BW LPG Stock

Good morning, afternoon, evening, everyone. Thank you for joining us today. My name is Aline Anliker, and I'm the Head of Corporate Communications at BW LPG.

On behalf of the management team, I'd like to extend a warm welcome to our shareholders, investors, analysts and valued stakeholders joining us for our quarterly earnings presentation. We appreciate you taking the time to be with us and for your continued interest and confidence in our company.

Joining me today are our CEO, Kristian Sorensen; and our CFO, Samantha Xu, who will walk you through the quarter's performance, key market developments and our strategic priorities moving forward.

Following the presentation, we will open the floor for a Q&A session. [Operator Instructions]. Before we begin, I would like to draw your attention to the legal disclaimers shown on the current slide. Please also note that today's presentation is being recorded. And with that, it is my pleasure to hand over to Kristian.

Thanks, Aline, and hi, everyone. Thanks for joining us as we take you through our second quarter financial results and latest market developments.

But before we start, I would, together with my fellow Norwegians listening in, like to pay tribute to our late King Harald, who passed away this morning.

Throughout his life, he fulfilled his royal duties and roles as Prince, Crown Prince and King impeccably for 9 decades.

He was also a great supporter of the Norwegian maritime community and his wife, Queen Sonja, was a godmother of 2 of our former VLGCs, the Berge Rachel and the Berge Racine, may King Harald rest in peace and long live our new King Haakon.

Now back to today's earnings release. The VLGC market experienced extreme volatility in the first half of 2026. The Middle East war and the subsequent closure of the Strait of Hormuz shifted LPG arbitrage economics.

New trade routes are driving pronounced changes in the global LPG trade flows and vessel supply. I will revisit these developments later in the market section. Moving on to the Q2 results. We reported a shipping TCE income of $74,000 per available day, below our guidance of $81,000 per day.

And the discrepancy from our guidance is primarily due to negative IFRS 15 and FFA adjustments of $16.4 million and $12 million, respectively, corresponding to approximately $7,500 per available day.

The Q2 profit after minority interest was $120 million, equivalent to an EPS of $0.79. And our trading business, BW Product Services generated a strong realized trading gain of $127 million during the quarter, while reporting a loss after tax of $31 million, primarily reflecting a large negative change of $145 million in the unrealized mark-to-market valuation of open positions.

For Q3, we are guiding on about $88,000 per day fixed for 92% of our available days. This is against our current all-in cash breakeven of $24,900 per day. The figure includes the fixed time charter coverage in the third quarter of 41% of our available days at $44,300 per day.

But please see the appendix in this presentation for the full breakdown of the time charter days and levels. The Board of Directors has declared a dividend of $0.95 per share, representing 100% of our shipping NPAT, exceeding the guidance set by the dividend policy. Further, it's still a busy dry docking period for us, and we report 99 dry dock days during the second quarter with a total of 58 dry dock days expected in the third quarter.

As for subsequent events, the commercial team has been busy with secondhand sales and fixing attractive time charter agreements. Since our first quarterly update back in June, we have sold the 2007-built BW Elm and BW Birch.

They are both sold at a similar price level. And as announced, the sale of the BW Birch will generate net proceeds of about $64 million, and this is equivalent to a newbuilding price of about $248 million. The BW Elm was delivered to the new owners in July, and the BW Birch is expected to be delivered by mid-November, latest.

We also announced the sale of the 2015-built BW Levant scheduled for delivery to the new owners by mid-November. We continue building a robust time charter portfolio, and we have fixed out one of our 2016-built LPG dual fuel retrofit vessels for a 5-year time charter in the mid-high $40,000 per day with delivery end 2026.

And we're also working on various other time charter opportunities, which we will announce later, provided successful conclusions of the negotiations. Now let's take a further look at markets. The first half of 2026 was one of the most volatile periods on record for the VLGC market. Following the outbreak of the U.S.-Iran war, the closure of the Strait of Hormuz has caused significant disruption to regional LPG pricing and global VLGC trade patterns.

With the Strait of Hormuz remaining closed and Middle Eastern exports constrained, the U.S. Gulf has continued to serve as a key source for LPG supply to Asia as U.S. export infrastructure continues to operate at high utilization to compensate for lower Middle Eastern export volumes.

Towards the end of June, the LPG price differential, the arbitrage between the U.S. and the Far East narrowed considerably as expectations for a sustained reopening of the Strait of Hormuz grew. More recently, however, spot VLGC rates have strengthened alongside a widening U.S. Far East LPG arbitrage as tensions in the Middle East reescalated.

Declining water levels have further led to increased congestion and transit restrictions in the Panama Canal, prompting more VLGCs to reroute via the Cape of Good Hope. And this consumes considerable shipping capacity and the resulting longer voyages have reduced the effective vessel supply in the U.S. Gulf and supported freight rates.

In addition, several secondhand sales to Middle Eastern players serve new AG trades, including ship-to-ship transfers of cargoes in the Indian Ocean, which in turn reduces the shipping capacity for loading in the U.S. and Canada. As briefly mentioned on the previous slide, U.S. LPG export growth has continued to surprise on the upside with exports increasing by approximately 16% year-on-year in the first half of 2026, supported by higher LPG production and continued expansion of export terminal capacity.

During the same period, Middle Eastern LPG exports declined by 46% as exports remained heavily constrained by the continued closure of the Strait of Hormuz. However, as mentioned on the previous slide, a number of vessels have remained idle in the Arabian Sea awaiting the reopening of the Strait, further tightening effective vessel supply in the U.S. Gulf.

And at the moment, we count in excess of 30 vessels employed or idling in Saudi Arabian Gulf or in the Indian Ocean. While the Panama Canal was already experiencing increasing congestion despite operating at full capacity, persistently low water levels due to drought have more recently forced the canal to operate at reduced capacity. This is further restricting daily transits and tightening available canal capacity.

With increased competition for slots and provided additional -- this provides additional support to VLGC shipping as more vessels are forced to seek alternative routes. And in recent days, we have seen more than $5 million being paid in auction fees to secure northbound transit slots.

And remember that this is in addition to the canal fee of about $500,000 for a VLGC in ballast. The constrained Panama Canal capacity and high transit costs increased the push for more VLGCs sailing the longer haul around South Africa to and from the U.S. and Asia. This is a very similar situation like we experienced in 2023 and the longer sailing distances will, in turn, require additional shipping capacity.

Over the past 4 months, stronger U.S. LPG exports activity to India and China has added further momentum to long-haul LPG trade flows. And we believe it's likely to assume that countries in the Indian subcontinent and Southeast Asia will increasingly source its LPG from the U.S. for strategic reasons, maintaining the trade pattern around the Cape of Good Hope also in the future.

India saw the most pronounced growth with U.S. LPG exports to India increasing by 212% in the first half of 2026 compared with the same period last year. U.S. exports to China also recovered, reaching monthly levels not seen since the onset of the U.S.-China trade war.

And as a result, the U.S. LPG exports to China increased by 2% year-on-year in the first half of 2026. If you look at the LPG export forecast and starting with the North American exports, new capacity is expected to support continued structural growth in the VLGC trade. North American exports are forecasted to increase by 18% in 2026 versus 2025, supported by strong oil and gas activity, expanding export infrastructure and the need to replace constrained Middle Eastern volumes.

Turning to the Middle East. Exports are expected to fall approximately 20 million tonnes short of pre-war forecast for 2026. The shortfall reflects both lost volumes and growth that was previously expected this year that has now been pushed out in time rather than permanently lost. Assuming the Strait of Hormuz reopens, Middle East and export volumes are expected to recover gradually. There are obviously lots of uncertainties, but a full recovery is likely to take approximately 12 to 36 months, depending on local conditions and the extent of infrastructure damage.

Additional U.S. LPG export capacity is expected to come online in the coming years, including recently announced expansions by AltaGas in 2027 in Canada and Energy Transfer in 2028 in U.S. Gulf. While flexible terminals have supported LPG growth so far this year, they are expected to increasingly pivot towards ethane exports, making the continued expansion of dedicated LPG capacity increasingly important.

Taking a look at the current fleet and order book, newbuilding contracting activity has been significant in recent months, and the total order book is now counting 157 VLGCs with delivery stretching all the way to the end of 2030. The fleet has grown in the last few months and now stands at 437 VLGCs on the water.

And while we're now entering a period with higher pace of newbuilding deliveries, it's important to highlight the aging VLGC fleet with 127 vessels expected to be 20 years or older by year-end 2030 compared to 68 vessels by year-end 2026. So to summarize the market outlook, geopolitics and weather are causing considerable market inefficiencies, which in turn are generating additional ton miles for VLGCs, driving the freight market to unprecedented levels.

With Middle Eastern LPG exports severely constrained by the closure of the Strait of Hormuz, U.S. cargoes have increasingly replaced those Middle Eastern volumes into Asia. And the resulting shift towards longer-haul U.S. Far East voyages has generated additional ton miles and supported the wide U.S. Far East arbitrage.

The timing of reopening of the Strait of Hormuz remains uncertain. And following a reopening, we expect the recovery of Middle Eastern LPG export volumes to be gradual as production and export infrastructure will require time to be repaired. The Panama Canal remains a wildcard and declining water levels are tightening transit restrictions, while several shipping segments are competing for a limited number of slots. We expect this to divert more VLGCs via the Cape of Good Hope, further reducing the implicit vessel supply. And that concludes our market segments. Over to you, Samantha.

Thank you, Kristian. Hello, everyone. Thank you all for dialing in today. Let's zoom in on our financial performance for the quarter. Our shipping business delivered TCE income of USD 71,600 per calendar day or USD 74,000 per available day. This reported result includes negative IFRS 15 and FFA adjustment of USD 16.4 million and USD 12 million, respectively.

The underlying spot performance was strong with spot TCE of USD 85,200 per available day, including waiting time and FFA and 87,600 per day, excluding waiting time and FFA. This demonstrates the earning power of our platform in a volatile market. Fleet utilization was 96%, reflecting strong operational execution. The healthy performance was underpinned by a strong spot market and a disciplined commercial execution.

As Kristian highlighted earlier, market inefficiency, disrupted trade flows and longer voyages created meaningful upside in the quarter. Among the uncertainties, it's also important that we maintain prudent downside protection through our time charter portfolio and active [ FFA ] risk management. In Q2, 53% of our available days were delivered by time charter, out of which 43% was fixed rate time charters. Looking ahead for Q3 '26, we have fixed 92% of the available fleet days at an average rate of about USD 88,000 per day.

This also includes index-linked time charter contracts, so the final rate may still move with the spot market. Looking at second half '26, we have secured 45% of our portfolio through fixed rate time charter and FFA hedges at [ $41,000 ] and $48,000 per day, respectively. This gives us meaningful contracted earnings visibility while preserving exposure to the currently strong spot market.

The remaining fixed rate time charter out portfolio is expected to generate approximately $249 million of revenue in second half '26. Next slide, please.

Product Services generated a strong realized trading gain of $127 million in Q2. This is an important commercial achievement in a turbulent market. The reported net result, however, was affected by noncash period-end mark-to-market movements. USD 190 million decrease on cargo position was partly offset by USD 45 million increase on paper position.

After G&A and other expenses, Product Services reported a net loss after tax of USD 31 million for the quarter with net asset value of [ $119 ] million at quarter end. The realized trading result shows the value creation from our integrated cargo, paper and shipping platform, while the unrealized mark-to-market movements reflect the value changes -- valuation changes at a specific balance sheet date.

These movements can be significant in volatile markets and will continue to fluctuate before the positions are realized. We would like to remind listeners that trading gains and losses are realized across different financial periods and cannot be extrapolated from past performance. Our trading model creates value by combining cargo, paper and shipping positions. That said, it's worth noting that reported net asset value does not include the unrealized physical shipping position of USD 70 million based on our internal valuation.

In Q2, our average VAR value at risk increased to USD [ 70 ] million. The step-up was mainly driven by increased market volatility and added cargo from our term contracts. Looking ahead, we expect the VAR to remain elevated as the market remains volatile, and our term contract book will gradually build from the late '26 into '27. Going on to our financial highlights. We reported net profit after tax of USD 138 million. Profit attributable to equity holders was USD 120 million or $0.79 per share, representing an annualized earnings yield of 18% based on the period-end share price.

We reported a net leverage ratio of 23.5% in Q2, down from 26.3% end of Q1. The Board declared a dividend of $0.95 per share, representing a 100% payout of quarterly shipping NPAT. Again, this is ahead of 75% minimum payout ratio under our dividend policy and reflects the strength of our cash generation, liquidity and confidence in the near-term future.

We continue to apply a forward-leaning approach to shareholders in the strong markets while maintaining sufficient liquidity and financial flexibility to fund fleet renewal and future opportunities. For the period end, our balance sheet reported a shareholders' equity of USD 2.1 billion. The annualized return on equity and on capital employed were 27% and 19%, respectively, for Q2.

Our Q2 '26 OpEx was $8,800 per day. For '26, we expect operating cash breakeven of around $18,800 per day for the own fleet and $21,700 per day for the total fleet, including time charter vessels. The all-in cash breakeven is estimated at $24,900 per day after catering for CapEx needs. As of end Q2, we remain in a strong liquidity position of USD 773 million, consisting of $302 million in cash and $471 million of undrawn revolving credit facilities.

Together with our low net leverage ratio, this gives us flexibility to return capital to shareholders, fund committed fleet renewals and prepare for future. In the past 2 months, we paid the first installment for our newbuilding project and exercised the purchase option of BW Capella, which was financed under our Chinese lease facility at USD 61 million.

BW Polaris, which was financed under the same facility, will be repurchased in the next weeks. On Product Services, trade finance utilization stood at $327 million or 44% of our available credit line, including both drawn amounts and the letter of credit.

This leaves us ample headroom to support future trading needs while maintaining disciplined balance sheet management. Looking ahead, our liquidity remains strong and repayment profile sustainable with major repayments weighted towards 2030 and beyond. With that, I would like to conclude my update, and thank you all for listening, and back to you, Aline.

Thank you, Samantha, and thank you, Kristian. We would now like to open the call for questions. [Operator Instructions] and since we only have one question right now in the chat, let's start with this one first. I'll read it out for Kristian, I guess.

With current VLGC spot rates at exceptionally high levels, why are Q3 fixed rates materially lower? And how much open exposure remains in Q4, '26 and '27 to capture the current market strength?

Yes. Thank you for that question. And I'll refer to the table in the appendix showing our time charter coverage for Q3, Q4, full year '26 as well as '27.

And you can see there that we are reporting for the third quarter, 41% of our fleet capacity fixed at $44,300 per day. So that leaves us still with a considerable exposure to the spot market, but we have been quite transparent about our strategy, which is to secure time charters for downside protection as we do operate in a very, very volatile market, which is easy to forget in today's market.

But if you look back historically, VLGC rates have fluctuated considerably during the course of the year. Looking into 2027, you will see that the percentage is currently 36% fixed rate at $43,500 a day. And you can expect us to increase that percentage somewhat provided we can obtain freight rates or time charter levels, which we find attractive. I hope that clarifies.

Thank you, Kristian. We have another question in the chat from [indiscernible] Could you please explain why G&A increased so significantly this quarter? Was the increase partly attributable to costs related to the realized gains from trading activities?

Thank you for the question. As we have reported that the Product Services has achieved quite a commercial result, delivering a positive trading result in a volatile market. Indeed, your assumption is correct that the G&A increase is correlated to the compensation in relation to the positive trading results.

Thank you, Samantha. One more from the chat. What do you expect in a scenario where Hormuz reopens, but Panama Canal stays constrained? Will this probably require very low VLGC rates in order to make the art work while sailing around the [ COTH ].

Yes, [ COGH ] [indiscernible] I think we saw back when there were signs of the Hormuz reopening earlier this year, how the market dynamics changed. And what happened then was that the U.S. Gulf spot rates came under pressure because like you alluded to, there is a narrowing arbitrage between the U.S. and the Far East, which is reducing the number of cargoes being shipped out of the U.S. Gulf in the short term.

However, if you look at the volumes being produced -- of LPG being produced in the States and North America in general, there are not really any other markets than the Asian markets, which can absorb the lion's share of these export volumes.

Europe and Latin America are not markets which are big enough. So what we have seen previously when you have situations like this is that in the short term, you can have -- shipping is typically suffering in the front of -- or in the beginning of such a change in the trading environment.

But eventually, the American LPG will be priced competitively enough to clear in the international market and first and foremost, for sale in Asia. So I think we have seen on numerous occasions that if you look at the medium-term market dynamics, the U.S. LPG prices are extremely dynamic.

And eventually, we do expect also in the future that the lion's share of the U.S. LPG export volumes will be shipped to Asia simply because they are competitively priced. So I think Christopher also has -- from Arctic has a similar question saying, how do you see a potential Hormuz reopening scenario playing out for the VLGC market. It's a little bit of the same answer to that because that's what we saw unfolding earlier this year when there were expectations of a reopening of the Strait.

And the initial reaction is that the spot rates in U.S. Gulf come under pressure. But eventually, this will balance out because the volumes from the U.S. will have to continue flowing from the U.S. to Asia because Europe and Latin America do not have enough capacity to absorb it. Okay.

Thank you, Kristian. [Operator Instructions] I see [ Jorgen Lian ] raising his hand. If you could please unmute yourself.

Just thinking about the India JV vessels that you're selling, you have quite good insights into that market. Any thoughts of scaling up there? Or how do things look considering the disruptions that we're having right now in Hormuz?

Good question, Jorgen. We obviously have a presence in India, which is important for us. And I think you can expect us to continue having that presence. Could be periods where we have less ships. But in general, I would say that it's -- it's a part of our business model, which is very important for us. And as you have seen before, we also last year that we dropped 2 of our 2015-built vessels to the JV.

So that could happen again. But we will get back to the market and announce if that is to happen.

Thank you, Kristian. Do we have any more questions? We can also go back to the chat for a minute. I'll read it out. It's a bit of a long question, so bear with me from [ Vasilis ]. How much new NA LPG terminal capacity was added in H1 '26? Was it 0 per media posts? Given 9 MTPA additions due in H2 '26 and another 7 in FY '27, doesn't the 7.1 MTPA and 7.3 MTPA forecast for FY '26 and FY '27, respectively, on Slide 8 of your presentation look rather conservative?

Thanks for that question, which is always a focus point for us. I think maybe the best way to answer this is that I kindly suggest that you look at our market presentation and earnings presentation last quarter, where you will see the terminal expansions, which have been placed in this year.

And then you can add on the new capacity that we have online for this quarter. So I think that should answer your questions.

Thank you. All right. We can move on. Are there any more questions from the audience? Doesn't seem to be the case. All right.

Then I would like to thank you at this point in time. This concludes BW LPG's Q2 '26 earnings presentation. Thanks, everyone, for joining us today and for your continued interest in BW LPG. We greatly value the time you've spent with us. A replay of the webcast, together with the transcript will be made available on our website shortly. And last but not least, on behalf of the entire BW LPG team, thank you once again for participating, and we wish you a great rest of your day.

Good morning, good afternoon, good evening, everyone and thank you for joining us today. My name is Aline Anliker and I'm the Head of Corporate Communications at BW LPG.

On behalf of the management team, I'd like to extend a warm welcome to all of our shareholders investors, analysts and valued stakeholders joining us for our quarterly earnings presentation. We appreciate you taking the time to be with us and for your continued interest and confidence in our company. Joining me today are our CEO, Kristian Sorensen; and our CFO, Samantha Xu, who will walk you through the quarter's performance, key market developments and our strategic priorities moving forward.

Following the presentation, we will open the floor for a Q&A session. You are welcome to submit questions throughout the Q&A chat, throughout the presentation or alternatively, raise your hand to ask your question directly during the Q&A part.

Before we begin, I would like to draw your attention to the legal disclaimers shown on the current slide. Please also note that today's presentation is being recorded. And with that, it is my pleasure to hand over to our CEO, Kristian.

Thanks, Aline. Hi, everyone. Thanks for dialing in as we review our first quarter financial results and recent developments including our announced new buildings and the Middle East situation, which is still overshadowing the market.

Let's turn to Slide 4, please. The first quarter was another one with significant geopolitical volatility, marked by increased inefficiencies from the Middle East conflict driving higher shipping demand from the U.S. and resulting in extraordinarily high freight rates, which we will cover in more detail in the market overview section.

In addition, as disclosed over the weekend, we are pleased to announce that we have signed a contract for 90,000 cubic meter Panamax newbuildings with HHI with expected delivery from start until the second quarter of 2030. Further details will be covered on the next page.

Moving on to the Q1 results. We reported a TCE income of $55,500 per available day above our guidance of $54,000 per day and $1,300 per calendar day. The Q1 profit after minority interest was $164 million, equivalent to an EPS of $1.08. Our trading branch, BW Product Services reported a gross profit of $127 million and a profit after tax of $98 million for the quarter. The extraordinary high results are mainly driven by large unrealized mark-to-market valuation gain of the portfolio.

Prior to no delays, we expect a large part of this to be realized by end of Q2, for the second quarter 2026, we're guiding on about $81,000 per day fixed for 85% of our available days. These are solid levels of our all-in cash breakeven of $24,500 per day. The figure includes the fixed time charter coverage in the second quarter of 40% of our available days at $44,000 per day. Please see in the appendix in this presentation for the full breakdown of time charter days and levels.

The Board of Directors has declared a dividend of $0.67 per share with $0.56, representing 100% of our shipping NPAT in Q1 and $0.11 per share from Product Services final dividend from 2025. Following the front heavy drydocking activity in 2026 with 257 days related to dry docking in Q1 alone. The majority of the dry docking is now behind us. We expect off-hire days to reduce to approximately 105 days in the second quarter.

In other subsequent events during the first quarter, we fixed BW Brage and BW Gemini for 5- and 3-year time charter-out agreements in the low $40,000 per day. We also fixed the BW Pampero, which is part of our India fleet for a 1-year time charter out at high $60,000 per day with delivery in August.

As the Middle East tensions have persisted and the Strait of Hormuz remains closed. We still have one vessel from our India flag fleet inside the Persian Gulf on time charter. The 2 other vessels transited the Strait of Hormuz safely back in April.

Turn to Slide 5, please. Okay. During the weekend, we announced that we have signed a contract for the construction of 800 90,000 cubic Panamax VDCs, with an average new building price of approximately $117.5 million per vessel. This is subject to final technical specifications on the respective vessels.

The new buildings are expected to be delivered from start 2029 until the second quarter of 2030. This new building series underpins our ongoing fleet renewal program, reducing the average age of the current fleet by about 3 years after the last newbuilding delivery. Furthermore, the Panamax new buildings represent the most flexible design, future-proofing our fleet composition. Newbuilding prices have eased from peak levels around $125 million some years ago, while shipyard capacity remains constrained for the foreseeable future in a high energy price environment. This is likely to increase the inflationary pressure the way we see it.

Against this backdrop, the timing of the new building order is supported by a strong balance sheet, enabling fleet renewal and capital structure optimization by balancing shareholder returns with long-term value creation. Furthermore, the new building deliveries follow the peak of the order book in 2027 and '28, coinciding with additional U.S. and Middle East LPG export capacity coming online. Various financing options are currently being considered with 30% of total newbuilding price to be paid within the next 6 months. Next slide, please.

Now let's take a look at the market. Increasing inefficiencies are reshaping LPG shipping economics and driving a historically strong VLGC market. The LPG shipping market entered 2026 on a strong footing, supported by solid U.S. LPG production growth and accelerated ramp-up in export capacity. Following the geopolitical disruptions, the market has experienced simultaneous reactions that are reshaping trade dynamics, increasing inefficiencies, absorbing shipping capacity and ultimately supporting higher freight rates.

Heading into 2026. U.S. propane inventory stood well above historical norms at around 100 million barrels versus 85 million barrels a year earlier. Strong production, combined with stable domestic demand created a persistent export surplus. At the same time, infrastructure developments added further momentum with the Energy Transfer, Targa and enterprise terminal expansions ramping up VLGC loading capacity in the U.S. Gulf.

The outbreak of the U.S. Iran war end of February and the effective closure of the Strait of Hormuz to Middle East LPG exports. This removed a significant portion of EDC loading volumes almost immediately and trigger the forced relocations as the vessels increasingly sold cargoes the U.S. Gulf.

The Middle Eastern exports with Middle East and exports remain in a [indiscernible] the supplier of LPG to Asia, operating close to maximum utilization as it compensates for the loss of Middle Eastern export volumes. At the same time, high spot fixture activity in the U.S. has tightened vessel availability and supported elevated freight rates. In addition, a larger number of LDCs than expected has remained idle in the Arabian Sea waiting for the straight of Horus to reopen rather than seeking U.S. cargoes, and this has further tightened shipping supply.

As other shipping segments with high willginess to pay also experience change in net trade flows, the traffic and congestion in the Panama Canal have increased. This has resulted in more VLGCs selling via the Cape Good hope significantly extending voyage distances between the U.S. and Asia and thereby absorbing additional shipping capacity from the global fleets. And this long-haul trade pattern via cap a good hope has been bolstered even further as India and Southeast Asian countries are now importing basically all the LPG from the U.S.

Next slide, please. Looking at the North American exports. The expansion is taking place somewhat earlier than anticipated as U.S. exporters are racing to replace lost Middle East volumes. Consequently, North American exports forecast is raised significantly for 2026 on the back of high oil and gas activity and demand for Middle East replacement volumes. Provided a reopening of the Middle East exports markets, volumes from the region will contribute more to overall growth in global shipping volumes.

In our forecast, we assume reopening of the homes during second quarter 2026 and then a gradual normalization, but this is obviously hard to know for sure. More U.S. export capacity is set to come online in the coming years. While we conservatively anticipate most of Energy Transfer and enterprise flex export capacity being allocated for ethane exports and the very large ethane carriers are delivered over the next years.

Next slide, please. Looking at the current fleet and order book. We can see that the fleet has grown in the last 3 months and now stands at 429 LDCs on the water. The order book is made up of 130 VLGCs currently under construction with delivery stretching all the way to the beginning of 2030. We've seen a significant ramp-up in contracting our vessels in recent months. And while we expect more newbuildings to be delivered going forward, we also keep in mind that 9% of the fleet is older than 25 years.

So as a summary, there are several factors driving the BGC freight market to unprecedented highs. Sharp increase in U.S. LPG exports, coinciding with the Middle East exports being choked has created a long-haul trade pattern where the sailing distances are compensating for the lost Middle Eastern volumes. As mentioned, it's impossible to have a clear view on when the Strait of Hormuz reopened. But when it does open, we expect repairs or production export infrastructure to take time before the LPG exports reach prewar levels.

As I said before, the Panama Canal remains a wildcard in our markets. And we believe the congestion will increase as several shipping segments are competing for the limited number of transit slots. While the order book is substantial, the fleet continues to age with more than 40 vessels equivalent to 9% of the fleet already exceeding 25 years of age. Also keep in mind that 53 wheel disease are considered part of the shadow fleet.

And that concludes our market segment. Over to you, Samantha.

Thank you, Kristian, and hello, everyone. Let's zoom in on our financial performance for the quarter. Start with our shipping performance. We delivered a quarter with a TCE at USD 51,300 per calendar day or USD 55,500 per available day. The free utilization was 92% after deducting technical off-hire and waiting time. The healthy performance was underpinned by a strong spot market full of uncertainties and a continuous disciplined execution of our commercial strategy been time charter portfolios and FFA at a healthy level.

In Q1, we have fixed the time charter portfolio at 53% and out of which 41% was fixed rate time charters. Looking ahead for Q2, we have fixed 85% of the available fee days at an average rate of about USD 81,000 per day. This also included index-linked time charter contracts, which could fluctuate with the spot market changes.

Looking at full year 2026, we have secured 42% of our portfolio with fixed rate time charter and FFA hedges at USD $44,800 and $48,100 per day, respectively. Altogether, our time charter out portfolio is expected to generate around USD 245 million.

Next slide, please. Product Services posted a realized loss of USD 10 million in Q1. Separately, Product Services also reported USD 145 million increase in mark-to-market on our cargo position, offset by a USD 8 million decrease in paper position. After accounting for general and administrative costs and other expenses, Product Services reported a net profit after tax of USD 98 million for the quarter with net asset value of USD 150 million at quarter end.

As we highlighted previously, this mark-to-market movement would fluctuate regularly are largely driven by the gradual phasing in of our multiple year term contract as reflected in a volatile market. While the product value adjustments are significant, they reflect delta between the balance sheet date, and we'll continue to see fluctuations before the positions are realized. We will continue to report our future trading performance, including the mark-to-market changes via our quarterly trading updates. It's also important to note that trading gains and losses are realized across different financial periods. They cannot be extrapolated from past performance as unrealized position will vary depending on the end period valuations.

Our trading model is designed to create value by combining cargo, paper and shipping positions. With that in mind, we would like to remind you that the reported net asset value does not include unrealized physical shipping position of USD 69 million, which is based on our internal valuation.

In Q1, our average VAR, value at risk, was USD 6 million, reflecting a well-balanced trading book, including cargo, shipping and derivatives. The VAR is expected to increase as we continue to account for the increased term contract volumes that will start from the end of 2026 and continue to accumulate into mid '27 and beyond, while this also reflects a volatile market in the meantime.

Next slide, please. Okay. Going on to our financial highlights. We reported a net profit after tax of USD 187 million, including a profit of $9 million from BW LPG India and $98 million profit from product services. Profit attributable to equity holders of the company was USD 164 million, which translates to earnings per share of $1.08 per share for the quarter and an annualized earnings yield of 25% when compared against our share price at the end of March.

We reported a net leverage ratio of 26.3% in Q1 and down from 28.4% at the end of '25. The reduction reflects principal repayments made during the quarter. The Board declared a dividend of $0.67 per share representing 100% payout of our quarterly shipping profits and $0.11 per share, 2025 final dividends from BW Product Services.

The 100% shipping profit payout is beyond the 75% payout ratio as guided by our dividend policy, Abeta newly announced fleet renewal program. to invest up to USD 940 million for 8 Panamax vessels. The dividend decision is a reflection of a continuous for lining principle to give back to our shareholders in a good market.

We are also pleased to see such principle is supported by our healthy liquidity and positive market outlook. For the period end, our balance sheet reported shareholders' equity of USD 2 billion. The annualized return on equity and on capital employed for Q1 were 38% and 30%, respectively.

Our Q1 2026 OpEx was concluded at $7,300 per day, a reduction than previously reported. For '26, we expect our own fleet operating cash breakeven to be about USD 19,000 and $21,300 for the whole fleet, including to charter vessels. The all-in cash breakeven is estimated to be $24,500 a slightly up from last reported due to predelivery funding cost for the new buildings.

Next slide, please. Finally, as of end Q1, we maintained a healthy liquidity position of $680 million, which consists of $176 million in cash and $442 million undrawn credit facilities, providing a strong base to support our new building projects.

Looking ahead, our liquidity stays strong. Repayment profile remains sustainable with major repayment starting from 2030. We're confident of maintaining a healthy liquidity and repayment profile to support our new building projects.

On product services, trade finance utilization stood at USD 161 million or 22% of our available credit line, leaving ample headroom for future trading needs.

And with that, I would like to conclude my update. Thank you for listening, and get back to you, Aline.

Thank you, Samantha and thank you, Krisitian. We would now like to open the call for your questions. [Operator Instructions]. Yes, we have Jostein Aschjem.

Yes, perfect. So this is Jostein from DNB Carnegie I just had a question regarding product services. So as Samantha also mentioned during the presentation, you had a very strong Q1 figures, which was also driven by the mark-to-market effect on the contract portfolio. Currently, it looks like the FOB premium has come down somewhat. Have you taken any actions in order to secure some of the profit?

Or how should we think about the product services results going forward.

Jostein, thanks for the question. I can start. So like you say, the the arbitrage is somewhat narrower than it was at the peak. But as you may know, the business model at product services is having is based very much on hedging positions and ensuring that you can actually capture the profit through the paper market by locking in the margins. So as mentioned by me in the presentation, we do hope and expect that a large part of the mark-to-market gain will come to realization in the second and probably also into the third quarter.

So but we will come back with the trading update as per normal in between the earnings presentations and can shed some more light on it then. Samantha, anything you'd like to add?

No, that's correct, Kristian. And I think it's also about where portfolios positions in the curve. -- although the position has changed as we speak. We do expect there's some realization or the reclassification from open position to be realized to be -- to come through by Q2.

Yes. So the realized position should be get going forward as well. But how about the mark-to-market, -- should that be more normal or potentially negative as the terminal fees has come somewhat down.

Well, it -- since you're coming from a very high level, it's a little bit like the freight market as well. I don't think it's completely natural if you see a correction in the market reflected in the in the mark-to-market and the valuation in the portfolio because you're coming in from a very high level. So relatively, there could be a correction on the back of that. Did that answer your question?

Yes. Yes. And if I just have one last question. So I saw the charter hire expenses come up some $7 million from the last quarter. Is it any sort of profit sharing mechanism on the charter hire contracts? Or anything else explaining the difference? It doesn't look like you have added any time charter vessels into your portfolio?

It sounds like you have a cover shipping long enough and U.S. board.

Would it be possible to give any indication on the mechanism?

It's down to the -- it's a profit split on some of the time charters. So I prefer not to go into detail on the specific deals that we have done.

Fully understand.

Thank you. Next up, we have Tim Mullen, please, if you want to proceed.

I wanted to start by asking a follow-up on the vessel that is strip inside the straight. The vessel is on time charter. But when does the contract end? And secondly, should the vessels still be trapped when the contract end date arrives. How would you proceed? Would you still receive a daily here? Or how would that work?

It's -- the chip is on time charter. It's with a cargo on board. So of course, the charters would like to sell and discharge a cargo before redelivering the ship. So it's -- that's something we'll have to get back on -- but the situation is that the ship is still on time charter. And when the Strait of Hormuz opens, we hope that we can ensure a safe transit for the ship, so she can find a discharge for cargo.

Okay, makes sense. Thanks for the color. And I also wanted to ask about your assumptions for Middle Eastern volumes on Slide 9. Krisitian, you show 2020 volumes down a bit relative -- and I was wondering what are the key assumptions behind that? Is it damage to infrastructure facilities in the region?

Yes. Well, as you know, the recent much LPG flowing out of the Middle East at the moment. So of course, you will then have a reduction simply because the recent any exports from the Middle East taking place as we speak. So the -- if you go back to some of our previous presentations, we had forecasted about 44 million tons, up from 340 million last year to be exported from the Middle East. And obviously, this is reduced now that there is basically no exports taking place.

But Kristian, I meant 2027, not 2026.

Yes, sorry. So that's -- sorry, misunderstood. That's the ramp-up, which is gradually taking place as we believe it will take probably a year even longer to finalize repairs on production and export infrastructure.

Thank you. Any more questions verbally before we move on to the Q&A in the check. If not, then maybe let's turn to the written Q&A. The first one would be from Arne. Can you provide some color on TC fixing going forward? -- for example, is plus/minus 30% coverage in 2027 meant to remain stable? Or will the company aim to maintain about 40% coverage as in Q1 '26.

Thanks for the question, Arne. We have more or less an outspoken aim to have approximately 40% at least on time charter. So you should expect us to increase that cover ratio as we get closer to 2027. But it also depends on what time charter levels we can see in the market because, obviously, we also want to -- we also need to fix vessels for period business at the level we find attractive. But provided the rate level, the time chart level is attractive. We will that cover ratio up towards the 40% we are talking about.

There is a follow-up question from Arne.

Could you provide some additional information regarding the decrease in cargo and delivery expenses as well as voyage expenses. Additionally, could you elaborate on the factors driving the increase in chartering expenses during the period. Yes, Samantha, I think this is probably one for you.

Arne, can you point a little bit closer, which part you're referring to? Just before you come up with a more specific reference of numbers, I could say that some of the voyage-related costs could also be because the product services as part of a risk management process have reduced CFR cargoes and the increased some of the FOB deals, which then naturally reduced the voyage expenses.

In the meantime, you can, if you can follow up with the more details in terms of a specific what numbers you're looking at, that would be very helpful.

Then meanwhile, let's move on to a question from Andersch. With respect to the currently very elevated VLGC rates and LPG inventories seemingly plateauing in the U.S. Could you offer some views on future or situation?

Well, I think I also replied so along the same lines earlier. Of course, the AR was wide by the ever probably back some weeks and months ago. And it's not natural that the arbitrage is narrowing as people have filled up their storage at least for a short period of time. And then they are typically widens again.

So this is typically, what we see when we also have a normal market functioning where you have wide arbitrage periods with wide arbitrage followed by more are arbitrage because simply because people have in the consuming markets stocked up, and they are not as willing to pay up for additional cargoes any longer. So I don't know if that replied answer the question, but, yes.

Thanks, Kristian. We have another question from Gregory regarding the VLGCs waiting of Hormuz. Do you expect Sun to migrate to the U.S. market after receiving U.S. Coast Guard regulatory approval and if so, to what extent.

Yes, we do see more of the ships balancing to the U.S. for cargoes, more of the Indian control tonnage, for instance. So the answer to this is yes. It's a number which is hard to specify here now on the spot, but it's clear that there are more ships which have the U.S. Coast Guard approval for loading in the states and have also taken the decision to ballast into the [indiscernible] Basin for cargoes out of the U.S.

Thank you. We have a couple of more questions actually. So Someone is referring to Page 9, are the new enterprise and Atlas gas terminals already at full run rate and when did this start or how much more do they have to ramp up? And why do you show minimal growth in U.S. exports in your 2728 forecast despite the new terminal start-ups.

Yes. So the flattish growth that we are showing is due to our, like I said, rather conservative assumption that most of the flex capacity, which is currently going at full steam or allocated to LPG exports, will be allocated to ethane exports from energy transfer and enterprise as more of the VLEC ethane carriers are delivered in the coming years.

Then you will see that on the same slide, there is another expansion taking place with a pure LPG export terminal facility from enterprise and AltaGas, which is going to take place somewhat later this year.

And then you have Targa and Onno also expanding towards the end of the decade. So I may say we are a little bit conservative in this assumption, but we like to take that approach since we also see that this is linked to the deliveries of all the ethane carriers in the coming years.

And then we have a follow-up from Arne on his earlier question directed to cement. So it's regarding the Voyage expenses. He was referring to the decrease from $92.9 million in Q1 '25 to $59 million in Q1 '26. The difference in charter in expenses has already been addressed. So thank you for that clarification as well.

Is there anything you would like to add here, Samantha?

Well, I think part of it is -- well, some of our savings on the bunkering due to we have very much increased the bunkering to use our fuel in a like-for-like basis especially in a day like this is a cheaper alternative than a conventional field. Separately, we also make some savings on the port charge side as well as other vessel-related costs as captured in the line of voyage cost.

So if you -- that's pretty much reflect the major change of the voyage cost honor.

And Arne comments, thank you for the helpful responses as always. So thank you, Samantha.

Another question from Andersch. Could you share some further views on Panama congestion the situation as of now, but also considering the fairly high chances of El Nino this year.

Sure. The Panama Canal congestion is basically varying from day to day, but -- so it's hard to give exact picture today. But just to illustrate, we have over the last couple of weeks, had auctions for available transit slots reaching as high as $4 million just to have access to the Panama Canal. And this is before the canal fees.

And then suddenly, 2 days later, could see in the next auction that it drops down to maybe 400,000 300,000. And then 2 days later, it's up to $3 million again. So this is simply speaking, a supply-demand situation on the day of the auctions. But the trend is pretty clear. And especially if you are stuck on the wrong side of the canal, you have to make make a transit to not lose the cargo dates in Houston.

Of course, people are willing to pay up quite substantially to get through the canal. And please also keep in mind that the competition from other shipping segments is increasing as more ships are being delivered in the container segments LECs from the ethane side, VLGCs and so on.

So it's something we believe is going to continue and even strengthen in the years to come. When it comes to El Nino, I can see everyone is talking about 80% chance of El Nino and lower water levels in the Panama here. If that plays out, it would be a very similar situation to what we saw in 2023, I think.

And obviously, that would push more VLCCs and also other shifts from other segments around the Cape Good Hope to and from the U.S. and Asia.

There's a follow-up from Andersch. Could you elaborate a little on which type of ships tend to bid their way through the canal when it contests, so like dry, LPG, et cetera, guessing it varies, but at least to some further color on the topic.

LPG vessels definitely have had a high willingness to pay up because the freight levels have been accelerated as they are. Tankers have also, from time to time, paid up. We know, for instance, that Australia was almost running out of diesel has at least chatter in the market was saying at 1 point. And of course, then the tankers heading to that direction, we're also willing to pay quite a lot to secure transit slots, ethane carriers, container ships are always there also to compete. So it's a good mix, I would say.

And then follow-up, El Nino again, will this have a lagging effect? Or is it coincidentally typically?

Not entirely sure what you referred to on that one, Andres. Could you be a bit more specific, please?

So then maybe let's continue with increases when you say that 85% of available fleet days fixed at $81,000 is that number of available days, including or excluding the TC days fixed at [ 44,000?]

Yes. As mentioned, it's including the time charter portfolio.

All right. The next 1 would be, thus, the bookings data of 85% fixed at $81,000 per day just correspond to the spot bookings, -- or does that also include the TC bookings of 39% at 41.80. And does it also factor in the FFAs or not.

So Yes. I think Kristian has previously mentioned, basically, the 85% has included both of the TC fixed rate TC coverage as well as the FFA.

And then another one on a different topic. Given strength on earnings, is there any consideration for stock repurchases in the open market, this from Kevin.

Kevin, as you know, we have a share repurchase program, which we actuate from time to time. It's typically when we see our share trading quite well below NAV -- so it's not something we find attractive and creative -- or shareholder value creating at the moment because our share price is is trading at the levels above NAV at the moment.

Thank you, Kristian. And then Andersch specified on the El Nino. So his question was related to if El Nino will drive lower water levels in the canal immediately? Or does it take some time from the higher temperature until it starts affecting water levels that drives congestion and long-haul effects for transporters.

And this is it at the level of detail. I'm not sure I can reply here and now. So I think -- what we could do is to get back to you after having looked at that with the research team here in our company. So we'll get back to you.

Thanks, Kristian. Let me check that we have any more verbally -- like any more verbal questions, someone who has raised his or her hands -- and then quickly in the jet again. I don't see any more questions right now.

All right. So if no more questions, then I would like to say thank you to everyone for joining us today. and for your continued interest and support of BW LPG, we really greatly value your time you've spent with us.

So this concludes BW LPG's Q1 2026 earnings presentation. A replay of the webcast and together with the call transcript will be made available on our website shortly. On behalf of the entire BW LPG team, then Q1, again, for participating. We wish you a great rest of your day. Thanks, and bye.

Hello, everyone. A warm welcome to BW LPG's Q4 2025 Earnings Presentation. My name is Aline Anliker, and I'm the Head of Corporate Communications at BW LPG. Today's presentation will be given by our CEO, Kristian Sorensen; and our CFO, Samantha Xu. After the presentation, we will have a Q&A session. [Operator Instructions]

Before we begin, I would like to highlight the legal disclaimers displayed on the current slide. Please also note that today's call is being recorded. Without further ado, I would now like to hand over to our CEO, Kristian.

Thank you, Aline, and Hi, everyone. Thanks for calling in as we review our fourth quarter financial results and the recent developments, including the Middle East situation, which dramatically escalated last weekend. Let's turn to Slide 4, please. So highlights. The beginning of Q4 was marked by lower tension in the U.S.-China relationship as the reciprocal port tariffs were lifted and postponed until November this year. In addition, there was a significant build in U.S. propane inventories, well above trend levels, driven by strong U.S. production. Over the winter, there were no major disruptions from the usual cold season weather, supporting a wide arbitrage throughout the fourth quarter and into 2026. Moving on to the Q4 results. We reported a TCE income of $50,300 per available day and $48,100 per calendar day, above our guidance of $47,000 per day for the quarter. The Q4 profit after minority interest was $104 million, equivalent to an EPS of $0.69. Our trading branch, BW Product Services reported a gross profit of $27 million and a profit after tax of $23 million for the quarter.

And we are pleased to report a strong realization of $12 million from our trading activities in Q4, bringing the full year 2025 realized trading results to $66 million. For Q1 '26, we're guiding on about $54,000 per day fixed for 94% of our available days. Solid levels above our all-in cash breakeven of $23,400 per day but it is reflecting the time charter coverage in the first quarter of 42% of our available days at $44,200 per day. Please see the appendix in this presentation for the full breakdown of the time charter days and levels. The Board of Directors has declared a dividend of $0.57 per share, representing 100% of our shipping NPAT, exceeding the guidance set by the dividend policy. Looking further on our shipping activities, we are continuing our active dry docking program in 2026 with 13 vessels scheduled for dry docking. The majority of these are planned during Q1 with a total of 193 off-hire days expected during the first quarter due to dry docking.

Given the dramatic escalation in the Middle East over the last couple of days, our first priority is to ensure the safety of our colleagues and crew in the region at the same time as we protect and optimize the overall interest of the company. We have 3 ships from our Indian flagged fleet in the Arabian Gulf, 2 on time charter to Indian charters and 1 vessel in dry dock. So far, there have been minimal negative financial impact only pertaining to the vessel in dry dock where the nighttime work is suspended. The 2 vessels on time charter are on hire in accordance with the respective time charter parties. In addition, we have other vessels on time charter idling out Saudi Arabian Gulf, assessing the evolving safety and security situation in the Strait of Hormuz. Our next open spot vessel for AG loading could be available last decade of March unless we decide to ballast them to the U.S. Gulf, of course, depending on how the security situation and market develops.

Like we have experienced in previous rounds of increased tension in the Middle East, the market response is to secure cargoes and ships from alternative loading regions and mainly from the U.S. Gulf. We fixed one vessel yesterday at around $80,000 per day for mid-March loading, while other fixtures in the market are reported around the same level for first half April loading in Houston. Further, in other subsequent events from the quarter, we recently announced that in January, we secured 3-year time charter out contracts for 2 VLGCs, the BW Tucana and the BW Yushi, increasing our full year 2026 fixed rate time charter out coverage to 36% at an average of $43,700 per day. Let's move to the next slide, please. So although the main attention right now is on the impact from the Middle East war, we believe it's worthwhile to remind ourselves of the market fundamentals as the fourth quarter of '25 and the start of '26 positively surprised the VLGC market.

By the end of 2025, the U.S. propane inventories were well above the trend level at 100 million barrels, which is compared to 85 million barrels at the end of 2024. This was driven by strong production levels and supported the U.S. export volumes, while domestic consumption remained steady at around 50 million tonnes per year. As we entered the inventory draw season, U.S. propane inventories declined somewhat, but remained well above the levels typically expected at this time of the year. The high inventory levels have contributed to continued downward pressure on U.S. LPG prices and have, together with healthy demand in the Far East, supported a wide arbitrage as reflected in the U.S. Far East price differential. If you look at the graph on the right-hand side, we can see the relationship between the arbitrage and the VLGC spot rates. A wider arbitrage usually allows for a higher willingness to pay for shipping, something that has been the case in recent months.

In addition to commercial drivers such as the U.S. Far East arbitrage, other geopolitical events and infrastructure expansions have also contributed to a strong market in recent months. Late October, for instance, the U.S. and China agreed to trade truce, paving the way for a revived U.S.-China LPG trade. And further into January this year, we've also seen the Nederland terminal in the U.S. Gulf increasing its number of VLGC loadings after commissioning the terminal expansion in 2025. And lastly, before the Arm conflict commenced on Saturday in the Middle East, the increased tension in the region led to market participants fixing vessels further out in time than what they normally would have. This was creating a shortage of available vessels and ultimately pushing up spot rates.

In addition to the factors we discussed on this page pertaining the exports of LPG, it's also important to look at how the developments in the Asian import markets are shaping the LPG trade dynamics under normal market circumstances. Next slide, please. On this slide, we can see how trade flows responded to several major disruptions during 2025, with trade tensions between the U.S. and China being among the most significant during the year. Chinese imports on VLGCs from North America and the Middle East fell by 3% in 2025 compared to the year before. This number is, however, heavily impacted by a few months during 2025, where the trade tensions were at the highest and imports from the U.S. were much lower than normal. Towards the end of last year, China had also lower imports than usual. This, however, coincided with Chinese LPG inventories declining. And for the beginning of '26, Chinese LPG imports are again on the rise and the ongoing Middle East conflict is likely to support more cargoes from the U.S. ending up in China as the Middle East supply is disrupted.

As we have highlighted before, incremental LPG production is priced to clear in the international markets. And with the U.S.-China trade war as a backdrop, this produced some interesting trade flows in 2025. For instance, as LPG volumes into the Far East declined 2% year-over-year, India saw its imports growing by 10% during the same period, driven by higher cargo flows from the U.S., increasing the ton mile compared to the traditional sourcing of LPG from the Middle East. India is a market of growing importance for LPG with about 10% equaling 2 million tonnes of Indian LPG imports contracted from the U.S. for 2026. We also see Indian government subsidies continue supporting retail demand and new pipeline infrastructure is expected to further improve inland distribution. Another region that saw an increase in import volumes from North America in 2025 was Southeast Asia.

This region has historically imported most of its LPG from the Middle East; however, with the trade war shifting from -- shifting more of the Middle East volumes to the Far East, increased volumes from North America found its way to Southeast Asia last year. As long as the Middle East tension is halting LPG exports from the region, we anticipate more U.S. volumes flowing to the market east of Suez, which is supportive for freight in the short term. Over the longer term, however, vessels that have traditionally loaded in the Middle East are likely to see cargoes from the U.S., which could place downward pressure on the rate structure for U.S. loading VLGCs. Next slide, please. If you're looking at the 2 main regions for LPG exports, North America and the Middle East, we will continue seeing export growth in the years ahead, assuming the Middle East situation returns to normal. In the Middle East, the exports from Saudi Arabia and Qatar are disrupted with duration of these disruptions remaining uncertain at this point in time.

Secondly, the raging Middle East war has halted all ships passing in and out of the Arabian Gulf, which would have a dramatic impact on the Middle East exports short term. It remains to be seen how long the large energy markets in Asia can accept their supply of hydrocarbons being choked. The U.S. exporters probably have some slack and room for optimization as we move into April, but we have limited visibility at the moment. Anyhow, it's obviously not enough to replace the shortfall of volumes from the Middle East in the medium term. If we look through the current fluid and dramatic situation, Saudi Aramco has now started oil production from the Jafurah field with gas output expected towards the end of this year. Furthermore, the first phase of Qatar's North Field expansions is expected to come online in Q4. In the U.S., the Permian crude oil production continues to yield more NGLs per barrel of oil produced. In addition to this, more LPG export infrastructure is coming online, enabling continued growth in exports.

In sum, we expect the larger North American region to grow its exports in the mid-single digits over the coming years, while Middle East LPG exports are expected to grow in the high single digits. Next slide, please. And let's take a look at the Panama Canal, which continues to play an important role for the VLGC market. Throughout 2025, the Canal Neo-Panamax locks frequently saw utilization close to its max capacity, often driven by increased transits from container vessels. This fuels volatility in transit fees and waiting time, which in turn continues to divert VLGCs around South Africa in order to timely reach their destinations. The Middle East situation may increase the traffic in the Panama Canal in the short term as market participants rush to secure cargo and shipping capacity from the U.S. While in the coming years, we expect usage of the Panama Canal to remain high. An important driver for this is growth in several shipping segments that, to a large extent, are being built for increased exports out of the U.S.

This includes VLGCs, of course, but also very large ethane carriers and LNG vessels. Now it's important to highlight that not all VLGCs and LNG carriers will service the U.S. exports exclusively. So we'll also be shipping volumes out of the Middle East and other places and some volumes out of the U.S. will not be sailing through Panama. But regardless, considering the limited capacity of the canal to handle additional transits, we will likely continue to see VLGCs sailing around South Africa in the foreseeable future. Let's take a look at the current fleet and the order book. And we can see that the fleet has grown in the last 3 months and now stands at 421 VLGCs on the water. The order book is currently at 105 VLGCs under construction with delivery stretching all the way to the end of 2028. We've seen some new orders for newbuildings this year, but the contracting remains modest compared to the levels seen in the recent years. And while we expect more newbuildings to be delivered going forward, it's also worthwhile to keep in mind that 10% of the fleet is older than 25 years of age.

So to sum up, the underlying fundamentals of the VLGC market are robust in the medium term, but the serious situation in the Middle East is increasing the volatility and uncertainty. The U.S. Gulf spot rates are so far benefiting from increased demand for cargoes and ships, while the long-term conflict will probably increase the number of VLGCs seeking employment in the U.S. Gulf and putting pressure on the rate sentiment. The U.S. does not have enough production and export capacity to meet the shortfall of the Middle Eastern exports, and we'll probably see a rather serious situation unfolding in the consuming markets in Asia unless the exports of hydrocarbons from the Middle East resume rather soon. Assuming the Middle East situation normalizes, the medium-term outlook is underpinned by expanding export infrastructure in the U.S. and increasingly higher NGL content in the Permian oil production.

At the same time, new gas projects are expected to support LPG exports out of the Middle East in the coming years. As mentioned, the VLGC fleet is now at 421 ships. The order book is relatively large and the inefficiencies in the VLGC market will define how the order book will be absorbed. Firstly, the Neo-Panamax locks in the Panama Canal are operated at or near full capacity and growth in several shipping segments linked to increased U.S. exports will likely continue to divert VLGCs around South Africa. Secondly, the trade pattern will play a vital role in how much shipping capacity is needed. And we have seen new long-haul cargo flows from the U.S. into markets east of Suez. And thirdly, if you envisage a normalization in the Middle East involving 11 million tonnes of Iranian LPG exports to be shipped on compliant vessels rather than the shadow fleet, which currently counts about 50 VLGCs, you will have a rather bullish outlook, pretty similar to how it would play out in the VLGC [ tankers ] market.

Finally, looking at the paper market at the moment. It's pricing itself around $85,000 per day for the Ras Tanura-Chiba benchmark leg, although the liquidity remains limited. And that concludes our market segments. Over to you, Samantha.

Thank you, Kristian, and hello, everyone, and thank you for being here with us today. Start with our shipping performance. The fourth quarter of '25 has been a quarter that we delivered above the guidance with a TCE of $48,100 per calendar day or USD 50,300 per available day. The fleet utilization was 94% after deducting technical off-hire and waiting time. Delivering this healthy result in market for of uncertainties is a strong testament to our commercial strategy, which built on healthy time charters and FFAs concluded during active and strong markets. Such protection provides stability and support when spot markets come under pressure as we have witnessed in this quarter. In Q4, the time charter portfolio was 44%, out of which 33% was fixed rate time charters.

Looking ahead for Q1 2026, we have fixed 94% of the available fleet days at an average rate of about USD 54,000 per day. This also includes index-linked time charter contracts, which could share some spot market upside when the market becomes stronger. For full year '26, we have secured 40% of our portfolio with fixed rate time charters and FFA hedges at USD 43,700, $47,900 per day. Altogether, our time charter out portfolio is expected to generate around USD 197 million. Although the level of rates appear to be slightly lower than 2025, it continues to represent a very healthy level of earnings against an all-in cash breakeven of low 20,000. Next slide, please. In Q4, the Product Services posted a realized gain of USD 12 million, reflecting effective risk management in a turbulent market conditions that we experienced. At the quarter end, we reported a USD 33 million increase in mark-to-market on our cargo position, offset by an USD 18 million decrease in paper positions.

After accounting for G&A costs and other expenses, Product Services reported a net profit after tax of USD 23 million for the quarter with net asset value at USD 53 million at the end of December, creating good dividend capacity. As we highlighted in previous quarters, these mark-to-market movements, which regularly gives volatility to P&L are largely driven by the gradual phasing in of our multiyear term contract as reflected in a volatile market. While the periodic value adjustments are significant, they reflect the delta between the balance sheet dates, and we'll see fluctuations before the positions are realized. We will continue to report our future trading performance, including mark-to-market via our quarter end trading result updates. We are pleased to see that the analyst consensus has, in general, included our trading performance. It is also important to note that trading gains and losses are realized across different financial periods. They cannot be extrapolated from past performance as unrealized positions will vary depending on the period end valuations.

The realized trading profit, though will add to the company's dividend potential and be considered for dividend distribution post year-end, along other factors such as net profit after tax, cash flow and other commercial considerations. Our trading model is designed to create value by combining cargo, paper and shipping positions. With that in mind, we would like to remind you that the reported net asset value does not include unrealized physical shipping position of USD 26 million based on our internal valuation. In Q4, our average VAR, value at risk was USD 3 million, reflecting a well-balanced trading book, including cargo, shipping and derivatives, even after accounting for the increased term contract volume that is scheduled to start from the end 2026. Going on to our financial highlights. We reported a net profit after tax of USD 123 million, including a profit of $31 million from BW LPG India and a $23 million profit from Product Services.

Profit attributable to equity holders of the company was USD 104 million for the quarter, which translates to earnings per share of $0.69 and an annualized earning yield of 21% when compared against our share price at the end of December. We reported a net leverage ratio of 28.4% in Q4, down from 32.7% at the end of '24. The reduction was mainly due to lower lease liabilities following the exercise of a purchase option of BW Kizoku and BW Yushi and principal repayment made in the duration of full year 2025. For Q4, the Board declared a dividend of $0.57 per share, representing a 100% payout of our shipping profit for the quarter, beyond the 75% payout ratio of shipping profit guided by our dividend policy. The healthy liquidity and positive outlook of the market supported our wish to pay back to our shareholders. For the period end, our balance sheet reported shareholders' equity of USD 1.9 billion. The annualized return on equity and that on capital employed for Q4 were 26% and 19%, respectively. Our 2025 OpEx concluded at $8,800 per day, a marginal reduction than reported in last year.

For '26, we expect our own fleet operating cash breakeven to be about $18,500 and $20,200 for the whole fleet, including time charter vessels. The all-in cash breakeven is estimated to be $23,400, driven primarily by lower lease repayments and decrease in financing costs. Next slide, please. Finally, let's look at our financing structure and repayment profile. As of end Q4, we maintained a healthy liquidity position of USD 613 million consists of $226 million in cash and $387 million of undrawn credit facilities. This is after voluntary cancellation of 2 ship financing facilities, including USD 36 million repayment and $260 million undrawn revolving facilities. This cancellation reduced our funding cost and level of cash breakeven, further strengthened our financing discipline. Looking ahead, our liquidity stays strong. Repayment profile remains sustainable with major repayment starts from 2030. On Product Services, trade finance utilization stood at USD 182 million or 23% of available credit line, leaving ample headroom for future trading needs.

And with that, I'd like to conclude my update. Thank you for listening and give it back to you, Aline.

Thank you, Samantha. Thank you, Kristian. We would now like to open the call for your questions. [Operator Instructions] I would like to start with the verbal questions first before then moving on to the chat. And I can see already that [ Peter ] has raised his hand. So please proceed, [ Peter. ]

A quick, very difficult question first then about the Middle East unrest. In terms of the current Iranian volumes, is there any indication that Iran is still exporting LPG? Or is that now come to a complete halt? And secondly, is there any convoys now planned for other exporters within the Arabian Gulf? And if so, what is the war risk premium paid these days? Three simple questions there, Kristian.

Thanks, [ Peter. ] We don't have the full overview of the exports from Iran under the current circumstances, but there are let's say, unconfirmed reports that ships are still planned for exporting LPG and being -- through convoys basically sailing to China. But we don't know if this is just a market rumor or if it's actually for real and a fact. So -- and your second question, [ Peter, ] what was that again?

Well, the first one was more about the Iranian specific questions. And the second one was about the convoys, I suppose, then for other sort of legitimate exporters.

Yes. So we don't -- there are no concrete news about convoys being established at the moment. So this is something we have seen, if you look historically back to when the pirate attacks were peaking and also previous wars in the Middle East, there have been convoys with naval escort vessels established, but that is something we have no firm news about at the moment.

Understood. And if sort of you were to do the transit here now, is there insurance to -- or is it possible to get insurance? And what is the war risk premiums paid these days?

As far as we have been informed, the -- you won't get ships insured if you pass into the Arabian Gulf through the Strait of Hormuz at the moment. But this is changing from day-to-day, [ Peter. ] So it's hard to give an exact answer to what would be the case tomorrow. But for time being, that's something which is difficult to assess.

Yes. So effectively now, the Hormuz is actually closed for LPG vessels at least, more or less.

As far as we can see, there are no ships on the conventional fleet shuttling in and out of the Arabian Gulf. But again, what is actually happening with the shadow fleet, which is about 50-odd ships shuttling between Iran and mainly China, that is unclear to us.

Understood. Understood. A quick follow-up on the FFA rates. And to what extent would you think that those rates now quoted, we see that it's pretty similar in terms of day rates out of the U.S. and out of the Middle East. But in the VLGC market, we've seen some numbers, which is, well, from what we hear, not particularly relevant being very high. So now the FFA market is pricing in some $80,000 plus. Is that also a level in which you can fix ships in the TCE market these days?

The -- okay, before the weekend, there were reports about the 1-year time charter done in the mid-$50,000 per day. So far this week with the current situation, we haven't heard any discussions -- about any discussions. And I think the situation is so fluid at the moment. So it's hard to give an assessment on that. But the last one in the market is reportedly in the mid-50s per day for 12 months.

I have [indiscernible] up next.

Several U.S. LPG projects have come online recently. You commented on this briefly, but at what utilization was overall U.S. LPG export infra running prior to the war. So in other words, to what extent is there, let's say, spare capacity to increase volumes out of the U.S. in the short term?

Yes, this is a very good question, and we tried to -- we discussed this yesterday at the desk actually. We believe the U.S. terminals have some slack capacity to export more volumes if they optimize the berthing, which we have seen they have done before, for instance, by loading VLGCs instead of midsized vessels. So you basically have a more optimal usage of the jetties and the berth. So we don't know exactly whether all the midsized vessels can be replaced by VLGCs, most likely not. But probably the U.S. has some slack in their export volumes. But it's difficult for us to assess exactly because we don't have enough visibility on the April loadings at the moment. So it's hard for us to say, but we anticipate some slack to be made available for VLGCs.

Next up would be [indiscernible].

I have 2 questions. So first thing is I would like to understand on the overall fleet from what we have known until now, is there any vessel getting impacted because of the Iran situation escalation over the weekend? And also looking forward, let's say, 2 weeks, is there any vessel that is unable to detour to avoid the high-risk waters as far as you are aware? Or is there like any so-called price management that has been put in place for all the fleet nearby the risky waters? Yes, this is my first question.

Okay. If I -- thanks for the question. If I understand you correctly, you're asking if there are any -- if ships can be diverted from loading in the Middle East. Is that your question?

Yes.

So of course, the ships which have not yet entered the Arabian Gulf and are outside in the Indian Ocean, for instance, they can always start ballasting towards the U.S. Gulf or other loading areas to seek employment. So this is basically down to the decision made for every single vessel in the region, which is not inside the Arabian Gulf. So -- and it depends if the ships are on time charter, it's up to the charters to decide where they want to employ the ships. If it's a part of the spot fleet like the one I mentioned, our first ship, which could be available for a spot cargo out of the Middle East is towards the end of March. But of course, if the situation is as serious as it is now, we will rather ballast the ship to the U.S. Gulf to employ the ship. If that made sense.

Yes. And sorry to build on top of that, can just confirm there is no vessel currently sort of stuck in that risky region near Iran?

Are you thinking of our fleet or the VLGC fleet in general?

Your fleet includes all the so-called managed fleet per se.

So if you -- as mentioned in our highlights, we have 2 ships, which are from our Indian flagged fleet on time charter to Indian charters, which are in the Arabian Gulf, still on time charter. And we have one vessel in dry dock in the region, also Indian flagged. So you will see that also being mentioned in the highlights page, Slide 4.

Okay. Got it. But do we see any serious coming up concerning these 3 that -- actually one in dry dock, one is in the risky zone sort of. Like do we foresee any financial impact or any drastic negative developments to these 3 vessels?

Yes. So far, there is -- as I also mentioned, there is minimal negative financial impact only due to a slight delay in the dry docking of the ship in dry dock. And then we don't have any threats to our ships or crew at the moment. So there are no direct threats, but it's an overall view on the market and the situation that is making us avoiding the transits through the Strait of Hormuz.

Thank you, Joy. Let's move on to John Dixon first before we then have Abhishek [indiscernible].

Kristian, I do have a question. So I've listened to Samantha for a little while, a couple of quarters. And relating to the trading profit that would be eligible for dividend distribution, is that included in your all's current dividends? Or are you guys planning on having your Board review that later in the year for dividend distribution? I'm just curious to see if I can learn a little bit more how that is considered and when you guys are likely to have that be a part of your dividend distribution?

Thanks for the question, John. It's a very good one and also for following up our previous quarter's earnings as well. Indeed, as we mentioned that Product Services, basically, their realized trading result will build on our dividend capacity, and then we would like to look at it to declare once a year post year-end. So specifically for Q4 2025, the $0.50 per share dividend declared by the Board is only 100% shipping NPAT, does not include any contributions from product services. However, the Product Services Board has already reviewed the dividend proposal and also approved the dividend proposal for product services for 2025. And the approved dividend will subsequently be considered in the future quarters within 2026 and distribute to the shareholders accordingly.

Okay. So that basically, it would be distributed on a quarterly basis throughout the remainder of the year. Is that what I'm understanding?

No. It would just -- it will be forming the overall company dividend capacity. You can imagine that we will have a bigger base for considering the dividend distribution for the upcoming quarters.

So next up, we have Abhishek, please.

I have 2 questions. One, you mentioned that there are 3 ships which are stuck in the conflict zone. May I know the name of these 3 ships? And second, last year, you raised borrowing for acquisition of new ships, basically new vessels in India. So -- and in the presentation also, we can see that India is a high-growth market for you. So do you plan any further new acquisition of fleet in India this year?

Thanks for the questions. The ships are BW Elm, Tyr and Loyalty from the Indian flag fleets. So when it comes to further expansion of the Indian flag fleet, that is something we are considering. It depends also on the employment that we see and how we can -- where we can employ our ships most efficiently to ensure a solid and robust shareholder value creation. So it's definitely something we are considering, but it remains to be seen if we decide to do so.

Thank you. So let's move on to some questions from the chat. We have a question posed by Kevin. Is there an option to delay dry docking to take advantage of current high charter rates?

Yes. So this is something we're always considering. It should be said that the immediate spikes that we experience now, for instance, are difficult to plan for. And these dry dockings, they have to take place within a certain time. We can -- we try to optimize depending on the market view and so on, but it also needs to fit into the commercial program. And of course, we also need to have available space at the docking yards. So the question is, yes, we try to plan around this. Usually, the first quarter is the weakest quarter of the year. We had, if you look back in time, several years where the rates are softening considerably in January, February. This was not the case this time. But, of course, we plan around optimizing the fleet positioning so that we can hopefully have all the vessels in position at the best point in time of the cycle in the market.

Thanks, Kristian. Another question from the chat. Has the current war disruption led to higher long-term charter rates?

So far, we haven't seen that -- and again, this is very recent development. So there hasn't been any serious talks about time charters so far.

And then another one from Kevin. Have scrapings increased recently? And will that continue or be delayed in 2026 due to the elevated spot rates?

Well, scrapping is, like you alluded to, very much dependent on the underlying freight market. And as long as we see the freight market operating at the current levels, we don't really see much scrapping activity, if anything at all. So -- and these ships, they can technically trade for many more years after they turn even 30 years of age. So technically, if they are well maintained, they can still sail across the Seven Seas.

The last one from Kevin. Will the 3 ships in the Gulf region of conflict be at risk for lower revenue than currently expected?

For time being, that's not the case. Two of the ships are, like I mentioned, on time charter in accordance with their time charter parties. And for the ship in dry dock, we'll see when she gets out of the dry dock, but we have -- we see there are certain needs in the region to employ ships as well. So we'll see what happens, but it's because the spot market and the freight market is evolving day by day here. But so far, no impact as far as we can see.

Thank you, Kristian. There's still some time for some more questions if you either want to type into the chat or raise your hand. I see one hand up. [ Carl ] line, can you hear us? [ Carl Honicke, ] can you hear us?

Could you comment a little bit about the capacity expansion in the U.S. Energy Transfer Enterprise product partners? How -- I read that it's about the 250,000 and 300,000 barrels a day in new export capacity, probably not all of it will go on via VLGC...

Carl, we can't really hear you that well, to be honest.

You cannot hear me? Hello?

If you just speak up a bit louder, if that's possible?

Yes. I wanted you to comment on the capacity expansion in the U.S., the exports and how many ships do you think that will -- or how many ships you will need to cover that expansion?

Yes. This depends on the trade pattern, like I also mentioned in the presentation. So it's -- and also how the Panama Canal is congested or not congested in the time ahead. So -- because it's a very big difference if the ships are sailing through the Panama Canal to Northeast Asia or like we have seen recently more and more ships sailing around South Africa into India and Southeast Asia, which is absorbing more shipping capacity actually than if you sail the milk route from the U.S. through Panama to Northeast Asia, a quick turnaround and back again.

So I think it's hard on the spot to simulate that exactly, but we can...

A high, low number.

Sorry, how many ships?

No, I said you can just provide a high and a low.

Sorry, a high number of ships needed for the exports. Is that what you're asking for?

Yes, you can just give us...

Are you -- Yes. So are you talking up until 2028? Or is it within this year?

I was thinking, first and foremost, this year, but I could get both answers, please.

Yes. I need to get back to you on that exactly, to be honest, because I don't have that number in front of me. So I'll get back to you on that when I have looked at the numbers.

But these 2 projects, when do you think they will come online in '26?

You mean enterprise -- the 2 enterprise expansions, right?

Yes, and Energy Transfer.

Yes. So Energy Transfer is already ramping up as of beginning of this year, end of last year, beginning of this year. Enterprise is expanding their flex capacity first. And then secondly, the LPG specific capacity, which is later this year. So you will see in our previous investor presentation, we have -- it's stacked up on Slide #6, isn't it?

All right. Thank you. Any more questions before we round up?

If not, thank you, Kristian. Thank you, Samantha. And hold on, I just see another hand. Okay. Well, okay, we have -- let me check, okay, we have a couple of minutes. So Troy, if you would like to unmute yourself, please.

Yes. I make this quick. So going back to the 3 vessels, Indian flag in the risky zone, can't get the names. I think I heard 2 names. One is, [ Amelia, ] one is Loyalty and what is the dry docking vessels name?

Yes. So Elm and Tyr and the Loyalty are the ships names.

Sorry, Elm and Tyr and Loyalty and one more?

No, that's the 3 vessel names.

Well, thanks a lot to all our key stakeholders for joining us for today's call. Thank you, Kristian. Thank you, Samantha. This will conclude BW LPG's Quarter 4 2025 earnings presentation. The call transcript and the recording will be available on our website shortly. And again, thanks for dialing in. We wish you a good rest of your day and look forward to see you again next quarter. Thank you.

Hello, everyone. A warm welcome to BW LPG's Q3 2025 Earnings Presentation. My name is Aline Anliker, and I'm the Head of Corporate Communications at BW LPG.

Today's presentation will be given by our CEO, Kristian Sorensen; and our CFO, Samantha Xu.

After the presentation, we will have a Q&A session. The questions can be put into the Q&A chat during the presentation, or you can raise your hand and ask your question directly once we move to the Q&A part.

Before we begin, I would like to highlight the legal disclaimers displayed on the current slide. Please also note that today's call is being recorded. And without further ado, I would now like to hand over to our CEO, Kristian.

Thanks, Aline, and hi, everyone. Great to have you with us today as we review our third quarter financial results and the recent developments.

Let's turn to Slide 4, please. Q3 was marked by a series of geopolitical events and market disruptions that significantly increased uncertainty in the shipping segment and heightened volatility in the trading environment. After minority interests, the Q3 profit was $57 million, equivalent to an earnings per share of $0.38. The Board of Directors has declared a dividend of $0.40 per share, representing 75% of our shipping and PAT in accordance with the dividend policy.

For the third quarter, we reported a TCE income of $ 51,300 per available day and for $48,700 per calendar day, slightly below our guidance of $53,000 per day. The difference was driven by limited fixing activity despite high headline rates in the second half of the quarter in addition to a negative IFRS adjustment of approximately $7 million.

Moving on to our trading operations. Product Services reported a gross loss of $23 million and a loss after tax of $29 million for the quarter. The accounting loss was due to a negative mark-to-market valuation adjustments driven by a surprisingly low October contract price announced by the Middle Eastern producers. More about that on Slide 7, when we review the market events for the quarter.

With regards to Product Services accounting loss, we want to emphasize that it's the realized results which generate Product Services dividend capacity. Despite volatile market conditions, the portfolio remains firmly net positive. We are pleased to report a continued strong realization of $15 million from our trading activities in Q3, bringing our aggregated realized results as of the 30th of September to $54 million. Further, regarding our shipping activities, we have continued our busy 2025 dry-docking program with 168 off-hire days in the third quarter. We expect a total of 121 days to be off-hire due to dry docking in the fourth quarter.

Looking into next year, 13 more vessels are scheduled for dry docking. For Q4, we're guiding on about $47,000 per day fixed for 91% or available days. These are solid levels above our all-in cash breakeven of $24,600 per day but reflecting the slow market from September well into October, which impacts the TCE guiding for Q4. In other subsequent events, we have as part of our refinancing terminated two ship financing facilities, which Samantha will talk more about later in the presentation.

Next slide, please. Despite the recent turmoil, the VLGC market is characterized by solid fundamentals. The growth in U.S. LPG export volumes is set to continue with expected growth rates in the mid- to high single digits, driven by an increase in gaseous drilling wells and ongoing terminal expansions. In the Middle East, stable OPEC+ production, along with new gas projects, is expected to support the Middle East LPG exports going forward. Following the deescalation of trade tensions between the U.S. and China, it's reasonable to expect some unwinding of the inefficiencies in the global fleet, as trading restrictions on the U.S. and China-linked vessels are now lifted.

At the same time, the fundamentals for the LPG shipping markets remain supportive. In addition to the mentioned increase in export volumes, which underpins the U.S. Asia trade, ton mile demand will likely see further support from the recent term deal signed by India to buy 2 million tons of U.S. LPG. And this is compared to 75,000 tons of the total Indian imports sourced from the U.S. back in 2024.

Last quarter, we talked about the impact from the Panama Canal congestion and more container vessels have been using the Panama canal this year, diverting VLGCs around the Cape of Good Hope. In the coming years, higher traffic from container vessels, VLGCs and VLECs will likely push a growing portion of VLGCs out of the canal as the canal capacity is fixed.

Looking at the global fleets. The fleet growth is currently at a low level with 413 ships currently in service and 1 more to be delivered in 2025. Taking a look at the paper market and how is pricing in the future, it is currently pricing the Ras Tanura-Chiba leg for 2026, slightly above $45,000 per day, although with limited liquidity.

Next slide, please. The last few months have been nothing, if not eventful for LPG shipping and its commodity markets. So let's catch up on the key developments. In August, USTR regulations targeting Chinese controlled and operated vessels calling at U.S. ports started to make an impact. This created a 2-tier market as China-linked VLGCs repositioned to the Middle East where they could operate without triggering high port fees. China retaliated in October, announcing similarly high port fees for vessels on 25% or more by U.S. entities, further complicating selling patterns for VLGCs.

And in this period, it was very limited fixing activity despite the solid headline rates as numerous ships were repositioning and effectively disappeared from the market for a preliminary period of time. And then in late September, Saudi Aramco announced a sharp price cut for the October monthly price for Middle Eastern LPG. This instantly caused propane prices in the Far East to adjust down accordingly which narrowed the price difference between the U.S. and the delivered price for LPG in Asia. And as the spot shipping market out of the U.S. dried up, something had to give. And eventually, both VLGC spot rates and terminal fees came down, kick starting the spot market activity as they are widened again as we moved into November.

However, the slow market we saw from September well into second half October has had a material impact on our TCE guidance for the fourth quarter as waiting time, positioning costs and the period [dry fixture] is done until the freight invoice is issued, have an accounting delay of several months. September to October proved to be a tricky market to navigate. But the supply-driven LPG market eventually demonstrated its resilience. With LPG price to clear and its ability to always find a home as a byproduct, we observed prices gradually rebalancing over a few weeks, activity picking up and freight rates improving.

With the Far East being the key destination for LPG, let's move on to the recent developments in the Asian import markets shaping the trade dynamics. On this slide, we can see the profound impact the trade tensions between China and the U.S. have had this year. The total Far East LPG imports on the VLGCs are more or less at the same level during the first 9 months this year compared to the same period in 2024. In fact, Chinese imports declined slightly that was largely offset by higher Japanese imports in the same period. We've also seen that China sourced considerably more of its LPG from the Middle East so far this year, as trade tensions between China and the U.S. caused both vessels and volumes to be diverted elsewhere.

India and Southeast Asia increased their imports in the first 9 months. Historically, these markets have largely relied on LPG volumes from the Middle East. This year, however, North American volumes have replaced a significant part of the Middle East cargoes accounting for a larger share of imports. And market participants interpret a solid contract price reduction as a direct response to the increased competition Middle East and producers have faced from U.S. exports as well as the Indian importers' recent purchase tenders for U.S. LPG.

The Indian state-owned energy companies will buy 2 million tons of LPG from the U.S., and this does not only raise the ton mile for volumes going into India, where it will most likely push some Middle East volumes to be shipped further east in Asia. Imports into these regions are still small compared to the Far East, but they are attractive offtakers nonetheless and showing how LPG finds new markets when it's competitively priced.

So now having looked at the Asian import trends so far this year, let's turn to what we can expect for exports going forward. Energy exports are expected to continue growing from both main exporting regions, North America and the Middle East. In North America, this growth is being facilitated by additional export expansions coming on streaming in the coming years as well as Permian oil production becoming increasingly gaseous as shown here in an excerpt from Targa Resources August investor presentation.

LPG volumes from the large U.S. natural gas fields will also contribute, although these are drier than the Permian crude oil wells. While for the Middle East, stable OPEC+ oil production, combined with new projects in Saudi Arabia, Qatar and the UAE are expected to support growth for several years. But the VLGC market is not only affected by volumes, trade patterns also play a vital role with inefficiencies, such as congestion in the Panama Canal, having a significant impact on the rate environment.

Last year, in 2024, the Panama Canal was less congested and its influence on the VLGC market was far lower than during the drought year of 2023. This year, the relevance of the Panama Canal to our market has returned as already limited slot availability has been further constrained during periods of elevated container traffic. The new canal logs where most of the VLGC transits have a daily average capacity of 10 transits in total for both directions. The limited capacity is very sensitive to one or two more ships from higher-paying shipping segments competing for the transits. And this, in turn, caused increased volatility in transit auctions and diverted more VLGCs to the much longer sailing distance around Cape of Good Hope to and from the U.S. and Asia.

Looking ahead, incremental growth from container volumes, fleet growth from ethane carriers and expanding VLGC fleet is likely to keep canal utilization high and in turn, divert VLGCs around Cape of Good Hope. LNG carriers, they also absorb canal capacity in the future, although they are less apparent in today's Panama canal traffic.

Looking at the current fleet and order book, there are no major changes compared to the previous quarter. The current fleet of VLGCs now stands at 413 vessels as 11 ships have been delivered so far this year with one more to be delivered in 2025. The order book now consists of 108 VLGCs with deliveries stretching into last quarter of 2028 and while we expect a more staggered pace of newbuilding deliveries next year, we also highlight that 10% of the fleet is now more than 25 years old.

And by that, over to you, Samantha.

Thank you, Kristian, and hello, everyone. It's great to be here with you today. Let's take a closer look at our performance in this quarter.

Start with our shipping performance. In the third quarter of '25, we delivered a TCE of USD 48,700 per calendar day or USD 51,300 per available day with fleet utilization at 92% after deducting technical offhire and waiting time. This healthy result achieved in a market full of uncertainties is a strong testament to our commercial strategy. If we have not consistently secured time charters and FFAs during active and strong markets, we will not have been able to provide stability and support when spot market came under pressure this quarter.

In Q3, the time charter portfolio was 44% of the total shipping exposure or 34% on fixed rate time charters. Looking ahead for Q4 2025, we have fixed 91% of the available fleet days at an average rate of about USD 47,000 per day. For full year '26, we have secured 35% of our portfolio with fixed rate time charters and FFA hedges at $43,600 and $47,500 per day, respectively. Altogether, our time charter out portfolio is expected to generate around USD 182 million. Although the level of rates appear to be slightly lower than '25, it continues to represent a very healthy level of earnings against our cash breakeven of low $20,000.

Next slide, please. Turning now to Product Services. The business posted a realized gain of USD 15 million for Q3 reflecting effective risk management despite the turbulent market conditions that we experienced. At quarter end, we reported a USD 32 million decrease in mark-to-market on our cargo position alongside a $6 million reduction in paper position. After accounting for other expenses, mainly G&A costs, Product Services reported a net loss after tax of USD 29 million for the quarter with net asset value sitting at USD 30 million at quarter end.

As we highlighted in previous quarters, these mark-to-market valuation movements are largely driven by the gradual phasing in of our multiple year term contract as reflected in a volatile market. While the periodic period value adjustments are significant, they reflect the delta between the balance sheet dates, and will see fluctuations before the positions are realized. And in the case of a favorable market condition, the mark-to-market will recover in the form of positive adjustments.

It is also important to note that trading gains and losses are realized across different financial periods. They cannot be extrapolated from past performance, as unrealized position will vary depending on end period valuations. The realized trading profit, though, will add to the company's dividend potential and be considered for dividend distribution post year-end. Our trading model is designed to create value by combining cargo, paper and shipping positions. With that in mind, we would like to remind you that the reported net asset value does not include unrealized physical shipping position of USD 35 million based on our internal valuation.

In Q3, our average VAR, value-add risk, was USD 5 million, reflecting a well-balanced trading book, including cargoes, shipping and derivatives, even after accounting for the increased contract volume that is scheduled to start end 2026.

Next slide, please. Going on to our financial highlights. We reported a net profit after tax of USD 57 million, including a profit of $11 million from BW LPG India and $29 million loss from Product Services. Profit attributable to equity holders of the company was USD 57 million for the quarter, which translates to an earnings per share of $0.38 per share and an annualized earnings yield of 11% when compared against our share price at the end of September. We reported a net leverage ratio of 29.7% in Q3, down from 32.7% at the end of '24. The reduction was mainly due to lower lease liability following the exercise of purchase options for BW Kizoku and BW Yushi.

For Q3, the Board declared a dividend of $0.40 per share, representing a 75% payout of our shipping profit for the quarter, in line with our dividend policy. For the period end, our balance sheet reported a shareholder equity of $1.9 billion. The annualized return on equity and return on capital employed for Q3 were 12% and 9%, respectively.

On operating costs, our Q3 OpEx was $9,300 per day. For full year '25, we estimated operating cash breakeven for our own fleet to be $19,400 per day and for the total fleet, including time charter in vessels at USD 21,300 per day. This is an improvement compared to 2004's breakeven of USD 22,200, thanks to disciplined financing, VLGC in vessels and lower G&A, which offset higher operating expenses. Including the dry-dock program, all-in cash breakeven is expected to be $24,600 per day.

Finally, let's look at our financing structure and repayment profile. As of end Q3, we maintained a robust liquidity position of $855 million comprising $276 million in cash and USD 579 million in undrawn revolving credit facilities. Post Q3, we further optimized funding costs by voluntarily canceling two ship financing facilities leading to repayment of $36 million and a reduction of USD 216 million in undrawn revolver facilities. With this disciplined approach, we expect liquidity to remain strong, providing a solid foundation for the future. Our repayment profile remains sustainable with major repayments only beginning after 2029. On product services, trade finance utilization stood at USD 153 million or 19% of our available credit line, leaving ample headroom for future trading needs.

And with that, I would like to conclude my updates. Thank you for listening, and back to you, Aline.

Thank you, Samantha, and thank you, Kristian. We would now like to open the call for your questions. [Operator Instructions] I see that Petter Haugen has raised his hand.

To start off with a question regarding the 2026 coverage. You increased that quite a bit now in the last quarter. And I was -- well, twofold. What would you think now is the targeted TCE coverage for 2026 and the second part, also 2027?

Petter, thanks for the question. We have previously being quite open about our aim to have about 40% of our fleet capacity locked in on period charters and/or FFAs, just as a tool for protecting the downside. So -- and if we are able to obtain what we believe is attractive rates in -- for time charters for duration of 3, 4, 5 years, you may see us add to the reported coverage that we have in this quarter. So as mentioned before, around 40% is what we are aiming at, given that we can obtain the levels that we find attractive.

Okay. And that also then applies to '27, '28 as we just go along and 40% is then to be thought of as a coverage you will have coming into that year, so that you're not seeking now in the last quarter or last month of this year to increase 40% any further than 2026?

No. And this is a gradual and ongoing renewal of the current contracts. And so that's why we also report on this quite granularly on a quarterly basis because it's -- it may vary from quarter-to-quarter depending on how we can renew vessels, which are coming off time charters as well. So it's something we don't fix all the ships at the same time. This is something which is ongoing concern in the company.

Understood. And the second question from my side. In terms of prices here according to what we look at the Clarksons quotes for both new builds and the 5-year old ships, and the second hand 5-year old ships seems to be trending upwards again over the past few months, and Clarksons now puts it at $90 million for a 5-year old VLGC while the newbuilding prices as well more difficult to assess, I would say, because it really depends on what sort of specifications you ask for, I suppose, in terms of ammonia, readiness and alternative propulsions. But I would very much -- I will find it very interesting if we can have some, well, ideally, price points that you would think is transactable in the market now, both for say, ammonia ready newbuilding and also a 5-year-old VLGC please.

Well, I think we, on Slide 11, are assessing the newbuilding price to approximately $116 million for a dual fuel. And then when it comes to a 5-year old $90 million, yes, that's a number we also see, but it's a limited liquidity on the 5-year-old vessels in the market. Where you do see quite -- still quite good buying interest for the vessels which are built prior to 2010 and also some interest for the 10 year olds. So I am -- and as we have reported recently, we have just or recently concluded the sale of the BW Lord, which is set to be delivered by the end of this year. And this was, as you may know it starts with a 6 in -- for a vessel of that vintage.

We have up next, Kevin Whelan, if you can please unmute yourself.

Two questions. Can you comment on any of the Avance Gas fleet acquisition and its contribution to the current quarterly profit? And I have a second question after that.

I mean the number of days and you -- what you're thinking about is the additional number of days that are reported in the fleet compared to last year before the acquisition. Is that what you think about a year ago?

Yes. I'm assuming that that's from the Avance Gas acquisition, yes.

Yes. So we acquired 12 vessels, I don't have the exact number of days that we reported the difference from a year ago. So let us come back to you on that, if that's okay. But it's 12 ships from the beginning of this year phased into the fleet and you can calculate the number of days from there, but we can also get back to you on the exact number of day that we calculate internally on this.

Yes. I guess part of my question gets -- I think a lot of the Avance Gas ships had longer-term time charter commitments and whether that is increasing the average rate that we're realizing and as those roll over, whether there would be a greater risk, but that will be balanced out when you get into the new time charters for '26 and '27, and so it's all good in terms of shareholder return, but I was just curious the contributions in there.

The second question is given some of the potential thawing of the Ukraine Russian situation, do you see any specific risk from the dark fleet of Russian ships that appear to be more idled rather than transporting gas as something dilutive to time charter pricing going forward into the second half of '26, '27?

Okay. Thanks and I understand where you're coming from. So from the 12 ships that we acquired from Avance Gas, only 2 vessels were on short-term time charter actually. So what -- so 10 ships were trading spots. And the -- it's only the Avance Polaris, which is still on time charter to a certain French energy company. And the -- so the impact on our time charter coverage from the Avance transaction was actually minimal. It was more spot trading fleet than time charter or a fleet with time charter coverage.

So at the moment, there's only one ship left trading on time charters from that fleet. And then to your question on the dark fleet, the impact of the Russian LPG exports is -- you can basically disregard it because it's only smaller vessels historically, which have traded from the Baltics down to the European continent or smaller vessel sizes, which have been affected. So for us, in the VLGC segment, the Russian LPG exports have not been part of our market. So this is not going to impact the VLGC market as such, if that was a clear answer.

Thank you. And then we have also [indiscernible] who raised his hand.

Samantha, you mentioned that the Board may consider the distribution of the realized gains on the Product Services division post year-end. Would that include the whole realized gains year-to-date plus the Q4 performance? And secondly, I mean, this is obviously not set in stone, but is it fair to expect the payout of around 75% of that amount?

Clement, good to hear your voice. Well, as you know very well already that the dividend distribution is very much the Board's discretion. I can only comment also on it historically that we have benefit greatly from Product Services' positive realized profit. You can benchmark and maybe go back to our Q4 '24 similar earnings and dividend distribution. So I would only say that the I think Product Services will continue to contribute greatly to our dividend potential. If you look at year-to-date, Product Services has already achieved USD 53 million realized profit -- trading profit. Yes, I hope that answers some part of your question, at least.

Yes, yes, it does. Definitely helpful. And you have not added any further time chartering exposure in recent months. Could you talk a bit about Europe on long-term time charter rates at the current time? And secondly, should we expect the India JV to grow further over the coming quarters?

So I guess you're referring to the time charter in fleet, right? That's what you are...

Yes. Yes, exactly. Yes.

So we are -- I would say, as you also can see from the presentation, gradually reducing the time charter in fleet, if we see opportunities which we find attractive in the future, of course, then we will increase that time charter-in fleet again, but we don't have a plan to drastically increase it at the moment. So -- but again, if we see attractive opportunities to TCE in vessels, we are always in the market for that.

And then to your question on the India JV, we -- I mentioned that we are -- sorry, we are delivering the BW Lord to the new owners before the end of the year. So it depends a little bit on the opportunities we see out there on time charters too, whether we want to dropped further vessels from the conventional fleet to the Indian JV, but that's something we may consider in the new year, but nothing has been decided on.

As I see no more raised hands right now, let's move on to some questions in the chat. We have one on the spot bookings for Q4.

So how would you compare your spot bookings for Q4 versus the Baltic benchmark?

Thanks, Chrysis. The -- I presume that -- because you have seen the guidance of $47,000 a day for Q4 that we have reported. So I assume that you are thinking of the vessels we are fixing now compared to the current Baltic level. And I would say that it's closer -- definitely closer to the Baltic index. The waiting time and the repositioning cost and what I described in the presentation is not at the same level as we saw back in September, October. So it's closer to the reference index. But again, there is always some waiting time, repositioning costs and so on, which will occur compared to the purely technical Baltic index that we -- that you are referring to.

And then you're also asking, how are the bookings for Q1 shaping up at the moment? It's a bit too early. When we fix vessels in today's market, we are looking at the last [decade] of December, some very, very early January pictures at the moment. So I think -- and again, like I said, it's more reflective of the index than what we saw back in September, October.

Thank you, Kristian. We have another question in the chat from Ernest. Can you provide some color on the increase in average daily OpEx per vessel and G&A?

Yes. Thanks, Ernest. I think you're referring to the increase of OpEx as recorded for year-to-date Q3 [indiscernible] 300 versus last year. As you know that we have taken over the Avance Gas vessels since end of last year. And during the course of this year, the focus has been optimizing the performance of this fleet. Part of it also included changing some of the ship managers as we took over from Avance Gas. So as that happened, we have incurred some sort of change cost for the ship management change. And also, there is some increase from the crew perspective but the increase of OpEx is well managed from the overall cost perspective as we optimize the G&A as well as the financing cost.

As for the increase of G&A, I believe you are referring to the reflection of some of accruals as reflected of G&A. So from a G&A perspective, the accrual of bonus is also reflect -- a reflection of our Product Services realized result. So that's why probably you see a little bit of an increase as the realized trading profit increases as well.

Thank you, Samantha. I see another raised hand from Axel Styrman, if you please unmute yourself.

Question to Kristian. On the import side, we see China actually has decreased imports so far this year only slightly. But do you think this relates to lack of sufficient volumes from the Middle East compensating for the switch out from the U.S. market relating to the trade war, port fees on Chinese-built ships, et cetera? Or do you think it reflects a new trend of weaker development regarding the demand from China?

I think you are pointing to something which is the fact that the U.S. exports is very much a propane heavy export, while the Middle Eastern production export is much more 50-50 butane and propane. And the Chinese importers are predominantly importing propane. So I think you have a point that the reduction in the Chinese imports is partly also because they simply can't get enough propane from the Middle East or other sources to replace the U.S. sourced propane, if that answers your question?

Yes. Just a follow-up there. Do you see any increased activity from China in the U.S. market now after truce?

Yes, definitely increased activity, but it's still not back at the same level as we had last year, for instance. So it takes a bit of time to recover the trading activities, it seems. But -- and you know there is still a 10% tariff on the Chinese side on the U.S. sourced LPG. So -- but we -- so far, that's being absorbed by the market participants. So the trade -- it doesn't really disrupt the trade as such. But let's say, the -- it's a more hesitant, let's say, trade relationship than what it was last year.

Thank you. Are there any more questions from the audience either verbally or via chat? Right now, I can't see any. I'll give you a few more seconds, if someone has any last questions.

All right. And if not, we would like to thank you very much for joining today's call. This would conclude our Q3 25 earnings presentation. The call transcript and recording will be available on our website shortly. So thanks so much for dialing in, and we wish you a very good rest of your day. Thank you.

Hello, everyone. A warm welcome to BW LPG's Q2 2025 Earnings Presentation. My name is Aline Anliker, and I'm the Head of Corporate Communications at BW LPG.

Today's presentation will be given by our CEO, Kristian Sorensen; and our CFO, Samantha Xu. After the presentation, we will have a Q&A session. [Operator Instructions] Before we begin, I would like to highlight the legal disclaimers displayed on the current slide. Please also note that today's call is being recorded. And without further ado, I would now like to hand over to our CEO, Kristian.

Thank you, Aline, and hello, everyone, and thank you for taking the time to be with us today as we review our second quarter financial results and recent developments. So let's turn to Slide 4, please. The second quarter was marked by extraordinary geopolitical and market events, which substantially increased the market volatility, both for shipping and trading. For the quarter, we reported a TCE income of $38,800 per available day and $37,300 per calendar day, above our guidance of $35,000 per day. In a quarter with spot rates fluctuating between $10,000 and $70,000 per day, the time charter portfolio played a vital role in protecting our downside.

After minority interests, the Q2 profit was $35 million, equivalent to an EPS of $0.23. And the Board of Directors has declared dividends of $0.22 per share, consisting of 75% of our shipping NPAT, topped up with retained dividends from Product Services 2024 results. Moving on to our trading operations. Product Services achieved a gross profit of $15 million and a profit after tax of $6 million. Samantha will take you through the details later in the presentation, and it's important to keep in mind that it is the realized result, which generates Product Services dividend capacity. As of 30th June, the aggregated realized result for the first half of 2025 is $39 million.

Further on our shipping activities, 2025 is a busy dry-docking year for us. And in the second quarter, we had 139 days related to vessels dry-docking. In the second half of the year, we expect 143 and 135 days, respectively, for Q3 and Q4. These numbers should be noted since the impact our revenue-generating potential on top of the dry-docking cost itself. For the third quarter, we're guiding on about $53,000 per day fixed for 90% of our available days. These are solid levels above our all-in cash breakeven of $24,800 per day. On the asset side, BW Yushi was added to our own fleet in June after we declared a very lucrative purchase option earlier this year.

On financing, we finalized a $380 million term loan and revolving credit facility to finance the Avance Gas fleet and secured a $215 million term loan facility for BW LPG India fleet. Our $250 million shareholder loan from BW Group was terminated earlier due to ample liquidity. But now that Q2 is over, the focus is on the second half of 2025, which has started off on a strong note. So let's turn to the next slide, please. The current VLGC market is characterized by solid fundamentals with robust growth in export volumes from the U.S., supported by high domestic LPG production and ongoing terminal expansions. The Middle East volumes are also slightly up, backed by a reversal of the OPEC cuts.

The extraordinary factor is how inefficiencies in the LPG trade pattern have absorbed substantial shipping capacity in recent months. The first such inefficiency emerged after China imposed retaliatory tariffs on U.S. sourced LPG, which led to a significant reshuffling of U.S. export volumes away from China and into other parts of Asia. The sudden shift of U.S. volumes toward India and Southeast Asia, combined with the redirection of Middle East volumes to China rather than India, absorbed considerable capacity from VLGC fleet and pushed rates up. The short but intense Israeli-Iran conflict also fueled spot rates for ships loading around that period in the Middle East.

Now trade patterns are slowly returning to pre-trade war flows, but the Panama Canal has once again become a bottleneck as growing traffic from container ships, ethane carriers and other prioritized or high-paying segments strains capacity. The consequence has been more VLGCs routing around South Africa, which significantly impacts the ton mile for the global VLGC fleets, making fewer ships available, which in turn is pushing rates up. In addition, the global fleet growth is at a low level with 409 ships currently in service and only 7 more to be delivered in 2025. We keep an eye on the LPG FFA market, which is currently pricing the balance of 2025 at an equivalent of low $60,000 per day for the Middle East, Japan benchmark leg.

Next slide, please. This slide shows how the LPG market dynamics played out after the Chinese retaliatory tariffs were implemented. The U.S. LPG export volumes shifted from Chinese destinations to India, but also Japan took a big chunk of the rerouted cargoes. U.S. LPG exports to India were above 1 million tonnes in the second quarter of 2025 compared to less than 100,000 tonnes for the entire 2024. Middle Eastern volumes also played a key role by replacing U.S. cargoes to China and thereby redirecting traditional cargo flows for India to longer-haul destinations in China and absorbing more shipping capacity.

Furthermore, China substituted U.S. LPG with cargoes from Canada and Australia, a trend that we see continues. All in all, the massive reshuffling of cargoes that took place was creating substantial inefficiencies in the LPG supply chain, which required more shipping capacity and moved rates up. The trade pattern is now pivoting towards the pre-Liberation Day structure in anticipation for a trade deal between the U.S. and China. But the Panama Canal has created new inefficiencies for the fleets.

Next slide, please. In 2023, '24, we all spent significant time analyzing the Panama Canal dynamics. Now with the canal regaining relevance, it's worth revisiting its key aspects driving our markets. The new Panama Canal locks have a daily capacity of around 10 ships in total combined for both directions. VLGCs have over the last years, taken up between 2 and 3 of these 10 transit slots. As previously explained, VLGCs are not prioritized through the canal during periods of increased traffic. So when waiting times become excessive or auction fees for available slots are prohibitively high, the alternative is to route vessels around the Cape of Good Hope. And this rerouting increases sailing distances by up to 50% compared with the Panama Canal route to Northeast Asia and has an immediate and material impact on the VLGC market by raising demand from tonnage to offset the longer voyages.

Monitoring developments in the Panama Canal will therefore be important in assessing the direction of the VLGC freight rates going forward. The increased demand for shipping capacity is $70,000 per day for loading in the U.S. Gulf. As you can see from the graphs on this page, shipping is currently capturing almost all the profit in moving cargoes from the U.S. Gulf to the Far East, and there is very little room left for profit on the cargo price itself. Driven by increased export volumes and the aforementioned inefficiencies is growing faster than the capacity of the VLGC fleet. And the upcoming export terminal expansions will likely lend support to shipping share of the U.S. Far East arbitrage.

In the LPG value chain, there is a daily arm wrestling going on between terminals, cargo owners and the shipping market on capturing as much as possible of the price difference between the U.S. and the landed price in Asia. For the time being, the supply-demand balance in the VLGC market is tight and the bargaining power is in the shipping market's favor. On that note, I'd like to remind you how this may impact the Q3 accounting result for Product Services since the change in the mark-to-market valuation of their shipping portfolio is not captured in the P&L, while forward cargo and paper positions are included.

Looking ahead on this slide, the U.S. export volumes are forecasted to continue growing on the back of increased production of LPG. The crude oil wells in the Permian Basin are more gaseous than we expected some years ago, and the gas production is forecasted to grow at least twice as much annually as the crude oil production, where lower growth figures are expected in the next 5 years period. The growth in U.S. LPG exports is supported by several terminal expansions from now into 2028, and Energy Transfer has already started their LPG exports from their Nederland terminal expansion.

Moving over to the Middle East. The export growth is forecasted to accelerate next year with Qatar leading the way as well as Abu Dhabi. Neighboring Saudi Arabia, the Jafurah project is worth keeping an eye on. Although it's further out in time, the size of the LPG volumes made available for exports are potentially adding another 5 million to 10 million tonnes of LPG to the growing volumes from the Middle East. On the fleet and new building front, there is a little new to report, and the order book counts 111 additional vessels to the current fleet of 409 vessels where about 15% equal to 60 ships and thereabouts are older than 20 years.

And then it's over to you, Samantha.

Thank you, Kristian, and hello, everyone. Let's dive into our shipping performance. The second quarter of 2025 completed with a TCE of USD 37,300 per calendar day or USD 38,800 per available day, over 94% fleet utilization after deducting technical off-hire and waiting time. The healthy result achieved in a volatile market was a strong testament to our commercial strategy, consistently taking on time charter and FFA for coverage in a strong market to provide support when spot market are under pressure. In Q2, the time charter portfolio was 44% of the total shipping exposure, among which 32% is fixed rate time charter.

Looking ahead for Q3, we have fixed 90% of the available fleet days at an average rate of about USD 53,000 per day. For second half '25, we have secured 34% of our portfolio with fixed rate time charter and FFA hedged, respectively, at USD 45,200 and USD 51,700 per day. Our time charter out-fleet is estimated to generate a profit of around USD 9 million over our time charter-in fleet. On top of that, the balance of our fixed time charter out portfolio is estimated to generate USD 74 million.

On the Product Services side, the business posted a realized gain of USD 6 million for Q2. The positive result reflected a disciplined approach and effective risk management in a volatile quarter. On the unrealized open positions, we reported a $12 million increase in mark-to-market on our cargo position, which was offset by a negative movement in paper position of $3 million. After accounting for other expense, which mainly comprise general and administrative expenses, Product Services reported a net profit after tax of $6 million for Q2. Net asset value of USD 58 million as at the quarter end.

As we mentioned in the previous quarters, the large mark-to-market valuation movement is due to the gradual phase-in of our multiple year term contract, which reflects value adjustments in time of volatile market. Value is significant. It reflects the delta between the balance sheet dates, and we continue to see fluctuations before the positions are realized. We also want to highlight that due to the nature of its gain and loss are realized in different financial periods and cannot be extrapolated and predicted using its historical performance. Its unrealized position will fluctuate depending on the valuation at the end of the financial period, driving the accounting results up and down drastically.

It's important to remember that our trading model looks at creating value combining positions of cargoes, paper and shipping positions. As such, we would like to remind you that the reported net asset value does not include the unrealized physical shipping position of $10 million, which was based on our internal valuation. In light of the strong shipping market outlook, the open cargo contracts and hedging position may, in turn, experience negative mark-to-market valuation changes, and we'll continue to see fluctuations before the positions are realized. In Q2, our average VAR, value at risk was USD 6 million, reflecting a well-balanced trading book of cargoes, shipping and derivatives after including the increased term contract volume, as mentioned.

Going on to our financial highlights. We reported a net profit after tax of USD 43 million, including a profit of $16 million from BW LPG India, a $6 million profit from Product Services. Profit attributable to equity holders of the company was USD 35 million for this quarter, which translates into an earnings per share of $0.23 and an annualized earning yield of 8% when compared against our share price at the end of June. We reported a net leverage ratio of 31% in Q2, a slight decrease from 33% reported end of last year. The decrease was due to lease liability reduction of $123 million from the purchase option exercised for BW Kizoku and BW Yushi, partly offset by the net drawdown of some banking facilities.

For Q2, the Board declared a dividend of $0.22 per share, which translates to 110% payout of our quarterly shipping profit. These are also supported by some of the retained dividends from Product Services in 2024. For the period end, our balance sheet reported a shareholders' equity of USD 1.9 billion. The annualized return on equity and capital employed for Q2 were 9% and 8%, respectively. Our Q2 OpEx was $9,000 per day. For full year '25, we estimate our own fleet operating cash breakeven per day to be $19,100 per day and total fleet operating cash breakeven, including time charter-in vessels to be $21,700 per day.

Please note, this is a reduction compared with the cash breakeven of 2024 of $22,800 per day, primarily due to meticulously managed financing, reduced time charter-in vessels and lower G&A per day. And this is also offset by increased OpEx. All-in cash breakeven, including dry-dock program for the year is estimated to be $24,800.

Next slide, please. On the liquidity side, at the end of Q2, we maintained a strong position of $708 million, including $287 million in cash and $421 million in undrawn revolving credit facilities. Due to our meticulously managed financing plan, we are able to support our fleet growth and remain a robust and resilient financial position to weather the future. Our repayment profile continues to be sustainable and healthy with major repayment only kicks in after 2029. On the Product Services side, trade finance utilization stood at a moderate level of USD 303 million or 38% of our available credit line, adding sufficient room for future trading needs.

Okay. With that, I would like to conclude my update. Thank you for listening, and back to you, Aline.

Thank you, Samantha, and thank you, Kristian. We would now like to open the call for Q&A for questions. [Operator Instructions].

We will start with the verbal questions first before then moving on to the chat. [Operator Instructions] I see first up [Thomas Christiansen].

Can you hear me?

Yes.

That's really good. I have a question regarding the fleet growth. First of all, if you could -- that's a factual question, put some figures regarding the capacity of the VLG fleet today and will the expected 111 vessels going forward? And then my next question is if that is a concern this fleet growth to you, and if it is, how you will mitigate the impact? And if not, why it's not a concern?

Thank you, Thomas. I can say -- I mean, it's to go into detail of every vessel size, it's probably going to take too long. But these ships are quite standardized, except that you have about 60 ships now of this fleet which are Panamaxes, which can go both the old and the new canal lane with a capacity of 88,000 cubic meters. Otherwise, the VLGCs are relatively standard in their design. Some are '91, some are '93 and some are '88, like I said. If you go back to the years before 2010, these ships are typically 82,000, maybe 84,000 cubes.

So that's kind of the way that the design has developed over the last 10 years. When it comes to the fleet growth in 2027, 2028, it's something we're absolutely not naive about. It should be viewed in the context of also more LPG volumes coming on stream, like mentioned from the U.S. as well as the Middle East. I think the fleet growth is kind of the same picture we had going from 2022 into 2023, where the fleet growth was actually absorbed very well in the market because the inefficiencies and the volume expansion from the U.S. in particular, absorbed the fleet capacity, which came on the water. But we are absolutely not naive about this. And as previously mentioned, we also have a time charter portfolio, which is currently just above 30% of our capacity, which we are given -- provided the rates are found attractive, probably going to grow towards 40%. So that's the way we are protecting the downside, as also mentioned in the beginning of our presentation.

Thomas, you had a follow-up question?

Yes, I did. I mean, little bit in the same context. I mean, recently, Panama announced that it wouldn't register ships above 15 years. I mean, can you say on a global level, how does that impact the fleet of big gas carriers? And also how does -- would that impact BW business?

Sorry, I didn't get that. The Panama has...

The Panama register -- the flag registered Panama announced that it will not register ships above 15 years going forward, how does that impact the global market and your market?

Well, then there will be fewer ships going through the Panama Canal. And I guess, more ships have to sail around South Africa to and from Asia and the U.S., if that is the case.

I think it's more about to register to B2B, to flag the Panama flag going forward that the...

Thomas, you disappeared.

Yes. It looks like we lost him.

Can you hear me now?

Yes.

Sorry. Yes. No, I think it's more about -- it's the register, the flag register, Panama's flag register that doesn't want to allow vessels above 15 years to be registered with Panama flag going forward. So I guess that somehow will exclude some vessels from the global fleet of gas carriers. So if you have a view on how that will impact the global fleet and your business too?

I think the -- I'm not sure about the restrictions on flagging ships in Panama. But if that is the case, I presume that there are all the registers where you can flag your ships. So it's nothing which will have a commercial impact on our markets as far as I can see.

Next up was Clement [indiscernible].

Over the years, you've generated significant shareholder value by assessing the purchase options that were below market prices on time chartered-in vessels with Yushi as the most recent example. Could you remind us whether you have purchase options on any of your remaining time chartered-in vessels?

We do have on one ship later in the decade, but there are no purchase options in the immediate future to say -- to phrase it that way. But we do have some towards the end of the decade.

Okay. Makes sense. Q3 guidance was a bit, let's say, disappointing maybe relative to recent market trends, especially on the spot market. A portion of that is attributable to your time charter book. But could you please delve a bit into the numbers where a significant portion of this fixed before rates went up?

That's something we will have to get back to you on for the next quarter because that requires a bit of meticulous working to get that number correct. But you're absolutely right that the time charter portfolio, which protected our downside in the second quarter is also affecting the number we're guiding on for the third quarter. And also keep in mind that we do have dry-dockings taking place throughout this year.

And there is also a position and timing effect here, which is important to keep in mind because these voyages are usually 3 months voyages and to have ships in position for the uptick in the rates takes time to -- before you see ships are load ready and can actually benefit from the strength in the market. So I think we have to get back to you on the details on the split between spot and time charter like we typically do in our earnings presentation.

Makes sense. And final question from me. You had 139 dry-docking days in Q2, followed by 143 and 135 in Q3 and Q4, respectively. How many vessels are expected to go through dry-docking each quarter? And secondly, have you seen any congestion going into dry-docks?

No congestions, but it's another 6, 7 ships for the remainder of this year.

Thank you, Clement. We have John [indiscernible] next.

I just have real quick question for you related to the Panama Canal. We saw earlier this year just -- you can hear me, right?

Yes. Can hear you well, John.

Okay. Earlier this year, President Trump here in the United States has really spent a lot of time with Panama trying to get the freight rates down for U.S. flag vessels, is that -- and U.S. naval vessels, of course, is that something that you see that's impacting the congestion in the Panama Canal? And do you kind of expect to see that going forward?

Not really. The capacity is mainly being absorbed by container ships. We see more ethane carriers on the back of the increased exports of ethane from the U.S., and this is going to accelerate in the coming years as well as other ship types. But we don't so far see any impact from the, let's say, naval ships or the U.S. flagships as you mentioned.

Thank you, John. Do we have any more questions that you would like to ask verbally before we move on to the chat. If not right now, might just turn to the chat, maybe starting with Andreas first. SGA has come down from Q4 and also Q1. What is driving this? And is the current level a more realistic level going forward?

Samantha, I guess, this one for you. On the G&A side, what typically drives this up, I presume this is the G&A we are referring to, right?

I assume the SGA refers to the G&A. Yes. I think, Andreas, so G&A is not something that we can have a say or can give you a good base for you to estimate because partly of that is that the shipping G&A and the other part is Product Services G&A, which is a reflection of the realized profit as part of the incentive scheme. So that's why you will see fluctuations of G&A as a true up reflecting the Product Services realized profit as well.

All right. Andreas had another question related to spot rates being lower. So the question was with the current market dynamics being favorably and comparing relative to peers reporting recently, what is the reason for the achieved spot rates for Q3 being relatively lower for BW LPG?

I think -- well, it's not -- I guess, our peers have to answer for their numbers themselves. But at least for us, when we guide on the Q3 numbers, it's including both spot and the time charter portfolio. So it's not pure spot. And as mentioned also to Clement earlier is that the time charter portfolio is affecting this number compared to the pure spot rate that you see in the market. And of course, you have the positioning, the timing effect and the fact that we also have a relatively busy dry-docking agenda and scheme this year, which will impact the guiding and the results going forward.

Thank you. We move on to a question from Peter on VLACs. To what extent are the VLACs affecting the VLGC market? And when do you expect to start seeing some scrapping?

The VLACs are currently -- as they are being phased in, these are basically going to trade as far as we can see as regular VLGCs because the ammonia trade for these kind of vessels hasn't materialized yet and that's probably not going to materialize before we are well into the 2030s as it looks now. So we regard them as part of the, let's say, conventional VLGC fleet in our market outlooks.

And then there was another question, which was whether we start seeing some scrapping. Scrapping is typically taking place when the markets are really, really low. These ships, when they go out on, let's say, exit the conventional trade, typically when they reach at least 25 years, they end up in captive trade, floating storage operations. And technically, these ships can last until they are 40 years of age basically because there is very little wear and tear compared to a dry cargo ship, for instance. So we -- I don't anticipate to see any scrapping activity picking up before the markets are at a very different level than what we see today.

Thank you, Kristian. We have another question in the chat from [Olaf] on contract extension. Do you have any plans to extend the contracts for the vessels you're currently chartering in?

This is something we will decide on as we get closer to the expiry of these various contracts. So we will inform the market more on how we extend or choose not to extend these contracts as we move into the third and the fourth quarter.

Thank you. Another question from [indiscernible] on ton-mile upside. Regarding ton-mile upside from U.S.-China trade tensions, you mentioned that Voyage patterns are reverting. Can you quantify in general terms, how much of the ton-mile upside is still here -- still there today? Is it mostly still there or mostly gone?

This is a very good question. What we do see is that the U.S. cargo flows into China have kind of returned to a certain extent. But the surge in U.S. cargoes heading into India has come off. So I think it's a bit too early to see whether there is actually a new trade pattern established between the U.S. and India, for instance, or if this was just a one-off. So it's hard to kind of quantify this.

But as mentioned, we saw more than 1 million tonnes heading from the U.S. into India in the second quarter against less than 100,000 tonnes for the entire 2024. But the -- and also a side effect of this, which is quite interesting, which we probably underestimated was that India, which over the last years has absorbed basically 50% of all the LPG exports from the Middle East was suddenly receiving less cargoes from the Middle East because the Middle East sent more cargoes all the way to China. So we need a bit more time, I think, to quantify the ton-mile effects and how it really impacted the market.

Thank you. We have a question from [indiscernible] on ethane. Do you have any comments to the optionality on ethane LPG exports from the U.S. Gulf in the second half of '25 and in 2026? Which share of ethane LPG do you expect to be shipped from the expansions where there is such optionality?

Thanks, [indiscernible]. So we understand that from the Nederlands terminal, for instance, they will start up with LPG and then facing the ethane as we get into 2026. We assess kind of we have a 50-50 split on that one. Enterprise, they have 2 expansions where one of them will eventually be ethane only. So I think there is good reasons to believe that a substantial part of the terminal expansion for energy transfer as well as enterprise will be designated for ethane capacity.

Question in the chat from [Chandan] on Panama Canal congestion. So he would like to know what is driving the containership congestion increase in Panama Canal, what do you think?

I'm not sitting close enough to the container market to give kind of a qualified reply on this. But I suspect that it has something to do with the ongoing trade war, trade negotiations between China and the U.S. But the container traffic in and around the canal is steadily growing simply because also there are more ships in general on the water, fighting for this very limited capacity, which the Panama Canal has to offer.

And final question for now in the chart before we can open up again verbally as well is from John on the spot rate level. How do you look at the current freight market for VLGCs or spot rates of USD 70,000 a day a sustainable level? Or do you feel there are some downside risk in the near to medium term? All containers into the second half of '25?

Good questions. [indiscernible] per day in the market. Today, for instance, that ships are being booked around that level. So it seems like the market is able to absorb it and that the rates are sustainable. But I wouldn't say that there is [indiscernible] in driving these rates further up or down. The fundamentals are solid. So it's not like we have changed any views on the fundamentals of the market.

But the wildcard is the Panama Canal. And as mentioned, we see the containers are taking up substantial and increasing part of that capacity over the last couple of weeks. So it seems like this situation, even though it's rapidly changing from one week to the other, it seems like the Panama Canal congestion is going to be playing a role in the market -- in our market going forward. I think that seems to be the case.

Just real quick. Looking to the fourth quarter, Samantha said, and you showed that you've booked about 30% of your available days to the fourth quarter, I'm assuming that. What's your [indiscernible] into that fourth quarter?

Yes. I think, John, the way to look at this is that regardless of how the market is performing, the spot market is performing, we have these 30-odd percent of all the fleet capacity locked in at $45,000 per day thereabout. And this will obviously have an impact on our time charter equivalent for an income for that quarter. But the remaining 70%, they are exposed to the spot market. So that's something we are happy to keep for time being, at least, if that kind of answers your question.

It does, Kristian. I appreciate it.

I think it's time to round it off and say thanks to everyone listening in and for asking good questions. We look forward to seeing you again in November. And in the meantime, we look forward to an exciting market development in the months to come. Thank you, everyone.

Thank you, Kristian. Thank you, Samantha. This will conclude our call. The call transcript and recording will be available on our website shortly. So thanks a lot for dialing in, and we wish you a very good rest of your day.