BW LPG Q1 2025 Earnings Report

BW LPG EPS Results

• Actual EPS: $0.30
• Consensus EPS: $0.21
• Beat/Miss: Beat by +$0.09
• One Year Ago EPS: N/A

BW LPG Revenue Results

• Actual Revenue: $158.70 million
• Expected Revenue: $183.96 million
• Beat/Miss: Missed by -$25.26 million
• YoY Revenue Growth: N/A

BW LPG Announcement Details

• Quarter: Q1 2025
• Date: 5/20/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 20, 2025
• Conference Call Time: 8:00AM ET

BW LPG (NYSE:BWLP) Ltd. (NYSE: BWLP) is a maritime transportation company focused on the international seaborne transportation of liquefied petroleum gas (LPG). The company owns and operates very large gas carriers (VLGCs), which transport propane, butane and other LPG products between major production and consumption markets.

BW LPG provides shipping and related logistics services to energy companies, commodity traders and other customers worldwide. Its activities include vessel ownership and operation, commercial management, ship management and LPG transportation. The company also participates in LPG trading and distribution activities in selected markets, supporting the movement of cargo from exporting regions to import terminals and end users.

The company is headquartered in Singapore and serves a global customer base through trade routes linking the Americas, the Middle East, Asia and other major LPG markets. BW LPG is part of BW Group, a maritime group with interests spanning gas shipping, offshore energy and related businesses. The company is led by Chief Executive Officer Kristian Sørensen, while Andreas Sohmen-Pao serves as chairman.

BW LPG Q1 2025 Earnings Call Transcript

Key Takeaways

• BW LPG delivered a Q1 TCE of $39,800 per available day and reported a $46 million profit, leading to a $0.28 per share dividend (10% annualized yield).
• The company completed a Japanese JOLCO lease for the BW Kyoto and is finalizing a $380 million bank loan refinancing with strong lender interest.
• VW Products Services posted a $33 million realized gain but recorded a $12.5 million net loss due to downward mark-to-market adjustments on unrealized positions.
• BW LPG reactivated its $20 million share buyback program after share price weakness and has seen a significant recovery as LPG market fundamentals improved.
• Management decided to exit the planned LPG import terminal project in India to focus resources on core shipping and trading amid elevated geopolitical risk.

Presentation

[Aline Anliker, Head of Corporate Communications at BW LPG]

Hello everyone, good morning, good afternoon, good evening. A warm welcome to BW LPG's Q1 2025 earnings presentation. My name is Aline Anliker, and I'm the Head of Corporate Communications at BW LPG. Today's presentation will be given by our CEO, Kristian Sørensen, and our CFO, Samantha Xu. After the presentation, we will have a Q&A session. The questions can be put into the Q&A chat during the presentation, or you can raise your hand and ask your question directly once we move to the Q&A part. Before we begin, I would like to highlight the legal disclaimers displayed on the current slide. Please also note that today's call is being recorded. Without further ado, I would now like to hand over to our CEO, Kristian.

[Kristian Sørensen, CEO at BW LPG]

Thank you, Aline, and hello everyone. Thank you for taking the time to be with us today as we review our first quarter 2025 financial results and recent developments. Let's turn to slide four, please. For Q1, we reported a TC income of $39,800 per available day and $38,800 per calendar day. This is above our guidance of $36,000 per day, thanks to the performance of our time-shorted portfolio. After minority interests, the Q1 profit was $46 million, equivalent to $0.30 per share. The board of directors has declared dividends of $0.28 per share, which is equivalent to 75% of our shipping NPAT and translates to an annualized dividend yield of 10%.

[Kristian Sørensen, CEO at BW LPG]

We've been quite busy on the financing side, and I've concluded a Japanese JOLCO lease for one vessel, the BW Kyoto, while we are at the final stages of refinancing a $380 million bank loan where we have received very strong interest from the banking group. As per our trading update back in April, BW Product Services realized positions showed a solid $33 million in profit in Q1, but due to a downward adjustment of the valuation of the unrealized positions, they reported a gross loss of $3.6 million and a net loss after tax of $12.5 million for the first quarter. We'd like again to emphasize that this is that it is the realized positions which generate the dividend capacity and that downward adjustments to the valuation of the unrealized positions do not necessarily mean the positions are loss-making when they are realized in the future.

[Kristian Sørensen, CEO at BW LPG]

Into the second quarter, we reactivated the share buyback program after the share price dropped in the wake of the U.S.-China tariff war. We're happy to see that the share price has improved significantly since then, as the solid fundamentals in the LPG market played out. More about that later. For our activities in India, two major events should be noted. The first is a sale of the 2015-built BW Chinook and BW Pampero to strengthen our Indian flag fleet. This is a strong sign of our belief in the Indian LPG market. Secondly, we have made the strategic decision to discontinue our involvement in the LPG import terminal outside Mumbai.

[Kristian Sørensen, CEO at BW LPG]

This was a very difficult decision to make, but given the increased geopolitical risk, which our freight and trading activities are exposed to, we believe it is in our shareholders' best interests to focus our attention and resources on the key value drivers for our company. Although this journey did not end as intended for us, I would like to thank our partners, Confidence Petroleum and Ganesh Benzoplast, for the cooperation on this project and wish them the best of luck going forward. Okay, let's take a look at the market, slide five. Q1 was relatively uneventful compared to what unfolded as we moved into the second quarter. As the Chinese retaliatory tariffs on U.S. source goods and commodities were introduced, the U.S.-China LPG trade came to a halt and freight rates tumbled.

[Kristian Sørensen, CEO at BW LPG]

However, the solid fundamentals of the market prevailed, and with high U.S. LPG production, the export levels were elevated as U.S. LPG volumes were shifted to other Asian import markets outside China. The U.S. terminal operators are moving forward with their expansion plans, which will facilitate further export growth, while the OPEC cutback reversals are expected to increase the Middle Eastern exports, with more export projects also on the horizon later in the decade. We are closely monitoring the Panama Canal traffic, and there are indications that more ships are sailing around South Africa on its way from the U.S. to alternative markets in India and Southeast Asia, driving up to a mile as the sailing distances increase. Another event, which the whole industry closely monitored, was the proposed sharp hike in the U.S. port charges for Chinese-built and/or Chinese-controlled vessels.

[Kristian Sørensen, CEO at BW LPG]

Ships arriving in ballast are exempted, and the BW LPG fleet is set to trade as normal, but we are awaiting news from the second public hearing, which is taking place this week, whether any changes are proposed or made. For the new building market, we'll take a closer look at the order book, which is now counting 109 ships later in the presentation. The spot market has taken a sharp upturn as the exports were back on track from the U.S. and the Middle East. We are currently fixing vessels around the $50,000 per day mark from the U.S., while the Middle East is trading around the $60,000 per day range. Next slide, please. On this slide, we're trying to show the market turmoil we went through when the Chinese introduced their import tariffs on U.S. source LPG.

[Kristian Sørensen, CEO at BW LPG]

Overnight, it became uneconomical to ship U.S. cargoes to China, its largest export market, and prices for delivered LPG in Asia came off quickly. There were talks about U.S. cargoes being canceled and withdrawn from exports. In the first week, the spot rates went from $40,000 per day to $10,000 per day in three days. It was a swift and brutal reaction, but it took out the downside, and the market could quickly thereafter start repricing itself. Non-Chinese players quickly moved in to capitalize on the situation, and after a couple of days, the market bounced back with increasing freight rates reflecting the high activity level. A very strong force in the LPG market is the fact that it is a supply-driven byproduct from crude oil and natural gas production, and LPG, which is not consumed domestically in the U.S., must eventually be priced to clear in the international market.

[Kristian Sørensen, CEO at BW LPG]

We were, however, somewhat surprised to see that the U.S. prices remained quite resilient, while the increase of the landed price in the Far East supported freight rates to increase, while the U.S. Mont Belvieu prices remained stable, at least so far. The 90-day tariff relief announcement led to another upswing in the freight market as more players tried to secure shipments. Over the last two weeks, the arc has narrowed, and there is currently kind of a standoff between the Mont Belvieu prices and the Far East prices, while shipping remains tight, with more ships diverting to a very active Middle East markets. Next slide, please. The LPG market is extremely dynamic and adapts very quickly to market conditions. As you can see on this slide, new trades emerged within days and weeks after the Chinese import tariffs were introduced.

[Kristian Sørensen, CEO at BW LPG]

Chinese import demand was met by cargo swapping and reshuffling of Middle Eastern and other non-U.S. LPG cargoes, while U.S. cargoes increasingly changed destinations to Japan, Korea, and Southeast Asia. India, being the second largest importer of LPG, played a key role in the new trade pattern which emerged, and we saw the first U.S. cargoes shipped all the way from the U.S. to India. From a shipping perspective, sailing distances increased somewhat, and the more inefficient LPG supply chain supported freight rates to rebound. The fundamentals of the LPG market remain robust, and the U.S. production of LPG is rising unabated, backed by oil price in the low $60 per barrel. We do, however, recognize that the lower oil price may lead to reduced production of LPG, although more U.S. LPG will come from natural gas production going forward.

[Kristian Sørensen, CEO at BW LPG]

Terminal expansion plans are going ahead, as previously announced, and it's in our view a positive sign for shipping demand in the future. Let's take a look at the order book before Samantha walks you through the financials. The total order book is now at 109 ships by including vessels scheduled for delivery in 2029. There is attention on the Chinese-built part of the 406-strong sailing fleet, and currently, we count 50 of these as built in China, while 26 units are on order from Chinese yards. Dry dockings continue to absorb capacity from the global VLGC fleet. We are heading into a higher pace of dry dockings into the months ahead, which should be positive for the rate environment. I leave the floor to you, Samantha.

[Samantha Xu, CFO at BW LPG]

Thank you, Kristian. Hello, everyone. Please follow me to slide 12 and have a closer look at our shipping performance. For this quarter, we are very pleased to report achieving a TC per calendar day of $38,800 or per available day, $39,800, over a 96% utilization after deducting technical hire and waiting time. The healthy result achieved in a volatile market was a strong statement to our commercial strategy, consistently taking on fixed rate time charter and FFA to cover a stronger market and to provide support when spot markets are under pressure. In Q1, the time charter portfolio was 41% of the total shipping exposure, among which 30% is fixed rate time charter, supporting the earning when the spot market softened. For Q2 2025, we have fixed in 79% of the available fleet days at about $35,000 per day.

[Samantha Xu, CFO at BW LPG]

Looking ahead, we have secured a total of 30% of our portfolio with fixed rate time charters and FFA at $45,000 per day and $50,600 per day, respectively. For 2025, our time charter out fleet is estimated to generate a profit of around $24 million over our time charter in fleet. On top of that, the balance of our fixed time charter out portfolio is estimated to generate $137 million for 2025. Next slide, please. On the Product Services side, the business posted a realized gain of $33 million for Q1, a very strong quarter delivered. On the unrealized open positions, we reported a negative change in market valuation on our cargo of $51 million, which offset by a positive paper position change of $15 million. This brought Product Services trading result to a gross loss of $4 million for the quarter.

[Samantha Xu, CFO at BW LPG]

After accounting for other expenses, which mainly comprise of general and administrative expenses of cruise, Product Services reported a net loss after tax of $12.5 million. As we mentioned in the previous quarters, the large sum of market valuation change is due to the gradual phasing in of our multiple-year term contract, which reflects value adjustments in time of a volatile market. While the value is significant, it reflects the delta between the balance sheet dates, and we'll continue to see fluctuation before the positions are realized. As at the end of Q1 2025, Product Services book equity position stands at $53 million. This was after a dividend of $65 million paid out to shareholders, as reported in our Q4 earnings call.

[Samantha Xu, CFO at BW LPG]

As usual, we would like to highlight that the reported book equity does not include the unrealized physical shipping position of $8 million, which was based on our internal valuation. In Q1, our average value at risk, VAR, was $5 million, reflecting a well-balanced trading book, including cargoes, shipping, and derivatives, including also the impact of the increased term contract volume, as mentioned earlier. Going on our financial highlights, we reported a net profit after tax of $67 million, including a profit of $48 million from BW LPG India and a $12.5 million loss from Product Services. Profit attributable to equity holder of the company was $46 million for the quarter, which translates to an earnings per share of $0.30 and an annualized earning yield of 11% when compared against our share price at the end of March.

[Samantha Xu, CFO at BW LPG]

We reported a net leverage ratio of 31% in Q1, a slight decrease from 32% reported at the end of December due to the release of a restricted cash held in brokerage account of $30 million and a reduction of total borrowing of $45 million. For Q1, the board declared a dividend of $0.28 per share, which translates to a 75% payout for our shipping profits. For the period end, our balance sheet reported a shareholders' equity of $1.9 billion. The annualized return on equity and on capital employed for Q1 were 14% and 10%, respectively. Our Q1 OPEX was $8,400 per day, largely in line with previous periods. For 2025, we estimate our own fleet's operating cash break-even to be $19,300 and the total fleet operating cash break-even, which, including the time charter in vessels, to be $21,700.

[Samantha Xu, CFO at BW LPG]

All-in cash break-even is estimated to be $25,000, some improvement than our previous estimate, but still elevated than last year, driven by 2025's dry dock program and higher financing costs. Next slide, please. On the liquidity side, as the end of Q1, we continue to maintain an ample position of $633 million, supported by $262 million in cash and $371 million in ongoing revolver facilities. This position was attributed to our meticulous financing planning to replenish liquidity as growth continues. Our recently concluded JOCO financing contributed $65 million while we took delivery of a BW Kisuku. The repayment profile is sustainable, with major repayment only kicking in after 2029. We're also in the process of concluding a $380 million bank financing on a competitive term. Once it's done, it will replace the shareholder loan from BW Group, which was arranged during the fleet acquisition, and further enhance our liquidity.

[Samantha Xu, CFO at BW LPG]

This financing is not expected to increase the current leverage ratio. On the Product Services side, trade finance utilization stood at a moderate level of $224 million, or 28% of our available credit line, giving very efficient room for future trading needs. With that, I would like to conclude my updates. Back to you, Aline.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you, Samantha, and thank you, Kristian. We would now like to open the call for your questions. Please, you can type your questions into the Q&A channel. You can also click the raise hand button to ask your question verbally. Please note that participants have been automatically muted, so please press unmute before speaking. We will start with the verbal questions first before moving on to the chat. If you have a question, you might just raise your hands. I see a question here from Kushal.

[Aline Anliker, Head of Corporate Communications at BW LPG]

If you could please unmute yourself.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Yeah, hi. Can you hear me?

[Aline Anliker, Head of Corporate Communications at BW LPG]

Yes.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you. Thanks for the opportunity. Just wanted to understand our broader strategy on the India LPG terminaling business. I just noted that we are moving out of the contract with Ganesh Benzoplast as well as Confidence Petroleum, where we wanted to set up this LPG import terminal. Why was this decision taken, specifically given the fact that now volumes are moving from U.S. to India directly, the LPG volumes which I'm referring to? That is my first question. Thank you.

[Kristian Sørensen, CEO at BW LPG]

Thank you. The terminal investment for BW LPG was estimated somewhere between $10 million and $15 million, which is, compared to the balance sheet, a relatively modest investment for our company. Like in the other greenfield infrastructure projects, there is a certain complexity, of course, when you construct a terminal. Given the challenging market environment and geopolitical turmoil, the management has had to make the decision to focus on the core value drivers of our company, which are shipping and trading. It is not an easy decision we have made, but it is simply because of the circumstances where we have to focus our attention and resources and time on our shipping and trading activities.

[Kristian Sørensen, CEO at BW LPG]

Thank you. That's all from my side.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you. Anyone else who would like to raise his or her hand? Yes, I have next up John Dixon. If you might unmute yourself, please.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Good morning, Kristian. Good morning, Samantha. Can you all hear me okay?

[Aline Anliker, Head of Corporate Communications at BW LPG]

We can, yes.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Kristian, I wanted to ask a question about the share buyback. I know you said that it was concluded, but of course, things here in the U.S., on the U.S. market, a very simple announcement by the president can have a huge impact on the stock market and on the stock prices, as we've seen. Are you guys still open to continuing to buy back shares should they fall to a lower level as they did prior?

[Kristian Sørensen, CEO at BW LPG]

Thanks, John. The main way we return value to our shareholders is through the dividends. That's something which is not going to change. If you look at the annual general meeting last week, we renewed a share buyback program, which is to be reactivated when the directors find it timely. I guess the answer to your question is that yes, we do have a new share buyback program in place, but our main way of returning value to our shareholders will remain the dividend payouts.

[Kristian Sørensen, CEO at BW LPG]

Sounds good, Kristian. Thank you.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you. We have also a question by Clement, if I pronounce your name correctly.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Yeah, yeah, that was correct. Hi, good afternoon, and thank you for taking my questions. I wanted to start by asking about your time charter portfolio. Do you have extension options on your existing time charter contracts? If so, are those included on slide 21? Secondly, as you think about your time charter portfolio, would you prefer to increase the number of TCINs or out amid current market conditions?

[Kristian Sørensen, CEO at BW LPG]

Thank you, Clement. When it comes to options on our time charters, some of the time charters do have options, but they are on the charter side. We do not include these optional periods because they are to be declared by the charters. That is on the Indian fleet primarily. On our side, we do not have any options to extend the period on the time charters that we have in our fleet at the moment. Like I said before, we have an aim to increase the share of time charters in our shipping portfolio. We are constantly working to try to increase the number of time charters and also its share of the fleet exposure that we have.

[Kristian Sørensen, CEO at BW LPG]

As I have mentioned before, I think if we can come back to a level around the 40% we had before the Avance Gas transaction, I think we would be quite happy with doing so. It is not like we are rushing into securing time charters at levels we do not find attractive. This is something we are working on constantly, but it has to be done and conducted in the right way, so to say.

[Kristian Sørensen, CEO at BW LPG]

That's helpful. Thank you. My second question was on the trading segment. Could you talk a bit about how the tariff turmoil affected operations and whether you have any visibility on Q2 results?

[Kristian Sørensen, CEO at BW LPG]

Yeah, thanks. When it comes to Product Services trading portfolio, that's shifting day by day and week by week. I'd rather refrain from commenting specifically on that. We will have, as you may know, a new trading update in the middle of July, I think it is. We will provide you with a status for the second quarter by that time. I think it's difficult for us to comment on that since the portfolio, like any other trading portfolio, is shifting on a daily and weekly basis.

[Kristian Sørensen, CEO at BW LPG]

Makes sense. That's all from me. Thank you for taking my questions.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you as well. Anyone else who would like to raise the hand? We have a few questions in the chat as well, but let's see if someone else wants to ask a question verbally. If not right now, we can just move to the questions in the chat. The first one is from Vasilis. Would you say that the recent VLGC spot rate strength is partly attributed to front-loading relating to U.S.-China 90-day trade truce?

[Kristian Sørensen, CEO at BW LPG]

Thank you, Vasilis. The strength in the spot market today is, like I also mentioned in the presentation, due to the strong fundamentals of the market with very good export levels from the Middle East supporting continued growth in exports from the U.S.. Of course, when you have a tariff relief like we are currently having, it does definitely impact the market, the freight market, and activity in the market positively. I would say that it's contributing.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you. We have some more hands raised. Let's go with Marcus. If you could please unmute yourself. Marcus, we can't hear you just now. Maybe try to unmute yourself.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Hello, can you hear me?

[Aline Anliker, Head of Corporate Communications at BW LPG]

Yes, now we can hear you.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Yes, thank you very much. This is Marcus in Germany. Just a quick question on finishing the business with the Indian terminal investment. Is there any impact in quarter two on one-time cost? Thank you.

[Samantha Xu, CFO at BW LPG]

Thank you for your question. It's a very early stage for our involvement in the terminal in India project. At this point in time, there's no significant sunk cost that we need to account for.

[Samantha Xu, CFO at BW LPG]

Thank you.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you. We have another question in the chat on Product Services from Arne. Congrats on the quarter. What is the confidence level for the Product Service VAR, please?

[Samantha Xu, CFO at BW LPG]

Thanks, Arne. I need to double-check on that just to answer to you accurately. If you don't mind, I'll reach out to you on an email.

[Aline Anliker, Head of Corporate Communications at BW LPG]

We have another question from Axel. Can you please explain the year-over-year increase in SG&A?

[Samantha Xu, CFO at BW LPG]

Thank you for the question. As we have mentioned, as part of the Product Services performance, we will gradually accrue for the bonuses-related expense based on the realized trading result. As for the year of 2023 and 2024, we have seen year-on-year improvement of the trading result. The same you can observe in Q1 2025 as well. The G&A increase is largely attributed to the accrued reflected as part of G&A.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you, Samantha. Actually, there has been another question from Arne, which I would also like to read out, of course. Could you give some more color on the decision to limit the share buybacks to only 2.7 million compared to a capacity of 20 million, if I remember correctly?

[Kristian Sørensen, CEO at BW LPG]

Yeah, thanks, Arne. As you know, there are certain limitations when you execute on the share buybacks and how much you can buy every day. That is one reason for it. The other reason was that the share started to increase quite shortly after we activated the share buyback program. We also had to end it because we were entering our blackout period where we are very much restricted to continue our share buyback program as we enter the blackout period, which is a month ahead of the earnings release.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you, Kristian. I would just like to hand back to Samantha on Arne's first question.

[Samantha Xu, CFO at BW LPG]

Hi, Arne. Thank you for your patience. Just to quickly check with the team and confirmed my initial answer, which I know is accurate to the confidence level of the Product Services bar is a 95%.

[Aline Anliker, Head of Corporate Communications at BW LPG]

All right, thank you. There is another question in the chat from Pieter. Last year, the terminals were taking a larger share of the arbitrage and putting pressure on rates. It seems that owners are again getting a more appropriate share. Do you expect this to continue?

[Kristian Sørensen, CEO at BW LPG]

That's a very good question, Pieter. I think the answer to that is that every day, as I used to say, there is this arm wrestling between cargo owners, ship owners, and the terminals on how much of the profit in the LPG supply chain they can obtain. The relative bargaining power of the shipping part of the value chain depends on the supply and demand of the vessels at that specific time. For this year and going forward, we see very little growth in the VLGC fleet. With the continued export expansion plans from the U.S., which we believe will mean more volumes for export from the U.S., it should be a good environment for shipping going forward simply because the supply-demand balance is hopefully playing in the owners' favor.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you, Kristian. Do we have any more questions, either verbally or in the chat? Please put them forward. Does not look like. Let me just double-check. No, nothing so far. Then I will hand back to Kristian to conclude the call.

[Kristian Sørensen, CEO at BW LPG]

Thank you, everyone, for joining us this quarter. We look forward to seeing you again next quarter. Bye-bye, everyone.

[Aline Anliker, Head of Corporate Communications at BW LPG]

Thank you very much. This concludes BW LPG's Q1 2025 earnings presentation. The call transcript and recording will be available on our website shortly. Thank you all for dialing in. We wish you a good rest of your day.

Participants

Executives

• Aline Anliker, Head of Corporate Communications
• Kristian Sørensen, CEO
• Samantha Xu, CFO

Analysts

• Analyst