that ton-miles have risen as distances increased, saying product tanker ton-miles have increased roughly 20% since 2019.
On supply, Doyle said the product tanker order book is almost 19% of the existing fleet, but he stressed that context matters, citing that 21% of the fleet is already over 20 years old, rising to 30% by 2028. He also pointed to sanctions: roughly 26% of the Aframax/LR2 fleet and 9% of the MR/Handymax fleet are sanctioned, with an average age of 20–21 years. Adjusting for aging vessels, sanctioned capacity, and LR2 crossover into crude trades, Doyle said the company expects fleet growth to average roughly 3% over the next three years, potentially lower.
LR2 crossover, time-charter demand, and Venezuela discussion
Several analysts questioned management on LR2s shifting between clean and dirty markets. Chief Commercial Officer Lars Dencker Nielsen said Scorpio’s approach to switching has “always remained opportunistic,” but he emphasized discipline and said the company does not “dirty up ships unless the economics clearly justify it on a sustained basis.” He noted that the number of LR2s trading clean globally is unusually low, citing about 220 LR2s trading clean out of roughly 515 globally.
Nielsen also said the company is seeing improving liquidity and demand for longer-term time charters, describing increased demand for multi-year periods as “very interesting at the moment.” In another exchange, Bugbee said one-year Aframax/LR2 rates could be fixed in the “high $40s,” and that five-year deals could start “comfortably with a $3” (as stated on the call), referencing multi-year interest and prior multi-year fixtures completed in Q4.
Management also addressed Venezuela-related opportunities. Doyle said Venezuelan crude exports averaged roughly 800,000 barrels per day last year, much of it to China on sanctioned tonnage, and suggested any redirection toward the U.S. or increases in production could increase Atlantic Basin activity. In Q&A, he said about 300,000 barrels per day had gone to the U.S. so far, adding that the U.S. Gulf refining system is well designed for Venezuelan crude, while noting uncertainty around how quickly production could increase and where incremental volumes would ultimately flow. Nielsen said any uplift would be positive “on the margin,” particularly for ships not in the sanctioned fleet.
Looking to the near term, Nielsen said the clean market is operating with “very little slack” and that he views the strength as more than a short-term spike, describing it as a “longer wavelength” supported by a high-running refining system and sustained ton-mile dynamics.
About Scorpio Tankers (NYSE:STNG)
Scorpio Tankers Inc (NYSE: STNG) is an independent provider of marine transportation services, specializing in the carriage of refined petroleum products. The company’s core operations focus on moving clean petroleum cargoes—such as gasoline, diesel, jet fuel and naphtha—on a global scale. By catering to both spot and time charter markets, Scorpio Tankers enables energy companies, refiners and traders to manage their supply chains with flexibility and reliability.
The company’s fleet is composed of modern, eco-designed product tankers, including medium range (MR) and long range (LR) vessels.
