Hafnia Financial Information Q3

21 Nov 2022 08:32 CET

I am proud to announce that Hafnia in Q3 has delivered the best quarterly result
in our company's history for the second quarter in a row.

In Q3, we achieved a net profit of USD 280.3 million, bringing our net profit in
the first nine months to USD 487.8 million.

In addition to our 129 owned and chartered-in vessels, we continue consolidating
our strong foothold in the product and chemical market by extending our offering
across our pool platforms. We now manage pools in every segment, operating a
total of 114 third-party vessels commercially. We provide bunker services to
over 1,000 vessels. For Q3, we have generated USD 12.1 million from our pool and
bunker business, totaling USD 26.6 million for the first nine months of the
year.

Founded on our ability to deliver strong and added-value shareholder returns, I
am pleased to announce a 50% dividend payout of USD 0.2801 per share or USD
140.1 million this quarter.

To increase shareholder return, we will, from the fourth quarter of 2022,
improve our dividend policy to target a quarterly payout ratio of net profit,
adjusted for extraordinary items, of:

50% payout of net profit if Net loan-to-value is above 40%,
60% payout of net profit if Net loan-to-value is above 30% but equal to or below
40%,
70% payout of net profit if Net loan-to-value is above 20% but equal to or below
30%, and
80% payout of net profit if Net loan-to-value is equal to or below 20%

The demand for clean petroleum products continued to increase in Q3, resulting
in more volumes shipped on our vessels, with longer voyages. With a strong
winter market approaching, alongside a historically low order book of newbuilds
and refined product inventories in the western hemisphere at an all-time low,
the market trading patterns continue to be strong, and we expect a continuation
of this upward trend in the coming quarters, as the US and EU Russia sanctions
take effect in December 2022 for crude products and February 2023 for petroleum
products, thereby changing trade flows and increasing ton-miles.

Finally, I cannot emphasize enough my appreciation to the Hafnia team and our
trusted partners, who have all been instrumental in these record-breaking
results.

Looking ahead, we will seek to build on this momentum to produce even greater
results. Our robust business model, and expansion in 2022, which included adding
36 vessels to our modernized fleet, is a true demonstration of how our active
management strategy delivers value. The acquisition of Chemical Tankers Inc
(CTI) and the 12 LR1 vessels have added approximately USD 116 million to our
profit this year, in addition to the vessels’ value appreciation, which is in
excess of USD 300 million.

- Mikael Skov, CEO Hafnia

Financial – Q3

Time Charter Equivalent (TCE) earnings for Hafnia Limited (the "Company" or
"Hafnia", together with its subsidiaries, the "Group") were USD 407.6 million in
Q3 2022 (Q3 2021: USD 88.7 million) resulting in an average TCE of USD 36,376
per day.

EBITDA was USD 326.0 million in Q3 2022 (Q3 2021: USD 29.7 million).

In Q3 2022, Hafnia recorded a net profit of USD 280.3 million equivalent to a
profit per share of USD 0.60 per share (Q3 2021: net loss of USD 20.7 million
equivalent to a loss per share of USD 0.06 per share).

The commercially managed pool business generated an income of USD 12.1 million
(Q3 2021: USD 7.0 million).

As of 16 November 2022, 67% of total earning days of the fleet were covered for
Q4 at USD 35,916 per day. 

Operating cash flow breakeven was USD 14,975 per day in the quarter.

In Q3 2022, Hafnia carried out the following activities:

On 7 July, Hafnia sold a LR1 vessel, BW Orinoco
On 8 July, Hafnia sold a Handy vessel, Hafnia Green
On 12 July, Hafnia sold a LR1 vessel, BW Lara
On 28 July, Hafnia sold the Handy vessels Hafnia Adamello and Hafnia Rainier
On 29 July, Hafnia signed a framework agreement for the sale of Hafnia Spark,
Hafnia Stellar, Hafnia Sirius and Hafnia Sky
On 4 August, Hafnia sold a Handy vessel, Hafnia Robson
On 8 August, Hafnia sold a Chemical - Stainless vessel, Hafnia Sceptrum
On 12 August, Hafnia sold a Chemical - Stainless vessel, Hafnia Spica
On 23 August, Hafnia sold a Chemical - Stainless vessel, Hafnia Saiph

Market

The spot market in the third quarter started strong on the back of a robust
second quarter. Global petroleum product demand in the third quarter continued
to grow by 1.5 million barrels a day, and an increase in the utilisation of the
worldwide product tanker fleet resulted in Hafnia delivering the best quarterly
result in the Company’s history for the second quarter in a row.

The growth in global product demand is expected to continue in the fourth
quarter, reaching 100.6 million barrels and 102.9 million barrels by the end of
2023. However, the deterioration of the global economy and the OPEC+ plan to cut
supply by 2 million barrels a day casts a cloud of uncertainty on future demand.
Oil-to-gas energy transitions and record-low product inventories somewhat
counter the immediate effect of such cuts.  

In this third quarter, the product tanker market experienced a decrease in laden
distance. Despite a 2% increase in transported volumes, this resulted in reduced
product ton-mile, but was partially offset by an increase in ballast distance.
The fourth quarter has seen laden distance increasing again to levels higher
than the second quarter, and not attributable to the seasonal spike typically
experienced in the first quarter. We also notice an unusual ballast duration
spike in the fourth quarter.

Russian exports to the US and EU markets have reduced in the third quarter, as a
result of ongoing sanctions. Still, they have been partially offset by an
increase to non-EU countries, resulting in significantly longer distances for
product tankers.

With the EU embargo on Russia’s product exports coming into effect in February
2023, EU countries have yet to diversify 75 % of their historical average
imports from Russia. We can expect ton-mile for product tankers to continue
increasing as the EU seeks to replace Russian imports from further regions such
as the Middle East.

Globally observed product inventories are at an all-time low, and the announced
cut of OPEC+ oil supply will reduce the likelihood of a build up in inventory
anytime soon. Despite OECD inventories increasing marginally in the third
quarter following the Strategic Petroleum Reserve (SPR) release, US and EU
diesel inventories are at an all-time low, and we expect to see increased diesel
imports into these areas.

Due to the continued dislocation between clean refined products and end-user
demand, we expect these diesel imports to come from further afar regions, such
as the Middle East and the Far East, over the winter season. We are already
seeing an increase in shipments from the Middle East to Europe, and we expect
this to continue increasing with the build up of refining capacity in the Middle
East and Southeast Asia compared with the closure of refining capacities in the
US and Europe.

With these solid fundamentals, the outlook for the product tanker market remains
very strong going into 2023.

Fleet

Fleet

At the end of the quarter, Hafnia had 116 owned vessels1 and 13 chartered-in
vessels. The total fleet of the Group comprises six LR2s, 40 LR1s (including
four bareboat-chartered in and four time-chartered in), 52 MRs (including nine
time-chartered in), six Handy vessels. The chemical tankers fleet includes six
Chemical - MR vessels, 18 Chemical - Handy vessels and one Chemical - Stainless
vessel (classified as an asset held for sale) which are bareboat-chartered in.

The average estimated broker value of the owned fleet was USD 3,976 million4, of
which the LR2 vessels had a broker value of USD 395 million, the LR1 fleet had a
broker value of USD 1,148 million2, the MR fleet had a broker value of USD 1,421
million3, the Handy vessels had a broker value of USD 185 million, the Chemical
- MR vessels had a broker value of USD 235 million and the Chemical - Handy
vessels had a broker value of USD 592 million. 

The fleet chartered-in had a right-of-use asset book value of USD 79.3 million
with a corresponding lease liability of USD 85.8 million. 


Hafnia will pay a quarterly dividend of USD 0.2801 per share. Record date will
be November 28, 2022 with ex. Dividend date of November 25, 2022 and payment on
December 6, 2022. Please see separate announcement for dividend.

Conference call

Hafnia will host a conference call for investors and financial analysts at 9:30
pm SGT/2:30 pm CET/8:30 am EST.

The investor presentation will be available via live video webcast via the
following link: Click here

Or call in (audio only): +44 20 7660 8381,,331112509#, United Kingdom, London

Contact Hafnia

Mikael Skov, CEO Hafnia: +65 8533 8900

www.hafniabw.com

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