BW LPG Limited(BWLP) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2025, the company reported a net profit after tax of $57 million, translating to an earnings per share of $0.38, with a declared dividend of $0.40 per share, representing 75% of shipping NPAT [2][21] - The TCE income was reported at $51,300 per available day and $48,700 per calendar day, slightly below the guidance of $53,000 per day [2][4] - The net leverage ratio decreased to 29.7% from 32.7% at the end of 2024, primarily due to lower lease liabilities [21][22] - Operating expenses for Q3 were $9,300 per day, with an estimated operating cash break-even of $19,400 per day for the own fleet [22][23] Business Line Data and Key Metrics Changes - Product Services reported a gross loss of $23 million and a loss after tax of $29 million for the quarter, attributed to a negative mark-to-market valuation adjustment [3][19] - Despite the loss, the trading activities generated a realized gain of $15 million in Q3, contributing to an aggregated realized result of $54 million as of September 30 [3][4][19] Market Data and Key Metrics Changes - The VLGC market fundamentals remain strong, with expected growth in U.S. LPG export volumes in the mid-high single digits, supported by increased gaseous drilling wells and terminal expansions [5][6] - The total Far East LPG imports on VLGCs remained stable compared to the previous year, with a slight decline in Chinese imports offset by higher Japanese imports [11][12] - The market is experiencing increased competition from U.S. exports, leading to a reduction in Saudi contract prices [12][14] Company Strategy and Development Direction - The company aims to maintain about 40% of fleet capacity locked in on period charters and/or FFAs to protect against downside risks [26][28] - The focus remains on optimizing the performance of the fleet acquired from Avance Gas, with a gradual reduction in the time charter in fleet [41] Management's Comments on Operating Environment and Future Outlook - Management highlighted the geopolitical events and market disruptions that have increased uncertainty in the shipping segment, impacting TCE guidance for Q4 [2][10] - The company expects continued growth in LPG exports from both North America and the Middle East, with stable OPEC+ production supporting the market [13][14] Other Important Information - The company has terminated two ship financing facilities as part of its refinancing strategy, leading to a repayment of $36 million [5][23] - The current fleet consists of 413 vessels, with one more to be delivered in 2025, and the order book includes 108 VLGCs with deliveries extending into 2028 [16] Q&A Session Summary Question: What is the targeted TC coverage for 2026 and 2027? - The company aims for about 40% of fleet capacity locked in on period charters and/or FFAs, with ongoing renewal of current contracts [26][27] Question: Can you comment on the Avance Gas fleet acquisition and its contribution to quarterly profit? - The acquisition included 12 vessels, with minimal impact on time charter coverage as most were trading spot [32][35] Question: Do you see any specific risk from the dark fleet of Russian ships? - The impact of Russian LPG exports is negligible for the VLGC segment, as it primarily involves smaller vessels not affecting the market [36] Question: Will the board consider the distribution of realized gains from the product services division post-year-end? - The board's discretion will determine the dividend distribution, with product services contributing significantly to dividend potential [38][39] Question: What is the view on long-term time charter rates currently? - The company is gradually reducing the time charter in fleet but remains open to attractive opportunities in the future [40][41] Question: How do spot bookings for Q4 compare to the Baltic benchmark? - Spot bookings are closer to the Baltic index compared to the previous months, with improved waiting times and repositioning costs [43][44] Question: What is the reason for the increase in average daily OpEx per vessel? - The increase is attributed to the takeover of Avance Gas vessels and associated management changes, but overall costs are being optimized [45]