Odfjell Se B

Thank you very much, Helge. As you said, we are today presenting for a live audience at Scandic Hotel close to Flesland Airport, and we will go through our quarterly and half-yearly results. For those following us on the webcast, unfortunately, you will not be able to ask questions directly during this presentation. due to the live presentation, but you're more than welcome to direct any question you might have to my colleague Nils-Jørgen Selvig, our finance director. This presentation will follow a very traditional pattern. I will go through the highlights and then my colleague and CFO Terje Iversen will take you through the financials. And I will conclude the presentation with an update on operations and our markets. So if we then switch to the highlights. I'm extremely pleased to inform you that once again, actually the third time, we are now presenting a record quarter for Oddfjell at elevated levels and with freight rate increases compared to our last quarter. I'm also similarly happy to say that our safety performance remains strong. All our safety-related KPIs are well within target and we did not experience any serious incidents during the quarter our time chart earnings in northfield tankers ended at 215 million us dollars that 20 million dollars up to compared to up compared to to the 195 that we delivered after the first quarter We saw an EBIT of 107 million, and this compares to 89 million in the first quarter. And we have a record quarterly net result of 88 million US dollars. And adjusted for one-off items, these 88 million compares to 69 for the first quarter. The rates on our renewed contracts during the quarter were up 5% and we renewed approximately 6% of our total contract volumes during the quarter. The net result contribution from Oddfield Tankers was 2.9 million and this compares to 3.2 during the previous quarter. The carbon intensity is slightly down to 7.1, actually 7.05, and this is marginally better than what we saw in the first quarter. During the quarter, we also took delivery of one long-term time charter vessel, and we also signed contracts for two additional vessels, indicating that we now have 17 vessels on order during the period from now until 2028. I'm also happy to inform that the board concluded and approved a a dividend of one dollar per share based on our adjusted first half results. Our results comes at the back of a very strong and robust contract portfolio and I'm also happy to say that, to repeat that we saw an excellent safety and operational performance during the quarter. To use an expression from soccer, most of what we tried to do during the quarter were pole in. Our view for the next quarter is that the next quarter will also be strong, but slightly lower than what we saw during the quarter behind us. So by that, I give the word to Terje, who will take you through our financial performance.

Thank you, Harald. I will, as always, start with the financials and the P&L and the balance sheets, also take you through the cash flow development, the financing, and also give an update on CAPEX and time-shutter commitments for end of June. Starting with the income statement, we saw that the time-shutter earnings increased to $250 million, actually up $20 million compared to the first quarter. The main reason for that is that they saw improved spot rates and also improved contract rates, while the number of days and the volumes were quite stable compared to the first quarter. Time charter expenses, being short-term time charter vessels, decreased or increased slightly to 3.4 due to less off-hire days and also one renewed rate for one of the vessels. while operating expenses increased slightly from 49.1 to 51 this quarter. Main reason is that we had a bit higher insurance cost this quarter compared to the first quarter. Share of net results from Jont Ventures, associated venture, is the net result from the terminal business, under that 2.9 compared to 3.2 in the first quarter. Main reason for the slight decrease is somewhat lower result at our terminals in the US. G&A decreased compared to the first quarter, but that's mainly due to seasonal reasons, being that we actually expand the salary throughout 11 months instead of 12 months, meaning that June is kind of free in our accounts in June, and then reducing the G&A in the second quarter compared to average quarters. Then we ended with an EBITDA of 147.2 up from 126.8 in the first quarter. Depreciation slightly up, 39.9, and that gives us an EBIT of 107.4 compared to 88.5 in the first quarter. Net winter expenses, quite stable compared to the first quarter, 19.1. And after other financial items and taxes, we ended down, as Harald said, with a net result of 88.2, which is a new record compared to the last record in the first quarter of 67.8. Adjusting for very few non-recurring items, we ended down at $88 million in net result compared to 69 in the first quarter. Over cash break even compared to time shutter rates, of course, that has been a quite nice development. We saw that the time shutter rates for the second quarter ended at $36,493 in the second quarter, up from $33,005 in the first quarter. Cashback even for this quarter ended at 22,103 compared to 22,501 in the first quarter, bringing the 12-month rolling average to around 22,876. Main reason for the decline is somewhat lower expenses and also some changes in our financing during the quarter. Going forward, we have set a new target for the cashback even to be around 21,000 US dollar per day, We are still above that level, but we expect to continue to be around the levels that we have seen in the last few quarters, also in the coming quarters. But still, the aim is to reduce that going forward. That could be on the back of lower interest, but also reduce debt in the future. Looking at the balance sheet, during the quarter, we took delivery of the one new vessel on long-term time charter, Vogue Jaguar. That led to an increase in right of use of assets. to 293.6 million US dollar. Also, we saw that we had a nice increase in cash, and ended at 140.8. And if you include undrawn and loan facilities, we are around 231 in available cash. And we will then pay out 79 million US dollar during the quarter or beginning of September, related to the net adjusted result for the first half. The total assets is around 2 billion US dollar, and we have now an equity around 900 million US dollar. And if you have just for RS16 related debt, which is excluded from our financial loan governance, we have an equity ratio of 51%, meaning a quite solid balance sheet, I would say. On the debt side, we have done a few refinancing. So we have actually increased non-curate interest-bearing debt, but at the same time we have reduced the current portion of interest-bearing debt by refinancing some of the current portion during this quarter. including in the current portion of 170.3 is also the bond loan of $850 million, which is maturing in January next year. Looking at the cash flow, we're happy to see that the increase in net results also is reflected in the increase in operating cash flow during the quarter, and at the $108 million in the second quarter, up from 91 in the first quarter, Of course, that is driven by increase in earnings and the reduce in expenses. We saw a change in working capital, negative 14.5. That is mostly related to the increase in revenue during this quarter. And looking at the investment side, limited capex. We have done some dry docking during the quarter and also paid one installment on a new building in China. So net, we had cash flow for investing activities, negative 17.5 in the quarter. On the refinancing side, we were quite active, as mentioned, and if you include the refinancing and also what we paid on the RFS-16 or operational lease debt, with a negative cash flow from finance activities of 36.6. And total for this quarter, we increased on the cash with 54.2 million US dollar, ending at 140.8. This is showing the cash flow or the free cash flow development the last 13 quarters. And as you can see, we have had quite a nice development. Also reflected this quarter, as I said, operating cash flow 108, cash flow from investments negative 17, meaning that we had free cash flow this quarter of 91 million U.S. dollar. And if you look at the 12 months rolling, we are at around 82 million U.S. dollar. And if you adjust that for a right of use of assets, meaning time shutter payments on long-term time shutters, the pre-cash flow reached 66 million US dollar. If you look at the depth side on the upcoming maturities, I think just one head of the presentation here. We go to the next one. There we are. I think it was one slide ahead of what was on the screen, actually, for some reason. This is showing what we have of maturities going forward. We have quite limited maturities, I would say, for the coming quarters. We have some maturities in the fourth quarter, including also some planned refinancing, Besides that, we of course have the bond loan that is maturing in first quarter next year. The plan for today, based on the solid cash flow that we are experiencing, is to repay that with debt from our cash or balance sheet at the time of maturity. We earlier said that we are considering to enter the market to do a refinancing, but currently that is not the plan we are working with. If we look at the total interest-bearing debt, we are around 787 million US dollars. end of this quarter. And if we repay loan according to the installments in the loan agreements going forward, we expect to be around $653 million in outstanding debt end of fourth quarter 25. Looking at CAPEX and time-shutter commitments, this is an overview we haven't included in the previous presentations, but we have been quite active, especially on the time-shutter commitments new long-term time charters, the last few quarters. So here we are showing what are the actually committed capital expenditure and also what is the committed time charter rates for the new long-term charters we are venting into. The first table here shows the clear options. We had four purchase options for four bare boat vessels of 41,000 dead weight tons. We have exercised one option and take delivery of one option in addition. We also declared an option in third quarter last year and in the second quarter this year for two additional vessels being Bo Aquarius and Bo Gemini. This will be delivered in December 24 and in the second in 2025. In addition, we also have an option for a fourth vessel that we have included here because we think it's very likely that we are going to exercise that option because the option price are quite comparable compared to today's market levels. So if we summarize these options, including new building we have at Dingheng, we are at around 143 million US dollar in capex commitments, and if we exclude the options not exercised yet, we are at around 108 million US dollar. More interesting maybe is the figures on the bottom of this slide. We have entered into many long-term shelters the last few quarters, being new buildings being built in Japan. And if you summarize the total terms of the commitments for all these 16 vessels that are going to be delivered We are close to 1 billion US dollar in terms of the commitments Totally we are done the controlling around 20% of the total order book within our segment And when these buses are going to be delivered, of course We have to capitalize the commitment, but that will be the bearable element of the term shutter rate, so it will be lower amounts that we are showing on this slide. Can I believe the word to you again, Harald?

Thank you, Terje. I will continue with an operational review and then we will conclude this presentation with market update and prospects going forward. We saw a very strong second quarter and trade disruptions continued to affect our market. We now see that the Panama Canal is returning to maximum capacity, and the canal is today around 90 percent. The Clarksons Index increased with 2.5 percent during the quarter, while the Oddfix Spot Index decreased. ended up 10.5%. If you look at the Panama Canal graph, we will see that the transits were at absolutely low during February and March, and those vessels transiting the canal were those that had no other options, those with ports just on the other side of the canal. For the long-range vessels, those transiting the Pacific, those vessels were all going the other way, across the Atlantic and the Indian Ocean, and then to the Far East. That situation is more or less solved today, and we are back to normal operation for the super-segregators. And that is, of course, slightly reducing the ton mile demand. We have now increased our contract rates for 13 consecutive quarters. This quarter we renewed 6% of our volumes and in average the contract rates were up approximately 5%. It's also important to notice that when we are reporting on contract renewals, we are only reporting on contracts that are directly comparable with the previous quarters. If there are significant changes either to volumes or to the ports, then of course the rates will no longer be comparable and we are not reporting on those contracts with significant changes. Volumes climbed slightly during the quarter and despite that longer sailing distances has an impact on the volumes that we are able to carry, I'm happy to see that we are also quite stable on our volumes both for the Oddfjell operated tonnage and also on our pool vessels. During the six last quarters, we have been stable above 60% on contract coverage. We are comfortable with that figure. And for the last quarter, we had a contract coverage of 62%, leaving approximately 38% open for spot cargoes. As mentioned, we see good rate increases and we've seen them during the quarters behind us and also I'm happy to see that volumes are stable despite the longer sailing distances. The last implies that our brokers are able to fill up the vessels and utilize them at the maximum despite that the capacity is taken up by those longer distances. If we look at our carbon intensity, once again, we are reporting a slightly lower carbon intensity than the previous quarter. This quarter, a 7.05, which is slightly lower than the average for last year. We've also, during the last year, tested out a new and novel technology called air lubrication, That system was tested on one of our Poland-class vessels, the BOS Summer. Unfortunately, we did not see the expected results on that project, and we are now in dialogue with the manufacturer to see what we can learn from the last year. This does not imply that we will cease developing novel technology. On the contrary, we are still 100% committed to support those projects to see whether there are inventions that can bring the carbon efficiency further up for the deep sea vessels. The next project out is suction sails. We are cooperating with a Spanish company called Bound for Blue. The vessel that will get those sails on board is the Bo Olympus, one of our Houdon class vessels, and we expect to install those sails towards the end of this year. The vessel is entering dry dock these years for the fifth survey, and then the vessel will be repositioned to Europe for installation. So this naturally takes some time. These projects, of course, important for our sailing vessels because they are relatively easy to retrofit. But of course, they are also important for the next series of new buildings for Oddfjell account, where we are gaining, I would say, important learning items from all these improvement projects that we are involved in. On the terminal side, the summary of this slide is that the terminals are performing extremely well and we have a good overview of the operations and activity at all our terminals. The average commercial occupancy rate was at almost 97%, 96.9%. We saw more or less full occupancy, 100% almost, at our terminal in Antwerp. We saw increased occupancy in Ulsan and Charleston, and we saw a slight downtick at our Houston terminal. Our financial performance is stable with EBITDA for the second quarter more or less at the same level as we saw in the previous quarter. We also see that the high freight rates are taking away arbitrage opportunities, and that is one of the reasons why we have seen a slight decrease in import and exports, particularly from the U.S., but also from Ulsan. And this, in combination with a reduction in end-consumer demand in certain regions, has resulted in a moderate reduction in activity levels at our terminals. If you look at the bottom slide, this might give the impression that we have more or less stable throughput at our terminals, but you also have to take into consideration situation that we have expansion programs more or less at all our terminals. So the available cubic meters at our terminals is slightly increasing, and therefore the figures here are not 100 percent comparable the more you go back in time for the terminal business. But still, healthy and stable business on the terminal side. uh then to our market update uh start with the the markets west of suez as mentioned the the the Panama Canal transit is back into operation, and that means that that also has an impact on markets, particularly those going westwards to the Far East. And we also saw a slight reduction in exports going the other direction across the Atlantic to Europe. All in all, if you summarize the various markets, we saw more or less flat development west of Suez. The situation is slightly better in east of Suez. The export volumes were strong both in Asia and the Middle East regions, but we also saw that the demand in China has been slightly reduced during the first half year of 2024. Rates are perceived as volatile, and this implies that there is a certain nervousness in the markets, and it's not easy to predict how things are going forward. But all in all, we've seen an average increase on the rates east of Suez. And then to the swing tonnage. We've seen an uptick since February this year, where we're at all-time low, around 3% of the MRs that are traditionally trading with CPP were into the chemical markets. And those 3% are those MRs that always are trading chemicals. So back in February, we were at all-time low. And now we've seen, I would say, a modest increase to approximately 4.5 percent, which is still very much acceptable compared to previous levels. Total volumes are still stable around 35 million tons per month. Then to the order book, and in Oddfjell we are mainly focusing on what we call the core deep sea segment, and that segment consists of medium-sized chemical tankers, large chemical tankers, and the super segregators. The order book today stands at approximately 9% of the total fleet, which I would say is still well within comfortable levels. To put this into perspective, in 2007, when the downturn started, the order book stood at 70%. If we look at the segments, the highest number of orders are in the so-called medium segment, and we consider many of those vessels as replacement tonnage, mainly for 20,000 tonnage, now being sold for domestic or regional trade. which means that those vessels will no longer be competing in what we define as the international market for deep-sea chemical tankers. And those vessels leaving for domestic and regional trades are being replaced typically by 25,000 tonnes, which is by far the biggest segment of orders in the medium segment. We have also seen some orders of what we define as super-segregators, the biggest chemical tankers with more than 28 tanks and more than 50% stainless steel. We consider all those vessels being ordered as replacement tonnage. If we look at the total order book, approximately 20% of that order book is for Oddfjell account. Yeah, we've been through Panama a couple of times already, but I would say that maybe our biggest focus these days is geopolitical tension. We see that the situation in the Red Sea and the Gulf of Aden is nowhere near an immediate solution, and we also see that that the situation is not at all improving between Russia and Ukraine. So we anticipate that we will still have high geopolitical tension going forward. The growth in GDP is forecasted at 3.2% in 2024, and that is one of the main KPIs to estimate the chemical market going forward. So we see that there is a soft landing within reach. The growth in China has picked up somewhat, but it's still slower than what was expected at the start of the year. And in line with the growth in GDP, we foresee that the global chemical production will grow by approximately 3% this year. We also see that the summer slowdown is now coming to an end, and activity is gradually picking up among our customers. So all in all, development on the production side as normal. There have been a slight decrease in ton mile production due to the reopening of the Panama Canal, but we still anticipate that we will have to sail through Sorry, around Africa in the months to come. There have been some orders during the quarter for new tonnage. If we are going today to order new vessels, the earliest we anticipate that the ship can be delivered. is in 2028, so we do not foresee any large changes when it comes to the order book. We have seen an increase on the swing tonnage that is of course impacting the chemical tankers. And to finalize this slide, average fleet speed is continued to remain at the present level. So to summarize this presentation, we once again achieved a record result in the second quarter, a result that I'm extremely proud of. And the reason for that is that it is not only market-driven, it's driven by clever chartering by our shipbrokers. We have a rock-solid contract portfolio. And on top of that, we see that our vessels and the operations run extremely well And at the back of that, we produce excellent results. So it's no secret that I'm today extremely proud of what my colleagues are delivering. We saw increased time charter earnings in the second quarter. We see freight rates staying at elevated levels. And we also saw stable volumes, despite what I said about the ton mile being increased. stable net result contribution from odd-field terminals, despite the fact that we saw a slight activity reduction at our Houston terminal. We expect the spot markets to pick up towards the end of the third quarter, and we also see that some of the MRs and LR operators are contemplating to move from clean products to dirty, which will again support our segment.

Then,

To summarize, the freight rates are still at historically elevated levels, despite some adjustment from recent highs, and we expect stable underlying results from odd-field terminals. In sum, we expect the third quarter to be another strong quarter, but maybe somewhat below what we saw in the second quarter. So by that, I thank you all for your attention, and we are open to questions, if any in the audience have questions to us. Yes, there was one at the back.

Hello. Yes. So this is Jorgen Leal from TV Markets. Fantastic quarter. Still a very strong market. You now have 17 vessels in the order book. Just wanted to ask your thoughts about the need for further vessels going forward and how you view both fleet renewal and also potentially growth.

First of all, I would say that we are extremely happy with our cooperation with these Japanese tonnage providers. We have a good cooperation, and I would say that the rates on those contracts are favorable. If you look into the details of what we have on order in Japan, it's mainly traditional tonnage and not so much the super-segregators. In Oddfjell, we today have 11 Kerner-class vessels that are reaching certain ages, and we also have to look at the super-segregator segment, and if we do anything within that segment, I think it would be for odd-fail account and not true external tonnage providers. So we are looking at two different segments when we are discussing this. For traditional commodity tonnage, we are extremely happy with what we see in Japan, and when it comes to the really specialized tonnage, then it would be our preference to do that on our own book.

Okay, thank you. And on the market more in general, there's been somewhat of a sell-off in the equity markets, recession risks picking up. Do you get any feedback from the customers in that regards, given the summer slowdown and the expected pickup going forward?

Well, then we have to look at the nominations that we receive from the nominations on the contracts, the volumes that they actually put on board of our ships. And I think the slide that I showed you in many ways speak for themselves. We are servicing... an extremely industrialized market, and those volumes continue to go slightly independent of what traders and others are thinking. So we are delivering building blocks that the world needs every day. So we remain optimistic, but of course I read the newspapers myself, so there is clearly a nervousness in the market, and I think you also have to take into consideration what we've seen in Europe, where volumes have been slightly reduced to the benefit of producers in the US and Middle East. So I would say that in our segment, volumes are stable, or in our market, volumes are stable, but we see that... the trading patterns are changing somewhat. Thank you. Any other questions? Okay, then I thank you all for your attention and thank you also for coming to hear this presentation. Thank you.