Pacific Basin Shipping : 2025 Interim Results Transcript

About this update from Pacific Basin Shipping Limited

2025 Interim Results Presentation Transcript 7 August 2025 Speaker: Martin Fruergaard Slide 1 - Introduction Welcome ladies and gentlemen and thank you for attending Pacific Basin's 2025 Interim Results earnings call. My name is Martin Fruergaard, CEO of Pacific Basin and I am joined by our CFO, Jimmy Ng. Assuming that you have already gone through the presentation, we will highlight key points discussed in it before we proceed to Q&A session. Please turn to slide 3. Slide 3 - 2025 INTERIM FINANCIAL RESULTS In the first half of 2025, we generated an EBITDA of US$122 million dollars, an underlying profit of US$22 million dollars and a net profit of US$26 million dollars. This yielded a 3% annualised return on equity and a basic EPS of 3.9 Hong Kong cents. Our Core business contributed US$51 million dollars before overheads compared to US$77 million dollars in 2024, while our Operating activity contribution increased to US$10 million dollars from US$8 million dollars in the same period last year, as our daily margin improved from US$550 dollars to US$710 dollars over a very similar 14,200 operating activity days. Our net cash increased to US$66 million dollars and our available committed liquidity stands at US$550 million dollars. A new 7-year revolving credit facility of US$250 million signed in July significantly increases our available liquidity, strengthens our financial capacity and supports our growth strategy. The Board has declared an interim dividend of 1.6 Hong Kong cents per share, which amounts to US$10.4 million dollars or 50% of our net profit for the period, excluding vessel disposal gains, consistent with our distribution policy. Please turn to slide 4. Slide 4 - CONTINUE TO RETURN CAPITAL TO SHAREHOLDERS Since 2021, we have maintained our commitment to returning to shareholders through both dividends and share buybacks. During this 4-5 year period, we have generated profits of about US$1.8 billion and distributed around US$1.2 billion through dividends and share buybacks, representing about 68% of total net profits before gains from vessel disposals. In our 2024 Annual Results announcement, we announced a new 2025 share buyback programme of up to US$40 million dollars. Since then, we have spent US$21 million to buy back and cancel about 93 million shares equal to 1.8% of our share capital. Following our exercised redemption option, the remaining outstanding bonds have been either converted, or will be redeemed before 14 August. Combining the interim dividend and share buyback activity in the year to date, we are paying out 153% of our net profit for the first half of 2025, excluding vessel disposal gains. Please turn to slide 5. Slide 5 - FREIGHT RATES RISING AFTER A WEAK START TO 2025 First half average market spot freight rates for Handysize and Supramax vessels decreased 21% and 34% year on year to US$8,690 and US$8,750 per day respectively, primarily because of weaker Chinese dry bulk demand, especially for coal and grains, due to high inventory levels after stockpiling activities in 2024. However, the market has strengthened significantly since June, driven by congestion in especially South Atlantic ports, as well as recovery in iron ore volumes and Brazilian soybean exports, resulting in a 23% and a 50% increase in Handysize and Supramax spot freight rates since the start of the year. Current Forward Freight Agreement or FFA rates point to a stable freight rate outlook for the rest of 2025. Please turn to slide 6. Slide 6 - TCE EARNINGS DECLINED ON SOFTER RATES, WITH IMPACT MITIGATED BY CARGO COVER Our Core Business generated average daily TCE earnings of US$11,010 for Handysize and US$12,230 for Supramax - down 7% and 11% respectively year-on-year. These TCEs represent a notable outperformance over average spot market rates, which fell 21% and 34% respectively. For the third quarter of 2025, we have currently covered 87% and 99% of our committed vessel days for our Handysize and Supramax core fleet at US$11,940 and US$13,950 per day, while for the fourth quarter, we have 26% and 43% cover at US$10,890 and US$12,490. We will continue to balance our spot market exposure and cover according to anticipated market developments, in order to maximise our earnings for the balance of 2025 and especially into 2026. Please turn to slide 7. Slide 7 - CARGO COVER AND FLEET POSITIONING DROVE CONTINUED OUTPERFORMANCE, OPERATING ACTIVITY MARGIN STRENGTHENED We outperformed the market indices in the first half of 2025 by a significant US$2,320 or 27% per day for Handysize and US$3,480 or 40% per day for Supramax. Although the benefits of scrubbers installed on our core Supramax fleet decreased due to narrowing spread between High Sulphur Fuel Oil and Low Sulphur Fuel Oil, they still added US$210 per day to our outperformance during first half of 2025. Our Operating Activity margins increased by 29% year on year to US$710 per day, while our operating activity days remained steady at 14,200. We aim to sustain the scale of our Operating Activity business, and to maintain its robust margins and maximise contributions. Please turn to slide 8. Slide 8 - HANDYSIZE - STABLE DAILY CORE VESSEL COST Handysize daily core vessel costs were generally stable in the first half of 2025. Operating expenses rose slightly, primarily due to increased manning costs on certain older vessels and higher depreciation as a result of drydocking and fuel-efficiency investments. Finance costs declined, reflecting lower borrowing levels and reduced interest rates. The cost of long-term chartered vessels remained largely unchanged, with only one long-term chartered-in vessel moved to our owned fleet after we exercised its purchase option. Our vessel costs overall remained sector leading, with our owned fleet cash breakeven before G&A being US$4,760 per day - up just US$50 per day from the end of 2024. Please turn to slide 9. Slide 9 - REDUCED VESSEL COST DUE TO REDELIVERY OF LONGTERM CHARTERED VESSELS WITH HIGHER CHARTER RATES Our Supramax daily core vessel costs declined, mainly due to lower long-term chartered costs, which reduced to US$14,120 per day. Operating expenses also reduced due to lower exchange rates for procuring spares and parts, and lower scrubber maintenance costs. As a results, our Supramax blended daily vessel cost reduced from US$9,650 to US$9,200 per day, and our owned fleet cash breakeven before G&A reduced US$240 to US$4,890 per day. I will now hand you over to our CFO Jimmy Ng, who will present our financial results.

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