Q2 2024 Golden Ocean Group Ltd Earnings Call
Good day, and thank you for standing by. Welcome to the second quarter 2024 Golden Ocean Group Limited and in its conference call.
Speaker Change: At this time, we'll participate in the final listen only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session, you will need to press star 1, 1 on your telephone. You will then hear an automated message advising your hand is raised. To assure your question, please press star 1, 1 again.
Speaker Change: Please be advised that today's conference has been recorded. I would now like to hand the conference over to your first week today. Peter Simonsen, please go ahead.
Peter Simonsen: Good afternoon and welcome to the Golden Ocean Q2 2024 release.
Peder Simonsen: My name is Peder Simonsen and I am the Interim CEO and CFO for Goldnorsion.
Peder Simonsen: Today I will guide you through the Q2 numbers on Forward Outlook.
Peder Simonsen: In the second quarter of 2024, we have the following May and Highlights.
Peder Simonsen: On our adjusted EBTA in the second quarter of 2024 ended up at 120.3 million compared to 114.3 million in the first quarter.
Peder Simonsen: We deliver the net income of 62.5 million an earnings per share of 31 cents.
Peder Simonsen: This compares to a net income of 55.4 million and earnings per share of 33 cents for the first quarter
Peder Simonsen: Our adjusted net profit was 63.4 million and adjusted earnings per share of 32 cents up from 58.4 million and earnings per share of 29 cents in Q1.
Speaker Change: RTE rates for Cape Science and Tanalanx vessels were about $28,000 per day and about $15,700 per day respectively and a fleet-wide net TTE of about $23,500 for the quarter
Speaker Change: We have continued to execute on our fleet renewals strategy by telling one older panomax vessel after an attractive price.
Speaker Change: For Q3, we have secured a net TCE of about 26,200 per day for a to 3% of our Cape size days and about 17,200 per day for 94% of our Panama space.
Speaker Change: We have locked in a net TCE of about 25,800 per day, 49% of our Cape size days, and about 17,900 per day for 18% of our Panama State.
Speaker Change: and with a stronger self in Q2, we are pleased to declare a dividend of 30 cents per share for the second quarter of 2024.
Speaker Change: Let's look a little deeper into the numbers.
Speaker Change: which is a total split-wide TCE rate of 23,500 in Q2 up from 22,600 in Q1.
Operator: Limited earnings conference call. At this time, all participants are in a listen only mode. After the speakers presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one, one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one, one again. Please be advised that today's conference is being recorded.
Speaker Change: We had four ships dry docked into Q2, compared to two ships in Q1, contributing to approximately 193 days of fire in Q2 versus 97 days in Q1.
Speaker Change: Six ships are scheduled for dry dock in Q3-24.
Operator: I would now like to hand the conference over to your first week today.
Operator: Peter Simonsen, please go ahead.
Speaker Change: of which one that's little has completed dry dog as of today.
Peder Simonsen: Good afternoon and welcome to the Golden Ocean Q2 2024 release.
Speaker Change: This result in net revenues of 196.7 million largely unchanged score from quarter as the former TCE performance was offset by pure vessel days.
Peder Simonsen: My name is Pataji Monsen and I am the interim CEO and CFO for Golden Ocean. Today I will guide you through the Q2 numbers and forward outlook. In the second quarter of 2024, we have the following main highlights. On our adjusted EBTA in the second quarter of 2024 ended up at 120.3 million compared to 114.3 million in the first quarter. We delivered a net income of 62.5 million and earnings per share of 31 cents.
Speaker Change: On our optics, we recorded 66.3 million versus 62.6 million in operating expenses.
Speaker Change: are running expenses for largely unchanged quarter by quarter, while more ships dried up impacted the Opix results.
Speaker Change: In addition, we had 4.3 million in the carbonation and digitalization investments versus below 1 million in the previous quarter.
Speaker Change: Our OPEC's reclassified from Charter Higher was 1.5 million.
Peder Simonsen: This compares to a net income of 65.4 million and earnings per share of 33 cents for the first quarter. Our adjusted net profit was 63.4 million and adjusted earnings per share of 32 cents up from 58.4 million and earnings per share of 29 cents in Q1. Our TCE rates for capesides and panoramic vessels were about $28,000 per day and about $15,700 per day respectively. And a fleet wide net TCE of about $23,500 for the quarter.
Speaker Change: Just below 1 million lower than in Q1.
Speaker Change: We are looking at our general rule on administrative expenses, we ended up at 5.1 million, down from 7.4 million in Q1.
Speaker Change: The decrease is explained by non-recurring personnel related expenses in Q1 and our daily G&A came in at $568 per day, net of course we charge the related companies down from $819 per day in Q1.
Peder Simonsen: We have continued to execute on our fleet renewal strategy by selling one older panoramic vessel at an attractive price. For Q3, we have secured a net TCE of about 26,200 per day for 83% of our capesides days and about 17,200 per day for 94% of our panoramic states. For Q4, we have locked in a net TCE of about 25,800 per day for 29% of our capesides days and about 17,900 per day for 18% of our panoramic states.
Speaker Change: We recorded 4.8 million versus 7.3 million in Q1 as fewer vessel dates for the trading portfolio was offset by profit split payments.
Speaker Change: Net Financial Expenses came in at 25.3 million versus 27.2 million in Q1. Lower due to lower average depth in the quarter.
Speaker Change: or derivatives in all the financial income, we recorded the gain of 1.9 million compared to a gain of 7.3 million in Q1.
Peder Simonsen: And with a strong result in Q2, we are pleased to declare a dividend of 30 cents per share for the second quarter of 2024. Let's look a little deeper into the numbers. Which is a total fleet wide TCE rate of 23,500 in Q2 up from 22,600 in Q1. We had four ships dry docked in Q2 compared to two ships in Q1, contributing to approximately 193 days of fire in Q2 versus 97 days in Q1.
Speaker Change: On the rivetives we record the gain of 2.4 million versus a gain of 12 million in Q1.
Speaker Change: This included a interest rate swap gains of 2.7 million of which 4.1 million was realized cash gains offset by market loss of 1.4 million
Speaker Change: in addition to the small loss on FFA and FX and bunker derivatives of $300,000.
Speaker Change: For Assault in Investment Associates, we recorded a loss of 0.4 million compared to 4.6 million loss in Q1, relating to investment in Swiss marine, TFG and UFC.
Peder Simonsen: Six ships are scheduled for dry dock in Q3, 24, of which one vessel has completed dry dock as of today. This result in net revenues of 196.7 million, largely unchanged quarter and quarter as stronger TCE performance was offset by fewer vessel days. On the road backs, we recorded 66.3 million versus 62.6 million in operating expense. – our running expenses were largely unchanged, quarter by quarter, while more ships dried up impacted the OPEX results.
Speaker Change: On that profit, ended up 62.5 million, or 31 cents, and an adjusted net profit of 63.4 million, or 32 cents.
Speaker Change: and the dividend of 30 cents declared for the quarter.
Speaker Change: and moving to the cash flow.
Speaker Change: Our class row from operations came in at 76.9 million, which includes
Speaker Change: 0.4 million in dividends received from associated companies.
Peder Simonsen: In addition, we had 4.3 million in decobinization and digitalization investments versus below 1 million in previous quarter. Our OPEX we classified from charter hire was 1.5 million, just below 1 million lower than in Q1. Looking at our general non-administrative expenses, we ended up at 5.1 million down from 7.4 million in Q1. The decrease is explained by non-recurring personnel related expenses in Q1 and our daily GNA came in at 568 dollars per day, net of course recharged related companies down from 819 dollars per day in Q1.
Speaker Change: on cash flow using investments.
Speaker Change: We recorded 25.5 million, which mainly relates to installments and costs relating to our camps and max new buildings.
Speaker Change: Casero used in financing recorded 95.8 million, which mainly comprised of 31.9 million and scheduled debt in these repayments.
Speaker Change: 23 million in net proceeds from refund on things announced in previous quarters.
Speaker Change: 25 million in repayments under the revolving credit facilities, and a dividend payment of 60 million relating to the Q1 results.
Speaker Change: The total net decrease in cash of 44.4 million.
Peder Simonsen: On our charter hire expense, we recorded 4.8 million versus 7.3 million in Q1. As fewer vessel days for the trading portfolio was upset by profit split payments. Net 7.2 million in Q1, lower due to lower average debt in the quarter. Our derivatives and all the financial income, we recorded the gain of 1.9 million compared to a gain of 7.3 million in Q1. On the derivatives, we recorded the gain of 2.4 million versus a gain of 12 million in Q1.
Speaker Change: Honour Balon sheet.
Speaker Change: We had cash and cash equivalents of 103.1 million at quarter-end, including 3.6 million over-stricted cash.
Speaker Change: In addition, we have a hundred and sixty million in ungrown available credit facilities at Quarterelle.
Speaker Change: That, and finance, lease liability is total 1.4 billion at quarter-end, down by approximately 33 million quarter-end quarter.
Speaker Change: The average fleet wide loan to value under credit facilities was 34.1% at quarter-end and a book equity of 1.9 billion.
Peder Simonsen: This included interest rate swap gains of 2.7 million of which 4.1 million was realized cash gains offset by market market loss of 1.4 million. In addition to a small loss on FFA and FX and bank derivatives of 300 thousand dollars. For assault in investment in the associates, we recorded the loss of 0.4 million compared to 4.6 million loss in Q1 relating to investment in Swiss marine, TFG and UFC. Our net profit ended at 62.5 million or 31 cents and an adjusted net profit of 63.4 million or 32 cents and a dividend of 30 cents declared for the quarter.
Speaker Change: Resulted in a ratio of equity to total assets of approximately 56%.
Speaker Change: If we have a look at the Golden Ocean Fleet Composition, we have over the last three years grown the fleet by around 30% while reducing the average age with the same percentage.
Speaker Change: The growth has been focused around the larger vessel pipes, particularly within the Cape size and new custom axe segments.
Speaker Change: Following consolidations among our U.S. listed pairs, as the graph illustrates, we are still the only company compared to our pairs with meaningful market caps that have significant to Cape-sized exposure.
Speaker Change: With our dual listing in New York and also, and a market cap of around $2.5 billion. We offer high trading liquidity, exposure to what we believe will be the most favorable dry bulk segment in the years to come.
Peder Simonsen: Moving to operations came in at 76.9 million which includes 0.4 million in dividends received from associated companies. On cash flow used in investments, we recorded 25.5 million which mainly relates to installments and costs relating to our comes and max new buildings. Cash flow used in financing recorded 95.8 million which mainly comprised of 31.9 million in schedule debt and lease repayments. 23 million in net proceeds from refining things announced in previous quarters.
Speaker Change: Although we have a significant growth of the past years, we have maintained the conservative leverage with the current LTV around 34%, which enables extended repayment profiles and industry-low credit margins.
Speaker Change: Together with highly competitive OPEX and GNA costs.
Speaker Change: We have an industry low cash procurement level giving full operational flexibility.
Speaker Change: In addition, our modern fuel efficient fleet has over time proven to significantly outperform marked grades.
Speaker Change: with the average historical premium of $4,000 above court rates.
Peder Simonsen: 25 million in repayments under the revolving credit facilities and a dividend payment of 60 million relating to the Q1 results. A total net decrease in cash of 44.4 million. On our balance sheet, we had cash and cash equivalence of 103.1 million at quarter-end, including 3.6 million overstricted cash. In addition we had 150 million in undrawn available credit facilities at quarter-end. That and finance lease liabilities totaled 1.4 billion at quarter-end, down by approximately 33 million quarter-end quarter. The average fleet-wide loan to value under our credit facilities was 34.1% at quarter-end. And a book equity of 1.9 billion resulted in a ratio of equity to total assets of approximately 56%.
Speaker Change: The combination of industry low cost labels and premium earnings created high-ruler bust in Brazilian business model.
Speaker Change: At the same time, it gives gold notion the ability to tilt its fleet into the spot market, while continuing to manage the shortening portfolio sensibly.
Speaker Change: If we have a look at the market in the past quarter the global cap size trade continues its positive trajectory with the year on the air growth of 3% for the first half of 2024
Speaker Change: Percylian iron ore volumes held up its Q1 strength resulting in a 9% growth for the first half.
Speaker Change: of the year.
Speaker Change: The box side volumes exported from West Africa were record high in Q1 but growth slowed down somewhat as they entered into the seasonal little weaker wet season. However, maintaining a strong baseline export.
Speaker Change: For Colombian coal, we noted a continued strong export ratio, recording a year-on-year staggering growth of 45% the first half of the year, adding tonal to the more standard trading routes.
Peder Simonsen: If we have a look at the golden ocean fleet composition, we have over the last three years grown the fleet by around 30% while reducing the average age with the same percentage. The growth has been focused around the larger vessel types, particularly within the Cape size and Newcastle climate. Following consolidations among our U.S, listed pairs as the graph illustrates, we are still the only company compared to our pairs with meaningful market caps and have significant Cape size exposure.
Speaker Change: China and India received most of these volumes, with a respective import increase of 7 and 9% year on year for the first half of 2024, across all main commodity segments.
Speaker Change: R&R continued to flow into China following the strong Q1, and the continued focus on high-grade R&R has led to growth in R&R source from Brazil, supporting ToneLine.
Speaker Change: The major miners, such as Valle, have continued to guide positively on their production targets, indicating continued healthy long distance volumes from Brazil, favoring the Cape's ice vessels.
Peder Simonsen: With our dual listing in New York and also and a market cap of around 2.5 billion dollars, we offer high trading liquidity exposure to what we believe will be the most favorable dry bulk segment in the years to come. Although we have a significant growth over the past years, we have maintained a conservative leverage with the current LTV over around 34%, which enables extended repayment profiles and industry low credit margins. Together with highly competitive OPEX and GNA costs, we have an industry low cash per given level, giving full operational flexibility.
Speaker Change: You are currently seeing export volumes exceeding 1 million tonnes per day from Bala and other widespread volumes from Australia.
Speaker Change: We have seen iron ore inventories.
Speaker Change: increased to 22 levels of higher imports have not been matched by corresponding steel production. Combined with seasonal slowdown, negative macro-news on the Chinese economy and poor steel margins, this is the pressure on iron ore prices which now are trading in the mid to high 90s.
Speaker Change: We should, however, keep in mind that these are healthy levels historically, and of the course-pertone delivery in Asia for the larger miners are in the $40 or $50 per ton, making exports highly profitable.
Peder Simonsen: In addition, our modern fuel efficient fleet has over time proven to significantly outperform market rates, with the average historical premium of $4,000 above-quote rates. The combination of industry low-cost labels and premium earnings creates a higher robust and resilient business model. At the same time, it gives gold notion the ability to tilt its fleet into the spot market while continuing to managing the charting portfolio sensibly. If we have a look at the markets in the past quarter, the global Cape size trade continues its positive trajectory, with the year-on-year growth of 3% for the first half of 2024.
Speaker Change: Analysts are also indicating that parts of the inventories are over low grade, which counters China's target over reducing emissions in the steel industry by increasing the use of high grade iron ore.
Speaker Change: China is in the process of including the steel industry into its emissions trading scheme, which would make increased high grade even more beneficial.
Bondingly: Of course, Bondingly, we see signs that China is targeting high-grade sourcing of iron ore over domestic production and lower grade producers.
Bondingly: China has built inventories across most commodities, both on agricultural products such as soybeans and energy such as coal, indicating that this is a strategic and politically supported buildup.
Peder Simonsen: Brazilian iron ore volumes held up its Q1 strength, resulting in a 9% growth for the first half of the year. The bulk site volumes exported from West Africa were record high in Q1, but growth slowed down somewhat as they entered into the seasonally weaker wet season. However, maintaining a strong baseline exercise. For Colombian Coal, we noted a continued strong export ratio, recording a year-on-year staggering growth of 45% the first half of the year, adding tone-mile to the more standard trading routes.
Bondingly: The field production has stayed flat globally, but Chinese field production has fallen by 1.1% in the first half of 2024 compared to last year. In line with general economic indicators.
Speaker Change: Inventories remain high as a result of lower steel output, it may eventually impact our and our prices and potentially trading volumes.
Speaker Change: We are now coming into the seasonally strong-grip period in the second half which normally carries higher industrial activity and where Chinese steel production normally picks up.
Peder Simonsen: China and India received mostly these volumes, with a respective import increase of 7 and 9% year-on-year for the first half of 2024, across all main commodity segments. Iron-R continued to flow into China following the strong Q1, and the continued focus on high-grade iron-R has led to growth in iron-R sources from Brazil, supporting tone-mile. The major miners, such as Val, have continued to guide positively on their production targets, indicating continued health-day long-distance volumes from Brazil, favoring the Cape-sized vessels.
Speaker Change: You have to be in a shift and where steel is used.
Speaker Change: We are as previously the majority of the steel was used in the real estate market. We now see that infrastructure investments, manufacturing and exports are increasing in the significance. Representing over 60% of the steel production.
Speaker Change: The steel exports from China is continuing at the high pace, with a 30% increase year on the air for the first half of 2024.
Speaker Change: Outside China, crewed steel production started recovering during 23, but faded someone in due to of 24. However, analysts expect a growth of 5% to 7% the next couple of years as the world recovers from increased inflation and interest rates.
Peder Simonsen: They are currently seeing export volumes exceeding 1 million tons per day from Walla, and otherwise strong volumes from Australia. We have seen iron-R inmentories increase to 2022 levels, as higher imports have not been matched by corresponding steel production. Combined with seasonal slowdown, negative macro-news on the Chinese economy and poor steel margins, this is the pressure on iron-R prices, which now are trading in the mid to high-90s. We should, however, keep in mind that these are healthy levels historically, and that the cost per tone delivered in Asia for the large miners are in the $40 or $50 per tone, making exports highly profitable.
Speaker Change: Chinese companies have over a long time invested significantly in mining and infrastructure in Guinea which in addition to the box site holds the largest high-grade iron ore deposit currently under development.
Speaker Change: In the end of 2025, we can expect the Simonsen do iron ore mine to start shipping its first oits for cost of 60 million tons. Export capacity.
Speaker Change: If assuming that the Simonsen dual volumes will replace Australian volumes, it will triple the sailing distance to Asia, boosting Tom Baldi Man when the mine is fully operational in 2022.
Peder Simonsen: Analysts are also indicating that parts of the inventory are over lower grade, which counters China's target over reducing emissions in the steel industry by increasing the use of high-grade iron ore. China is in the process of including the steel industry into its emissions trading scheme, which would make increased high-grade even more beneficial. Correspondingly, we see signs that China is targeting high-grade sourcing of iron ore over domestic production and lower grade producers.
Speaker Change: In addition, there were increased production capacity of high-grade volumes, on track out of Brazil and in Gabon, which further supports Cape size tell me.
Speaker Change: As highlighted in previous presentations, long-haul bookside exports has become significant driver for the Cape Side Market.
Speaker Change: We are entering into the high season for books at her exports in Q4 and Q1 and we expect that volumes will remain healthy and increase from the seasonal levels in Q2 and Q3.
Peder Simonsen: China has built inmentories across most commodities, both on agricultural products such as soybeans and energy such as coal, indicating that this is a strategic and politically-supported build-up. Steel production has stayed flat globally, but Chinese steel production has fallen by 1.1 percent in the first half of 2024, compared to last year, in line with general economic indicators. If inmentories remain high as a result of lower steel output, it may eventually impact iron ore prices and potentially trading volumes.
Speaker Change: Both sides which it's used to produce aluminum is heavily used in the growing Chinese car industry which has been further subsidised by the government recently to support further car sales.
Speaker Change: Further, most soon seen in India is ending in September and we expect to see an increase in the month for coal as we see in the Lisi each year.
Speaker Change: Coal represents the main energy source for power generation in India and China, with over 2-3rds of all electricity produced from coal And around 15% new power plant capacity under development
Peder Simonsen: We are now comming into the seasonally stronger period in the second half, which normally carries higher industrial activity, and where Chinese steel production normally picks up. We have seen a shift in where steel is used. Whereas previously, the majority of the steel was used in the real estate market. We now see that infrastructure investments, manufacturing, and exports are increasing in significance, representing over 60 percent of the steel production. The steel exports from China is continuing at the high pace, with a 30% increase year-on-year for the first half of 2024.
Speaker Change: Supply.
Speaker Change: The Order Book remains.
Speaker Change: Highly favorable with the Cape size being the most compelling segment.
Speaker Change: Although we have seen some additions to the core or the book this past quarter, we remain at historically low levels, illustrating the restrictions post by your capacity, high-new building prices and lonely times remain a key fundamental support.
Hoff: Hoff mentioned in previous presentations.
Peder Simonsen: Outside China, crude zero production started recovering during 23 but faded someone into Q2 of 24. However, analysts expect a growth of 5 to 7% the next couple of years as the world's recovers from increased inflation and interest rates. Chinese companies have over a long time invested significantly in mining and infrastructure in Guinea, which in addition to bulk sites holds the largest high-grade iron ore deposit currently under development. In the end of 2025 we can expect the Simons do iron ore mine to start shipping its first or its forecasted 60 million tons export capacity.
Hoff: The additional volumes from the New Cimado Mine in Guinea will alone be able to absorb the 7% Cape size orderbook
Hoff: It is also important to note that the Cape size fleet is aging and that over half of the Cape size fleet will be above 15 years of age, in 2022 and the period where environmental regulations are tightening.
Hoff: And lastly, on the supply side, the Cape size fleets continues to operate highly, efficiently, with low congestion, and only marginal Panama and Suez Canal exposure.
Speaker Change: We round this presentation of what we normally do, illustrating the Castro potential of Goldnotion.
Peder Simonsen: If assuming that the Simons do volumes will replace Australian volumes, it will triple the sailing distance to Asia boosting tonbal demand when the mine is fully operational in 2026. In addition there are increased production capacity of high-grade volumes on track out of Brazil and in Gabon, which further supports capesized on mine. As highlighted in previous presentations, long-haul box-side exports has become a significant driver for the capesized market. We are entering into the high season for box-side exports in Q4 and Q1, and we expect that volumes will remain healthy and increased from the seasonal loans in Q2 and Q3.
Speaker Change: Despite the negative macro data and rising inventory, we continue to see strong volumes out of Brazil.
Speaker Change: The balanced freight market and a support group FFA curve.
Speaker Change: The freight market is still not out of the summer low, that is normal for this time of year, but we are starting to see activity levels pick up in line with the seasonal pattern.
Speaker Change: We will round off with a reminder of our robust business model.
Speaker Change: Low cost dates and modern fleet, which lays the fundament for the free cash flow and dividend potential in Golden Ocean.
Speaker Change: We have since 2021 paid out an aggregate of $1.1 billion in dividend, representing about 90% on net profits for the period.
Peder Simonsen: Box-side, which is used to produce aluminum, is heavily used in the growing Chinese car industry, which has been further subsidized by the government recently to support further car sales. Further, Monsunse in India is ending in September and we expect to see an increase in amount for coal as we seasonally see each year. Coal represents the main energy source for power generation in India and China, with over two thirds of all electricity produced from coal, and around 15% new power plant capacity under development.
Speaker Change: While there are risks, we continue to see seaborn trading volume flow, and we are optimistic as we enter into the seasonal strength.
Speaker Change: I will now pass the word back to the operator and welcome any questions.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: As I remind you to ask a question you will need to press star 1, 1 on your telephone and wait for your name to be announced. To enjoy your question please press star 1, 1 again. We will now take our first question. Please stand by.
Speaker Change: And the first question comes from the line of Omar Noctur from Jeffree's please go ahead your line is not open.
Peder Simonsen: Supply, the order book remains highly favorable, with the capesized being the most compelling segment. Although we have seen some additions to the order book this past quarter, we remain at historically low levels, illustrating that restrictions posed by yard capacity, high-neuveling prices, and long-lead times remain a key fundamental support. As mentioned in previous presentations, the additional volumes from the new CMDU mine in Guinea will alone be able to absorb the 7% capesized order book.
Omar Noctur: Thank you, I Futter.
Omar Noctur: Thanks for the update.
Speaker Change: I got a couple of questions from my side.
Omar Noctur: You talked about the market and these are both markets related.
Speaker Change: We've seen the cakes continuing to do well.
Speaker Change: This summer, this year, in fact, despite the fact that Chinese steel markets have been soft as you were highlighting.
Speaker Change: We're in the Smith 20s range and we're actually, as of today, we're above your day to day averages. So I just wanted to ask, you know, what do you think is the supporting rate?
Speaker Change: from say a fundamental picture and also maybe seasonally what haven't we seen like a seasonal lead-up and in-race in your eyes.
Peder Simonsen: It is also important to note that the capesized fleet is aging, and that over half of the capesized fleet will be above 15 years of age in 2028, in a period where environmental regulations are tightening. And lastly, on the supply side, the capesized fleet continues to operate highly efficiently, with low congestion, and only marginal Panama and Suez Canal exposure.
Speaker Change: Hi, I'm Mark. I think...
Speaker Change: is very much follows the cease to pattern the development we've seen if you have decided the first half development was worse counterseasonal.
Peder Simonsen: We round this presentation off as we normally do, illustrating the cash for potential of gold notion. Despite the negative macro data and rising inventories, we continue to see strong volumes out of Brazil, a balanced freight market and a supportive FFA curve. The freight market is still not out of the summer low, as is normal for this time of year, but we are starting to see activity levels pick up in line with the seasonal pattern.
Speaker Change: We have a fundamentally strong market with fundamentally health-sive-all-ins flowing. It's a little bit like last year when we said that despite all the negative news flow, we can just call what we see in the market.
Speaker Change: on the R now and in a period where there is what sees in both in West Africa and India.
Speaker Change: We see that even though you saw the iron ore ties drop down due to the macro-sentiment falling, it has rebounded because you can see you see volume flowing.
Peder Simonsen: We will round off with a reminder of our robust business model, low cost base and modern fleet, which lays the fundamentals for the free cash flow and dividend potential in Golden Ocean. We have since 2021 paid out an aggregate of 1.1 billion dollars in dividend, representing about 90 percent on net profits for the period. While there are risks, we continue to see borne trading volume flow, and we are optimistic as we enter into the seasonal strength.
Speaker Change: That is an indication that we see the unbeleying fundamentalist being fairly strong and this is obviously with the healthy, bell-based line box size export, but we come into the season where this is going to ramp up and also Chinese industrial activity.
Speaker Change: Without.
Peder Simonsen: I will now pass the word back to the operator and welcome any questions. Thank you. As a reminder to ask a question, you will need to press star 1, 1 on your telephone and wait for your name to be announced. To enjoy your question, please press star 1, 1 again.
Speaker Change: trying to call absolute rate levels. We are very positive for what's to come based on the fundamentals that we see in the market.
Operator: We will now take our first question. Please stand by.
Speaker Change: and I'm sort of a seasonal option that we normally see and as I was mentioned, Cole Williams will start to pick up going into India as we come to the other monsoon season.
Omar Nokta: The first question comes from the line of Omar Nocta from Jeffries. Please go ahead. Your line is not open. Thank you. I better. Thanks for the update. I got a couple of questions from my side. You talked about the market, and these are both market related. We've seen the capes continuing to do well this summer. In this year, in fact, despite the fact that Chinese steel markets have been soft as you were highlighting, we're in the mid-20s range, and we're actually, as of today, we're above your date to date averages. So just wanted to ask, what do you think has been supporting rates from, say, a fundamental picture and also maybe seasonally? Why haven't we seen a seasonal lead-up in rates in your eyes?
Speaker Change: Okay.
Speaker Change: I think thanks for that appreciate the perspective and I guess you know.
Speaker Change: Maybe just a bit more on the other segments you've seen in case you're obviously doing well, super maxes, which I know you don't have much exposure, they're also holding up and doing quite well.
Speaker Change: is trading above levels from last year and definitely...
Speaker Change: How would you think about depenimaxes? I know Golden Ocean here results have been much stronger than say the spot market averages we've been seeing. But we've seen the panemack of coming under pressure here recently while the other side came to be just steady or rising perhaps.
Speaker Change: I would you explain this kind of damaging of the pen and maxes by the large and smaller shifts. Have you seen this before and how you see that evolving here in the coming months given the seasonal changes ahead?
Peder Simonsen: Hi, Omar. I think it very much follows the seasonal pattern in the development we've seen. If you set aside the first half development with worst counter-seasonal, I think we have a fundamentally strong market with fundamentally healthy volume slowing. It's a little bit like last year when we said that despite all the negative new slow, we can just call what we see in the market. And there are now in the period where there is wet season, both in West Africa and India.
Speaker Change: I think the sentiment has also been very much to present on the panel on the panel next side. I mean the volumes have been.
Speaker Change: You know, just slightly below sort of a fleet capacity, so you've seen sort of a activity level sliding, and then there while attempting to do it, we have.
Speaker Change: You know, our ice-class business, which has supported us this quarter, we had the positioning cost last quarter, and then we see the benefit of all these contracts now in Q3 and actually.
Peder Simonsen: We see that even though you saw the iron ore price drop down due to the macro sentiment that's falling, it has rebounded because you continue to see volume slowing. So that is an indication that we see the underlying fundamentals being fairly strong. And this is obviously with the healthy, bell-based line box-sized export, but we'll come into a season where this is going to ramp up, and also Chinese industry-lectivity, without trying to call absolute rate levels.
Speaker Change: Positioning in this quarter and uncompromptious.
Speaker Change: Now playing Alvin Q3 Q4 so...
Speaker Change: Normally, these are linked and, and, and, and, and,
Speaker Change: and Coralating. So we do expect that that also call volumes will start to give for to to the Paramaxist in addition to obviously the grains and soybeans and corn coming out of the Atlantic. We see that there is a-
Speaker Change: Beak volumes coming out of Ukraine on the grains and also out of the continents due to a very dry crop this year. So we may see that we replaced by a longer ton-mile volumes.
Peder Simonsen: We are very positive for what's to come, based on the fundamentals that we see in the market, and Amazon sees no lapse in that we normally see. And as I mentioned, call volumes, we'll start to pick up going into India, as we come to the end of the monsoon season.
Speaker Change: So, we do look on constructive attackments as well, but we see it or the...
Omar Nokta: Okay, thanks for that. I appreciate the perspective.
Speaker Change: The seasonal rebound hitting the cave sizes to larger extent than maybe the panmarks at the moment.
Speaker Change: Okay. God, thank, thanks, better appreciate that. I'll pass it over.
Omar Nokta: And I guess maybe just a bit more on the other segments we've seen in case you're obviously doing well, supermaxes, which I know you don't have much exposure. They're also holding up and doing quite well and spreading above levels from last year and definitely much much stronger overall.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: As I remind you to ask a question you will need to press dial one on your telephone and wait for your name to be announced.
Speaker Change: [inaudible]
Omar Nokta: But how would you think about the pentamaxes? I know, you know, Golden Ocean, your results have been much stronger than, say, the spot market averages we've been seeing. But we've seen the pentamax coming under pressure here recently, while the other segment came to be just steady or rising, perhaps. How would you explain this kind of dandwiching of the pentamaxes by the large and smaller shifts? Have you seen this before?
Speaker Change: As there are no further questions, I would now like to hand back to Peder Simonsen for an Eclosing Remark.
Peder Simonsen: I just want to do thank you for dialing in and listening and we will see you back in November for the next quarter.
Peder Simonsen: And how do you see that evolving here in the coming months given the seasonal changes ahead? I think sentiment has also been very much decreased on the pentamax side. I mean, the volumes have been just slightly below sort of a fleet capacity. So you've seen sort of a activity level sliding and thereby the sentiment being pretty gloomy. We have, you know, our ice class business which has supported us this quarter. We had the positioning cost loss quarter and then we see the benefit of all these contracts now in Q3 and actually positioning in this quarter and contracts now playing out in Q3 and Q4.
Peder Simonsen: Thank you.
Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.
Peder Simonsen: Peder Simonsen.
Peder Simonsen: So normally, these are in linked and correlating. So we do expect that also coal volumes will start to give support to the pentamaxes in addition to obviously the grains and soybeans and corn coming out of the Atlantic. We see that there is a big volumes coming out of Ukraine on the grains and also out of the continent due to a very dry crop this year. So we may see that be replaced by longer toned mild volumes.
Gregory Lewis: Peder Simonsen, Gregory Lewis
Gregory Lewis: [inaudible]
Peder Simonsen: So we do look constructive at that segment as well but we see sort of the seasonal rebound hitting the capes sizes to a larger extent than maybe the moment.
Omar Nokta: Okay, thank you. Thanks better appreciate that.
Omar Nokta: I'll pass it over. Thank you.
Operator: As a reminder to ask a question, you will need to press one on your telephone and wait for your name to be announced.
Gregory Lewis: [inaudible]
Peder Simonsen: As there are no further questions, I would now like to come back to Peder Simonsen for an closing remark. I just wanted to thank you for dialing in and listening and we will see you back in November for the next quarter. Thank you.
Operator: This concludes today's conference call. Thank you for participating, you may now disconnect.
Operator: Thank you very much for joining us today, thank you very much for joining us today, thank you very much joining us today, thank you[inaudible] joining us today, thank you very much[inaudible] joining us today, thank you[inaudible][inaudible][inaudible][inaudible] the Most Merciful, the Most Merciful, the Most Merciful, the Most Merciful,[inaudible]
Speaker Change: [inaudible] Peder Simonsen,
Speaker Change: Peder Simonsen, Gregory Lewis, and Gregory Lewis
Speaker Change: Music