Pushing levers to minimise impact to environment and maximise returns to shareholders.
Against a backdrop of geopolitical and economic uncertainties; technological developments on the cusp of big leaps; and increasing demand from investors and communities to reduce climate impact, how can we as a shipping company navigate? With well-considered steps operationally, commercially and financially, to ensure we protect our position as a leading owner and operator of Very Large Gas Carriers (VLGCs), while laying the foundation for future growth.
Decarbonising Operations with Technology
BW LPG’s USD 130 million keystone project to decarbonise shipping was completed in May 2022, with the redelivery of its 15th VLGC, BW Malacca from Yiu Lian Dockyards. We serve customers with the largest fleet of LPG-powered VLGCs, with the sector’s lowest greenhouse gas (GHG) emissions profile. LPG has the lowest GHG emissions profile of any carbon-based fuel. With LPG, we benefit from a 15% – 20% decline in CO2 emissions versus compliant fuels. And by retrofitting, we save over one million tons in CO2 emissions versus ordering newbuildings. With over 25,000 hours in operation, we have shown that LPG propulsion technology works. Read more about LPG propulsion here.
Over half of our fleet is also equipped with SMARTShip technology onboard that enables real-time data transfers between ship and shore. Together with other initiatives such as smart weather routing, we reduced fuel consumption by approximately 2,650 metric tons in 2021 which not only means lesser emissions, but also greater savings of approximately USD 1.5 million. In an uncertain future, our next-generation VLGCs must comply with long-term trends in emissions regulations, and yet make business sense in the short term.
Securing Value for Shareholders and Stakeholders
We continue to react nimbly to market opportunities and support initiatives that uplift communities. We announced asset transactions and corporate actions that strengthened our financial position and de-leveraged our balance sheet. And as we did well, we continued to support local grassroots initiatives that improved quality of life and protected the environment.
Part of our strategy to secure long-term value for our stakeholder involves asset transactions. In a strong second-hand market, we sold seven vessels at above new-build equivalent prices over the past 1.5 years which generated over USD 25 million in net gain.
In December 2021, we initiated a share buy-back programme to purchase up to 10 million common shares for a maximum amount of USD 50 million, to be held as treasury shares. This program reflects our ability to react to market opportunities – we sell assets at a profit to our book values and invest in the Company by buying shares which are trading at a significant discount to our shareholders’ equity value. As of end March 2022, we purchased 3.8 million shares at an average price of USD 5.59 per share, amounting to USD 21 million.
A new Investor to Boost our Presence in India
Since establishing our India subsidiary in 2017, we have increaesd its fleet over the years to its current eight vessels. BW LPG India is the largest owner and operator of India-flagged VLGCs. The fleet currently comprises eight modern VLGCs which are maintained to world-class standards. These VLGCs are on time-charter contracts with accretive rates and returns in India.
We also welcomed Maas Capital Shipping B.V. (Maas Capital) into BW LPG India in January 2022, who acquired a minority stake for USD 50 million. In Q2 2022, we concluded discussions for increased ownership. and when the transaction is completed, BW LPG will own 52% in our India subsidiary. This partnership allows us to look beyond traditional LPG shipping, and into LPG infrastructure opportunities where we see significant upsides as a first mover.
Maas Capital is one of the world’s leading institutional shipping equity investors. Its portfolio includes controlling and non-controlling stakes in shipping, intermodal and offshore services related assets.
Growing our Purse
As of March 2022, BW LPG’s available liquidity of USD 651 million and net leverage ratio of 25% are, respectively, its highest and lowest since listing. It is in a solid financial position to explore investment opportunities to foster future growth. Reflecting our confidence in the long-term fundamentals of our business, the Board has enhanced our dividend policy to return even greater value to shareholders.
Smart Shipping with BW LPG
We are witnessing exciting shifts in ambitions, technology and regulations, and amidst the changes, our vision remains the same. We want to be Best on Water – being customers’ preferred energy shipping company, supporting the global clean energy transition, and doing all these in accordance with our corporate values.
- Find Investor-related information here.
- Read our Annual Reports and Sustainability Reports here.
- Read about ESG at BW LPG here.
Keywords: ESG, Sustainability, Shipping, Climate, Climate Change, Climate Impact, Decarbonisation, Zero Carbon, Emissions Reduction, Alternative Fuels, Maritime Trade, Innovation