BW LPG Limited

Good morning, good afternoon, good evening, everyone. And thank you for joining us today. My name is Aline Andliker and I'm the head of corporate communications at BWLPG. On behalf of the management team, I'd like to extend a warm welcome to all of our shareholders, investors, analysts, and valued stakeholders joining us for our quarterly earnings presentation. We appreciate you taking the time to be with us and for your continued interest and confidence in our company. Joining me today are our CEO, Christian Sorensen, and our CFO, Samantha Xu, who will walk you through the quarter's performance, key market developments, and our strategic priorities moving forward. Following the presentation, we will open the floor for a Q&A session. You are welcome to submit questions throughout the Q&A chat, throughout the presentation, Or alternatively, raise your hand to ask your question directly during the Q&A part. Before we begin, I would like to draw your attention to the legal disclaimers shown on the current slide. Please also note that today's presentation is being recorded. And with that, it is my pleasure to hand over to our CEO, Christian.

Thanks, Alina. Hi, everyone. Thanks for dialing in as we review our first quarter financial results and recent developments, including our announced new buildings and the Middle East situation, which is still overshadowing the market. Let's turn to slide four, please. The first quarter was another one with significant geopolitical volatility, marked by increased inefficiencies from the Middle East conflict, driving higher shipping demand from the US and resulting in extraordinarily high freight rates, which we will cover in more detail in the market overview section. In addition, as disclosed over the weekend, we are pleased to announce that we have signed the contract for eight 90,000 cubic meter Panamax new buildings with HHI with expected delivery from start 2029 until the second quarter of 2030. Further details will be covered on the next page. Moving on to the Q1 results, we reported a TCE income of $55,500 per available day, above our guidance of $54,000 per day and $51,300 per calendar day. The Q1 profit after minority interests was $164 million, equivalent to an EPS of $1.08. Our trading branch, BW Product Services, reported a gross profit of $127 million and a profit after tax of $98 million for the quarter. The extraordinary high results are mainly driven by a large unrealized market-to-market valuation gain over the portfolio. Provided no delays, we expect a large part of this to be realized by end of Q2. For the second quarter of 2026, we're guiding on about $81,000 per day, fixed for 85% of our available days. These are solid levels above our all-in cash break-even of $24,500 per day. The figure includes the fixed time-sharded coverage in the second quarter of 40% of our available days at $44,000 per day. Please see in the appendix in this presentation for the full breakdown of time charted delays and levels. The board of directors has declared a dividend of 67 cents per share with 56 cents representing 100% of our shipping and pathing Q1 and 11 cents per share from product services final dividend from 2025. Following the front heavy dry docking activity in 2026, with 257 days related to dry docking in Q1 alone, the majority of the dry docking is now behind us. We expect off-fire days to reduce to approximately 105 days in the second quarter. In other subsequent events during the first quarter, we fixed the BW Brage and the BW Gemini for five and three-year time charter out agreements in the low $40,000 per day. We also fixed the BW Pampero, which is part of our India fleet, for a one-year time charter out at high $60,000 per day with delivery in August. As the Middle East tensions have persisted and the Strait of Hormuz remains closed, we still have one vessel from our India-flagged fleet inside the Persian Gulf on time charter. The two other vessels transited the Strait of Hormuz safely back in April. Turn to slide five, please. Okay, during the weekend, we announced that we had signed a contract for the construction of eight 90,000 cubic Panamax civil disease with an average new building price of approximately $117.5 million per vessel. This is subject to final technical specifications of the respective vessels. The new buildings are expected to be delivered from start 2029 until the second quarter of 2030. This new building series underpins our ongoing fleet renewal program, reducing the average age of the current fleet by about three years after the last new building delivery. Furthermore, the Panamax new buildings represent the most flexible design, future-proofing our fleet composition. New building prices have eased from peak levels around 125 million some years ago, while shipyard capacity remains constrained for the foreseeable future in a high energy price environment. This is likely to increase the inflationary pressure the way we see it. Against this backdrop, the timing of the new billing order is supported by a strong balance sheet, enabling fleet renewal and capital structure optimization by balancing shareholder returns with long-term value creation. Furthermore, the new billing deliveries follow the peak of the order book in 2027 and 2028, coinciding with additional US and Middle East LPG export capacity coming online. Various financing options are currently being considered with 30% of total new building price to be paid within the next six months. Next slide, please. Now let's take a look at the markets. Increasing inefficiencies are reshaping LPG shaping economics and driving a historically strong VLDC markets. The LPG shipping market entered 2026 on a strong footing, supported by solid US LPG production growth and accelerated ramp up in export capacity. Following the geopolitical disruptions, the market has experienced simultaneous reactions that are reshaping trade dynamics, increasing inefficiencies, absorbing shipping capacity, and ultimately supporting higher freight rates. Heading into 2026, US propane inventory stood well above historical norms at around 100 million barrels versus 85 million barrels a year earlier. Strong production combined with stable domestic demand created a persistent export surplus. At the same time, infrastructure developments added further momentum with the energy transfer, targa and enterprise terminal expansions ramping up VLGC loading capacity in the US Gulf. The outbreak of the U.S.-Iran war end of February and the effective closure of the Strait of Hormuz introduced a structural disruption to Middle East LPG exports. This removed a significant portion of LJC loading volumes almost immediately and triggered a forced relocation of trade flows with longer sailing distances as vessels increasingly sold cargoes from the U.S. Gulf. With Middle Eastern exports remaining constrained, the U.S. Gulf has effectively become the supplier of LPG to Asia, operating close to maximum utilization as it compensates for the loss of Middle Eastern export volumes. At the same time, high spot fixture activity in the U.S. has tightened vessel availability and supported elevated freight rates. In addition, a larger number of ill disease than expected has remained idle in the Arabian Sea waiting for the Strait of Hormuz to reopen rather than seeking US cargoes. And this has further tightened shipping supply. As all the shipping segments with high willingness to pay also experienced change in trade flows, the traffic and congestion in the Panama Canal have increased. This has resulted in more VLDCs sailing via the Cape of Good Hope, significantly extending voyage distances between the US and Asia, and thereby absorbing additional shipping capacity from the global fleets. And this long-haul trade pattern via Cape of Good Hope has been bolstered even further, as India and Southeast Asian countries are now importing basically all their LPG from the US. Next slide, please. Looking at the North American exports, the expansion is taking place somewhat earlier than anticipated as US exporters are racing to replace lost Middle East volumes. Consequently, North American exports forecast is raised significantly for 2026 on the back of high oil and gas activity and demand for Middle East replacement volumes. Provided a reopening of the Middle East exports market, volumes from the region will contribute more to overall growth in global shipping volumes. In our forecast, we assume reopening of the Hormuz during Q2 2026 and then a gradual normalization, but this is obviously hard to know for sure. More US exports capacity is set to come online the coming years. Well, we conservatively anticipate most of energy transfer and enterprise flex exports capacity being allocated for ethane exports when the very large ethane carriers are delivered over the next years. Next slide, please. Looking at the current fleet and order book, we can see that the fleet has grown in the last three months and now stands at 429 VLDCs on the water. The order book is made up of 130 VLDCs currently under construction, with delivery stretching all the way to the beginning of 2030. We've seen a significant ramp up in contracting of vessels in recent months. And while we expect more new buildings to be delivered going forwards, we also keep in mind that 9% of the fleet is older than 25 years. So as a summary, there are several factors driving the BGC freight market to unprecedented heights. Sharp increase in US LPG exports, coinciding with the Middle East exports being choked, has created a long-haul trade pattern where the sailing distances are compensating for the lost Middle Eastern volumes. As mentioned, it's impossible to have a clear view on when the state of Hormuz is reopened, but when it does open, we expect repairs or production and export infrastructure to take time before the LPG exports reach pre-war levels. And as said before, the Panama Canal remains a wild card in our markets, and we believe the congestion will increase as several shipping segments are competing for the limited number of transit slots. While the order book is substantial, the fleet continues to age, with more than 40 vessels equivalent to 9% of the fleet, already exceeding 25 years of age. Also keep in mind that 53 wheeled GCs are considered part of the shadow fleet. And that concludes our market segment. Over to you, Samantha.

Thank you, Christian. And hello, everyone. Let's zoom in on our financial performance for the quarter. Start with our shipping performance. We deliver a quarter with a TCE at $51,300 per calendar day or $55,500 per available day. The fee utilization was 92% after deducting technical off-hire and waiting time. The healthy performance was underpinned by a strong spot market full of uncertainties and a continuous disciplined execution of our commercial strategy built on time charter portfolios and FFA at a healthy level. In Q1, we have fixed a time charter portfolio at 53%, out of which 41% was fixed rate time charters. Looking ahead for Q2, we have fixed 85% of the available fee dates at an average rate of about US$81,000 per day. This also included index-linked time-charter contracts, which could fluctuate with the spot market changes. Looking at full-year 2026, we have secured 42% of our portfolio with fixed-rate time-charter and FFA hedges. at US$44,800 and $48,100 per day, respectively. Altogether, our time-chartered hour portfolio is expected to generate around US$245 million. Next slide, please. Product Services posted the realized loss of US$10 million in Q1. Separately, Product Services also reported the US$145 million increase in mark-to-market on our cargo position, offset by a US dollar 8 million decrease in paper position. After accounting for general and administrative cost and other expenses, product services reported a net profit after tax of 98 million US dollar for the quarter, with net asset value of 150 million US dollar at quarter end. As we highlighted previously, this market to market movement, which fluctuate regularly, are largely driven by the gradual phasing in of our multiple year term contract as reflected in a volatile market. While the periodic value adjustments are significant, they reflected delta between the balance sheet dates and will continue to see fluctuations before the positions are realized. We will continue to report our future trading performance, including the market to market changes via our quarterly trading updates. It's also important to note that trading gains and losses are realized across different financial periods. They cannot be extrapolated from past performance as unrealized position will vary depending on the end period valuations. Our trading model is designed to create value by combining cargo, paper, and shipping positions. With that in mind, we would like to remind you that the reported net asset value does not include the unrealized physical shipping position of $69 million, which is based on our internal valuation. In Q1, our average VAR value at risk was $6 million, reflecting a well-balanced trading book, including cargo, shipping, and derivatives. The VAR is expected to increase as we continue to account for the increased term contract volumes that will start from the end of 2026 and continue to accumulate into mid-2027 and beyond. While this also reflects a volatile market in the meantime. Next slide, please. OK. Going on to our financial highlights. We reported a net profit after tax of $187 million, including a profit of $9 million from BWLPG India and $98 million profit from product services. Profit attributable to equity holders of the company was $164 million. which translate into earnings per share of $1.08 per share for the quarter. And an annualized earning yield of 25% when compared against our share price at the end of March. We reported a net leverage ratio of 26.3% in Q1, down from 28.4% at the end of 25. The reduction reflects principal repayments made during the quarter. The board declared a dividend of $0.67 per share, representing 100% payout of our quarterly shipping profits, and $0.11 per share, 20, 25 final dividends from BW Product Services. The 100% shipping profit payout is beyond the 75% payout ratio as guided by our dividend policy. obey the newly announced fleet renewal program to invest up to 940 million US dollar for eight Panamax vessels. The dividend decision is a reflection of a continuous forward leaning principle to give back to our shareholders in a good market. We are also pleased to see such principle is supported by our healthy liquidity and positive market outlook. For the period end, our balance sheet reported shareholders' equity of $2 billion. The annualized return on equity and on capital employed for Q1 were 38% and 30% respectively. Our Q1, 2026 OPEX was concluded at $7,300 per day, a reduction than previously reported. For 26, we expect our own fleets operating cash break even to be about 19,000 US dollar and $21,300 for the whole fleet, including time charter vessels. The all-in cash break even is estimated to be 24,500, slightly up from last reported due to pre-delivery funding cost for the new buildings. Next slide, please. Finally, as of end Q1, we maintain a healthy liquidity position of $680 million, which consists of 176 million in cash and 442 million undrawn credit facilities, providing a strong base to support our new building project. Looking ahead, our liquidity stays strong. Repayment profile remains sustainable with major repayment starting from 2030. We're confident of maintaining a healthy liquidity and repayment profile to support our new building project. On product services, trade finance utilizations stood at $161 million or 22% of our available credit line, leaving ample headroom for future trading needs. And with that, I'd like to conclude my update. Thank you for listening and get back to you, Aline.