Q2 2020 Torm PLC Earnings Call
[music].
Thank you Ms. stunning.
Q2, Twinge 20 earnings call.
All participants and then any mode.
Presentation, you May ask a question by pressing star and one.
Telephone keypad well by submitting your questions via the webcast I must advise you to conference is being recorded.
And your first each day.
Please go ahead.
Thank you.
And thank you Oh for dialing in and welcome to Tom's Conference call gone into results for the second quarter on first off of 2020.
My name is more not cool and I'm head of corporate finance as to whether the here too.
As usual, we will refer to the slots as we speak and at the end of the presentation, we will open up for questions.
Slide two please.
Before commencing I would like to draw your attention to our safe Harbor statement.
Slide three please.
With me today, I have actually because she's ericsson and they'll she'll be gone and all she evoking failure.
I'll now hand, the call once we got them.
Thank you modem and good afternoon, and thank you all for filing in <unk>.
Turn to slide four.
[laughter].
We commenced a review of our financial results I would like to express my gratitude to all else seafarers, who made a great SEC price during the troublesome peered.
That's how come back to later the situation for our seafarer has improved over the past weeks, but they have especially here in the second quarter of Twentytwenty being the truth Foundation of terms operations.
As you know the second quarter up Twentytwenty was characterized by significant market volatility with product tanker rates, reaching all time high levels by the end of April.
Supported by temporary export <unk> and floating storage.
The strong market was the result of the cool with 19 outbreak with dramatically reduce the oil demand.
The Opex cost price war at the same time resulted in an increased oil production in March and into early April.
However, here by the end of June rates had come off asset oil market started to rebalance, resulting in a significant part of the tonnage in floating stores being released I'll go back into the details on the market shortly.
But here for the second quarter.
Our parts tanker rates.
Fleet realized ever Tc rates of $25274 per day and for the first off the number was slightly lower at $24465 per day.
So yeah in the second quarter of Twentytwenty, we realized the profit before tax of $71 million and it was $128 million for the first half.
Our return on invested capital right was 18.5% earning per share 96% for the core and for the first off the number.
17.1.
Percent in return on invested capital answering of 1.7 $1 per share and Danish kroner, earning per share for the six months.
Twentytwenty were 11.6.
With all financial result, we are pleased to distribute a total of $63 million or 85 cents per share in dividend to our shareholders.
The distribution is in line without distribution policy, where we aim to distribute 25% to 50% of the net income on a semi annual basis.
These metrics are all obviously, a very attractive levels and I'm pleased that Tom has been able to capitalize on the positive market developments here during the first six months of Twentytwenty.
We also continued our ongoing fleet renewal during the second quarter.
And since our first quarter, earning release in May we have sold seven older vessels covering two will have twos and five m. us.
Further scrubber program is progressing according to plan.
And we had as of today installed a total of 40 scrubbers on all vessels.
Lastly, I want to mention that Weve executed two initiatives covering a total financing of around $50 million, which further supports our strong financial position and attractive debt repayment profile.
Slide please.
Yeah.
Safety is tough pricing for tool and it has had an even greater focus here during the course 19 pandemic.
An obvious issue for tone as well as for most other owners and operators of ocean going vessels has been the challenges with respect to crew change.
Well crew changes remain an issue due to travel bans and Karen quantity in several countries around the world tone has absurd a very positive development since the end of the core and we performed more than 700 crew changes since the end of the second quarter.
By we've reduced the percentage of crude with or what you employment from around 42 today around 10% of the toll on board Thomas.
This positive development is a result up a constructive dialogue with authorities with customers and during this period, we've seen a great benefit from the tone integrated platform, which through coordination between the commercial and technical department as has been able to them.
To perform crew changes as opportunities arose during the vessels commercial operation.
Slide 16.
During the second quarter, and so far into the third quarter, we have executed on our ongoing fleet renewal with transactions, which we believe both timely and were priced.
We sold a total of seven older vessels for consideration of 66 million dollar, which is slightly above the Q1, 2020 broker valuations, which wasn't good price point for second hand tonnage.
As such we had capitalize on the strong markets in March April and May this year through these vessel sales.
A total of $37 million and debt will be repaid in connection with the transactions.
The weather we've sold have been built from 99 seven to 2002 and the transaction should be seen as a natural integral part of our ongoing fleet renewal.
The sales proceeds will also support us to further push you attractive opportunities in the market should they arise during a more challenging period further supporting the companys renewal of the fleet.
Slide seventies.
Now I will turn to some of the drivers in the product tanker market.
As mentioned Toms product tanker fleet realized an avid tc rate of $25274 per day.
The lot segment, we achieved two rates of $32732 per day in a lot one rate of $31655 per day.
In terms of larger segment. The MRM segment tome achieved rates of $23012 per day, and Tom's Handysize segment achieved rates of $15270 per day.
The second quarter was characterized by significant market volatility with product tanker rates benchmark, reaching all time high levels by the end of April supported by increased long haul trade flows floating storage and increasingly inefficient trading patterns.
Following the initial could 19 outbreak in China, and the spread of the virus to the rest of the world.
The impact of the measures taken to contain the virus gained considerable momentum in the second quarter.
With most of the world and some type of Lockdown, the global oil demand decline and an unprecedented rate.
With the impact, peaking April when the global oil demand was estimated around 20% below year ago levels.
The crude oil supply and refinery runs did not react as fast and choppy and this was in exaggerated by the Opex plus price will in March in early April leading to stop built at an unprecedented scale.
This resulted in temporary trait boost from several export regions, starting with China already in the first quarter, followed by Europe, The U.S., India and Middle East.
At the local demand was effected the cargo needed to find a home for the way, thereby positively impacting the ton mile. Both in April and into me.
The unprecedented product inventory buildup boosted onshore inventories and led to floating storage.
At its peak in the first half of May 14% of the clean trading tonnage was involved in floating storage effectively removing these vessels from the tightening market.
The above situation gave rise to increasing inefficiencies in trading patterns. So thats vessels sailing around the cable krwtwo in order to take advantage of the contango or cargo and diverse trying to find new buyers further away.
By the end of the second quarter rates had come off as all market starts rebalance, resulting in a significant part of the tonnage in floating stores being released to the market.
We currently estimate at around 4% of 16 trading tonnage is still unfolding stores down from the 14% at the peak.
The market east of Suez has seen rates being stronger affected by abundant tonnage lack of cargos due to refineries running at low utilization rate in the vest and especially in the U.S club head remains strong supported by increasing exports from the us Gulf Aswell as Rick a tight vessel availability in the.
Region.
Currently we have around 35% of our him off lease in the Americas, allowing us to gain from the beneficial rates in that region.
The above mentioned developments are also reflected in our bookings and as our 13th August the total coverage for the third quarter of Twentytwenty was 68% at $17928 per day.
Slide eight please.
Let me come back to the developments in the product inventories.
This slide illustrates the dynamics of the cool 19 impact on the oil demand refinery runs and changes in product stockpiles.
Initially refinery runs were slow to react to declines in demand leading to unprecedented inventory bills, which benefited the product tanker market.
As already mentioned the oil market has started to rebalance with a global oil demand recovering from those.
As refining margins have remained very weak refinery runs have not kept pace with the recovery in the oil demand and we have now moved from the start building phase two a stock trophies.
This is generally associated with headwinds for the tanker market as vessels being released from this devoting stores and de stocking lessens the demand for transportation.
Slide nine please.
Indeed.
The Destocking has started with offshore inventories and most of the floating storage of clean petroleum products that has been building since in March has cleared by now.
As mentioned at its peak in early May 14% of the clean trading ties was engaged in floating storage.
Several vessels were fixed for contango related stores business, it was especially discharging issues that tied up ties in so-called operational floating storage.
Currently we estimate that the tonnage that has remained in floating storage accounted for 6%.
The clean trading feet only slightly above what we consider normal levels.
In light of this.
I think it is important to emphasize that despite the fact that most of the tarnish tied up in foreign source has now been released to the market. Our earnings has been relatively robust here in the third quarter so far.
You should also be mentioned that while most owned stores in the M., our second has clear.
Floating storage on it a two vessels has been more resilient and could potentially even temporarily increase as the Kuvin 19 continues to impact the market, resulting in regional imbalances, although we do not expect to see the same magnitude as seen in the second quarter.
Slide 10 please.
If we look at onshore inventories. These have remained more resilient, but have lately stabilized and even started to decline as a result of the demand recovery.
And why it in general the Destocking period is not beneficial for the product tanker market.
Hi, inventories are likely to be exporters', rather than competing with imports.
A good example here is at record high diesel inventories in the us.
Also have seen diesel exports currently having almost doubled from the lows in may.
Slide 11 please.
This slide summarizes the main short and medium term effects of the quoting 19 pandemic on the product tanker market, which we have already discussed.
As I mentioned before the quarter 19 pandemic has time tightens the tightening supply considerably in the second quarter and introduced increased efficiencies to trading pattern, which resulted in record high product tanker rates.
The main trigger for these developments has been unprecedented decline in oil demand and the resulting or supplier for us.
As I mentioned earlier, we've now moved from a stock building phase two a stop growing face.
This has already released most vessels tied up in the floating storage to the market.
And while de stocking up onshore stocks will not had a negative impact on the tarnished supply side. This will never this lesson demand for trade as demand will be partially supplied by local inventories.
However.
What makes the current situation different from other de stocking periods. We've seen over the past 20 years is that the order book to feed rate you for product tankers is currently at historically low levels and only covers 7% of the existing fleet.
This has been further supported by the relative low interest for Newbuilding ordering so far in Twentytwenty as a result of the uncertainties of the global economy June 19, and the uncertainties regarding the potential new proposed consistent for vessels.
We will therefore, not see a significant additional pressure on the market from new building deliveries at a time of Destocking.
Slide 12 please.
Obviously, uncertainties around the corner 19 impact on the global economy, and the all demand remain.
Not at least in light of the recent increases in the number of actions in several countries.
And while we believe the large scale positive impact from demand supply imbalances on the product tanker market is over.
And indeed, the industry has to go through the Destocking phase now we also believe that temporary smaller scale regional imbalances.
Still likely to occur, giving a boost to regional trade flows and thereby mitigating the negative effect of truck stop gross.
Slide 13 please.
To conclude my remarks on the product tanker market, Tom expects to see volatility in the market in the short to medium term related to the Corvidae 19, and its impact on the global oil markets and financial activities.
Aside from the cooling 19 effects, we see a number of key market drivers. The next three to five years to remain positive such as a low order book refinery dislocation, which will provide support to product tankers.
Rates over the longer term.
The letter aspect is something that industry has been talking about for some years now expecting refineries, especially in the west to close down as a result of increasing competition from newer and more efficient refineries in the.
The current situation with all demand being impacted by the Corbett 19 seems to have given a new boost to refinery consolidation.
With a number of refiners in the U.S. West Coast and in Europe recently, having announced that they are going to close down.
In addition, a number refineries in other regions, such as South Africa, Japan, and New Zealand I reported to shutdown.
For the closure is now being considered.
These closures are all expected to increase to ton mile demand.
Hi, 14 please.
Looking at Tom's commercial performance, we have again in the second quarter Twentytwenty outperform the peer group average in our largest segment demo.
In the second quarter Twentytwenty, we achieve rates achieved rates of $23012 per day compared to a peer average of $19512 per day.
This translates into additional earnings of $80 million in the second quarter alone.
And $34 million for the first six months or Twentytwenty.
In general I must say I'm very satisfied that Tom's operational platform continues to deliver these competitive Tc earnings.
Slide 15 piece.
A key deciding factor for delivering above average Tc earnings is driven by our continued focus on positioning our vessels in the patients with the highest earning potential.
We have a balanced strategy, where we generally do not position all of vessels in one basin, but instead have some overweight in either east to west depending on our expectations of future market.
In the second quarter the market West of Suez was strongest and we also had the majority of vessels in the midst.
Towards the end of the quarter.
The market east of Suez improved significantly compared to the market west of Suez and we conducted a general repositioning towards the east to capture the market.
Most other owners conducted the same repositioning which resulted in a general overweight of M&A in the east for the first time in five years.
As I mentioned earlier the market in the West is currently stronger than in the east and here. The strongest areas. Currently are the Americas, where we have around 35% of our MRM positions.
With this I will handed over.
Two.
Kimbell to take us through the next slides thank you Jacob.
Please turn to page 16.
With our spot based profile, Tom has significant leverage to increase.
To increases in the underlying product tanker rates as US 13th of June 2020. Every 1000 dollar increase in the average daily Tc rate achieved translates into an increase in EBITDA of around $11 million in twentytwenty.
The corresponding figuring increase to $26 million in 2021 27 million in 2022.
As our 13th of August Twentytwenty, the coverage for the third quarter Twentytwenty was 68%.
At $17928 per day.
Please turn to page 17.
Before discussing our cost structure and financial position I would like to remind you of terms operating model, where we operate a fully integrated commercial and seconds or platform, which we believe is significant competitive advantage patrol importantly, it also provides a transparent cost structure for our shareholders and eliminates related party transactions.
Naturally we are focused on maintaining efficient operations and providing a high quality service to our customers.
Despite the tradeoff, we've seen a gradual decrease of more than 20% in our opex per day over the last six years, which translates into a total decrease of around $44 million on an annual basic pieces.
Opex was below $6100 per day in the second quarter of Twentytwenty, which we find competitive in light of our fleet composition.
The recent Opex per day development is partly a result of delays in crude changes and planned maintenance due to the cobot 19.
Slide 18 please.
I would now like to discuss our financial position in terms of key metrics such as net assets.
Value on loan to value.
Mr values have decreased by around 5% during the second quarter of Twentytwenty and the value of Tom's vessels, including Newbuildings was around $1.7 billion as of 13 of June Twentytwenty.
Outstanding gross debt amounted to $908 million as of two as of June 20 to 20.
Finally, we have outstanding committed capex of $86 million related to our Newbuilding program, a cash of $181 million as of purchase of June Twentytwenty.
This gives tom and it loan to value of 47 present at the end of the second quarter, which we consider conservative level.
The net asset value is estimated to $985 million per day.
As per searches of June 2020 corresponding to 13.3 dollars or 80.2, Danish kroner per share.
And just before commencing this call Tom share withstanding our trading at 52.
$52, sorry to do Danish krone.
And in show, we believe we have a balance sheet, which provide us with strategic and financial flexibility and on the following slides I'll give some more insights to our liquidity position capex commitments and the profile.
Okay.
Slide 19 piece.
As of Thirtys of June Twentytwenty, Tom had available liquidity for three or $2 million cats over $188 million and we had undrawn credit facility as of $121 billion.
Our total capex commitments related to our new buildings were $86 million as of 30 as of June Twentytwenty.
In addition to the Capex related to the new buildings. We also expect to page $12 million in Twentytwenty for retrofit scrap installations on vessels on water.
With some strong liquidity profile capex commitments are fully funded and very manageable while that creates a precision at the same time provide provides route to pursue new opportunities should they arise.
Slide 20 please.
After having finalize the refinancing in the beginning of 20 to 22, we have eliminated all major refinancing concentrating twentysix, which provides strong with financial and strategic flexibility to pursue value enhancing opportunities in the market.
Following the quarter.
We have entered into a 35 million dollar Refinancia will issue, which includes a full year postponement offer 2020 one maturity payment and this refinancing has not been included in the numbers you see here.
As of 30 as of June 20 to 20 hour outstanding debt plus $902 billion.
Slide 21 please.
Lastly, I would like to conclude our presentation with some details on our upcoming dividend payment.
The dividends of $63 million or 85 cents a share correspond to a payout ratio of 50% of the net income and is in the high end of the range of our distribution policy.
Based on a share price or 50 days grown or the dividends also correspond to almost 11% semi annual dividend yield.
We're very pleased that our commercial performance our strong capital structure allow us to distribute a significant amount to our shareholders I still have a very strong balance sheet and liquidity reserves to issue value adding initiatives.
With that I will let the operator open for questions.
Thank you, ladies and gentlemen, she would like to ask a question of Justin Please press star one on your telephone keypad.
Chris the Heskey to council.
Darren one to ask a question and you May also submitted questions. After the webcast.
First question comes from Jon Chappell from Evercore. Please go ahead.
Thank you good afternoon everybody.
Good morning.
For either one of view.
The 50% payout ratio I know that's within your range, but maybe a bit of a pleasant surprise just given the uncertainty in the market and maybe the choppier near term outlook.
Given that the next semi annual dividend is in a several several months away can you talk about your capital allocation plans for the next couple of months or the third quarter bookings or are pretty decent. So you should still be very cash flow positive and with a limited debt amortization hardly thinking about use of capital as we get to the end of this year and into early next year.
Yes, thanks for that John Jacobs here so.
The what we're looking at now is that we have the.
As you point to we've delivered a strong set of numbers for the first half we will be distributing after this.
By virtue of a dividend being paid out the rest is obviously available to the company at the same time.
We have released.
Further financial finances by selling off about 10% of of our fleet in the vessel sales here since our last.
Coal and our loss.
Lease so that.
This was at the capital allocation, we are thinking off on top of the distribution is really to.
Take advantage of potentially as you point to a choppy or market where.
Rates are lower than what we experienced in the first half so far and where we also see that there could be potential opportunities.
The NPL focus area.
Okay.
And then just a follow up just to be tie all your slides together very limited capex commitments, but it's covered by financing somewhat de minimis.
That amortization over the next several years.
Market outperformance in your one of the few companies that actually probably provides and then avi.
I have to think at some point with your dividend distribution with all the other positive things I've already mentioned this discount starts to become perpetual frustration. So you could just speak maybe a little bit strategically about.
Hi, how you feel about the discount to the Sun Avi and what plans you may have to hope to narrow it.
Yes, I can.
I have to confess agenda that that is absolutely also frustration as I think it is unfortunately, not a company specific thing it does look as if.
The broad buckets in terms of shipping stops, but also specifically when we look at the product tanker space that the discount to NAV.
It is generally across the sector and names is is quite high also from our historical perspective, right now and I think it is going to be hardware on our side to continue to demonstrate that we actually as you point to a superior platform that delivers high.
Return on invested capital in the industry quarter after quarter and that we at the same time.
Distributing win.
Yes, I'd like this that we are giving back to the to our shareholders of causes a balancing.
As we all know about being.
Prudent about on capital structure, and other ASI rewarding shareholders when the timing, but I think that is.
That's what we can do and then I see this.
As a broader seem that investors in general have been probably a little scared about the consequences for transportation and energy stocks.
Off the call with 19, and I must admit that if I tip stepped back and think about how I felt about this just sort of the before the saw month back in June.
Was probably more nervous.
Then what our figures have shown us. So far we are we are going to be delivering a positive result also for the third quarter and that is not necessarily the way I felt about how the world would evolve only a couple of months ago.
Yes that makes sense. Thanks for your thoughts as usual Jacob.
Thank you.
Your next question comes from back from SCB. Please go ahead.
Yes, Hi, Jacob I can.
So a few questions from my side.
Latest data points point to a large inventory level as you mentioned, both onshore, but also us floating storage.
Sure I suppose will affect rage for some time can you. Please provide an update of the current market from your perspective, what dynamics at play at the moment and if the market balance will improve from here or get worse before it gets better.
And also if you can shed some light on when you expect inventory levels to be back at normal levels. Thank you.
Thank you that's a very good question I think just taking a step back.
Inventories have peaked whether its floating or onshore than.
Pete here, so restored probably back in may and for onshore inventories in the key trading hub back in queue. So we are going to.
Had to live with that there is going to be a period here of de stocking.
I am actually.
You can say I've been positively surprised about how fast that de stocking and rebalancing of the vessels intralinks stores have actually taking place.
Yes, we still have let's say around 6% of the king.
Trading vessels in floating storage the normal level is around 4% to can say this difference of around 2% is is of course, something we will have to.
We'll go sales through but it is not a big number is not a 10% or 15% number that that we're looking at and the fact that the global economy.
It is today I think.
Drifting towards a transitory that is positive of course, there can be setbacks.
Either very local or in countries around the world, where the corporate 19 will affect demand, but I think today.
As a global community, we have better placed.
To.
Handle the core with 19 positive negatives.
Sort of for economic point of view.
Today than what we were back in March so I expect that from here, we have had a deep.
Caught in demand and there has been a build up off of storage onshore and on.
On our our top of vessels, however from where we go from here I do see it as a positive territory in terms of underlying demand and there will be volatility around it.
And.
So I think my best estimate is that yes, there will be appear here, where we have to brace ourselves for that that theres a lot of uncertainty.
But coming back to if I look at the Q3 bookings we've done so far they actually at a decent level, our PBT breakeven for the quarters around 15 these rates in the vicinity of around 18.
If if this is the big storm.
For for Tom I Am I.
Im very very pleased obviously.
Okay. Thank you that makes sense.
And then second question is.
To the sale of your vessels you've sold now seven vessels in the relatively short period of time and you mentioned that.
For the timing was right and that's a part of your.
Your natural yeah involvement and to bring on younger tonnage will decrease the age of your vessels, but.
Do you see yourself selling further vessels or are you more in the market for buying younger secondhand vessels.
It really depends on the on the vessel pricing.
No the ultimate cava in our industry, we often talk about.
So what have you then color going forward when you sold seven vessels in our case, we've actually taken 10% ultimate cover those vessels our of our equation and we are willing.
Obviously, we have the capacity on our platform and we also have the financial flexibility to go out and potentially acquire tonnage when we deem that the price points.
So I think we will leave it up to the markets will dictate what we see at the right to move but I would expect.
That prices will will have softened in this environment where rates.
More choppy and where volatility is higher than the order underlying asset prices is that there will be opportunities to to buy but of course, if we're wrong and the markets proved to be behave differently and vessel prices go north than we are also willing to sell.
But it was a good timing for us.
Where demand was strong and where.
The bias, we're willing to transact at or above our broker valves photonics that that from time to time.
Can be.
Were kind of experience in that it can be difficult to sell more than one ship that we transacted seven or relatively short period is something that the that we saw strategically years as a very good opportunity.
Okay. Thank you.
And then my final question to your dividend payments.
Very sizable dividend payment of 50% off your Bayano net income.
Can you. Please elaborate on what made you to distribute 50% and if you consider doing share buybacks given that the shares trading at a discount to the navy.
Yes, absolutely so.
As we point to we look at this.
On a semi annual basis, we have a distribution policy in place for the past the five years, where we DCP between 25 and 50% and currently with the strength of outperformance then to go to 50% was actually a very natural because we have room in our sort.
Our balance sheet in our structure, both in terms of where our where our net ltvs, which is right in the speeds for of where we think we should be at the current point of the cycle and also the availability of cash. So it's a it's very natural for us to be distributing 50% at this where the company.
So strong going into the into this first half we already had a balance sheet that was strong now we have one that is even stronger.
Then what we had before even after having distributed if you then come to the find around.
Whether you should be disputing as a dividend or whether share buyback, yes, absolutely we have evaluated and a what we've seen we have on a number of times actually done.
Share repurchases serve as part of this is not ahead, a meaningful effect and we are getting to a stage where.
We think that is the free float in our shares is trumping.
The opportunity for us to go in and narrow the gap in Avi and obviously the shareholders. We had who think that it would be beneficial to have more timeshares can can absolutely go and and use the proceeds here.
And utilize them against buying off.
Stock in their own right.
Okay that makes perfect sense. Thank you I have no further questions.
Thanks.
Thank you and your next question from the phone comes from Espen Landmark from suddenly. Please go ahead.
Hi, guys.
So just thanks, Lyne I guess always I'm looking at page eight.
Yes, maybe one shouldn't get too just smart about this but I think by many metrics. It seems were both more product inventories than crudes. During this and that may come and Thats, just said refiners haven't been able to match the.
You mentioned with the non loss I think most agencies.
Crude balances reverting back to average levels by year end I mean, do you anticipate to seven trend on the product side or is that more of a 21 of them given the relatively large portion of product being filter.
Yes, I guess, so I really think it depends on the development in the global economy, because ultimately obviously the refined for US has to have an end user which is one of us.
So to say so so the choppy road ahead of us on the recovery track for some normalization in utilization of the various refined products will will detail.
Where we end on on your question, but if we look at slide 10.
In the in the deck I would say that it is somewhat comfortable that we today and we look at the CP inventories in key during our already trending down and that it doesnt take that March.
To come into it where we've been in a situation back in 2015, where we had to be very patient over several years before inventories really came back to the five year averages I don't think it will take as long, but whether we will look at it by year end or early 2021 I think it's.
Too early to tell it really depends on the call with 19.
Development it depends on how the global economy fast and ups offset but I think as I tried to describe.
Also in the voice over here the slides is that it is it is quite encouraging that we are already now at this juncture eating into inventories whether its floating or whether is onshore because as of course that is that can be quite painful.
To come back to a normal normalized supply demand picture for the for the for the trade.
But I see.
It is positive that we have not build up more and that we're already engaging in this.
We.
We balancing of the inventories.
Okay. That's helpful. I know, it's a difficult question.
Yes.
Maybe it's.
Hi.
The refinery undersea.
Dan Dyer stands at the moment I think it's been even under utilized.
For the call with 19, So you said you're on your refining our shares potentially has a positive impact in terms of Myles I guess, we can see.
Theres.
Other indications from shipowner perspective that industry being more consolidated.
So everything of other negative consequences.
Then I would I will walk you know.
There is still is still a relatively fragmented.
Industry as such when you look I don't think that.
The fact that you will have consolidation will necessarily be too that you will.
Have less demand for transportation. So so I don't see that I really see that the areas, where you are closing down.
Hi, though.
Where you have or decided to permanently shutdown or where closure is under.
Consideration that is in areas, where you will be needing to import.
Refine products into it it is us west coast. It is Japan, It is South Africa, Scissor and these areas.
We will not be able even though that would be refinery consultation.
In the industry as a whole there is still going to be a gap between some local production and then the underlying demand in those areas when and if this refinery closures.
Alright, perfect. Thank you.
Thank you and we have no further questions from the phone at the moment.
Okay.
The questions from the Whip I believe we have the there was a carbon footprint I believe we have entered those in the.
Q in a session.
So with that I would like to thank you all for dialing in and.
With that will improve the quality of our second quarter.
Okay. Thank you bye.
Thank you that does conclude user conference. Thank you for dialing in you may now disconnect.
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No.
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