Odfjell Se B

Good morning everyone and welcome to the presentation of Oddshell's results for the first quarter of 2025. This presentation will follow a standard agenda. I will take you through the highlights and our CFO Terje Iversen will present the financials. And then I will conclude this presentation with an operational review and a market update and prospects going forward. So turning to the highlights, we continued our strong performance on safety with high operational efficiency and no significant incidents during the quarter. All our safety and operational KPIs were well within the requirements that we have defined. We delivered resilient financial results in the first quarter in a market that is characterized by increased uncertainty due to the announced trade tariffs from the USA. Our time chart earnings ended at 168 million and this compares to 183 million for the fourth quarter of last year. The time chart earnings per day for the quarter was 29,556 US dollars and this is down 4% compared to the 30,744 US dollars that we delivered last quarter. Our EBIT was 54 million US dollars and this compares to 68 million US dollars in the fourth quarter. Our quarterly net result was 34 million US dollars and adjusted for one of items we ended at 33 million US dollars and this compares to 53 million US dollars in the fourth quarter of 2024. The net result contribution from odd field terminals was 2.9 million and this is slightly up from the fourth quarter. I'm also happy to say that once again we reduced our carbon intensity, the so-called AER, and in the first quarter we delivered 7.0, which is a further improvement from the previous quarter and a new record low for Oddfjell. We are also proud that Boa Olympus in April completed the first near carbon neutral transatlantic voyage where we utilized suction sails and biofuel. I will come back to that when we go through the sustainability slide. We concluded two contracts for new buildings to be delivered on long-term charter in 2027 and 2028 and this brings Oddfjell's total order book to 20 vessels of which 18 on long-term time charter and two vessels to be fully owned by Oddfjell. And this concludes the walkthrough of our quarterly highlights, and by that I give the word to Terje Iversen.

Thank you, Harald. And I will, as usual, start with the income statement for this quarter. Starting with the time shutter earnings, as Harald mentioned, we ended at $168 million, a decrease of $15 million compared to the fourth quarter. That is partly due to two reasons. One is that the time charter earnings per day is down 4% this quarter, which was then driven by reduced spot freight rates, while we saw the freight rates for lifted core volumes were slightly up. The other half of the 50 million US dollar decline is due to fewer days, commercial days in this quarter. due to the sale of two vessels at the start of the quarter and also one time charter vessel being on fire throughout the quarter. Operating expenses are slightly down, slightly up, 0.8 million compared to the fourth quarter. While we also saw the same increase in G&A up 0.8 million USD compared to the fourth quarter 24. Main reason being that we had some costs related to the long-term incentive program and also due to higher fees this quarter than I would say is normal level for the company. Terminals delivered 2.9 up from 2.2 in the fourth quarter. Main reason being that we had some one-offs in the fourth quarter. So I would say it's quite stable results that continue to be delivered from the terminals. That leaves us an EBITDA of 93.1 compared to 110.5 in the fourth quarter. Deportation slightly down compared to the fourth quarter where we booked the capital gain this quarter of 2.2 million USD related to the sale of both Clipper and both Oceanic at the start of the quarter. That leaves us with an EBIT of 54.4 compared to 68.1 in the fourth quarter. Net finance ended at 19 million US dollar, up compared to the fourth quarter. Main reason being that we took an expense around 2.1 million US dollar, which was capitalized the financing cost on two vessels that we refinanced this quarter. So we should not expect the same effect in the coming quarters. So after other financial items and taxes, we then delivered a net result of 34.4 million US dollar compared to 50.5 in the fourth quarter. And as I mentioned, we had a decline in revenue days around 269 days this quarter. And we also had more off-hire this quarter than we had in the previous quarter. Looking at the time chart of earnings per day, that declined slightly this quarter. We ended at 29,556, down from 30,744 in the previous quarter. Where we saw the cash break even increased slightly to 22,996 compared to 23,386 in the fourth quarter, bringing the 12-month rolling average to 23,156. The reason for the increase was the same as for the decline in time charter. We saw fewer days, commercial revenue days from our vessels due to the sale of these two vessels and one vessel being off-hire throughout the quarter. Going forward, we expect cashback even to decrease slightly in the coming quarters. due to interest expenses being reduced as a consequence of repayment of our last outstanding bond, which we did at the beginning of the first quarter. P&L breakeven at 23,553 compared to 22,368 in the previous quarter. Moving on to the balance sheet, it was a hectic quarter, so to say. We had a lot of activity on the financing side, and we also sold two vessels, as mentioned, both Clipper for recycling and both Oceanic, reducing the book value of ships and new building contracts to $1,225,600,000. We saw that cash declined under that 86 million US dollar, or if you include an unknown loan facilities, we have 145 million US dollar in available liquidity. The decline is of course related to the fact that we paid out a dividend in February of 62 million US dollar, and we also repaid the last outstanding bond as mentioned with around 100 million US dollar. Total equity decreased slightly with $23 million, which then, of course, also is impacted by the dividend that we paid out in February of $62 million. On the debt side, as I said, quite a busy quarter. In sum, we saw that non-current interest-bearing debt increased as we refinanced two vessels that previously was on financial lease. And we also drew bank debt for one vessel acquired for operational lease in December. 2025, meaning that we took delivery in December, paid that with cash on the balance sheet, but now we have a new loan facility to finance that on a long-term basis. All the three vessels were not financed by the new US$242 million bank debt facility that we established in the beginning of 2025. Non-current rate of use of assets decreased as we prepaid the outstanding amount for our position, which we took formally ownership of in early April, while we financed down the vessel end of March. Current portion of interest-bearing debt reduced as we repaid the bond, as mentioned, and we also refinanced two vessels for financial lease to bank debt being then moved from current debt to non-current interest-bearing debt this quarter. Looking at the cash flow, operating cash flow was $60.4 million this quarter, a decrease from $89.5 million in the fourth quarter, mainly due to the lower time shutter earnings this quarter. And also we saw a negative development in working capital of $12.6 million, then decreasing the total cash flow from operating activities from the previous quarter. On the investment side, we sold two vessels, as I mentioned, but also we refinanced both Explorer and both Excellence, from finance lease to bank debt, and we drew bank debt for both Aquaris. We also drew bank debt for both Precision, that formerly was then taken ownership of in April, and we also drew 20 million US dollar on existing Revolver credit facility. On total, we then ended with net cash flow from financing activities negative 128.9, meaning that we are continuing to reduce the debt on our balance sheet, even though we are quite active buying back chips that have been on operating lease. This is showing a free cash flow on a more long-term basis, comparing each quarter back to first quarter 22. And as mentioned, we saw operating cash flow this quarter at 60 million US dollar, decline of 29 million US dollar from the last quarter. But then we got a positive free cash flow from investment due to the sale of these two vessels. of $17 million, so in total we then had a positive effect from the investment of $8 million, leading to a free cash flow of $69 million in the fourth quarter. If you look at the 12-month rolling free cash flow, we ended at $80 million, slightly down from the previous quarter. And if you adjust for debt repayments related to the right of use of assets, we reached $61 million in 12-month rolling free cash flow. As mentioned, quite active quarter with a new bank debt facility established and repayment of the bond, meaning that going forward it would be less balloons, less loans maturing. End of first quarter we have nominal interest-bearing debt amounted to 738 million USD. and we expect a moderate increase during the course of the year due to taking delivery of some operational vessels that we have exercise purchase options for. During this quarter, four vessels were refinanced under the new facility, and as mentioned, also one additional operating lease vessel will be purchased and included in this new facility. We also successfully repaid the last outstanding bond in January this month. Going forward, we expect $738 million increased to around $745 million at the end of 2025 and also slightly decreased in 2026 and 2027 based on what we expect. Going forward, the purchase options that we have exercised and the CAPEX commitments we have per today. Going into the details about the CAPEX, as I said at the start of the first quarter, we had four declared purchase options for vessels on operational lease to us. We did payment for the first vessel, Boat Precision, end of March, leaving us with three remaining vessels to be acquired at quarter end. The next vessel, Boat Performer, was acquired early April, and all the acquired vessels will be financed by this new debt facility. And also mentioned before, all the declared purchase options are well below the current market values, meaning that obtained financing will be around the full purchase amount for these vessels. All declared purchase options are included in the balance sheets per end of the quarter as a current debt right of use of asset. In addition to the declared purchase options, we then have two new billings on order for our own account included in the figures at the top of this page. Looking at the new buildings to be delivered on long-term time charters, as mentioned, we have exercised options or we have entered into two new buildings this quarter, meaning that we have now 18 new buildings on long-term time charters to be delivered from fourth quarter this year until 2025. In summary, we have $1.1 billion in commitments if we include the OPEX element in these commitments, which will not be included in the balance sheet when we actually enter into these time charters when the ships are being delivered. These vessels, together with our new buildings, account for around 40% of the current order book in our core segments. Then I will leave the word to you again, Harald.

Thank you very much, Terje. I will then continue with an operational review. We start with a look at the odd-fix and Clarkson's chemical tanker spot index. The odd-fix saw a decline of 2.5% during the quarter and that corresponds to a 3.2% decline in Clarkson's chemical tanker spot index. If we then look at the three major export regions, first the US exports during the quarter, we saw a slight decline in the volumes being exported from the US. And this is in line with the broader market sentiment when it comes to US exports. Middle East Gulf, here we saw an increase in volumes during the quarter. This is mainly driven by increased nominations on our contracts. At the same time, the total market when it comes to Middle East exports saw a decline in volumes. Eastern Asia exports saw an increase in export volumes and here we had a slightly higher market share in our trades. And then what's on everybody's lips these days, the U.S. tariffs. On the left-hand side, you will see the proposed U.S. sweeping tariffs. Today, all the countries except China are experiencing a 10 percent tariff. And in China, they have a tariff that is already imposed of slightly more than 100 percent. If we look at the total volumes going in and out of the US, we will see that the imports have had an increase of approximately 10% over the past two years and the total import volumes are now around 24 million tons of liquid chemicals. Exports are more stable, slightly above 30 million tonnes. If we then look specifically at the trade between US and China, In 2024, the U.S. exported approximately 1 million tons of chemicals and they imported 1.5 million tons. This implies that the trade between China and the U.S. when it comes to liquid chemicals is relatively modest and the imports are around... around 4% of the total volumes. Of course, we don't have any impact on those tariffs. So what we are doing now is that we are maintaining extremely close contact with our customers to try to understand how they perceive the markets and how they intend to distribute the production volumes going forward. And then to our contract renewal activity, we renewed 18% of our expected total contract volumes during the quarter. And despite the relatively soft spot markets, our contracts were on average renewed very close to rollover terms. We also secured three new contracts during the quarter. The total volumes increased slightly during the quarter to 3.2 million metric tons, and this was by far due to increases in contract nominations under our contracts. Volumes carried by the pool vessels were stable around 100,000 tons. Sustainability, once again, we delivered a new record low when it comes to our carbon intensity, the so-called AER, and the average for our own fleet during the first quarter was 7.0. This is a slight improvement compared to the previous quarter. At the beginning of the quarter, we installed suction sails on, sorry, at the end of the quarter, we installed suction sails on board our super-segregator, the Boe Olympus. And in April, the vessel sailed from Antwerp to Houston on a trial voyage where we were testing the sails. And I'm extremely proud that on the return voyage from Houston to Antwerp, we conducted a near carbon neutral voyage with the combination of these sails and 100% biofuel. And by that we have proved that it's possible to sail carbon neutral already today with the existing technology and the existing available fuels. And this is 25 years ahead of the IMO 2050 deadline. Then turning to terminals, all our terminals continued to perform well during the quarter. We had an average commercial occupancy rate of 95.8, and this is 0.6% above the previous quarter. The EBITDA for the quarter was 8.4, which is in line with the previous quarter. Turning to the outlook, we are still below the peak levels that we saw in 2021 and 2022, but we have seen increases in the throughput on all our terminals during the recent months. We are optimistic about the near and medium term, and we at the same time recognize that there is significant uncertainty regarding how trade flows will be impacted by the proposed tariffs in the US. We continue with expanding at our existing terminals. We have completed the construction of tank pit R in Antwerp that is adding 10 tanks and almost 30,000 cubic meter to the capacity in Antwerp. At the same time, the construction of the so-called tank pit Q in Antwerp is continuing. We are building two stainless steel tanks. The total capacity is 12,000 cubic meter and we expect to have those two tanks on screen during the second half of this year. We are also well underway with our expansion project in Korea, the E5 expansion project. This is progressing according to plan and we expect groundbreaking in Korea later this month. It's also important to notice that all these expansion projects are financed locally in the local JVs. Then to a brief market update and prospects going forward. As mentioned several times during this presentation, we have seen a decline in the spot rates. The spot rates west of Suez saw a modest decline with reductions between one and nine point six percent. The biggest decline was for soybean oil exports out of Argentina, a trade where we have, I would say, very limited influence or presence in that trade. We saw bigger fluctuations east of Suez, where we had the biggest decrease on Middle East exports to Europe, where we saw an almost 20% reduction in rates. And also significant decreases from Southeast Asia to Europe, meaning that the volumes from Asia and the Middle East to Europe are in decline. Swing tonnage, we indicated in our fourth quarter presentation that we were expecting the swing tonnage to continue to reduce the influx on the chemical trades, and that has proved to be right. The first quarter saw increases in CPP MR rates, and the influx of MRs in the chemical trades is now down to 3%. Here, it is important to notice that that many chemical tanker operators are permanently operating MRs in the chemical trades. Oddfjell is a good example of that. We are operating six coated MRs in chemicals, and they have been permanently in chemicals since delivery. And that is also the case for... for many of our competitors. So this means that we do not expect the influx of MRs to be any lower than what we see today. We are now at rock bottom, and we will expect this to continue going forward. Turning to the order book, I will start on the right-hand side with the total order book, which now stands at 20% of the sailing fleet. There has not been announced any new orders, despite the fact that we are now showing an increased order book, but what is the case is that we have received more information about existing orders, and those existing orders have now been added to the total order book. Those orders that have been added are mainly by Chinese operators of chemical tankers. Oddfjell has 14% of that order book. And if we then turn to the left-hand side and look at each segment of the core chemical tankers, we anticipate that we will see an increase in capacity of the medium stainless steel vessels during the coming years. Medium stainless steels are typically 20,000 tonners and 25,000 tonners. This is where we have the largest orders for chemical tankers. The large stainless steel segment is a relatively old segment. And despite the order book, we will see a decline for those large chemical tankers. And those are large vessels with less sophistication and fewer tanks. And on the super-segregators, we see a market which is more or less in balance, maybe with a small surplus, but that surplus will barely be enough to cover the losses that we will see in the large segment. So all in all, we conclude that the order book is still at sustainable levels. And then to summarize this presentation, the geopolitical tension is still very high. And that was evidenced only a couple of days ago where we saw increased tension between India and Pakistan. The macro economic uncertainty has increased significantly due to the US tariffs. It's putting a damper on the market segments. We see less trader activity and we see more uncertainty among our customers. The maximum pressure policy by U.S. on Iranian exports in combination with the sanctions on Russia and in combination with the proposed increased oil production by OPEC will likely increase the demand for compliant tankers, which again will... will lead to less swing tankers operating in the chemical segments. We have seen downgrading of global GDP with 0.8% to 2.8% for the world in total. And we also have seen downgrading of GDP for the US with 0.9% to 1.8%. But it's important to notice that we still see positive growth in all the regions where we are present. The global seabourn chemical trade is expected to increase with approximately 2% during 2025. And as mentioned, we expect the swing tonnage to remain low as the... the earnings are boosted by the effects that I already mentioned. So to conclude this quarterly presentation, I give you the summary. We delivered a resilient financial result for the first quarter in a market which was very much characterized by increased uncertainty due to the proposed U.S. tariffs. Our time charter earnings declined in the first quarter with lower spot rates and fewer commercial revenue days. We saw a slight increase in volume and those were for the most driven by our robust contract portfolio. And we also saw an active quarter when it comes to contract renewals, which we believe reflected a firm fundamentals in the markets where we are present. We saw on the terminal side an increase in net results and this is basically due to underlying performance and also partly due to some one-off effects that negatively affected the previous quarter. Market outlook, swing tonnage expected to remain low and with all the uncertainty that are created by the proposed tariffs, we are preparing for multiple scenarios. We are in close dialogue with our customers, but with the GDP forecasted to grow and a very limited number of vessels being delivered in 2025, we maintain a moderately positive outlook. So to summarize, we expect the second quarter financial results to be in line with or slightly better than the first quarter. But we are of course also closely monitoring the uncertain market situation that is present today. And before we turn to the Q&A session, please be reminded that on Monday, May 26, we will have our annual Capital Markets Day at the Hotel Continental in Oslo from 10 to 1 o'clock. For those of you who would like to attend this session, please send an email to the address that is presented on the screen. So with that, we have concluded this presentation and we are turning to the Q&A session.

Yes, we have received a few questions, and I would also like to remind the audience viewing that you may still ask questions by using the Q&A button at the top right corner of the livestream. Of the questions we have received, I think... Most are related to geopolitical matters, and you touched upon a few of these, Harald, but I will start just at the top here, and that's from Bandic Nyttingnes. A potential Red Sea reopening seems to be back on the table. What is your assessment on how a reopening would impact the chemical space?

First, I've noticed that I think two days ago, President Trump announced that he had reached a ceasefire with the Houthis. I think the first observation is that no one has confirmed that there is a ceasefire in place. And I think we need more evidence before it's... a relevant topic to send our vessels through the Red Sea. Having said that, it's positive that there are signals and signs that the Red Sea might reopen, and our estimates indicate that an opening of the Red Sea will add somewhere between 1 and 3 percent capacity to our fleet and our segments.

Thank you. The next question is from, we don't have the name, but it is on the KUA renewals. As you mentioned, it was quite an active quarter also in Q1. And the question is, what was your KUA renewal rate for the quarter?

The core renewal rate for those 18% that were renewed were a reduction of slightly more than 1%.

Okay. Then turning to our order book, and the question is if you can elaborate a bit on the 20 vessels that we currently have on order.

Yes, if you look at the Oddfjell fleet, which today stands at, let's say, approximately 75 vessels, and if you anticipate that the normal lifetime for those 75 vessels is 25 years, that implies a loan that just to maintain the current number of vessels, we will have to order, on average, three vessels per year to maintain the fleet. And then if we anticipate that the market will grow with, let's say, 2% to 3% over the coming years, then we will need to add at least one vessel to that order book, meaning that to maintain our present market position, we will need to order, on average, four vessels per year. If we still, on top of that, have some growth ambitions, then we will have to add... more vessels to our order book and today we have an order book of 20 vessels they will be delivered over four years meaning that we have in average five vessels being delivered over the next four years. And that means that we are replacing the aging vessels, we are maintaining our present market position, and we are positioning ourselves for a slight growth of our market position. So I think that this order book makes a lot of sense for Ottfjell.

Okay, thank you. One question for you, Tarje, and I think you touched upon it, but on the CapEx commitment we have going forward, how much of that is funded today? And could you say a little bit on that, call it exposure?

We have, as I mentioned, three vessels that are currently on lease at the end of the first quarter that we are taking ownership of through the year, one in April and one in June, and the third one is done in January next year. All of those have been funded with the loan facilities that we have in place. And also, as mentioned, due to the very favorable purchase option prices that we are having on these vessels, we expect to finance 100% of the acquisition price for these vessels. Then we have the new buildings on order, two new buildings on order in addition. Those are not financed today. There are still a few years until delivery. And based on the balance sheet and based on the funding capacity we have on the balance sheet, I think we will obtain the needed financing well ahead of delivery of those vessels. But for today, we don't have any rush to go out and secure financing based on the very solid balance sheet we have.

Excellent. Thank you. Then we have one question here, and that's back to you, Harald. Will Oddfeld be exposed to the proposed U.S. port fees?

We did quite significant work preparing for the proposed port fees. There were in total I think somewhere between 10 and 20 different proposals. Some of them would hit us quite hard and some of them were aimed directly at Chinese operators and would not hit us at all. So we were going through all those proposals. We were in very close dialogue with our customers to explain to them what the consequences of these port fees might be. We were in dialogue with international organizations such as Intertanko, ICS, and EXA. So we were trying to... share information about the consequences in as many ways as we could. The conclusion is on the table today, and chemical tankers have been exempted from the port fees. So at this point, U.S. port fees are not an issue for chemical tankers. And we cross fingers that that will continue.

Indeed. Then there is just a question received here from Alexander Just, and that's back to you, Tarja. Will the new builds that are on time-sharter N be booked on the balance sheet as financial lease, or are they operational?

uh there are operational lease uh we have have purchase options for for some of those uh but there is an eight year tenor for these vessels i mean can decide on whether we want to use that option when we are approaching eight year or maybe after five or six years but whether we will exercise those options that is uh that remains to be seen will depend on the market and other alternatives we have for our fleet so They will be operationalized on a balance sheet, and they will be then included as right of use of assets. And that will, as I said, we have 1.1 billion US dollar in total time shutter commitments for vessels not delivered yet. But around two-thirds of that will be capitalized on the balance sheet when we are entering into these time shutter agreements.

Okay. And then I think there was one final question from Sam, and I will read it out, but I also suggest that you send me an email, Sam, on the address that is on the final slide of the presentation, on the capital markets slide. A bit more, I guess, technical on our data sources, but the question is CKB Fleet, which is our source for the supply slide, suggested Oddfell has more than 20 ships on order. Can you please comment if that is accurate or not? And I guess we can comment that that is accurate.

That is 100% accurate. Today we have exactly 20 vessels on order.

So again, please send me an email if there's something that you want to discuss further. Yeah, and I think that was the final question in the Q&A session here.

Yeah, then I thank all of you for attending this presentation, and I sincerely hope to see as many as possible of you at our Capital Markets Day on May 26. Thank you very much for your attention.