Operator:

Welcome to Hafnia's Second Quarter 2025 Financial Results Presentation. We will begin shortly. You will be brought through today's presentation by Hafnia's CEO, Mikael Skov; CFO, Perry Van Echtelt; Soren Winther, VP Commercial; and Thomas Andersen, EVP, Head of Investor Relations. They will be pleased to address any questions after the presentation. [Operator Instructions] During this conference call, some statements may be considered forward-looking, reflecting management's current expectations. These statements involve risks, uncertainties and other factors, many of which are beyond Hafnia's control, that could cause actual results, performance or plans to differ significantly from those expressed or implied. Additionally, this conference call does not constitute an offer or solicitation to buy or sell any securities. With that, I'm pleased to turn the call over to Hafnia's CEO, Mikael Skov. Mikael Opstun Skov: Thank you. And hello, everyone, and thank you for joining Hafnia's second quarter 2025 earnings call. My name is Mikael Skov, CEO of Hafnia. And with me today are our CFO, Perry Van Echtelt; our VP of Commercial, Soren Winther; and our EVP and Head of Investor Relations, Thomas Andersen. We have earlier today issued our second quarter earnings, which are now available on our website. Over the course of the call, we will take you through Hafnia's second quarter performance and provide an update of the current market outlook. We will also share our recent financial developments, and conclude with an update on our sustainability initiatives. Let's move to the next slide, which is Slide #2. Before proceeding, I would like to go through our safe harbor statement. The information discussed on this call is based on information we have today, which may include forward-looking statements that involve risks and uncertainties. Actual results may differ materially from these statements. This call does not constitute an offer to buy or sell securities. Thank you for your attention, and let's begin with a look at our results for the quarter. Going to Slide #4. The second quarter has experienced an improvement in trade volume and tonne-miles driven by strong underlying demand and improved refinery margins. This has supported the spot market, and I'm pleased to announce another quarter of strong results for Hafnia. For the second quarter, we achieved $134.2 million in adjusted EBITDA and generated a net profit of $75.3 million, reflecting the strength of our operational execution and underlying market. Our performance was further supported by our adjacent fee-generating business, including our commercial pool and bunkering operations, which together contributed $7.9 million to our overall results. Seascale Energy, our bunker joint venture with Cargill, commenced operations in mid-May. On the fleet development side, our dual-fuel methanol MR IMO II newbuild program in partnership with Socatra has proceeded as planned. In May, we took delivery of the Ecomar Guyenne, the second vessel in the fleet; and in July, the Ecomar Garonne, the third vessel in the joint venture. Moving to Slide #5. Next, I would like to highlight Hafnia's key investment attributes. Hafnia is a global leader in the product and chemical tanker market, operating one of the largest and most diversified fleets in the industry. We own and have chartered in a total of 126 vessels with a lower-than-industry average age of 9.4 years. At the end of the second quarter, our net asset value stood at approximately $3.3 billion, equating to an NAV of USD 6.55 or NOK 66.07 per share. We operate our own in-house technical management and global commercial platform with chartering teams across Asia, Europe, the Middle East and the U.S.A. Our technical team upholds the highest safety and environmental standards, while our chartering team manages approximately 80 third-party vessels across our 8 different pools. At Hafnia, we take a proactive approach to market evaluation, continuously seeking opportunities as part of our active management strategy. Our diversified business model including the pool platform and Seascale energy, our bunkering procurement platform, complement operations and provide steady, reliable revenue. Finally, Hafnia maintains a transparent and consistent dividend policy having paid consistent dividends across the past years. For the full year 2024, we paid out 82.8% of net profit through dividends and share buybacks, with total dividends in 2024 reaching $1.16 per share. Let's move on to the next slide, which is Slide #6. At the end of the second quarter, our net LTV ratio remained unchanged from the first quarter at 24.1%, reflecting a balance of both a decrease in vessel market values and a further debt reduction. In line with our dividend policy, we declared a payout ratio of 80% for the quarter. This equates to a total cash dividend of $60.3 million or $0.1210 per share. For shareholders receiving dividends in Norwegian kroner, the exchange rate will be based on the value date which is 2 business days before the payment date. This marks 14 consecutive quarters of dividends, underlying consistent shareholder returns and a commitment to delivering long-term value. Soren Winther, our VP in Commercial, will now be sharing the industry review and market outlook. Soren Skibdal Winther: Thanks, Mikael. Let me start with an update on the current market conditions in the product tanker and clean product segments where Hafnia primarily operates, and then share our outlook for the months ahead. Looking at clean products on water, we see volumes in 2025 sitting above the last 4-year average, supporting the year-to-date market resilience. Q3 represents an uncommon seasonal rise in clean products on water and volumes loaded. Despite about 140 additional product tankers being sanctioned this year, clean product volumes transported on sanctioned vessels have decreased by 17%. On the right, we zoom in on the unseasonal change in clean product volumes. Q2 to Q3 volumes on water this year exceeded average movements observed in prior years by over 30%, underlining the fundamental strength of current achievable earnings for the quarter. Moving on to Slide 9. Improvement in demand fundamentals is further illustrated here. Looking at the year-on-year tonne-mile comparison for clean products in July, we can see a clear trend of continuous growth since 2020. This is further supported by cargo volumes loaded reaching their highest levels in the past 8 years, reinforcing the view that oil demand remains resilient with limited signs of downside risk in the medium term. On the other hand, dirty petroleum cargo volumes and tonne-miles have been on a decline since 2023, reflecting weaker fundamentals compared to clean products. However, the recent OPEC+ decision to boost production in September is expected to support crude tanker rates in the short term and also benefit the product tanker market through higher refinery throughput and exports. Moving on to Slide 10. We have seen a strong recovery in accumulated ton-days for the clean segment since the end of 2024, significantly surpassing the 3-year average by Q3. This has also led to a recovery in earnings in early 2025. In Q2, earnings reached the lowest levels of 2025, mainly due to the Western Hemisphere drawing down on accumulated inventory overhang. In Q3, earnings and ton-days have shown a strong countercyclical recovery driven by tight European gasoline and distillate supply as a result of continued refinery closures and an August incident in the Nigerian Dangote refinery resulting in a 15 to 20-day production stop, forcing a demand in Nigeria for European gasoline, which further tightens the product space in the Atlantic Basin. These factors drive tonne-mile increases and strong trading margins from the U.S. and the eastern basin for Q3 to date. The graph on the right provides further evidence that distillate flows east to west were countercyclical high for the month of July and expected to stay strong for August and September, benefiting from high trading margins between the regions. Moving on to Slide 11. The increased western product demand for Q3 is reinforced by 2 main factors and is expected to carry into Q4. Firstly, global refinery margins remain strong with the 3-month forward curve staying healthy. Secondly, global refinery outage for the remainder of the year appear very limited and are projected to reach a 3-year low. This will support higher volumes and longer haul trading with average voyage length and ton-days to potentially improve further. The combination of lower-than-usual turnarounds in the Eastern Hemisphere and refinery closures in the Western Hemisphere, plus planned maintenance of the Nigerian Dangote refinery in Q4, forms the foundation for further tonne-mile improvement towards the end of the year. Moving on to Slide 12. Inventory levels is a fundamental driver of the product tanker market. Data for both dirty and clean trades point to significant draws in 2025. These low inventory levels will help amplify the impact of strong refinery margins and low outages, reinforcing the market effects highlighted on the previous slides to replenish inventories. Moving on to Slide 13. Crude tanker cannibalization has been a key topic at the end of 2024. This has gradually returned in 2025 with its largest impact in February, June and July of this year. However, the key driver of this has shifted, with 2024 primarily being from large tankers cleaning up and repositioning west of Suez, where 2025's cannibalization largely originates from newbuild tonnage. We expect the cannibalization for the remainder of the year to be minimal, with limited newbuild deliveries expected and also keeping in mind that Q4 deliveries could likely defer to achieve a 2026 nameplate. The year-to-date impact on tanker supply has also been minimal. Despite a sizable number of newbuild deliveries, the net additional competing deadweight in 2025 remains limited, at only 0.3% for the clean trade and 1.2% for the dirty trade. This is mainly being offset by vessels turning 20 years of age as well as increasing number of sanctioned tonnage reducing effective supply. Importantly, 28 out of 37 newbuild LR IIs have shifted into the Aframax trade, further tightening supply within clean product tanker markets. Slide 14. The supply outlook remains positive. From 2025 to 2028, we expect about 114 million deadweight worth of newbuild tankers across Handys to VLCCs. Over the same period, potential scrapping could reach 167 million deadweight based on typical scrapping ages of 23 years for larger segments and 25 years for MRs and Handys. Beyond that, another 87 million deadweight tons could leave the market between 2029 and 3031. It's also worth noting that we did not account for any differences in utilization between newbuilds and older vessels. Slide 15. Sanctioned vessels continue to have a large impact on the fleet supply. The U.K., U.N. and OFAC sanctioned another 409 tankers during 2025, bringing the total to around 800 tankers trading outside normal market competition rules. We estimate approximately that another 335 vessels have engaged in sanctioned trade regions, sailing -- signaling the potential for additional sanctioning. The dark fleet is identified as tonnage with questionable ownership and predominantly older age profile, while the gray fleet is associated with reputable ownership. Now Perry, our CFO, will bring you through the financial development. Over to you, Perry. Perry Wouter Van Echtelt: Thanks, Soren, and good morning and afternoon, everyone. Hafnia posted another strong financial performance in the second quarter, driven by an improving spot market and a disciplined operating platform. For the second quarter, we posted an adjusted EBITDA of $134.2 million, resulting into a net profit of $75.3 million or $0.15 per share. Our commercial pool management and bunkering businesses contributed $7.9 million in operating income. And with the launch of Seascale Energy in mid-May, our bunker procurement business has been transferred to the joint venture and will now be accounted for using the equity method moving forward in the coming quarters. We continued to deliver strong returns with a 13.2% return on equity and a 10.6% return on invested capital this quarter. On the balance sheet, net LTV stayed unchanged at 24.1% compared to the last quarter as further debt reduction balanced out a decrease in vessel values. The chart on the top-right displays our liquidity profile. We have access to over $450 million in liquidity at the end of Q2. This includes $194 million in cash and around $260 million in drawdown capacity under our credit facilities. Additionally, early July, we secured a $715 million revolving credit facility, which I will discuss shortly. We also remain well protected against interest rate volatility. At the end of Q2, 55% of our interest rate exposure was hedged at a weighted average base rate of 1.95%. If we then move on to the operating summary. You'll see we continue to produce strong operating cash flows, thanks to our solid balance sheet and low breakeven levels. For the quarter, we earned a TCE income of $231.2 million, averaging $24,452 per day across our vessel segments. Then with many of our own vessels built in the years of 2015 and 2016, several will undergo their second drydock this year and next. As a result, our Q2 results were affected by numerous vessels being in drydock or undergoing repairs, leading to about 630 off-hire days during the quarter. We expect fewer drydockings and repairs in Q3, resulting in roughly 510 off-hire days. And starting from the last quarter, we anticipate our drydocking schedule to ease and off-hire days to decrease. If we move to the next page. Our delevering efforts over the past 2 years have enabled us to significantly reduce our net debt, to the tune of $500 million, compared to the same period in 2023. While current market conditions led to an approximately 5% decline in vessel values quarter-on-quarter, we maintained our net LTV at 24.1%, supported by a reduction in our net debt. In July, we concluded a new $715 million amortizing revolving credit facility with a syndicate of 11 banks. This facility has a very competitive margin, a tenor of 7 years and an age-adjusted amortization profile of 20 years. It also includes an uncommitted accordion tranche of up to $417 million exercisable within 2 years. Since the closing of that facility, we've drawn approximately $290 million under this RCF to refinance existing debt that this facility is replacing. And Hafnia currently maintains around $600 million in undrawn capacity with a highly competitive margin and, as I said, a very attractive structure. This facility not only reduces our overall funding costs, but also lowers our cash flow breakeven levels and further strengthening our balance sheet resilience. And if we move on to the next page. As demonstrated here on the slide, our earnings have strengthened quarter-on-quarter, positioning us for a robust performance in 2025. As of August 15, we had secured 75% of the earning days for the third quarter at an average rate of $25,395 per day across the segments. For the remainder of the year, 48% of earning days are covered at an average rate of $23,623 per day. And if we look at the scenarios for covered rates and analyst consensus, they indicate robust net profits in the range of $305 million to $310 million for the full year. And Mikael, over to you for the next few slides. Mikael Opstun Skov: Thank you for this. We now go to Slide #22. And let me now turn to Hafnia's sustainability strategy and goals. As a leading company in our industry, we understand the responsibility we have in building a more sustainable maritime future. We set high standards and work to meet them, aiming to make a positive difference for communities and stakeholders. We're also consistently collaborating with industry partners and international organizations to develop long-term solutions for the challenges shipping faces. This keeps us at the forefront of change, ensuring Hafnia actively participates in this transition. Going to Slide #23. Here we showcase some of the strategic initiatives we have been working on. Take Seascale Energy, for example. It has recently started operations and aims to provide more reliable, efficient and sustainable solutions for customers worldwide. Through smart investments and strong partnerships, Hafnia is positioning itself at the forefront of maritime innovation. Slide 24. Looking ahead to the rest of the year, Hafnia remains strong. The positive momentum from the first quarter continued into the second and third quarters driven by growth in trade volumes and tonne-miles. We achieved solid earnings while keeping our 80% dividend payout ratio. Market fundamentals remain robust with limited fleet supply and improved spot rates. Our proven operational excellence along with recent refinancing boost both our resilience to market changes and our ability to pursue new opportunities. This concludes our presentation. With that, I would now like to open the call for questions. Operator: [Operator Instructions] So Frode, I believe you had raised your hand first. May I ask you to unmute yourself? Frode Morkedal: Yes. First off, congrats on the good trading performance, the Q3 guidance. My first question is on the refinancing you announced. I assume that you'll draw that fully and refinance the existing debt. Can you perhaps quantify the improvement to cash breakeven rates and how that will be after you have refinanced? Perry Wouter Van Echtelt: Thanks for that question. Yes. So we're very happy with that refinancing. First of all, it brings down our funding costs further. I think on the elements that we have refinanced now, you would see a margin improvement of 50 to 60 basis points overall. The structure in itself also gives a longer profile and more flexibility in terms of paying down. Looking towards our cash flow breakeven, I think that would go towards roughly $13,000 if the whole refinancing takes into effect later on in the year. Frode Morkedal: Okay. So that's roughly a $1,000 improvement or something like that. Perry Wouter Van Echtelt: Yes, depending on whether you're looking at averages or quarter-on-quarter. Frode Morkedal: Okay. So 50, 60 basis points, that's, I guess, that's a positive effect on EPS and, therefore, dividend capacity? And then, of course, there's a longer amortization profile, it sounds like, right, as well? Perry Wouter Van Echtelt: Yes. But -- yes, exactly. Frode Morkedal: Okay. I had a question on the market. I guess, I think on Slide 9 you showed July tonne-mile figures. So seaborne trade appeared to be up quite healthy, like 4% year-on-year. And then tonne-miles were up like 1%. So that indicates that the average miles were still down year-on-year in July. But then you said you expected the long-haul movements on LR IIs to improve going into Q4. Maybe you can elaborate on that, please? Soren Skibdal Winther: Soren here. I think we, on a general note, we have seen an improvement in tonne-mile over years over years. What we are alluding to on the improving tonne-mile right now is more related to here-and-now factors, the fact that Europe has drawn quite heavily on inventories in Q2 and Prax and Immingham going Chapter 11, together with a few other planned refinery shutdowns or stops in reality causes Europe to draw really tight on middle distillate and following that on gasoline more because there was a refinery outage in Dangote, Nigeria, which has called upon European gasoline products to service demand in principle, which basically drives an east to west up that has been present but not at the volumes that you have seen to the latter part of Q2 and weigh into Q3 now. And that drives a significant amount of tonne-mile on a general note. China has had to step in on some product supply as well, which is obviously even longer tonne-miles. So the comment originates from there and really drives the abnormality that you're seeing in Q3 now. You would typically see a pretty steep draw in tonne-miles and also volumes of cargo and water, which you are not seeing in [ brackets freak year ] like this and achievable earnings now that is superseding many other quarters of Q3 over years. Did that answer your question? Frode Morkedal: Yes. Perfect. Operator: I am moving on to Omar Nokta. Omar, can you please unmute yourself? Omar Mostafa Nokta: Thanks for the update. Yes, just maybe a follow-up question perhaps to Frode's on the market. As we've been looking at the spot market and your bookings so far here in the third quarter, there seems to be a noticeable shift where it's the MRs and the Handys that are driving higher and they're outpacing the LRs. Are you maybe able to explain what's driving that, maybe that divergence where it's the smaller ships that are really improving and it's the LRs that have been somewhat stagnant? Is that normal? Or what could you say is really behind the shift in vessel classes? Mikael Opstun Skov: Yes. Soren here again. I actually think I'll turn the question a little bit around. The fact is that the LR Is and the LR IIs, in particular, have been very resilient through Q2 and have produced quite significant numbers and significantly above the MRs. So if it looks on paper like the MRs have improved and the others have not, the chosen ones have remained on very high levels in the above 30% for the LR Is and in the very high 30s for the LR IIs. So it's merely the MRs catching up rather than the IIs and the Is getting more wind in the sales, if you like. Omar Mostafa Nokta: Okay. So yes, MRs just sort of playing catch-up. And then maybe just a follow-up, and I know you probably answered this several times in the past, but you were just discussing earlier in the presentation the cannibalization and whatnot. Have you -- does Hafnia as a platform, do you sort of reverse-cannibalize if the opportunities make sense to go into the dirty trade? Or does that maybe disrupt too much the clean trading platform? Soren Skibdal Winther: No. In principle, not. You can say that where the value is and where you can do some swapping is between -- for the LR I segment is into the Panamaxes. But keeping in mind that the Panamax segment is somewhere between 90 and 100 ships only and a very confined trade. You've got to be very careful in how many ships you move into that sort of segment before you kill yourself sort of thing. On the LR IIs, it's much more evident to switch between Aframax and clean trade. And there's actually opportunities to go dirty and then clean up again if you had the right swing. So that we will look at. Obviously, we are not players on the Suezmax VLCC game, and you can't really cannibalize that. It's really the bigger ships. We do have some dirty presence both in the Panamax segment and also on the MR side. But again, dirty MR is also, in the Eastern Hemisphere at least, very confined and limited to about 45, 50 ships. So you got to be careful a little bit how you cannibalize your own market if you go that way around before you sort of kill your own earnings. Operator: I am going to move on to [ Peta Haugen ]. Can you please unmute yourself? Unidentified Analyst: A quick question on the sanctions. My impression is that the OFAC sanctions are sort of harder to work around and more effectful than U.K., EU sanctioning. Is that correct? And to what extent would you say that sanctions now on the margin is having a real impact in terms of removing tonnage from the markets? Soren Skibdal Winther: Soren here again. Yes, you can say that the OFAC sanctions is probably the ones that have existed the longest time and where you had the early Iran and Venezuela sanctions coming on. So as a market pool, it may be like they have more effect. But actual fact is if you have a ship sanctioned by EU or by U.K. even, I mean, you have to be a relatively confident charter to go out or take even that sort of ship because many of the companies that we deal with will have EU and U.K. presence of some sort. You can say maybe the OFAC sanctions get a little bit closer to the dollar. But our experience in the market is that no matter where you are sanctioned, you're not really welcomed in the world that we are trading in at least to a large extent for sure. You will find that if you go through ship by ship, you will find many of the OFAC sanctioned ships be double listed in EU. And obviously, in our material, we have gone by IMO number. So there's one sanction per ship and no double-counting in that. Unidentified Analyst: Understood. And I suppose the next question would be to some extent related, because on your Page #14 you look upon the scrapping potential here. And if I understood you correctly, you have simply just used the age brackets to point to what would be sort of relevant to look at. But given the strength of the market, but also these sanctionings, or sanctioning of -- well, in predominantly older ships, how do you think about the more realistic scrapping scenario going sort of through the next, say, 6 to 12 months? Soren Skibdal Winther: Well, I think it's all interlinked somehow. I think as long as the now almost 800 sanctioned ships have a home to play in, which is outside the more -- all these adjacent trades, if you like, the Indian cabotage trade and Indonesia and other places. I guess if you remove the Russian playground for sanction tonnage now, you would have to put a lot of tonnage over 20 years into an adjacent trade that is a nongrowing trade that is sort of pretty static, and I would assume you would see accelerated scrapping. And maybe I can take -- there's a question in the chat as well. The deadweight that we specify here is exactly, I should say, it's age group, and it's on average previously scrap vessels, i.e., over time, it's scrap age for LR Is to VLCC is about 23 years, and it's 25 years for Handys and MRs. So it's scrap potential that we are talking about here. To add a little bit of flavor, when you look at ships over 20 years, it's not like you're super-welcome in an overall trading market. On general note, there's a lot of big trading houses, including oil majors, that do not take ships over 20 years simply, which means that the utilization of the fleet goes down. And as you say, you would find a lot of tonnage over 20 years being part of the sanctioned fleet for sure. Operator: [ Clemont Morlans ], may I ask you to unmute yourself? Unidentified Analyst: The U.S. has been vocal regarding the proposition to the IMO's net-zero framework. There is a lot of uncertainty, but could you talk a bit about your expectations regarding the October meeting and whether you think the new regulation will still be approved? And if it's not, what could be the next steps regarding the potential decarbonization for shipping? Mikael Opstun Skov: Thank you for that question. It's Mikael here. Well, as you clearly point out, when it comes to these kind of political major decision points, there's always an element of uncertainty, I guess, overall. But I do think that from where we are sitting, we do believe that the IMO will vote this through and that it will come into effect. And when it comes to Hafnia's strategy about how we see the future decarbonization, etc., we are working on the assumption that IMO will vote through what has been proposed even without the U.S. being supportive of it. So that's kind of how we see it. But I guess it's fair to say that the world we live in today is obviously influenced by a lot of geopolitical events that keeps on changing the agenda. But that's, for now at least, is our working assumption and that's how we believe it's going to play out. Operator: Gregory, may I ask you to unmute yourself? Gregory, we don't seem to hear you. I can see you're off mute. Okay. Gregory, maybe you would like to put your question in the chat. We're unable to hear you. So there is actually -- I will actually head into the chat questions for now and I'll come back to you, Gregory. So we have one from Tony, who asks, looking ahead, do you anticipate returning value to shareholders via dividend, share buybacks or a combination? Mikael Opstun Skov: Thank you for that question. So basically, the way that we view that part of our business is that we have a dividend policy, which has been clearly described. So that's what we are focusing on. When it comes to share buybacks, we do, of course, debate that every quarter, and we'll continue to do it. But for the time being, the dividend policy is what stands. And if there's any share buybacks, it will be in addition to the existing dividend policy. That's the way we look at it at the moment. Operator: Okay. And then leading on to the next question coming from [ Hans Henrik ]. So also again, regarding share buybacks. So regarding the share buyback, back in December, given the limited positive impact on share price, what is your position on this now? Will refrain from further buybacks despite strong cash position? I guess will you refrain from further... Mikael Opstun Skov: Yes, I think that was a little bit of what I said earlier. So I said basically that the dividend policies that we are paying, out of the net profit percentage that is linked to the net LTV. And if there are any share buybacks, that would be in addition to that. Operator: Okay. Thank you. I'm actually not seeing any more questions in the chat or the Q and A, I actually do see Gregory's hand is still raised. Maybe we'll just give Gregory a couple of seconds in case he'd like to -- okay, now his hand is not raised anymore. Okay. So I'm not seeing anything else more. So then we have come to the end of today's presentation. Thank you, everyone, for attending Hafnia's Second Quarter 2025 Financial Results Conference Call. You can find more information plus the recording of this meeting available online at www.hafnia.com. Sorry, is there one more question? So we have another question, sorry. So coming back to the Q&A now. Would it -- so this is also from [ Hans Henrik ]. Would it not make more sense to use cash to reduce debt and increase dividends? Perry Wouter Van Echtelt: Yes. It's Perry here. I think it is, as Mikael alluded to, is that we have a very clear dividend policy. We pay out our dividends in cash. Once we see more opportunities to distribute either by buybacks or anything, that will be coming on top of that. I think we're quite comfortable with the stable and high payout ratio that we have at the moment and look at it on a quarter-by-quarter basis. But otherwise not so much to add to that for the moment. Operator: Thank you, Perry. I'm going to wait a couple more seconds in case anything else is coming through in the chat or the Q&A. But then, otherwise, we're at the end of today's presentation. And if you'd like to relisten to this presentation later, you can find it on our website in the Investor Relations section. Thank you, everyone, for attending and thank you for the great questions, and speak next time.