Hello, good morning, good afternoon. My name is Charles Maltby, CEO of BW Epic Kosan. I'm joined today by our Chief Financial Officer, Uta Urbaniak-Sage. We would like to welcome you to our call to discuss our results for the second quarter and first half of 2023. I would like to highlight that the webinar is being recorded for later viewing and allows for questions to be asked anytime via the Q&A window. We will answer your questions at the end, either verbally or via a written response, or offer to take offline separately later. I would also like to draw your attention to the disclaimer on slide 2. Moving on to slide 3. The second quarter saw improved utilization of 92.8%, irrespective of a heavy dry docking program, driven by a stronger market and an increasing average vessel size. Combined with effectively managed operating costs, we delivered a second quarter net profit of $11.4 million, up from $3 million last year. With an eye on a sustainable and future-focused fleet, we continue to upgrade our portfolio, which includes pressurized, semi-refrigerated, ammonia, and ethylene-capable vessels, by releasing one more non-core vessel during the quarter, contributing to our average vessel size being over 8% larger year-on-year. Consequently, we earned a second quarter revenue of $70.9 million, 5.5% higher than a year ago, despite a 10% reduction in fleet calendar days. Time charter earnings, that's TCE per calendar day for the second quarter, increased by over 17% year-on-year to $13,154 per day, driven by the stronger underlying market and an increase in average vessel capacity. Our lost time injury frequency, LTIF, this quarter was 0.5, an improvement from 0.9 in the second quarter of last year. We thank our colleagues at sea and ashore for their focus on zero harm. Our year-on-year emissions have reduced by 3.4%, with an AER of 23.32 grams of CO2 per deadweight ton-mile, placing us in compliance with our AER and sustainability-linked financing trajectory. We continue to invest in carbon emission reduction, especially during routine dry docking in areas such as silicone paints and other energy-saving initiatives. Our second quarter ROE of 9.2% was up from 2.5% in 2022. Whilst a further step in the right direction, there remains more work to be done. Following payment of a dividend in the first quarter, and in line with the company's dividend policy to target a twice-yearly payment of 50% of net profit, our board has declared a cash dividend of $0.073327 per share, amounting to $11.7 million in total, payable on or about the 5th of September 2023. BW Epic Kosan at a glance. BW Epic Kosan operates a world-leading fleet of 62 vessels, ranging in size from 3-11,000 cubic meters in the pressurized, semi-ref, and ethylene-capable shipping sectors. We aim to deliver to our customers the best solution for their transportation needs, along with exceptional service and operational standards. Zero harm drives our safety culture and commitment to operating without accidents and achieving our environmental goals. Our organization has significant commercial and technical capability across the gas and petrochemical transportation sector, with the experience and flexibility to meet our customers' needs worldwide. This operational and technical experience is enabling us to work alongside industry partners to not only reduce emissions, but also to explore projects that support wider decarbonization, such as shipping related to carbon capture and storage. LPG remains a primary cargo for which we are an integral part of the supply chain, both for distribution over the last mile or regionally around the globe, primarily into domestic or residential markets, typically for use as a cleaner energy in cooking and heating. We are also actively involved in the transportation of petrochemicals like ethylene, propylene, butadiene, and VCM. The company is headquartered in Singapore, with Copenhagen covering our regional activities in the West, alongside teams in Manila and Tokyo. Turning to vessel supply. There are a total of 355 pressure vessels on the water, which includes two new builds that delivered during the quarter. The International Pressure Vessel Order Book has six more new builds scheduled to be delivered in 2023, four in 2024, and three in 2025, a total of 71,000 cubic meter. This represents a total of 3.7% increase in the existing 1.9 million cubic meter fleet capacity. There are also two, 7,500 cubic meter CO2 LPG carrier new builds scheduled for delivery in 2024, which are being specifically built for a carbon capture, utilization, and storage project in Northwest Europe. Looking at the semi-ref and ethylene-capable sectors, the smaller size semi-refrigerated fleet has no new builds on order. There are 3 7,200 cubic meter LNG dual-fuel ethylene vessels under order for delivery next year, which represents a 2.4% increase in existing flat vessel fleet capacity. The newbuild order book must be measured in the context of the potential scrapping pool. In the international pressure fleet today, there are 15 ships totaling approximately 53,000 cubic meter that are aged 30 years and older. These potential scrapping candidates represent 2.8% of existing fleet capacity, which offsets some of the newbuild fleet capacity growth. In the similar size segment, there are 8 non-ethylene semi ref vessels and 2 ethylene vessels that are aged 30 years and older, equivalent to 3.6% of existing fleet capacity. To summarize, for the combined smaller gas carrier sectors, our expectations are for 1.8%, 1.3%, and 0.6% net fleet growth in capacity before any further scrapping in 2023, 2024, and 2025, respectively. Turning to global demand, global LPG seaborne trade remains robust and continues to grow. Drewry latest research has estimated that seaborne LPG trade in 2023 will increase by 4.1% year-on-year to 121.2 million tons, with a related 4.2% growth in ton-mile demand. US LPG seaborne exports have continued to ramp up, and despite OPEC's oil production cuts, LPG exports from the Middle East are expected to increase by 15% to over 50 million tons per annum by the end of 2025, according to Facts Global Energy. China, India, Japan, and South Korea remain the main demand drivers, together imported over 17.4 million tons of LPG in Q2 2023, as reported by Kpler, up 5% quarter-on-quarter. China's LPG demand is driven by petrochemical sector, and imports increased by 47% quarter-on-quarter and 40% year-on-year. US cargoes now account for over 40% of total Chinese imports. Indian LPG demand is from the residential and retail sectors, and imports have risen by 4% year-on-year. Amidst weaker and uncertain economic conditions, industrial and manufacturing activity declined, which impeded the recovery of the petrochemical sector. Consequently, the global seaborne olefins trade, that is ethylene, propylene, butadiene, VCM, and other similar products, trade, sorry, in 2023, is estimated to increase by 2.2% year-on-year, with a further 1.2% gain expected in 2024, according to Drewry. Ethylene exports from the US in the second quarter exceeded 300,000 tons, though 1.5% lower than the first quarter. Kpler's data showed that US ethylene exports to Asia accounted for 64% of the volumes in the second quarter, compared to 70% in the previous quarter, and 19% in Q2 2022, when over 75% of the cargoes went to Europe on account of pricing. Supply of propylene in Asia is expected to increase with new plants coming online that can offer long-haul trading opportunities to the West. FGE reports that eight new propylene dehydrogenation plants, that's PDH plants, are planned to start up in China this year, adding approximately 4.8 million tons of annual production capacity to their existing 12 million tons capacity. Turning to smaller gas carrier demand, the shipping market in Europe started losing momentum halfway through the second quarter as a seasonal lull in LPG demand led to a buildup in shipping length. Freight levels in Europe continued to demand a premium over the East, and longer-term freight levels remained firm. European olefins and producers curtailed operating rates of their plants to balance limited storage and weak downstream demand, impacting the intra-region trade. High freight costs and increasing supplies in Asia limited discussions and fixtures. LPG exports out of Iraq improved during the second quarter, offering gainful employment to ships serving the Middle East and Indian Ocean region. In Asia, rising energy needs supported LPG demand. Bangladesh's LPG imports increased by 4% quarter-on-quarter and by 26% year-on-year, despite their challenges with the value of their local currency. Similarly, as Sri Lanka recovers from weak demand in 2022, LPG imports increased by 39% quarter-on-quarter and by 100% year-on-year. LPG demand from the Asian petrochemical sector also recovered in the second quarter as plants completed turnarounds and operating rates scaled up. However, limited downstream demand, combined with increasing Chinese domestic production, meant persistent low pricing and negative margins, which kept intra-regional shipping activities at low levels. China's propylene and ethylene imports fell by 35% and 4%, respectively, quarter-on-quarter. Turning to the 12-month time charter market now. The overall supply-demand fundamentals have resulted in firmer freight market levels, improving underlying revenues, and an encouraging increase to forward cover rates. Year-on-year, there have been gains across all sectors, +2% for the 3,500 cubic meter, 1% for the 5,000 cubic meter, and 12% for the 7,500 cubic meter, 16% for the 11,000 cubic meter pressure vessels, and 5% for the larger ethylene 8,250 cubic meter sector. All sectors are now above the 10-year average. Our business is globally diversified. At the end of the quarter, we had 11 vessels operating in the Americas, 30 in the Europe, Middle East, Africa belt, and 22 in Asia. In the second quarter, we averaged 4 loading operations every day across our fleet, loading over 1.2 million tons and engaged in 781 cargo operations in 198 different ports. Our cargo mix is split approximately 50/50 between LPG and the petrochemicals, with 1 vessel in the growing ammonia trade. This diversity in geography and commodity has widened with the formation of BW Epic Kosan and provides options for our fleet and relative stability in our earnings floor. Ship-to-ship, or STS operations, are an important part of our business, as we are part of the integral global LPG supply chain. We continue to perform STS operations for delivery of LPG over the last mile into developing economies, with 52 such operations performed during the second quarter. Looking at our operating metrics, we ended the quarter with 59 core vessels, with a total capacity of 466,000 cubic meter and an average size of 7,899 cubic meter, up 8% year-over-year. We also have four additional vessels with a total capacity of 23,573 cubic meter under our commercial management. We continue to fine-tune our fleet to focus on modern, larger vessels. When it comes to the trading of our vessels, we are keen to collaborate with customers over the long term and offer flexibility between time charter, voyage charter, contracts of affreightment, so-called COAs, and spot contracts. During the second quarter, the fleet traded under time charter for 72% of the total voyage days, compared to 65% a year ago, and COA for 7% of the total voyage days, compared to 10% a year ago. During the second quarter, the fleet experienced 297 technical off-hire days, which included the impact of 7 planned dry dockings. Our docking program during 2023 is at a higher level than a typical year due to our fleet age profile. Overall, for the quarter, this resulted in fleet availability of 94.5% and an operational utilization of 92.8%, compared to 96.3 and 91.7%, respectively, a year ago. I would now like to hand the call over to Uta to step through our financials. Thanks, Uta. Thank you, Charles. Starting with our P&L. In the second quarter, we generated TCE revenues of $71 million, 5.5% higher than the $67 million we recorded in Q2 last year, despite the reduction in fleet calendar days by 9.9%. Our TCE earnings per calendar day have increased by 17.2% to $13,154, reflecting an improved market and the increase of our average vessel size as we redelivered smaller vessels and took delivery of larger-sized vessels. Vessel operating expenses decreased 16.5% from $29.3 million to $24.5 million year-on-year, reflecting the reduction in fleet calendar days and the end of significant incremental costs related to COVID-19. Operating expenses on a per calendar day basis decreased from $5,446 to $5,115 year-on-year. Charter in costs were $3 million, a similar level as in Q2 last year. As of 30th of June, we had eight ships on inward charter arrangements, one on a bareboat basis and seven on a time charter basis. G&A expenses per calendar day increased from $1,007 to $1,280 year-on-year due to the overall reduction of fleet calendar days, in-housing of crewing services, and unfavorable foreign exchange movements. Finance expenses increased from $5 million-$5.7 million year-over-year due to a one-off write-off of unamortized deferred financing costs of $0.8 million, following our refinancing and increased LIBOR and SOFR rates on our floating rate debt, partially offset by our reduced indebtedness. As of the quarter end, we had interest rate swaps in place for $149 million at a weighted average interest rate of 1.045%, covering 51% of our bank debt. Our hedge ratio will increase to 95% when incremental forward swaps at the rate of 1.5% commence in June 2024. We achieved an EBITDA of $34.6 million for the quarter, an increase by 31% year-on-year. We finished the quarter with a net profit of $11.4 million. This translates into a return on equity of 9.2%. Moving on to the balance sheet. The book value of the fleet, excluding leased assets at period end, is $759 million, $105 million below latest broker valuations. Our total debt, including lease liabilities at the 30th of June, was $395 million. Including our cash position of $85 million, our net debt is $310 million, equal to 39% of book value, which we regard as a conservative level. Our net asset value, based on broker valuations, is $611 million, or $3.83 per share. As previously reported, we completed the refinancing for $140 million, covering 19 vessels and the hunting line amounting to $20 million that will be available for potential vessel acquisitions. The new facility includes a sustainability-linked margin adjustment with 2 key performance indicators. 1 KPI is linked to fleet emissions, and the second is linked to number of female seafarers. We have no loan expiries until 2026. During the quarter, we sold 1 more non-core vessel. Subsequent to the quarter end, we exercised a purchase option under a bareboat charter contract to buy 1 11,000 cubic meter, 2016-built LPG carrier. The option price was 50% of fair market value of the vessel and fully financed with bank borrowings. In July, we purchased an older semi-refrigerated vessel under a put option arrangement. And sold the vessel above its book value. That leaves us with 62 vessels on the water. I will now hand back to Charles for a summary and outlook. Thank you very much, Uta. To summarize, our improved second quarter results were driven by market strength and an increase in our average vessel capacity. We also continue to add improving longer-term coverage for time charters and COAs, and are effectively managing our operating costs. The supply of newbuild vessels in our sector remains balanced, with the small gas carrier fleet forecast to grow by 1.8% this year before any further scrapping. The order book for larger LPG segments is more substantial, but tight shipyard capacity, demand, and inflationary pressures are leading to increased shipyard newbuild costs and a longer order book for all sizes, alongside the higher technology costs associated with the lower emission dual fuel engines and other emissions reduction improvements. We note that 74% of newbuild orders now placed for LPG vessels are for dual fuel LPG, ethane, or LNG. We expect that the implementation of the IMO's EEXI and CII regulations in 2023 will result in a general reduction in the global fleet's steaming speed. The threat of recession in key markets and higher interest rates, with uncertainty on China's economic growth and ongoing geopolitics, provide some reasons for uncertainty. LPG demand is expected to remain firm, and Drewry's latest research estimates seaborne LPG trade in 2023 to increase by 4.1% year-on-year to approximately 121 million tons, with a related 4.2% growth in ton-mile demand. The olefin seaborne trade is also estimated to grow, but by a more modest 2.2% to 16.1 million tons. Asia remains the main driver for the LPG and olefins markets, but will be impacted by uncertainty of pace in China's growth. Ethylene exports from the US are also an important driver, and whether most cargoes end up in Asia or in Europe will determine shipping ton-mile demand and consequential availability. We are working to manage these impacts through the diversity of geography and commodity available to our fleet and continuing to deliver efficiency to our combined GNA and OpEx levels. Whilst the summer seasonal lull has impacted the smaller gas carrier freight levels in the third quarter, we have placed cover, further cover since the end of the second quarter. As of today, we have TC cover in place for 2023 at $13,458 per day, an increase of $1,615 per day compared to the end of the second quarter 2022, with 45% of our remaining fleet days for the year uncovered. BW Epic Kosan has the scale and operational strength for future success, and is working to grow the average vessel size and to maintain an attractive average age so that we can provide safe transportation in a lower carbon world. We believe that LPG will continue to serve as a cleaner form of energy than many alternatives, sorry, a cleaner form of energy than many alternatives, especially in the residential sector, where it is a growing source of fuel in developing economies. Alongside LPG, we're optimistic for growth opportunities in adjacent sectors, such as ammonia and carbon dioxide. We have now reached the end of our presentation. I'll hand over to Uta to coordinate if there's any questions. Yeah, thank you, Charles. We have a question here from Øystein Bøe. "Hello, good to see that you continue your 50% net profit as a dividend. To enhance your shareholder-friendly attitude, could you elaborate your thoughts on share buybacks? Your stock trades at 64% of book values and 52% of your broker NAV. You recently sold a vessel above its book value. As a shareholder, it seems logic to buy back own shares and sell ships until this difference has closed a bit." Thank you very much, Øystein, for your question, and this topic has indeed been discussed at our board meeting this week. Our board decided to focus on dividends for the time being, but share buybacks, we will definitely keep that in mind for the future. We are also looking at other opportunities to grow the business. You know, there might also be opportunities that we are spending US dollars to buy ships if the price is attractive. Yeah, for the time being, focus is on dividends. Thank you, Uta. Any other questions? There are no more in the Q&A box. Oh, one more. "You mentioned COVID-related costs. What were they?" Hi, Ola. That was last year, so that wasn't this year. It was just an explanation why our OpEx this year were lower than last year, because last year we still had, you know, COVID-related expenses. Nothing for this year. Okay. Thank you very much to everyone for taking the time to join and listen with us today. We appreciate your interest in working for the company. Sorry, in your interest in the company. If you'd like to discuss further, Oh, sorry, Darcy, there's one more question come in. Yeah, it's still related to COVID. Was it airfares? Yeah, it was, I mean, all sorts of things. Airfares, logistics to supply spares to the ships, vaccinations, quarantine costs, hotel costs. Yeah, everything related to COVID-19. Vaccine costs and all sorts of things. Yeah, absolUtaly. Thank you, Ellie. Thank you very much for everyone for joining us today. We appreciate your interest in supporting the company. Thank you. If you'd like to discuss further, if you've got questions you'd like to follow up with directly, with Uta or I, please do so. In the meantime, we look forward to catching up in November 2023 for our third quarter 2023 earnings report. Thank you very much, everyone, for joining.
Loading workspace