Q4 2024 TORM plc Earnings Call
Pam: Thank you for standing by. My name is Pam and I will be your conference operator today.
Speaker Change: Looking back at the past year. We are pleased to report a very satisfactory performance with TCE earnings climbing to a new all time high for you.
Speaker Change: 1.135 billion supported by the additions made to our fleet during the year.
Speaker Change: Freight rates remained at high levels throughout most of the first three quarters, enabling us to achieve statewide race.
Speaker Change: U S dollar $39026 per day.
Speaker Change: However, in the fourth quarter freight rates decreased and normal seasonal strengthening of the market did not materialize.
Speaker Change: Despite continuous.
Speaker Change: Rerouting volumes on long haul voyages from east to west with Noah and our she'd like rates decreased to U S dollar $25775 per day, thus, adding to the downward trajectory seen from Q2 223.
Speaker Change: While the rate levels in the last quarter window compared to the strong performance in the first three quarters of the year, we still delivered solid earnings.
Speaker Change: For the full year, we achieved a net profit of USD $612 million and a return on invested capital of 24, 3% demonstrating resilience despite a challenging market environment.
Speaker Change: Now looking into 2025, the ever changing nature nature of cheating presents both challenges and opportunities.
Speaker Change: Geopolitical developments.
Speaker Change: <unk> Flo ships and oil demand fluctuated require that we continuously adapt our business.
Speaker Change: We remain confident in the factors that are within our own control. These include fleet efficiency.
Speaker Change: Has it been cost management prudent capital management, and a bill execution commercial strategy highway.
Speaker Change: However, we acknowledge that Q believes there's risk introduce a wide range of potential outcome for the year.
Speaker Change: Beyond geopolitics market condition will be shaped by trade disruptions regulatory changes and broader macroeconomic factors such as the global oil demand and economic growth trajectories.
Speaker Change: <unk> will dictate both freight rates and features isolation.
Speaker Change: So if you say it hit.
Speaker Change: We constantly continuously monitor and analyze deal pleased with trends issuing.
They're well positioned to navigate uncertainties effectively.
Speaker Change: I can turn to slide five.
Speaker Change: For the past three years, Gail Canadian sanctions have driven product tanker rates to a new higher average level.
Speaker Change: However in recent months as already noted we have seen a decline in rates as short term fixes.
Speaker Change: Yes.
Speaker Change: Intensified crew tanker cannibalization have softened the positive impact from geopolitical factors and the general market uncertainty has increased there.
Speaker Change: And nevertheless remained at levels, which is still strong and historical tubes.
Speaker Change: Please turn to slide six.
Speaker Change: To conclude on the year 2024, we saw a very strong positive impact on ton miles from the ritzy disruption, which led to longer trading distances at the same time as growing oil demand and changes in the refinery landscape increased volume of products being transported.
Speaker Change: This positive ton mile. If it was that way were frontloaded for product tankers.
Speaker Change: For the first half of the year food chain gets cleaned up in order to benefit from the new currency rates from transporting clean products from the east to the vet.
Speaker Change: Cable could hope to book most of the incremental ton miles for.
Speaker Change: For full year 2020 for clean Earth tanker ton miles increased by 9% in 2024, but due to this kind of cleanups product tankers benefited from only two thirds of that.
Speaker Change: While crude cannibalization declined towards the end of the year trade volumes on the routes mostly affected by the Red Sea disruption, Phil two layers that offset the longer trading distances. So with this.
Speaker Change: The impact of the Ritchie disruption in fact became nonexistent by the start of this year.
Speaker Change: Please turn to the next slide to slide seven.
Speaker Change: Elaborate a bit more of that so that's the main trade routes affected by the Ritchie disruption is from the middle East to Europe, the outcome of the potential future risky normalization really depends on this route.
Speaker Change: Currently Europe Stifel imports are down by 30%.
Speaker Change: Especially flows from the middle East effected.
Speaker Change: If it can be pushed ton miles on this rate moved down to pre disruption levels, although distances have increased.
Speaker Change: At the same time.
Speaker Change: We believe that such low imports.
Speaker Change: Sustainable, especially taking into account the European diesel demand is expected to increase slightly this year supported by increased demand for diesel from the Mediterranean emission control area acre.
Speaker Change: From me for this year.
Speaker Change: Same time, three refineries will close down in northern Europe. This year, while diesel stocks are at below average levels.
Speaker Change: We expect that a potential reopening of the Ritz. He passes will encourage intra basin trade and returned the volumes lost since the end of 'twenty 'twenty four at the same time incentives for crude cleanups would decline even with shorter sailing distances ton miles.
Speaker Change: With stay at around the current levels with any upside to imports would add to product tanker ton miles, we deem it unlikely that the volumes would not increase at the current levels are unsustainable at any increase in imports needs to be met by the middle East given refinery capacity closures in the U S.
Speaker Change: <unk>.
Speaker Change: Now please turn to the next slide to slide eight.
Speaker Change: This brings me.
Speaker Change: Drew the conclusion that the impact of any potential reversal.
Speaker Change: The latest SKU for the newest drivers will likely be less pronounced as much of that impact is currently non existent.
Speaker Change: As I just explained the potential retsina amortization could in fact be neutral for product tanker Tomas with an upside to this from potential increases in European.
Speaker Change: European diesel imports.
Speaker Change: Sure that's great distances, maybe offset by a potential return of currently loss trade volumes and lower incentives for crude tanker cleanups.
Speaker Change: Seemingly any potential easing of sanctions against Russia would not hit the product tanker market by a full effect as some of the gains ton mile every seeded by now.
Speaker Change: Due to the uncertainty with regards to the prospects for ceasefire, we do not foresee a creek abolishment of EU sanctions against Russia.
Speaker Change: And finally, we also have some new potential geopolitical drivers, which could have a positive ton mile impact such as a potential tariff war between the U S and its closest neighbors, Canada, and Mexico, leading to potentially new trade redirection towards longer distances.
Speaker Change: Now please turn to slide nine.
Speaker Change: So let me also take a look at the tonnage supply side as we pointed out earlier relatively high product tanker order book should be seen in combination with the fact that the average age of the fleet is the highest in two decades.
Speaker Change: With 50% of the fleet being more than 20 years old this will potentially offset a large part of the fee growth in the coming years.
Speaker Change: Furthermore, we see that as vessels turn towards 20 years of age the average utilization dropped significantly compared to younger vessels.
Speaker Change: That would lead to a growing share of the fleet operating at lower utilization and in addition, a large share of especially the older fleet is sanctioned which is expected to support exits from the market. This is especially the case for the combined two aframax feed where almost three quarters of the <unk>.
Speaker Change: All the fleet today.
Speaker Change: Today under U S sanctions.
Speaker Change: I will now turn to slide 10.
Speaker Change: To sum up on the market.
Speaker Change: Geopolitics I expected to drive the product tanker market also this year on top of the demand and supply fundamentals yet.
Speaker Change: Yet the level of uncertainty is even higher.
Speaker Change: And the speed of change has increased significantly with a new U S administrators more aggressive approach to gear politics and trade policy.
Speaker Change: I already touched upon potential normalization of the risky situation.
Speaker Change: Tastes and easing of sanctions against Russia, and the proposed tariffs on oil from Canada, and Mexico. Another element of uncertainty on the market stems from the U S. Administration's proposal to implement a port feature operators with vessels built on order in China.
Speaker Change: On the other hand, the new U S administration has more tough approach towards Iran, and Venezuela is expected to benefit the product tanker market via the reduced risk of crude cannibalization.
Speaker Change: I'm certain that trauma is well positioned to navigate in this environment of increased uncertainty through our strong capital structure operational leverage an integrated platform at all.
Speaker Change: I'm here with these comments I'll conclude my part of the presentation I hand over to my colleague, Tim who will walk us through the financials.
Tim: Thank you Jacob now please turn to slide 12 for an overview of the financials.
Tim: In the fourth quarter TCE amounted to USD $215 million and based on this we achieved U S dollar $142 million in EBITDA in U S dollars 77 billion in net profit.
What we average TCE rates of close to U S. Dollar 26000 per day with a luxury was slightly above U S. Dollar.
Tim: 34000, and de La once at over 22000, <unk> at more than 23000 U S dollars.
Tim: These numbers are aligned with the covers that'd be partners in connection with our Q3 results probably the lowest spot rates in the last half of November and the month of December thus in line with our old guidance communicated back in November.
Tim: For the full year 2024, we've generated TCE of U S dollar 1.15.
Tim: Billion EBITDA of USD $851 million net profit of USD $612 million.
Tim: As you can see on the right side of the table full year 2020 full rates were close to the elevated levels. We saw in 2023.
Tim: The compensation of these rates so it's a more nuanced story yeah.
Speaker Change: Yeah, Hi annual rates were largely driven by exceptionally strong market conditions in the first half of the year tight supply demand fundamentals and favorable trade pattern supported.
Speaker Change: Elevated spot rates during this period.
Speaker Change: Contrast, Q3 saw some softening.
Speaker Change: Cannibalization by carriers that catch up is significant part of the additional ton mile demand.
Speaker Change: While rates remained healthy they trended lower compared to the earlier part of the year.
Speaker Change: The fourth quarter brought an additional setback with no seasonal upswing and rates decline further.
Speaker Change: Due to the industry's natural spot exposure our earnings per share are closely tied to movements in freight rates and this dynamic becomes especially evident in a very volatile market environment.
Speaker Change: In Q4, we experienced a sharp decline in freight rates, which had a direct and material impact on our earnings per share. Thus.
Speaker Change: Thus basic earnings per share for Q4 decreased to 77 U S cents per share compared to U S dollars 2.118 per share in the same period last year.
Speaker Change: This time, our board of directors have declared a dividend of 60 U S cents per share.
Speaker Change: We believe that our approach ensures that distributions aligned with actual financial performance, maintaining a disciplined transparent and sustainable capital allocation strategy.
Speaker Change: Slide 13 please.
Speaker Change: This slides this slide provides a clearer view of our top line performance for the full year 2024, compared to 2023, Escuela, that's a quarter by quarter development throughout the EU.
Speaker Change: The numbers illustrate the strong bogs in the first half of the year gateway to softer conditions in the last half of the year impacting overall performance.
Speaker Change: He brought rates remained elevated in the first half of the year moving above U S. Dollar 40000, a day. However, as we moved into Q3 rates started to decline and this trend accelerated further in Q4.
Speaker Change: This reflects.
Broader Microsoft doing things in a positive ton mile impact from enrich seed disruption diminishing as <unk> shifted to dirty trades and a trade volumes on affected routes declined effectively neutralizing dirty of gains.
Speaker Change: While need wide rates declined by about 40% from two one or two for USG, our Tc saw a small decline of 35%.
Speaker Change: This demonstrates the positive impact our fleet expansion and operational efficiency.
Speaker Change: EBITDA amounted to USD $142 million in Q4, and as a reminder, everything else being equal a change in daily freight rates of USD 10000 translate into an EBITDA impact of approximately plus minus USD 80 million for a quota based on approximately 8000 of many days in a quarter.
Speaker Change: This illustrates the significant earnings sensitivity to market movements.
Speaker Change: It is a key consideration for our financial outlook.
Speaker Change: Please turn to slide 14.
Speaker Change: Likewise on this slide we provide a breakdown of the quarterly develop development in net profit and keisha and related ratios.
Speaker Change: A key factor to note is that the total number of shares increased by around $10 million over the year.
Speaker Change: The decline in freight rates this translated into a corresponding downward trend in net profit earnings per share and dividend per share.
Speaker Change: This is a direct consequence of the softer market conditions seen in the latter half of the year.
Speaker Change: As in previous quarters, our dividend policy remains unchanged, we continue to distribute excess city on a quarterly basis, while maintaining a prudent financial buffer.
Speaker Change: Our threshold liquidity level is determined by two key factors first.
Speaker Change: Our fixed liquidity requirement of U S dollar $1 8 million person and second a discretionary element to sit by the bold.
Speaker Change: This discretionary component considers or capital structure future obligations and broader market trends to ensure a balanced approach to capital allocation.
Speaker Change: Consequently, the payout ratio for Q4 is 75%.
Speaker Change: Slide 15 please.
Speaker Change: As shown on this slide visual values have been on a steady upward trajectory over recent quarters, but saw a decline in the fourth quarter to U S. Dollar three 6 billion with an average broker valuation down $4 six.
Speaker Change: <unk> revenue relative to the end of 2023.
Speaker Change: In the chart in the Middle we highlight the development of our net interest bearing debt, which now stands at USD $948 million against U S. Dollar sitting on 73 million a year ago. This increase reflects our fleet expansion over the past year.
Speaker Change: By this our net loan to value remained stable at 26, 8% in line with the same quarter last year, ensuring a conservative financial foundation as we move forward.
Speaker Change: Additionally, in the chart to the right side, we provide an overview of the debt maturity profile.
Speaker Change: This year, we have only borrowings of USD $168 million maturing and committed scrubber installations of USD 12 million beyond 2026, our obligations remain relatively modest until a larger loan matures in mid 2029.
Speaker Change: Overall, our financial position the range strong, allowing us to manage our commitments, while maintaining flexibility for future risks and opportunities.
Speaker Change: And now please turn to slide 16.
Speaker Change: As already shown on slide 12 based on the quarterly results the volatile rate us as the clear in Q4 2024 dividend of 60 U S cents per share.
Speaker Change: Sure wish corresponds to a payout ratio of 75%.
Speaker Change: Also on this slide we provide a full overview of the key dates.
Speaker Change: Dividend date pushes on NASDAQ Combing is set for March 19, while domestic New York It will be on March 20th.
Speaker Change: The record date will be on by switches and payment date will be on April 2nd.
Speaker Change: And now turning to slide 17.
Speaker Change: In the annual report that we have published this morning, we are taking a significant step forward in our sustainability reporting.
Speaker Change: Transparency is to call to provide stakeholders with a clearer view of our approaches with the implementation of the kobo sustainability reporting directly we are refining how we communicate our carbon resource bases. This.
Speaker Change: This framework spaces, our ability to report on material impacts risks and opportunities across environmental social and governance purchase and I encourage you all to either go with this.
Speaker Change: Our approach to social sustainability includes clear measurable targets across safety diversity in carbon intensity reduction.
Speaker Change: Starting with safety our key performance indicator is long term exit and frequency, which tracks accidents per 1 billion exposure hours.
Speaker Change: In 2024, we achieved an <unk> of <unk> and although this number is very sensitive to single accidents, we will continue working towards further improvements.
Speaker Change: On gender diversity and dealership, we are committed to increase women in leadership positions since 35% by 2030.
Speaker Change: Yes.
Speaker Change: Lastly on carbon intensity reduction we are well on track by the end of 'twenty 'twenty four we reached our 40% reduction target target. Thus already now meeting the Imo's 2030 targets.
Speaker Change: Looking ahead, we remain committed to our nation ambitious 2030 goal of a 45% reduction and ultimately to achieve net zero seem to emissions from our fleet.
Speaker Change: By 2015.
Speaker Change: Sustainability remains a core part of our long term strategy and we will continue taking decisive actions in these areas.
Speaker Change: We have set new ESG targets for 2024, reinforcing our commitment to reducing seem to emissions enhancing staff safety and improving gender diversity in leadership.
Speaker Change: These actions demonstrate our dedication to making a tangible impact while creating long term value for stakeholders.
Speaker Change: And now please turn to slide 18 for the outlook.
Speaker Change: We forecast TCE earnings of U S dollar 650 to 950 million Atkins.
Speaker Change: 'twenty 'twenty four actuals of U S dollar on $135 million and EBITDA.
Speaker Change: Of USD $350 million to $650 million against the 2024 actuals of USD $851 million.
Speaker Change: This reflects expectations of lower freight rates year on year based on current spot and forward market trends.
Speaker Change: Based on our rates and currency.
Speaker Change: On March 25, we have to fix that sort of 84% of our earning days at U S. Dollar tranche 6600 shale 12.
Speaker Change: <unk> per day in the first quarter across the fleet.
Speaker Change: Likewise for the full 2025, we had a total of 27% of our winning based at U S. Dollar 28916 per day for the full year across the fleet.
Speaker Change: And with this I conclude my remarks and hand, okay.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Thank you we will now begin the question and answer session. If you have dialed in and would like to ask a question. Please press star one on your telephone keypad Theresa had enjoying Yankee.
Speaker Change: You would like to withdraw your question simply press Star one again, if I can.
Speaker Change: Called upon to ask a question in our listening via loud speaker in your advice. Please pickup your handset and ensure that your phone is not on mute when asking your question. Your first question comes from Jon Chapell with Evercore. Please go ahead.
Speaker Change: Okay.
Jon Chapell: Good afternoon.
Speaker Change: Jacob <unk> senior strategy over the last three years with the.
Jon Chapell: The elevated market.
Jon Chapell: The fleet replenishment filling of the older vessels, even the dividend policy as we entered this year I guess, we're well into this year at this point with a lot more uncertainty a lower starting point.
Jon Chapell: How does that strategy change if at all as it relates to both.
Jon Chapell: Operations and fleet evolution, as well as capital structure and capital return.
Jon Chapell: Yes. Thanks.
Jon Chapell: The question John.
Jon Chapell: Then.
Jon Chapell: So I will I will answer it a little more detail, but I.
Jon Chapell: I think the short end.
Jon Chapell: Is that there's no change so if I just take it one by one on operation.
Jon Chapell: As I alluded to also in my prepared.
Jon Chapell: Remarks, then.
Jon Chapell: We do see.
Jon Chapell: Yeah.
Jon Chapell: Politics.
Jon Chapell: And.
Jon Chapell: And the associated change.
Jon Chapell: He is obviously still front and center as it has been over the last three years I think that the difference is really the speed with which we at least.
Jon Chapell: That we could potentially have these changes coming to us and what you need on an operational platform in that scenario.
Jon Chapell: I would say.
Jon Chapell: From the outside.
Jon Chapell: But the playbook is chased.
Jon Chapell: And if redefined.
Jon Chapell: Is to have agility and it has to be prepared for scenarios. There I actually I really think that the.
Jon Chapell: Value of an integrated company.
Jon Chapell: Yes.
Jon Chapell: In that scenario.
Jon Chapell: As we deem it.
But you can have because we can we will be able to.
Jon Chapell: To redefine.
Jon Chapell: Okay say our operational optimal.
Jon Chapell: The way of setting you up with.
Jon Chapell: With a very.
Jon Chapell: With a very short notice so that's number one.
Jon Chapell: Expect us to change anything there then on fleet.
Jon Chapell:
Jon Chapell: Is not has not been part of the presentation, but it says you should see that as more of the same and I think the.
Jon Chapell: The Testament to that is that we did.
Jon Chapell: After the end of the year.
Jon Chapell: And we have announced as a subsequent event we have sold.
Jon Chapell: Again three.
Jon Chapell: All of its vessels to three <unk> built in 2005.
Jon Chapell: In a marketplace, where the dynamic clearly has been that the liquidity.
Jon Chapell: In the market has been relatively low.
Jon Chapell: Cost of the uncertainties, but we have been able to stick to our strategy around maintaining.
Fleet, where.
Jon Chapell: The average age is in line on a par with the global product tanker fleet, but where we can utilize them all the way up to you can say of course it depends a little on the specific of the vessel, but in this case up until the year of 'twenty.
Jon Chapell: And again that fleets ready will not change we are going.
Jon Chapell: Going a little bit that we have not experienced that we cannot execute on that particular strategy and you can say of course, if it is the other way if it would be inbound.
Speaker Change: We should have misses common Sophie.
Jon Chapell: Yes.
Jon Chapell: Ready for that when and if the right circumstances.
Jon Chapell: Are there and then on.
Jon Chapell: Our.
Jon Chapell: The strategy.
Jon Chapell: On our financials.
Jon Chapell: This again really no change I think we've demonstrated is also here with the way.
Jon Chapell: That we pay out.
Jon Chapell: For this quarter 60 cents.
Jon Chapell: You know.
Speaker Change: I think Tim and I and the rest of management and our board feel very comfortable with our capital structure with a leverage and with still maintaining.
Speaker Change: <unk> the same intense around the use of excess.
Speaker Change: <unk> cabazon to be paid out obviously.
Speaker Change: There may be circumstances, where you would argue with that.
Speaker Change: Then it gets so compelling to buy back shares, but it's really not.
Speaker Change: It's not really been the tech.
Speaker Change: And I think it would be at to be a real special circumstance.
Speaker Change: If we were to look at that as a tool in the toolbox so for now.
Speaker Change: I would argue you should expect more of the same.
Speaker Change: Great I appreciate that answer.
Speaker Change: My second one.
Speaker Change: It relates a little bit more to the market you mentioned the crude cannibalization so to speak.
Speaker Change: Kind of reversing entering this year kind of a two part or where do we sit today on kind.
Kind of crude encroaching on traditional product trades maybe.
Speaker Change: Relative to the peak of the second half of last year, and then I guess bigger picture is it just becoming more easier I guess, we're kind of always under the impression it was difficult for accrued ship to get into the product trade several voyages process of kind of slowly cleaning up.
Speaker Change: Via the cargo.
Speaker Change: Is it just become easier that you can go kind of back and forth between crude and product and we should look for.
Speaker Change: So that impact and volatility going forward.
Speaker Change: Yes, let me.
Speaker Change: I'll do it in reverse order.
Speaker Change:
Okay.
Speaker Change: I think the.
Speaker Change: So yeah.
Speaker Change: You've been around.
Speaker Change: Maybe I'm not been around maybe as long as you've only been in the prostate business 15 years, but I think what we're raceway and shipping is that crude tankers late Kerry group and as you quite too is really.
Speaker Change: It is possible to carry clean, but youre kind of is not really what you want to do not as a ship owner with the risk associated and also not as the customer because you sort of have the risk of contamination of your cargo and it will be devalued on arrival.
Speaker Change: All of these are kind of operational hindrances, leading to that we have actually not.
Speaker Change: Over the last 30 years been able to observe that you had existing vessels in.
Speaker Change: That cleaned up Youll see.
Speaker Change: First of all it's after.
Speaker Change: After you come out of the yard is a neutral yes and.
Speaker Change: And maybe even more than one voyage, but it's really been a change of <unk> to see that business go in and out of the trade as you point to and now all comes from our reflection is that.
Speaker Change: It is actually the circumstances around the Red Sea.
Speaker Change: And the impact of that.
Speaker Change: No.
Speaker Change: Hey.
Speaker Change: <unk> a new trade.
Speaker Change: Between Middle East and Europe with diesel that only came about in 2022.
Speaker Change: In bigger volumes because until then.
Speaker Change: Most of the needs of Europe.
Speaker Change: We're served by Russian diesels.
So that's the first important well when you look further away and then you take diesel as we all know you take it then from nearby with the U S into Europe, and then Europe.
Speaker Change: Sort of second option would be to then replenish the balance from the middle East.
Speaker Change: So that was the first thing that happened in 2022 and continued into 2024, but then of course at the beginning of 2020 for 70% of core products and decided that it was not a safer option to transit through pantile Bob.
Speaker Change: And two to go to the debt load that meant that certainly the electrical market that was servicing this needle in 'twenty two 'twenty three and 'twenty four for the first time.
Speaker Change: <unk> became you can say at par.
Speaker Change: With a suezmax or VLCC on the particular routing that you did because before a VLCC would have to go cable could hope.
Speaker Change: And up but the <unk> will do that.
Speaker Change: You can say the Suez Canal and save 12 basis. So it was on a per ton basis.
Speaker Change: It was significantly cheaper to do this transportation on an electrical then.
Speaker Change: E.
Speaker Change: But what happened is obviously that the freight rate in the first half of 'twenty four per tonne.
Speaker Change: And is it true to care diesel became so high that it was relevant for the traders to think well this product diesel in itself is less risky.
Speaker Change: Around contamination than poisons gasoline or jet fuel.
Speaker Change: So it was product specific and it was the trade lane specific TV tee off that the small vessels and the big vessels with travel the same.
Speaker Change: And you would therefore called for.
You can say that size matters and that scale of the business was there so.
Speaker Change: So this is.
Speaker Change: I don't think any of US could have played out let's say 10 years ago that we had the discussion will could take that cannibalized.
Speaker Change: You would need to see something akin to this before you could imagine I E. A product that is less risky in high volumes going between.
Speaker Change: How can I say ports that are well developed and that's exactly what you heard relates refiners come on stream being relatively modern.
Speaker Change: <unk>.
Speaker Change: Receiving infrastructure in Europe, being some of the largest ports et cetera. So you could substitute and then what you had lift is actually only the operational thing about the cleanup.
Speaker Change: So to my point.
Speaker Change: Here or are your question is that.
Speaker Change: It is something that can occur when you have but I don't think it's something that I would.
Speaker Change: <unk> sort of forward thinking of course in the circumstances I, just described and something like that yes, but in general this is not going to be at right. Now we see that 3% of CPP on water is on <unk> and Suezmax is at the peak in September last year It was 8%.
Speaker Change: And we think that this is a 3% is more what we would calculate as being a normalized level.
Speaker Change: Okay.
Jacob: Great. That's all very helpful. I appreciate it Jacob thank you.
Jeff: Thanks, Jeff Thanks for the questions.
Speaker Change: The next question comes from Omar <unk> with Jefferies. Please go ahead.
Omar: Thank you Hey, guys good afternoon.
Speaker Change: Yes, just a couple for me.
Speaker Change: Obviously, you've given a wide guidance range for the year makes sense. It's the beginning early in the year end.
Speaker Change: The spot market the spot market.
Speaker Change: You outlined all the geopolitics and the uncertainty, but just maybe.
Speaker Change: In terms of seasonality I wanted to get your sense of how you're thinking about that now.
Speaker Change: Any any kind of ideas of how you think seasonality is going to play out here not not perhaps what all 25, but maybe the first half is there anything that you could see at the moment.
Speaker Change: That suggests there is a shift in how seasonality is going to be.
Speaker Change: Given obviously theres a lot of uncertainty and geopolitics, probably factoring into the seasonality also but just any sense of how do you think the market is going to be shifting here in the coming months.
Speaker Change: Yes, I think we will have seen that.
Speaker Change: I think that currently we are more.
Speaker Change: Up seven to about.
Speaker Change: The items that I described around geopolitics I mean, another key that I think will impact our market and the regulators of course, the OPEC plus we have not mentioned this.
Speaker Change: Some of these things will.
Speaker Change: B, a higher processes for us to try and understand what takes place rather than the seasonality because over the long term there is seasonality, but in the last years is actually different.
Speaker Change: And I don't have a particular view on how it will play out for this year to be honest.
No that's fair and I appreciate you, giving some context there.
Speaker Change: I guess maybe.
Speaker Change: I know, it's still fresh in its early days, but the U S proposal.
Speaker Change: Chinese tonnage.
Speaker Change: Just wanted to get a sense from you or safer for term has that affected anything in how youre doing business weather.
Speaker Change: Do you think about allocating vessels into the U S market or.
Speaker Change: Holding on to ships that are Chinese built or contemplating new buildings has there been any shifts or changes as a result of that.
Speaker Change: Yeah, well that's a.
Speaker Change: Thats a good question I mean, if we looked at a little up above the Tom then in the product tanker market. Our count is that about 26% of the total product tanker fleet is a Chinese built and around 70%, maybe even a little higher.
Speaker Change: The new builds and as you if you read the material.
Speaker Change: The proposal that have come out and which we'll be hearing here end of the month.
Speaker Change: It is both you can actually I would say.
Speaker Change: <unk> get a fee based on both U S.
Speaker Change: Percentage of an existing fleet.
Speaker Change: And on your order book and we take it sort of then at a total level we are.
Speaker Change: At 41%.
Speaker Change: After the latest the sale of our vessels, we are Chinese ratio was 41, and we have zero.
Speaker Change: Neutrals, we have COPD newbuild overall, but we also of course it isn't had zero China sales. So can say if we take it for us it would really be the.
Speaker Change: Currently the U S trade is approximately 20% of our overall trade.
Speaker Change: And it would really be a question of whether the.
Speaker Change: The costs associated with the potential fee on our vessels given our ratio would makes sense for us whether we would reach a rectal. This was currently.
Speaker Change: We don't we don't have any plans, but I think coming back to my point a little more.
Speaker Change: A little before that I think an integrated platform like ourselves, where actually we have I would say the highest degree of flexibility of hardware we maneuver.
Speaker Change: Uncomfortable in saying that I think that.
Speaker Change: This will be something that I would rather be without I think it's going to be costly for the.
Speaker Change: The refiners.
Speaker Change: For that industry, but how it will all play out will you will have lower U S volumes, because it will simply not make sense for the U S. Refiners to two I was a correct their oil and have refined products, which is not competitive in the global market because the all landed.
Speaker Change: Cost.
Speaker Change: The product plus insurance prostrate will be noncompetitive compared to others and that others would then raise I think that dynamic is yet to be seen.
Speaker Change: And we will we will basically just again be a receiver that in many ways.
Speaker Change: Yes.
Alright. Thank you Jacob I appreciate the comments I'll pass it back.
Speaker Change: Thanks.
Ben: Thank you next question comes from Ben <unk> with Clarksons <unk> Securities. Please go ahead.
Speaker Change: Yes.
Speaker Change: Thank you I have a quick one on growth or between you will going forward.
Speaker Change: It seems to have been.
Speaker Change: Quite well.
Speaker Change: In activity in the <unk>.
Speaker Change: Fourth quarter compared to.
Speaker Change: The last two years with you guys on the Florida market in general when it comes to.
Speaker Change: B deals, but how do you view this going forward should we expect sort of peer trades to be the main season for a quarter or the next few months or do you expect any sort of larger type of transactions.
Speaker Change: Yes.
Speaker Change: Thank you Ben and Jacob So so looking forward.
Speaker Change: I think it is going to be depending on the circumstance, but I think looking a little back and clinging to your good point around that liquidity in the market in the secondary market on a sale and purchase in the fourth quarter was significantly lower than what we had been experienced for let's say a number of years and I think the fact is that when.
Speaker Change: Prizes recalibrate to now.
Speaker Change: A step change down to <unk>.
Speaker Change: Healthy rates in a historical sense and good rates for a company like ourselves, but lower than what they were.
Speaker Change: I think the market and potential buyers and sellers simply need to be comfortable with that you have found a new level and then transactions in my opinion will start to creep up I think a testament to that is that we have sold.
Speaker Change: Here very recently three vessels.
Speaker Change: <unk> 2005, so I think that liquidity.
Speaker Change: It comes back when.
Speaker Change: The both the earning potential and sort of prices. They recalibrate from from where they are we then at that point now if we let's just argue that that is the case then I think we will see that that would be more meeting of minds between buyers and say listen that you will have an uptick in volume on <unk>.
Speaker Change: Transaction, but.
Speaker Change: Hey, Tom will tell but I think it's quite explain it and I think it behaves our markets on SMT VA is pretty much like we all understand real estate market set.
Speaker Change: Well it is as a shock to let's say.
Speaker Change: The price of houses or apartments, I mean, those markets tend to also come to a client because people need to evaluate okay. What is then the next year's price and I think it's very much the same here.
Jacob: Thank you Jacob.
Speaker Change: Okay.
Speaker Change: It sounds like it.
Speaker Change: Okay.
Speaker Change: Thanks, Tony.
There are no more questions I will now turn the conference back over to CEO Jacob Melkite for.
Speaker Change: For closing remarks.
Yes, thanks to all of you for listening into the presentation of the annual report 2024 first of all thank you.
Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].