Okeanis Eco Tankers Corp. Q2 FY2025 earnings call

• Fleet: Total of 14 vessels, youngest fleet among listed crude tanker peers, all scrubber-fitted and eco-designed. Two 2020-built Suezmaxes scheduled for 5-year dry dock in Q3/Q4 2025, and one Suezmax in 2026.
• Capital Structure: Refinanced three Chinese leased vessels with attractive terms, lowering financing margins by 55-60 basis points, extending average maturities by ~1.5 years per vessel, realizing annual interest savings of ~$1M and reducing daily cash break-even by >$1,000 per vessel per day.
• Dividends: Board declared 13th consecutive dividend of $0.70 per share. Total distributions over last 4 quarters at $1.82 per share or ~9% of earnings.
• Market Coverage: Expansion of equity leases coverage, with DNB-Carnegie merger and Jefferies initiating coverage.
• Q2 Performance: Fleet-wide TCE climbed over $12,000 per day QoQ, 100% utilization in VLCCs and Suezmaxes, leveraging fleet flexibility to adapt to market dynamics.
• Q3 Outlook: Market eased from Q2 but outlook healthy, fixed 77% of VLCCs at $44,200 per day and 60% of Suezmaxes at $34,200 per day, with Suezmax market firm, expecting higher rates for upcoming voyages.
• Market Dynamics: Supply side structurally tight, especially on large vessels; OPEC plans to restore production cuts, increasing crude volumes needing tankers; geopolitical factors like Trump's measures and EU price cap on Russia affecting trade flows.

For the second quarter of 2025, Okeanis Eco Tankers achieved a fleet-wide time charter equivalent (TCE) of about $50,500 per vessel per day. VLCCs had a TCE of almost $50,000, while Suezmaxes were at $51,500. Adjusted EBITDA was $47.3 million, adjusted net profit was $26.7 million, and adjusted EPS was $0.83. For the 6-month period, TCE revenue stood at $113 million, EBITDA was almost $80 million, and reported net income was over $39 million or $1.23 per share. The fleet consists of 14 vessels, 6 Suezmaxes and 8 VLCCs, with an average age of 5.9 years, the youngest among listed crude tanker peers.

• Q3 Fleet-wide TCE guidance: Average of $40,800, with Suezmax market firm expecting higher rates for upcoming voyages.
• OPEC Production: Anticipation of additional crude volumes from OPEC production increases leading to higher tanker utilization.
• Q4 Outlook: OPEC weighing partial reversal of production cuts, potentially increasing demand for VLCCs to move crude.
• Refinancing: Set to refinance last of legacy leases on Nissos Rhenia and Nissos Despotiko in H1 2026, with potential to further improve capital structure.

• Sanctions Impact: Uncertainty around sanctions lifting and their effect on shifting traffic between shadow and conventional vessels.
• Exchange Rate Effects: G&A costs affected by exchange rate spikes between euro and USD, though hedged.
• Market Fluctuations: Seasonal market softness and geopolitical events (e.g., Trump's measures, EU price cap) can impact tanker earnings.

Q: Could you give an overview of what the VLCC that was cleaned up to trade diesel will do after its voyage and the economics?

A: The ship will likely load a crude cargo, either from the U.S. Gulf, North Sea, or Malta and go East. Economics depend on comparison of clean market earnings vs. VLCC market earnings; if backhaul + front-haul averages outperform TD3 runs, it makes sense.

Q: Are you seeing incremental cargoes coming out of the Middle East as a result of OPEC boost?

A: Yes, seeing more cargoes coming back to the market, with VLCC rates increasing, and charters unable to hold cargoes off the market as before, leading to potential September upside.

Q: Is it possible to say something about the levels of spread between VLCCs/Suezmaxes vs. MR rates for cleaning up?

A: Depends on charter control of terminals and loading expenses. Clean market needs to be firm and VLCC market not relatively as firm for it to make sense. Right now, only one or two ships in fleet do clean trade on spot basis.

Q: What could happen in case of a deal between U.S. and/or Europe and Russia?

A: Unlikely to see significant change in Europe's policy on importing Russian crude; U.S. may soften sanctions, but shadow fleet remains sanctioned, with Russian crude not bought by Turkey/India likely going to China.

Q: Is the increase in operating cost per vessel unusual?

A: Partially due to exchange rate effects as G&A/OpEx in euros are impacted, but mostly seasonality; compared to last year, cost should be relatively flat or slightly above with no significant change.