In the first quarter, BW LPG reported a net profit after tax of USD 81 million, with an annualised return on equity of 27.6%.
Time Charter Equivalent (TCE) income amounted to USD 162 million in Q1 2020, mainly attributable to higher LPG spot rates and higher fleet utilisation. EBITDA for the quarter amounted to USD 126 million with an EBITDA margin of 78%. Earnings per Share was USD 0.58 for Q1 2020.
Net leverage ratio decreased to 48.9% in Q1 2020, mainly due to solid cash flows from operations, net of USD 118 million total dividends paid for 2019.
The Board has declared an interim cash dividend of USD 0.20 per share amounting to USD 28 million. The shares will be traded ex-dividend from 2 June 2020. The dividend will be payable on or about 12 June 2020 to shareholders on record as at 3 June 2020.
On 15 May 2020, the existing USD 400 million facility at LIBOR + 170bps was increased by USD 38 million with all other terms unchanged, to finance the retrofitting for five dual-fuel LPG propulsion engines.
Near term LPG exports are supported by the lagged effect of production changes on exports, high inventory in the US and the Middle East increasing production before the OPEC+ production cuts. In the medium to long term, LPG exports are negatively impacted by lower shale oil and gas production in the US, driven by low oil prices and OPEC+ production cuts starting from May 2020.
Near term LPG imports are supported by the recovering demand in China and increasing retail demand due to COVID-19 lockdown measures. In the medium to long term, LPG imports are negatively impacted by lower demand from steam cracking as Naphtha becomes relatively cheaper than LPG. LPG imports are, however, supported by strong end user demand driven by a green trend towards cleaner energy and less domestic productions, due to lower refinery runs.
Until the end of 2022, the newbuild orderbook stands at 35 vessels, which is 12% of the total VLGC fleet of 294 vessels. However, 10% of the total fleet will be older than 27 years by the end of 2022 and some of these vessels will likely be recycled.
Near term rates have been supported by the lagged effect of production changes, accumulated inventory and firming retail demand from Asia. In the medium to long term, a weaker outlook for LPG supply coupled with a high order book is expected to put downward pressure on vessel utilisation. Recovery to a higher oil price environment may affect this outlook positively.