Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the d'Amico Full Year 2019 Results Conference Call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. Should any participants 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 Paolo d'Amico, CEO of the company. Please go ahead, sir.
Thank you. Welcome to everybody. Hello. Today for us is have a sort of real conversation because we are spread out. Our CFO is in Monaco and myself, I am in Italy, as you can imagine, closed in a room. Anyhow, we are here to do our job, and we are going to do it the best way we can. Let's go to the executive summary first. As you remember, in 2019, the share capital increased. The subscription have been basically subscribed by 97.3% of the right, and the remaining part is being private placed. Had a capital increase amounting at EUR 44 million. Now, net results. This posted a loss of EUR 27.5 million in full year 2019, and this is versus EUR 50.1 million in full year 2018.
On Q4 2019, this made a profit of $4.9 million and versus a loss $13.9 million in Q4 2018. Here again, if we exclude the non-recurring items from both years and the effects of the IFRS 16 from 2019, this net result would amounted to $12.7 million for the full year loss, for the full year 2019, compared to $57.4 million full year 2018. The result of Q4 2019 would have been $7.4 million profit versus $13 million loss in Q4 2018. The trend is very evident. The Q4 2019 represents the first profitable quarter since Q1 2017. The vessel disposal and sale and leaseback is raised around $41,200,000 in liquidity to such a transaction in full year 2019.
We also had amendments to our financial covenants on all bank loans, because the application of the IFRS 16 from January 1, 2019 had a negative effect of 4.3% on our net worth to total asset ratio. We had a reduction of the minimum ratio to 25% from 35% as it used to be before on our covenants. Time charter equivalent. This daily spot rate was in full year 2019, 13,600, a little bit more than that, against 10,798 achieved in full year 2018. In Q4 2019, the time charter equivalent has been 17,242 against 11,617 in Q4 2018. This achieved a totally daily average rate of $14,230 in full year 2019 versus 12,184 in full year 2018. Now, market outlook and time charter coverage.
54.9% of our available vessel days in 2020 are covered, a daily rate of [$6,200], which is a profitable level for our company. We are having other time charter renewals coming in due for renewal a year, and we will proceed. I see that every time that we are winning, as far as up to now, we achieve always a better rate. Of course, what's going on today is a big question mark. I don't want to quote on this because I think it's out of anybody's capability.
Certainly, what we can say with strong reduction of oil price should, let's say, should use traders and oil companies to buy, at least to store, not only crude, but also product. We also expect, it's been declared, strong stimulus from various countries, starting with China, but also from U.S. and the United States. Said that, the fleet continues of being extremely young.
We took deliveries of last new building in September, and we will keep looking for opportunities to sell the older vessels and the way to deleverage the company. Said that, I would like to leave a word to the floor to Carlos. He can go more in the numbers. Thank you.
Yes. Good afternoon to everyone. Going on to page eight. This is a slide that we present regularly, our CapEx commitments, as we stated several times, we invested a lot to renew our fleet. We ordered and took delivery of 22 new buildings. We terminated our new building program in October last year. Therefore from 2020, we are much lighter in terms of CapEx commitments, which are only linked to maintenance CapEx. 2020 is actually quite a big year in terms of maintenance. It's just a coincidence, the date of deliveries of vessels. We owned a lot of vessels. It's not a coincidence that 2015 then also was a big year in terms of CapEx. From 2021, this number falls further to around $4 million, and the same applies to 2022.
The CapEx numbers are a bit inflated relative to usual because it includes also the addition of the water ballast treatment systems. We go on to the following page, once again, all year we have a big improvement relative to 2019. In 2020, we are much lighter in terms of loan repayments. We fall from $32.5 million to $34.4 million. That's excluding balloons. Facility of $17.5 million, which entails our reimbursement of $15 million per annum principal repayments that we fully reimbursed by the end of 2019. That was a facility that was on top of the traditional bank financing that we take to buy our vessels. We made a gain in that facility, and we have in terms of debt repayments from 2020 onwards, which means more cash that is being generated for our shareholders. On page 10, we show the purchase options on these vessels.
They are now all in the money. Last time we looked at this, there was one which was out of the money, but the vessel price has continued moving up in the last quarter of the year. That does not imply we are going to be exercising soon these options because the LTVs, if we were to exercise, would still be quite high and not consistent with traditional bank debt financing, which can take you up to LTVs of around 65%. Therefore, since these are also, in terms of cost, quite competitive structures and quite flexible and long-term money, usually banks' tenants do not exceed five years, but a lot of these facilities when they started, they had a 10-year maturity, and they also for most of them without any financial covenant.
We will keep them until we can potentially refinance with bank debt without putting additional equity or if we intend to exercise the option to sell vessels, but that is not the case. Now, these are part of our younger vessels, Eco vessels that we want for some time still. As Paolo mentioned, in fact, there are some older vessels that we plan to sell over a few years into the stronger market that we are starting to experience. Going on to the following page, just a bit more detail on the fixtures that Paolo referred to. We continued fixing vessels at increasing rates throughout 2019. For example, the last fixture on an eco MR was at $18,000 per day, eco MR2 for one year. We fixed MR1, so that's a Handymax, one year this year at $17,750 per day.
That's almost $20,000 per day for an MR2 equivalent, so that's also an eco vessel, so that's a very strong rate. Obviously this rate was not as aligned with the market when it was done. It is a reflection of also a very strong relationship with a specific vessel at that point in time in that location. Nonetheless, it does confirm the trend of a strengthening market also on period contracts. Going on to the following page, a bit more detail on the average rates for our period contracts and the percentage of the available vessel days that are covered by such contracts. We show that in Q2 we have 61% covered. In Q1 2020, we have 67% covered.
If we look at 2020 as a whole, our coverage is around 55%, so it does decline quite fast throughout 2020, and we only have 19% covered in 2021. The good thing also is that the average rate at which these contracts rise throughout the year. They rise from $15,900 in Q1, which is already significantly higher than the average rate for 2019, to almost $16,800 , Q4 2020. That should definitely help us going forward, especially if we are also supported by the spot market. In this respect, also the fact that we have an increasing proportion of our fleet, which is eco, that is also going to be helping us going forward because these vessels do earn a premium which with today's lower oil price is likely smaller.
We saw this premium not long ago arrive at around $2,000 per day. With today's oil price, maybe the premium of the Eco vessels is probably around $1,000-$1,250 per day, but it's still significant. Going forward on page 13, we show the fleet evolution, the average number of vessels we control, and how that changes over the next three years. Our fleet falls slightly as we deliver some 410 TEU vessels. Our exposure to the spot market actually rises, so does our sensitivity for every $1,000 where they change in TC equivalent earnings. It increases from $6.5 million in 2020 to $11.5 million in 2022. On the following page, daily operating costs. They are confirming the trend that we have been seeing throughout 2019.
Also on a full year basis, we had an important decrease in the daily operating costs relative to 2018, which as previously mentioned, is attributable to a younger fleet, the deliveries of all the new buildings over the last few years, a more homogeneous fleet, and also to technology, in particular the adoption of a condition-based maintenance system, which through equipment allows us to monitor the actual state of the spare parts, critical spare parts, and increasing the average life of these parts significantly and also reducing off hires. When necessary, we can replace earlier and avoid a breakdown, but on average, we can keep these parts going for much longer. Also the stronger dollar in 2019 relative to 2018 also helped in this respect.
The same applies and even more so to G&A because 75% of our costs are daily costs in currencies which are different from the U.S. dollar, mostly the euro. We did benefit from that. Going on page 15, we show our ratio of the net financial position. It fell from 70% to 64% in 2019. 64%, which is the figure at year-end 2019, it's one which we are much happy with, but we want to reduce this further going forward, as Paolo mentioned. The profits we expect to generate in 2020 with the TCE vessels we intend to sell, we believe we can bring this ratio down significantly. The factors which contributed to the reduction in the ratio in 2019, are mainly the increase in vessel values, and the capital increase that we closed in April of 2019 of EUR 44 million.
In terms of vessel sales, this was already covered in executive summary by Paolo. We did raise around $41 million through sale and sale leaseback transactions, and we closed two sale and leaseback transactions in the beginning of the year. We sold four vessels that we had in JVs. They're all JV vessels, so one owned by Eco Tankers, on which we had a 33% participation. Two vessels owned by DM Shipping, on which we had a 51% participation. One vessel owned by Glenda International Shipping, on which we had a 50% participation. That, of course, helped our liquidity position throughout the year. Going forward, on page 16, we show our key line items of our P&L. In 2019, we lost $27.5 million, which is much better than the $55 million we lost in 2018. If we exclude non-recurring items, then the result is even better.
We lost only $7.7 million in 2019 against a loss of $57.4 million in 2018. If we look at only Q4 2019, the profit was of almost $5 million with a loss of almost $14 million last year. Excluding non-recurring items there, the profit was at $7.4 million in Q4 2019, against a loss of $13 million in Q4 2018. The profit in Q4 2019 is almost the full year loss for 2019. We are seeing a per vessel per day basis is equivalent to around $400 only. It really gives an idea of how close we were to our breakeven in 2019. Going on to the following page. Just a small comment on the EBITDA. Even excluding the IFRS 16 effects, which improved the EBITDA in 2019, our EBITDA in 2019 is four times higher than in the previous year.
On the following page, we have a closer look at the daily time charter equivalent earnings of our vessels, both the spot and the covered and the blended result. For the spot, average for the year was $13,700, which is not a great result. The important thing is that Q4 2019 was a daily average of $17,200, which is already a much more satisfactory result. It's a very profitable level for us. In 2019, we had contracts at an average rate of $14,760, the blended result was $14,200, which is, as previously mentioned, not very far from our P&L breakeven. If we look at only Q4 2019, our blended result, including the contracts at $15,100, was of almost $16,000. Going on, we have just a comparison of our results, only looking at the MR2s here and not all our vessels.
We also have some Handys on the spot. A lot of time instead are employed through period contracts. You see the MR2s on the spot earned an average of $14,200, relative to $13,700 for the Clarksons average. If we look at only the Eco vessels, then the outperformance is bigger. It's 14%, we earned $15,700 rather than compared to $13,700 for the Clarksons average. Yeah, the blended rate for all MR2s, including the period contracts, was $14,300. That is it for the financial highlights. I'll pass it over to Paolo again, for the market review.
Thank you. On page 20, you can see that there is still a very strong potential upside, not only on rates and asset values. Since the last peak on a one-year time charter, we are respectively 49% and 65% below the last cycle peak, which as far as one-year time charter rates. When it started as values, a five-year-old potential vessel are respectively 34% and 33% below the cycle. This doesn't mean that we are going back to the peak again. The risk that the go up is still very long, and there is still a lot of potential in both earnings and values. The improvement, you can see it in page 21, when we started with very low excess of $12,000 rates in 2016, up to on excess of $15,000 for a one-year time charter.
This means the market is, as you certainly know, improving very well, and so are the values. The demand growth now, which is of course, it grows on whatever coronavirus is going to leave us with. Let's say, the fundamental are still our demand growth, even if today there are a lot of corrections which have to be taken on the expectation that various agencies and brokers did at the beginning of the year. One thing is important, and this is not going to change because of the virus, is the participation of refined products trade to the total oil trade. Refined products are becoming more and more actors in the oil trade because from 25%, as they were in 2000, today they are basically at 35. They are increasing their share. This is due to the displacement of refineries from the actual consumption market.
The recovery has been so far driven by factors that you certainly know very well. We are supply driven. We had various factors from the bunkering, which has been a huge problem on the beginning of 2020, but already on the end of 2019, you had a run of refineries for middle distillates. You had maybe even too much, but it was there. When 1st January went in, we had a lot of logistical problems also because suppliers were already met with all their storage for the very low sulfur fuel, and this, of course, efficiency on the fleet. Ships in Singapore, which is the biggest bunkering hub in the world, ships have been waiting 15 days to bunker.
We have to say, we had very heavy weather in the Gulf of Mexico, and we still have very heavy weather in the Mediterranean. Scrubber installation. This is through old shipping. A lot of ships have been sent to the shipyards to retrofit scrubbers. I would say, I would add to this two things. Number 1, installation of this scrubber is being totally by owners, by the shipyards. The time consuming is by far longer than what was thought. To this, you have to add now coronavirus, because a lot of this activity was happening in China, and China, as you know, declared force majeure on many of those done, not only on new buildings, but also on the retrofitting and other dry dock issues.
We had the biggest which of course, hit the crude market, but in the end, a cascade comes down to us also on the clean, is being the sanction on the COSCO fleet in October, end of September, beginning of October, which as you know, took off a fleet of the VLCCs, which goes to 40, 44 ships. Is fleet been pushing the market up. I would say this has been the first element to turn around the market. Many others came in. Floating storage, which we suppose is going to increase due to low price of a barrel, is already in act. I understand that a Saudi company looking for something like 18 VLCCs. Of course, have coronavirus, which the only, I would say, positive effect is the fact that is delaying ships in the shipyards, so is keeping down the supply side of the thing.
If we move on to 34. The impact that coronavirus had on product tankers is being not always negative. I have to say, you had, of course, Chinese refinery, they start slowing down their throughput because they were already on surplus of product. We had a market which was not following this refining slowdown. In fact, we had a rising the cargoes from China to the U.S. coast, and not only China, also Korea, with jet fuel, where U.S. was in deficit. We will see refining activities coming back from the Middle East. They are coming out. Some refineries are coming out of maintenance period. We have a continued strong exports of products from the U.S. to South America, which really isn't affected by coronavirus at all. We have lower vessel deliveries.
I remember you that normally, the big bulk of the new building delivery happens in January, February, March, because whatever is ready in November, December, is postponed to January in way of gaining one year. These deliveries have been delayed by coronavirus, because of course, the Chinese yard, they couldn't deliver. This, of course, add to the ships which are there to retrofit their scrubbers. We also after all this, there is been in the press that China certainly is going to come in with a huge stimulus program, something which is equivalent at 4% of the huge GDP. We are talking big numbers. With the Fed already ease the monetary policy, and they are still coming out with something more, and something certainly has to be expected from Europe.
If we sum up all these things, and if coronavirus, let's say, is not going to be too long, that we can have a big counter effect due to all these interventions. Of course, refining volumes in 2020 didn't start very well because, as we say, China had to slow down its production. We expect a decrease in 2020 from whatever it was always forecast at the end of last year. How much, Frank? Nobody knows, because it all depends really how long this thing is going to go. I mean, today now, America stop all flights from Europe to United States. This is another hit, of course. We are going to have a lot of fuel to store, which can easily end up in also in floating storage, by the way. Talking about growth in refinery capacity, 2019 has been a record year.
It's been estimated somewhere the growth of 2 million barrels per day. If we look at the period of 2019 to 2023, the growth looks like something like 6.4 million barrels. This percentage numbers is going to happen between Middle East and China and the rest of Far East. Here again, far away from Europe. This, and we go to page 28, is the change in the refining landscape. You can see an expanding capacity is certainly upward trend, and this will create an increase of demand for seaborne transportation. The OPEC forecasts, reversal OPEC forecasts. The fact that Saudis and Russians didn't agree, basically, will benefit my tankers initially, but can be on longer a threat to U.S. crude exports because, as you know, Saudi Arabia is by far than America.
This is less ton-miles if China would start re-buying from Saudi Arabia instead of U.S. Page 31, we have a slowing fleet growth. Looking at MRs and LR1, we expect a growth on only 2% in 2020 and 0.8% in 2021. This sums up, I would say, to today, slowdown in ordering is due to the fact that shipowners also are afraid of building ships with technology unknown, and there is not too much equity out there to do it. The big investors have not moved that much anymore on new buildings, at least up to now. We can think that the supplies will stay the way it is for a while. The expectation is the market is to get back after you revised your expectation due to coronavirus.
Expect an expansion of the product tanker demand of 3.7%, which as I said before, will exceed totally the supply of new building. On page 35, we have the opinions of various brokers, but I leave it to you to read and why invest in this, and this I leave the floor to Carlos to do it. Thank you.
Just quickly to look at our NAV. If you look at the net asset value in absolute terms, not on a per share basis. After reaching a bottom in 2016, we touched a similar level in December, it has been moving up, but this also thanks to the capital increase that we pursued in 2019. To a large extent, the improvement also reflects the increased asset values that we have been experiencing throughout 2019. From a bottom of $218 million in December 2018, the NAV of the company is $340 million. Per share basis in US dollars, our NAV now as at the end of December, was at $0.25 per share. That means that at the end of December, we were trading at almost 40% discount to NAV.
As you can imagine, now this discount is actually significantly higher, given the turbulence in the market and the worries surrounding the coronavirus, which hit the shares of our company as well as those of many of our peers. As you saw from the results that we are publishing today, and from the market insights we provided to you relating to Q1 this year, the concern appears to be largely term. Of course, we don't have a crystal ball. We know that the coronavirus issue is a very serious one, firstly from a human perspective, but of course also from an economic perspective. We don't underestimate it in any way.
In that respect, I just want to mention that we as a company have taken many measures to protect our employees, not only those which have been mandated by governments, but also often going beyond that in countries which are a bit slower to the punches than Italy, which is at the forefront today in terms of intervention. My sense is that, as Paolo mentioned, the reversal of the OPEC cuts are very important for our sector. We saw that already in 2015, which was a very good year for us. We earned over $50 million. The same dynamics seem now to be at play again. At the time, the world economy was slowing. This time, it's probably going to be more serious because of this coronavirus. It's a big question mark.
If they are able to deal with it in a relatively short period of time because governments are dealing with it aggressively, then there is a very good chance of a recovery already in the second half of this year. For an economic recovery, I mean, otherwise, we might have to wait for next year. We counter-cyclically in 2015, although the world economy was slowing, we did very well. The same could happen in 2020 because the world could be flooded with oil. We saw that oil went into contango. This contango is steepening. Today, oil is down again another 6% at the front end of the curve. Also, refined petroleum products, for example, contango.
There is a growing incentive to store oil also on boats, and take capacity out of the system, and buy cheap oil today, process it, and sell it for sale in the future at a higher price. It could really play out in our favor, and surprisingly so, given the very complicated and delicate economic scenario that we are facing today. I believe that's it, and I pass it over to you. Please let us know if you have any questions.
This is the Chorus Call conference operator. 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 yourself from the question queue, please press star and two. We kindly ask to use handsets when asking questions or to pick up the receiver. Anyone who has a question may press star and one at this time. That's star and one. The first question is from Matteo Bonizzoni with Kepler. Please go ahead.
Good afternoon. I have two questions. First one, in your presentation, you show that the demand growth to Clarksons should be 3.75%, while the fleet growth should be in the 2%. Can you provide me the sensitivity to this 3.75%? In other words, is it a recent estimate that already includes the potential impact of the epidemics or not? Do you think we could be materially below this 3.75% demand growth? The second question is about the discount at which your stock is trading versus NAV. The net valuation increased to $0.25 per share. The stock is trading now, I would say, in the region of 70% discount versus your net asset. Apart that we are in a very peculiar market condition, but do you think the asset values could, for example, go down from this level?
Do you see risk of deflation in the asset value for your ships? Thanks.
On the Clarksons number, just a quick answer there. The value is from a March update of Clarksons. It's not our estimate, it's their estimate. I'm not 100% sure what kind of consideration they made to arrive at those figures. If it is a March estimate, as I'm saying it is, then of course, there is some estimation of the impact of the coronavirus, but this is developing very fast. I don't know what scenarios they developed when they arrived at this process. For sure, they haven't included in this estimate the decision, which the breakdown of the negotiations of OPEC on last Friday. That is short-term, much more important as we have seen, because we have seen the rates of our vessels move over the last few days. It is more important. It is outweighing the effect of the virus short term.
Longer term, it's a big question mark, but right now, that seems to be the case. I assume that they haven't included this effect in their forecast. It is a big question mark. Unfortunately, it's not a perfect science forecasting for shipping and especially for product tankers, especially in the environment we are in right now, where there are a lot of very important variables out there that have to be better evaluated path to be able to make a better forecast. If we look at the stock market, has moved up considerably this week. Not so much for a month, which were already very strong. They have been outperforming all the other product tankers this year by a big margin.
They have been doing better than the LR1 and LR2 but it was very beneficial for the LRs, because they are more immediately correlated with the crude tankers. We have seen the LR rates go up to, again, on certain routes, $100,000 per day or more. Suezmax rates also go up considerably. That has pulled up also the bigger product tankers, which are now to the MRs, which is not surprising. I think this is really something which has happened over the last five days only, and we have to see how this plays out throughout the rest of the year. As we were mentioning, in 2015, we had a very similar scenario, but with a much higher fleet growth. The fleet growth was of around 5%, and this year the fleet growth is around 2%.
We had an exceptional market in 2015, despite a fleet growth of 4.6%, with a fleet growth of 2%, maybe you can imagine what could happen this year. Yeah. That I believe answers the first question.
Okay, on the discount?
On the NAV, we have five vessels that we classified as held for sale on our financials. We are currently not marketing all those vessels, but we intend to sell them over the next 12 months. It is because we believe there are going to be a strong enough market to do so and get attractive value. We are positive on the second-hand vessel values. On the negotiations that we are now performing they are not any difference, any decrease in value, I would say. Of course there is a lot of uncertainty out there, but the rates are good. As long as the freight rates are positive, the period rates are good. The vessel values are very correlated with that so we don't see currently the risk of a big correction in vessel values.
Thank you.
The next question is from Daniele Alibrandi with MainFirst. Please go ahead.
Yes, hello everybody. Thanks for taking my questions. With the production cuts and the cooperation between OPEC and OPEC+ collapse, it seems that the OPEC and the OPEC countries are basically free to produce as much as they want. I was wondering if further oil downturn, how would you benefit from this situation and if you maybe are concerned on the demand side? My second question is if you can elaborate will be your approach and more aggression on fixing rates versus exploiting the spot. Thank you very much.
If I understood well, the first question is, if a further reduction on the barrel, what is the benefit for us? The first benefit, of course, is our bunker cost, which is going down, and as you know, is the number one cost we have. This is, of course, we're talking about our spot ships. We already coming from a long slide because if you think that in January, the low sulfur fuel was at $700 a ton, imagine how much we are saving today. Our strategy has been that we have over 50% of the fleet which is covered by term contracts. Some of them are due now and we renew them at extremely profitable rates. We just fixed one MR for one year, just a slight over under $18,000 a day.
We offered for the next which is 1 LR1 now for a very, very good rate. I cannot unfortunately make numbers now because it is not fixed yet. We are talking of extremely profitable rates. There are still people looking for ships for three years. I am talking about major oil companies and also that we are negotiating. Our attitude is to take certainly the cover where the money is good, is profitable, and it is big. In the meantime, we are playing with something less than 50% of our fleet, the spot market, and I think very today. No, I think, I hope.
Okay. Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further question, please press star and one on your telephone. Gentlemen, there are no questions registered at this time. Mr. d'Amico, I give the floor back to you.
Okay. I thank you very much to our call. I hope we have been explanatory enough. As I said, it's a little bit surreal because Karim is in one office, I am in another one. I hope we satisfied all your questions. From my side, I just say hello and to the next time.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.