BW LPG Limited

Welcome to BWLPG's third quarter 2023 financial results presentation. Bringing you through the presentation today are CEO Christian Sorensen, CFO Samantha Shi, and EVP Commercial Niels Riegel. We are pleased to answer questions at the end of the presentation. Should you have any, please type them into the chat box in your Zoom panel. You may also use the raise hand option. Before we begin, we wish to highlight the legal disclaimers shown on the current slide. This presentation held on Zoom is also recorded. I now turn the call over to Christian.

Thank you and hello everyone and welcome to our Q3 earnings release. I'm happy to be joined today by our CFO Samantha and our Head of Commercial Nils. To start off with the highlights, we are pleased to report our highest historical daily TCE at an average of $63,100 per available day. We report a net profit after tax of $122 million, equivalent to earnings per share of $0.85. This is after a downward IFRS adjustment of $24 million. For the third quarter, we're also pleased to announce a dividend of 80 cents per share, which translates into an annualized yield of 22%. Due to the requirements in connection with our US listing process, we can no longer refer to non-IFRS terms like trading profit for product services results or in our dividend policy. And the revision of the dividend policy was necessary since last quarter. Like previously, the revised dividend policy will still be based on the shipping performance and the net profit after tax generated by the shipping segment, while also adjusting for product services performance, cash and capital requirements. We're happy to answer any questions after the presentation regarding the dividend policy. For the third quarter, 100% dividend payout is sourced from our shipping earnings with upward adjustment of 2 cents. Moving over to subsequent events for the quarter, BW Tokyo is delivered to BWLPG this month after exercising an attractive purchase option earlier this year. The vessel will be on a six-year time charter starting in Q1, securing a return of capital employed of approximately 18% over the time charter period. In addition, we're pleased to announce that we have entered into an agreement to sell the BW Princess with delivery first quarter next year. The sale is expected to generate approximately $64 million in liquidity and a net book gain of $20 million. Further, we're also increasing our operated VLGC fleet, which will expand to 45 vessels as Cyanogas is joining the pool in the fourth quarter by adding one LPG dual fuel vessel. And then looking at the market outlook, we reiterate our positive view for 2023 and 2024. although high volatility remains. And the key reasons for this include energy prices that are conducive to continued strong US exports and steady export growth from the Middle East. Further, new PDH plants, which are coming on stream in China, supporting the demand side of the market. And we also see continued growth in the residential sector in the developing world. We also see delivery of VLDCs to slow down after the summer of 2024, and shipyards are booked until first half of 2027. And of course, the much talked about disruptions in the Panama Canal that will continue to absorb capacity from the VLDC fleet. We have recently experienced how ongoing challenges relating to low water levels and persistent drought conditions lead to further restrictions on canal transits. As mentioned in the early presentations, VLGCs have lower priority than LNG carriers and container vessels, forcing them to sail alternative longer voyages from the US to Asia via Suez or South Africa. And these longer hauls extend the sailing days by up to 50%. While the factors mentioned above paint a positive picture for the VLGC shipping market, it's also important to remind ourselves that things can change quickly. We are watchful of the current uncertain macroeconomic environment and how much this can impact the current strong market environment. Those are the highlights. Under the current market conditions, the VLGC sector is generating a dividend potential which is unprecedented for the segment. Depending on your view of the market, we have simulated and illustrated the dividend yield potential in this slide. We're also pleased to have returned more than 70% of our earnings in dividends since the IPO 10 years ago. Based on the current share price, we have a 28% annual return to our investors if you had reinvested the dividends in the share during the same period. And with that, I'll hand it over to Nils to cover the commercial slides.

Thank you, Christian, and hello, hello to everyone listening. I'd like to turn the focus to slide eight in our presentation. Predicting the future is always complex, particularly when macroeconomics, geopolitics, and climate issues are raised at the same time, shadowing an effect-based logical forecast as we experienced this year. 2023 has proven surprisingly robust for the Belgian Sea segment, making a historic high. In the third quarter alone, we witnessed a remarkable 30% increase across all rate indexes. Largely driven by sustained high import volumes to China and the widening arbitrage between the US and Far East had also encouraged active trading between the regions. As Christian mentioned, a major point of discussion is the Panama Canal. We have observed significant impacts on spot rates due to operational disruptions. At the end of the second quarter, the main reservoir of the canal experienced critical low water levels. Subsequent lack of seasonal rainfall lead the canal authority to limit transits preserving water resources. This limitation on VLC transit, as mentioned, could result into a 50% increase in sailing days for the fleets trading between the US and the East. However, It is crucial to note that the inefficiencies leading to the high rates also translates into increased costs for owners and traders, a burden not easily passed on to the end users. Looking forward, our supply demand model suggests a positive outlook for the VLDC market. Of the 43 VLDC new buildings scheduled for delivery this year, 75% have already been delivered. We anticipate further growth in LPG export from North America and the Middle East. However, it's important to recognize that several unpredictable factors could significantly influence rate fluctuations as we saw in 2023. Moving on to slide 11. Our fleet composition remains robust with 45 LGCs despite active sales. As Christian mentioned, we finalized the sale for another ship this quarter at record levels, scheduled for delivery at the end of the first quarter next year. In addition, we are pleased to welcome Steiner Gas to our pool, contributing their first dual fuel ship in the fourth quarter of this year. Their addition underscores the benefits of scale in this volatile market. Let's move to slide 13. Our time charter equivalent performance for the third quarter was 63,100 per day for the entire fleets. This figure includes fixed time charters and derivative hedges. The spot fleets fleet achieved a TCE of 81,300 per day, excluding waiting days. Given the current market volatility, we remain focused on optimal managing our risk. For the fourth quarter, around 79% of our available days are fixed at an average of 73,000 per day. Our spot rate currently stands up 104,000 per day, and we expect a strong final earnings for Q4, reflecting the exceptional hotspot market. For 24, 19% of our fleet is already fixed under TC, with an average daily rate of 41,300. We have balanced our TCE in and out commitments in 24, securing a 23 million profits. Additionally, 30% of our days are hedged with derivatives at an average TCE of 59,000 per day. Before handing over to Samantha for the financial overview, I'd like to provide a brief update from product services. In 2023, they have handled approximately 7 million tons of physical LPG and about 20 million tons of derivatives. Next year, they anticipate a 30% increase in volumes. They have expanded into the mid-size space, securing two TCs, allowing us to tap into the new market beyond the VLC segments. On FOB product contracts, we have renewed our U.S. gold equity commitments, but also secured a term contract in the Middle East, diversifying our exposure and mitigating Panama Canal risk. Now I pass the microphone to Samantha for a closer look at our financial.