Avance Gas is going a lot further than shipping companies promising to pay half of their profit as dividends.
Oystein Kalleklev, executive chairman of the Oslo-listed VLGC owner, was asked on a conference call with analysts if it was safe to assume 100% hand-outs to investors in future.
Kalleklev said: “Some shipping companies are bragging that they are paying 50% of earnings in dividends. We are not planning to do that, we are planning to pay out everything.
“As long as we have a fairly good outlook and a good financial position, we don’t see any reason to be holding back all that cash.”
Kalleklev said investors could choose to put their money with the US government at 5% interest or put it with Avance Gas at 16% or 29% yields.
“I think it’s fair to assume 100% dividends in terms of earnings,” Kalleklev said.
The company increased its $0.20 dividend in the previous three quarters to $0.50 for the fourth quarter.
This made a total of $1.10 for the year, compared to earnings per share of $1.16.
The shipping company said a combination of solid earnings and a very robust balance sheet with no unfunded capital expenditure and $224m of free cash puts it in a very good financial position.
Buybacks tough due to big Fredriksen holding
Kalleklev told the call that dividends were an easier way to return capital to investors than share buybacks.
This is because major shareholder John Fredriksen has a 77% stake, leaving little stock liquidity.
Kalleklev said the company has an exemption from the Oslo Stock Exchange, because listings usually require a free float of 25%.
The organisation’s net profit was $34.7m in the final three months of 2022, compared with $7.5m a year ago, while revenue rose from $52m to $67m.
Earnings for the year of $89m were the best since 2015.
