Höegh Autoliners ASA: Second quarter results, distribution of dividend and updated guidance for dividend frequency
CEO of Höegh Autoliners, Andreas Enger, says: “Second quarter saw geopolitical challenges, lockdown in China, supply chain disruptions, rising fuel costs and continuous port congestions. Therefore, it is a great satisfaction that Höegh Autoliners, despite all this, is continuing our track record of solid performance and delivering record quarterly financial results.”
Highlights of the quarter
Höegh Autoliners reported solid financial results for the second quarter of 2022.
Operating profit (EBITDA) of USD 99 million (up 27.7% Q-o-Q), net profit of USD 53 million (up 49.2% Q-o-Q). Dividend of USD 15 million scheduled to be paid in September 2022.
Volumes grew 0.3 million CBM (up 7.3% Q-o-Q) while net rate increasing to a new high level of $61.9 per CBM (up 8.4% Q-o-Q). The growth in volumes was mainly due to increased utilisation, while net rate improvement was a result of optimal cargo mix and continuous repricing in several markets.
The Company concluded the refinancing of the fleet mortgage debt in June 2022 with significantly improved terms. Reduced amortisation profile, lessened interest cost, extended maturity and fewer vessels pledged allows for further financial flexibility for the Company.
In May 2022, the Company signed contracts with China Merchants Heavy Industry (Jiangsu) Co., Ltd. (CMHI) to build another four multi-fuel and zero carbon ready 9 100 CEU Aurora class vessels, taking the total newbuild program to 8 vessels. The Company has committed external financing for all eight vessels at favourable market terms. Delivery of Aurora class vessels will start from the second half of 2024.
Höegh Autoliners’ shares were uplisted to the Oslo Stock Exchange’s main market in May 2022. The uplisting will expand Höegh Autoliners’ exposure and possibilities to enhance the liquidity of the stock.
CEO of Höegh Autoliners, Andreas Enger, says: “Second quarter saw geopolitical challenges, lockdown in China, supply chain disruptions, rising fuel costs and continuous port congestions. Therefore, it is a great satisfaction that Höegh Autoliners, despite all this, is continuing our track record of solid performance and delivering record quarterly financial results. Thank you to all who have contributed to our strong performance during the first half of 2022”.
CFO of Höegh Autoliners, Per Øivind Rosmo, says: “I am happy to see how we are able to create shareholders value through both our excellent operational performance and through the recently concluded refinancing of our legacy debt, as well as the financing of the newbuilding program. We operate and control our own vessels in well balanced trade systems and benefit from record high utilisation and increasing freight rates. We are also pleased to announce the commencement of dividends with a solid dividend yield”.
The general market fundamentals remain positive with a tight tonnage situation and repricing of cargo in most trade lines. However, the volatile situation we have had in first half related to supply chain disruptions, delays and port congestions is expected to continue for a while and could potentially impact the current favourable supply and demand balance if the situation with delays normalizes.
The global macro picture with high inflation, increasing interest rates and fear for recession have so far not impacted our business, but this is something we are monitoring closely as it could curtail consumer and business spending as well as increase our cost of borrowings. Most of the increase in bunker prices earlier this year is, from Q3 2022, covered by BAF and will not impact the results going forward unless prices move drastic from current levels.
The refinancing of the legacy debt and the new financing agreements for the newbuilds has reduced the Company’s financial risk and exposure to volatile credit markets.
Based on current trading performance, dividends are expected to be maintained at around the same level for the remainder of the year.
Update of dividend policy
The updated dividend policy will be as follows:
Höegh Autoliners targets to distribute quarterly dividends to shareholders of between 30-50 percent of quarterly net profit after tax adjusted for extraordinary items, taking into consideration its outlook, investment opportunities and financial position. Any declaration of dividends will, however, be at the discretion of the Board of Directors.
Dividends will be declared in USD and paid in NOK.
Publication of monthly trading update
To improve transparency to investors, the Company will commence publication of a monthly trading update from September 2022. The Company will disclose preliminary net rate, gross rate, volumes and HH/BB share for the previous month 5-10 days into the month.
Source: Höegh Autoliners