Dr. Loukas Barmparis
Analyst · those forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the fourth quarter 2025 earnings release, which is available on the Safe Bulkers website, again, www.safebulkers.com. I would now like to turn the conference over to one of our speakers today, the Chairman and CEO of the company, Mr. Polys Hajioannou. Please go ahead, sir
Good morning to all. I'm Loukas Barmparis, President of Safe Bulkers, and I'm welcoming you at our quarterly results. During 2025, the dry-bulk market witnessed increased market volatility, mainly due to geopolitical reasons. In the fourth quarter of 2025, we achieved $0.14 of adjusted earnings per share, and our Board has declared a $0.05 per share dividend, rewarding our common shareholders. The company maintains a prudent balance between spot- and time-charter exposure, allowing it to capture market opportunities while preserving net cash flow visibility and a strong capital structure, providing flexibility in our capital allocation. Following a comprehensive review of the forward-looking statements language, which is presented on Slide 2, let's proceed to examine the supply side dynamics in Slide 4. The dry-bulk fleet is projected to grow by about 3% in 2026 due to stable new deliveries with fleet growth estimated to be the highest for the Panamax and Supramax segments. The order book now stands at about 11.4% of the current fleet. The forecast for dry-bulk supply as per BIMCO is to grow by 2.5% in 2026 and by 3% in 2027, as adjusted for the sailing speed. Asset prices remain elevated in line with the current freight market. Recycling volumes are anticipated to rise, but still remain low compared to historical levels. Currently, about 11% of ship capacity in the dry-bulk order book will be ready to use alternative fuels upon delivery. And out of these ships, about half will use methanol, 36% LNG and the remaining ammonia and hydrogen. However, the dual fuel order book remains small in the dry-bulk segment. The postponement of the adoption of the global fuel standard by IMO may alter the path on decarbonization towards more pragmatic solutions. In a total order book of 20 Phase 3 vessels placed in 2020, we do have 2 dual fuel newbuilds on order, with deliveries by Q1 2027, able to operate with fossil fuels until alternative fuels become available and economically viable, hedging for the increasingly more stringent carbon intensity limits of the fuel new regulation after 2030 and the potential adoption of new regional or global regulations. Safe Bulkers fleet now counts 12 Phase 3 vessels in the water, all delivered from 2022 onwards. In addition, 26 vessels have undergone environmental upgrades and 11 vessels are Eco, incorporating superior fuel efficiency characteristics. Approximately 80% of our fleet is Japanese-built compared to the global average of roughly 40%, underscoring our focus on quality and asset durability. We need also to underline the improved quality of our Chinese ships, which incorporate improvements in durability and fuel efficiency. Our average fleet age of 10.5 years is approximately 2.5 years younger than the global fleet average, which is 12.6 years, strengthening our competitive position in terms of operational performance and regulatory compliance. Our commercial competitiveness will strengthen as we will be taking delivery of our remaining order book of 8 Phase 3 vessels. By Q1 2029, Safe Bulkers fleet will be comprised of 38 Phase 3 vessels, positioning us favorably to compete based on the fuel efficiency of our vessels, while the shipbuilding capacity will continue to be constrained, leading to longer lead terms. When we speak about supply, we need also to highlight not only the reduced scrapping rate, but also the aging dry-bulk fleet, 35% of which exceeds 15 years of age and the increasing expectation of older vessels, which will be reflected on the -- and the increasing inspection of older vessels, which will be reflected on the OpEx. Moving on to Slide 5, we present an overview of the demand and basic commodities trade. The global GDP growth expectations for 2026 and 2027, as reflected in the IMF's January forecast, call for a growth around 3% in the coming years, accompanied by gradual control of inflationary pressures. BIMCO forecasts a global dry-bulk demand growth of 2% to 3% in 2026. Cargo volumes are projected to expand by 1% to 2% in 2026 with average sailing distances increasing by 0.5% to 1.5% annually, supporting tonne-mile demand. Iron ore shipments expected to grow up to 1% in 2026 and similarly in 2027. Lower prices, driven by increased exporter's output, could stimulate trade and enhance competitiveness, especially lower-grade domestic Chinese supply. However, high Chinese port inventories plus 11% year-on-year may soften import demand in first half of 2026. Coal shipments are projected to decline by 1% to 2% in 2026. The International Energy Agency expects global coal demand to fall by 1.4% between 2025 and 2027, with coal imports declining by 4%. Chinese demand is projected to fall by 1.5%, while India and Asian regions remain growth pockets. Thermal coal trade is weakening. Coking coal remains relatively resilient. Grains remain the strongest performing major bulk, with shipments estimated to grow by 5% to 6% in 2026. Strong harvest in the U.S. and EU, Argentina, Russia and Brazil under peak supply. However, China's policy push towards greater self-sufficiency and reduced soya meal usage presents a downturn risk. Minor bulks growth is expected at 3.5% to 4.5% in 2026. Energy transition-related ores remain supported, though bauxite trade growth may moderate due to China's aluminum production cap. Fertilizer demand continues to expand, but at a slower pace. China remains a central strength factor for dry bulk. The broader economy continues to face structural headwinds from a weak property sector, elevated inventories in key commodities, iron ore, coal, policy-driven industrial adjustment and increasing trade barriers and the exporter licensing controls. Steel demand in China is expected to weaken, though exports remain elevated despite tighter regulation. Domestic production policy and import substitution strategies, particularly in coal and grains, represent key downside risk to seaborne trade. Trade tensions between the U.S. and China, although truce has been reached, remain a key source of global economic uncertainty. India continues to perform and is projected to experience the fastest growth among major economies, with a forecast of 6.4% in GDP increasing in 2026. This expanding domestic market and manufacturing sector may continue to contribute positively to the dry-bulk demand with infrastructure investments playing a vital role. In Japan, following a decisive super majority victory in February Snap elections, the Japanese government now holds significant political capital to advance a responsible and proactive fiscal policy aimed at transitioning the economy from prolonged deflation towards a phase of sustainable growth, widely referred to as Sun Economics, emphasizing aggressive fiscal stimulus to catalyze domestic demand and reinforce economic momentum. Summing up the supply-demand equilibrium on Slide 6, the supply growth is expected to marginally match demand for 2026. The freight market has shown strength during the fourth quarter of 2025 and continues to be healthy in early 2026. In relation to our Capesize class vessels, 7 were chartered under period time charters, with an average remaining charter duration of 1.8 years and an average daily charter hire of $24,000, topping $130 million in contracted revenue backlog from Capes alone. Moving to Slide 8, we present an overview of our quarterly highlights. We have declared our 17th consecutive quarterly dividend of $0.05, representing 3.3% dividend yield. At the same time, our free cash flow finances our newbuild program. We maintain ample liquidity and capital resources of $382 million and a comfortable leverage of $34 million -- of 34%. We have $72.6 million of net revenues, and we do have an active 10 million shares repurchase program. In January, we placed order for 2 Kamsarmax Phase 3 newbuilds. And in February, we sold a 2012 Chinese-built Capesize class vessel. In Slide 9, we present our returns to shareholders of $89 million paid in common dividends and $35 million paid in common shares and purchases. Since 2022, we're reflecting our consistency in generating sustainable returns across market fluctuations because of our track record, hazard management and our overall business model. Concluding the company update in Slide 10, we present our strong fundamentals. Safe Bulkers is a dry-bulk company with $628 million market cap, 45 vessels on the water, $1,274 million scrap value. We maintain significant firepower with $163 million cash, $220 million in undrawn RCFs and $192 million borrowing capacity against our significant order book of 8 newbuilds, mainly in Japanese shipyards. We focus on our majority Japanese-built fleet standards on fleet energy efficiency and lower CO2 taxation, reflected in our CII rating of several vessels on the bottom categories of D and E. We maintain a young technologically advanced fleet, strong balance sheet, comfortable leverage and low net debt per vessel of $8.4 million for a 10.4-year-old fleet. We have built a resilient business model with cash flow visibility of $164 million in revenue backlog, hefty expansion for a sizable fleet that achieves scale and a meaningful 3.3% annualized dividend yield positioned to leverage on its fuel efficiency. I now pass the floor to our CFO, Konstantinos Adamopoulos, for our quarterly financial overview. Konstantinos, the floor is yours.
