Welcome to Hafnia's Fourth Quarter and Full Year 2024 Financial Results Presentation. We will begin shortly. You will be brought through today's presentation by Hafnia's CEO, Mikael Skov; CFO, Perry Van Echtelt; VP Commercial, Søren Winther; and EVP, Head of Investor Relations, Thomas Andersen. They will be pleased to address any questions after the presentation. [Operator Instructions] During this conference call, some statements may be considered forward-looking, reflecting management's current expectations. These statements involve risks, uncertainties and other factors, many of which are beyond Hafnia's control, and that could cause actual results, performance or plans to differ significantly from those expressed or implied. Additionally, this conference call does not constitute an offer or solicitation to buy or sell any securities. With that, I'm pleased to turn the call over to Hafnia's CEO, Mikael Skov.

Thank you. Hello, everyone. I'm Michael Skov, CEO of Hafnia. Welcome to our fourth quarter 2024 earnings call, and thank you for joining us today. Joining me today are our CFO, Perry Van Echtelt; our VP of Commercial, Søren Winther; and our EVP and Head of Investor Relations, Thomas Andersen. Together, we will walk you through Hafnia's performance for the quarter. Today's presentation will cover four key areas. I'll begin with a review of our fourth quarter performance and key highlights, followed by an overview of Hafnia and our market position. Søren will then discuss recent commercial developments and share our outlook for the product tanker market. Per will review our financial results and capital allocation strategy. I will then conclude with an update on our ongoing sustainability initiatives and provide closing remarks. Let's move to next slide. Before proceeding, I want to direct your attention to our safe harbor statement. Today's presentation will include forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from these statements. This call does not constitute an offer to buy or sell securities. Thank you for your attention, and let's start the presentation. Let me begin by outlining some of the key highlights from the quarter and 2024. Going to slide number 4. I'm pleased to share that Hafnia delivered another year of strong results, underscoring our operational resilience and ability to generate value through market cycles. While market conditions moderated in the fourth quarter, we achieved a net profit of $79.6 million, bringing our full year net profit to $774 million, marking another year of great results. Our core operations continued to generate strong earnings with a total TCE income of $1.4 billion for the year. This was further supported by our adjacent fee-generating businesses, which contributed $35.2 million…

Thanks, Søren. As Søren mentioned, the product tanker market softened in the fourth quarter. Despite these challenges, Hafnia has continued to demonstrate a strong performance, achieving solid earnings for the quarter and for the full year. In Q4, we generated TCE income of $233.6 million, bringing our full year TCE income to $1.4 billion. Additionally, our commercial pool management and bunkering businesses continue to perform well, generating $6.9 million in the fourth quarter and $35.2 million for the full year. This all resulted in an adjusted EBITDA of $131 million for the quarter and $992 million for the year. Overall, we've achieved a net profit of $79.6 million for the quarter, which included a $13.6 million gain from the sale of a vessel. This brings our full year profit to $774 million, translating to a return on equity of 34.5% and a return on invested capital of 25%. These results reflect yet another year of strong performance that we will continue to build upon. And if we move on to the balance sheet on the next page. Our balance sheet remains robust despite vessel values declining from the third quarter. As a result of our proactive efforts in optimizing our balance sheet, we remain in a very strong financial position. At the end of the year, our cash balance stood at $195 million with a total liquidity of approximately $517 million. So this includes undrawn facilities of $322 million. We've hedged approximately half of our interest rate exposure at a weighted average base rate of just over 2%, 2.01% to be exact, on a SOFR basis. Our hedging strategy has been important in reducing our cost of debt and shielding us from the high interest rate environment, and we will continue to monitor market conditions to manage our financing costs…

Thank you. We are moving to Slide number 21. Moving on, I would like to provide insight into Hafnia's sustainability strategy and goals. As a recognized market leader, we understand our critical role in shaping a more sustainable future. We are actively driving the integration of sustainability principles throughout our operations to create a positive impact on our communities and stakeholders. Through collaboration with industry peers, regulators, international bodies and constant engagement with stakeholders, we are committed to developing long-term solutions that will address the maritime challenges, enabling us to not only future-proof our business, but also contribute meaningfully to the world. Slide 22. Next, we understand the constantly evolving landscape of the world and actively seek initiatives where we can future-proof ourselves. We have embarked on several key strategic initiatives that we believe will play a key role in defining the maritime future. Most recently, we have announced the launch of Seascale Energy, a new joint venture bunker procurement entity between Hafnia Bunker Alliance and Cargill Pure Marine Fuels. This aims to transform marine fuel procurement services by delivering customers worldwide with cost efficiencies, transparency and access to sustainable fuel innovations. By aligning our strategic investments with strong industry partnerships, we reinforce our position at the forefront of maritime innovation. Moving to slide number 23. Looking ahead in 2025, Hafnia is operating from a position of strength. While market dynamics remain complex with the evolving nature of sanctions, tariffs and developments in the Red Sea, I'm optimistic about Hafnia's ability to capitalize on the positive trajectory of the market. Our proven operational excellence and financial strength position us well to create long-term value. Having returned over $1.5 billion to shareholders over the past three years, we remain focused on disciplined fleet deployment and capital allocation, while maintaining the flexibility to capture opportunities as they arise. This concludes our presentation. With that, I would now like to open the call for questions.

We will begin our Q&A session now. [Operator Instructions] So thank you, everyone. We will start the Q&A session now. I will start with the questions that have been posed in the chat in the Q&A section. So I'll just read out one that says, hello, why did you decide to pursue the share buyback program with such bad USD prices? Thanks.

Yeah, I can take that. I see there's more questions indeed on the share buyback. Why would we do them, or why wouldn't we do it more? It's actually both questions on both sides. We did the share buyback in Q4 as part of the shareholder distributions in our dividend policy, because we saw a big disconnect between the share price and the NAV. So that's why we concluded the total program of around $50 million in Q4 and another $25 million in Q1. Going forward, we have our dividend policy that is connected to our net LTV. So in principle, we focus on cash distributions via dividends. But, obviously, where we see a big disconnect, we always, as we have shown, have the opportunity to do the share buybacks as well.

Thank you, Perry. So I will actually move to the Raise Hand function now. Omar Nokta, can you please unmute yourself.

Sure. Thank you. Hi, Mikael and team. Thank you for the update. Yes, just maybe a couple of questions more market related. I just wanted to get your sense given you're obviously very pretty significant in terms of fleet and how you're operating. Just in reference to the sanctions that we've been seeing here, you mentioned China and India are appearing to -- or plan to adhere to the sanctions. I guess maybe just on that, what are you seeing from your vantage point at the moment in terms of how those two importers have been handling imports? And are you seeing kind of like a full adherence to the view that they're not bringing in sanctioned ships? Have they stepped up demand for compliant vessels? Can you give us some color on how things have been progressing there?

I guess that's for me, Michael. Yes, on a general note, you can say that when it all kicked off in the end of January, there was a pretty big push already for other traders to cover the lost in terms of import volume, especially for crude into India and into China. It seems relatively evident that they are taking Venezuela [ph] tonnes nowadays and to a large extent, also oil from other regions. To support that, you can, for instance, see that exports out of Iran has dropped more or less to one-third of what it was in January before the sanctions. So there is certainly some adherence to the -- to what they have said, and it's self-imposed in essentially, right? They have not said no to Russian oil, but they have said no to sanction tankers, probably OFAC listed sanction tankers. Q – Omar Nokta: That's interesting. Okay. Thank you. So you mentioned just -- it looks like Iran exports are down a third from January. Did I hear that right?

Yes. I mean, although February data is not completely to an end yet, right? You are seeing about 750,000 barrels versus about 2 million in January. It's the exact number. Q – Omar Nokta: Okay. Got it. Thank you. And then just a separate question. You had mentioned the cannibalization of crude going into product would slow or obviously stop perhaps altogether as a result of sanctions and the ships getting pulled away. I guess it sounded like the whole cannibalization theme had already ended or seen that it kind of ended last year or late in the year. Are you still seeing pressures from that today in the product market?

You can say that on a general note, the cannibalization is more or less back to normal averages, what you would expect from a newbuild program or anything to the tune of that. So you would see a hard trail-off in December and into January. Recent data will show that you actually have a little bit of an elevation in February. But if you drill into that, it will carry a couple of VLCCs that is going from the AG to the Red Sea. That doesn't count as cannibalization because it's an adjacent trade that is not really involving the international trading fleet, if you want. So I would say from December until date, you have -- you're back to or close to normal averages, as you would expect. I think it's merely related to a stronger crude market as well, of course, in that sense. And that's also why we believe at the end of last year that it would actually have come off earlier than it did eventually. But now we are where we are. Q – Omar Nokta: Yeah. Okay. Well very good. Thank you. I will pass it back.

Frode Mørkedal, may I ask you to unmute yourself, please. Frode Mørkedal: Yes. Thank you. On the buyback, just to clarify, are you able to continue that program? Or do you have to declare a new buyback program if you wanted to? And secondly, what's the intention with the shares you intend to cancel? Søren Winther: Yeah. Hi. Frode, thanks for that. To your last question, yes, the bulk of the treasury shares will indeed be canceled. And in terms of the -- yes, of the share buyback, we had the program that ran until was it late January up to $100 million. If we want to go further, then we'll discuss with the Board and would announce a buyback program going forward. Frode Mørkedal: Okay. Understood. And just generally speaking, what's the verdict on the buyback versus dividends? Do you feel differently now after completed the buyback? Or is that -- do you still see that as a good tool in the toolbox? Søren Winther: Yes. I think -- I'll take that, Per. Thanks, Frode. So I think what's important to understand here is that the -- we debate the dividend policy, if you like, with the Board every quarter, right? But in reality, I mean, our dividend policy that we have established is firm and here to stay. The share buybacks were kind of always for us more of an opportunistic approach, i.e., that once we see share price coming down to levels, as we saw now, you bought at 30% discount to NAV, we would look at it. But it's probably -- the way to look at it is probably more of an opportunistic view when share prices in our view, are way too low rather than being a permanent thing. So the dividend policy, as you…

Thank you, Frode. Lewis Gregory, can I ask you to unmute we can hear you now. Yes, we can hear now, yes, yes.

Okay. I wasn't quite sure how to unmute my phone. Yes, you would think I would know that by now. Good afternoon everybody. I was hoping to talk a little bit about just given the focus on the buyback in Q4 and really how asset prices have trended. It looks like since maybe the middle of last year at least MRs for, we'll call them modern tonnage has started to kind of pull back realizing that no cycle is the same. But as you guys think about asset prices over the next 12 to 18 months, are you seeing the potential for asset prices to stabilize? And really, what I wonder is, I think sometimes people focus on asset prices and they see markers from brokers. This decrease in asset prices, has there been any breadth in the S&P market around these indicated lower prices?

Yes. Thank you for the question. This is Mikael. So yes, I think it is a really good question because as you say, if you look back historically through cycles, there's obviously a certain element of asset values and freight markets and long-term time charter markets. So I think what we are seeing now is actually more of a situation which you also saw in the drybulk market is that -- so freight markets have been sliding a bit last year and now coming back. Asset prices went down at the end of last year, which is why our net loan-to-value also increased above 20%. But you're not really seeing a lot of activity out there. And I think what you're going to see on asset prices is probably more of a -- what we call like a theoretical valuation mark rather than real transaction values because sellers are not going to buy lower prices and buyers are not going to buy unless they get a real bargain, because they want to have more visibility of some of these uncertainties that Søren have just described in the market. So I think you've got to see a bit of a standstill actually on this because nobody is going to be pressurized to take and sell assets at lower prices when you are looking into the next 2 to 4 years of a potential removal of a dark fleet, sanctioned vessels, which is much, much larger than the current order book of newbuilds that's coming into the market. So I think right now, when it comes to at least to transactional value, I think, first and foremost, freight markets and long-term time charters have to show more activity before you're going to see actual marks that reflect underlying transactions.

Okay. Okay. Great. And then I did have one more question. As -- and it's funny because today, as I look at MR rates in the Atlantic and the Pacific, they're kind of right on top of each other. But really, my question is, as we think about the dark fleet, I mean, roughly speaking, any kind of sense for -- I mean, I'm assuming all of it, but I'll defer to you -- the team. How much of the dark fleet is trading Asia versus East? And as that happened, as the dark fleet unwinds, could you actually see that the Asian markets outperform the Atlantic markets? It seems like it's been the opposite over the last couple of years. Søren Winther: The Asian or the Far East market and the U.S. Gulf market to take that, the last part of it first has been the strongest over the past two years really. And you can say in terms of the dark fleet, we are counting 400-plus ships that is trading in and out of Russia at the moment being the kind that has a bit of a questionable ownership structure, a little bit older age. Predominantly, these ships are actually loading out of the Baltic region and the Black Sea. It's more to the crude side when you look at the Asia Pacific Russian loadings, which is more sort of a Suezmax and an Aframax game, which is certainly trading above the price cap. So, I think it's a worldwide thing really. If you have a full sanctioning of this fleet as well, whether or not that happens, it's hard to say. But if it happens, then it's more a total demand thing than anything else. Then you would have to have replacement barrels coming from something else, which would be the normal fleet, but it's our sort of fleets that would take over that trade, right?

Okay, great. Super helpful. Have a great day. Søren Winther: Thank you.

Thank you, Gregory. Clement [indiscernible], can you ask you to unmute yourself please?

Hi, can you hear me?

Yes, we can.

Hi, good afternoon. Thank you for taking my questions. I wanted to ask about your fleet positioning. You have a fairly modern fleet, especially including the vessels owned via the joint ventures. And I was wondering, how do you feel about your current split between LR2s, LR1s and MRs? Would you like to, let's say, bolster your exposure to any of those in the medium term?

Thank you. Yes, I think the way we normally answer these questions about the assets is really that we see the product tanker market as being one market, basically in the sense that what happens in the LR2 market eventually will also have an effect in the MR market and vice versa. So, we're not really that sensitive about whether it's one size or the other that we invest in. It's actually more about pricing versus earning capability. To give you an example, back in late 2021 when we bought 12 LR1s, the whole reason for that was not necessarily that we just wanted to strengthen our LR1 fleet. It was actually more that the pricing was almost similar to an equivalent age of a medium-range ship at the time. So, the extra earning value by paying the same price was just much more attractive in the LR1 segment, which is why we went for that. But you can say in an ideal world, we wouldn't mind having equal distribution in all asset classes. But for us, it's really only about pricing and earning capability when we invest in ships.

Makes sense. Thanks for the color. In the past, you had mentioned some of your time chartered in vessels had purchase options priced below market pricing. Asset values have declined a bit from the highs. And I was wondering how does current pricing compare to the options? And secondly, should we expect any of those to be exercised throughout 2025?

Yes. Hi, thanks for the question. in general, the prices or the purchase prices that we have in these options are still in the money despite the correction that we saw in the last quarter. So, we keep that in mind as long as we have the options and there's value, we have time to consider whether we buy them out or not. But overall, still in the money, yes.

Thank you. I'll turn it over. Thank you for taking my questions.

Thank you, Clement. [indiscernible], can you please unmute yourself.

Yes. Hello. Can you hear me?

Yes, we can.

Okay. Thank you to the gentlemen over at Hafnia for the presentation and the updates. How probable would you say that it is that moving closer to Q1 results for the current year that your guidance may not be as soft as it is right now? Because, I mean, I'm a long-term minority shareholder investor in Hafnia. It's a top line position for me. Fundamentally, I think it's a very quality play on the long term.

What is going on?

What is going on is that the price today is falling by 10%, coinciding with the conclusion of your share buyback program, which should have boosted, I think, market sentiment a bit. And I'm just trying to understand because it's more of a short-term thing. You touched upon some of the elements, the dark fleet included. It plays a role, I think, too, yes. It's just that it's such a big day drop and it doesn't make sense for me. And I'm trying to understand if it's just because the guidance is soft because there are so many uncertainty factors influencing the next like 12 months to 18 months and if the guidance could get a bit less soft than it is currently perhaps as we -- as the management gets more visibility towards the running year.

Thank you so much for that. This is Mikael. So I'm not sure exactly what guidance you're referring to, but I'm assuming it's more of the analyst guidance in general or some of the covered rates. But I think in any case, yes.

Yes.

Yes, exactly. So I think in any case, I mean, I think what we are seeing at the moment, and I know it's a bit difficult these days because there's a lot of uncertainty around. Our view is exactly the same as your view in the sense that there seems to be a lot of uncertainty at the moment in the world, and therefore, people rather say, well, we will rather take the safe process of not sitting on too many exposures rather than being a bit safe on our portfolio. We don't understand. There's no factual reason why share price should drop today, for instance, or for that matter, what they did last week when we look at the long-term perspective of this business. We appreciate there's some uncertainty around the Red Sea and the war in Ukraine. But I think as we try to illustrate here in our presentation, going back to where things were is not bad for our industry. What is bad is actually that when there's uncertainty and people stop taking long-term positions. So we are not sitting saying we'd love everything to go on as they were. We think when things go back to normal, which hopefully they will soon, the big issue here is that 16% of the tanker fleet are either in the dark fleet or sanctioned. And depending on what regulators decide and what happens to that fleet, that is way, way, way, way above any form of newbuild entrants into the market. At the same time, as you have a demand scenario that's still strong when it comes to oil in general. So as you're saying, we can only assume this is like more spot day trading philosophy and sentiment rather than long-term perspective because for us over the next 2 to 4, 5 years, I mean, almost half of the fleet will have to go out for scrap and the order book is nowhere near to be able to replace it. So that's kind of our long-term perspective on it. Realizing in between, of course, that geopolitical uncertainties will always in a way, provoke different reaction from different investors. But like you said, we certainly don't think there's any justification whatsoever on the development of the share price that we've seen lately.

Thank you very much for adding color on this. Thank you.

Thank you. And just a reminder to please keep yourself on mute because I think there has been some confusion with the person asking the question and some other people on the call. Jan, may I ask you to take yourself off mute. Jan, can you hear us? So Jan, we can't actually hear you. If you would like to put your question into the chat or the Q&A instead. In the meantime, I will move over to a question that we've received in the chat from Oscar. We have hi, how are you – hi, how are you expecting the impact of possible tariffs on upcoming quarters? And as the share price is now lower, are you looking for share buybacks for Q1? Thanks.

I'll take the tariffs. It's a little bit hard to say and it becomes political what is going to happen. I think the honest answer is that any sort of uncertainty and turmoil in the market is typically good for shipping. If Mexico has to -- or product from Mexico to the US Gulf has to be delivered from somewhere else, it's longer ton mile. The same product will be needed. Canadian crude coming into the Midwest of the US in terms of tariffs there. You have already seen Vancouver export port open for nighttime berthing elevating their potential for loadings from 20 to 30 Aframax’s a month. So in a sense, I think it's good for shipping. But it really becomes a very political question where -- and what tariffs is it going to be. It's even more difficult when you start looking at the potential Chinese build ships being tariffs come into the US, which will be a major part of the fleet, not only for tankers, but for containers and dry cargo and everything else. And it seems difficult to see that that's going to follow through, but God knows when? I don't know if that answered that question.

Okay.

There was also another question, Gina, I think, on share buyback, right? And I think we did answer that previously that share buyback will be part of more of an opportunistic approach. So whenever we and the Board feel that the timing is right, price is right, then as I said, then we may look at it, but it will be more on an ad hoc basis.

Okay. And Mikael, we have a second question after about some of the buybacks of shares occurred in Q1 2025. As I understand, this comes out of Q1 dividends that will be paid. Can you confirm how many cents per share will the buyback reduce the Q1 dividend? Second question, what is your breakeven TCE rate currently?

Yes. Sorry, it's Perry. I was on mute. I don't have the exact cents per share, but we bought back roughly $25 million of shares back in the quarter. So divided that by the net shares outstanding, you will have the number per share.

Thank you, Perry. Do we have any more questions either via the chat, the Q&A or the raise hand function? Okay, I'm not actually seeing anything.

Yeah, there's two extra questions…

Two…

… coming in, Sina. One more on buybacks …

Okay. Okay.

and one on the U.S. listing, I can take that.

Okay.

Yeah. I think we discussed a lot about the share buybacks. And as Michael indicated, we have a very consistent distribution policy in terms of how much we pay out of our net profit. Focus will be on cash dividends. And as and where we think that there's a very big disconnect, we have the tool of the share buybacks as well. So that is, I think, what we can say about it rather than having any strict mechanical way of looking at that. And then, in terms of the U.S. listing, so we've been listed in the U.S. now for, what is it, about 10 months. We've definitely seen stronger interest from investors in the U.S. Also, the trading in the shares has been much stronger since we listed both in Oslo and the U.S. with actually the bulk of the trading already going through the U.S. Stock Exchange.

Okay. Thank you, Perry. We have a second half of the question from Boris, about the TCE breakeven. What is your breakeven TCE rate currently?

I have to look that up one second. So there's one other question as well on the breakdown, then I'll look at the number.

What's your cash breakeven?

Yeah. Sorry, I said I have to look that up,…

Okay.

… if you look at the next question that …

Sorry, we have what is the ….

… I will answer that later.

We have what is the percentage breakdown of fleet trading on the spot market versus the fleet trading on period charters in 2025?

I think that you forward.

Yeah. I can take that. So basically, if you look at the -- I'm not sure we have published these numbers yet. But I think for the time being, when you look at for the rest of the year, excluding what we have already fixed in the spot market, I think the numbers we put in the slide, correct me if I'm wrong, Perry and Thomas, is that we fixed 25% of the full year already at $24,000 per day. For the hedging part, which goes beyond what we fixed in the spot market, we're probably covered around 13% to 14%, which is on a combination of time charter contracts and the rest is spot exposure.

Thank you, Michael. We have another question about any -- from Molly [ph] on any considerations for a Canadian listing. The American listing does not allow Canadian dividend tax credits.

Yes, I can take that one. We're at the moment, not pursuing listing on another stock exchange. So we have Oslo and the New York Stock Exchange at the moment. Then I see a question on offset of buybacks in January against Q4 dividend. So for the Q4 dividend, we've offset what we spent on the buyback in Q4. So that's close to $50 million. For the Q1 dividend, we will set off the amount that we spent in Q1 on the share buyback, which is roughly $25 million.

Thank you, Perry. We have a question from Jan who has asked, what has surprised you the most regarding the development of the rates since they have changed a lot since the second and third quarter earnings call, and there was no mentioning of an expected drop in rates. Søren Winther : I think what has surprised us the most is that you have a strong buildup towards the latter part of the Q3 into Q4 in terms of oil and water and ton miles. -- in that sense, the market was probably more tight in December than rates have actually reflected. So our analysis when we spoke last in November was that you would have the cannibalization coming off, ton-mile was already creeping up. Loaded volumes was already going up. And I think probably sentiment is the big surprise to us in terms of having, at some point of time, tight markets that was equivalent of some of the much higher earnings that we have seen, but not seeing that reflected in TCEs, although that fundamentals were actually coming along nicely and showing what they should be showing. It came later and it came into January. The market actually did go up, but not to the tune that one would have expected coming from the environment we have been in for the past couple of years.

Thank you, Søren. I am not seeing any more questions in the chat or the Q&A.

Well, we have one open question.

Sorry, one open one up. Yes.

So for the Q4, we were around -- on the operating cash flow breakeven. So before dry docks, we were around $14,000. It will be in that range, maybe a little bit higher for Q1.

Okay, great. Thank you, Perry. I'm not seeing any other questions coming through. I think I'll just take a couple of seconds to see if anything else comes through in the Q&A or the chat or the Raise Hand function. Okay. We have one from Frank Lopez [ph]. Can you speak to any plans that might be in play for a global recession in 2025?

So I think as far as Hafnia is concerned and our long-term strategy has always been to have a strong focus on our cash flow breakevens and to make sure that on the balance sheet part that we could basically make it and wave it through any down cycle that may occur. And if you look at the way that Hafnia has kind of built the business over the years, and I alluded to it a little bit before is that back in 2021, which is the last time we had a negative market, we were basically in a position to go out and be offensive and aggressive in a market and buy assets when the industry in itself was suffering from poor results. So for us, it's really about the balance sheet discipline. It's not about only recession in 2025. That's just the general possession of how we want to run the business. We prefer to have more spot exposure and the counterweight to that has been to have control over the cost side and low cash flow breakeven at levels where we feel that even at the lowest point we've seen historically, Hafnia will still weather through it and more than that, hopefully also be able to reposition, modernize and even increase the fleet as we go into a period of the next, say, two to five years where we do see there will be still a shortage of product tankers going forward.

Thank you, Mikael. I'm not seeing anything else coming through. So thank you, everyone, for your questions. So we have come to the end of today's presentation. Thank you so much for attending Hafnia's fourth quarter 2024 financial results conference call. You can find more information available online at hafnia.com. Thank you, everyone.