Hafnia Limited (HAFN) Earnings

Management highlights

### Fleet Strategy and Renewal - Continued divestment of older vessels per the fleet renewal strategy, maintaining a modern low average age fleet of 9.6 years across 118 owned and chartered-in vessels as of end-Q1 2026. - Signed a contract for 8 new MR newbuilds with Hyundai Heavy Industries, with deliveries scheduled between Q3 2028 and Q2 2029, plus exercised 2 additional options for 2 more MRs for delivery in 2029, locking in efficient modern tonnage to strengthen long-term earnings capacity. - Net asset value increased to ~$4 billion ($8.09 per share) from $3.5 billion at end-Q4 2025, driven by higher segment valuations and strong Q1 earnings. ### Shareholder Returns - 17 consecutive quarters of dividend payments; declared an 80% payout ratio, translating to a $143.8 million total cash dividend ($0.2877 per share) for a 14% annualized yield. - Cumulative dividends over the last 4 quarters totaled $365.3 million ($0.79 per share), and total shareholder return over the past 12 months exceeds 100%. - Net loan-to-value improved to 20.2% at end-Q1, down from 24.9% at end-2025, driven by strong cash flow from operations and vessel sales. - Net debt decreased to $797 million from $932 million, with total liquidity of ~$660 million ($146 million cash + $514 million undrawn credit facilities). ### Market Dynamics - The quarter was defined by unprecedented geopolitical disruption from the closure of the Strait of Hormuz, which reshaped global oil trade flows and tightened tanker supply, pushing freight rates higher. - Global oil inventories have drawn down ~200 million barrels between February and April 2026, with a projected cumulative deficit of ~900 million barrels by September 2026, requiring multi-quarter inventory rebuilding that will support future tanker demand. - U.S. clean product exports have surged ~40% between February and May 2026 to partially offset supply gaps from Middle Eastern disruption. Ballast voyage lengths hit a record 1,900 nautical miles in April 2026, indicating repositioning inefficiencies that tighten the global supply-demand balance. - 2 million barrels per day of Middle Eastern refining capacity is currently offline due to war-related damage, with full capacity not expected to return before Q1 2027, supporting elevated product flows and ton mile demand through late 2026. ### Sustainability and Operational Innovation - Maintains unchanged sustainability targets: 40% reduction in fleet carbon intensity by 2028, net zero emissions by 2050, and zero harm across operations; target of 40% women in offices by 2030. - Has commenced deployment of an enterprise AI platform to improve decision-making speed and workflow efficiency, with initial results showing improved response times across commercial and finance operations, with plans to scale the platform through 2026 and 2027.

Guidance

- 73% of Q2 2026 earning days are already secured at an average rate of $46,600 per day, supporting management's expectation that Q2 will be significantly stronger than Q1 2026. - For full-year 2026, management projects net income in a range of $700 million to $1 billion, based on current forward coverage and market rates. - Management is constructive on underlying market fundamentals, and expects freight rate resilience into 2027, supported by supply recovery, structural tanker market tightness, and a multi-quarter inventory rebuilding cycle after the eventual resolution of Middle Eastern disruption. - Expected CapEx for the 10 new MR newbuilds is ~$80 million in Q2 2026, with most remaining CapEx concentrated in 2028.

Segment performance

Overall: Q1 2026 TCE income was $282.5 million, up from $218.8 million in Q1 2025. Adjusted EBITDA reached $198.6 million, compared to $125.1 million in Q1 2025. Net profit was $179.7 million, nearly 3x the Q1 2025 result. Fee-based pool operations contributed $7.1 million, and $9.9 million in dividend income was earned from the Tor investment. Fleet-wide average TCE reached $30,327 per day, with average spot rates of $31,543 per day. Product and Chemical Tanker Segment (core): This is Hafnia's leading core segment, representing the majority of revenue and earnings. The segment benefited significantly from elevated freight rates driven by geopolitical disruption, ton mile increases, and constrained tonnage supply. Handy Segment: Hafnia is exiting the Handy segment entirely as vessels are sold, and will wind down Handy pool operations in 2026. LR2 Segment: Most LR2 vessels will transition to time charter employment, and Hafnia will wind down its LR2 pool operations. 72 LR2 vessels have migrated to dirty Aframax trading year-to-date, reducing the global clean LR2 fleet by 28% and tightening clean segment supply.

Risks & headwinds

- The timing and trajectory of geopolitical developments in the Middle East remain highly unpredictable, and the overall outlook is heavily dependent on the duration of the Strait of Hormuz disruption and the speed of recovery for global oil production and refinery operations. - Approximately 114 million barrels of oil (96 million barrels dirty, 18 million barrels clean) are trapped with 157 tankers in the Strait of Hormuz region, which has materially tightened current global supply but creates uncertainty if the situation changes abruptly. - Projections of global oil demand show a projected annual decline in 2026 (the first decline since 2020), which could pressure demand for tanker shipping if recovery does not materialize as expected by year-end. - The current market break from historical patterns (supply deficits coinciding with high freight rates instead of weak rates) creates two possible outcomes: a sharp correction in freight rates if supply does not recover as management expects. - Geopolitical and market volatility create uncertainty around future spot rate levels, which is the primary driver of near-term earnings.

Analyst Q&A

• Q: What changed to make Hafnia place its first major newbuild order in several years, after previously holding off due to future fuel uncertainty and long lead times? /

  A: Management explained Hafnia has sold many older secondhand vessels at very strong prices, which match the depreciated value of new builds today. This order is just normal fleet modernization after divesting older tonnage. Additionally, shipyard order books are full far into the future, so ordering now secures delivery slots by 2028-2029 to avoid the fleet continuing to age with no replacement options available. This order will not impact the company's dividend policy.

• Q: What is the reasoning behind winding down Handy and LR2 pool operations and transitioning LR2s to time charters? /

  A: For the Handy segment, the market has shrunk over time on both the demand and supply sides, and Hafnia received extremely attractive pricing for Handy vessels, selling them for close to original newbuild purchase prices from 2015 after years of profits. With only a small number of Handys left, the pool no longer had the scale needed to optimize earnings. For LR2, Hafnia has few LR2s left after many migrated to dirty trading, and the remaining vessels are chartered out, so there are not enough spot-market LR2s to justify maintaining a pool, making time charter a logical hedging approach.

• Q: Why has forward coverage increased significantly, and what is the reasoning behind locking in rates at current spot levels? /

  A: Management confirmed coverage has increased to the 25%-30% range for the half-year. The higher coverage is a deliberate hedge against broad geopolitical unrest and the high uncertainty around the timing of future market developments, given the unpredictable nature of current Middle Eastern tensions.

• Q: Will the current Hormuz disruption reverse the LR2 migration to dirty Aframax trade? /

  A: The primary driver of migration has been extremely strong Aframax market economics in the Western Hemisphere, combined with trade disruption from the Hormuz closure. As of Q1 2026, only 179 clean LR2s remain in clean trading, a major reduction that has sharply tightened clean segment supply. If clean product trade economics improve after Hormuz reopens, some vessels may shift back, but any meaningful reversal would take 1-2 quarters to complete.