Q4 and FY 2021 Analysis – Staying the Course in a Challenging Year

An eventful year, but continued reasons to be optimistic

Q4 and FY 2021 Highlights

• Generated Q4 2021 net profit after tax of USD 62.9 million. Declared a Q4 2021 cash dividend of USD 0.18 per share
• Achieved Q4 2021 VLGC freight rates of USD 31,000 per calendar day, or USD 32,400 per available day with 97% commercial utilisation
• Maas Capital became a minority shareholder in BW LPG India, a subsidiary of BW LPG
• Upsized the existing USD 221 million facility with a USD 40 million sustainability-linked loan
• Initiated a USD 50 million share buy-back programme, with approximately 1.4 million shares purchased
• Concluded the sale and delivery of BW Sakura
• Invested approximately USD 92 million on fleet upgrades and digitalisation in 2021. Through smart operations, realised approximately USD 10 million in savings over the year

Overview

2021 was certainly an eventful year. VLGC rates ranged from USD 100,000 per day to USD 6,000, and we experienced new variants of Covid-19, leading to continued difficulties on the crewing side. Just as we were starting to see light at the end of the tunnel and a more normalised world, the situation in the Ukraine has created significant geo-political turmoil. While it is still too early to conclude what the effects will be for VLGC shipping, the uncertainty has dramatically increased. Still, we believe that there are reasons to be optimistic for our shipping business over the medium and longer term. One of the less negative effects of Covid-19 is that shipping as a whole has accelerated change and adopted a number of new technologies. LPG is one of the cleanest and most versatile energy sources currently available, and we see continued strong demand both in the Far East, India and Europe. Healthy production is expected both in the US and Middle East, so LPG shipping will continue to be in demand.

Solid Finances

We reported a Q4 2021 net profit after tax of USD 62.9 million (FY2021: USD 186.4 million) or an earnings per share of USD 0.45 (FY 2021: USD 1.33), yielding an annualised return on equity of 14% with USD 330 million of free cash flow. The Company’s available liquidity of USD 453 million is its highest since 2013; and a net leverage ratio of 35% is its lowest in seven years. In 2021, we generated USD 307 million in operating cash flows and USD 330 million in free cash flows. Our strong cashflow has allowed us to aggressively pay down our debt while continuing to return cash to our shareholders. Including the USD 0.18 per share of dividends just declared for the fourth quarter, we will have paid a total of USD 77 million in dividends for 2021, equivalent to USD 0.56 per share. This translates to a pay-out ratio of 51% of NPAT, excluding the non-cash write-back of impairments.

Ship Smarter with LPG

We continue our investments in technology, remaining focused on digitalising our vessels, harnessing data and automating workflows, while augmenting these new tools with solid operational experience and innovative thinking. We invested over USD 92 million in fleet upgrades in 2021, to maximise the value of our assets and enable smarter operations. This includes retrofitting another eight vessels with LPG dual-fuel propulsion technology and another eight vessels with SMARTShip technology amongst other initiatives. To-date, we have a total of 12 LPG-powered VLGCs and 19 SMARTShip digitalised VLGCs on water. In total, we saved about USD 10 million and reduced greenhouse gas emissions fleet-wide by about 12% in 2021.

We will continue to invest in R&D and position the company well for new technologies that are on the horizon. Plans for our next-generation VLGC are in full swing, and we appreciate the support and collaboration with market-leading partners and top-tier suppliers.

Market Outlook

Geopolitical uncertainty clouds 2022 VLGC market. Near term rate volatility could be triggered by factors such as bunker price shocks, changing trading patterns, unexpected LPG inventory management and changes to shipping inefficiencies. For 2023 onwards, despite the uncertainties from the heavy newbuilding delivery schedule and the implementation of IMO EEXI regulations, we remain confident on the long-term VLGC market as LPG remains a viable transition fuel towards decarbonisation and the use of cleaner energy.

Annual and Sustainability Reports 2021

We have published our 2021 Annual and Sustainability Reports and they are now available for download on our website. When reading the reports, you will find that we can ship smarter because we have 2000 talented and dedicated professionals. We can ship smarter because we actively use new technology to reduce our carbon footprint and make our operations more efficient. We can ship smarter because we remain agile and make active decisions to optimise our assets through the cycles. With these initiatives and more, we have stayed the course in a challenging year.