Hafnia Limited 2026 Q2 Earnings Call

Good morning, and welcome to this presentation of the Q2 of Hafnia's results. It's a pleasure to have with me today the CEO, Mikael. Welcome, Mikael. Nice to see you.

Thank you. This will be your final time.

We'll talk about that a little bit later. What we've prepared this time is just a brief introduction, then of course, the Q2 highlights, and then into the industry section again. Please ask all the questions you may have in the chat, and I'll make sure that they are put forward to Mikael. Mikael, welcome. Thank you. And let's take the brief introduction to Hafnia as always, so that potentially new investors can get the grip.

Thank you for that too. Yes, as you can see from this slide here, basically Hafnia is all about transportation of refined oil products. Refined oil products is really defined by gasoline, diesel oil, gas oil, et cetera, all the products that come out of a refinery. So that is our specialty. We own and financially control 103 ships. Then we have a number of vessels on time charter as well. So, including owned time-chartered ships and third-party vessels, which is 60 ships that we operate from third-party owners, we get close to almost 200 product tankers that we have commercial responsibility for in the daily life. The average age of the owned fleet is 9.7 years, which should be seen in context of the average world global fleet of product tankers, where the average age is closer to 14 years.

It is a modern fleet, and it is one of the strategic key pillars for Hafnia to make sure that we at all times renew the fleet to make sure that it stays modern and efficient. Which is also a way of, by the way, to reduce fossil fuels consumption, and therefore, stay on a decarbonization trajectory that is within the international regulation. At the end of the quarter, we had a market value of $4.4 billion. So, it has been quite a substantial period for Hafnia and I think you have seen that the net asset value of the business have gone up. Sorry, the net asset value of $4.4 billion, which basically highlights that it has been a strong period, not just of earnings, but also of increase in vessels values.

And with that, Mikael, let's take a few highlights of Q2, please.

Yeah. As some may be aware already, Q2 was an extremely strong quarter for the tanker business overall. Not just product tankers, but also transportation of crude and dirty petroleum products. A very, very strong quarter. The second strongest quarter in the history of Hafnia, except for third quarter of 2022. All of this really was driven by a lot of these geopolitical uncertainties that we've seen and longer tonne-mile of transportation. A very strong quarter with a net result for us of around $278 million in net profit. On the back of that, we are paying out $250 million in dividend, which is a 90% payout. All in all, I think a great quarter for Hafnia and for its shareholders.

Again, happy to say that we're still able to return a lot of capital to the shareholders, which we have now done 18 quarters in a row.

Yeah. Speaking of that, Mikael, let's go into a little bit more about that because you're actually getting up to the highest level of dividend payback this time, 90%. Maybe you can put more words on that.

Yeah. What we have decided in Hafnia is to base the dividend and our dividend policy on our Net Loan-to-Value. What we have done is created a very threshold, so at certain levels, as we reduce our Net Loan-to-Value, the dividend goes up. This is now a dividend policy we've had for a number of years. As you say, once we come below 20% in Net Loan-to-Value, the payout ratio goes up to 90%. By the end of this quarter, we were at just above 13% in Net Loan-to-Value, and therefore, the payout is 90%. I think it's been an integral part of Hafnia strategy to make sure that we focus on investing when markets are low, which is where we built the company, bought in a lot of assets.

But when you have the high cycles, as we see now, it's also an important part to make sure we return capital to shareholders until, again, at some point, we're going to see that there are attractive investment opportunities. I think it's one of the key things of a shipping company, particularly in this very cyclical industry, that making sure and try to time your investments when things are cheap, and making sure you sell and capitalize and return capital to shareholders when markets are strong and you're making a lot of money.

And just to put into a relative context, this actually is representing 21% of an annual basis of payback, which is, I don't know, very, very high, I would argue.

Yes. And also, I know for a fact that people will ask about the TORM shares, where they have also announced some dividends, and that is included in this.

Is that correct? Yes, that is correct.