BW LPG Limited

Hello, everyone. A warm welcome to BWLPG's Q4 2025 earnings presentation. My name is Aline Andlicher and I'm the head of corporate communications at BWLPG. Today's presentation will be given by our CEO, Christian Sorensen, and our CFO, Samantha Xu. After the presentation, we will have a Q&A session. The questions can be put into the Q&A chat during the presentation already, or you can raise your hand and ask your question directly once we move to the Q&A part. 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. Without further ado, I would now like to hand over to our CEO, Christian.

Thank you, Aline. Hi, everyone. Thanks for calling in as we review our fourth quarter financial results and the recent developments, including the Middle East situation, which dramatically escalated last weekend. Let's turn to slide four, please. So highlights. The beginning of Q4 was marked by lower tension in the US-China relationship as the reciprocal port tariffs were lifted and postponed until November this year. In addition, there was a significant build in US propane inventories, well above trend levels, driven by strong US production. Over the winter, there were no major disruptions from the usual cold season weather, supporting a wide arbitrage throughout the fourth quarter and into 2026. Moving on to the Q4 results, we reported a TCE income of $50,300 per available day and $48,100 per calendar day, above our guidance of $47,000 per day for the quarter. The Q4 profit after minority interest was $104 million, equivalent to an EPS of 69 cents. Our trading branch, BW Product Services, reported a gross profit of $27 million, and a profit after tax of $23 million for the quarter. We are pleased to report a strong realization of $12 million from our trading activities in Q4, bringing the full year 2025 realized trading results to $66 million. For Q126, we're guiding on about $54,000 per day, fixed for 94% of our available days. Solid levels above our all-in cash break-even of $23,400 per day. But it is reflecting the time charter coverage in the first quarter of 42% of our available days at $40,200 per day. Please see the appendix in this presentation for the full breakdown of the time charter days and levels. The Board of Directors has declared a dividend of $0.57 per share, representing 100% of our shipping impact, exceeding the guidance set by the dividend policy. Looking further on our shipping activities, we are continuing our active dry docking program in 2026, with 13 vessels scheduled for dry docking. The majority of these are planned during Q1, with a total of 193 off-hire days expected during the first quarter due to dry docking. Given the dramatic escalation in the Middle East over the last couple of days, Our first priority is to ensure the safety of our colleagues and crew in the region, at the same time as we protect and optimize the overall interests of the company. We have three ships from our Indian flagged fleet in the Arabian Gulf, two on time chartered to Indian charters, and one vessel in dry dock. So far, there have been minimal negative financial impacts, only pertaining to the vessel in dry dock, where the nighttime work is suspended. The two vessels on Time Charter are on hire in accordance with the respective Time Charter parties. In addition, we have other vessels on Time Charter idling outside the Arabian Gulf, assessing the evolving safety and security situation in the Strait of Hormuz. Our next open spot vessel for AG loading could be available last decade of March, unless we decide to balance them to the US Gulf, of course depending on how the security situation and market develops. Like we have experienced in previous rounds of increased tension in the Middle East, the market response is to secure cargoes and ships from alternative loading regions, and mainly from the U.S. Gulf. We fixed one vessel yesterday at around $80,000 per day for mid-March loading, while other fixtures in the market are reported around the same level for first half-April loading in Houston. Further, in all the subsequent events from the quarter, we recently announced that in January, we secured three-year time-short drought contracts for two wheeled disease, the BW Tucana and the BW Yushi, increasing our full-year 2026 fixed-rate time-short drought coverage to 36% at an average of $43,700 per day. Let's move to the next slide, please. So although the main attention right now is on the impact from the Middle East war, we believe it's worthwhile to remind ourselves of the market fundamentals as the fourth quarter of 2025 and the start of 2026 positively surprised the B2C market. By the end of 2025, the US propane inventories were well above the trend level at 100 million barrels, which is compared to 85 million barrels at the end of 2024. This was driven by strong production levels and supported the US export volumes, while domestic consumption remained steady at around 50 million tons per year. As we entered the inventory draw season, US propane inventories declined somewhat, but remained well above the levels typically expected at this time of the year. The high inventory levels have contributed to continued downward pressure on US LPG prices, and have, together with healthy demand in the Far East, supported a wide arbitrage as reflected in the US Far East price differential. If you look at the graph on the right hand side, we can see the relationship between the arbitrage and the VLGC's bulk rates. A wide arbitrage usually allows for a higher willingness to pay for shipping, something that has been the case in recent months. In addition to commercial drivers such as the U.S. Far East Arbitrage, other geopolitical events and infrastructure expansions have also contributed to a strong market in recent months. Late October, for instance, the U.S. and China agreed to a trade truce, paving the way for a revived U.S.-China FIG trade. And further into January this year, we've also seen the Needland Terminal in the U.S. Gulf increasing its number of EGC loadings after commissioning the terminal expansion in 2025. And lastly, before the armed conflict commenced on Saturday in the Middle East, the increased tension in the region led to market participants fixing vessels further out in time than what they normally would have. This was creating a shortage of available vessels and ultimately pushing up spot rates. In addition to the factors we discussed on this page pertaining the exports of LPG, it's also important to look at how the developments in the Asian import markets are shaping the LPG trade dynamics under normal market circumstances. Next slide, please. On this slide, we can see how trade flows responded to several major disruptions during 2025, with trade tensions between the US and China being among the most significant during the year. Chinese imports on VGCs from North America and the Middle East fell by 3% in 2025 compared to the year before. This number is, however, heavily impacted by a few months during 2025 where the trade tensions were at the highest and imports from the US were much lower than normal. Towards the end of last year, China had also lower imports than usual. This, however, coincided with Chinese LPG inventories declining. And for the beginning of 26, Chinese LPG imports are again on the rise, and the ongoing Middle East conflict is likely to support more cargoes from the U.S., ending up in China as the Middle East supply is disrupted. As we have highlighted before, incremental LPG production is priced to clear in the international markets. And with the U.S.-China trade war as a backdrop, this produced some interesting trade flows in 2025. For instance, as LPG volumes into the Far East declined 2% year over year, India saw its imports growing by 10% during the same period, driven by higher cargo flows from the U.S., increasing the ton mile compared to the traditional sourcing of LPG from the Middle East. India is a market of growing importance for LPG, with about 10% equaling 2 million tons of Indian LPG imports contracted from the U.S. for 2026. We also see Indian government subsidies continue supporting retail demand, and new pipeline infrastructure is expected to further improve inland distribution. Another region that saw an increase in import volumes from North America in 2025 was Southeast Asia. This region has historically imported most of its LPG from the Middle East. However, with the trade war shifting more of the Middle East volumes to the Far East, Increased volumes from North America found its way to Southeast Asia last year. As long as the Middle East tension is halting LPG exports from the region, we anticipate more U.S. volumes flowing to the markets east of the Suez, which is supportive of freight in the short term. Over the longer term, however, vessels that have traditionally loaded in the Middle East are likely to see cargoes from the U.S., which could place downward pressure on the rate structure for U.S. loading of UTCs.

Next slide, please.