Release Date: August 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Klaveness Combination Carriers ASA (STU:36K, Financial) reported its best ever half-yearly results, driven by strong performance in both the product tanker and dry bulk markets.
- The company achieved average earnings of $38,376 per day, outperforming standard dry bulk vessels by 2.5 times.
- A dividend of $0.30 per share was declared, equating to a 13% running yield, continuing the company's consistent dividend payouts since its IPO.
- The CABU segment achieved its highest ever earnings at $37,656 per day, benefiting from strong market conditions and efficient operations.
- The company maintains a solid liquidity position with $208.3 million in available liquidity, providing a buffer for potential market fluctuations.
Negative Points
- EBITDA was slightly down compared to the previous quarter, with CLEANBU earnings decreasing by $7,500 per day.
- Operating expenses increased by 3% quarter-on-quarter, with CABU OpEx rising by 15% compared to last year.
- The CLEANBU segment experienced higher emissions due to trading mainly in tanker trades, potentially missing the emissions target for 2024.
- The product tanker market weakened over the summer, impacting forward pricing and creating uncertainty for future quarters.
- The company faces risks related to geopolitical tensions in the Red Sea and potential normalization of trade routes, which could affect ton mile demand growth.
Q & A Highlights
Q: Considering your more cautious market outlook, are you considering taking a more long-term coverage, for example, over a year?
A: Engebret Dahm, CEO: On the CABU side, it's limited by customer preferences for contract duration. We might consider longer coverage if possible, but are comfortable with the current 12-month duration. For CLEANBUs, we are considering extending fixed rate coverage beyond one year.
Q: Can you expand on the terms for the dry bulk contract from Australia to China? And are you looking to increase fixed coverage for dry bulk in 2025 as well?
A: Engebret Dahm, CEO: The contract is a fixed rate and secures cargo volume and operational efficiency for CABUs. We aim to add more contracts to ensure efficiency, likely with a 12-month duration, focusing on operational benefits.
Q: Will you be able to maintain dividends if the tanker market declines significantly in 2025?
A: Engebret Dahm, CEO: Dividends are linked to profitability and cash flow, with a strategy to pay out at least 80% of adjusted free cash flow. Our fleet's flexibility allows us to shift capacity to stronger markets, maintaining higher dividend payouts compared to others in volatile markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
