Good afternoon. This is the Chorus Call Conference Operator. Welcome, and thank you for joining the d'Amico International Shipping third quarter and nine months 2020 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask a question. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Paolo d'Amico, Chairman and CEO of d'Amico International Shipping. Please go ahead, sir.
Hello, everybody, and thank you to be with us. Let's go straight to the executive summary. Our net result, DIS posted a net profit of $15.4 million in the first nine months of 2020. This against a loss of $32.5 million in the first nine months of 2019. In the third quarter 2020, DIS posted a net result of a loss of $1.7 million against a loss of $8.2 million recorded last year. TCE, time charter equivalent. DIS daily spot rate was $18,592 on the first nine months of 2020, against $12,786 achieved last year for the same period. In Q3 2020, DIS generated a daily spot average rate of $12,866 against $11,616 of last year. DIS achieved a total daily average rate of $16,973 on the first nine months of 2020, against the $13,674 of last year.
Of this, $14,806 in Q3 2020 against $13,264 last year. Leverage reduction. The net financial position, excluding IFRS 16 to fleet market value ratio, was 65% at the end of September 2020 versus 64% at the end of September 2019. This compared against 72.9% at the end of 2018. As far as the vessel sales, Glenda, which is a 50/50 joint venture with Glencore, sold one ship with Glenda Meredith, and this transaction generate around $18.8 million in cash. In May 2020, DIS announced that d'Amico Tankers signed a memorandum of agreement for the sale of Cielo di Guangzhou. In Q2 2020, this transaction allowed d'Amico Tankers to generate around $8.8 million in cash, net of commission. All this is being already delivered. In July 2020, DIS announced, d'Amico Tankers signed an MOA for the sale of two MRs, the High Progress and High Performance.
This transaction will allow d'Amico Tankers to generate a total net cash around $16.3 million in the second half of 2020, of which $8.3 million already in Q3 of 2020. In September 2020, DIS announced that d'Amico Tankers signed a memorandum of agreement for the sale of the High Courage. This further transaction will allow d'Amico Tankers to generate a total net cash around $8.9 million between November 2020 and January 2021. I would move directly at this point to the overview and key financial because the market, we will touch it later on, so it's useless to do it twice. I leave the floor to Carlos. Thank you.
Yes, good afternoon to everyone. Just a quick look at our fleet profile as of 30th of September. It consisted of 41 vessels, of which 21 owned and nine on the bareboat. I would say 30 owned, and the remaining on time charter. Of course, our main presence has always been, and is still today, the MR segment. We control 29 vessels in that segment. We delivered today one of the vessels that Paolo was mentioning we sold to the new buyer. As of today, our fleet falls to 40 vessels from 41. We have a young fleet with an average age of 6.8 years. 78% is IMO class, and 70% is Eco. This percentage has been rising, and it's going to continue rising for us as we sell our older non-Eco design vessels.
As you all know, we underwent an important newbuilding program, to which we ordered 22 newbuildings since 2012, and we completed this newbuilding program in Q4 2019. In terms of CapEx commitments, this is also a graph that we look at on a regular basis. This has been falling this year significantly after we completed the newbuilding program. We only had the maintenance CapEx left. It was a big figure if you take into account it only related to maintenance CapEx. It was $10.2 million for the year, only $1.1 million left for Q4. That is because we had a number of vessels which had to stop for a special survey this year, and they also had to install water ballast tank systems. This figure falls to $6 million next year, and then to $4 million in 2022.
We are already much lighter, and we're going to become even lighter in terms of CapEx commitments going forward. The same applies to debt repayments. As we mentioned several times in the past, on the front page of the presentation, page nine, we finished reimbursing the medium-term Intesa facility in the end of 2019, and therefore our principal repayments fall quite significantly in 2020 from $52.5 million to $36 million, and they continue falling over the course of the next few years. The other positive aspect here on the bank financing side is that we signed last night the loan agreement to refinance all the balloons we had for 2021. We had a number of vessels with balloons in early 2021 and one with a balloon in October 2021.
We refinance all of these to one facility, which we signed last night. We are going to be drawing down next week. The next balloons to be refinanced are only in 2022, and we are going to be working on those in the second half of 2021, most likely. Hopefully, we expect in a much better market after the rebalancing, which still is ongoing, but which we hope will have finished by then. Going on to the next page, the purchase options of these vessels. We have nine vessels for which we closed sale and leaseback transactions over the course of the last few years. Six of these are already exercisable. A seventh one will become exercisable in December. They are all in the money or theoretically in the money. This is a potential use of funds.
We build up quite a comfortable cash position over the course of the first nine months of this year through vessel disposals and through the strong performance, especially in the first half of the year. This is something we would look at, and at the right time, we might decide to deleverage a bit our balance sheet by exercising some of these options and therefore reducing the cost of our debt financing. Going on to page 11, we show the forward coverage for TC contracts at fixed rates. We managed to keep quite a good level of coverage for Q3 and Q4. Q3, we were 63% covered. Q4, just slightly less, 58%. That drops in Q1 to 38%. The average rate for Q3 and Q4 is around $16,300 almost. That is quite positive.
Of course, as some of these contracts that expire in Q4 and Q1 2021 arrive close to termination, we are most likely going to be asked by the charterers to renew them on TC at the going levels, of course, which are nonetheless decent. Today, one-year TC for an Eco MR vessel is around $14,500. It's not too distant from our overall P&L breakeven. Going on, we also highlight at the bottom that the percentage of the Eco fleet has been rising, and it's forecasted to continue rising. That, of course, is a tailwind for our results. Going on to the following page, we show the fleet evolution.
There is a small decrease expected in the fleet, mostly as a result of the redelivery of vessels on TC-in. Since the coverage through period contracts falls over time, actually our sensitivity to the spot market rises, and in 2021, it's around $10 million for every $1,000 per day change in the TC pro-forma earnings, and it's almost $12 million in 2022. It's only $1.5 million in Q4 2020. Going on to the following page, we have done quite well in terms of becoming more efficient in the operation of our vessels, so the daily operating costs have fallen from $7,300 in the first nine months of 2018 to $6,700 in the first nine months of this year, which is pretty much aligned with the $6,700 we had in the first nine months of 2019.
These savings are attributable to, I would say, mostly the investments in technology, which allows us, through condition-based maintenance, to identify problems ahead, but also to lengthen the average lifespan of a lot of our spare parts. We reduce the breakdowns, and we increase significantly the average lifespan of our spare parts. It's also the result of operating with a more homogeneous fleet, and through the 2020 buildings that were delivered over the last few years, and also a younger fleet. That also helps in terms, of course, of the operating cost. As well as, of course, some efficiency in purchasing arrangements that we are always trying to improve on, and which also add to some benefits. The G&As also improved, although to a lesser extent. There was a bigger improvement between nine months 2018 and nine months 2019.
Some of that improvement we lost in the first nine months of 2020. We must also highlight that there was an element of administrative income that was being offset against these administrative costs that we lost in the first nine months of 2020. There's also some exchange rate differences which play a bigger role here, and in particular in this year, so they penalized us a bit here in terms of the G&A. Finally, the fact that our fleet has been decreasing means that our overall general administrative cost has spread out over a smaller number of vessels. Therefore that contributed to this increase we experienced between nine months 2019 and nine months 2020. It must be said that relative to our peers, I would say that our G&As are still very competitive. Also peers which have much larger fleets than us.
Looking at the balance sheet and our liquidity position, looking at the key ratios, the ratio between the net financial position, the fleet market value remained stable this year. It improved still significantly relative to the end of 2018, where it was 73% almost. It declined to 64% at the end of 2019, and it increased only very slightly to 65% as at 30th of September. This is despite a decrease in asset values this year. They rose in the beginning of the year by a few percentage points before declining after peaking in May by around 15%. Over the year, they declined five-year-old vessel and 10-year-old vessel declined by between 10% and 12%, the asset value.
Thanks to the profits and the cash that we generated during the year, we managed to keep this ratio stable, and of course, also thanks to the vessel sales, we managed to help to keep this ratio stable. We are particularly happy with the cash and cash equivalent position, which is at $59.3 million at the end of the quarter. That does not include, of course, the cash that we generated of around $8 million through the vessel that we delivered to the new owners today, and it doesn't include the cash that we will generate with the vessel that we expect to deliver to their new owners in January next year of around $8.9 million.
This position, even in a weak market that we are seeing today, a weak spot market, given the coverage we have and these vessel disposals, we expect this cash position to keep improving slightly over the coming quarters. That leaves us in a very comfortable position, I would say, to confront this near-term weakness. In terms of the key items of the P&L on page 15, the nine months cumulative profit is of $15 million. If we exclude non-recurring items, it's of $26 million. Which is already, I would say, a number we can be a bit more satisfied with. If we look only at Q3, the losses of $1.7 million, but excluding the non-recurring items, the losses of $0.4 million. That is basically break even. Given the size of our fleet, it's basically break even.
Going on to the next page, we look at the daily results of our vessels from an employment perspective. The Q3 results, we earned $12,900. It was of course not brilliant, but putting it in context, comparing to Q3 2019, it was actually better than Q3 2019. It comes to the strong coverage we had this year, 63% at a rate of $16,000, which was also higher than the rate we had in Q2 2019. We managed to achieve a blended average rate in Q3 of $14,900 almost. As I was mentioning, it's basically, if you exclude non-recurring items, it's equivalent to our break even.
In the nine months of 2020, of course, the figures are much better because we benefit from the very strong results in the first half and the daily average on the spot market was almost $18,600, and the daily average on the TC contracts was $16,000, leading to a blended average of almost $17,000. I pass it over to Paolo again for the market overview.
Thank you, Carlos. Looking at time charter rates and asset value. Since October 2016 and up to just before the COVID exploded, the market has been with various bumps but recovering. We were basically at the beginning of a year with good fundamentals and let's say good spirit. The COVID arrived, and it created two consequences. First, the spike. I mean, first you had the collapse of a barrel. That created a rush of traders and oil companies to store oil and to store crude oil and clean also, clean cargo. This clearly create a very strong spike in the market. It all collapsed in June 2020. Because at certain point we filled up whatever was possible to fill, and at that point, basically, they stopped buying.
The OPEC realized what they could make, because there's been a two problem thing. One has been the COVID, the other one who create the collapse of the barrel. The second one with Saudi Arabia and OPEC and Russia, they didn't agree on a cut on the beginning, as you remember, they start pumping like hell. The market has been oversupplied. You had two elements which made the barrel drop, the contango went out. The super contango it was called. There's been a highly storage rate, which has been, of course, good for us in those days, but very short-sighted because in June we were back again down. At the end, the fundamentals came out. The fundamentals of COVID were basically flights are all grounded, people are not moving at all.
We were in a lockdown, cars were not circulating. The only thing was trucking. That created a huge drop in oil demand at a certain point up to more than 10 million barrel per day. At the end of 2019, the oil world demand was close to 100 million barrel per day, it was 10% drop. At the end of the lockdown, people restarted slowly on the opening ups to drive and went to consume, and we recuperated something of this terrible drop. From the peak of a 10.5 million barrel per day lower than last year, we think that the drop average on all the year will be around eight. Now, as I said, it created a build up in floating storage.
With the floating storage as far as refined product increased from 25 million barrel in December 2019 to a peak of 75 million barrel early in May 2020. Now, the market has been rapidly rebalancing with 70% of the COVID-related increase in floating storage already annulled by the end of September 2020. 70% of this storage already in September was gone. The long-term demand growth is still there because, of course, COVID is very limited, even if it's very cruel and very strong, but is very limited and, I would say, emergency situation. The market is on fundamentals. On long-term fundamentals is in demand growth. Certainly, this is something that we are going to see it once this pandemic will be over. Of course, and I am in page 22, the potential for upside on asset value is very strong because we have this vision starting from 2016.
We were already coming a long way from a valley in the market's value. COVID exacerbated the whole thing. We have a very strong potential upside as we are today because value, of course, are still depressed due to the COVID effect. Still on long-term, there is a strong growth in refining capacity. This growth is by 76%, and this 36% is of planned refining capacity coming in. 36% is all in Asia and Middle East. As you can see, the growth on the refineries will be far away from the consuming market like Europe and U.S. Not only this, with being a new generation of refineries and with high technology and also high productivity, we will put certainly the European refining system, which is mostly, let's say, oldest, in a non-competitive position.
We do expect a reduction of refining capacity in Europe and also some reduction in U.S. These reductions are already happening because, as you probably know, European refineries and American refineries are running at lower productivity, and some refineries are really closing once forever. The landscape will change. Will change also because, as you know, from January 2020, we are using fuels with low content of sulfur, and these are all produced by new generation of refineries. The old refineries in Russia and Europe are big producer of fuels with high content of sulfur. This will create, here again, the difficulties where we are talking about before. On the supply side of the market, the ship supply, we have a very slow fleet growth. Slowing even more because the new order contracts are minimal.
Due to the fact that ship owners, as consequence of the IMO rules on CO2 emission, we don't know yet what is going to be the propulsion of the future. Today you take a risk of building a ship which will be outdated already during his life, not at the scrapping moment, but before that. There is a lot of uncertainty, and this is bringing to low newbuilding orders. As a matter of this, as a consequence of this, there is a reduction in fleet growth expected already in the second half of 2020. I have to tell you that on the first half of 2020, due to the COVID and due to the lockdown, the scrap yards were closed. Now the scrap are open, and so we do expect a higher rate of scrapping.
Always as COVID consequence, the second-hand ships values are by far more competitive than the newbuilding prices. The purchase market of ships is very much focused today on second-hand than newbuilding. This is a good thing always for the supply side because we have less money going to newbuildings. COVID really changed the dynamic of everything, changed also the dynamic of our market. We are very much COVID related, I would say, and I think more we go ahead, and more we are solving this problem, and more the market will come back to us because more we will feel free to move at a certain point. It's not the case now because we are still in a moment of lockdowns.
Will happen that we will overtake this thing and everybody, not only me, just everybody in the system, is expecting a very strong rebound of the market because the consumption at that point will fly again. Thank you.
Thank you. Just one last page in the presentation, page 30. Just quickly look at the evolution of our NAV and our NAV per share and the discount to our. As we mentioned, there was a decrease in the asset values this year, and that, of course, had a negative impact in our net asset value, overall net asset value, which declined relative to December 2019. On a per share basis, a decline from $0.25 to $0.22. Nonetheless, we were, the 30th of September, still trading at a very deep discount to our NAV of around 53%. Given we don't expect this rebalancing that we have been discussing to be that long, almost 70% of the floating storage was already reabsorbed. It's true that the second wave of lockdowns might delay a bit this process, but nonetheless, there's also good news out there.
We all heard about the developments on the vaccines of Pfizer and BioNTech, and the good news is also expected soon on the vaccine of Moderna, which is also undergoing phase III trials and uses the same technology, and is benefiting from the high contagion out there in its efficacy test. Hopefully, we will be able to roll out, there will be a good rollout of vaccines in the first quarter, first half of next year, which will then contribute to a much healthier market in the second part of 2021. Once again, we feel that this deep discount in our NAV is not justified by the fundamentals of our company and of the sector we operate in. Thank you all, and I'll pass it over to you if you have some questions, please let us know.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove your question, please press star and two. The first question comes from Matteo Bonizzoni of Kepler Cheuvreux. Please go ahead.
Good afternoon. I have some questions. The first one is on your expectation about the asset value. We have seen in the chart, which you presented today, that the asset value is roughly seeing a decline by 15% since last spring. Do you expect quite depressed? Do you expect some continuation of this deflation of the asset values? In relation to this point, I would like to know if you are planning the disposal or the sale and leaseback on some of your vessels. Second question is about the coverage strategy. We have seen that after 2020, in which you benefited particularly the last quarter, Q3, from a high coverage at good rate. On 2021, you say that the coverage is down quite significantly, currently 38% for the first quarter of 2021, down to 15% in the fourth quarter.
Quite low compared to normal and compared to this year. On the other side, the coverage rate you have said is $14,500, not particularly attractive. My question is, should we expect more coverage on 2021? Maybe with this low rate, you will stand by, we are going to remain exposed more to the spot rates for the next year? Third and last question, I would like to know the cost of the recent $42 million balloon refinancing, which you commented, when compared to the loan which was expiring. Thanks.
I can, if you want, answer for the coverage, and Carlos can answer for the rest. We know already that the charters that are using our ship, they keep using it. I give you an example. There is a first-class European charter which a few days ago renewed one ship of ours for another year at $14,500 a day, when the spot market today is paying around $8,000. With a huge differential, but the charter took our ship and he keep using it because, of course, the way the market is a picture of COVID.
Going ahead, the more we go versus the solution of COVID, the more we are going towards improving of a market, because the two two things are extremely related. When this will happen, nobody knows, but we know that in 2021 somewhere, a big part of this COVID problem will be over. I can tell you also, a big part of the market rates, the way they are today, will be over, is a direct concept. To lose, let's say, coverage in 2021, and is more toward the second quarter of 2021, I would say, and the first quarter of 2021. To lose coverage there could be a benefit more than a real risk, because probably rates will be on different grounds in those moments. On the other question, I leave it to Carlos to answer.
Exactly, yeah. Hi, Matteo. Yes, if I understand correctly, your question is relating to the refinancing, to the balloons, the facility that we are drawing down now to refinance the balloons in January. The facilities would basically refinance the amounts outstanding under the existing facilities. With some marginal differences, that's the intention. The facility also allows us to refinance another vessel, if we seek to. We have the option of including another vessel at a later stage in the facility. For now, it only refinances these vessels which had balloons, which were upcoming in January, with the exception of the High Courage, which we will be selling beside the MOA for, and we expect to deliver in January. We are not going to be refinancing the balloon of this vessel for that particular reason.
Thank you.
The next question is from Massimo Bonisoli of Equita. Please go ahead.
Yes, good afternoon. Thank you for the presentation. Three questions. One is back to the question of Matteo on the coverage. Just if you have a trigger level to increase the coverage again in 2021, just to understand if the level of TC rates goes up to a certain level, you start again to cover it. The second question is on the implication of the election of Biden in U.S., if you have any thoughts on the implication for the refining industry, especially for the refining partner shipping industry as well. What would be the next step there? The third is on the spread between high sulfur fuel oil and the ultra-low sulfur diesel, which currently is very narrow. What are the implications for your cost and also for the current demand right now?
Let's start from the last one. The spread is very low, is around $40. It depends very much where you are going to bunker, because we have three elements we have to look at. You have the high sulfur fuel oil, you have the low sulfur fuel oil. Then you have diesel.
Yeah.
I can tell you, for instance, that the diesel in this moment is at the same level of very low sulfur fuel oil. It's already more competitive than the low sulfur fuel oil because diesel is more efficient by 5%. The spread with high sulfur is, let's say, big average around $40, and it's going to repay those scrubber in by far a longer period of time of what was forecasted in the beginning. To my mind, the scrubber has not been a good thing. At the end, it's been only complicated life and a lot of money spent, from my point of view, in a useless way.
This is not affecting us at all because we have only one ship with scrubber, and we did that more for technical experience than really economic belief, and I think we have been right. This ship is chartered out on time charter already, and is getting a premium because we did this contract way before the delivery of the ship. It was in a better period, and we got a premium for the scrubber on the time charter, which at the end of the charter will repay completely the scrubber. The company is not going to be affected at all by the scrubber elements. On the other question, I don't remember the second one, sorry.
It was the implication of the election of Biden in U.S. on the industry in general, just as a general thought from yourself.
I don't know. To be frank, I don't know. We are not very much If they were exclude movement of oil, of course, we will be affected. This is not certainly possible now. I wouldn't say is a threat, as Trump it was not again. We are totally neutral to this. The first one?
The first one on the coverage of the, again, on the trigger level of the coverage.
Yeah, there is not really a trigger level. When we are due to expiration of the charters, we start talking with our charter and we see what level we are talking about. Certainly, if we still are in the defensive as we are today because we have to, we have COVID, which is around still, then we look to always two levels which are close or just over our break-even rates, and up to now, we managed to do so. When we will be out of COVID, then we will talk by far different numbers. By far different numbers, I mean, high teens, close to the 20s, if not over the 20s. It depends very much what will market will tell us too.
Okay, very clear.
Mr. d'Amico, sir, there are no questions registered at this time.
Okay, thank you. Thank you to everybody for being with us, and looking forward to meet you on the phone at the next call. Thank you very much from my side, and bye-bye.
Thank you. Thank you to everyone.