Odfjell Se B

Good morning to all of you and welcome to Odfjell's presentation of our second quarter results. We will follow an agenda which should be well known to all of you. I will take you through the highlights and then my colleague Terje Iversen will present our financial performance. And finally, I will conclude this presentation with an operational review, market update and the prospects going forward. So if we then turn to the highlights, we start with safety. We have seen a very volatile environment this quarter, but I'm still very satisfied to report that our strong safety performance continued throughout the quarter. I'm equally happy to say that our four Odfjell vessels that were trapped inside the Middle East Gulf have all safely left the region. And this is due to a fantastic cooperation between the people on board our ships and also on shore on different locations. We are presently not considering to send vessels through the Strait of Hormuz. If we then turn to our financial performance, we delivered time charter earnings of 195 million US dollars. This is up from 167 million US dollars in the previous quarter. Our average time charter earnings per day was 29,486. This is also up from 27,232 in the first quarter. And this reflects the stronger spot market that we observed during the quarter. Our EBIT was 69 million. This compares to 46 million. The net result contribution from Odfjell Terminals was 1.8, which compares to 2.3 in the previous quarter. And summarized, this concludes a net result of 54 million US dollars in the second quarter compared to 32 million in the previous quarter. If we adjust for one of items, the net result was 56 million compared to 26 million in the first quarter. Other important items are carbon intensity, the so-called AER, was 6.9 in the second quarter, and this is down from 7.0 in the previous quarter. We delivered this result despite the obvious inefficiencies that we observed in the Middle East region. We also took delivery of two new buildings on long-term charter during the quarter, and at the same time we sold one vessel for sustainable recycling. On top of that, we signed an agreement to purchase four super-segregators to be constructed at the Kita Nihon shipyard in Japan. And finally, yesterday the board approved a dividend of 52 cents per share based on our adjusted first half results. And by that, I give the word to Terje Iversen who will take you through our financial performance. Thank you.

Thank you, Harald, and good morning to all of you. I will, as usual, start with the income statement for this quarter. As mentioned from Harald, time shutter earnings this quarter ended at 195 million U.S. dollars, a significant increase from the first quarter with 167. Looking behind the figures, of course, we were helped by higher spot rates, especially in the start of the quarter. We also had an increase in commercial revenue days with 6,409 days, an increase of 295 days, primarily due to delivery of two new vessels this quarter and also three vessels that were delivered through the first quarter. We also had a slight decline in offer days, also then increasing available days this quarter. Included in the net time shutter earnings, we have also included 5.3 million USD, which is a customer settlement following a favorable outcome of a recent arbitration, that of course then helped the total time shutter earnings this quarter. Timeshot expenses ended at 14.4 million USD compared to 15.2 in the first quarter Operating expenses we saw a slight increase to 54.6 mainly due to new vessels joining the fleet this quarter While we saw the G&A reduce this quarter from 20.3 to 18.2 million USD, mainly due to seasonal effects in the second quarter. After operating income not shown at this table at 1.4 million USD, we delivered an EBITDA of 111.3 million compared to 81 million USD in the first quarter. That also includes net results from our jump ventures with 2.2 compared to 2.8. Including that figure is net result from our terminals with 1.8 million compared to 2.3 in the first quarter. Decline is related to a small impairment being done at one of the terminals in this quarter. Deportation and arbitration increased somewhat to 41.7 million USD, mostly related to more vessels on our balance sheet. Now after a small capital loss this quarter related to a resale of a new building contract for vessels being built in China of 0.9 million USD, we delivered a bit of 869 million USD compared to 46 million USD in the first quarter. Net interest expenses declined somewhat to 13.8 million USD compared to 14.3 in the first quarter. Also helped by net interest income this quarter related to the customer settlement that I mentioned in the time chart earnings with 1.4 million USD then contributing to net interest expenses going down this quarter. After other financial items and taxes, we then delivered a net result of 53.5 million USD compared to 32.1 in the first quarter, leading to earnings per share of 68 cent compared to 41 cent in the first quarter. If you adjust for non-recurring items, we delivered a result of 56 million USD That is then related to the impairment I mentioned and also the capital loss and other finance improving the results to 56 million USD compared to adjusted results of 26 million USD in the first quarter. Timeshot earnings per day strengthened this quarter at the same time we saw a lower cash break even. Our timeshot earnings per day ended at 29,486 compared to 27,232 in the previous quarter. Main driver, of course, the stronger spot markets, especially as we saw in the start of the quarter. And this is also worth mentioning that this timeshot earnings per day excludes the customer settlement that I mentioned on the previous slide. Kasper Geven declined to 21,804 compared to 22,984 in the first quarter, bringing the 12-month rolling average to 22,165. Decreases were driven by added revenue days from the five new billings that were delivered during the first half, and also less off-hire days in the second quarter. Going forward, we expect the average cashback even for this year to be around US$22,000 per day. And also worth mentioning, our P&L breakeven was around US$22,288 compared to very much the same figure in the previous quarter. Looking at the balance sheet, we saw some changes on the ships and new building contracts. As mentioned, we sold one new building under construction. We also sold one vessel for recycling. On the other hand, we also paid pre-delivery installments for the four new buildings, 40,000 dead by ton vessels being built of 35 million US dollars in April. We also took delivery of the two vessels on long-term time charters, then increasing the total value of ships and New Berlin contracts this quarter. The right of use assets then also increased from 285.7 to 321 million USD this quarter. While we saw investments in associated joint ventures decline somewhat from 182.8 to 180.9 million US dollar this quarter, main effect was related to that we took out dividend from the terminals of 3 million US dollar this quarter. Cash equivalents ended at 165 million USD while including available drawing facilities we had 385 million USD in available liquidity end of second quarter. Also worth mentioning that we paid the new building of Pluto that we took delivery of in July with cash and that will later be included in an existing loan facility. On equity, we saw that equity increased by 46 million USD in line with the comprehensive income we booked this quarter, leading to an equity percentage end of second quarter of 46%, very much in line with previous quarter. On the depth side we saw that other current assets increased and that was primarily due to the fact that we have more expensive bunker on our vessels and also increase in other inventories during this quarter being also impacted by new vessels being added to our fleet. Cashflow this quarter, we ended with a very strong operating cashflow of 81 million USD, increase of 30.9 compared to first quarter, and of course that is mainly related to higher earnings this quarter. On the investment side, we sold the new building under construction in China, and we also sold one vessel for recycling, in total that gave us cash of 23.2 million USD. On the other hand, we invested in the four new building vessels with $35 million and also had some expenses to dry docking and other projects. So in total, we are then left with net cash flow for investing activities of 19.5 this quarter compared to 21.7 in the first quarter. Not much going on on the debt side when it comes to refinancing on new facilities, only ordinary repayments, leading to a net cash flow from refinancing activities of negative 27.2, and in total we then saw an increase in net cash and cash equivalents this quarter of 33.9 million USD. Looking at the last 10-11 quarters, we see that we are delivering a quite strong quarter with $80.6 million in operating cash flow, up from $49.7 million in the previous quarter. Relates to higher term short earnings, as mentioned. Net cash flow from investment was negative 20 due to the installments in the new buildings. Primarily, and on the other hand, we also had the proceeds from the sale of ships during this quarter. In net cash flow, free cash flow, down under that 80 minus 20 is 61 million US dollars a quarter, up from 28 million in the previous quarter. Looking at the 12 months rolling free cash flow, we are at 49.7 million US dollar. And if we adjust that for repayments related to right of use assets, we reach 37 million US dollar compared to 35 million in the previous quarter. On the debt side, not that much going on when it comes to maturing facilities the next quarters, not before in the fourth quarter of 2017. Looking at the total debts end of second quarter, we have around 738 million USD in interest-bearing debts. We expect a slight increase year-end due to the labour of Bo Pluto that will be financed by the new tranche that will be drawn upon in these days. And then we expect a small decline going forward based on existing profiles and a maturing loan going forward. Not included in this slide is the financing of the four new buildings, the 40,000 new dead by tons vessels being delivered from first quarter 27 until second quarter 2029. So that will increase these estimated numbers. On the projected debt, right of use assets, that is 321 million US dollar end of second quarter. That will increase end of this year around 400 million US dollar, mainly due to delivery of three, four new buildings that we deliver on time charter throughout the second half. And then we also will see an increase in right of use asset debts in 27 and 28 due to the new buildings being delivered on long-term time charters to Odfjell. When it comes to the new buildings, the four new buildings, we are in process and we are evaluating alternative stage days and we expect that financing to be finalized within end of this year. Capex and time charter commitments. In total we have time charter or Capex commitments at 289 million US dollar end of for the total for the four new buildings and including both Pluto. which then was paid in July with $35.4 million. So then we are left with 40,000 new buildings being scheduled to be delivered from first quarter 27 to second quarter 29. On long-term time charters, we are signalizing that we are having a lot of commitments when it comes to new buildings being delivered from second half 26 until 2029. If we summarize a total time charter higher for all these vessels, we are close to 970 million US dollar. On our balance sheet, that means that we will add around 500 million US dollar in new assets from second half 26 to end of 2029. Harald will come further into that, but these vessels that we have on time charter that are going to be built and our own new buildings accounts for around 13% of the current order book in our core segment. Then I will leave the floor to you again, Harald.

Thank you very much, Terje. And by that, I will continue with an operational review. We start with the volumes. And as you can see on the left-hand side of this slide, we have relatively stable volumes quarter on quarter. We lifted 3.2 million tons of cargo during the second quarter, which is the same as we did in the first quarter.

However, if you look at the quarters reported in January,

In 2025 you see that the volumes are down from previous levels and that is of course the effect of the Middle East Gulf situation. The split between spot and contract volumes were relatively stable also during this quarter and we are reporting contract coverage of 46% which is up 1% compared to last quarter. If we then turn to the markets in general, the Clarkson Chemical Tanker Spot Index reported an increase of 24% during the quarter, while the Odfix Index is up 9.8%. It's important, once again, to notice here that Clarkson is reporting... Thank you for watching. If we look at the volumes, we see that there is a slight decrease on speciality and commodity chemicals, but this is to a large extent outweighed by an increase on veg oils and biofuels. During the second quarter, 19% of the volumes that we lifted were veg oils and biofuels. In the second quarter, this figure was 12%. And this compares to an average of 8% in 2025. So we clearly see that there has been a bigger influx of bag oils and biofuels during the first half. And I must say I'm satisfied by my organization's ability to change operation models in line with changing market conditions. CPP was stable at approximately 4% of our total volumes. And then to sustainability, we reported an AER of 6.9, which is down from 7.0 in the previous quarter. And it's important to notice that we deliver those strong figures, despite the fact that we see significant inefficiencies in and around the Middle East Gulf. Going forward, we will add more and more super eco vessels, and that will have a positive impact on our AER performance in the future. And finally, we are watching carefully the build-up of the El Ninja in the Pacific Ocean. We do believe that this will have an impact on transits through the Panama Canal. It will likely have an impact on energy prices from November onwards and we are also curious about the effects that it will have on the crop yields and by that production of veg oils and biofuels. Turning to our terminals, the headline here is stable performance despite significant volatility in the global markets. Our average commercial occupancy rate increased to 96%, that's up from 94% in the previous quarter. Crew put was up 6% and the number of handlings was relatively stable. Our consolidated EBTA for the terminals was 10.7% and this compares to 10.6% for the previous quarter. We have previously disclosed a shareholder dispute at our terminals in the US and this dispute was referred to the court and we are satisfied to see that the judge ruled in favor of Odfjell on all the counts handled in the court. Going to the market situation, the storage demand in the US is relatively soft. This is due to the world geopolitical situation. And we see the same tendency in Asia, where there are direct and indirect headwinds due to the shortfall or disappearance of Middle East volumes. We expect this situation to continue as long as the We have previously reported two important expansion projects, one at our terminal in Antwerp, where we are building 18 duplex stainless steel tanks with a total capacity of 36,000 cubic meters. This project is on schedule, it's on budget, and we expect the tanks to be on screen by the first quarter of next year. We are also building out at our terminal in Ulsan. Here we are building 88,000 cubic meters of carbon steel tanks. This project is on time and below budget and we expect the tanks to be on stream towards the end of this year. Then to the market update and prospects going forward. We see that there are being reported strong earnings from the other tanker segments both for VLCC and for the MR earnings and this situation has obviously an effect on chemical tanker freight rates so we did see a sharp increase in rates at the start of the quarter particularly west of Suez but also east of Suez. West of Suez, this increase has been tailing off towards the end of the quarter but the rates are still at very robust levels. We also saw some tailing off of rates east of Suez towards the end of the quarter and of course this area was Nettestad Nettestad And then to the volumes and swing tonnage situation, I think the most interesting takeaway from this graph is the shortfall of volumes during the past three months, where we see that volumes are lower than what we've seen in the previous months and quarters, and the shortfall is approximately 6% of the total volumes. We are also satisfied to see that swing tonnage is being maintained at very low levels. And then to the order book. The order book today stands at 20% of the sailing fleet. Odfjell has 13% of that order book. And that is at the end of the second quarter, we had 20 vessels on order. Since then, one vessel has been delivered, meaning that today we have 19 vessels on order, of which 17 are being built in Japan. The biggest fleet increase will be seen in the medium stainless steel segment, while we see more modest increases in the supersegregator segment, which is Odfjell's core segment. Going forward, we have seen the total volumes decline during the second quarter. And we've also seen that there has been an increase in volumes out of the U.S. and Asia. But these increases have not been enough to totally compensate for the lost Middle East volumes. The uncertainties in these figures relates to what is related to production increases and what is related to drawing on feedstock inventories. So that is one uncertainty when it comes to the chemical tanker markets going forward. The economic growth figures are relatively stable, but there are signs of increased inflation, which again can have an impact on interest rates. And finally, we clearly see that the inefficiencies in the Middle East have a significant impact on the ton mile production, which is the main reason why we have seen freight rate increases both east and west of Suez. On the supply side, We do see that there will be vessels delivered over the rest of this year and also next year and that will of course have an impact on the freight rates. At the same time we see that we are building up a rather significant book of recycling candidates which will provide a buffer for the vessel deliveries in the coming years. When it comes to swing tonnage, we expect that the other tanker segments will continue to maintain the present rate levels and that will prevent the influx of swing tonnage into the chemical tanker business. So, going forward, we expect the volumes to be more or less in line with what we've seen in the second quarter. We don't observe any important changes in the world GDP growth. We expect the geopolitical situation to continue throughout the year. The third quarter. And here I would like to add that the situation that we are facing today with unrest in the Middle East, we have seen increased unrest in the Black Sea, we have seen increased volatility in the Red Sea. We've seen a tech in the eastern part of the Mediterranean. And finally, we've also seen increased activity on the coast of Somalia. And I think this is the first time that we see increased volatility in all these areas at the same time. On the supply side, I've mentioned the increase in the total sailing fleet, and I've also touched upon the modest influx of swing tonnage. So to summarize this short presentation, Odfjell reported a net result of 54 million US dollars. This compares to 32 million in the previous quarter. For Odfjell Tankers we saw an increase in average time charter earnings per day and we also saw an increase in total time charter earnings during the quarter. We reported an increase in commercial days and we also had a relatively low activity on the dry docking side. For Odfjell terminals, stability is the key word. EBITDA and net result was very stable quarter on quarter, but the volatile geopolitical situation has an impact on storage markets, both directly and indirectly, and we expect this to continue throughout the third quarter. Thank you for watching. We do believe that this will continue to support the present rates, but there might be a potential downside with respect to vessel deliveries and the potential uncertainties related to diminishing inventories around the world. For the next quarter we expect the underlying net result to be lower and closer to the levels reported in the first quarter. And by that we have concluded our presentation and we are now open to answer any questions that you might have.

We have received quite a few questions during the presentation so I will as per usual read them chronologically and I think some are of the same topic so maybe we will try to bundle a little bit together here. Starting with the first one here, this goes to you Harald. If Asia and the US were unable to compensate for lost Middle East Gulf volumes, why did freight rates spike and why are they still elevated? Do you expect rates to soften for the remainder of 2026?

If we start with the volumes, I said that the total volumes transported by chemical tankers was done approximately 6%. At the same time, we do know that the Middle East is delivering some 15-20% of the total production of the world. And that means that When those 15-20% disappear from the market, but the total decrease is only 6%, that means that volumes are increasing in other regions of the world. So we have seen, first and foremost, an increase in volumes. A compensation for the volumes that have disappeared and that compensation is now being transported over much longer distances meaning that That the total ton-mile production during this quarter has been higher than what we have seen in the previous quarter and that again explains why the freight rates are going up. So this is to a very large extent ton-mile driven.

Next one is to you, Terje. It's quite a specific question, and I think you touched upon it during your presentation, but just for any confusion, I think this is relevant. In your tanker's report, you show an EBITDA of 116.8 million, but after adding elements, this is in fact 115.5 million. What is the difference?

As I mentioned during the presentation is that we had the operating income of 1.4 million USD this quarter which is included in the EBITDA but not specifically shown in the P&L that we showed on the screen. If you look into the detailed P&L and also the notes you will find further details related to that. Thank you.

I think there are a few questions here and this I think goes back to you Harald. It's relating the current market and our outlook and also the fact that we are taking delivery of vessels for the second half of 2026 and of course for the coming years so maybe if you could just elaborate a little bit on our how we see sort of taking new vessels into a potentially somewhat softer market and a little bit around that development

We have been taking vessels into our fleet for more than a year already. All those vessels have been planned into our schedule. They go immediately into production and they are making money from day one. So I'm not for a second concerned about the vessels that... will come into our fleet in the coming quarters and years. We have a plan for every one of them. And secondly, we also have some buffer with existing vessels that are either due for recycling or where the time charter agreement is expiring. So we have plenty of opportunities to balance our fleet. But I think the main message is that for more than a year we've been taking those vessels into our fleet. We've been making money on them and we will continue to do so also for those 19 vessels that are due to enter our fleet.

Next question is a bit specific on products here, and if I may, I believe I have some of the figures that he's asking for here. But the question is, I read that sulfuric acid volumes are declining due to export bans. I assume that refers to China. Given our large stainless steel fleet, would that have a big impact on us? It is correct that asset volumes out of China have declined. At the same time we see that our total asset volumes, first off we have a diversified mix of products that we carry, so we will never see that one Thank you for watching! The next question is to you Terje again and you touched upon it in your presentation but the question is if you could elaborate a little bit more on the planned timing of when you will secure financing for the owned new buildings on order. Sure.

I must say that we started to look into alternatives right after we placed the new billing orders a couple of months back. We have been working on alternatives and I must say we are quite advanced in our discussions with alternative structures. And I must say that we are very happy to see large interest out there to finance us and offer us competitive financing. I'm quite optimistic that we are during this fall going to conclude financing at least for a couple of these vessels and we may wait a bit because some of these vessels are delivered in 28 and 29 and to avoid paying commitment fees and being Stuck with that for a couple of years. We may conclude only a couple of nows before end of year and wait with the two last ones. But that remains to be seen. But as I said, we are seeing great interest and we expect to land a really good competitive financing for these vessels.

Great.

Thanks.

Next one is back to the Middle East situation. And again, you did touch upon this in your presentation, Harald, but as the Middle East Gulf remains shut, which markets do we have some sort of advantage in and can we pivot to?

Odfjell is luckily present in all the important global markets in the world. And the advantage of that is seen in the situation that we are in now. We have the capacity to change our vessels around. The shortfall of Middle East means that we are moving our vessels into other trades and also other products. And I think this is best showcased with the 90% of total volumes that I mentioned for VAG oils and biofuels. This is just an example of how we are utilizing our fleet to maximize earnings.

Thank you.

Next one is regarding COAs and the question is how has your COA rate renewal evolved in 2026 so far? And there's also another question is how do you see your COA rate as a relative share of volumes going forward?

When it comes to the renewal rates, I don't have the exact figures, but we do see a moderate increase when we are renewing the contracts. I also have to add that the second quarter was not a particularly active month when it comes to contract renewals, so it remains to be seen how this will develop throughout the year. I'm equally happy to see that we continue to attract new contracts. We had several contracts being added to our portfolio during this quarter, and that is, I would say, a very positive sign. And then the second part of the question was...

How do we see the development of contract volumes versus spot volumes?

Of course, the main reason why we see a reduced contract share during the two last quarters is the absence of Middle East volumes. So all the contract volumes from that region have disappeared and they are being replaced by spot volumes in other markets. And that is the reason why we see... I think there is no immediate sign of a resolution to the situation in the Middle East, so I think we will continue to see this type of situation also in the coming quarters. Thank you.

And then the final question that we have received is regarding the Panama Canal. And the question is, the Panama Canal yesterday announced a cut in all daily transits effective in September. In 23-24, when slots were last cut, chemical tanker rates improved significantly. How do you view the potential implications for your segment?

There are not... Chemical tankers are not kind of the major ship type in the Panama Canal, but of course those vessels that are... The last time that we saw a decline in Panama Canal transits, then most of the chemical tankers were rerouted and sailing eastwards around Africa and then that way to Asia. My first observation is that it seems that the Panama Canal is much better prepared this year than what they were the last time that they had a drought in Panama. So they have taken action at an earlier stage. They have on two occasions reduced the maximum draft, and now they are making new plans. New efforts to reduce the effects of a potential linear effect in Panama. So I think this time we will see a more controlled situation. Development of the situation in Panama but still there will be effects for chemical tankers simply because chemical tankers are not prioritized ship type when it comes to transit through the canal. The prioritized ship types are above all the gas tankers and secondly the container vessels.

Thank you. That was the final question that we have received today.

Okay, then I thank all of you for listening in. I thank those of you who have sent in questions for very interesting questions. I wish you a nice day ahead and also a nice weekend when that time comes. Thank you for attending.