Hafnia Ltd. Q4 FY2024 earnings call

Key Highlights:

• Hafnia delivered strong results in 2024 with a full year net profit of $774 million and TCE income of $1.4 billion.
• It is a global leader in the product and chemical tanker market, operating over 200 vessels across 8 pools. As of December 31, 2024, the owned and chartered fleet comprised 125 vessels with a net asset value of approximately $3.8 billion, equating to an NAV per share of around US$7.63.
• Fleet renewal strategy includes dual-fuel methanol chemical IMO II MRs; the first vessel, Ecomar Gascogne, was delivered in January 2025.
• Completed share buyback program in January 2025, repurchasing approximately 14.4 million shares at ~70% of NAV. Q4 dividend payout ratio was 80%, with total shareholder payout for the full year reaching $640.8 million.

Hafnia's core operations generated a total TCE income of $1.4 billion for the year 2024. The adjacent fee-generating businesses contributed $35.2 million in full year revenue. In the fourth quarter, TCE income was $233.6 million, and the commercial pool management and bunkering businesses generated $6.9 million in the fourth quarter and $35.2 million for the full year. Adjusted EBITDA was $131 million for the quarter and $992 million for the year. The net profit for the fourth quarter was $79.6 million, and the full year net profit was $774 million. The net loan-to-value ratio stood at 23.2% at the end of Q4.

Forward-Looking:

• Q1 2025 tanker rates are recovering. As of February 13, 2025, 67% of the total earning days in Q1 2025 have been covered at an average rate of $23,989 per day, and 25% of the full year 2025 earnings are covered at an average of $24,062 per day. Hafnia is projected to generate robust net profits estimated to range around $300 million to $400 million in 2025.

Risks:

• Market conditions uncertainties such as the impact of Red Sea reopening, which may have a marginal net impact on tonnage demand. Sanctions on tankers, including the de facto scrapping of sanctioned vessels affecting crude tanker cannibalization and potentially shifting product tankers into dirty trades. The presence of around 400 non-OFAC listed dark fleet vessels engaged in Russian trade, signaling potential for further sanctions.

Q: Why did you decide to pursue the share buyback program with such bad USD prices?

A: Perry Van Echtelt said they did the share buyback in Q4 as part of shareholder distributions because of the big disconnect between the share price and the NAV. The share buyback was an opportunistic approach when there was a significant disconnect between the share price and NAV.

Q: Can you give color on how China and India have been handling imports in relation to sanctions?

A: Perry Van Echtelt mentioned that when sanctions kicked off in late January, there was a push for other traders to cover lost import volume. Iran exports have dropped to about one-third of what they were in January, and India and China are taking oil from other regions to support imports.

Q: What's your breakeven TCE rate currently?

A: Perry Van Echtelt stated that before dry docks, the operating cash flow breakeven was around $14,000, and it will be in a similar range, maybe a bit higher for Q1.