John Fredriksen’s Avance Gas has delivered a record profit and delighted analysts with a big payout to shareholders.
The Oslo-listed VLGC owner said net earnings were $146.5m for the first quarter, of which $84.9m came from three ship sales, compared with net profit of $61.5m a year ago.
Revenue increased to $116m from $77m year on year.
The average time charter equivalent rate on a load-to-discharge basis was $78,800 per day, compared with $71,900 in the fourth quarter. This is the highest level since 2015.
The discharge-to-discharge figure was $60,900, compared with $76,200 three months previously.
For the second quarter, Avance Gas has booked 83% of days at an average TCE of $48,000 on a discharge-to-discharge basis.
Daily operating expenses were $8,200 in the first three months.
During the quarter, the company completed a refinancing of three vessels, resulting in a total net cash release of $45m.
It is paying out a combined return of capital and a dividend of $2.15 per share, or $165m, representing 112% of net profit.
This equals the amount handed back in the whole of 2023.
Chief executive Oystein Kalleklev described the period as “yet another blockbusting quarter” and “by far the highest quarterly result we have ever delivered”.
Long voyages
“The record-breaking earnings were driven by successful completion of the sale of three ships … but also very strong freight income adding $62m to the bottom line,” he added.
Despite the sharp slump in rates at the beginning of the year due to the cold snap in the US affecting the arbitrage levels, the shipowner benefited from having booked long voyages, primarily from the US to Asia, which limited market exposure during this “shake-out” period, the CEO explained.
He also pointed to a strong cash position of $360m at the end of the quarter.
The fleet renewal programme is now complete with the sale of all five VLGCs built in 2008 and 2009.
The fleet now has an average age of less than five years and consists of eight 2015-built eco VLGCs; four large dual-fuel ships from 2022 and 2023; and four dual-fuel midsize gas carriers under construction, which will carry LPG and ammonia on delivery next year and in 2026.
“Avance Gas is therefore well positioned to continue delivering strong results in an attractive shipping segment while at the same time reducing our emissions well ahead of the IMO targets,” Kalleklev said.
“With forward freight rates for the second half of the year at even higher levels, we expect to continue to deliver attractive shareholder returns.”
Fearnley Securities called the dividend “stellar”, yielding 13.5%, with earnings ahead of expectations.
Bookings were slightly below estimates for the second quarter. This should result in Ebitda of $41m, the investment bank said, lower than consensus figures at $49m.
