In a groundbreaking financial performance for Q4 2023, BW LPG, the world’s largest owner and operator of Very Large Gas Carriers (VLGCs), reported a net profit after tax (NPAT) of $162 million, leading to a full-year NPAT of $493 million. The company declared a quarterly dividend of $0.90 per share, representing a 98% payout of annual earnings, and plans to return $30 million to shareholders in Q2 2024. Additionally, BW LPG is gearing up for a dual listing on the New York Stock Exchange (NYSE) in the second quarter of 2024 to expand its investor base and enhance share liquidity.
Key takeaways from BW LPG’s Q4 2023 financial results include a record NPAT of $162 million for the quarter and $493 million for the year. The company also announced a dividend of $0.90 per share, equating to a 98% payout ratio and an annualized yield of 28%. Furthermore, BW LPG is set to undergo a dual listing on the NYSE in Q2 2024.
Investments in a new LPG import terminal in India and a $30 million stake in Confidence Petroleum were highlighted as strategic moves. Despite high volatility in the VLGC market, BW LPG remains optimistic for 2024 due to solid fundamentals and limited newbuilding deliveries.
The company’s fleet has 23% fixed for 2024 at $41,500 per day and 14% hedged with derivatives at $56,500 per day. The Product Services segment’s net asset value increased by $18 million to $62 million, and BW LPG maintains a healthy liquidity position with nearly $500 million, including $126 million in broker margin accounts and $295 million in undrawn revolving credit facilities.
Looking ahead, BW LPG anticipates a positive outlook for 2024, supported by strong market fundamentals and returning inefficiencies in the fleet. The dual listing on the NYSE aims to broaden the company’s investor base and improve share liquidity.
In terms of market trends, the VLGC sector faces uncertainties with increased ammonia newbuildings. The impact of IFRS 15 remains unpredictable but is expected to be less negative in the current quarter. Increased Panama Canal transits could potentially affect ton-mile demand by about 50%.
Despite challenges, there are bullish highlights to note, such as the positive demand for LPG imports in China and increased export capacity in the US Gulf. American terminals have shown efficiency and the ability to handle more than expected.
On the flip side, there are areas of improvement, including the current PDH utilization rate and the potential for enhancement. The company’s share repurchase program is ongoing, with $13 million worth of shares already repurchased and $37 million remaining. BW LPG has addressed environmental regulations by reducing ship speeds.
In conclusion, BW LPG has showcased strong financial discipline and shareholder returns amidst a volatile market. Strategic investments and market maneuvers, including the dual listing and Indian joint venture, demonstrate a forward-looking approach to growth and adaptation. With a robust liquidity position and proactive market strategies, BW LPG is well-positioned to navigate the challenges and opportunities that lie ahead in 2024.