Slide 1: Hafnia Limited Investor Presentation Q4 and Full Year 2019
HAFNIA LIMITED INVESTOR PRESENTATION Q4 AND FULL YEAR 2019 25 February 2020
Slide 2: Disclaimer
DISCLAIMER IMPORTANT: YOU MUST READ THE FOLLOWING BEFORE CONTINUING. THE FOLLOWING APPLIES TO THIS DOCUMENT, THE ORAL PRESENTATION OF THE INFORMATION IN THIS DOCUMENT BY HAFNIA LIMITED (THE "COMPANY") OR ANY PERSON ON BEHALF OF THE COMPANY, AND ANY QUESTION-AND-ANSWER SESSION THAT FOLLOWS THE ORAL P
Slide 3: Q4 2019 Highlights
Q4 2019 HIGHLIGHTS Q4 Financials • EBITDA was USD 94.8 million in Q4 2019 and USD 277.8 million for 2019 • Net Income for Q4 was a net profit of USD 42.4 million and a full year net profit of USD 71.7 million for 2019 • EPS of USD 0.11/share and USD 0.19/share for Q4 2019 and full year 2019 respecti
Slide 4: Q1 2020 market outlook by segment
Q1 2020 Markets are in general negatively affected by lower crude markets and fear of COVID-19 virus demand destruction. Handy: Trading benefits from seasonal Atlantic market tightness and support from adjacent MR and LR markets. Despite lack of winter heating oil demand, high Russian exports and we
Slide 5: Financial Summary
FINANCIAL SUMMARY Q4 2019 annualized return on equity of 16.2% and full year 2019 return on equity of 6.8% despite challenging market conditions 20% 16.2% 15% 11.2% Return on 10% 4.8% 6.8% equity 5% (annualized) - (5)% (10)% (4.3)% Q1'2019 Q2'2019 Q3'2019 Q4'2019 2019 10% 9.4% 7.8% 8% Return on 6.2%
Slide 6: Investment Highlights Summary
INVESTMENT HIGHLIGHTS SUMMARY Key value proposition 1 Best commercial performance Annualized return on equity – Q4 & 2019 2 Lowest operating cost 20.0% 16.2% 15.0% 3 Lowest cost of funding 10.0% 6.8% 5.0% 0.0% -5.0% 4 No fee leakage -10.0% -15.0% Q4'2019 2019 5 Good stewards of capital Superior retu
Slide 7: Strong earnings potential combined with an attractive dividend policy supporting a high dividend yield
STRONG EARNINGS POTENTIAL COMBINED WITH AN ATTRACTIVE DIVIDEND POLICY SUPPORTING A HIGH DIVIDEND YIELD Illustrative ROE and dividend yield sensitivities2 • All-in cash break-even at USD 13,625 per day across the entire fleet provides strong cash flow potential USD/d Current spot 30.6% LR2 23,500 Str
Slide 8: Pool Economics
POOL ECONOMICS Global commercial platform with chartering teams at strategic locations Pool economics Earnings contribution from commercial management • Fixed fee of USD 250 per day per vessel covering the Fixed Commission fixed cost of managing the vessels in the pool Pool commission USD 250 per 2.
Slide 9: Largest Product Tanker Operator
LARGEST PRODUCT TANKER OPERATOR Largest operator of product tankers1 Second largest owner of product tankers2 # vessels MR & Handy LR1 LR2 NB MR & Handy LR1 LR2 NB 200 140 128 180 176 120 160 143 138 100 93 140 81 120 113 80 100 67 81 62 60 80 50 48 60 50 49 40 40 20 20 0 0 Hafnia Maersk Scorpio Nor
Slide 10: Demand growth expected to exceed supply growth in 2020
DEMAND GROWTH EXPECTED TO EXCEED SUPPLY GROWTH IN 2020 Tighter product tanker market expected Seaborne product demand Orderbook Supply and demand growth for product tankers Bn tonne-miles % of fleet 3,184 3242 70% 3,065 2,892 20,000 8% 60% 2,558 50% 7% 2,082 40% 1,561 30% 6% 17,769 20% 5% 10% USD/da
Slide 11: Strong focus on corporate governance and aligned incentives
STRONG FOCUS ON CORPORATE GOVERNANCE AND ALIGNED INCENTIVES Corporate governance overview Fully aligned incentives with no fee leakage Highly reputable Board of Directors • Hafnia has a fully integrated business model • Highly experienced and reputable Board of Directors - In-house commercial manage
Slide 12: Hafnia's ESG Strategy
HAFNIA’S ESG STRATEGY Hafnia’s ESG efforts at a glance Objectives and status snapshot 1 Key facts and figures Objective Compliance obligations Status after Q4-2019 Vetting observations (SIRE) per inspection* <3 Zero oil spills to sea MARPOL Annex I Zero oil spills to sea ✓ Port state control (PSC) d
Slide 13: Appendix
QHAENIA ‘Member of BW Group APPENDIX
Slide 14: Growing regional imbalances of oil products significantly adds to tanker tonne-mile demand
GROWING REGIONAL IMBALANCES OF OIL PRODUCTS SIGNIFICANTLY ADDS TO TANKER TONNE-MILE DEMAND Major seaborne oil products trade routes 2019 Major Seaborne Oil Products Trade Routes 2019 Source: Clarksons Research, February 2020 Global seaborne oil products imports (mbpd) Global seaborne oil products ex
Slide 15: Commercial behaviour when rates are increasing
COMMERCIAL BEHAVIOUR WHEN RATES ARE INCREASING LR1 earnings Handy earnings 30,000 30,000 20,000 20,000 USD/day USD/day 10,000 10,000 0 0 Jan Apr Jul Oct Jan Mar May Jul Sep Nov 2019 5-year average 2019 5-year average MR earnings 30,000 • Disciplined balance sheet with continued focus on cash flow br
Slide 16: GDP growth and increasing oil demand expected to drive seaborne product tonne miles
GDP GROWTH AND INCREASING OIL DEMAND EXPECTED TO DRIVE SEABORNE PRODUCT TONNE MILES Global GDP growth Global oil demand World seaborne tanker trade – oil products Mb/d Billion tonne-miles 3.9% 3.8% 3.8% 3.6% 3.6% 103 3.4% 3.4% 3,184 3,072 3,065 102 2,892 3.0% 100 2,558 99 2,082 98 1,561 96 2016 2017
Slide 17: IMO 2020: Potential positive impact on tanker demand
IMO 2020: POTENTIAL POSITIVE IMPACT ON TANKER DEMAND Uncertainty remains given range of scenarios, but potential for ‘boost’ to crude and products trade IMO 2020 demand impact Further upside ✓ Gasoil (c.30% of seaborne products trade in 2018, with Impact Scenario Changing demand for crude types c.3%
Slide 18: Product Tanker Rates
PRODUCT TANKER RATES LR1 earnings Market Q4 • Softer global oil demand growth and weak refining margins in Asia have 30,000 undermined product tanker demand growth in the first three quarters of 2019, 25,000 whilst extended refinery turnarounds East of Suez into Q3 2019 had limited westbound diesel
Slide 19: Thank You
a) HAFNIA Member of BW Group THANK YOU www.hafniabw.com