Hafnia Limited Q3 FY2025 earnings call

• Fleet renewal: Sold four older vessels built between 2010-2012. Announced preliminary agreement to acquire 14.45% of TORM shares.
• Financial position: Net loan-to-value ratio improved from 24.1% in Q2 to 20.5% due to strong operational cash flows. Used $100 million to repurchase vessels via sale and leaseback financings. Liquidity position: Over $630 million in total available liquidity at quarter end.
• Dividend policy: Declaring a payout ratio of 80% for the quarter, corresponding to a total cash dividend of $73.2 million or $0.1470 per share. 15 consecutive quarters of dividend payments.
• Market conditions: Product tanker market strengthened in Q3 with higher trading volumes and strong refinery margins. Clean petroleum product volumes on water tracked above 4-year average. LR2 migration and vessel sanctions impacted supply-demand balance.
• Sustainability: Highlighted sustainability initiatives and collaboration with partners to address industry challenges.

For Q3 2025, Hafnia achieved adjusted EBITDA of $150.5 million and a net profit of $91.5 million, its best quarter in 2025 so far. The fee-based business in the pools remained steady, contributing $7.1 million in fee income.

• Q4: As of 14th November, secured 71% of Q4 earnings days at an average rate of $25,610 per day.
• 2026: Operational cash flow breakeven below $13,000 per day. 15% of 2026 earning days covered at an average rate of $24,506 per day.
• Acquisition impact: Incorporating TORM shares into net LTV calculation will be based on lower of investment's market value or purchase price.

• Geopolitical tensions: Impact on product tanker market, e.g., Russian clean product exports decline, prompting substitute barrels from U.S. Gulf and Europe.
• Red Sea reopening: Potential impact on Suez canal traffic and arbitrage transportation volumes, but net effect expected to be minimal.
• Vessel sanctions: Sanctions reduce available supply, limit crude cannibalization, but potential for further sanctions and dark/grey fleet issues.

Q: Can you shed color on the coverage slide with 67% of the LR2 fleet booked for 2026?

A: Four ships, three with 3-year deals and one with a 2-year deal.

Q: How has the Russian export decline affected the market?

A: Offsetting effect from conventional tonnage entering the market, with no significant competition from dark fleet yet.

Q: Explain the Red Sea slide and impact on fleet supply?

A: Analysis based on historic data shows limited impact on market as volumes regaining via Suez are offset by Cape of Good Hope tonnage loss, resulting in minimal negative impact.

Q: Effect of purchasing vessels under sale and lease back on all-in cash breakeven?

A: Improved cash flow breakeven, bringing it below $13,000 per day for 2026.

Q: Thoughts on fleet renewal growth at current pricing and TORM acquisition?

A: Strategy linked to bigger projects; not in a situation to pursue big newbuild program at current levels; TORM acquisition's LTV impact depends on market value and purchase price.