Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Dionico Q3 and 9 months 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.
At this time, I would like to turn the conference over to Mr. Paulo Diamico, Chief Executive Officer. Please go ahead,
Let's go through the exact summary of the 1st 9 months of the year. Being 9 months, you already know 6 months of it, but with us rapidly through the whole thing. As you know, in March, the, this shareholder extraordinary general meeting authorized the board for an increase of its share capital with an assurance of new shares Now, this increase of capital has been 97.3 places. From, the total number of rights where they take the size, and the remaining part was placed under private placement. The net result, and this is the new data, This posted a net loss of $42,500,000 in the 1st 9 months of of 'nineteen versus a net loss of 41.2 in the 1st 9 months of 'eighteen.
But if we exclude the nonrecurring items from both years and VFX, ILS 16 from 'nineteen, this net result would have amounted to 15,100,000 in the 1st 9 months of 2019 compared to recorded in the same period of 'eighteen. This has been in these months, disposing of the sales. Some of the sales have been straight sales of shifts belonging to the joint venture and others up in sales and leaseback including the first Jolt Codeil, which is a tax key or Japanese tax scheme, that we did on one of our LR1 shares. We amended The financial covenant on all bank loans guaranteed by these because the application of IFRS RS 16 from January 1, 2019 had a negative effect of 4.3 on these networks to total asset ratio. So based on this, We had a reduction of a minimum threshold ratio of 25%.
When previously was 35%. As far as the time charter equivalent, the 30 spot rate is being 12,786 in the 1st 9 months of 2019, versus 10,574 of the 1st 9 months of 'eighteen. Of course, talking about outlook and time charter coverage, as you see, And as you certainly know, the market improved very well. It improved a lot and is substantial let's say, improvement, which to my mind is not yet due to IMO 2020, but is due to a consequence, a domino effect of the black listing of a Costco shares because this brought a very strong tightness in the crude market. And as a consequence of this, it's spillover on the clean sand.
I leave now the floor to Carlos Perezra, for the overview and key financials.
Yes, hello to everyone. So our fleet, as of 30th September, consisted of 48 vessels, of which 32 either owned or on bareboat and 16 on time charter. We took delivery of our NAST new building on the 1st October, which was, it's not counted in this fleet numbers as the 30th September. We have a very modern fleet, as you know, an average age of six point 4 years, 85 percent IMO class. We went through a very important fleet renewal program.
We ordered 22 vessels since 2012 and the, they are, which 10 MR600s and 6LRs. The new building CapEx as the 30th September still included the installment for the last installment for the last Basiline onion building program, the other one that was delivered on the 1st October, our equity portion of that last installment corresponded to around $11,000,000. The vessel is on time charter on a 2 year time charter at a very profitable rate and we are going to be paying back in around that to this DC coverage. From 2020, we only have maintenance CapEx left, relative to the previous presentation of the half year results, the outlay for these investments have been reduced. We now assume only $11,600,000 before we were at around $14,000,000.
The reason for the reduction is that we had a closer look at the actual repairs that our vessels need to undertake and we identified some potential savings there. Also the program of drydocks changed slightly with some of these events being postponed to 2021. In reality, we are most likely going to selling some of our older vessels in 2020, and therefore, the actual outlay for the maintenance CapEx is going to be most likely, substantially lower than the figure indicated here. So we're going to be much lighter in terms of CapEx requirements next year. The same is true of, that repayments, as we have stated several times, we had this facility with Intesa, which started off at 75,000,000 And we had to reimburse over 5 years.
So $15,000,000 of reimbursements plus interest every year. We finalize reimbursement of this facility in December this year. And thereafter, therefore, our debt reimbursements fall significantly overall in 2019. We had $53,000,000 in the end loan repayments. And for 2020, this should amount to $36,000,000.
Of course, we assume that the balloons, which will, mature the facilities that which will mature next year, we will be financing the balloons. In most cases, these balloons are around 50% to 55% of the vessels value. So we don't foresee any produce refinancing the loans. Going on to the next page, just as a reminder that the fact that on the vessels we pursued sale leasebacks for, we have purchase options and these are very flexible structures and they can be exercised from the 1st exercise date at any point in with 3 months notice already 4 of these, interior accessible in 2019, of all the options, some already in the money and can be exercised, some a theoretic the money. And only one is actually out of the money.
It's the high priority, but it's only slightly out of the money. So a continuing recurve, we won't need too much of an upside to asset values, which have already been rising over the last year or so. For this option to become in the module. Going on to the next page, again, this hasn't changed much from when we We last presented our first half results we have fixed a number of our vessels this year at active rates, the LR1s, in particular, at around $19,000 per day for 1 year, but also there was an MR2 fixed for 3 years at 16,750. These period rates have been rising throughout the year, as a testament to the very strong sentiment surrounding the sector, the very positive outlook, which is shared by both owners and charter as oil majors, leading trading houses.
Today, if we were to fix one of our MR2 echo vessels for 1 year. The rate would be around $17,500 per day maybe even more, maybe even $18,000 per day. So it's a further improvement relative to our last fixture. Goes without saying that those are very profitable rates for us. Our P and L breakeven this year was below $15,000 per day.
Looking at our forward coverage and also comparing that with our historical coverage on the following page, which 12, we see that we touched a bottom in Q2 'nineteen, where we had an average rate of $14,400 per day. For our coverage. And then it starts rising, and also quite rapidly. Throughout 2020 and in 20 20 as a whole, we have around 41 percent of our days available vessel days covered at $16,000 per day. Which is, yeah, which is, of course, a profitable rate for us.
The percentage of our eco fleet has been rising and will continue rising over the next quarters. And the chart at the bottom of this page here doesn't include vessel disposals, only the vessels which we already classified as held for sale, which currently are the Glenda Meredith and the Cielodiguanzus, But as the previously mentioned, in a stronger market next year, we are likely to sell some other of our older vessels. So this percentage of fleet composed of echo vessels is likely to rise faster than what we are showing here in this chart. On the following page, we see we show the fleet evolution, the average number of vessels we control as this has fallen from an average, it will fall from an average of 48 vessels in Q4 'nineteen to around 39 vessels in 2021 as some of our TCNs vessels are redelivered to owners. The average number of vessels in the spot market will have arises significantly from 'eighteen in Q4 'nineteen to $33,100,000 in 2021.
The sensitivity next year for every $1000 per day change in the TC Equipment's earnings is now of $8,400,000. Last time we looked at this, it was 9.5%. So it came down slightly as we fix more vessels on time charter. On the following page, we show how the costs have been coming down quite significantly, both on the, direct operating costs of our vessels and the G And A. In particular, the direct operating costs, we have worked quite hard on, We invested quite a lot of new technology, and we are managing our vessels now through condition based maintenance system, which where we have some modern equipment, which allows us to inspect the parts of, several of the critical parts of our engine and the I mean, exactly when they need to be replaced, instead of relying on, general statistics, And therefore, in some cases, we can delay significantly a replacement of parts.
In some cases, said, we can anticipate problems and avoid an off hire. So it is a big change, and it has led some very significant savings. And in addition, also, we have been working hard to optimize our purchases a renegotiating contracts, standardizing parts that we purchase, so that we can have volume discounts and also, the tank the new building program that we, that we just pursued, we now have a much more homogeneous fleet which means that we can rely on the same type of spare parts for all our vessels. We have 22 vessels, which are built from the same yard group, either in Korea or in Vietnam, and that also helps us to obtain some savings. On the, of course, the younger the young vessels are also cheaper to manage.
And in that respect, the fact that our fleet has been recently renewed has helped us also to to keep this costs under control. On the G And A, the biggest the biggest factor has definitely been the strong U. S. Dollar, but we have also been very careful in trying to obtain savings wherever we could on our G And A and And there are we have reorganized some of our activities to obtain these savings. And so some additional savings in this respect might also be possible next year.
Although, of course, there is the currency effect, which is very important here. So a lot will depend on how the U. S. Dollar will move, we'll move next year whether the savings can be maintained or not in full. Going on to the following page, the ratio of the net financial position total fleet market value has fallen from around 73% at the end of 'eighteen to 65% now as a 30th unit was 66%.
So despite the loss, we recorded in Q3, this ratio improves likely because vessel values, continued rising throughout the quarter. And this is a much more acceptable ratio. But we seek to improve further and it will be one of our priorities going forward to further deleverage our balance sheet to position ourselves in a with a very strong balance sheet for the next cycle. Going on to the next page, we look at we take a closer look at the results, the P and L results, as Paolo previously mentioned, the loss in the 1st 9 months was $41,000,000. Sorry, $32,500,000 relative to $41,000,000 in the 1st 9 months of last year.
But excluding nonrecurring items, the improvement is much more significant. It's minus $15,000,000 relative to minus $44,000,000. And for Q3 2019, excluding non recurring items, we are at around minus $6,000,000 relative to minus 21 in Q3 'eighteen. Also at the EBITDA level, the improvement is also very evident. Even if we excluded the IFRS impact, which is of positive around $26,000,000 for the 1st 9 months of 'eighteen, our EBITDA is, would have amounted to around $43,000,000, which is more than 5 times more than in the same period last year.
So, of course, this was this improvement is mainly attributable to the stronger spot markets. And on Page 17, we take a closer look at the results of our spot vessels as well as the vessels which are fixed on the, on TC. And we see that for the Q3 seen the average result of our spot vessels with an F-six, which is weak but it is much better than in the same period last year when we are average only $8700 per day. Q3 is, of course, usually affected by the maintenance of refineries And this year, this activity was a bit subdued relative to last year as a lot of refineries stop for longer in the spring in anticipation of IMO 2020. So that is one of the reasons which explains the output of Q3 'nineteen relative to Q3 'eighteen.
Overall, for over the 9 months we recorded a result of $12,800 per day on the spot market, which is an improvement of around $22,200 per day. Relative to what was achieved in the 9 months of 2018. So if we include the time charter coverage, which has been very valuable to us throughout these difficult years. We have experienced our blended result for the 9 months of 2019. It's around 13 $1700 per day.
So it's really around $1000 per day lower than our P and L breakeven. So we are not that far from our P and L rate here. Going on to the following page, we take closer look at the results of our MR vessels relative to market benchmarks. As usual, we outperformed the Clarkson's average if we look at all our vessels on the spot market, all our MR vessels on the spot market. If we look at all ERCA vessels, we outperformed significantly the Clarkson's average $15,300 per day was the result in the 1st 9 months of the year of our echo vessel.
So it's also quite interesting to note the outperformance of the echo vessels relative to the conventional which was very significant this year. Going on to the market, I pass it over to Paulo again.
Thank you, Carlos. Let's move first of all to the potential upside the rates and values or asset values. If we take the last peak, and we see that the 1 year time charter and spot and the spot rates today are 47% and 56% below that last cycle fleet. And so we look at values, in that case, when you're building the five year old and the ten year old vessel, When you're building up 33% below the last market peak, The five year old, 44% below, and the ten year old is 58% below. This does not mean that market will automatically go back there.
That means certainly that there is a lot of room for improvement on both earnings and values. As a matter of fact, on the on the rate side, we can see how the 1 year time charter for an Emma non echo is improved up to more than $60,000 a day for a 1 year charter to date, which means you have to add a premium of $1500 for an acreage. So you are talking about 17.5 and we are, I would even say that we are getting close to AP. The demand the demand of the sea food oil is increasing. It's been increasing from the weight over the last close 20 years.
But what is extremely interesting to my mind is the fact that on year 2000, the oil products were playing only by 20 5% of the total moved were oil products. Today, this 25% became 35% And of course, this is going to increase more and more due to the refining capacity, which is coming in force in this year. So we will see as we have another slide later on. We have an extremely surge refining volumes, this is due of, an anticipation of IMO 2020. So when global, refinery throughput is expected to stay very elevated over the 2020 and this final part of 2019.
Here, what I would say, we have record growth in refining capacity in 2019. Because annual 2019 is a forecast to rise by 2.7 1,000,000 barrels per day. And if we take materials between 'nineteen and 'twenty one, is going to increase by 5,100,000 barrels per day. Now, I remember that oil consumption reward is around $100,000,000 per day. So you have a 5,000,000, a 5% decrease on VB filing side.
This is a visceral matter of 3 years. The landscape of refineries changing, of course, and this is dragged demand because here, again, we are moving away consumption from production of our products, European refi areas, as you know, extremely old, and we've been exclusion a few of these big investments recently. We're probably going to be extremely sacrificed by the fact that They produce a lot of high sulfur steel. The CapEx And the price today is good enough to improve reserves and development of new oil, either on the sell side, even if it's that's a reason to this slowing down and also on the offshore side. And Brazil is a little bit approved already.
We have a very rapid growth of U. S. Crude export, which is continuing. I remember that the U. S.
Crude export, they do not necessarily because we always talk about have, but there are big players like Korea, the fans that they are importing, U. S. Crude today. I'm a 2020 game changer. I think this is something that you know very well because we have been talking about this I'm not going to say 20 for the last 5 years, so it's something quite normal.
You know that we have basically changed our fuels and this implies for those ones who want to be scrubber fitted to go for very extensive, retrofitting. So decreasing mostly, it's been so decreasing with supply. And this will of course create a better strength in the market. And we see a lot of potential for floating storage because will be a moment where all these volumes have to go somewhere talking about the high sulfur As a matter of fact, there are some banker hubs minor ones, which may have a difficulty to provide the to provide the high sulfur fuel because they are cleaning by all their stores, and they are more heading to the 0 fab instead of going of keeping the 3.5. One thing which is happening in this, I mean, I just read it yesterday, but it's quite interesting.
It is, U. S. Refinery are buying high sulfur fuel from Russia. As a feedstock for their cookers, we wait to make gasoline and middle distillates out of it. So ice sulfur fuel is becoming also something new, but it was not before and could end up in, as in refineries for totally different reasons.
So it's not going to be only the utilities that are going to look to it, but also the sophisticated refineries. We have clear sales of brokers opinion, I'll leave it to you to read it, but they are all positive because it cannot be different, it's right. The fleet group is growing, there is a very orders that are very reluctant to place orders for 2 reasons. 1, they want to see the market where it goes. But the second one, which I think is more important, they and we are because we do research, extremely worried of the future technology because as you know, 2030 is 12 years far away and even 2050 is 30 years far away.
So it's very easy that you do something building a ship today It must be extremely careful on what fuel is going to win in the future because you can never a modern series getting obsolete very fast. We have delays in scrapping, which they are going to happen because the older ships are getting more and more non economics. So the high burners are going to be outplaced from the market. And even Tawke taking the new building, producing values NOCIBA is a big advantage still to stay on second hand, more than building a new ship in consideration what I said before. I think in the revenue shift, you have to see what sort of engine you have to put on hold.
The market is clearly expected to be tighter for many elements, including the fact that many ships are going to retrofitters. Happens. And also, I think we have finished our presentation.
There's only the last slide on the NAV. Yes. So we like to highlight there that our NAV after bottoming in the December 2018 started moving up. It moved up between 2018 March 2019. Of course, after the capital increase, which was up around $50,000,000.
It moved up more markedly between March and and June to $285,000,000. And then it's moved, however, up again, to almost $300,000,000 in September. And I think for the first quarter, in a long time, we have also on the NAB per share, an improvement, slight improvement the NAV per share went from $0.23 to $0.24. Our share price has also moved up quite significantly here as the 30th September. It was still $10 And, and I calculated this, this morning.
So air price this morning was around 0.120.116 per share, which, in dollar terms, it's around 0.1, a bit less than 0.1 and the discount to NAV was around 45%. But since then, I believe the share price has moved up quite a lot today. So this discount is even smaller, but still very significant, still very significant. And we believe and justified given the fundamentals of the company and of the sector, and we are very positive also with regards to the future evolution of the share price of the And I remember that in the past, we have also traded at a premium to NAV. So we don't see why that should not happen again.
I think that the discount was maybe justified at the beginning of last year where there were concerns about the potential capital increase, diluted capital increase today with the lighter debt and cap repayments going forward, the period contracts that we have in place at increasing rates throughout the next year in 2021 and the prospects for the spot markets, which unanimously, I would say, positive, both financial analysts, as well as charters, oil majors and owners that seem to be very positive and the period rates at which we are fixing our vessels reflected. We believe that this discount is totally unjustified and we'll definitely contract And of course, the NAB, we should continue rising also over the next quarter. So I'd say that's all. Thank you.
Excuse me. This is the Chorus Call conference operator. We will now begin the question and answer you. First question, sir, is from Luigi Dentalis, excuse me, from Equitissen. Please go ahead.
Yes. Good afternoon to everybody. I have three questions. The first one, we have seen recently some put back on crude tankers, the LCC spot rates. Do you expect some correction from this very high level also for clean and tankers?
And the second question, where do you expect spot rates to stabilize after this important spike of October November, where you are quarter to date in terms of spot rates. And final question on the positioning of your fleet trading route, where are positioning now your vessels on spot rates? Thank you.
As I said before, the reason why the market is what it is today. It's more due to the blacklisting of the Costco fleet than of IMO 2020, because the effects of IMO 2020, we're starting happening now The decreasing of a Costco fleet and that's 44 the LCCs are being put out of the market business. This type of the crude oil market a lot starting from the VLs and then went down to Suezmax and Aframax. As it does, we are from Maxnard segment, many ARAPUs who are clean vessels and our Aframax size moved from the clean trade to the dirty one. And this is not pulling also NR1s, so created a tightening also in the clean market.
But this is all due to the fact that a big piece of the fleet of VLCC is free, but not only VLCCs because Kosco has more different size of VISO is being taken out of the market, even if the blacklisting was hitting 1 single company, it was Costco, Costco, that, yeah, and another one. So but the traders were so afraid to get involved in his sanctions that we just refused to touch the all three altogether. This is why the market drives now. In all this, IMO 2020 is moving in. So we start having a more middle distillate move, but it's only on the beginning.
So The rights of the VL rates, VLCCs rate has been by far stronger with what happened on the green vessels. So the correction on the rear 6 week and will happen and probably will be very it will be, I would say, irrelevant at the end of the day to a clean slate. Well, these things have to happen. On top of that demand, we improved because as we say, all this middle distillate has to be moved. Now, if we want to set a rate where, when will be the market in the future bank, the paper market is talking more than $30,000 a day, that is the paper market.
So it's not the real has not made 3. So it is a different thing. I hope that this is, you know, in Southern Health. Yes, thank you.
The next question is from Matteo Bonnetzoni of Kepler Cheuvreux. Please go ahead.
Good afternoon. I have a question as regards the fleet rejuvenation or enlargement going forward. So basically you have reduced the net debt to fit market value to around 65%. And in 2020, considering that the CapEx will be will be low or below depreciation, you probably are going to go much below this level. So what is your, let's say, meet the term strategy in some years down the road.
So in other words, should we think that at some point, you start to invest the EUR 40,000,000 to EUR 50,000,000 per year. That is what you needed to rejuvenate your fleet and to keep the fleet stable, or are you considering at some point? And, if and when to, or to go ahead with another, major, explain, so what is your view or approach on this point? Thanks.
Yes, Matteo. No, our thank you for the question. Our number one priority now, as we mentioned, in several occasions is to continue deleveraging our balance sheet. I mean, we went through some difficult years now. We had to pursue a number of sale leaseback transactions, which increased our overall indebtedness So we want to, 1st of all, strengthen our balance sheet because in shipping, the important thing is to be in a position to be able to invest aggressively when the market when the time is right.
So if we cannot just pursue a strategy of constant renewal of the feet, we need also to try to time the cycle and be able to then move in more aggressively when the values arise, when the prospects for recovery. I would say that our recent renewal program was very well timed. It may be We received some vessels a bit early and we were a bit caught out with regards to the sale of our older vessels, which we've should have sold earlier. And we were a bit stuck with them at a certain point because the liquidity for these vessels fell quite significantly. And it was very hard to do outright sales.
And that's why we had to pursue these sale leaseback transactions. To generate the liquidity we needed to finalize our new building program. So our number one priority will now be to sell some of these older vessels, which we would have sought to sell before, and we couldn't. So when the at, hopefully, higher values, we have a stronger market the next year. And then, at the right time, we have a stronger balance sheet when we see a window, we will also consider a new acquisition opportunities, but we cannot really tell you a figure now of how much we will be investing, it will be based on opportunities that will arise in the future.
We're about to close the Q and Mr. Demiko, there are no questions registered, sir.
Hello?
Would you like to make some closing remarks?
Now just to thank everybody for being with us today. And I hope that off call will be even more on a more positive story. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephone.