(29 February 2024)
Highlights and Subsequent Events
- Strongest quarterly performance on record with daily TCE of USD 75,000 per calendar day and USD 76,000 per available day.
- Generated NPAT of USD 162 million or earnings per share of USD 1.14. Declared a Q4 cash dividend of USD 0.90 per share which represents a 98% full year earnings payout ratio and an annualised dividend yield of 28%
- Product Services generated a net accounting profit of USD 18 million in Q4 after adjusting for G&A and tax provisions from the earlier announced USD 27 million quarterly profit. It has also scheduled a share capital reduction of USD 30 million in Q2 2024.
- Took delivery of one VLGC and welcomed one VLGC to the pool in Q4. Entered into an agreement to sell one VLGC in Q4, with estimated delivery in Q1 2024.
- BW LPG signed joint venture agreements to invest in infrastructure project in India; and completed USD 30 million share subscription of Confidence Petroleum for 8.5% ownership.
- The announced US listing, now decided to be on New York Stock Exchange (NYSE), is on schedule and expected to be in Q2 2024. [1]
Financial Performance
BW LPG Limited (“BW LPG”, the “Company”, OSE ticker code: “BWLPG.OL”) reported a Q4 2023 Net Profit After Tax (NPAT) of USD 162 million, yielding an annualised return on equity of 42% with USD 128 million free cash flow generated. The Q4 EBITDA was USD 195 million, and earnings per share was USD 1.14.
The net leverage ratio remained low at 21% in Q4 with available liquidity at USD 457 million at the end of the quarter. On the back of the Company’s strongest quarter on record, the Board has declared a cash dividend of USD 0.90 per share, or a total dividend of USD 118 million. This represents an 98% earnings payout ratio for 2023 and an annualised dividend yield of 28%.
Product Services generated a net accounting profit of USD 18 million in Q4 after adjusting for G&A and tax provisions from the earlier announced USD 27 million quarterly profit. It has also scheduled a share capital reduction of USD 30 million in Q2 2024.
Commercial Performance
Shipping — Q4 VLGC freight rates averaged USD 75,000 per calendar day or USD 76,000 per available day, with 97% fleet utilisation. Time Charter Equivalent (TCE) income was USD 235 million for the quarter, and our India subsidiary contributed a stable TCE income of USD 35 million for Q4.
BW LPG took delivery of BW Kyoto (2010-built MHI Nagasaki Shipyard, Japan) in Q4. The vessel will be on a six-year time charter from Q1 2024 and will secure a ROCE of ~18% over the said period. BW LPG entered into an agreement to sell BW Princess (2008-built, Hyundai Heavy Industries, Korea) in Q4, with estimated delivery in Q1 2024. The sale will generate approximately USD 64 million in liquidity and a net book gain of about USD 20 million. Lastly, the BW LPG pool welcomed one dual-fuel VLGC (Gas Venus) from Sinogas in Q4.
Product Services— Product Services reported a USD 32 million gross profit for Q4, including a depreciation of USD 17 million due to five time charter-in vessels recorded as right-of-use assets. After taking into account other expenses, comprising mainly of G&A and income tax expenses, Product Services reported a net profit after tax of USD 18 million for the quarter.
Infrastructure — BW LPG completed the transaction to invest USD 30 million in Confidence Petroleum India Limited (“Confidence”) through a preferential allotment of equity shares in Q1 2024. The shares constitute 8.5% of the issued and paid-up share capital of Confidence on a fully diluted basis.
BW LPG also established a 50/50 joint venture (JV) with Confidence in Q4, named “BW Confidence”. BW Confidence signed an agreement with Ganesh Benzoplast to jointly develop and operate a new LPG onshore import terminal at Jawaharlal Nehru Port Association Port (JNPT) in Navi Mumbai, India.
Corporate Update
Preparatory work towards a dual listing of BW LPG shares in the US on the New York Stock Exchange (NYSE) is progressing as planned, with the listing expected in Q2 2024.
Market Outlook
Spot rates corrected down sharply in January 2024 due to cold weather increasing US LPG prices and thereby reducing exports. Rates have since recovered in February on the back of normalised temperatures leading to high US exports, in addition to an active lifting program in the Middle East. Our view is that the underlying fundamentals remain sound, and we reiterate our positive view for 2024, although we expect high volatility. Key underlying drivers include:
- High oil price leading to increased oil and gas production conducive to continued strong export growth from the US and steady growth from the Middle East;
- Newbuilding deliveries abate after Q1 2024 while 13 ships scheduled for delivery in 2025;
- Unpredictable Panama Canal situation; and
- Forward Freight Agreements price indicating a positive second half of 2024.
Q4 2023 Earnings Presentation and Interim Financial Report
Please see the attachments for the Q4 2023 Earnings Presentation and Interim Financial Report.
BW LPG will present the financial results at 13:00hrs CET today. The presentation will be hosted by Kristian Sørensen (CEO) and Samantha Xu (CFO).
The presentation will be held live via Zoom. Please register in advance at the link below:
https://tinyurl.com/BWLPGQ42023EP
A presentation recording will also be available after the event on the Company’s website at: https://www.bwlpg.com/investors.
For further information, please contact:
Kristian Sørensen, CEO
E-mail: Kristian.sorensen@bwlpg.com
Samantha Xu, CFO
E-mail: Samantha.xu@bwlpg.com
About BW LPG
BW LPG is the world’s leading owner and operator of LPG vessels, owning and operating Very Large Gas Carriers (VLGC) with a total carrying capacity of over 3 million CBM. With five decades of operating experience in LPG shipping, experienced employees and an in-house LPG trading division, BW LPG offers an integrated, flexible, and reliable service to customers. More information about BW LPG can be found at www.bwlpg.com.
BW LPG is associated with BW Group, a leading global maritime company involved in shipping, floating infrastructure, deepwater oil & gas production, and new sustainable technologies. Founded in 1955 by Sir YK Pao, BW controls a fleet of over 490 vessels transporting oil, gas and dry commodities, with its 200 LNG and LPG ships constituting the largest gas fleet in the world. In the renewables space, the group has investments in solar, wind, batteries, biofuels and water treatment.
This information is subject to disclosure requirements pursuant to Section 5-12 of the Norwegian Securities Trading Act.
[1] This does not constitute an offer to sell or the solicitation of an offer to buy any securities of BW LPG nor shall there be any sale of any securities of BW LPG in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
