Singapore VLGC owner BW LPG is paying out an unexpected dividend after posting its best ever quarterly profit.
The company said it made $117m on a net basis to 30 September, up from a $2.8m loss a year ago.
VLGC time charter equivalent earnings were $48,100 per day, boosting revenue to $262.2m from $142.7m in the same period of 2018. EBITDA was $149m, with a margin of 80.9%.
The performance was underpinned by outstanding commercial performance and a strong VLGC freight market, with higher fleet utilisation, the company said.
"In light of the solid financial performance," it has changed its dividend policy from semi-annual to quarterly, it added.
Shareholders will receive $0.33 per share for the third quarter.
Fearnley Securities said earnings and spot rates were impressive.
On the dividend policy shift, it said: "Whilst this is a sensible move in our view, the 33 cents only reflects a payout ratio of circa 40%.
"However, we would expect BW LPG to up this ratio come the fourth quarter and pay out somewhere in the tune of 60%."
VLGC rates showed strength throughout the third quarter, mainly supported by overall strong US LPG exports and high geographical LPG price spreads, BW said.
Ton-mile demand to rise
"The expectation is...that ton-mile demand for VLGCs will increase, giving a positive freight outlook for the remainder of 2019 and 2020," it added.
"We foresee the coming IMO 2020 regulation to have a positive impact on VLGC rates, mainly as a significant number of VLGCs are expected to be docked for scrubber retrofits. This further supports our positive freight outlook for the remainder of 2019 and 2020."
But it said: "However, for the longer term, we maintain our view that sustained US LPG production growth and no further newbuild orders remain key to a balanced VLGC market."