d'Amico International Shipping S.A.

It is the conference operator. Welcome and thank you for joining the D'Amico International Shipping second quarter and first half of 2025 results web call. All participants are only synonymous. And after the presentation, there will be a Q&A session. At this time, I would like to turn the conference over to Mr. Federico Rosa, CFO. Please go ahead, sir.

Thank you very much, good afternoon everyone and welcome to the Amico International Shipping Earnings Call.

As always, I'll skip the executive summary and I'll go directly to our fleet snapshot. So, as you can see, we had 32 vessels at the end of June 2025, of which 29 owned and three bare boat chartered. The situation is a little bit different compared to what we had at the end of Q1. As we exercised, we took delivery actually of one of the time shuttering vessels, the I leader that we exercised our option on. As you may recall, we exercised our purchase options on two time shutter vessels and they were delivered to us in the first half of the year, the I navigator and the I leader. So we increased our own fleet. This situation will change a little bit also in the next coming months. As you know, we agreed to save two Glenda vessels, the Glenda Melody and the Glenda Melissa. The first one was already delivered to the buyers on the 14th of July, while the other one, the Glenda Melissa, will be delivered to the buyers by the 21st of December. So overall, at the same time, one more thing, we exercised purchase option on one of our bare boat charter vessels, the Charity Houston, which will be delivered to us in September. So at the end of the year, we should have a total fleet of 30 ships. Still a young fleet, 9.6 years average age compared to an industry average of 14 years for MRs and 15.7 for LR1s. 81.3% of the fleet was IMO class. We're also increasing the percentage of our ecovessels, which is now 84% of our fleet, with an industry average of 38%. moving to the next slide on the very you know quiet situation on the bank that front uh we repay the 13.4 million uh dollars in each one 2025 uh scheduled loan repayments uh we're expecting to repay 20 12.5 million dollars in the second half of the year The $5 million, the additional $5 million that you see over there in the rest of the year 2025 are related to the debt of one of the Glenda vessels that we obviously repaid before the sale of the vessel. uh going forward uh uh in 26 and 27 we have scheduled repayments of slightly less than 25 million dollars um very low level of debt coming to maturity in 2026 of only 3.2 million dollars situation is of course a little bit different in 2027 as we're planning to take a delivery of the four lr ones that we ordered in April 2024, which are going to be delivered, which are expected to be delivered in the second half of 2027. In the bar that you see over there, we're planning to raise debt on these vessels for 86.8 million dollars. Interesting graph, as always, the one that we're showing on the right. So our daily bank loan repayment on our own vessels dropped from $6,147 in 2019 to only $2,500 in 2025. And this is obviously the result of a big leveraging plan that would be implemented in the last years. Moving to the next slide. Here, as always, we provide a rough overview on how Qtree looks right now, based on everything that we've been fixing so far, both on the time shutter market and on the spot market. So looking at Qtree, we fixed 54% of our days at $23,600 a day. In Time Charter, at the same time, 25% of the days on the spot are fixed at $25,287 per day. So this entails a total blend at WPCE of $24,139 a day for 79% of our Q3 days. So realistically, it looks like we're going to have another profitable quarter in Q3. On the right-hand side, we show also sensitivity on the free days, on the days that haven't been fixed yet. So should we make $18,000 a day on those days, then our blend ability would be of 20,878. Should we make $21,000 a day, then our total blended TCE would be $23,500 a day. Should we make $24,000 a day, then our total daily blended TCE would be above $24,000 a day. Next slide. Estimated fleet evolution. I briefly mentioned this in the previous slide on the fleet snapshot. So we're expecting to have 30 ships by the end of 2025, largely owned fleet. Then the fleet is expected to increase again a little bit in 2027. as we are expecting to take delivery of four new building ships in the second half of the year. Potential upside to earnings, this is our sensitivity for every $1,000 a day that we make more or less on the spot market. Sensitivity right now stands at $1.9 million for every $1,000 a day for 2025. $8.3 million for 2026 and $10.2 million for 2027. Looking at the bottom graphs on the left, we show what our net result would be should we break even for the rest of the days of 2025. So should we make just a break even, our net result for this year would be of $69 million. And based on what we have fixed so far, we would make $19.2 million in 2026. On the right, You see also sensitivity relative to this number. So if instead of making a break even, we made $18,000 a day on our free days, then our net result for this year would rise to $74.7 million. Should we make $21,000 a day on our free days, our net result would rise to above $80 million. Should we make $24,000 a day on our free days, then our net result would be of approximately $86 million. On the cost side, We continue to see some inflationary pressure on the OPEX, although especially on insurance and many costs. although the trend the increasing trend is decreasing relative to q1 uh so this is a figure that should be really uh looked at uh on an annual basis uh but we don't think that this figure will increase too much relative to this level going going to the next to the following months of the year On the GNA front, we also had higher GNAs compared to the same period of last year. This is mainly due to the variable component of personal cost, which is really the reflection of some very positive years that we had in DIS so far. Coming to the net financial position, we had a net financial position at the end of June 2025 of $144.3 million, compared to $121 million that we had at the end of 2024. Of course, you have to consider that in the first six months of the year, we distributed dividends for $35 million in May 2025, and we also exercised two purchase options, as I mentioned before, in our time-chartered in-vessels, on the iNavigator and the iReader, for a total disbursement of $69.3 million. So, very strong financial position. We had a cash and cash equivalent at the end of the first semester of the year of $124.1 million. Also, the ratio between our net financial position, excluding the IFRS 16, which is now a very limited amount, to fleet market value was of 13%, 1.3% at the end of June 2025. And, of course, we always compare this figure with the historical ratios that we had. This figure was 72.9% at the end of 2018. And, again, this is the result of a big leveraging plan that we have been implementing together with strong cash flow generation that we achieved in the last years. Going to the income statement results, very positive first half of the year, $38.5 million net profit, very profitable second quarter of the year, $19.6 million. even better than the first quarter of the year. Of course, these results are a bit incomparable to the same periods of 2024 in which there was a totally different market, a much higher market. However, the market, as we will see in the next slide, is still extremely strong and extremely profitable. Excluding non-recurring items from H125 and Q225, our net result would have been $42.8 million in H125 and $23.5 million in Q225. The main item was related to an impairment loss that we booked in the quarter, in the second quarter of the year, which is related to the sale of these two Glenda vessels that I mentioned before. which were obviously reclassified in our balance sheet as assets for sale, and their carrying amounts were adjusted to reflect the agreed safe price, which was a little bit lower than their book values. consider that these ships were ordered many, many years ago at a peak of the market, and that's why we had to book this loss, this small loss on two ships in the second quarter of the year. Going to the next slide, next slide, key operating measures. As I mentioned before, strong spot market in Q2 2025. We achieved a daily average of almost $24,500 a day. In the quarter, we also had a contract coverage, a time-shutter contract coverage of slightly less than 51% at a daily average of $23,365, which gave us a total blended EDTC for the quarter of almost $24,000 a day. Looking at H1, we had a time shutter coverage of 45.2% at $23,900 a day. We achieved a daily spot TCE of $22,655 and we generated a total daily blended TCE, so spot past time chatter, of $23,214 a day. So, of course, this figure, as I mentioned before, is lower than in the same period of last year, but still extremely profitable. I pass it on to Carlos.

Thank you, Federico. Perfect. So we continue now with the market overview and some strategic considerations. On the CapEx commitments, this is the usual slide we show. Just summarizing a few key points. We have been quite active with investments over the last few years. Fortunately, we could do so at very attractive prices because of the purchase options we had. And we have invested almost $264 million since 22. mostly in relation to the exercise of six options on modern Japanese MR2 vessels, which we had on time charter in from the delivery of the yard, but also for the 50% stake we bought on a JV we had with Glencoe, which controlled four MR2 vessels. And, of course, this figure includes also the 20% stake we paid, which represents the first installment on the four LR1 vessels we ordered at Yangtze Jiang for delivery in 27. Therefore, in relation to these new buildings, the overall investment is 235 million, of which 191 million still to be paid to the yards in the coming years, mostly in 2027. On the purchase option on the lease vessels, we don't have many news here for you. We still have these two vessels which can be exercised with three months notice and which are well in the money. And we, however, have refrained from exercising these options because they are fixed rate deals at very attractive implicit cost of financing. So we prefer for now, given we are still in a very high interest rate environment, delaying the exercise of these options. if and when interest rates do start coming down, we are likely to be exercising these options. For the ETC investors, the options that we exercise, the difference between the market value and the book value as of 30th of June is still very significant, although slightly lower than this delta at the time in which we exercise the options. We do have a good level of coverage, especially for the second half of the year. It was we had planned to increase this coverage, and we executed on this plan, and we obtained some good contracts which allow us to have a good blended rate, a very profitable rate of around $23.6, $23.7. on these contracts for the second half of the year. We are a bit more exposed to the spot market in 26. We will be gradually increasing the coverage also for 2026. Most of this additional coverage is likely to come towards the end of the year as we renew some contracts we have, which will be terminating in Q4. But we might also find some opportunities to take coverage before then. With the disposals of the Glenda vessels Federico referred to, the percentage of our echo fleet will rise to around 90% by the end of this year. So we are controlling an increasingly competitive fleet. The markets are still at historically high levels, both on the freight front, TC front, and on the asset values front, although these have softened somewhat over the last few months. But there has been a stabilization, and actually I would say on the spot market, an improving trend over the last few months with the market now at this very moment at quite attractive levels. The Ukrainian war continues being a major factor affecting the market for the reasons that we have discussed already several times before, so I will not dwell too much on this slide. This is another slide which we usually present and we have modified slightly. We have include on the upper right hand side here the total ton days for the both east to west and west to east CPP. And what we see here, what we are trying to show is how the disruptions in the Bab al-Mandeb's trade were initially very positive for the market. So we show the red line there, which is the average CPP ton days on these routes. in 23, and then the yellow line, horizontal line, shows the average for the first nine months of 24, and we see there is this big jump relative to the levels in 23, which is associated with the longer distances which the vessels had to sail through Cape of Good Hope rather than transiting through Suez. However, in the last quarter of 24, we have seen a big drop in these ton days to a level which was actually lower than what we had seen in 23. So already in the last quarter of 24, I would claim that the disruptions associated with sewage were not a positive for the market. They might have actually been a negative. And this became even more so in the first six months of this year, where you see the gray horizontal line, which is even lower than the green line, and much lower than the red line. So why is that? Initially, there was refining margins were extremely high in the first half, in particular, of last year. And there was, and therefore, these arbitrages were wide open, and it was profitable to transport these refined products from the Middle East to Europe, even when accounting for the higher transportation costs associated with going the longer route through Cape of Good Hope. However, as refining margins came down and as refined stocks in Europe increased, these arbitrage is closed. And therefore, this additional cost associated with saving the longer distance meant that products stayed more regionally. And rather than sail this longer route. So it had a negative ton mile effect on the market. One positive aspect to highlight here is that at this very moment, as we will see later in the presentation, this arbitrage is again open and this should help the market going forward. One other important point to make in relation to this slide, which is not immediately apparent here, is that although, for example, in July and August, there were important volumes transported, they were mostly transported or mostly or a large portion was transported on a non-coated tank. Here we are looking at CPP ton days, but not necessarily at the vessels transporting this CPP. If we were to look only at the product tanker vessels transporting this CPP, then we would have seen already a decline in the months, in the summer months last year. which explained why the market started correcting in the summer months last year and then continued correcting further in Q4. Going on to the following slide here, we do see the proportion transported by instead – vessels which are uncoated of the CPP trade, long-haul CPP trade. And we see here that there was this big increase over the summer to around 13%, and then it fell, and then now it's again at the high level, but much lower than it was last summer. So unfortunately, there are still Suez Maxis and VLCCs, in particular Suez Maxis, transporting refined products, CPP products on this east to west routes. It is this year, I would say mostly new buildings because there's an increase in the number of Suez Maxis new buildings being delivered this year. For them, it is, of course, a very attractive proposition to be able to transport these clean petroleum products on their maiden voyages. If instead we look at the economics of cleaning the dirty Suez Maxes today, it is actually not particularly attractive. relative to transporting the same cargoes on LR2 vessels. But there are these new buildings being delivered, and therefore there is this cannibalization which is continuing, although to a lesser extent than last year. Here we see that the refining margins have been rising, in particular for diesel we see in jet fuel on the left-hand side where we have seen this spike over the last few months. On the right-hand side we see also U.S. Gulf Coast refining margins, blended refining margins, which are also very attractive. and they have driven an increase in refined volumes in the U.S. Gulf Coast. Refinery utilization currently is at around 96, almost 97% there. And therefore, we have seen an improvement very recently in rates out of that region. A lot of the cargoes were moving from the U.S. Gulf to Europe, but some also from the U.S. Gulf to Brazil, which is because of the sanctions that we will look at more closely later, has been importing less from Russia as had been anticipated. Going on to the following slide, here we see also, this is a new slide, we see that gas oil stocks in ARA, in the Arab region, and also jet fuel stocks were very high at the beginning of the year, and that was dampening this arbitrage into Europe that I was referring to. but they have since fallen markedly and now well below where they were last year and also below where they were in 23, both for gas oil and for jet fuel. And that is what is driving this positive arbitrage, which we see on the right-hand graph at the bottom. where the more negative the line is, the wider the arbitrage is here. This is the discount of buying gas oil east relative to west. So now this discount is at quite a high level, implying a positive arbitrage to transport this gas oil to Europe. And so that coupled with the continued disruption in the Suez Canal, which actually got more pronounced recently because of the two vessels which were sunk recently by the Houthis while transiting about the Bab al-Mandeb Strait, contribute to an important strengthening in the market going forward. Of course, if these arbitrages stay open for long enough, and of course, if these additional volumes are not transported mostly on non-coated tankers, so then I think this could be very positive for the market. The sanctions are a very important factor and an increasingly important factor. We now have 500, almost 600 vessels which are sanctioned. A big increase in the number of sanctioned vessels in the recent package. announced by the EU. And so, sanctioned vessels now represent more than 10% of the deadweight tonnage of all tankers. EU sanctions are possibly not as effective as halting trade altogether on vessels as the US sanctions. Nonetheless, they do tend to lead to a reduction in the productivity of the affected vessels. And many operators, importers cannot charter these vessels sanctioned by the EU because they have interest in the EU. And therefore, we do expect that these additional sanctions will have an important impact in the market. The first vessel sanctioned, it was easier for them to find alternative employment in trades such as those linked to Iran or Venezuela. uh but uh there's only so much uh tonnage uh these traits can absorb uh and therefore as the number of sanctioned vessels increases and the sanctions become more effective at hampering uh the um the exports, the Russian exports, and also they tend to lead to a more stronger tightening effect on the supply-demand balance for the market. Going on to the following slide, well, this is not much new here in relation to the U.S. sport fees on Chinese vessels. The positive side, as we will see later, is that, as intended, these fees are already dampening interest for new builds in China. And on the refining throughputs and oil demand growth this year, the projections are not spectacular. Refining throughputs were actually quite depressed in the beginning of the year. And now finally in July they are expected to be higher than they were last year. Overall for the year the increase is expected to be only of around half a million barrels per day. But this low figure masks a more pronounced increase in non-OECD crude volumes, runs of 700,000 barrels per day, and a decline in OECD runs of 200,000 barrels per day. Oil supply is abundant. It was expected to exceed the demand growth at the beginning of the year, where it was not anticipated that OPEC would return volumes to the market so rapidly. But its decision to unwind cuts at an accelerated place means that oil supply growth this year is going to be even stronger. and well below the demand growth we saw forecasted in the previous slide. So there is a strong chance that as we move into the second half of the year and into Q4 in particular, the market will be oversupplied and we could see the forward oil price curve move into contango. It is currently backward dated still, but there is this possibility that it might move into contango, which creates some positive short-term dynamics for the market. Not particularly healthy dynamics, but nonetheless positive dynamics short-term. uh overall refined product stocks are well below the five-year averages and we see here that demand growth is driven mostly by nafta and jet fuel demand increase with a good contribution also of gasoline and on the nafta front here we see that a lot of this nafta is ending up in china where The petrochemical industry is expanding fast. And in addition, they have placed tariffs on inputs of U.S. LPG, which was an important supplier of LPG to petrochemical plants in China. NAFTA is a competing feedstock, and therefore it is benefiting from these tariffs. And we see this sharp increase in imports over the course of the first six months of this year. On this slide here highlights how, as we had anticipated, the good, the positive dynamics for the crude tanker sector has meant that a lot of the LR tools which were trading clean have dirtied up. So at July, as of January 24, or rather July, we had 63% of the fleet which was trading clean. And as of July this year, it's 57%. So there's a 6% decline in the fleet which is trading clean, which is quite an important reduction. which has supported the clean tanker markets. And this is a trend that we expect to continue going forward. Despite the deliveries of LR2s over the course of this year, we actually saw a contraction in the number of LR2s trading clean because of this switch into dirty trades. And there are good fundamentals for the crude markets going forward, which should ensure that this trend continues. in the coming months. And here we see both new refineries coming on screen in the Middle East and Asia, and also refinery closures in the OECD, in particular in the Americas and in Europe. The closures this year were even higher than had been anticipated, one million miles per day. It is very difficult for refineries, some of them very old, that are located in these regions to compete with the new refineries. They are also subjected to much tougher environmental regulations, in particular the refineries in California in the U.S. and those in Europe. and that is driving these refinery closures and decline in refinery utilizations in certain regions with these volumes being displaced by those from the newer, more competitive refineries being built. And the fleet continues aging. If we look at the MRs and LO1s on the left, At the end of 24, we had the order book which was pretty much aligned with the proportion of the fleet which had more than 20 years after the substantial orders that had been placed in 23 and 24. But the decline in new build ordering this year and the fleet age profile meant that the fleet continued aging quite rapidly. And now we have 18.3% of this fleet, which is more than 20 years, and only 15.1%, which is... uh accounted for by which represents the order book so there is this delta of 3.2 percent which is i think a very positive in the indicator for the market going forward again especially if uh new interest in new buildings does not resume soon um and we see at the bottom that we have a very high proportion of the fleet which reaches 25 years of age from 2028 and which therefore is very likely to be demolished and this is both if we only look at the mars and la ones but also if we look across all tankers uh and deliveries uh rather at low in the first nine months of this year, but with an acceleration expected in Q4 and then next year. So that, of course, is not a positive. We will have one or two years of quite fast deliveries ahead of us, but there is ample scope for demolition to compensate this. And here we see that were only 18 vessels, MRs and LL1s, ordered in the first six months of the year. If we analyze this, it is 36, which would still be amongst the lowest values since 2007. It was only lower in 2009 and 2016. So feed growth, yes, it will be accelerating in 26, but potentially still manageable. Here we are assuming quite limited demolitions. and we are not taking into account the effects of this increasing number of vessels which are being sanctioned and which is reducing the available fleet for compliant trades. And then finally, this slide here where we look at the NAV discount of our fleet, which is still very big not as big as it was in december but still a 50 discount to to nav or nav is uh has declined slightly since december but it's still close to one million dollars uh and i think that is it uh for now and i pass it over for you to the the q a thank you this is the conference operator we will now begin the question and answer session

To enter the queue for questions, please click on the Q&A icon on the left side of your screen. When announced, please click continue on the pop-up window. If you are connected in audio only, please press star and 1 on your telephone. The first question is from Massimo Bonisoli of Equita. Please go ahead.

Good afternoon, Carlos and Federico. Thank you for taking my questions. I have two questions. One, in your slide on page 26, you showed almost 600 vessels were sanctioned, representing about 10% of total tonnage. You already briefly discussed it, but I would like to hear your thoughts on the effectiveness of the European Union and your sanction on the fleet transporting crude oil from countries under sanctions, so the dark fleet in general. It seems that The fleet owners are quite able to escape sanctions somewhat, so what is the real underlying effectiveness of this sanction? And second question more for Federico, just if you can give us some guidance or indication for the depreciation cost in second half and also for financial cost in the second half. Thank you.

Thank you, Massimo, for the questions. uh i i believe the in the past the first sanctions were not particularly effective but they are likely to become more effective going forward because there are less trades available where there are players willing to continue working with these sanctioned vessels. Of course, there are some private companies in China and some teapot refineries. in the Shandong province, which continued receiving sanctioned vessels. And so the first sanctions meant that vessels were slightly more limited at targeted vessels in how they could trade. So they could not maybe triangulate as much as they used to. So when they were not transporting sanctioned cargoes, Russian cargoes, or sanctioned cargoes from Venezuela or from Iran, they were ballasting, basically. But There is only so much volumes that can be absorbed by these trades. So as the number of sanctioned vessels grows, it becomes increasingly difficult for them to find employment opportunities. And so I think that these latest sanctions will have a bigger impact than the first sanctions had. In addition, what we have not commented on is the fact that there is also, from January next year, sanctions placed by the EU on products refined from Russian crude. So that will also lead to a change in trade flows. It's hard to predict how that will affect the market, but it will affect the market, probably creating other inefficiencies which potentially could be positive for the market. And there is the possibility that the U.S. also might decide to impose even tougher sanctions on Russia. There has been recently a change in posture by Trump. Of course, he's changing posture all the time, so it's very hard to read. But most recently he has changed posture in relation to Putin. and he has shortened this deadline for a peace agreement to be reached in Ukraine to 10 days. That was announced a few days ago. It is shortly coming, this deadline, and we will see what are the implications of peace agreement not having been reached by that deadline very soon, whether there will only be a further extension or whether there will be some, some initiatives to penalize Russia. And if there are, then that could also have a major impact in the market. So let's see how that plays out. But I think that the patience of everyone with this with this situation is ending. It is also a very costly war also for the countries backing Ukraine. And therefore, the willingness to take even tougher action against Russia to try and bring them to the negotiating table is increasing. Federico, I pass it over to you.

Going to my question. Hi, Massimo.

In terms of the remainder of the year, I wouldn't expect appreciation to be in the second half of the year and also financial costs very different than what we had in H1. So I would assume a pretty stable figure in H2. potentially then both figures could decrease in 2026 and increase again potentially in 2027 when we will get the delivery of the four ships.

So to answer your question, in H2 2025 I would expect a very stable situation compared to the first half of the year.

Very clear. Thank you very much.

The next question is from Gianmarco Gadini of Kepler Chevrolet.

Hi everyone, thank you for taking my question. Just a quick one on the cost side, on the operating cost, particularly given that we saw that they were pretty stable year on year, but I was wondering whether there were some effects derived from the denomination of such costs. So euro denominated costs that translate in dollars should be higher. So I was wondering whether there are other moving parts that were not clear. Thanks.

Sure, hi, hi again.

But in reality, it is right what you're saying, even though on our cost structure that has a higher impact on our GNAs, because we have several GNAs, a big portion of our GNAs in euros, given the fact that we have people and offices in Europe. The large majority of our OPEX costs are in dollars. even though there's certainly a portion that is also in Euro. The reason for the increase relative to the previous years is really inflationary pressures that we saw on many in particular, on many costs, also salaries of crew members. and on insurance, a part of which is also related to the fact that vessel values went high, vessel values have increased compared to a few years ago. So, of course, you pay a higher premium relative to a higher valuation of your vessel. We had also some inflationary pressure on some of the spare parts that we had, so on the technical cost side. But the main driver is certainly the manning cost and insurance cost. Consider also that manning is a big proportion of the total OPEX cost that we have. It's probably almost half of the total OPEX cost that we have.

Clear, thanks. So we can... Yeah, yeah, it's... That's great. So just a quick follow-up. We can expect this level of cost to remain also throughout the rest of the year.

Look, it's not great, unfortunately, to analyze daily OPEX costs or OPEX costs in general on a quarterly basis, because there's always a big time in effect, especially when it comes to technical costs. They should be really looked at on an annual basis. On an annual basis, we don't expect daily OPEX at the moment to be much higher compared to what we reported in H1. So we expect here a pretty stable situation. All right. Thanks.

As a reminder, if you wish to register for questions, please click on the Q&A icon on the left side of your screen or press star and one on your telephone. For any further questions, please click on the Q&A icon or press star and one on your telephone. Gentlemen, there are no more questions registered at this time.

Thank you, Dan. Thank you very much. And, well, I wish a great summer for everyone and hopefully also with a good market for us. I think that... there is a good chance that that it will be the case uh given where we stand right now and and see you soon after the break for i hope most of you will be able to to enjoy thank you bye-bye ladies and gentlemen thank you for joining the conference is now over you may disconnect your devices thank you