Release Date: May 08, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Odfjell SE (FRA:O7F1) maintained high operational efficiency and safety with no significant incidents during the quarter.

• The company achieved a new record low in carbon intensity, demonstrating progress in sustainability efforts.

• Odfjell SE (FRA:O7F1) completed a near carbon-neutral transatlantic voyage using suction sails and biofuel.

• The company secured two new contracts for vessels to be delivered on long-term charter, expanding its order book to 20 vessels.

• Terminals performed well with an average commercial occupancy rate of 95.8%, indicating strong operational performance.

Negative Points

• Time charter earnings decreased to $168 million, down from $183 million in the previous quarter.

• The company experienced a 4% decline in time charter earnings per day due to reduced spot freight rates.

• Net results fell to $34 million, adjusted to $33 million, compared to $53 million in the previous quarter.

• Operating cash flow decreased to $60.4 million from $89.5 million in the fourth quarter.

• The market outlook is uncertain due to proposed US tariffs, impacting customer sentiment and trade flows.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Sign with FRA:O7F1.

Q: A potential Red Sea reopening seems to be back on the table. What is your assessment on how a reopening would impact the chemical space? A: I've noticed that President Trump announced a ceasefire with the Houthis, but no one has confirmed it yet. If the Red Sea reopens, it could add between 1% and 3% capacity to our fleet and segments.

Q: What was your COA renewal rate for the quarter? A: The COA renewal rate for the 18% of contracts renewed was a reduction of slightly more than 1%.

Q: Can you elaborate on the 20 vessels currently on order? A: Our fleet stands at approximately 75 vessels. To maintain this number, we need to order about 3 vessels per year. With market growth expectations, we need to add at least one more vessel annually. Our current order book of 20 vessels, to be delivered over four years, supports maintaining and slightly growing our market position.

Q: How much of the CapEx commitment is funded today? A: We have three vessels on lease that we are taking ownership of this year, all funded with existing loan facilities. The new buildings on order are not yet financed, but we expect to secure financing well ahead of their delivery due to our solid balance sheet.

Q: Will the new builds on time charter be booked as financial lease or operational? A: They will be operational leases. We have purchase options for some, but decisions will depend on market conditions. Around two-thirds of the $1.1 billion in total charter commitments will be capitalized on the balance sheet when entering these agreements.