BW LPG Limited(BWLP) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The total charter income per available day ended at $37,900, which is lower than the previous quarter but above the guidance of$ 36,000 per day [3][4] - The company reported a net profit after tax of $40 million in Q4, with profit attributable to equity holders of$ 31 million, translating to an earnings per share of $0.22 [26][28] - The net leverage ratio increased to 33% in Q4 from 12% in Q3, primarily due to additional borrowings for fleet financing [27][28] Business Line Data and Key Metrics Changes - The product services segment achieved a gross profit of$ 50 million, including a realized profit of $59 million from trading activities [23][24] - The time charter portfolio constituted 38% of total shipping exposure, supporting earnings when the spot market softened [21][22] - The average value at risk for product services was$ 7 million, reflecting a well-balanced trading book [25] Market Data and Key Metrics Changes - Spot market rates fluctuated between $35,000 and$ 40,000 per day, with current rates hovering around mid $20,000 per day from the Middle East and U.S. Gulf [3][9] - The VLGC market fundamentals are positive, with expectations of increased U.S. exports due to terminal expansions [12][15] - The overall LPG export capacity is projected to increase by about 45% by 2028, with North America specifically seeing a 66% increase [16] Company Strategy and Development Direction - The company aims to maintain a solid time charter ratio to mitigate spot market volatility [8][21] - There is a focus on expanding product services to stabilize and enhance returns to shareholders [28] - The company is closely monitoring geopolitical and regulatory developments to optimize its position [10][44] Management Comments on Operating Environment and Future Outlook - Management noted that the VLGC market is currently experiencing a seasonal trough but anticipates increased volumes from the U.S. in the upcoming months [9][14] - The geopolitical landscape is affecting global trade patterns, which in turn impacts the shipping industry [90] - The company is optimistic about the growth prospects in the Indian LPG market and is actively participating in that sector [94] Other Important Information - The board declared a dividend of$ 0.42 per share, representing a 123% payout ratio of total shipping impact for the year [4][28] - The company ended 2024 with a liquidity position of $603 million, supported by$ 232 million in cash [31] Q&A Session Summary Question: Financing strategy related to new ships and dividend payouts - Management explained that share issuance was used as a currency during the Avance Gas transaction and clarified that dividends are paid from product services results, not exceeding earnings [35][38] Question: Impact of U.S. tariffs on LPG trade with China - Management stated that there are currently no tariffs on LPG and emphasized the importance of monitoring developments closely [43][44] Question: Share buyback plans - Management confirmed that a share buyback program is under consideration and may be activated when deemed appropriate [47] Question: Strategy for reducing debt ratio - Management indicated that the current leverage ratio is healthy and that cash flow will be used to gradually pay down debt while also returning value to shareholders [50][51] Question: Governance role of Avance Gas - Management clarified that Avance Gas has divested most of its shares in BW LPG and there are no plans for increased governance involvement [80] Question: Upcoming CapEx in Q1 and FY '25 - Management noted that CapEx will primarily reflect dry docking programs, estimated at approximately $4,000 per day for 2025 [83] Question: Global perception of the shipping industry - Management attributed low price-to-earnings multiples to earnings volatility and emphasized the company's strategy to mitigate this through time charters and diversification into adjacent value chains [88][89]