Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Dionico International Shipping Third Quarter And Nine Month 2020 Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask At this time, I would like to turn the conference over to Mr.
Paulo DiAmico Chairman and CEO of the Amico International Shipping. Please go ahead, sir.
Hello, everybody, and and thank you to be with us. Let's go straight to the executive summary. A net result. The IRS posted a net profit of 15,400,000 in the 1st month, 9 months of 2020. This against the loss of 32.5 in the 1st 9 months of 2019.
And in the third quarter 2020, disposed a net result of a loss of 1,700,000 against a loss of $8,200,000 recorded last year. TCA time charter equivalent. This daily spot rate was 18,592 on the 1st 9 months of 2020. Against 12, 786 achieved last year for the same period. In Q3 2020, this generated a daily spot average rate of 12,866 against 11,616 of last year.
This DIS achieved the total daily average rate of 16.973 on the first 9 months of 2020 against the 13,674 of last year. And August 14,800 and 6 week in Q3 2020 against 13,264 last year. Leverage reduction, this financial position, excluding IF IFRS 16. 2 fleet market value ratio was 60 65% at the end of September 20 versus 64% as at the end of September 2019. And this compared against 72.9 percent at the end of 2018.
As far as the vessel sales, Glenda, which is a fifty-fifty joint venture with, Glencomb, sold once up by Glenda Meredith, and this transaction generate around $18,800,000 in cash. In May, in May, 2020, DIS announced that Damico Tanker, signed at the memorandum of agreement for the sale of Hclodiguanzoo. In Q2, 2020 transaction allowed Demico Tankers to generate around $8,800,000 in cash, net of commission. We have all this is being already delivered. In July 2020, DIS announcement.
Damiko Tank has signed an MOA for the sale of 2 MRs, the high progress and high performance. This transaction will allow Damico Tankers to generate a total net cash around 16,300,000 in the second half of twenty twenty, of which $8,300,000 already in Q3 of 2020. In September 2020, this announced at Damico Tanker signed the memorandum of agreement for the sale of the high coverage This further transaction will allow the Mico Tankers to generate a total net cash around 8,900,000 between November 2020 January, January 2021. I would move directly this part to the overview and key financial because the market will touch it later on, so it's useless to do it twice. And I leave a floor to Carlos.
Thank you.
Yes, good afternoon to everyone. Just a quick look at our fleet profile as the 30th September. It consists of the 41 vessels, of which 21 on 9 on the bareboat side, I would say 30 on and the remaining on the time charter. Of course, our main presence has always been till today, the MR segment. So we controlled 29 vessels in that segment.
We delivered today, one of the was that Paolo was mentioning, we sold to the new buyers. So as of today, our fleet falls to 40 vessels from 41. We have a young fleet with an average age of six point eight years. 78% is IMO class and the 70% is echo. This percent has been rising from it, going to continue rising for us, as we sell all the non Eco design vessels.
As you all know, we underwent an important new building program to which we ordered 22 new buildings since 2012. And we completed this moving program in Q4 'nineteen. 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 new building program. We only had the maintenance CapEx left.
It was a big figure if we take into counted only related to maintenance CapEx. It was 10.2 for the year, only one point one left for Q4. That is because we had a number of assets, which had to start for a special survey this year, and they also had to install water ballast tank system. So, this figure close to 6,000,000 next year. And then to $4,000,000 in 2022.
So we are already much lighter and we're going to become even lighter in terms of CapEx commitment going forward. The same applies to debt repayments, as we mentioned several times in the past in the following page of the presentation, page 9, we finished reimbursing the medium term into the facility in the end of 2019. And therefore, our print report repayments fall quite significantly in 2020 from $52,500,000 to $36,000,000 and they continue falling over the course of the 2 years. The other positive aspect here on the bank financing side is that we signed last night at the loan agreement to refinance all the balloons we had for 2021. We had a number of vessels with balloons in early 2021 and 1 with a balloon in October 21.
We refinance all of these through one facility, which we signed last night and we are going to be drawing down next week. And so the next balloons to be refinanced only 2022 and we are going to be working on those in the second half 21 most likely. And hopefully, we expect in a better in a much better market after the rebalancing, which still is ongoing, but which we hope will have finish by then. Going on to the next page, the purchase options of these vessels, we have 9 vessels for which we, closed sale leaseback transactions over the course of the last few years. 6 of these are already exercisable.
A seventh one will become exercisable in December. And they are all in the money theoretically in the money. And so this is a potential use of funds. We have been, we've built up quite a comfortable cash position over the course of 1st 9 months of this year through vessel disposals and through the strong performance, especially in the first half of the year. So this is something we would look at and at the right time, we might decide to deleverage a bit our balance sheet, but I have some of these options and therefore reducing the cost of our debt financing.
Or going on to page 11, we show the the coverage the port coverage at, for, through PC conference at fixed rates. We managed to keep quite a good level of coverage for Q3 and Q4. Q3, we were 63% covered in Q4, just slightly less 58. And that drops in Q1 to 38%. The average rate for Q3 and Q4 is around 16.3 almost.
And so that is quite positive. Of course, as some of these contracts that expire in Q4, and Q1, twenty twenty one arrive close to termination. We are most likely going to be asked by the charters to renew them on the OTC at the ongoing levels, of course. Which are nonetheless decent today 1 year see for an Echo Mar vessel is around 14,500. So it's not too distant from our breakeven overall P and L breakeven.
Going on to the yes, so we also highlighted the bottom that the percentage of the Eco fleet has been has been rising and it's forecasted to continue rising. And 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 as a result of the redelivery of assets on TCN. But since the coverage through field conference calls over time are actually of sensitivity to the spot market rises and in 2021, it's up around $10,000,000 for every $1000 per day change in the TC equivalent earnings and it's almost $12,000,000 in 2022.
It's only $1,500,000 in Q4 twenty. So going on to the following page, we have done quite well in terms becoming more efficient in the operation of our vessels or the daily operating costs had fallen from 7300 in the 1st 9 months of 2018 to 6700 in the 1st 9 months of this year, which is pretty much aligned with the 6700 we had in the 1st 9 months of 2019. The savings are attributable to, I would say, mostly the and also investments in technology, which allows us through condition based maintenance to, identify problems, in a head when, but also to land from the average life span of the lot of spare parts. So we would we reduce the breakdowns and we increase significantly the average lifespan of our spare parts, but it's also the result of operating with a more homogeneous fleet and through the 2020 year business that was available over the last few years and also a younger piece. So that also helps in terms of cost of operating costs as well as, of course, some efficiency in purchasing arrangements that we are always trying to to improve on, and which also will allow some benefits.
The G and A is also improved, although to a lesser extent, there was a bigger improvement between 9 months 2018 9 months 2019. Some of that improvement we lost in the 1st 9 months of 2020. We must also highlight that there was an element of income that was being offset against the, these administrative costs that we lost in the 1st 9 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 And A. And then finally, the fact that our fleet has been decreasing means that our overall general administrative costs have spread out over a smaller number of vessels. And therefore, that contributed to this increase we experienced between 9 months 'nineteen and the 9 months 'twenty let's be said that relative to our peers, I would say that our G and A's are still very, very competitive. So and also peers which have much larger feet than us. Looking at the balance sheet and liquidity position and looking at key ratios, the ratio between the net financial position, the feed market value remained stable this year.
It improved still significantly relative to the end of 2018 where it was 73% almost, then it declined to before the end of 2019 and it increased only very slightly to 65% as the 30th 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%. So over the year, they declined five year old vessel and 10 year old vessel declined by between 10% 12% the asset value.
But thanks to the profits and the cash that we generated at the during the year, we managed to keep this ratio stable and of course also thanks to the vessel sales we managed to to help to keep the space at this ratio stable. So this and we are particularly happy with the cash from cash equivalent position, which is a $59,300,000 at the end of the quarter. And that does not include the, of course, the cash that we generated of around $8,000,000 through the battle that we delivered to the new owners today it doesn't include the cash that we will generate with the vessel that we expect to deliver to the new owners in in January next year of around $8,900,000. So this position even in a weak market that we are seeing today, weak spot market given the coverage we have and these vessels supposes, we expect its cash position to keep improving slightly over the coming quarters. And 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 and L, on page 15, the 9 months profit, cumulative profit is of 15,000,000. If we exclude nonrecurring items, it's of 26 And, which is already, I would say a number we can be a bit more satisfied with. And if we look only at Q3, the losses of 1,700,000, but excluding the non recurring items, the losses of 0 point 4,000,000, and that is basically breakeven given the size of our fleet it's basically breakeven. Going on to the next page, we look at the daily results of our vessels from an employment perspective. The Q3 results we, we earned 12,900.
So it's it was of course not brilliant, but putting it in context comparing to Q3 'nineteen, it was actually better than Q3 'nineteen. And, and 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 'nineteen. We managed to achieve a blended average rate in Q3 of 49 almost. So that's not bad at all.
And as I was mentioning, basically, if you exclude recurring items, it's equivalent to our breakeven. And in the 9 months of 2020, course, the figures are much better because we benefit from the very strong results in the first half and the baby average on the spot market was almost 18.6% and the baby average on the Tissue was 16,000,000, leading to a blended average of almost 17,000. I'll pass it over to Paulo again for the market overview.
Now looking at, at time charter rates and asset value. Now since October 2016, and up to just before the the COVID exploded, the market has been with various bumps but recovering. And we were basically at the beginning of the year with good fundamentals and then and it's a good spirit. Then the COVID arrived, and it created 2 2 consequences. First, the spike, I mean, first, you had the 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.
And this, clearly create a very strong spike in the market. But it all collapsed in June 2020. And, because at certain point, we feel that whatever was possible to fill. And uh-uh, at that point, basically, they they stop by, not only but the, OPEC realized that we could make, because there's been a 2 the 2 problem thing. One is being recorded and the other one who creates the collapse of the battle.
And the second one with Saudi Arabia and OPEC and Russia, they didn't agree on on a cat. On the beginning, as you remember, and we start pumping like hell. And then the market has been over supplied. So you had 2 elements which made the mark, the barrel drop, and the contango went out. The super contango, I was quoted.
It'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. And at the end, the fundamentals came out with fundamentals of COVID, but basically, flights are being all grounded. People are not moving at all. We were in a lockdown. So cars were not circulating.
The only thing where it was tracking that create a huge drop in oil demand at a certain point up to 10 more than 10,000,000 barrel per day. And I I think, at the end of 2019, we were the oil world demand was close to a 100,000,000 barrel today. So was 10% drop. And then at the end of it, at the end of a lockdown, people restarted slowly on the opening apps to drive and and went to consume and we recuperate something of this terrible drop. So from the peak of of a 10,500,000 barrel per day lower than last year.
We think that the the the drop average on all the year would be around 8. Now, as I say, they they create built up and floating storage. And, with the floating storage, as far as the refinery product increased from 25,000,000 barrel in December 2019 to a peak of 75,000,000 barrel early in May 2020. Now the market has been rapidly rebalancing with 70% of the COVID related increase in floating storage already unwound by the end of September 2020. So 70% of the storage already in September was gone.
Hello. Demand growth is still there because, of course, COVID is a very, limited, even if it's a very cruel and and very and very strong, but it's a very limited and I would say emergency situation. The market is on fundamentals and long term long term fundamentals is is in demand growth. And certainly, this is something, but we are going to see it once this pandemic will be will be over. Of course, and I am in page 22.
The potential for upside on asset value is very strong. Because we were already coming because we we we have this vision starting from 2016. We were already coming a long way from, a valley in the market's value. And, COVID is as is as related to the whole thing. So 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, with a strong growth in refining capacity. And, this growth is by 76% and this 36% is of planet refining capacity coming in is, all I mean, Frederick Versace and Middle East. So we are, as you can see, the growth on the refineries will be far away from the consuming market like Europe and and United States. And not only this, with being a new generational 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 in, in a non competitive position.
So we do expect a reduction of refining capacity in Europe and also some reduction in United States. And 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. So the landscape will change. Which is also because, as you know, by January from January 2020, we are using fuels with low content of sulfur.
And these are all produced by new generation of refineries. The older refineries in Russia and Europe are big producer of fuels with high contact of alpha. And this will create year again with difficulties where we are talking about before. On the supply side of the market, the sheet supply, we have a very slow fleet growth. And, as low as low as even more because the new contracts are being new order contracts are minimal.
Also due to the fact that ship owners, they do not know in, as consequence of the IMO rules on, on a mission or CO2 emission. We don't know yet what is going to be the propulsion of the future. So 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. So There's a lot of uncertainty and this is bringing to low new building orders. And as a matter of this, as a consequence of this, there is a reduction in fleet growth expected already in the second half of twenty twenty.
I have to rema I I have to tell you that on first half of twenty twenty due to the COVID and due to the lockdown, the scrap yards were closed. Now the scrap, we are are open. And so we do expect, a higher rate of scrapping. Now do you also always have a COVID consequence? The second and the shifts values, by far more competitive than the new buildings, new building prices.
So the market where, the purchase market or ships is very much focused today on second hand when you're building. And this is a good, a good thing always for the supply side. Because we have less money going to new buildings. So COVID really changed the the the dynamic of of everything. And so change 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 the market will come back to us. Because more, we will feel free to move in certain parties. It's not the case now because we are still in a moment of lockdowns. But we'll happen that we will overtake this thing and, everybody is not all in need. I mean, just everybody in the system is expecting a very strong rebound of a market because of the consumption that one will fly again.
Thank you.
Thank you. So 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 us. So as we mentioned, the there was a decrease in the values in the asset values of this year. And that of course had a negative impact in our net asset value, overall net asset value, which should decline relative to December 2019. On a per share basis a decline from $0.25 to $0.22.
But nonetheless, we were the 30th September still trading at a very deep discount to be of around 53%. So, given we don't expect this balancing 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 or what lockdowns might vary a bit of this process, but that number does There's also good news out there. I mean, we all heard about the developments and the vaccines of a Pfizer in BioNTech and good news is also expected soon in the vaccine of Moderna, which is also undergoing Phase III trials and uses the same technology.
And it's benefiting from the, high contingents out there, in this, efficacy test. So hopefully, we will be able to roll out. There will be a good rollout of vaccines in the first quarter, first half of year, which would then contribute to a much healthier market in the second part of 2021. And so once again, we feel that this deep discount in our NAV is not justified by the fundamentals of our company if that's the end of the factory operator. Thank you all and I'll pass it over to you.
If you have some questions, please let us know.
Excuse me. This is a Chorus Call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on a touch tone telephone. To remove your question, please press star and 2.
The first question comes from Matteo Bonnetone of Kepler. Please go ahead.
Good afternoon. I have some questions. The first one is on your expectation about the asset value. So we have seen in the chart which you presented today that the asset value roughly seen it declined by 15% since last spring. Do you expect quite depressed?
Do we have that, some continuation of this, the deflation of the asset values and the relation to this point, I would like to know if you if you are planning the disposal or the sale and leaseback on some of your vessels. Second question is about the covers strategy. So we have seen that after 2020, in which you benefited the, particularly the last quarter, so Q3 from a high coverage, good rate on 2021. You say that the coverage, is down quite significantly, currently, 38% for the 2nd for the first quarter, sorry, of 2021, down to 15% in the 4th quarter so quite low compared to normal and compared to this year. On the other side, the coverage rate you have seen, your savings 14.5 $1000 or so not particularly attractive.
My question is, should we expect more coverage on 20 1 or maybe within this low rate, you you will standby and then so we we we are going to remain exposed more to the spot rates for the next here. And then I would turn turn the last question. I would like to know the cost of the recent $42,000,000 balloon refinancing, which recommended that when compared to the, to the loan, which was expiring. Thanks.
Hi, Ken. If you want answers for the coverage, and and Carlos can answer for the rest, but as far as the coverage, as you said, going down because, of course, it is via spiritual of the actual time charters, locked in for that for that moment. But we know already that the charters that are using our ship. They won't keep to they keep using it. I'll give you an example.
With the 1st class European charter, which few days ago, renewed 1 ship of hours for another year at $14,500 a day when the spot market they is paying around 8000. So we were huge differential, but but started to cover shipping is keep using it because, of course, the way the market is is is a picture of of the COVID. Going ahead and more we go versus the solution of a COVID and more we are going towards, improving our market because if the two things are extremely related. Now when this will will happen, nobody knows, but we know that in 2021, somewhere This a big part of the COVID problem will be over. And I can tell you, also a big part of the market rates the way they are today would be over.
It's a direct answer. So to lose, let's say, coverage in 2021 and is more, let's say, 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 than a real risk because Probably rates will be in a different in a different on different grounds in both moment. On the other question, I leave it to to Carlos to answer.
Exactly. Yes. Hi, Mattel. Yes. And also, and if I understand correctly, your question is relating to the, to the refinancing, to the balloons, the facility that we drawing down now to refinance the balloons in January.
And the facilities would basically refinance the amounts outstanding under the existing facilities. There are some marginal differences that the that's the intention. And the facility also allows us to, refinance and other vessel, if we seek to so we have the option of including another vessel at a later stage in the facility. But for now, it only refinances these vessels, which had balloons which were, upcoming in January with the exception of the high carriage which we will be selling beside the BOA for and we expect to deliver in January. So we are not going to be refinancing the balloon of this vessel.
For that particular reason.
Thank you.
The next question is from Masimo Bonasale of Equita. Please go ahead.
Yes. Good afternoon. Thank you for the presentation. Three questions. One is back to the question of Mattel on the coverage.
Just if you have a trigger level to increase the coverage again in 2021, just to understand, if the the level of TCRA scores up to a certain level, you you start again to to cover it. And the second question is on the implication of the election of Biden in US. If you have any any thoughts on the implication for the refinancing, especially for the refining product shipping industry as well. So what what would be the next the next step there. And the turbine is on this spread between high sulfur fuel oil and the ultra low sulfur diesel, which currently is very narrow So what are the implication 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, but it depends. It depends very much where you are going to bankrupt because we have 3 elements. We have to look at you have 2 the high sulfur fuel oil.
You have low sulfur fuel oil. And when you have a diesel.
Yep.
I can tell you, for instance, with the diesel in this moment, is at the same level. Of very low sulfur, sulfur fuel oil. So he's he's already more competitive. Than the low sulfur fuel oil because diesel has is more efficient by 5%. The spread with high sulfur is alright.
Let's say big average around around $40 and it is it's never it's going to repay both the scrubber in quite a in by far a longer period of time or what was forecasted in the beginning. To my mind, the sky, but it's not been a good thing. The end has been only complicated life and a lot of money spent from my point of view in a useless way. And 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.
And this ship is chartered up on time charter already. And it's getting a premium because we we we did discounted by the way before the delivery of a ship. So it was in better in a better period, and we got a premium for the scrubber on the time charter. Which at the end of the charter will you repay completely the scrapper? So we we will compare is not going to be affected at all by by the scrapper elements.
Do you have a question? I don't remember the second one. Sorry.
It was the application of the action of of binary. US, on the on the industry in general, just as a general talk from yourself?
I don't know. To be frank, I don't know. Is something which, but, I mean, we are we are not very much I mean, yes. If they were exclude movement of oil, of course, we will be fact that, but, I mean, this is not set as possible now. So I I wouldn't say it's a threat.
It has has trampy was not a game. So We are totally new trials of this. And the first one
and the first one on the coverage of the again, on the the trigger level of the coverage.
Yeah. But the reason, not really a trigger. I mean, when we are due to, to expiration of charters. We start talking with a when we have a charter, we see what level we are talking about certainly, we've if we have, let's say, we if we still are in the defense, as we are today because we have to give a code, COVID, which is around still. But then we we look to always two levels which are, close or just over our breakeven rates.
And to now, we managed to do so. When we will be out of the COVID event, then we will talk by by far different numbers. So that by far different numbers, I mean, high teens close to close to the twenties. I mean, if not over the twenties, it depends very much what what will market retailers do.
Mister Vandico, sir, there are no questions registered at this time.
Okay. Then, thank you. Thank you to everybody for being with us. And looking forward to to meet you on the phone at the next at the next call. Thank you very much from my side and bye bye.
Thank you. Thank you to everyone.