Half Year 2026 Hafnia Limited Earnings Call Transcript
Key Points
- Delivered the strongest quarterly net profit of $277.8 million since Q3 2022, with a 44.6% annualized return on equity.
- Declared a dividend of $0.5003 per share, marking the 18th consecutive quarter of payouts and an annualized yield of around 21%.
- Reduced net loan-to-value to 13% from 20.2% in the prior quarter, driven by strong cash flow and vessel sales.
- Fleet-wide average TCE reached $44,093 per day, with spot rates near $50,000 per day, reflecting robust market conditions.
- Strategic positioning in the US Gulf and Far East markets, along with LR1 and MR segment outperformance, supported by early tonnage migration decisions.
- Effective fleet supply decreased by 3% since the start of the year due to clean-to-dirty migration, tightening the clean tanker market.
- Strong forward coverage: 80% of Q3 earning days covered at $30,716 per day, and 53% of H2 2026 covered at $28,917 per day, well above breakeven.
- Completed vessel sales with a $39.3 million gain in Q2 and an additional $13.3 million gain from JV sales in Q3, optimizing the fleet.
- Maintained a strong balance sheet with net debt of $527 million and total liquidity of $631 million, including undrawn facilities.
- Positive outlook supported by expected inventory restocking, rebounding exports, and an aging fleet that may reduce supply.
- Market remains disrupted due to the Persian Gulf conflict, with volumes east of Suez constrained and the Hormuz Strait reopening agreement breaking down.
- Clean products on water remain 12% below pre-conflict levels, equivalent to 180 MRs of displaced demand.
- Dirty loadings east of Suez are still roughly 30% below pre-crisis levels, with recovery dependent on Arabian Gulf exports returning.
- Global clean departures are still about 10% lower than pre-crisis levels, indicating incomplete recovery.
- Potential risks from the order book, which could have a stronger net impact from 2028 onwards, and the unwinding of LR2 migration could add to clean fleet supply.
- If Hormuz and the Red Sea reopen for normal traffic, markets could lose inefficiency effects such as ship-to-ship shuttle services and longer ballast legs, reducing ton-mile demand.
- Chinese export volumes may not meet 2025 averages due to domestic demand and inventory constraints, limiting product trade flows.
- Russian clean product exports remain constrained by refinery disruptions from drone strikes, removing about 0.8 million barrels per day from the market.
- Dry dock and off-hire days totaled 392 in Q2, reducing available earning days, though expected to decrease in Q3 and Q4.
- The market is highly political and volatile, with changes occurring weekly, posing uncertainty for future earnings.
Hello, everyone. Welcome to Hafnia second-quarter 2026 financial results presentation. We will begin shortly. You will be brought through today's presentation by Hafnia's CEO, Mikael Skov; CFO, Perry Van Echtelt; Soren Winther, VP, Commercial; and Thomas Andersen, EVP, Head of Investor Relations. They will be pleased to address any questions after the presentation, which will be moderated by myself, Sheena Williamson-Holt, Head of Communications at Hafnia. (Operator Instructions) During this conference call, some statements may be considered forward-looking, reflecting management's current expectations. These statements involve risks, uncertainties and other factors, many of which are beyond Hafnia's control, that could cause actual results, performance or plans to differ significantly from those expressed or implied. Additionally, this conference call does not constitute an offer or solicitation to buy or sell any securities. With that, I'm pleased to turn the call over to Hafnia's CEO, Mikael Skov.
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