BW LPG Limited

Afterwards, we will open up for a Q&A session. The questions can be put into the Q&A chat or you can raise your hand, unmute yourself and ask your question directly. Before we begin, I would like to highlight the legal disclaimers displayed on the current slide. Please also note that today's call is being recorded. I will now give the word to our CEO, Christian.

Thank you, Aline, and hi, everyone, and thank you for taking the time to be with us today as we review our 2024 Q4 financial results and recent developments. Let's turn to slide four, please. For a large part of the quarter, the spot market rates fluctuated in the $35,000 to $40,000 range per day, and our TC income per available day ended at $37,900. This is somewhat lower than previous quarter, but above our guiding of $36,000 per day. The board has declared a dividend of 42 cents per share, which consists of 75% payout of the end path from our shipping activities, topped up with an additional dividend declared from product services for 2024. Total dividend for the year represents 123% payout ratio of our total shipping end path. We're very happy with our product services result last year. The investment we made back in November 22 is already returned with a tidy profit. We do recognize that the accounting result for product services is challenging to decipher. I would recommend that our investors and analysts focus on product services realized results as the guidance on the actual trading performance. The unrealized cargo and paper positions are just showing the change in valuation from end date of one quarter compared to end date of the next quarter, and do not necessarily show a loss when the positions are realized. Moving on to our ship assets side, we closed the advanced gas transaction as planned, and all 12 VLDCs were well delivered to VWLPG by New Year's Eve. The acquisition has further solidified our position as the world's leading owner and operator of LGCs, with the current owned and operated fleet of 52 vessels, of which 22 are equipped with LPG dual fuel propulsion technology. In addition, we have added to our own fleet with the previous declared purchase option of the 2019 built BW Kizuku, which was delivered to us earlier this month as a purchase price of $69.8 million. Some weeks ago, we also exercised the purchase option of the 2020 built sister vessel, BW-Yushi, with equally attractive purchase price of around $70 million when the vessel is delivered to us in Q2. On the sales side, we concluded the sale and delivery of the 2007 built BW-Sedar earlier this month, and it was generating about $65 million in proceeds and a net book gain of $32 million. Looking at our chartering activities, we have over the last months concluded several time charters with commencement throughout 2025. And at the moment, we have 31% of our fleet exposure covered by time charter out at $40,800 per day and 2% covered by FFA hedges at $50,600 per day for calendar year 2025. This is following our strategy to maintain a solid time chart ratio to sustain the volatility in the spot market. On the market outlook, the VGC market fundamentals are positive, although the spot market currently is battling in the seasonal winter trough, with less cargoes for export from the U.S., Spot rates are hovering mid-$20,000 per day from the Middle East as well as from the U.S. Gulf, but we anticipate more volumes from the U.S. when we move into the April loading window. And together with the rest of the shipping industry, we are closely following the geopolitical and regulatory developments and will take the measures, if necessary, to optimize our company position by using our size and commercial platforms. The Panama Canal is operating basically at full capacity, and the VLGCs currently absorb about two to three canal slots per day, which is equivalent to 25% of the new Panama Canal traffic. Since the capacity is limited to around 10 transits in total per day, it goes without saying that the canal is very sensitive for sudden increases of one or two more dry cargo, container, or LNG vessels competing for the slots. Looking towards the middle of 2025, we will have a terminal expansion from energy transfer on the US Gulf Coast. And this is an expansion which can flex between LPG and ETH exports. And we currently assume 50% of the volumes to be designated for LPG. We have more details on this on slide 7, but for obvious reasons, we view the terminal expansion plans in the US and the Middle East as a positive driver for the VLGC market when matched against the growing demand side in Asia. One thing to keep an eye on is the accelerating dry docking program for the VLGC fleet this year, with about 80 of a total of 400 ships being scheduled for docking in 2025, compared to 35 last year. And the FFA market is pricing in a substantial uptick in the spot rates later in the year and is currently trading at levels translating to low $40,000 per day, although with limited liquidity. So let's turn to page six for a closer look at the market fundamentals, please. Looking at the details and the market for the first months of 2025, the stock market has shown a seasonal lack of momentum with less cargoes from the US made available for exports compared to Q4. At the same time, the Middle East exports were dominated by cargo flows by Indian charters. Normally, this time of the year, we do see a turning point with a handful of more U.S. cargoes made available for the international market. And in a finely balanced market like we are now, the sensitivity of plus minus five to six cargoes a month is enough to drive the market up or down. The more exciting factor in the BLGC market this and next year is the expansion of the U.S. export terminal capacity. which we anticipate will push the U.S. VLGC exports towards the mid 60 million tons per year mark by end 2026. In such cases, representing an approximate 12% increase from the 2024 VLGC export volumes. On this slide, we summarize the export terminal expansion projects in the U.S. and Canada, as well as the Middle East. The number of projects represents a substantial increase in LPG export capacity of about 45% by 2028, and for North America specifically, about 66% increase. This is if we assume the flex capacity at US terminals being in full LPG service. If all the flex capacity is designated to ethane, which we believe is unlikely, it will still represent about 29% growth in LPG export capacity, for North America and the Middle East combined. As mentioned, we assume that the middle point of about 50% of the fixed capacity will be designated for LPG. Of course, the total LPG export capacity includes all vessel sizes, with VGC historically accounting for about 85% of the export volumes. We know that some of the volumes should be lifted on smaller LPG vessels, but over time, wheel disease will remain the most cost-efficient way of transporting LPG over longer distances, with quick turnarounds at load and discharge port terminals allowing for higher terminal utilization. Next slide, please. The overall landscape remains largely unchanged since the last update. In Asia, demand for LPG continues to grow, driven by the residential sector in the Indian subcontinent, as well as Southeast Asia, while China's petrochemical industry is steadily increasing its use of propane as heat stock for its PDH plants. What's interesting to note from last week's news is that there is increased attention at government level about India potentially importing more of their energy from the US in the future to diversify their sourcing of energy. If this materializes, it will add significant ton miles compared to today's Middle East India milk run trade. And another trend is that VGCs cover a larger part of the India LPG imports at the cost of smaller vessels due to improved infrastructure and terminal capacity. And more VGCs are consequently going to serve the growing Indian imports of LPG. If you look at the VGC fleet and new buildings, there is not much change from last quarter, except for four more vessels added to the list with delivery 2027-28. There is good visibility on the new building deliveries over the next 18 months. And for 2025, we have 13 vessels on our list. And then I turn the microphone to you, Samantha.

Thank you, Christian. And hello, everyone. In the past winter quarter, where lower activities were experienced, we have achieved a 96% fee utilization and a TCE of $36,700 per calendar day or $37,900 per available day. This is in part thanks to our consistent strategy execution using healthy level time charter and FFA for coverage, avoiding leaving earnings purely to stock market swings. The benefit is clear when you look at the difference between the spot rate excluding FFA, which is 31,600 a day this quarter, and spot rate including FFA, which is $35,400 per day, as shown in the slide here. In Q4, the time charted portfolio was 38% of the total shipping exposure, supporting the earning when the spot market softened. For Q1 2025, we have fixed 91% of the available fee days at about $36,000 a day. Looking ahead, our time charter out fee is estimated to generate a profit of around $22 million over our time charter in fleet, with the balance of our fixed time charter out portfolio estimated to bring additional $137 million for 2025. Next slide, please. On product services side, the business achieved a gross profit of $15 million, which included a remarkable realized profit of $59 million, which represents the money in the bank from our successful trading activities. The unrealized cargo and paper position has seen some notable market changes this quarter, total of $44 million. After accounting for G&A, tax, etc., product services closed off the quarter with a net profit of $3.4 million. As we mentioned in previous quarters, the large sum of market value is due to the gradual phase-in of our multiple-year term contract. While the amount is significant, It is only a delta reflected on the balance sheet date and will continue to fluctuate before the positions are realized. As of the end 2024, product services book equity reported $130 million. As usual, we would like to highlight that the reported book equity does not include the unrealized fiscal shipping position of $14 million, which was based on our internal valuation. In Q4, our average value at risk was $7 million, reflecting a well-balanced trading book, including cargoes, shipping, and derivatives, even with the increased volume from the mentioned term contract. Coming to the financial highlights. The company reported a net profit after tax of $40 million in Q4, including a profit of $17 million from BWLPG India and $3 million from product services. Proper attributable to equity holders of the company was $31 million for the quarter, which translates to an earning per share of 22 cents per share and an annualized earning yield of 8% when calculated on our year-end share price. The Q4 dividend concluded 2024 with a total dividend of $2.42 per share. We reported a net leverage ratio of 33% in Q4, an increase from 12% in Q3. This increase was mainly driven by the additional borrowings used to finance the advanced gas fleet. With the last vessel delivered on 31st December, a perfect conclusion for the eventful year. Compared with the previous quarter, we increased borrowings by $628 million, including drawdowns from our revolving credit facilities, shareholder bridge loan, and transfer of Chinese leasing. For Q4, the Board declared a dividend of $0.42 per share, which consists of a 75% pay down of our shipping profits, topped up by a $0.28 dividend from product services. The dividend showcases the function of product services to stabilize and enhance the returns to the shareholders when the shipping market softens. It also speaks to our strategy execution ability and our ongoing commitment to return value to shareholders. As the Q4 ends, the balance sheet reported a shareholder equity of $1.9 billion. The annualized return on equity and capital employed for Q4 were 9% and 7% respectively. Our 2024 OPEX concluded at $8,300 per day, a marginal reduction than last quarter reported. For 2025, we expected the operating cash break given for our own fleet to be about $19,800, and for the whole fleet, including time travel vessels, to be $22,200. The all-in-cash break-even is estimated to be $25,600 to run primarily by dry dock program in 2025 and increased interest cost. On the liquidity side, we ended 24 with a healthy position of $603 million post-completion of the advanced gas lead delivery. supported by $232 million in cash and $371 million in ongoing revolver facilities. The repayment profile, as you can see here, is healthy and sustainable. We plan to refinance a few facilities starting from this year to achieve a more efficient leverage. The refinancing is not expected to further increase the current leverage ratio. on the product services side trade finance utilization still on a moderate level of 168 million or 21 percent of our available credit line giving sufficient room for future trading needs with that i'd like to conclude my updates and back to you aline thank you samantha we would now like to open the call for your questions