Full Year 2023 TORM PLC Earnings Call
Operator: Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the TORM Annual Report for 2023 Conference Call. All lines have been placed on mute to prevent any background noise.
Good morning, My name is Rob and I will be your conference operator today at this time I would like to welcome everyone to the term annual report for 2023 conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply.
Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Michael Lassen, Head of Investor Relations. You may begin your conference. Thank you very much, and welcome everyone to our webcast. Thank you for joining us.
Press Star followed by the number one on your telephone keypad. If you would like to withdraw your question again prestige star one.
Thank you Michael Larson head of Investor Relations you May begin your conference.
Thank you very much and welcome everyone to our webcast and thank you for joining us.
Michael Bau-Larsen: My name is Michael Bau-Larsen, and I have recently joined Tron as Head of Investor Relations, and I'm very much looking forward to getting up to full speed on this. Today we will present our results for the fourth quarter and for the year 2023, but first we will walk you through a short presentation that we've prepared for you, and then, as usual, we will take your questions. The call will be recorded and available for rebate later.
My name is Michael <unk>.
Recently, John Paul.
And also Investor relations.
Is it more just getting up to full speed on this.
Today, we will present, our results for the fourth quarter on the 20th century.
But the first.
Walking through a short presentation and then as usual we will take your questions.
All of the call is available.
Later.
Michael Bau-Larsen: Before we kick off, however, I would like to draw your attention to one important matter, the safe harbor statement on slide number two. Turning to slide three, as usual, our presentation will be made by our Executive Director and CEO, Jacob Meldgaard, and our CFO, Kim Balle. So without further ado, I will now hand over to you, Jacob, who will be off on slide four. Thank you very much, Michael, and welcome. Good afternoon and good morning to all.
Before we kick off however, I would like to draw your attention to Boston, both better Safe Harbor statements on slide.
Thank you.
Turning to slide three as usual <unk> presentation will be drawn by law. Thank.
Thank you for your durations CEO, Jacob uncle, and I'll show, you don't care about it.
So without further Ado I will now.
I'll hand, the call Geos.
Helpful.
Thank you very much Michael and welcome here.
Good afternoon, and good morning, Thank you for connecting with US for all of 2023 results presentation.
Jacob Balslev Meldgaard: Thank you for connecting with us for our 2023 results presentation. We are pleased to present another quarter with healthy financial performance, thus enabling us to reach a new historical high for our full-year results with CCE of $1,084,000,000 and EBITDA of $848,000,000, both numbers in line with the expectations we presented back in November last year. 2023 has indeed been an extraordinary year for all of us, with both geopolitical tensions and climate changes adding to foreign mild demand. But personally, I would like to once again highlight how TORM has performed in this market environment. We pride ourselves on our one-to-one platform and the tradability of our fleet. And based on this, we've been able to deliver strong performance, as shown in the TCE per day numbers. Fuck that.
We are pleased to present, another quarter with healthy financial performance.
Enabling us to reach a new historical high of 48.
So we see a 1 billion mandate for maybe in U S dollars and EBITDA of eight.
$848 million both in line with the expectations we presented.
In November last year.
Slide 23 has indeed been an extraordinary year for all of us with Paul geopolitical tensions and climate change is adding to ton mile demand, but personally I would like to once again highlight how Tom has performed in this market environment we.
Pride ourselves on one platform and the train ability of upbeat and based on this we've been able to deliver strong performance as shown in the TCE per day numbers.
Jacob Balslev Meldgaard: 2023 has not only been about current year operations. It has also been a year where we have made important strategic decisions and actions to ensure that we have the right exposure to what we believe will be a strong product taker market for some time to come. Therefore, we have been very active both in renewing and adding to our total feed capacity and in gradually increasing our exposure to the long-haul segment.
2023 has not only been about current year operations. It has also.
Yeah, well, we have made important strategic decisions and actions to ensure that we have the right exposure to what we believe would be a strong product tanker market for some time to come.
Therefore, we have been maybe react to both renewing and adding to our total peak capacity and gradually increasing our exposure to them.
Long haul segment.
Jacob Balslev Meldgaard: On a fully delivered basis, we now have 90 vessels compared to 78 vessels at the end of 2022. This is important for us as we see this strategic move as a vital step for our positioning to add future value. At the same time, we have returned more dividends to shareholders than ever before, with the proposed final dividend for the year.
On a fully delivered basis, we now have 19 vessels compared to 78.
End of 'twenty to 'twenty two.
This is important for us as we see it.
Well, that's a buy some debt for our positioning to add to that.
At the same time, we have returned more dividends to shareholders.
Paul.
The proposed final dividend for the year, we are bearing sales from returning $500 million for 2023 and by this I believe we have found the right balance between investing in growth and rewarding our shareholders.
Jacob Balslev Meldgaard: We are very close to returning $500 million in 2023. And by this, I believe we have found the right balance between investing in growth and rewarding our shareholders. Now, please forward to slide five.
And now please.
To slide five.
Jacob Balslev Meldgaard: In the past two years, the product-sector market has seen great volatility as a result of geopolitical tensions. The Russian invasion of Ukraine in early 2022 and the introduction of sanctions against Russia have led to a step change in product tanker freight rates towards a higher average level. Renewed volatility was added to the market as a result of attacks against commercial vessels in the Red Sea that started at the end of last year and which have led to a large-scale rerouting of vessels away from the Red Sea. And here, please turn to slide six.
In the past two years.
I think the market has seen great volatility as a result of geopolitical tensions.
Russian invasion of Ukraine in early 2022, and things or adoption of sanctions against Russia has led to a step change in product tanker freight rates towards Ohio ever said.
Renewed volatility was added to the market as a result.
What was he attacks against commercial basis in the Red Sea.
At the end of last year, and which has led to a large scale rerouting of business away from the vaccine.
And please.
Please turn to slide six.
Jacob Balslev Meldgaard: In essence, the geopolitical tensions we have experienced now for almost two years have reshaped product-tanker trade flows towards longer distances traveled. The sanctions against Russia that were officially introduced in early 2023 led to a trade rerouting towards long-haul trade, both for European imports but also for Russian exports, which, according to our calculations, added 7% to the product tank a ton-mile in 2021. This happened despite the fact that Europe imported 10% fewer products after the sanctions were introduced.
Isn't it.
The geopolitical patients waiting now for almost two years has reshaped product tanker trade those towards longer distances travelled.
The sanctions against Russia that were officially introduced in early 2023 led to a freight rerouting towards long haul trade both for European imports, but also for Russian exports, which according to our calculations and it's 7% so the product tanker ton miles in 2023.
This happened despite the fact that Europe important 10% led products. After the sanctions were introduced.
Jacob Balslev Meldgaard: So far this year, the park-tanker market has been strongly affected by the Hoochie attacks against commercial vessels in the Bab-el-Mandeb Strait. The attacks have similarly led to trade being redirected towards longer trading distances, this time redirecting vessels away from the Red Sea to go around the Cape of Good Hope instead. Depending on the trade route, this has added 30-70% to the sailing distance for the main trade. Assuming some volumes via the Sewerage Canal remain, some trade will be redirected towards other regions, and some trade volumes could be lost. We estimate that the Red Sea disruption is likely to add another 5% to product hangups per mile as long as it lasts. Here I may note that the latest developments with the loss of seafarers' lives are very tragic and highly concerning. Please turn to slide 7.
So far this year the product tanker market has been strongly affected by the Gucci attacks against commercial basis at the bottom on that straight via tax had similar lifts and freight being redirected towards longer trading distances. This time redirecting vessels away from the Red Sea to go around.
The Cape of good hope.
Ted.
Depending on the trademark <unk> has added 30% to 70% to the sailing distance on mainframes.
You mean, some volumes via the Suez Canal remain some freight will be redirected towards other meetings and some trade volumes could be lost we estimate that the rest of the disruption is likely to add another 5% support tickets online as long as it lasts.
Yes no.
The latest developments with loss of Sea Paradise.
There is traffic and highly concerning.
Please turn to slide seven.
Jacob Balslev Meldgaard: Let's look at disruptions in rates. Prior to the disruption, around 12% of global clean petroleum product volumes transited the Suez Canal, while the importance of this sea route has increased with the trade recalibration related to sanctions against Russia. For the LR2 segment, the importance of this sea route is even more important, with 45% of the clean product volumes lifted on LR2s going via the Suez Canal. With the Houthis attacks, the parts tanker capacity traveling through the Bab-el-Mandeb has decreased by 46%. However, the capacity of product hankers transiting through the Suez Canal has fallen a little less by 42% as exports from the Saudi refinery Bin Jambou and the new Jassan refinery are not directly affected by the attacks, so exports from these toward Europe and North Africa can continue.
Look at disruptions at the Red Sea.
Obviously, the disruption around 12% of global clean petroleum product volumes trended at the Suez Canal, while the importance of this seaworld has increased with its weight recalibration related to sanctions against Russia for a truly best in segment income.
<unk> of it is even more important with 45% of the feed product volumes lifted ornella tools going by the Suez Canal.
With the rudi's attacks the product tanker capacity traveling through the button Monday at decreased by 46%.
The capacity of product tankers strengthening the Suez Canal, that's fallen literalists by 42% as exports from the Saudi refineries in D&O and the new Japan refinery are not directly affected by the attacks. So exports from east to West Europe, and North Africa can continue.
Jacob Balslev Meldgaard: What is also important to mention here is that we saw a number of new refiners coming online in the Middle East last year. However, because of several startup issues, the incremental production from these new refiners has been limited. This means that the full impact of exports from the refineries on the product market will first be seen in the coming months when these refineries reach full utilization and will further support the Middle East export capacity with the potential to push more volumes around the cable. Good night.
What is also important to mention here is that we've seen a number of new refineries coming online in the middle East last year. However, because of several startup issues. They commenced production from these new refineries has been limited.
This means that the full impact of exports from these refineries.
On the product tanker market will first be seen in the coming months. When these refineries reached flows utilization that will further support the middle east export capacity with the potential to push more volumes around the table.
Now.
Jacob Balslev Meldgaard: Kindly turn to slide 8. Along with geopolitics, fundamental market drivers are also supposed to put the products in command. I already mentioned the new refining capacity ramping up in the Middle East. This is one part of the refinery dislocation story, with refining capacity being added to the net exporting region. The other part is refinery closures that we have seen in recent years, mostly taking place in net importing regions, leading to higher import volumes and higher demand for products. As an example of the impact of refinery closures we have seen is Australia and New Zealand, where recent refinery closures have led to a 60% increase in the region's clean oil product imports and hence higher tonne-mile demand for products. Even though we can say that we have seen the main effect of refinery closures in Australia and New Zealand already, imports have risen to a new higher level and continue to keep demand for tankers at an elevated level. 5, 9.
Turn to slide eight.
Yeah.
Along with geopolitics also fundamental market drivers asset posted for the product tanker market I already mentioned, the new refining capacity ramping up in the Middle East. This is one part of the refund refinery dislocation story with refining capacity being added to knit exporting regions.
Other part is refinery closures that you may have seen in recent years, mostly taken place and then importing regions, leading to higher import volumes and higher demand for product tankers.
As an example of the impact of refinery bullish as we have seen is Australia and exceeded recent refinery closures had led to a 60% increase in the region's clean product.
Product imports and hence higher ton mile demand for product tankers.
Even though we can say that we had seen the main effect of refinery closures in Australia, and New Zealand already input and reasons for a new higher level and continue to keep demand for tankers at an elevated level.
Slide 19.
Jacob Balslev Meldgaard: Let's look at the supply side for hours. After years of subdued nuclear incapacity activity, product-tanker ordering at Hitchcock's has picked up in the last year. Currently, the order book stands at 13 percent of the fleet, which is double the ratio seen at the beginning of 2021. However, here, what is important to mention is that the current order book is spread across almost four years, translating into a 3% annual growth rate. This compares with an average growth of 4% per year for the past 10 years. Furthermore, if we compare the order book for product hangers with the share of feed at above 20 years old, we see that feed growth will be relatively balanced.
Let's look at the supply side trials after yes. So.
So cute you can link capacity.
T product tanker ordering at Ccs has picked up last year and currently the order book stands at 13% at the peak, which is double the ratio seen at the beginning of 2023.
However, what is important to mention is that the current order book is spread across almost all years translating into a 3% annual growth rate.
This compares with an average growth of 4% per year for the past 10 years.
Furthermore.
When comparing the order book for product tankers with a share of fleet at above 20 years old we see that the growth will be relatively balanced.
Jacob Balslev Meldgaard: The 18 products and complete means that the net fee growth could even turn negative in the second half of this decade, assuming all vessels at or above 25 years are scrapped. Another aspect important to mention here is that the recent pick-up in new building activity has largely concentrated around the LR2 segment. Given the versatility of the LR2 feed, which can trade both clean and dirty products, the LR2 order book should be seen in connection with the dirty Afromax order book. The combined order book is currently at 13%, which compares with 15 percent of the combined feet being candidates for recycling over the same period. Please turn to slide 10. To conclude my remarks here on the product-tanker market, we expect the main demand-to-supply drivers in the product-tanker market to continue to be supported.
<unk> product tanker fleet means that the net fee growth could even sort of negative.
In the second half of this decade, assuming all vessels at or above 25 years would be correct.
Another aspect important to mention here is that the we can pick up in the new building activity has largely concentrated around the electrical segment.
Given the versatility of the pillar two feet, which can trade, both clean and dirty products.
To all of them should be seen in connection with the Dirty Aframax order book.
The combined order book is currently at 13%.
Which compares with 15% of the book being candidates for <unk> I think over the same period.
Please turn to slide 10.
Yeah.
To conclude my remarks here on the product tanker market, we expect the main demand and supply drivers on the product tanker market continue to be supported.
Jacob Balslev Meldgaard: The global product tanker demand in terms of ton-miles increased last year by 8%, mainly driven by trade recalibration due to sanctions against Russia. As long as the Red Sea disruptions last, the ton-mile can potentially increase by a further 5%. On the other hand, net growth is much more limited, and we saw no fleet growth in 2021, as a large number of fellow tourists moved into the dirty.
The global product tanker demand in terms of ton miles increased last year by 8%, mainly driven by trade recalibration due to sanctions against Russia.
As long as the Red Sea disruptions lost the ton mile can potentially increase by a further 5% this year.
On the other hand net fleet growth is much more limited.
And we saw no equal in 2023.
Large number two versus moved into the dirty market. So.
Jacob Balslev Meldgaard: So far this year, we've seen an increasing number of LR2s cleaning up. But even in the case of a potential large-scale net migration back to the clean trade, our calculations show that the product and the demand supply plan will remain at a much firmer footing than before the geopolitical tension started.
So far this year, we've seen an increasing number of EDA tools cleaning up but even in case of a potential large scale net migration back to the teens rate okay.
Relation show that the products and the demand supply balance will remain at a much firmer footing and before the geopolitical tension started.
Now.
Kim Balle: With those comments, I'll make my conclusion on my part of the presentation. I'll hand it over to my colleague Kim, who will walk us through the financials. Thank you, Jacob.
With these comments I'll make my conclusion of my part of the presentation I'll hand, it over to my colleague <unk>, who will.
Walk us through the financials.
Kim Balle: Please turn to slide 11 for the financial highlights for the fourth quarter of 2023. Our earnings development during the fourth quarter once again shows strong performance driven by both market dynamics and operational execution in our business. TGE was 267 million U.S. dollars, reflecting a combination of the increased underlying tonne mile demand seen for some quarters now and the current geopolitical tension that added further to this.
Thank you CAGR T Central Slide 11 for the financial highlights for the fourth quarter of changing changed printing suite our earnings development. During the fourth quarter. Once again showed strong performance driven by both market dynamics and operational execution in our business <unk> was $267 million, reflecting a combination of increased underlying.
Ton mile demand seen for some quarters now and the current geopolitical tension that added further to this it's all achieved TCE rates of $37985 per day with a lot of tools at 44048, one said 40098 and Amos.
Kim Balle: Total achieved TGE rates of $37,985 per day, with LR2s at $44,048, LR1s at $40,498 and MRRs at $36,122 a day in Q4. Our fleet had a total of 7,312 earning days, i.e. marginally lower than the 7,494 days we expected back in early November, as we made some changes to the dry-dugging schedule and changes in delivery schedules for vessels. So basically, all due to period shifts.
They start from $122 a day in Q4.
Our fleet had a total of 7300 zero, earning days by a marginally lower than the 7419, both as we expected back in early November.
We made some changes in the dry docking schedule and changes in delivery schedules for vessels, so basically all future periods.
Kim Balle: During the quarter, we made profit from sailor visas of 40 million US dollars. Our unadjusted EBD for the quarter amounted to 234 million US dollars, including unrealized losses on FFA agreements of around 11 million US dollars. Net profit amounted to a very satisfactory 185 million US dollars, corresponding to an EPS of... $2.18. Based on our distribution Policy, the Board of Directors will propose a fine dividend for the quarter of $1.36 per share to be paid out shortly for approval at the AGM in April. This corresponds to a payoff ratio of 87% based on net profits adjusted for profit from sales of vessels in Q4. Please note that the increase in outstanding shares in the ratio due to the share issuance expected during Q1 and Q2 is 24%. Please turn to slide 12 for the full definition.
During the quarter, we made profit from sale of business of automation, you would've thought us our unadjusted EBITDA for the quarter amounted to $234 million included unrealized losses on HSA agreements.
Around $11 million net profit amounted to a very satisfactory.
5 million in U S dollars corresponding to an EPS.
2.1 $8.
Based upon our distribution policy in the bolt on rate us with proposed a final dividend for the quarter Oh, sorry for the yeah for the quarter of $1 $36 per share we paid out shopping for approval.
The AGM in April this corresponds to a payout ratio of 87% base.
The on net profit adjusted for profit from Signet basis. In Q4. Please note that the increase in outstanding shares and the ratio between the share issuance expected during Q1 and Q2 2024.
Please turn to slide 12 for the full year.
Kim Balle: TTG grew to a record high of 1.84 billion US dollars, i.e., adding 10% to the previous historical high in 2022. As previously mentioned, both geopolitical conflicts and climate-related factors such as the drought in Central America that has reduced traffic through the Panama Canal added to the timeline demand.
Yes.
GCE grow grow to a range of IL one.
A $4 billion I E, adding 10% from the previous historical high in 2020 as previously mentioned, both geopolitical conflicts and triangulate affects us as the drought in Central America that has reduced trading.
The Panama Canal edits with its online demand. This has enabled us to achieve CD rates.
Kim Balle: This has enabled us to achieve TTG rates of $37,124 per day, with LR2s at $44,048 per day, LR1s at $40,498 per day, and MRs at $36,122 per day. We believe these are strong numbers, and added together, they reflect a very satisfactory performance, where we've been able to increase the TCE rate per day by almost $3,000 while increasing OPEX only by $244 All in all, we are very pleased with the numbers, which evidence strong execution throughout the year. Based on our earnings and continued focus on disciplined capital allocation, we achieved a return on invested capital of 30.4% for the full year. And further, by actively using our shares as part of the consideration when acquiring new vessels, we maintain a GTV ratio below 30%. Adding the proposed dividend for the last quarter to the dividend paid out over the previous three quarters, we get to a distribution of $5.78 per share, which corresponds to a payout ratio of 83% for the full year when adjusting for business sales. Please turn to slide 13. Our primary safety KPI is lost time accident frequency and measures accidents per one million exposure hours.
37100.
$4 per day with a lot of tools at 44048 Boes per day once it 40498 tons per day in March 30, <unk> 2000, <unk>. We believe these are strong numbers and as together they perfect.
They're satisfactory performance, where we've been able to increase the TCE rate per day by almost $3000 while.
Increasing opex only was $144 per day all in all we are very pleased with the numbers, which evidenced strong execution throughout the year.
Based on our earnings and continued focus on disciplined capital allocation. We have achieved a return on invested capital of 34% for the full year and further by actively using <unk> as part of the consideration when acquiring new business, we maintain our <unk> ratio below 30%.
Adding the proposed dividend for the last quarter.
So the dividend paid out.
Over the previous three quarters, we get to a distribution of <unk> $78 per share, which corresponds to a payout ratio, 83% for the full year when adjusting for businesses.
Please turn to slide 13.
Our primary safety Kpis lost time accident frequency and measured basis.
<unk> per 1 billion exposure hours and trades transitory. Some safety performance was <unk> 32, and outside footprint just loading is open three while we believe it wasn't satisfactory results.
Kim Balle: In 2023, TORM's safety performance was 0.32, and our target for 2030 is 0.3, so we believe it was a satisfactory result. With respect to women in leadership positions onshore, TORM has been at a stable level for a number of years, and admittedly, we still have some way to go in order to reach our target. We believe that diverse teams led by diverse leaders deliver better business performance. Thus, TORM will focus even further on gender diversity in leadership to meet our 2030 target of 35% of women in leadership. And finally, TORM continues to work towards the 2030 carbon intensity reduction target of 45%.
With respect to women in leadership positions onshore.
As being on a stable level for a number of years and admittedly we still have some ways to go in order to reach our targets. We believe the diverse teams lead led by diverse need us deliver better business performance, thus top with focus even further on gender diversity in leadership to meet our 2030 target of 35% hopefully going to need a ship.
And finally, Tom continues to work towards 2030 carbon intensity reduction target of 45%. We are already close to meeting the accelerated 2025 target of 40% reduction in covenants entity, having reached 39 six reduction at the end of 2020 looking ahead, we are committed to Omega.
Kim Balle: We are already close to meeting the accelerated 2025 target of 40% reduction in carbon intensity, having reached 39.6% reduction at the end of 2023. Looking ahead, we are committed to making further progress on this, and we will pursue an ambitious climate agenda whereby we'll have zero CO2 emissions from operating our fleet by 2023. Please turn to slide 14. On this slide, we show the development of how Visa's value is reaching 3.1 billion U.S. dollars by the end of the year, and NAB amounting to 2.8 billion U.S. dollars. Also, on this slide, you can see our net interest-bearing debt at the end of the year amounting to 774 million U.S. dollars and a net loan-to-value of 27.6.
Further progress on this and we will pursue an ambitious climate agenda, whereby we've had cirrhosis two emissions from operating our fleet by 2015.
Please turn to slide 14.
This slide we show the development of our vessel values, reaching $3 1 billion in U S dollars by the end of the year and Nab amounting to $2 8 million U S. Dollars also on this slide you can see our net interest bearing debt at the end of the year amounted to $774 million and a net loan to value of 27, six while we at the same time.
Kim Balle: While we are at the same time... have both increased our fleet and returned significant cash to our shareholders. In early January, we issued a $200 million U.S. dollar five-year senior unsecured bond in the weekend market, which was used to partially finance five of the vessels acquired in the fourth quarter of 2023, including full repayment of a bridge facility in connection with the acquisition. Slide 15, please. I've already touched upon the strong cash return to our shareholders, so this slide details how we are thinking about the dividend payout ratio. Our net profits for the full year amount to $648 million, where our $15 million stem from profit from sales of business, i.e., adjusted profits for the year amount to $598 million.
But both increased our fleet and returned significant cash to our shareholders early January we issued.
One 1 million U S dollar five year senior unsecured bond in the weekend Margaret.
Which was used to partially finance five of the vessels acquired in the fourth quarter, principally three including full repayment of the.
At this facility in connection with that acquisition.
Slide 15 please.
I've already touched upon the strong cash generation for our shareholders or kept the turns of our shareholders. So this slide details how we are thinking about dividend payout ratio on net profits for the full year amounted to 648 million square of 15 million stemmed from profit from sale of basis adjusted profit for the year amounts through from 198.
Kim Balle: Based on our distribution policy, the states are intended to pay out excess liquidity above a threshold cash level. The Board of Directors will approve a fine dividend for June 4, 2023, of an amount of approximately 126.3 billion U.S. dollars. Thus, we would expect total dividends for the full year 2023 to amount to 497 U.S. dollars, corresponding to the payout ratio mentioned at 83 percent.
Based on our distribution policy that states are adjacent to.
Excess liquidity above its ratio of cash level deposit rates as we approved a final dividend for Q4 2023.
An amount of approximately $126 3 million U S dollars. Thus, we would expect total dividends.
Full year 2023 to amount to 490, 70, <unk> corresponding to the payout ratio mentioned at 83%.
Kim Balle: Going forward, Tom will amend the distribution policy slightly, where the built-in mechanism for the EMR proceeds will no longer be part of the policy. Furthermore, in addition to dividends, Thorne will, as usual, consider the Shandai Bank. Slide 16, please.
Going forward <unk> the distribution policy slightly.
We're building mechanism for EMI proceeds will no longer be part of the policy. Further in addition to dividends chartwell as usual transceivers.
Thanks.
Slide 16 please.
Kim Balle: Here I will talk about the outlook for 2024. We expect GCE earnings to be in the range of 1 billion to 1 billion and 35 million US dollars, i.e. guiding to a result marginally higher than what we realized in 2023, and we have a range that is reflecting the volatility we have in trade rates due to the current geopolitical tensions. Further, EBDA is expected to be in the range of 700 million to 1 billion and 50 million against $884 million USD in 2020. For the first quarter of 2024, we expect to have 7,703 earning days, and for the full year, we would expect to have 31,404 earning days.
Yeah, we will I would socializing I will talk about the outlook for 2024, we got TCE earnings to be in the range of $1 billion to 1 billion or 35 million U S dollars.
Guidance will result in margin will be higher than what we realized in 2020.
And we have a range that is replacing the volatility we have in freight rates due to the current geopolitical changes further EBITDA has space to be in the range of $700 million to 1 billion a $50 million.
$884 million in 2023.
The first part of 'twenty 'twenty four we expect to have statements at 703, earning base and for the full year with respect to have 31 powerful early days.
Kim Balle: You should know that in early January this year, we acquired one edition of the LR2 vessel, and the two LR1 vessels and one MR vessel we sold back in 2023 were delivered in the beginning of January. Based on our rates and cover as of 4th March 2024, we have fixed a total of 82% of our earning days at $45,036 across the fleet. And likewise, based on our rates and cover as of 4th March 2024, we have fixed a total of 25% of our earning days at $44,089 for the full year across the fleet.
You should note that in early January this year, we acquired one additional electrical vessel and the two and a one basis and what we saw back in 2023 was delivered in the beginning of January.
So on our rates and cover.
In March 2024, we have faced a total of 82% of operating days and 45036 in the first quarter across the fleet and likewise based on our rates and power as Mark Twain's windfall, we have fixed that sort of 25% of our earning days at 44089 for the full year across the fleet.
And now please turn to slide 17.
2023 was a year of strong execution not only in terms of financial performance, but also we believe in terms of strengthening our position in.
Kim Balle: 2023 was a year of strong execution, not only in terms of financial performance but also, we believe, in terms of strengthening our position in the product-tanker market by adding exposure to the LR segment to further capitalize on the strong unchanged market fundamentals. In total, we have acquired 23 measures over the course of the last 14 months, i.e. from the start of 2023 until now, and for 16 of those, we have arranged for the considerations to be partly shared. We see this as a unique strength of our shares, and it gives us the opportunity to add additional flexibility to our financing of acquisitions. By doing this, we adhere to a conservative approach towards what we think is a comfortable capital structure, thus increasing the net interest-bearing debt only to an estimated 280 million US dollars and instead opting to issue new shares to fund our expansion endeavors.
In the product tanker market by adding exposure to the elastic went to further capitalize on our strong and change margin fundamentals.
So we have acquired 23 vessels over the course of the last 14 months I E from the start of 2023 on somehow.
And for 16 of those we have a range for the considerations will be partly share base.
We see this as a unique strength of Australia, and it gives us the opportunity to add additional flexibility to our own financing of acquisitions.
Pursuing this we escalate to the conservative approach towards what we.
St is a comfortable capital structure, thus, increasing the net interest bearing debt only at an estimated 280 million U S dollars and has the option to issue new shares to fund our expansion endeavors. This strategy not only ensures a healthy balance sheet, but also underscores our commitment to sustainable growth and long.
Long term value creation for our shareholders.
This concludes my part of the presentation. So I'll now hand, it back to the operator, who will take care for Q&A session. Thank you very much.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
Kim Balle: This strategy not only ensures a healthy balance sheet but also underscores our commitment to sustainable growth and long-term basic creation for our shareholders. And with that, I conclude my part of the presentation. So I will now hand it back to the operator, who will take care of the Q&A session. Thank you very much.
And your first question comes from the line of Jon Chapelle from Evercore. Your line is open.
Thank you good afternoon.
Tim just Super quick update on the modest change to the dividend policy can you just walk us through the reasoning behind that.
Yeah. Thank you John I can do that it says.
Operator: At this time, I would like to remind everyone, in order to ask a question, press star, then the number 1 on your telephone keypad. We'll pause for just a moment to compile the Q&A roster, and your first question comes from the line of John Chappell from Evercore. Your line is open. Thank you. Good afternoon.
Basically rather simple.
Based on feedback and also our own experience, we found it to be slightly slightly complex, having the <unk> account. So we basically just deliver that but else. We are committed to as I said earlier.
The shareholder return of course and then.
And it's basically just that to remove that is slightly complex power.
Kim Balle: Kim, just a super quick update on the modest change to the dividend policy. Can you just walk us through the reasoning behind that? Yeah, John. I can do that.
So the policy is everything is in place.
It is still based on the post separation.
And we will maintain this I'll say the same focus on there.
Business, we can control.
Okay. Thank you.
Kim Balle: It's basically rather simple. Based on feedback and also our own experience, we found it to be slightly complex having the MR Proceeds account, so we basically just deleted that. But otherwise, we are committed to, as I said earlier, the shareholder return, of course. And it's basically just that we remove that slightly complex part of the policy. Everything is in place.
Jacob in the press release as you talked through the fleet evolution over 2023.
Noted the attractive returns that you saw from having a larger share of the bigger vessels.
I understand that from a trade flow perspective, but maybe from a supply side or the capacity side, maybe the amas are quite more constrained than the LR to slash Aframax fleet. So.
Jacob Balslev Meldgaard: It is still based on the BOSS description, and we will maintain, as I said, the same focus on high-difficulty distribution going forward. Okay, thank you. Jacob, in the press release, as you talked through the fleet evolution over 2023, you noted the attractive returns that you saw from having a larger share of the bigger vessels. I understand that from a trade flow perspective, but maybe from a supply side or a capacity side, maybe the MRs are quite more constrained than the LR2 slash AFRMAC fleet. So, as you think about the fleet going forward, do you think you'll continue to push towards more LR2, longer haul, bigger carrying capacity exposure? And if that's strictly a demand-side environment, or is there more flexibility around how you view the total utilization balance between capacity additions as well?
About the fleet going forward do you think youll continue to push towards more alert to longer haul bigger carrying capacity exposure and is that strictly a demand side environment or is there more flexibility around how you view the total utilization balanced between capacity additions as well.
Yeah, Thanks for that.
So I think as I look back then we have.
A number of years been believers in the expansion of the refinery sector in the middle East with everything else being equal.
Command long haul trades and when you have long haul space then.
Customer perspective, it's more efficient 12 larger ships so that has been our focus.
Jacob Balslev Meldgaard: Yeah, thanks for that, John. So I think, as I look back then, we have for a number of years been believers in that the expansion of the refinery sector in the Middle East, with everything else being equal, commands longer-term hold trades, and when you have longer-term hold trades, then from a customer perspective, it's more efficient to have larger, So that has been a focus for us over the years to sort of maintain a presence in that segment because we believe So when we have that opportunity, And now we've added one more of these two to sort of double up our exposure in that segment, to now a total of around 20 ships, having sold some and added some. I think that simply, at that time, it felt like it fit in very well with our strategy.
For us over the years to sort of maintain a presence in that segment because we believe here.
Going forward that that will play out.
So when we have that opportunity now.
We've added one more of this to sort of double up our exposure in that segment to our total around 20 ships, having sold Solomon and added some.
That simply at that time felt like.
Fitting very well with our strategy.
Where we sit now I think we have a more balanced fleet conversation between us and <unk>. So I think going forward, we'll will be quite open minded.
Yes.
Around the opportunity set.
On my way, but im not sure that I think that Amos.
Awesome.
Jacob Balslev Meldgaard: At the point where we sit now, I think we have a more balanced fleet composition between LRs and MRs. So I think going forward, we will be quite open-minded about the opportunities that come our way. But I'm not sure that I think that MRR is sort of necessarily a much better place because actually, you have an aging fleet that is more pertinent to LR2s than it is to MRs on a relative scale. And that's a combination of the efforts going on without being reordered. I think just a final comment on that is that I'm personally not of the opinion that all the LF2 holders that we now put sort of into the bracket of LF2, will be operated as LF2. If you look sort of detail into who has ordered these vessels, a lot of them are natural Afro-Max players who are just buying sort of an optionality to potentially, of course, trade in LL2s but who are renewing their fleet team from an Afro-Max player.
Very much better placed because actually you ahead.
The aging fleet that is more pertains to EDA tools.
This effort in addition to a modest on a relative scale.
And that is predominantly.
Without being Reordered I think just a final comment is that.
I am personally not of the opinion that all the other tools that we now call sort of into the bracket of EDA tools that they will be operated as a license.
If you look sort of detailed into who has all of these vessels.
A lot of them.
Uh huh.
Natural Aframax players.
Just buying sort of an optionality to potentially of course traded at a tooth, but well renewing their feet seem from an aframax perspective.
Mhm.
Jeff that's very helpful. Thank you.
One more if I may just bigger picture market.
You know it was noteworthy that you called out the 5% potential impact ton miles from.
Jacob Balslev Meldgaard: Yeah, that's very helpful. Thank you. One more, if I may, just bigger picture market, you know, is it noteworthy that you called out the 5% potential impact to 10 miles from the Red Sea. If we go back maybe a year ago, a year and a half ago, you had identified a 7% impact from Russia-Ukraine sanctions. As you look back and have some more time to digest the impact of, you know, the first geopolitical event in Russia and Europe Has it been greater, maybe more volatile, stickier, so to speak, as opposed to maybe the Red Sea, which may be a bit more fleeting?
From the Red Sea if.
If we go back maybe a year ago year, and a half ago, you had identified a 7% impact from Russia, Ukraine sanctions as you look back and have some more time to digest the impact of the.
The first geopolitical event in Russia and Europe.
Is that 7% played out as you expected is it Ben.
Later, maybe more volatile stick.
Stickier, so to speak as opposed to maybe the Red sea, which would be a bit more fleeting just a little bit of a retrospect on how things have evolved over the last two years, just given the geopolitics that we know.
Yeah, so on venmo.
On average is eight and we were a bit little bit careful.
<unk> seven, but it's been volatile as you point to.
Jacob Balslev Meldgaard: Just a little bit of a retrospective on how things have evolved over the last two years, just given the geopolitics that we know. Yeah, so on Zonmail, we averaged, it's 8, so we were a bit, probably a bit careful in calling 7, but it's been volatile, as you pointed out. So, I would expect that to continue at the same level that we've had, but of course, with the volunteers. As I also stated around the Red Sea disruption, we see this as something that is, something that has now sort of been turned on, that you have it. My hope is that it can disappear as quickly as it came, which is different than, I think, our interpretation of the European sanctions on the import of Russian oil.
So so.
Yes.
Would expect that to continue at the same level, but with that but of course with the volatility.
And all of those data around the Red Sea disruption, we see this as something that is.
Something that has now sort of being turned on that you've got it my.
My hope is that it can disappear as quickly as it came.
Which is different than I think our interpretation of the European sanctions on imports of Russian all I think that is very sticky for many reasons.
Obviously, the <unk> situation could potentially be resolved quickly now has been escalating, especially over the past 24 hours, but now Unfortunately, there's always have lives of in <unk>.
So it's not going away right now.
Jacob Balslev Meldgaard: I think that is very sticky for many reasons. Obviously, the Red Sea situation could potentially be resolved quickly. Now, it's been escalating, especially over the past 24 hours, but now, unfortunately, the loss of lives of innocent seafarers. So it's not going away right now, as we are on this call, but my point would, of course, be that that one is a temporary thing that, hopefully, can be solved quickly. I don't think that the conflict around Ukraine will be temporary.
As we announced on this call, but my point, we will of course be that that one is a temporary thing.
That hopefully can be solved quickly I don't think that the conflict around Ukraine is temporary.
Right Yeah, Okay that makes a ton of sense. Thank you Jacob thanks, Kevin.
Okay.
Again, if you would like to ask a question press star one on your telephone keypad.
Okay.
And there are no further questions. This does conclude today's conference call. Thank you for your participation and you may now disconnect.
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Jacob Balslev Meldgaard: Right. Yep. Okay. That makes a ton of sense.
Yeah.
Okay.
Operator: Thank you, Jacob. Thanks, Kim. Again, if you would like to ask a question, press star 1 on your telephone keypad. And there are no further questions. This does conclude today's conference call. Thank you for your participation, and you may now disconnect. Thank you for watching.
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Okay.
Yes.
Okay.
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