Q1 2022 Torm PLC Earnings Call
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Andrew.
Ladies and gentlemen, thank you for standing by welcome and thank you for joining bump plc first quarter 'twenty to 'twenty two results call.
Today's recorded presentation, all participants will be in a listen only mode.
Presentation will be followed by question and answer session.
If you would like to ask a question you May press Star followed by one on you touched on the telephone. Please press the star key you've followed by zero for operator assistance.
I would now like to turn the conference over to SaaS that'll be got Heinz. Please go ahead.
Yes.
Thank you. Thank you for dialing in and welcome to Tom <unk> Conference call regarding the results for the first quarter of 2022. My name is in place and go high enough.
Investor Relations central.
As usual, we will refer to the slides as we speak and at the end of the presentation, we will open up for questions.
Please turn to slide two.
Before commencing I would like to draw your attention to our safe Harbor statement.
Please turn to slide three.
The results will be presented by executive director and CEO , Jacob Milka and CFO Kimberly.
Please turn to slide four I will.
I'll now hand, the call over to Jacob.
Thank you Andreas.
Good morning.
All of you in the U S and good afternoon. Thank you for dialing in.
Truly a pleasure to be here.
We published our source for the first quarter of 2022.
As you can see at the end of February 2022, patrolling haptics to 85% of the open days in the first quarter of 2022 at $15569 per day, and then due to a number of factors the market firmed during.
During the reminder of the quarter and we ended at $16743 per day.
That is then put it into perspective.
Current market, we are trading at versus above $40000 per day.
For our fleet.
Now since the demand recovery finally materialized in product tanker rates, we ended with an EBITDA of $60 4 million and we had a profit before tax of $10 $7 million.
This equates to a return on invested capital.
One 4%.
Now in the largest secondly, Marc.
We achieved $16462 per day, whereas the LR vessel class obtained rates above 18000, now looking into the second quarter of 2022.
Changing travelling patterns increase in supply of products.
<unk> meeting and increased demand.
I mean that we've secured spot moving at $28348 per day.
We have again outperformed our peers in the largest seconds.
<unk>.
Since.
The end of 2021, we've sold one vessel in each vessel class and we've entered into an agreement to acquire secondhand Ala two vessel on what we believe to be attractive terms.
Here in the first quarter of the year, we increased our global commitment to 60, thereby increasing obviously our access to lower fuel prices. We also invested in certain process for the two new buildings, we have delivered in the fourth quarter and here in the first quarter respectively.
And this second Roses, we are currently having them tested and I expect them that they will be installed during the second half of the year.
Please turn to slide five.
And yes, we will talk no surprise I think to anyone will talk about geopolitics and the Russian invasion.
You create that as COO.
The great achievements there on prices in Europe since the second World War and my thoughts are with the people of Ukraine, Who's suffering is beyond anybody's imagination.
This conflict has also prompted.
<unk> political awakening of duty and in Europe .
With the ambition from here on to reduce Europe's entity.
Tendency on Russia.
The immediate effect of this has been felt on the product tanker market already as we speak with official sanctions by the U K and also by the U S and there is substantial and taking place by several western market players that has led to a search and product flows from regions.
Further afield.
While we've seen on the ground is that U S and Indian refiners. They were really quick to respond to this increase in demand for distillate, which arose from the sale of sanctioning of the European receivers.
Primarily of Russian oil <unk>.
U S. Gulf refinery utilization responded and quickly increase to near maximum levels at around 95%, resulting in a significant increase in exports as the demand.
Both here in Europe , but also in Latin America continued.
Freight levels as an example in the U S Gulf wind from lump sum $800000 in February 2022 to as high as $3 million during April 2022 for carrying diesel back to Europe .
This increased <unk> to close to $100000 per day at the peak.
In the middle East the increased demand for <unk>, turning to carry diesel jet fuel back to the Atlantic Basin and also increase the spot earnings we experienced <unk>.
Prior to the outbreak of the war at the raised around $10000 per day at the end of February which is currently as we speak trading up to $80000 per day.
Yes.
Medium to long term implication on the product tanker market.
Yet to be seen.
European Commission.
We ended the plan last week to have a full panel of imports of Washington crude oils within six months and imports of Russian refined products by the end of the year and effectively.
This means that half of Europe's clean petroleum products import or 7%.
<unk> of the global clean petroleum product flows would need to be replaced by other sources.
As we have announced.
At the <unk>.
Release of our fourth quarter release <unk> made the decision immediately after 2045 not to enter into a new business involving Russian protocols and also not taking on any new business for Russia accounts for whatever original destination it may be.
Please turn to slide six.
The need to recalibrate the whole oil product.
<unk> ecosystem will lengthen trade distances, hence increasing the ton mile demand for tankers, given the obvious proximity of Russia to Europe . For example, if northwest Europe imports diesel from the Middle East and setup from the Russian 40 ports. It will increase the ton mile for the same amount of fuel by around three.
Times.
So far we've seen only a limited shift in the trade compare us meaning that most of this effect will actually not be visible until the coming months.
When we do our calculations and modeling a total oil embargo by the EU on Russia, and the corresponding trade recalibration.
Could add a net of 7% to product tanker ton mile purely based on changes in trade distances.
This would be a permanent effect, which will bring the fleet utilization rate to a new higher level as long as sanctions and sanctions are in place.
This trade recalibration affect comps on top of the 3% ton mile growth, we already forecasted for this year based on the continued oil demand recovery from the COVID-19 effect as well as the impact of the recent refinery closest in as you All know for example, Australia CEO.
In South Africa, where the important needs of all of these regions have been increasing correspondingly.
Further support is likely from the need to replenish both commercial and strategic oil inventories in many countries. We have been drawing for almost two years now.
Sure.
Opinion is that the timing of this effect is highly uncertain given the current backward dated oil price environment.
Now on the tonnage supply side.
We have seen low fleet growth this year and also expected in the next couple of years. The order book feed ratio now standing at 5% for product tankers and contracting activity over the past three quarters being negligible.
From this.
You can easily deduct that.
Also.
<unk> product tanker fleet will not be part of the active fleet due to sanctions and this is accounting for 2% of the total product tanker fleet.
Since the start of the year. We have also seen a considerable number of LR tankers shifting into 30 traits underpinned by the strong food Aframax earnings as a result.
Surgical alternative crude oil after Russias invasion of Ukraine, as well as subsequent crude strategic petroleum starts releases in the U S.
Yes.
Turn to slide number seven.
So far we've only seen a small fraction of the potential trade recalibration effect with only 200 kilograms per day.
European oil for us input from Russia being replaced by supplies from the United States and the Middle East region, whereas this is from a high base in February 2022.
However, the impact on the freight rates has been significant already.
With a full band on Russian oil products, we believe that the price incentives for these producers from the U S and the Middle East, India will increase even further.
<unk> is currently very tight.
And our U EU ban on Russian diesel would activate the tightness even further however, the ramp up of the <unk> refinery in Saudi Arabia, and the start of sour refinery in Kuwait, both scheduled for the coming months will facilitate the needed trade recalibration.
We cannot disregard the fact that high oil prices and high inflationary pressure on the global economy in general are likely to slow down the growth pace of global oil demand.
Nevertheless.
We believe that the positive demand effects of the redistribution of the energy supply chain will outweigh the negative effects caused by slower demand growth. This will be further supported by the need to refill commercial and strategic reserves once the oil price structure is supportive.
Kindly ask you to turn to slide eight and here.
If we look at medium and long term drivers that Colby on fixed rate recalibration due to the Q political conflicts we are facing in Europe right now we're already seeing at more than 2 million barrels per day of refining capacity has been closed down permanently and a further $6 million is scheduled to be closed.
During this year and next year.
On top of that another 1 million barrels per day of capacity could risk being shut down.
Most of the effective capacity is located in regions, which are already large importers of refined oil products, such as Europe West Coast U S East Coast, Australia, New Zealand South Africa.
Even in the regions, where refiners have already been closed down here in 2021 'twenty two 'twenty, we've not seen the full effect on import demand yet as oil demand has been negatively affected by COVID-19.
At the same time.
More than $4 million.
Barrels per day of new capacity scheduled to come online mainly in the middle East, China, and India regions with already today, a large exporters of oil products.
Both these developments are positive for tradeshows and ton mile in the coming years with only a few projects that are less positive for trade in.
Please.
Turning to our slide number nine.
The positive outlook for the demand for product tankers in the next three to five years coincides with the supply side, which is the most supportive it has been for at least the last 25 years.
With record high new building prices.
Emitted shipyard space tanker ordering has as I mentioned being used for the past three quarters.
Here. Consequently, the order book to fleet ratio is now at a historically low level of 5%.
If we leave up chemical tankers.
This is further supported by similar historically low 7% order book fleet ratio for crude tankers.
So consequently, we are keeping the fleet growth in the next two to three years will be hovering around 2% a year only half the pace seen over the past five years.
My concluding remarks here on the parts and commodities, we do expect volatility on the market due to the current geopolitical sanctions is considerable.
While increases due to crude and oil product tanker re roofing.
This recalibration of the transport of refined oil products.
We will take some time to settle.
It is.
We have the opinion that the average rate environment will be above the levels. We saw prior to the outbreak of the conflict in Ukraine.
This will further be supported by increasing refinery dislocation effects as well as the need to rebuild depleted crude and product inventories further supported by this very positive supply side outlook.
<unk>.
Please turn to slide 10, and here if we look at our commercial performance.
<unk> outperformed the peer average in almost all quarters during the past six years in the largest vessel class a mark and here in the first quarter of 2022, we achieved rates of $16462 per day in that segment.
And I can say.
That I am in general very satisfied.
The Watson platform consistently deliver the superior.
Superior results on a day to day basis.
And here.
Turn to slide 11.
This above average TCE earnings is driven by our continued focus on positioning our vessels in the basins with the highest potential.
In the first quarter of 2022, we can had an overweight west of the Suez Canal, where we also saw an outperformance when looking at the full quarter.
Our debt.
Let me hand, it over to you Kim for a further elaboration.
Cost structure, our accretive position.
And the balance sheet.
Thank you Jacob please turn to slide 12.
As Joe mentioned, we have seen a recovery in the tanker market in the first product 2022 with rates, reaching $16743 per day and a further increase in the second quarter of 2022, where we fixed 85% of our base at $28348.
And the first product 2022, we saw a reduction in our operating expenses due to lower repair and maintenance cost, but we still see an impact from COVID-19 related expenses. So for the rest of 2022, we could see slightly higher opex per day than realized in the first quarter of 2022, but in line with previous performance.
We will maintain our focus on cost optimization without jeopardizing quality and customer focus.
Please turn to slide 13.
It is part of our strategy to renew our fleet continuously and since the beginning of 2021, <unk> acquired 11, secondhand vessels and taken delivery of two new buildings, thereby significantly expanding our fleet.
Further we have recently entered into an agreement to purchase a second hand about two vessels of which we will take delivery in the third quarter of 2022.
Second hand vessels.
<unk> have increased significantly over the last months and we have used the opportunity to divest five older vessels since late 2021.
All this shows that we have strong capabilities in replenishing our sheet, while maintaining a conservative capital structure.
Please turn to slide 14.
As of 31st March 2022, so im had available liquidity of $440 million cash.
Cash totaled $95 million and we have repaid our Austria facility.
And himself Undrawn credit facility, which is now at $45 million. The total cash capex commitments relating to our scrubber program and other assets worth $13 million as of 31 March 2022.
With our strong liquidity profile. The capex commitments are fully funded and we have significant liquidity research.
Slide 15 please.
Looking at our maturity profile, we have no major refinancings until 2026, which combined with our strong cash position provides us with the financial and strategic flexibility to pursue value enhancing opportunities in the market.
Further with the new dividend distributions.
Distribution policy that our board of directors approved this morning.
We based our dividend payments on a fixed amount provision. We are now we have good capabilities to distribute dividends to our shareholders or buyback shares.
As displayed.
Not any major repayments until 2026.
Further in the first quarter of 2022, we have increased our interest rate hedges to plus 90% in the coming three years and 85%, 85% from three to five years, thereby we are prudently saving out the potential interest rate risk caused by the increase we have seen integration levels recently.
Slide 16 please.
The value of Tom's visuals was approximately $1 $96 billion by the end of the first quarter outstanding gross debt amounted to approximately $1 1 billion as of 31st past 2022 with limited committed Capex as I, just mentioned and a solid cash position we are in an LTV of.
52%.
All in all we have a strong and attractively priced debt structure was attributable banks and leasing institutions and we have hedged demonstrated our strong excess to device diversify funding sources in the market. We are very satisfied with our current position.
The net asset value was approximately.
$1 billion of surplus March 2022, this corresponds to a $13 $6 or 1991, one <unk> per share.
Just before commencing this call Tom share shifts was trading at 79 Danish kroner.
I'm pleased that our conservative balance sheet supports our strategic flexibility.
Capability as well as financial strengths.
With that I'll, let the operator for questions.
Ladies and gentlemen at this time, we will begin the question and answer session.
The one who wish to ask a question, Matt that star followed by one that touchstone telephone.
If you wish to remove yourself from the question queue.
Star followed by Q.
If you are using speaker equipment today, please with the handset before making your collections.
Anyone who has a question. Please star followed by one this time one moment for the first question. Please.
The first question is from the line of Jon Chappell from Evercore. Please go ahead.
Thank you good afternoon.
Jacob if I could start with you Big picture, one I think.
You've laid out a lot of what's happened since the invasion I think there may be a perception that.
What's going on in the product tanker markets may be it may be a bit anomalous.
As we think about the future what are some of the longer lasting secular changes to trade flows et cetera that even if there is god willing.
A resolution to what's happening in eastern Europe .
Hopefully as soon as possible.
Why is this product take their upturn going to last a lot longer than.
The war.
Thanks, Thanks, John .
Very good question so.
I think.
If you had asked me on the day of the outbreak of the war I would have been still somewhat in shock.
We have that we have a war taking place.
On the ground in Europe .
And I would probably have been very.
Matching the candidate this would be a short a short term thing that you've had some disruption.
And then it would sort of as we've seen many times.
And this product tanker market that it would be fading out relatively quickly knowledge to date and in my view has changed.
In as much as.
I think the signaling.
From the political.
Side, and I think more or less unity in Europe .
Is that the dependency that has been now build up over the last 30 years on.
Russian entity.
Oil.
To a much lesser degree call, but anyway, though energy complex.
Even if there are still a piece on the ground stopped.
Today, and hopefully it will and very very soon.
I don't think that we can tick back.
The.
Sort of the the geopolitical situation and in making that it will then come back to what it was on the 20 <unk> of February I think today that as a very unlikely scenario I think that what form the line as communicated over the past week and the.
Sort of the negotiation that is taking place.
Especially in Hungary, I think is a very clear signal that this.
Even if the war and I do not believe personally that we will see a return to the.
The way that energy was sourced because of that so that's my long answer too.
But I think that it's of course.
This is an extreme situation that win.
I think that the.
Personally I'm of the opinion that we need.
Actually as countries to now no longer support.
Actually.
This regime in Russia.
So I'm, probably a bit color.
No I think that all makes sense.
Very thoughtful thank you too.
Two questions for you Tim.
The dividend distribution policy excuse me.
Maybe not the clearest on the on the surface.
Read it a few times to kind of understand it maybe.
For our purposes could you do like an illustrative example, just made up numbers second quarter, you ended with $100 million of cash you have 81 vessels, the $1 5 million per well.
The working capital facilities, maybe a bit less clear how some of these minuses work.
I hope not too detailed and catch you off guard, but maybe an illustrative example of how we go after the dividend.
Yes. Thank you no no that's good.
Good question, so the way.
We think about it as say we have now you mentioned 81 vessels, let's let's do that.
One four and five if we just take the first Q2 quarter is $1 eight following that.
At one time.
81 times one fund.
Five.
Then you would end up with $121 five right.
And you will take the cash balance we have at the end of the quarter.
I would say the 100 list, let's make it 172 to have a number where you will distribute some dividends.
And that will.
Consists of cash on hand, and the ICF.
<unk>.
The drilling part of the <unk>.
So thats $5 million.
Yes is that $45 million.
I will say that.
Okay, So, let's say that will be.
170, all in all and you will deduct the restricted cash we would have that is primarily related to medical instruments like the interface or anything there on <unk>.
Similar.
That was a swing sheets and you would go to 160 million.
So so the so just on the this very simple numbers that <unk> just about $30 million you can distribute.
And as dividends or share buybacks.
Then the other thing is as we mentioned that you have this 12 months look back period, where you can take into consideration as you mentioned you have showed a refinancing should have made.
And we did a refinancing.
In the quarter.
Maybe just in that all off to re lever some some marine vessels.
<unk> whatever.
$10 million $20 million in cash we would do that.
Probably because we would like to invest in business going forward. So we can choose to preserve that for investments in the coming period.
And of course, we would need to be somewhat vocal about how we think about that when we come through this.
Positive situation and we will try to communicate that through to USD aliens plausible.
So that is sort of the $30 million and that could be minus something we will be sure for investments in business for instance, and the competency three to six months.
Okay. That's helpful is that okay.
Yes, I think we will just have to reassess how we model. It every quarter based on on some of those things, but that's that's very helpful final one got it.
John .
I'm, sorry, I'm, sorry, I interrupted but of course also the working capital.
I like this.
Because we can shape the wooden cabinet into account that's important.
But when you when it when it comes down to modeling that.
Can I add on effect of course.
Alright.
Thank you final one hopefully quicker.
All of these transactions the LR to purchase.
Sales for delivery in Q2, most of the numbers you gave in the presentation, where as of March 31.
2022 can you tell us what the LRT purchase prices and also the proceeds that youre expecting from all the deliveries in <unk>.
Okay.
Excuse me.
Yes.
Okay.
Okay.
Sorry, I just have two.
Hello, Chad.
We've not published that.
It's around the 42 number.
Okay on the electric.
And the proceeds.
And sorry, and the proceeds from the divestments I didn't get that exactly yep. Okay. Just two weeks on just have it gives us to look at a few evidence.
Two things.
Okay, we get back to you John .
Okay.
But in my mind, where you're getting at I mean.
Ill hop out of the queue and let someone else go and then.
You can just pop in at some point with that that'd be helpful. Thank you and thanks for all the thoughts.
The next question comes from the line of Matt <unk> from H C. Wainwright. Please go ahead.
Yes. Thank you.
Jacob then Kim just.
Couple of questions to follow up on the dividend distribution policy.
With the stock trading at a discount to NAV, how do you think about.
Stock buyback versus cash distributions going forward.
Yes, I think it's.
Clearly something we need to take stock on every quarter when we have the luxury of computing, where the rupee.
And are also a component of the share buyback.
Authority to the board and to the company.
Is that you can buy up to a total of approximately 10% of the shaft has settled.
So there's plenty of room.
To put that in place, but we will take that decision makers, depending on the circumstances at the time when we are too to make the announcement.
Okay.
We have not put ourselves strongly in one in one camp, but obviously, what we are trying as Kim mentioned, what we are doing here is to make it very clear.
The flows.
Between the operations and then the investors.
Our opinion is obviously that the gap that you plan to.
We should be supporting the share price.
Friendly moves towards investors.
Okay. Thank you on the last quarterly presentation, you provided the breakdown of <unk>.
Pictures going forward between the different asset classes I am not sure. It I found that from this presentation, but do you have a breakdown between the different bookings between <unk> and <unk> or <unk>.
Or just give a ballpark.
Kevin.
It's in the report.
There is more than a science side.
Thus far.
Okay.
As stated in the report on things.
Competing.
For the individual.
I'll now take a look at it okay, yes, but it's 32 for Ela tools and it's around $35 <unk> in 2007.
The Ams.
Okay.
Very good and then just lastly, I mean.
You have installed scrubbers on most of the ships you have a few left annually.
These are smaller ships so.
Can you share with us how the performance has been on those scrubbers, if you can quantify.
That's kind of average on the LR twos, how many days they typically work out of the year and compare that with the Mr's.
So the way we look upon this is a bit different.
We put out the total look at the total investment.
For the scrubbers and then what we are evaluating is what is actually the return on that.
Investment because that's the cash outlay you can say is as a pure investment that we've done.
So we're not actually so focus on.
On each of the segments, but is that so far proven for us to be a very attractive investment.
Overall.
Sure.
Patrick.
Sorry.
Yes can you share any of those metrics than what the returns have been so far.
So I think that out of the 100 million plus that we made.
Total investment we appropriately look at my colleagues here and were probably half.
<unk>.
Right.
Around 65% of that.
<unk> has been recouped by the end of this year is our expectation.
Okay.
Good.
So all I had thank you.
May I just come back to the question that I did not have it handy for you John .
We just the fall versus we divested this year.
The SMA proceeds net of debt of 33.
And the newest on us.
The next question is from the line of Carlson from Kepler. Please go ahead.
Good afternoon, Jeff.
Sure.
Sure.
Couple of questions.
Yes.
Both <unk> are you still looking to buy ships.
At this point or are you kind of finished doing it.
Given.
Okay. That's fair market size. This year I guess, you could expect to see higher prices going forward.
Yes.
Yes.
Trade off between that the market is also.
Very much favoring if you if you haven't I think there's no particular, we'll look at anything but there is no particular strategy I would agree with you that that currently after the end of March you can see what all are outstanding.
Vessel values.
And it has increased since then so clearly we need to be cautious at this at this time and not jumping onto this asset is so expensive.
That might be.
A few ships that could be an interesting still to take on our balance sheet, but don't expect anything major in sort of incidence of just.
Small small things then they would need to be something bigger strategic.
Okay.
In terms of finishing levels here, you said, then the portofino levels or above.
What you have been fixing it for guidance what kind of levels are you actually.
At this time.
Allows us a lot of them.
At March.
So I think.
It's interesting it's a good question I mean normally when we internally have these conversations people would peak at the end of by the thousands. So you would you will probably add somewhere in the neighborhood mentioned to fix.
Fixing at 15000 to Oreo of fixing at 16, five or whatever the number be now.
Currently it goes by a 10, thousands but I'll do it in 10000 cells.
Probably our <unk> across the board.
Turning around 40.
Currently and on <unk> around 50, and on an absolute around 60 sort of in a global mix.
It does take bombers.
You also said that.
One thing sorry, Carl Wilson.
Do you expect that markets will normalize after that ball bulk what you.
So pre COVID-19.
What's not premium do you expect.
Alright, okay.
What.
What's the trigger that normalization.
I think there is a lot of stress in the system.
Right now that clearly causes to freight rates to be elevated above what you can sort of calculate yourself.
On a simple supply demand matrix I think that will that settled once some of the supply chain.
To be more known and you can plan it better either.
Provider of the cargo where the receivables the cloud.
That will be I don't think I don't have the answer to how long it will take but there will be a normalized facing at some point in this market, but it is not business added next month.
Okay. Thank you that's all from me.
Thank you guys.
As a reminder, if you would like to ask a question. Please press star followed by one. Our next question is from the line of amendments from value Investor. Please go ahead.
Good morning, gentlemen, and thank you for taking my questions.
Following up on the question regarding scrubbers alongside Q4 earnings you mentioned you had increased the total number of scrubbers to be installed in your feet to 67.
And you have subsequently decided to increase the number to closer to <unk> could you provide any additional commentary and the reasoning behind the decision should we expect additional installations.
Not really a lot of color on that we make a very detailed assessment.
The vessel by vessel.
And case by case as to whether it makes economic sense to make the investment.
So.
Yep, we've decided to add.
Number of Scrubbers, we've also purchased a vessel with a scrubber.
So.
I don't think.
It's not very material E turbo investments. So I don't have a particular view as to whether we will make more the ratio and our fleet is quite high now so of course.
Number in that.
It tends to be good is low and the cost for each of these units is also relatively low given that we are producing them ourselves at our locals.
Thanks.
Okay.
Makes sense.
You can provided ample commentary and the improving rate environment.
Your Q2 guidance. It Perfect example of this trend could you provide some additional commentary on the medium and longer term temporary markets.
Rates also increased sharply on the back of this thing can distort in terms of the markets.
Superior I think what we're seeing is that our customers are also.
Trying to adapt to this I think I've mentioned.
Covenant rates earlier, if we had had the call let's say just turning the clock back one week rates would have been significantly lower.
Experiencing that there is a lot of activity in the term market simply because rates have not settled between the bid and the ask.
As of now so I'm not experiencing a lot of them that I think we need to see the markets as I mentioned before.
Find itself on.
<unk> fit before we sort of established a new market level.
Both for vessel prices, but also for charter rates.
Alright Thats all for me. Thank you for taking my questions and congratulations for this quarter and for the new dividend policy.
Thanks for your questions and comments, thanks a lot.
There are no more question at this time I am back John and I'll be got Trian for closing comments.
Okay.
Thank you.
I have a few questions online here.
So we have one question.
From <unk> coal.
Q2 outlook is strong, but do you have any views on how the summer quit looking.
Looking at the FFA market is spectation cautiously optimistic, but with lower rates any conviction on rates and how would you position your fleet in this regard.
West or east.
Yes, that's good.
Very good question.
I don't have a particular absolut.
The view on the market given the volatility. We just described I think in general comment on the Soma market.
Well the European refinery runs they could be negatively affected by this high oil price and FX.
That European refiners.
Way, either by sanctions or sub sanctioning.
Have to get the crude supply from afar.
And with everything else.
Equally lead to less gasoline being available for European refineries.
Export.
<unk> U S East coast and that could mean that you could actually achieve over the summer that you would need to get casually quaintance from India or from Middle East into the U S. We are in.
<unk>.
Currently.
Making any precise predictions about the summer market per se I think.
That is that the freight rate developments over the last couple of weeks or so of course for to be cautious around.
Making predictions and making.
Taking positions in this market. So we will we will operate our fleet spot and we will operate it very opportunistically I think.
The thing that I'm experiencing in the market. If I may is that you can see that there is a lot of leverage on the shipowner side that we didn't have only two months ago, meaning that when you have strong markets globally basically all over the place <unk> almost.
<unk> two then.
Actually be willing to balanced out even out of our load area. If you do not get a premium contract and this is doing two things to the market is doing one that market prices are staying relatively high right now.
And two youre actually having a less efficient marketplace. Because if you can pellets out of load area egg and simply go into loan area and get the same right is of course less efficient actually for the for the whole system as such.
So I am capital to make any predictions around the market is very strong right now and.
Yes.
It's in my opinion is something that could stay for longer how long is very difficult to say.
And we have one more question from a participant thats for you.
So we have included in our distribution policy.
We have included that we.
Go for share buybacks can you put some words on that.
Okay.
But.
I think Jacob just.
Touched on that earlier on I think one thing we could add to it is.
This.
If you choose between dividends share buybacks you are basically trying to take.
As good care of your Investor such Okay that is what drives you here in that decision and that too.
Things you need to Venezuela is of course liquidity in our shares that that is an adequate liquidity.
Because that would be attractive for our investors and on the other side of course, the price to NAV that you would also monitor so I think as Jacob said.
We will take that decision when we come to that very fortunate point in time, hopefully soon and have an evaluation on that but you need to sort of <unk>.
Concerns.
Thank you.
We have no further questions. So.
This concludes.
This concludes the earnings conference call for the results for the first quarter of 2022, Thank you for participating.
Yeah.
Ladies and gentlemen, the conference has now concluded and you may disconnect. Your telephone. Thank you for join and have a pleasant day Goodbye.
Okay.
Yes.
Yes.
Good evening.
Okay.
Okay.
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Yes.
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Okay.