Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dorian LPG Ltd (LPG, Financial) has returned over $820 million to shareholders since its IPO, reflecting a strong commitment to shareholder value.
- The company's net debt to total capitalization remains low at about 14%, indicating a strong financial position.
- Dorian LPG Ltd (LPG) is well-positioned to take advantage of investment opportunities, particularly in optimization and decarbonization initiatives.
- The Helios LPG pool is performing well, allowing the company to capitalize on favorable fuel prices and offer commercial flexibility.
- The addition of an eighth board member with extensive experience in global energy and shipping markets is expected to bring valuable insights to the company.
Negative Points
- The VLGC freight market experienced a period of softening due to an unusual combination of forces, impacting rates negatively.
- Weather-related disruptions and terminal capacity issues have temporarily limited export capacity, affecting market dynamics.
- The company's TCE revenue per available day was sequentially lower than the prior quarter, indicating some pressure on earnings.
- The market is experiencing volatility, with disruptions causing sharp fluctuations in rates, posing challenges for stability.
- There is uncertainty regarding the development of the green ammonia trade, which could impact future fleet utilization and investment decisions.
Q & A Highlights
Q: With the current limitations in U.S. terminal capacity affecting VLGC spot rates, do you foresee a soft patch for the next two quarters until terminal expansions are completed?
A: John Hadjipateras, CEO: The efficiency of the Panama Canal transit is a more significant factor than terminal capacity restrictions. We expect the canal to become less efficient for VLGCs due to increased demand from LNG and container ships, which could impact rates.
Q: Do you anticipate the usual winter seasonality affecting U.S. LPG inventories and rates this year?
A: John Hadjipateras, CEO: Weather predictions suggest a colder winter in the U.S., which could pressure the arbitrage. However, predictions can change, and the market's response will depend on actual weather conditions and the Panama Canal's efficiency.
Q: Can you provide an update on the bookings for the current quarter?
A: Theodore Young, CFO: For the quarter ending December 31, 2024, we have fixed just over 60% of available days at a TCE in excess of $40,000 per day, including spot fixtures, time charters, and COAs within the Helios Pool.
Q: How do oil output cuts in the Middle East affect LPG exports, and what are your expectations if these cuts are reduced?
A: John Hadjipateras, CEO: LPG exports from the Middle East are correlated with oil output. If OPEC+ increases production, we expect LPG volumes to rise, although internal usage in countries like Saudi Arabia can cause some variations.
Q: What is the timeline for the ammonia trade to impact the VLGC market significantly?
A: John Hadjipateras, CEO: The development of the green ammonia trade has been slower than expected, but when it materializes, it could quickly absorb tonnage. We are monitoring projects that are moving beyond the planning stage.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
