Q1 2025 Golden Ocean Group Ltd Earnings Call
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Operator: Good day and thank you for standing by. Welcome to the first quarter 2025 Golden Ocean Grp earnings conference call and webcast. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you need to press star 1 1 on your telephone keypad. You will then hear an automatic message advising your hand is raised. To withdraw a question, please press star 11 again.
Speaker Change: Good day, and thank you for standing by welcome to it to the first quarter 'twenty 'twenty five Golden Ocean Group earnings Conference call and webcast. At this time all participants are in listen only mode. After the speaker's presentation. There will be the question and answer session to ask a question during the session you need to press star one.
Speaker Change: One on your telephone keypad, you want they cant and its magic message advancing your hand this waste can we do.
Speaker Change: Your question. Please press star one again please.
Operator: Please be advised that today's conference is being recorded.
Speaker Change: Please be advised that today's conference is being recorded.
Operator: I would now like to hand the conference over to our speaker today, Peder Simonsen, CEO. Please go ahead.
Speaker Change: I would now like to hand, the conference over to our speaker today, Peter C Medicine field. Please go ahead.
Peder Simonsen: Good afternoon and welcome to the Golden Ocean Q1 2025 release. My name is Peder Simonsen and I'm the CEO and CFO of Golden Ocean. I will today present the Q1 2025 numbers and forward output.
Speaker Change: Good afternoon, and welcome to the Golden Ocean in Q1 2025 release My name is Pepsi Mountain now I'm, the CEO and CFO of Golden Ocean.
Speaker Change: Today's presenter Q1 trying to identify for numbers and forward outlook.
Peder Simonsen: In the first quarter of 2025, we have the following main highlights. Our adjusted EBTA in the first quarter ended up at $12.7 million compared to $69.9 million in the fourth quarter. We recorded a net loss of $44.1 million and a loss per share of $0.22 compared to a net income of $39 million and earnings per share of $0.20 in the fourth quarter. Our TCE rates were about $16,800 per day for cape sizes and about $10,400 per day for panamax vessels, and a fleet-wide net TCE of about $14,400 per day for the quarter. We continue our intensive dry docking program, recording dry docking costs of $38.3 million for 380 dry docking days in Q1 compared to $34.3 million in Q4 relating to 320 dry docking days.
Speaker Change: In the first quarter at 175, we have the following main highlights.
Speaker Change: Our adjusted EBITDA in the first quarter ended up at $12 7 million compared to $69 9 million in the fourth quarter.
Speaker Change: We recorded a net loss of $44 1 million loss per share of <unk> 22 cents compared to a net income of 39 million and earnings per share of <unk> 20 cents in the fourth quarter.
Speaker Change: Our TCE rates were about $16800 per day for Capes artist and about $10400 per day for Panamax vessels.
Speaker Change: Fleet wide net TCE of about $14400 per day for the quarter.
Speaker Change: We continue our intensive dry docking program recording Drydocking cost of $38 3 million for 380 dry docking days in Q1 compared to $34 3 million in Q4 related to 320 Drydocking basis.
Peder Simonsen: Following the share purchase by CNBTEC of close to 50% of the shares in Golden Ocean, a contemplated share-for-share merger between Golden Ocean and CNBTEC was announced after quarter-end. In line with our fleet renewal strategy, we have entered into agreements for the sale of two older Camsomax vessels at attractive prices. For Q2, we have fixed a net TCE of about $19,000 per day. for 69% of Cape side stays and about 11,100 per day for 81% of our Panama states. For Q3, we have fixed a net DCE of about 20,900 per day for 16% of cape-sized days.
Speaker Change: Following the share purchase by C and B tech of close to 50% of the chefs and Golden Ocean.
Speaker Change: <unk> share for share merger between Golden Ocean CMV take was announced after quarter end.
Speaker Change: In line with our fleet renewal strategy, we have entered into agreements for the sale of two older come some extra muscles at attractive prices.
Speaker Change: For Q2, we have fixed a net TCE of about $19000 per day.
Speaker Change: 469% of keeps us states and about 11100 per day for 81% or Panamax space.
Speaker Change: Yeah.
Speaker Change: For Q3, we have fixed a net TCE of about 20900 per day for 16% of Capesize days.
Peder Simonsen: and about 12,900 per day for 38% of Panamak states.
Speaker Change: And about 12900 per day for 38% of Panamax space.
Peder Simonsen: Finally, we declare a dividend of 5 cents per share for the first quarter of 2025.
Speaker Change: Finally, we declared a dividend of five cents per share for the first quarter of 2025.
Peder Simonsen: Let's look a little bit closer into the numbers. As mentioned, we had a total fleet YTCE of 14,400 in Q1, down from 20,800 in Q4. We are in the period of frequent dry dock. From Q4 to and including Q2 2025, we will have dry docked around 30 of our cave sizes in Newcastle Maximus. We recorded 445 days of total off-fire in Q1 versus 364 days in Q4. Dry dock constitutes 380 days in the quarter and 320 days in Q4 respectively. For Q1, in addition to the 9 dry dockings, we recorded 93 days due to spillover effects from delays in completion of dry dockings in Q4.
Speaker Change: Let's look a little bit closer into the numbers.
Speaker Change: As mentioned, we had a total fleet wide TCE of 14400 in Q1 down from 20800 in Q4.
Speaker Change: We are in a period of frequent drydocks.
Speaker Change: From Q4, two and including Q2, two 225, we will have dry docked around Turkey over Cape sizes of Newcastle Max vessels.
Speaker Change: We recorded 445 days of total off hire in Q1 versus 364 days in Q4.
Speaker Change: Drydock constitute 380 days in the quarter and 320 days in Q4, respectively.
Speaker Change: For Q1 in addition to the nine dry dockings, we recorded 93 days due to spillover effects from delays in completion of dry dockings in Q4.
Peder Simonsen: Seven ships scheduled for drydock in Q2 2025, of which three vessels have completed drydock as of today. The rest will enter the yard in June. This resulted in net revenues of $114.7M, down from $174.9M in Q4. On operating expenses, we recorded $95.3 million versus $95.6 million in Q4. Our running expenses entered at $53.8 million, $5.9 million down from Q4, mainly due to less Canada days in the quarter, and lower expenses for ballast water treatment systems recorded in Q4. be extensed or dry your wrinkles. and we saw an increase in the OPEX results of 4.1 million, quarter on quarter, relating to dry docks.
Speaker Change: Seven ships scheduled for dry dock in Q2 225.
Speaker Change: Which three vessels have completed dry dock as of today, the rest will enter the yard in June.
Speaker Change: This resulted in net revenues of $114 seven down from $174 9 million in Q4.
Speaker Change: On operating expenses, we recorded $95 3 million versus 95 6 million in Q4.
Speaker Change: Our running expenses ended at $53 8 million $5 9 million down from Q4, mainly due to less calendar days in the quarter and lower expenses for ballast water treatment systems.
Speaker Change: <unk> recorded in Q4.
Speaker Change: We expense all dry docking costs and we saw an increase in the Opex result of $4 1 million quarter on quarter relating to dry docks and they get $38 4 million versus $34 3 million in the previous quarter.
Peder Simonsen: ending at $38.4 million versus $34.3 million in the previous quarter. OPEX reclassified from charter hire was $1 million, $1 million down from Q4. And we incurred 2.1 million in fuel efficiency enhancements and other vessel upgrades in the first quarter of 2025. Our GNA ended at 5.4 million, down from 6.5 million in Q4. Daily G&A came in at $614 per day, net-of-cost recharge to affiliated companies, $95 per day down from Q4 due to lower legal fees. On charter hire expense, we recorded $1.5 million versus $4.2 million in Q4. as a result of lower vessel dates for the trading portfolio.
Speaker Change: Opex reclassified from charter hire was $1 million.
Speaker Change: 1 million down from Q4.
Speaker Change: And we incurred $2 1 million in fuel efficiency enhancements and older vessel upgrades in the first quarter or two incentive.
Speaker Change: Okay.
Speaker Change: Our G&A ended at $5 4 million down from $6 5 million in Q4.
Speaker Change: Daily G&A came in at $614 per day net of cost recharged to affiliated companies.
Speaker Change: $95 per day down from Q4 due to lower legal fees.
Speaker Change: On charter hire expense, we recorded $1 $5 million versus $4 2 million in Q4.
Speaker Change: As a result of lower vessel days for the trading portfolio.
Peder Simonsen: on depreciation. We saw a reduction in depreciation by 3.6 million to 31.9 million in Q1 as a result of the declaration of purchase options for leased vessels with SFL and thereby extension of their useful life in our balance. on Net Financial Expenses. We recorded 22,000,000 versus 23,300,000 in Q4, a reduction mainly due to lower soft rates in the quarter. On derivatives and over financial income, we recorded a loss of 2.5 million compared to a gain of 13.6 million in Q4. On derivatives, we record a loss of 3 million versus a gain of 11.8 million in Q4.
Speaker Change: On depreciation.
Speaker Change: B.
Speaker Change: So a reduction in.
Speaker Change: Depreciation by $3 6 million to 31 9 million in Q1 as a result of the degradation of purchase options for leases leased vessels with a CFO and thereby extension of the useful life in our balance sheet.
Speaker Change: So net financial expenses.
Speaker Change: We recorded $22 million versus $23 3 million in Q4.
Speaker Change: A reduction mainly due to lower swap rates in the quarter.
Speaker Change: On derivatives and other financial income we recorded a loss of two 5 million compared to a gain of $13 6 million in Q4.
Speaker Change: On derivatives, we recorded a loss of $3 million versus a gain of $11 8 million in Q4.
Peder Simonsen: included in the derivatives. was a market-to-market loss of $7 million on interest rate swaps in addition to a $2.7 million realized cash gain.
Speaker Change: Included in derivatives.
Speaker Change: Plus a mark to market loss of $7 million on interest rate swaps. In addition to a $2 7 million realized cash gains.
Peder Simonsen: And finally... FFA and FX derivatives, a positive result of 1.3 million. For results in investments in associates, we recorded a gain of 0.7 million compared to 1.6 million gain in Q4, relating to investments in Swiss Marine, TFG, and U.S. A net loss of $44.1 million, or a $0.22 loss, and a dividend of $0.05 per share declared for the quarter. Cash flow from operations came in at negative 3.3 million, down from 71.7 million in Q4. Cash flow used in financings were $15.8 million, mainly comprising of net proceeds from new financings of $50 million. which was a drawdown under our revolving credit facility.
Speaker Change: And finally.
Speaker Change: FFA and FX derivatives.
Speaker Change: The result of $1 3 million.
Speaker Change: For results and investments in associates, we recorded a gain of <unk>.
Speaker Change: <unk> 7 million compared to one 6 million gain in Q4 relating to investments in Swiss Marine T F G and UFC.
Speaker Change: Our net loss of $44 1 million.
Speaker Change: Part of 'twenty, two cent loss on a dividend of five cents per share declared for the quarter.
Speaker Change: Cash flow from operations came in at negative $3 3 million down from $71.7 million in Q4.
Speaker Change: Cash flow used in financings were $15 8 million, mainly comprising of net proceeds from new financing of $50 million.
Speaker Change: Which was the drawdown under our revolving credit facility.
Peder Simonsen: $35.9 million in scheduled debt and lease repayment and a dividend payment of $29.9 million relating to the Q4 results. A total net decrease in cash of $19.1 million.
Speaker Change: $35 9 million in scheduled debt and lease repayments on.
Speaker Change: A dividend payment of $29 9 million relating to the Q4 results.
Speaker Change: Total net decrease in cash of $19 1 million.
Peder Simonsen: on our balance sheet. Lyric had cash and cash equivalents of 112.6 million, including 5.9 million of restricted cash. In addition, we've had 100 million of un-drawn available credit lines at quarter end. Our debt and finance lease liabilities totaled $1.44 billion by NQ1, up by approximately $73 million quarter-on-quarter. Average fleet-wide loan-to-value under the company's debt facilities per quarter-end was 39.2%. and a book equity of $1.8 billion and a ratio of total equity to total assets. of approximately 54%.
Speaker Change: On our balance sheets.
Speaker Change: <unk> had cash and cash equivalents of $112 6 million, including $5 9 million of restricted cash.
Speaker Change: In addition, we've had $100 million of Undrawn available credit lines at quarter end.
Speaker Change: Our debt and finance lease liabilities totaled 144 billion.
Speaker Change: But in Q1 up by approximately 73 million quarter on quarter.
Speaker Change: Average fleet wide loan to value under the Companys debt facilities per quarter end was 39, 2%.
Speaker Change: And the book equity of $1 8 billion and a ratio of total equity to total assets.
Speaker Change: Approximately 54%.
Peder Simonsen: In Q1, we saw seasonality play out. for the main drivable commodities in addition to a reduction in sailing distances year-on-year. Ton miles fell 1.5%, with grains and coal being the main contributors, as China reduced their imports by 14% and 25% respectively, compared to Q1 2024. This has impacted the smaller shipping segments the most, which Panamaxis will support. by an increase in the relative share of coal volume. Iron ore volumes fell in line with seasonality driven by weather-related trade disruptions, in particular for Australia. In fact, Brazilian exports were slightly positive year-on-year, despite more heavy rain season, which indicates infrastructure improvements.
Speaker Change: In Q1, we saw seasonal seasonality play out.
Speaker Change: For the main Drybulk commodities in addition to a reduction in sailing distances year on year.
Speaker Change: Ton mile fell one, 5% with grains and coal being the main contributors as China reduced their imports.
Speaker Change: 14% and 25%, respectively compared to Q1 2024.
Speaker Change: This has impacted the smaller shipping segments, the most which panamaxes were supported.
Speaker Change: By increasing the relative share of coal volumes.
Speaker Change: Iron ore volumes fell in line with seasonality driven by weather related trades receptions in particular for Australia.
Speaker Change: In fact, Brazilian exports were slightly positive year on year, despite more heavy rain season.
Speaker Change: Which indicates infrastructure improvements.
Peder Simonsen: Stalk site volumes from Guinea, which had their high season in Q1, recorded a 37% year-on-year growth in Q1, with 48.8 billion tons exported. of which approximately 85% goes to China. On iron ore, Australian iron ore exports were impacted by an extensive cyclone season in Cuba. with volumes reduced by 9.7% compared to Q4 and 2.2% year-on-year. Spain, season in Brazil. also impacted export volumes but interestingly ended higher compared to Q1 2025. despite geopolitical unrest and lowered global growth forecasts. We have seen supportive signals from Australian and Brazilian miners on their expected annual export volume. Both Rio Tinto and Vala expect 2025 full year volumes to reach 325 to 335 million tons, while BHP reiterates their 255 to 265 million tons target.
Speaker Change: Bauxite volumes from Guinea, Richard had their high season in Q1 recorded a 37% year on year growth in Q1 with $48 8 billion tons exported.
Speaker Change: Of which approximately 85% goes to China.
Speaker Change: On iron ore Australian Iron ore exports were impacted by an extensive cyclone season in Q1.
Speaker Change: With volumes reduced by nine 7%.
Sent compared to Q4, and two 2% year on year.
Speaker Change: Grain season in Brazil.
Speaker Change: Also impacted export volumes, but interestingly ended higher compared to Q1 2024.
Speaker Change: Despite geopolitical unrest and lowered global growth forecasts.
Speaker Change: We have seen supportive signals from Australia, and Brazil in miners on their expected annual export volumes.
Speaker Change: Both Rio Tinto involved.
Speaker Change: 2025 full year volumes to reach 325 to 335 million tonnes.
Speaker Change: BHP reiterate SER 265 to 265 million tons target.
Peder Simonsen: The targets represent flat year-on-year development for all three exporters. China continues to be the main importer of iron ore. As for coal and grains, Chinese R&R import volumes have been lowered during the period with geopolitical unrest. Chinese steel production has come down quarter on quarter in line with seasonality and compared to Q1 2024. However, the Chinese government are continuing to stimulate the economy through lowering interest rates. And according to recent announcements from the China Iron and Steel Industry Association, they forecast a 2% year-on-year growth in steel demand, backed by further stimuli in the industrial sector, counterbalancing the weak property market and consumer demand.
Speaker Change: The target represents.
Speaker Change: Year on year development for all three X borders.
Speaker Change: China continues to be the main inputs of iron ore.
Speaker Change: As for coal and grains Chinese iron ore import volumes have been lower during the period with geopolitical unrest.
Speaker Change: Chinese steel production has come down quarter on quarter in line with seasonality and compared to Q1 2024.
Speaker Change: However, the Chinese governments are continuing to stimulate the economy through lowering interest rates.
Speaker Change: And according to recent announcements from the China, China Iron and steel industry Association, therefore, a cost of 2% year on year growth in steel demand backed by further stimuli in the industrial sector counterbalancing, the week property market and consumer demand.
Peder Simonsen: The quality of Chinese domestic iron ore is poor and deteriorating, with an estimated Fe content of around 20-30%. On the back of increased pressure to decarbonize the steel industry, the Chinese government focused on high quality coal and high FE content. And this is highly supportive to Tonmail, with the largest new deposits of high-grade iron ore found in Brazil and Guinea. In Q4 this year, we will see the Simandou project in Guinea, West Africa, commence exports. Simondou high-grade iron ore mine is suspected to ramp up production over two years, adding an additional 120 million tons export capacity annually.
The quality of Chinese domestic iron ore is poor and deteriorating with an estimated F E content of around 20% to 30%.
Speaker Change: On the back of increased pressure to Decarbonize, the steel industry. The Chinese government focus on high quality coal and high F E content.
Speaker Change: And this is highly supportive to tone mile with the largest new deposits of high grade iron ore found in Brazil and Guinea.
Speaker Change: In Q4 this year, we will see the Simandou project in Guinea West Africa commence exports.
Speaker Change: The Simandou high grade Iron ore mine is expected to ramp up production over two years.
Speaker Change: An additional 120 million tons export capacity annually.
Peder Simonsen: In addition, new expansions are underway in Brazil, adding 50 million tons in new capacity over the next years. Iron ore prices continue to be well supported, trading around $100 per ton for a long period. This compares very favorably to the break-even rate of the major miners of around $50 per ton delivered to China. Further, when new high-grid volumes come on stream, ore prices may fall from current levels. and with domestic Chinese iron ore in the high end of the cost curve, a lower iron ore price is expected to favour more tonne-mile heavy trading routes. With significant Chinese investment in mining and infrastructure in Guinea, we expect these volumes to be prioritized as a replacement for its domestic ore, supporting the long-term positive outlook for the Cape Sightseeing.
Speaker Change: In addition, new expansions are underway in Brazil, adding 50 million tons of new capacity over the next years.
Speaker Change: Iron ore prices continued to be well supported trading around $100 per ton for a long period.
Speaker Change: This compares very favorably to the breakeven rate over the major miners over around $50 per ton delivered China.
Speaker Change: Further when you high grade volumes come on stream oil prices may fall from current levels.
Speaker Change: We stood domestic Chinese iron ore and the high end of the cost curve lower iron ore price is expected to favor more ton mile heavy trading routes.
Speaker Change: With significant Chinese investments in mining and infrastructure in Guinea, we expect these volumes to be prioritized as a replacement for it to domestic or supporting the long term positive outlook for the Capesize vessels.
Peder Simonsen: The Guinea government, together with Chinese industrial conglomerates and global mining giants developed infrastructure and port facilities in an area where the largest deposits of high quality bauxite and iron ore are found. Kenyan bauxite over the last five years in an average growth rate of 22%. Bauxite, which is used in the production of aluminum, is supplying the booming EV industry as well as other industries in China. Q1 export volumes from Guinea showed the export capacity with volumes exceeding 48 million tons, 37% up from Q1 2024. The first quarter is the high season for Vauxhawks exports, and this year exports have surprised on the upside, which substantiates the consensus expectation for 5-10% growth annually for the next two years.
Speaker Change: Again, the government has together with Chinese industrial conglomerates and global mining Giants.
Speaker Change: Developed infrastructure and port facilities, and an area, where the largest deposits of high quality bauxite and iron ore salt.
Speaker Change: Kenyan bauxite hub.
Speaker Change: Over the last five years, and an average growth rate of 22%.
Speaker Change: Bauxite, which is used in the production of aluminum.
Speaker Change: Supplying the booming EV industry as well as other industries in China.
Speaker Change: Iran export volumes from Guinea showed the export capacity with volumes exceeding 48 million tons, 37% up from Q1 2024.
Speaker Change: The first quarter is the high season for bauxite exports and this year exports have surprised on the upside, which substantiates the consensus expectation for 5% to 10% growth annually for the next two years.
Peder Simonsen: Massaginian bauxite trade constitutes 12-15% of the total cape-sized tonne-mile demand. 5-10% growth in volumes will represent a 1-1.5% growth in the ton-mile demand. representing the full 2025 order.
Speaker Change: As the Guinean bauxite trade constitutes 12% to 15% of the total capesize ton mile demand.
Speaker Change: 5% to 10% growth in volumes will represent a one to one 5% growth in the ton mile demand.
Speaker Change: Representing the full 2025 order book.
Peder Simonsen: We are currently seeing some instability in Guinea, whereby mining licenses have been temporarily revoked, having a shorter potential impact on exports. Due to the high importance of the iron and bauxite ore exports for the country's economy, we expect that this will be resolved.
Speaker Change: We are currently seeing some instability in guinea, whereby mining licenses have been temporarily roped, having a short term potential impact on exports.
Speaker Change: Q2, the high importance of the iron and bauxite or exports for the country's economy. We expect that this will be resolved.
Peder Simonsen: The order book remains attractive for the Cape Size fleet with around 8% order book to fleet ratio. Shipyard capacity for cape sizes and new custom maxes is limited and yards prioritize container and MNG and tanker orders over dry bulk. Despite historically high new building prices, the profit margins for drywall is limited compared to other vessel segments. We are in a period with increasing competitive advantages for modern vessels, both in terms of fuel efficiency and carrying capacity, but also tightening regulations relating to safety, crew welfare and emissions. As seen on the left-hand graph, the Cape Scythe fleet is aging rapidly, and by 2028, over half of the global Cape Scythe fleet will be over 15 years.
Speaker Change: The order book remains attractive for the Capesize fleet with around 8% order book to fleet ratio.
Speaker Change: Shipyard capacity for Capes Hudson, New costume Axis is limited and yard prioritize container.
Speaker Change: LNG and tanker orders over dry bulk vessels.
Speaker Change: Despite historically high new building prices the profit margins for dry bulk is limited competitor other vessel segments.
Speaker Change: We are in the period with the increasing competitive advantages for modern vessels, both in terms of fuel efficiency.
Speaker Change: And capacity, but also tightening regulations relating to safety crew welfare and emissions.
Speaker Change: As seen on the left hand graph the Capesize fleet is aging rapidly and.
Speaker Change: By 2028 over half of our global Capesize fleet will be over 15 years.
Peder Simonsen: in a period where environmental regulations are tightening. The global capsized fleet will, over the next two years, experience high proportions of dry docks compared to an average five-year cycle. A large share of these vessels are 15-year dry dockings, normally requiring substantial investments to meet class requirements. The focus by major miners and traders on safety, technical conditions and emissions are increasing, which has substantially increased the investment needed to maintain a trading flexibility for older ships. The fleet continues to operate at high level of efficiency with port disruptions in the lower end of the historical range. While we do not expect conditions to increase meaningfully, There is no remaining downside to fleet efficiency.
Speaker Change: In a period, where environmental regulations are tightening.
Speaker Change: The global Capesize fleet will over the next two years experienced high proportion of dry docks compared to an average five year cycle.
Speaker Change: A large share of these vessels are 15 year dry dockings normally requiring substantial investments to meet class requirements.
Speaker Change: The focus by major miners and traders and safety technical additions on emissions are increasing which has substantially increased the investment needed to maintain a trading flexibility for older ships.
Speaker Change: The fleet continues to operate at high level of efficiency with port disruptions in the lower end of historical range.
Speaker Change: While we do not expect conditions to increase meaningfully.
Speaker Change: There is no remaining downside to fleet efficiency.
Peder Simonsen: Sailing speeds remain low and expect this to continue, particularly for the large portion of the older, if inefficient, fleet. We are still only seeing marginal transits through the cave sizes through the Suez Canal and while the reopening will provide some reduction in tonne-mile at phase value. may also re-open tonne-mile acquittive trade.
Speaker Change: Sailing speeds remained low unexpected to continue particularly for the large portion of the older inefficient fleet.
Speaker Change: We are still only seeing marginal transit through the keeps us is through the Suez Canal and while the reopening will provide some reduction in ton mile at face value.
Speaker Change: And also we open ton mile accretive trades.
Operator: I will now pass the word back to the operator and welcome any questions. Thank you, dear participants. As a reminder, if you wish to ask a question, please press star 11 on the telephone keypad and wait for a name to be announced. To withdraw a question, please press star 11 again.
Speaker Change: I will now pass the word back to the operator and welcome any questions.
Speaker Change: Thank you Dear participants as a reminder, if you wish to ask a question. Please press star one one on your telephone keypad and wait for your name to be announced to withdraw your question. Please press star one again.
Operator: Please stand by, we'll compile the Q&A rules to this, we'll take a few moments. Once again, if you wish to ask a question, please press star 1 1. Dear participants, as a reminder, if you wish to ask a question, please press star 1 1.
Speaker Change: Please standby, we will compile the Q&A narrow studies will take a few moments.
Speaker Change: Once again, if you wish to ask a question. Please press star one one.
Speaker Change: Yeah participants.
Speaker Change: A reminder, if you wish to ask a question. Please press star one one.
Operator: Just give us a moment, and now we're going to take our first question.
Speaker Change: Jeff give us a moment and I will go into the first question.
Peter Hogan: And the question comes to the line of Peter Hogan from ABG, Sundar Kolier. Your line is open, please ask your question. Good afternoon.
Speaker Change: And the question comes from the line of Peter Hogan from <unk>. Your line is open. Please ask your question.
Speaker Change: Good afternoon.
Peder Simonsen: I was wondering if you could shed some light on the timing for the contemplated merger. Well, yeah, I suppose more. if you can be specific on dates to look forward. in this.
Peter Hogan: I was wondering if you could shed some light on that.
Peter Hogan: I mean for the contemplated merger.
Peter Hogan: In terms of well, yes, I suppose.
Peter Hogan: More.
Peter Hogan: If you can't be specific on that.
Peter Hogan: Dates to look.
Peter Hogan: Look forward to.
Peter Hogan: And in this context.
Peder Simonsen: Hi Peder, I think as of date it's really hard to say. We are working in accordance with the plan that was announced in the press release and there are obviously in such processes a lot of different work streams, so it's hard to be more specific than what has been announced. OK. Okay. I don't know, is it looking at the prices for the two related equities here? It seems to be a detachment between market prices and the agreed 0.95 exchange ratio. Should we interpret that as the market is not expecting the merger to go through with such an exchange ratio?
Peter Hogan: Hi, Betsy.
Peter Hogan: No I think I think guess of dates it's really hard to say we are working are in accordance with the plan that was announced in the press release and there.
Peter Hogan: There are obviously in such processes a lot of different work streams.
Peter Hogan: So.
Peter Hogan: It's hard to be more specific on what has been announced.
Peter Hogan: Okay.
Peter Hogan: Okay.
Peter Hogan: <unk>.
Peter Hogan: I don't know.
Peter Hogan: Looking at the prices.
Peter Hogan: For the two.
Peter Hogan: <unk> equities here it seems to be a detachments.
Peter Hogan: Between market prices be agreed.
Speaker Change: Oh, Mike five.
Peter Hogan: The exchange ratio.
Peter Hogan: Should we interpret that as if the market. This.
Peter Hogan: It's not expecting.
Peter Hogan: Yes.
Peter Hogan: The the merger to go through with such Nex exchange ratio or.
Peder Simonsen: Or are there any other elements to this that, well, I don't understand? I have to say that that's something that you should probably interpret on my behalf, isn't it? I mean, it's priced in the way it's priced and for whatever reason, I guess some of it has to do with liquidity in the stock, but I leave that to you to interpret. I understand Peter, I do understand that it's probably closer to my profession. to explain it as you understand it. It's quite difficult to grasp that now, so 15, 16, 17% is...
Peter Hogan: Or are there are the other elements to this stuff well.
Speaker Change: Well I don't understand.
Speaker Change: I have to say that that's something.
Speaker Change: Something thats usually probably.
Speaker Change: Great.
Speaker Change: On my behalf as mix.
Speaker Change: It's priced in the way it's priced in.
Speaker Change: Is that fair.
Speaker Change: For whatever reason I.
Speaker Change: I guess some of it has to do with liquidity.
Speaker Change: In the stock today, but I'll leave that to you to interpret.
Speaker Change: I understand that there are Peter I do.
Speaker Change: I do understand that it's probably closer to my profession.
Speaker Change: As you understand.
Speaker Change: It's quite difficult to grasp that now so 15 16, 17% discounts.
Peder Simonsen: Okay, but towards the market then, we've had sort of, I would say a conventional sort of Q1, perhaps somewhat on the low end. If you go back a few weeks, we had some good momentum here, but over the past, well, few trading days, it's stagnant again.
Speaker Change: Okay.
Speaker Change: Market then.
Speaker Change: We've had sort of Oh, I would say a conventional sort of Q1, perhaps somewhat on the low end.
Speaker Change: If you go back a few weeks we have some some good momentum here.
Speaker Change: Over the past Oh.
Speaker Change: <unk>.
Speaker Change: Fewer trading days.
Speaker Change: Documents again.
Peder Simonsen: In terms of near term expectations here, should we think that we need to see Simonsen volumes coming and trying to get covered with ships or are there significant or sort of meaningful catalysts in the marketplace to be expected prior to that? I think what has happened in the recent couple of weeks is that we've seen some disruptions on the Guinea export side. There's been some turmoil on force majeure being invoked on some of the mines and export facilities there and also we saw a breakdown of a some technical equipment in Peru also disrupting some of the markets and these things do not necessarily give a lot of less volumes into the market but they impact the sentiment and given the sort of general economic sentiment that can impact the FFA curve which is what prices freight.
Speaker Change: In terms of our near term expectations here.
Speaker Change: Should should we think that we need to see similar to volumes coming.
Speaker Change: I'm trying to get the cupboard, a wood chips or are there significant or sort of a meaningful catalysts in the marketplace to be expected prior to that.
Speaker Change: I think what has happened in the recent couple of weeks is that we've seen are.
Speaker Change: Some disruptions on the give me.
Speaker Change: The export side.
Speaker Change: There's been some some.
Speaker Change: Turmoil on on.
Speaker Change: Force majeure being invoked on some of the mines.
Speaker Change: Mines and export facilities, there and also we saw for a breakdown of a.
Speaker Change:
Some technical equipment in in Peru also disrupting some of the markdowns and these things do not necessarily give and also less volumes into the market, but they impact the sentiment.
Speaker Change: Given the sort of general economic sentiment that that can impact.
Speaker Change: The FFA curve, which is what prices freight so I think.
Peder Simonsen: So I think incidents like that will impact the market given the nervousness in general but the volumes are picking up in line with seasonality. We see that Vale is now approaching 900,000 tonnes per day which is very solid and I don't see that there's going to be, you know, that gravity will find its way here as well. So, I don't think we need to wait for Simondu. We are still very positive for the second half, expect volumes to be healthy for the capes. So, that's our expectation, but it may take some time given the way the sentiment works as of now.
Speaker Change: Incidents like that will impact the market given the nervousness in general, but the volumes are.
Speaker Change: Picking up in line with seasonality, we see that the.
Speaker Change: <unk> now are approaching $900000 tons pumps per day.
Speaker Change: Which is it's very solid and.
Speaker Change: And I don't see that there's going to be.
Speaker Change: Yeah that gravity will find its way here as well.
Speaker Change: Yeah. So.
Speaker Change: So I don't think we need to wait for Simandou, we are still very positive for us.
Speaker Change: For the second half I expect volumes to be to be healthy.
Speaker Change: For the Capes so.
Speaker Change: So that's our expectation, but it may take some time given the way the sentiment works.
Speaker Change: I don't know.
Peder Simonsen: Okay, and in light of what is now, as I said before, not a very, at least good quarter in hindsight that we... We saw in Q1 and with current rates also, perhaps at least not in the high end. The asset prices continue to be strong here, is it from your perspective? well Is it to be expected that we'll continue to see, according to Clarkson quotes, $79-$80 million for a resale, Newcastle Max, if rates continue for the standard capes in mid-teens level? doesn't something have to give here? Either rates come up or asset prices would see some pressure?
Speaker Change: Okay.
Speaker Change: And in light of.
Speaker Change: Now as I said before.
Speaker Change: Not a very at least good quarter and hidden sites.
Speaker Change: <unk>.
Speaker Change: We saw in Q1.
Speaker Change: Current rates also.
Speaker Change: Perhaps at least not in the high end.
Speaker Change: The asset prices continue to be strong here.
Speaker Change: Is it from your perspective.
Speaker Change: Well.
Speaker Change: If it's to be expected.
Speaker Change: We'll continue to see well according to Clarkson quotes $79 million to $80 million for resale.
Speaker Change: You come from Max if rates continue for the standard capes and sort of.
Teen level.
Speaker Change: Something has to give here either rates come up or off the prices would see.
Speaker Change: Hum.
Speaker Change: We would see some some pressure yes.
Peder Simonsen: Yeah, I mean, you've asked this question, you know, for quite a long time, and that there's been a disconnect between asset prices and sort of the rates. I think that, you know, new building prices have. are high as a function of both sort of supportive long-term fundamentals for the market, but also lack of yard capacity. So I think those are very well supported. We see it also on the second-hand values, which we don't expect to come down. I mean, we have Simandu, we have a lot of the demand sort of fundamentals being positive for the big ships, and not least historically, well, good visibility on the supply side.
Speaker Change: You've asked this question and I'll further for for quite a long time and.
Speaker Change: There's been a disconnect between asset prices and sort of Uh huh.
Speaker Change: The rates are.
Speaker Change: I think that.
Speaker Change: New building prices have.
Speaker Change: Our are higher as a function of.
Speaker Change: Both sort of supportive long term fundamentals for the market, but also a lack of the yard capacity. So I think those are very well supported.
We see it also on the second hand values.
Speaker Change: Which we don't expect it to come down I mean, we have some on do we have a lot of the demand sort of fundamentals being positive for the big ships.
Speaker Change: Not least the historically well.
Speaker Change: A good visibility on the supply side.
Peder Simonsen: So I don't really see what's going to bring values down, and I think it is a matter of time before this this gravity trickles into the freight market as well. There are a lot of warm-offs that impact this market as of now. We had obviously a good Q1 last year, sort of unusually good, and this year it was more in line with seasonality. And we've seen that the big miners are still very much guiding positively for full-year volumes in line with loss, which means that they would need to ramp up their exports significantly for the second half.
Speaker Change: So I don't really see walks.
Speaker Change: Well, it's going to bring values down and I think it is a matter of time before this.
Speaker Change: These gravity trickles into the freight market as well there are a lot of warm off that impact to this market.
Speaker Change: As of now we have obviously a.
Speaker Change: Q1 last year.
Speaker Change: The sort of.
Speaker Change: Unusually good and this year it was more in line with seasonality.
Speaker Change: And we've seen that the the big miners are still very much.
Speaker Change: Guiding positively four or full year volumes in line with loss, which means that they would need to ramp up their exports significantly for the second half.
Peder Simonsen: So I don't think fundamentally there's anything that has changed that picture and obviously supported by a risk-constrained shipyard capacity and the willingness to build the cape sizes and the coastal maxis. I think that's not going to change in the near term.
Speaker Change: So.
Speaker Change: I don't think fundamentally there is anything that has changed that picture and obviously supported by by.
Speaker Change: Constrained shipyard capacity.
Speaker Change: And willingness to to build the Cape sizes.
Speaker Change: And Nicole some access I think that's a that's not going to change in the near term.
Operator: Okay, it's going to be an interesting still market this. I hand it back to the operator. Thank you, Peder. Thank you. Dear participants, as a reminder, if you wish to ask a question or to do some kind of follow-up question, please press star 11. Dear speaker, there are no further questions.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: It's going to be.
Speaker Change: So market this alright, I'll hand, it back to the operator. Thank you. Thank.
Speaker Change: Thank you Pat.
Speaker Change: Thank you.
Speaker Change: Yeah participants as a reminder, if you wish to ask a question or to do some kind of a follow up question. Please press star one.
Speaker Change: The speaker there are no further questions I would now like to hand, the conference over to Peter Coleman for any closing remarks.
Peder Simonsen: I would now like to hand the conference over to Peder Simonsen for any closing remarks. Thank you. I just want to thank you for joining in and have a great rest of the week.
Peter Coleman: Thank you.
Peter Coleman: I just want to thank you for joining in and a have a great rest of the week.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. Have a nice day.
Peter Coleman: This concludes today's conference call. Thank you for participating you may now disconnect have a nice day.
Peter Coleman: Okay.
Peter Coleman: [music].
Peter Coleman: Okay.
Peter Coleman: Okay.
Peter Coleman: Okay.
Peter Coleman: [music].
Peter Coleman: Yes.
Peter Coleman: [music].