BW LPG Reports Q2 2026 Results: Full Earnings Call Transcript

On Friday, BW LPG (NYSE: BWLP ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at Summary BW LPG reported a shipping TCE income of $74,000 per available day for Q2, which was below the guidance of $81,000 due to negative IFRS 15 and FFA adjustments. 95 per share, representing a 100% payout of shipping impact, which exceeds the dividend policy guidance. BW LPG has guided for Q3 with an expected $88,000 per day fixed for 92% of available days, against a cash breakeven of $24,900 per day. Strategically, the company has been active in second-hand sales and time charter agreements, including the sale of several vessels and securing a five-year time charter for one of its dual-fuel vessels.

S. exports. 5% and strong liquidity of $773 million. Operationally, the company experienced 99 dry-dock days in Q2 and expects 58 in Q3, indicating a busy maintenance period.

Management highlighted ongoing market inefficiencies due to geopolitical and environmental factors, causing longer shipping routes and higher freight rates. Full Transcript Aline Enlicher, Head of Corporate Communications Good morning, afternoon, evening everyone. Thank you for joining us today. My name is Aline Enlicher, and I'm the Head of Corporate Communications at BW LPG.

On behalf of the management team, I'd like to extend a warm welcome to our shareholders, investors, analysts, and valued stakeholders joining us for our quarterly earnings presentation. We appreciate you taking the time to be with us and for your continued interest and confidence in our company. Joining me today are our CEO, Christian Sorensen, and our CFO, Samantha Xu, who will walk you through the quarter's performance, key market developments, and our strategic priorities moving forward. Following the presentation, we will open the floor for a Q&A session.

You are welcome to submit questions through the Q&A chat throughout the presentation, or, alternatively, you can click the Raise Hand button to ask your question directly during the Q&A part. Before we begin, I would like to draw your attention to the legal disclaimers shown on the current slide. Please also note that today's presentation is being recorded, and with that, it is my pleasure to hand over to Christian. Kristian Sørensen, Chief Executive Officer Thanks, Aline, and hi everyone.

Thanks for joining us as we take you through our second quarter financial results and latest market developments. But before we start, I would, together with my fellow Norwegians listening in, like to pay tribute to our late King Harald who passed away this morning. Throughout his life, he fulfilled his royal duties and roles as Prince, Crown Prince, and King impeccably for nine decades. He was also a great supporter of the Norwegian maritime community, and his wife, Queen Sonja, was a godmother of two of our former VLGCs, the BW Rachel and the BW Racine.

May King Harald rest in peace, and long live our new King Haakon. Now back to today's earnings release. The VLGC market experienced extreme volatility in the first half of 2026. The Middle East war and the subsequent closure of the Strait of Hormuz shifted LPG arbitrage economics.

New trade routes are driving pronounced changes in the global LPG trade flows and vessel supply. I will revisit these developments later in the market section. Moving to the Q2 results, we reported a shipping TCE income of $74,000 per available day, below our guidance of $81,000 per day. 4 million and $12 million respectively, corresponding to approximately $7,500 per available day.

79, and our trading business, BW Product Services, generated a strong realized trading gain of $127 million during the quarter while reporting a loss after tax of $31 million, primarily reflecting a large negative change of $145 million in the unrealized mark-to-market valuation of open positions. For Q3, we are guiding on about $88,000 per day fixed for 92% of our available days. This is against our current all-in cash breakeven of $24,900 per day.

The figure includes the fixed time charter coverage in the third quarter of 41% of our available days at $44,300 per day, but please see the appendix in this presentation for the full breakdown of the time charter days and levels. 95 per share, representing 100% of our shipping impact, exceeding the guidance set by the dividend policy. Further, it's still a busy dry-docking period for us, and we report 99 dry-dock days during the second quarter with a total of 58 dry-dock days expected in the third quarter. As for subsequent events, the commercial team has been busy with second-hand sales and fixing attractive time charter agreements.

Since our first quarterly update back in June, we have sold the 2007-built BW Elm and BW Birch. They're both sold at a similar price level, and, as announced, the sale of the BW Birch will generate net proceeds of about $64 million, and this is equivalent to a newbuilding price of about $248 million. The BW Elm was delivered to the new owners in July, and the BW Birch is expected to be delivered by mid-November. Latest, we also announced the sale of the 2015-built BW Levant, scheduled for delivery to the new owners by mid-November.

We continue building a robust time charter portfolio, and we have fixed out one of our 2016-built LPG dual-fuel retrofit vessels for a five-year time charter in the mid-high $40,000 per day, with delivery end-2026. And we're also working on various other time charter opportunities which we will announce later, provided the successful conclusions of the negotiations. Now let's take a further look at markets. —Iran war.

The closure of the Strait of Hormuz has caused significant disruption to regional LPG pricing and global VLGC trade patterns. S. S. export infrastructure continues to operate at high utilization to compensate for lower Middle Eastern export volumes.

S. and the Far East narrowed considerably as expectations for a sustained reopening of the Strait of Hormuz grew. —Far East LPG arbitrage as tensions in the Middle East re-escalated. Declining water levels have further led to increased congestion and transit restrictions in the Panama Canal, prompting more VLGCs to reroute via the Cape of Good Hope.

S. Gulf and supported freight rates. S. and Canada.

S. LPG export growth has continued to surprise on the upside, with exports increasing by approximately 16% year on year in the first half of 2026, supported by higher LPG production and continued expansion of export terminal capacity. During the same period, Middle Eastern LPG exports declined by 46% as exports remained heavily constrained by the continued closure of the Strait of Hormuz. S.

Gulf, and at the moment we count in excess of 30 vessels employed or idling inside the Arabian Gulf or in the Indian Ocean. While the Panama Canal was already experiencing increasing congestion despite operating at full capacity, persistently low water levels due to drought have more recently forced the Canal to operate at reduced capacity. This is further restricting daily transits and tightening available Canal capacity with increased competition for slots, and this provides additional support to VLGC shipping as more vessels are forced to seek alternative routes.

In recent days we have seen more than $5 million being paid in auction fees to secure a northbound transit slot, and remember that this is in addition to the Canal fee of about $500,000 for a VLGC in ballast. S. and Asia. This is a very similar situation to what we experienced in 2023, and the longer sailing distances will in turn require additional shipping capacity.

S. S. for strategic reasons, maintaining the trade pattern around the Cape of Good Hope. S.

LPG exports to India increasing by 212% in the first half of 2026 compared with the same period last year. S. S. LPG exports to China increased by 2% year on year in the first half of 2026.

If you look at the LPG export forecasts and starting with the North American exports, new capacity is expected to support continued structural growth in the VLGC trade. North American exports are forecasted to increase by 18% in 2026 versus 2025, supported by strong oil and gas activity, expanding export infrastructure, and the need to replace constrained Middle Eastern volumes. Turning to the Middle East, exports are expected to fall approximately 20 million tons short of pre-war forecasts for 2026. The shortfall reflects both lost volumes and growth that was previously expected this year but has now been pushed out in time rather than permanently lost.

Assuming the Strait of Hormuz reopens, Middle Eastern export volumes are expected to recover gradually. There are obviously lots of uncertainties, but a full recovery is likely to take approximately 12 to 36 months depending on local conditions and the extent of infrastructure damage. S. S.

Gulf. While flexible terminals have supported LPG growth so far this year, they are expected to increasingly pivot towards ethane exports, making the continued expansion of dedicated LPG capacity increasingly important. Taking a look at the current fleet and order book, newbuilding contracting activity has been significant in recent months, and the total order book is now counting 157 VLGCs, with deliveries stretching all the way to the end of 2030. The fleet has grown in the last three months and now stands at 437 VLGCs on the water.

And while we're now entering a period with a higher pace of newbuilding deliveries, it's important to highlight the aging VLGC fleet, with 127 vessels expected to be 20 years or older by year-end 2030 compared to 68 vessels by year-end 2026. So to summarize the market outlook, geopolitics and weather are causing considerable market inefficiencies which in turn are generating additional ton-miles, driving the freight market to unprecedented levels. S. —Far East arbitrage.

The timing of reopening of the Strait of Hormuz remains uncertain. Following a reopening, we expect the recovery of Middle Eastern LPG export volumes to be gradual, as production and export infrastructure will require time to be repaired. The Panama Canal remains a wild card, and declining water levels are tightening transit restrictions while several shipping segments are competing for a limited number of slots. We expect this to divert more VLGCs via the Cape of Good Hope, further reducing the implicit vessel supply.

And that concludes our market segment. Over to you, Samantha. Samantha XU, Chief Financial Officer Thank you, Christian. Hello, everyone.

Thank you all for dialing in today. Let's zoom in on our financial performance for the quarter. Our shipping business delivered TCE income of US$71,600 per calendar day or 74,000 per available day. 4 million and US$12 million, respectively.

The underlying spot performance was strong with spot TCE of US$85,200 per available day including waiting time and FFA, and 87,600 per day excluding waiting time and FFA. This demonstrates the earning power of our platform in a volatile market. Fleet utilization was 96%, reflecting strong operational execution. The healthy performance was underpinned by a strong spot market and a disciplined commercial execution.

As Christian highlighted earlier, market inefficiency, disrupted trade flows, and longer voyages created meaningful upside in the quarter. Among the uncertainties, it's also important that we maintain prudent downside protection through our time-charter portfolio and active FFA risk management. In Q2, 53% of our available days were delivered by time charter, out of which 43% was fixed-rate time charters. Looking ahead for Q3 26, we have fixed 92% of the available fleet days at an average rate of about US$88,000 per day.

This also includes index-linked time-charter contracts, so the final rate may still move with the spot market. Looking at second half 26, we have secured 45% of our portfolio through fixed-rate time charter and FFA hedges at 44,000 and 148,000 per day, respectively. This gives us meaningful contracted earning visibility while preserving exposure to the currently strong spot market. The remaining fixed-rate time-chartered-out portfolio is expected to generate approximately US$249 million of revenue in second half 26.

Next slide please. Product Services generated a strong realized trading gain of US$127 million in Q2. This is an important commercial achievement in a turbulent market. The reported net result, however, was affected by non-cash period-end mark-to-market movement.

A US$190 million decrease on cargo position was partly offset by a US$45 million increase on paper position. After G&A and other expenses, Product Services reported a net loss after tax of US$31 million for the quarter, with net asset value of US$119 million at quarter end. The realized trading result shows the value creation from our integrated cargo, paper, and shipping platform, while the unrealized mark-to-market movements reflect valuation changes at a specific balance sheet date. These movements can be significant in volatile markets and will continue to fluctuate before the positions are realized.

We would like to remind listeners that trading gains and losses are realized across different financial periods and cannot be extrapolated from past performance. Our trading model creates value by combining cargo, paper, and shipping positions. That said, it's worth noting that reported net asset value does not include the unrealized physical shipping position of US$70 million. Based on our internal valuation in Q2, our average VaR (value at risk) increased to US$17 million.

The step-up was mainly driven by increased market volatility and added cargo from our term contracts. Looking ahead, we expect the VaR to remain elevated as the market remains volatile and our term contract book will gradually build from late 26 into 27. Going on our financial highlights, we reported net profit after tax of US$138 million. Profit attributable to equity holders was US$120 million, or 79 cents per share, representing an annualized earnings yield of 18% based on the period-end share price.

3% end of Q1. The board declared a dividend of 95 cents per share, representing 100% payout of quarterly shipping NPAT. Again, this is ahead of the 75% minimum payout ratio in our dividend policy and reflects the strength of our cash generation, liquidity, and confidence in the near-term future. We continue to apply a forward-leaning approach to shareholders in the strong markets while maintaining sufficient liquidity and financial flexibility to fund fleet renewal and future opportunities.

1 billion. The annualized return on equity and on capital employed were 27% and 19%, respectively. For Q2, our Q2 26 opex was 8,800 per day. For 26 we expect operating cash break-even of around 18,800 per day for the owned fleet and US$21,700 per day for the total fleet including time-charter vessels.