Highlights
• Achieved Q2 VLGC freight rates of USD 35,400 per calendar day
• Generated Q2 Net Profit After Tax of USD 38.6 million
• Concluded the sale and delivery of one VLGC, generating USD 19.3 million in liquidity
• Declared a Q2 cash dividend of USD 0.20 per share amounting to USD 27.0 million
• Completed the second tranche sale of stake in Indian subsidiary BW LPG India
• Entered into an agreement to acquire the LPG trading operations of Vilma Oil
Financial Performance
BW LPG Limited (“BW LPG”, the “Company”, OSE ticker code: “BWLPG.OL”) reported a Q2 2022 Net Profit After Tax of USD 38.6 million, yielding an annualised return on equity of 10.5% with USD 21.2 million of free cash flow. EBITDA was USD 82.6 million for the quarter, representing an EBITDA margin of 67.6%. Earnings per share was USD 0.26.
Net leverage ratio remained at a record low of 24.7% in Q2 2022, mainly due to solid cash flows from operations and investing activities. Available liquidity was USD 360 million at the end of Q2 2022. BW LPG’s strong financial position will allow the Company to withstand any short to medium term volatility, and to invest in the right opportunities for future growth.
On the back of another strong quarter, the Board has declared a cash dividend of USD 0.20 per share amounting to USD 27.0 million. This translates to a pay-out ratio of 75% of NPAT for the quarter.
Commercial Performance
Q2 2022 VLGC freight rates averaged USD 35,400 per calendar day, or USD 36,800 per available day with 98% commercial utilisation. Time Charter Equivalent (“TCE”) income was USD 122 million for Q2 2022, mainly due to higher LPG spot rates and higher fleet utilisation with the final three committed vessels completing their dual fuel propulsion engines retrofitting during the quarter. It also includes a net downward impact of USD 7.7 million related to the effects of IFRS 15 where spot voyages that straddle the quarter-end are now accounted for on a load-to-discharge basis.
The second tranche sale of additional stake in BW LPG India as earlier announced in BW LPG’s Q1 earnings report was completed in Q2, adding an additional USD 30 million in new equity. Following the transaction, BW LPG owns approximately 52% in BW LPG India.
The sale and delivery of BW Liberty (2007-built, Daewoo Shipbuilding & Marine Engineering Co. Ltd.) for further trading was concluded in Q2. The transaction generated approximately USD 19.3 million in liquidity and a net book gain of USD 4.8 million.
BW LPG entered into an agreement to acquire the LPG trading operations from Vilma Oil to expand the Product Services division. The acquisition is subject to approval from the Spanish regulatory authorities, and the transaction is expected to close by the end of 2022. When completed, the expanded Product Services division will enhance the Company’s core shipping business with an additional five time-charter-in vessels; with a combined total of over four million metric tons of physical LPG expected to be traded annually.
Technical Performance
Q2 is the first quarter all 15 LPG-powered vessels are on water serving customers. Approximately 10,000 metric tons of LPG fuel were used, translating to over USD 5.0 million in savings from fuel price differentials and over 15% reduction in carbon emissions compared to compliant fuels.
Market Outlook
For the rest of 2022, VLGC freight rates are expected to remain firm. This is driven by continued growth in U.S. LPG exports and recovering volumes from the Middle East. However, freight rate volatility is expected to remain high as low U.S. inventories coupled with squeezed petrochemical margins in Asia may put pressure on the LPG price arbitrage between the U.S. and the Far East.
For 2023, the Company remains optimistic despite concerns over a large VLGC orderbook and continued macroeconomic uncertainties. If oil and gas prices remain elevated, BW LPG is well positioned to benefit from a strong energy cycle ahead. If the global economy deteriorates and commodity prices fall, the Company believes that its modern fleet, low leverage, and strong liquidity will enable it to navigate through the challenges ahead.
Q2 2022 Earnings Presentation and Interim Financial Report
Please see attachments for the Q2 2022 Earnings Presentation and Q2 and H1 2022 Interim Financial Report.
1. BW LPG Q2 2022 Earnings Presentation
2. BW LPG Q2 and H1 2022 Interim Financial Report
BW LPG will host an investor presentation of the financial results at 13:00hrs CET today. The presentation will be made by Anders Onarheim (CEO), Elaine Ong (CFO), Niels Rigault (EVP, Commercial) and Pontus Berg (EVP, Technical and Operations).
The presentation will be held live via Zoom. Please register in advance at the link below:
http://bit.ly/BWLPGQ22022EP
A recording of the presentation will also be available after the event on the Company’s website at: https://www.bwlpg.com/investors.
For further information, please contact:
Elaine Ong, CPA, CA
Chief Financial Officer
Tel: +65 6705 5506
E-mail: [email protected]
Iver Baatvik
Head of Corporate Development and Investor Relations
Tel: +65 6705 5519
E-mail: [email protected]
About BW LPG
BW LPG is the world’s leading owner and operator of LPG vessels, owning and operating Very Large Gas Carriers (VLGC) with a total carrying capacity of over 3 million CBM. With five decades of operating experience in LPG shipping and experienced seafarers and staff, BW LPG offers a flexible and reliable service to customers. More information about BW LPG can be found at www.bwlpg.com.
BW LPG is associated with BW Group, a leading global maritime company involved in shipping, floating infrastructure, deepwater oil & gas production, and new sustainable technologies. Founded in 1955 by Sir YK Pao, BW controls a fleet of over 490 vessels transporting oil, gas and dry commodities, with its 200 LNG and LPG ships constituting the largest gas fleet in the world. In the renewables space, the group has investments in solar, wind, batteries, biofuels and water treatment.
This information is subject to disclosure requirements pursuant to Section 5-12 of the Norwegian Securities Trading Act.