Hafnia (HAFNI) Q4 2019 earnings summary

Executive summary

• Q4 tanker markets rebounded; Q4 net income was $42.4m and FY 2019 EBITDA was $277.8m.

• The merger, completed newbuild program and Oslo Axess listing expanded the fleet and strengthened the balance sheet.

Financial highlights

• Q4 revenue was $224.6m, TCE income $157.1m, EBITDA $94.8m and EBIT $57.6m; FY revenue was $827.9m, TCE income $514.4m and EBIT $145.6m.

• Net income was $42.4m in Q4 and $71.7m for FY 2019; comprehensive income was $43.5m and $64.9m, respectively.

• FY net financial expense was $73.7m; profit before tax was $72.7m and income tax was $1.0m.

• Operating cash flow was $92.9m in Q4 and $242.4m for FY 2019; year-end cash and cash equivalents were $91.6m.

Outlook and guidance

• As of 15 Feb 2020, Q1 earning-day coverage was 61% at $22,123/day; LR2 coverage was 99%, LR1 58%, MR 59% and Handy 57%.

• Total covered rates were $22,146/day for 2020 and $22,436/day for 2021, with earning-day coverage of 20% and 5%, respectively.

• A $1,000/day rate increase was expected to add ~$32m to 2020 net income; fleet cash breakeven was $13,625/day, excluding pool-company contribution.

• Product tanker demand was forecast to grow faster than fleet supply in 2020; the orderbook-to-fleet ratio was historically low.

• Middle East refinery restarts were expected to support demand, while COVID-19-related weakness was expected to suppress near-term rates, particularly in the Far East.