Höegh LNG Holdings expecting future profits from FSRU surge

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Höegh LNG Holdings Ltd and its subsidiaries reported a total income of USD 106.1 million and an EBITDA of USD 51.9 million for the fourth quarter of 2022, compared to USD 96.1 million and USD 0.1 million for the preceding quarter.

The increase in EBITDA was mainly a result of higher revenues from Höegh Giant being redeployed after having been idle since April and reimbursement of certain costs incurred when modifying the two vessels allocated to the contracts in Germany. This increase was partly offset by lower revenues due to idle time and higher vessel operating expenses for three vessels which were in yard to complete class renewals and modifications. The share of result from joint ventures declined quarter-on-quarter due to impairment provisions made for the two Arctic vessels. Furthermore, the EBITDA also increased because of non-recurring administrative expenses incurred in the third quarter not being repeated.

The group recorded a net loss after tax of USD 4.0 million for the fourth quarter of 2022, up from a net loss after tax of USD 45.9 million in the preceding quarter. This increase is mainly related to the above-mentioned increase in EBITDA, partly offset by reversal of the unrealised foreign exchange gains on the unhedged portion of the NOK-denominated bonds. Additionally, the third quarter result included a reduction of provision for potential tax liabilities related to the group’s operations in Indonesia which was not repeated in the fourth quarter.

Operating cash flows increased in the fourth quarter by USD 36.9 million to USD 69.6 million. The increase was mainly driven by higher EBITDA which was partly offset by a lower positive effect from changes in working capital than in the previous quarter. Net cash outflows from investing activities of USD 14.3 million was mainly related to class renewals and modifications to ready three vessels for FSRU operations. Net cash outflows from financing activities of USD 59.6 million during the quarter mainly comprised of regular amortisation of borrowings and lease payments, dividends paid to non-controlling interests in Höegh LNG Partners (HMLP) and interest payments. The net decrease in cash and cash equivalents during the fourth quarter was USD 4.3 million.

On 31 December 2022, Höegh LNG held USD 146.8 million in unrestricted cash (USD 151.1 million). Net interest-bearing debt, including lease liabilities, decreased during the fourth quarter by USD 7 million to USD 1 337 million (USD 1 344 million). Total assets and book equity on 31 December 2022, after adjusting for the mark-to-market of interest rate swaps, were USD 2 404 million (USD 2 427 million) and USD 699 million (USD 706 million) respectively, equivalent to an adjusted book equity ratio of 29% (29%).

For the full year ended 31 December 2022, Höegh LNG reported a total income of USD 380.8 million and an EBITDA of USD 153.2 million, which compares with USD 351.8 million and USD 217.2 million for the previous year. Although revenues increased, the group also incurred higher expenses in 2022, through increased vessel operating expense primarily related to repositioning of three vessels to make them ready for FSRU operations and increased administrative expenses. Höegh LNG reported a net loss of USD 55.4 million for 2022, which compares with a net loss of USD 21.3 million for 2021. The decrease is primarily due to the decrease in EBITDA, partly offset by reversing parts of a tax provision recorded for uncertain tax position in Indonesia in 2021.

Business development

Fourth quarter was a busy quarter for Höegh LNG, preparing three vessels for FSRU operations in Germany and Brazil. All three vessels completed the preparations at the yard during the quarter, and the two 10-year time charter contracts with the Federal Government of Germany were signed in December and January respectively. Höegh Esperanza and Höegh Gannet are allocated to these two contracts and are already in place in Germany, located in Wilhelmshaven and Brunsbüttel. The third vessel, Höegh Giant, left the yard in November, and is now operating in the LNG carrier market on an interim charter before it is scheduled to go to Brazil in the second quarter of 2023 and commence operations under Höegh LNG’s 10-year time charter contract with TSRP/Compass.

The business development team is in active dialogue with several potential new projects looking for FSRU capacity which could provide growth opportunities for the group in the future.

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