CEO Anders Onarheim spoke about the increasing relevance of LPG in the global energy mix, the growing LPG market, and how we are maximising the value of our assets with technology.
Date: 15 September 2022
Event: Pareto Securities 29th Annual Energy Conference
Download presentation here
Why Does LPG Matter?
LPG is efficienct, clean, versatile and cheap. LPG is portable and does not require large investments into infrastructure, can be transported long distances without loss of energy, and produces the most energy per unit than any other fossil fuel. LPG is is non-toxic and can reduce carbon emissions substantially. LPG has over 1000 applications across commercial, retail and industrial segments. LPG is affordable, especially in current energy environment.
Say What We Do, Do What We Say.
At BW LPG, our purpose is to work Towards a Better World. As we protect our leading position in the LPG value chain, we do so with Sustainability in mind. We hold ourselves to high standards, and have been recognised with industry-leading ESG ratings. We are prudent stewards of resources, and strive to deliver even greater value to shareholders through corporate actions such as expanding our Product Services team; growing our presence in India, an important LPG market; and selling our vessels at above newbuild equivalent prices.
Increasing Our Presence in India
India is one of world’s fastest-growing LPG consuming nation. It presents a premium market for shipping with robust demand for period charter contracts at very
attractive terms. It also reduces residual risk and optimises the returns on older vessels. We welcomed Maas Capital into our India subsidiary in January 2022. For more information on BW LPG India, visit our BW LPG India website.
Expanding Our Product Services Team
BW LPG entered into the agreement on 1 August 2022 to acquire the LPG trading operations from Vilma Oil. The combined team trades over four million tons of physical LPG last year and we had the capacity to grow further. The transaction also adds five additional time-charter in Very Large Gas Carriers, including one newbuild into our fleet. We are expanding our coverage from user centric to a global presence supported by teams in both Europe and Asia. The acquisition brings increased agility and important insight into this volatile market, further enhancing our core shipping business. We also see tremendous growth opportunities ahead along the LPG value chain. The acquisition is subject to approval from the Spanish regulated authorities, and we expect the transaction to close by the end of Q4 this year.
Focused on Profitability and Returns
BW LPG consistently outperforms its peers when measured by Annualised earnings yield, ROE, ROCE and EBITDA margin. LPG shares are currently trading at subdued prices versus other segments in shipping. Since IPO, we have paid out 62% of our earnings as dividends. Read more about our share performance here.
Strong long-term growth fundamentals. We see increasing relevance for LPG in today’s energy environment. There continues to be positive underlying fundamentals for the market, and the distance between Supply and Demand sources continues to drive demand for shipping.
Market leading profitability. We offer the highest returns amongst peers, and we have a low cash breakeven and a solid balance sheet with ample available liquidity of
$360 million with record low net leverage ratio of 25% to-date.
Deliver on strategy and continue to grow. We will continue to optimise returns on assets, the expansion of Product Services division enables us to capitalise on opportunities in the LPG value chain and increase our earnings base.