Good afternoon, this is the conference operator. Welcome and thank you for joining the d'Amico International Shipping second quarter and first half of 2025 results web call. All participants are in listen-only mode , and after the presentation, there will be a Q&A session. At this time, I would like to turn the conference over to Mr. Federico Rosen, CFO. Please go ahead, sir.
Thank you very much. Good afternoon, everyone, and welcome to the d'Amico International Shipping earnings call. As always, I'll skip the executive summary and I'll go directly to our fleet snapshot. As you can see, we had 32 vessels at the end of June 2025, of which 29 owned and three bareboat chartered. The situation is a little bit different compared to what we had at the end of Q1. As we exercised, we took delivery, actually, of one of the time chartering vessels, the iLeader, that we exercised our option on. As you may recall, we exercised our time charter options, our purchase options on two time charter vessels, and they were delivered to us in the first half of the year, the iNavigator and the iLeader. We increased our own fleet. This situation will change a little bit also in the next coming months.
As you know, we agreed to sell two Glenda vessels, the Glenda Melody and the Glenda Melissa. The first one was already delivered to the buyers on the 13th of July, while the other one, the Glenda Melissa, will be delivered to the buyers by the 21st of December. Overall, at the same time, one more thing, we exercised a purchase option on one of our bareboat charter vessels, the Charlottes of Houston, which will be delivered to us in September. At the end of the year, we should have a total fleet of 30 ships. Still a young fleet, 9.6 years average age compared to an industry average of 14 years for MRs and 15.7 for LR1s. 81.3% of the fleet was IMO-classed. We're also increasing the percentage of our ECO-classed vessels, which is now 84% of our fleet, against an industry average of 38%.
Moving to the next slide, on the very quiet situation on the bank debt front, we repaid $13.4 million in H1 2025 scheduled loan repayments. We're expecting to repay $12.5 million in the second half of the year. The $5 million, the additional $5 million that you see over there in the rest of the year 2025 bar are related to the debt on one of the Glenda vessels that we obviously repaid before the sale of the vessel. Going forward, in 2026 and 2027, we have scheduled repayments of slightly less than $25 million. Very low level of debt coming to maturity in 2026 of only $3.2 million. The situation is, of course, a little bit different in 2027 as we're planning to take delivery of the four LR1s that we ordered in April 2024, which are expected to be delivered in the second half of 2027.
In the bar that you see over there, we're planning to raise debt on these vessels for $86.8 million. Interesting graph, as always, the one that we're showing on the right. Our daily bank loan repayment on our own vessels dropped from $6,147 in 2019 to only $2,500 in 2025. This is obviously the result of a big deleveraging plan that we've been implementing in the last years. Moving to the next slide. Here, as always, we provide a rough overview of how Q3 looks right now, based on everything that we've been fixing so far, both on the time-charter market and on the spot market. Looking at Q3, we fixed 54% of our days at $23,600 a day in time charter. At the same time, 25% of the days on the spot are fixed at $25,287 per day.
This entails a total blended WTCE of $24,139 a day for 79% of our Q3 days. Realistically, it looks like we're going to have another profitable quarter in Q3. On the right-hand side, we show also sensitivity on the free days, on the days that haven't been fixed yet. Should we make $18,000 a day on those days, then our blended WTCE would be $22,878. Should we make $21,000 a day, then our total blended WTCE would be $23,500 a day. Should we make $24,000 a day, then our total daily blended WTCE would be above $24,000 a day. Next slide, estimated fleet evolution. I briefly mentioned this in the previous slide on the fleet snapshot. We're expecting to have 30 ships by the end of 2025, largely owned fleet.
The fleet is expected to increase again a little bit in 2027 as we are expecting to take delivery of four ships, four newbuilding ships in the second half of the year. Potential upside to earnings, this is our sensitivity for every $1,000 a day that we make more or less on the spot market. Sensitivity right now stands at $1.9 million for every $1,000 a day for 2025, $8.3 million for 2026, and $10.2 million for 2027. Looking at the bottom graphs on the left, we show, as always, what our net result would be should we break even for the rest of the days of 2025. Should we make just a break even, our net result for this year would be $69 million. Based on what we have fixed so far, we would make $90.2 million in 2026.
On the right, you see also sensitivity relative to this number. If instead of making a break even, we made $18,000 a day on our free days, then our net result for this year would rise to $74.7 million. Should we make $21,000 a day on our free days, our net result would rise to above $80 million. Should we make $24,000 a day on our free days, then our net result would be of approximately $86 million. On the cost side, we continue to see some inflationary pressure on the OpEx, especially on insurance and manning costs. Although the increasing trend is decreasing relative to Q1, this is a figure that should be really looked at on an annual basis. We don't think that this figure will increase too much relative to this level going to the next to the following months of the year.
On the G&A front, we also had higher G&As compared to the same period of last year. This is mainly due to the variable component of personal cost, which is really the reflection of some very positive years that we had in DIS so far. Coming to the net financial position, we had a net financial position at the end of June 2025 of $144.3 million compared to $121 million that we had at the end of 2024. Of course, you have to consider that in the first six months of the year, we distributed dividends for $35 million in May 2025. We also exercised two purchase options, as I mentioned before, on our time chartering vessels, on the iNavigator and the iLeader, for a total disbursement of $69.3 million. A very strong net financial position.
We had a cash and cash equivalent at the end of the first semester of the year of $124.1 million. The ratio between our net financial position, excluding the IFRS 16, which is now a very limited amount, to a fleet market value was of 13% at the end of June 2025. We always compare this figure with the historical ratios that we had. This figure was 72.9% at the end of 2018. This is the result of a big deleveraging plan that we have been implementing together with strong cash flow generation that we achieved in the last years. Going to the income statement results, very positive first half of the year, $38.5 million net profit, very profitable second quarter of the year, $19.6 million, even better than the first quarter of the year.
These results are a bit uncomparable to the same periods of 2024, in which there was a totally different market, a much higher market. However, the market, as we will see in the next slide, is still extremely strong and extremely profitable. Excluding non-recurring items from H1 2025 and Q2 2025, our net result would have been $42.8 million in H1 2025 and $23.5 million in Q2 2025. The main non-recurring item was related to an impairment loss that we booked in the second quarter of the year, which is related to the sale of these two Glenda vessels that I mentioned before, which were obviously reclassified in our balance sheet as assets for sale. Their carrying amounts were adjusted to reflect the agreed sale price, which was a little bit lower than their book values.
Considering that these ships were ordered many, many years ago at a peak of the market, that's why we had to book this loss, this small loss on two ships in the second quarter of the year. Going to the next slide, key operating measures. As I mentioned before, strong spot market in Q2 2025. We achieved a daily average of almost $24,500 a day. In the quarter, we also had a contract coverage, a time-charter contract coverage of slightly less than 51% at a daily average of $23,365, which gave us a total blended TCE for the quarter of almost $24,000 a day. Looking at H1, we had a time-charter coverage of 45.2% at $23,900 a day. We achieved a daily spot TCE of $22,655, and we generated a total daily blended TCE, so spot plus time-charter, of $23,214 a day. Of course, this figure, as I mentioned before, is lower than in the same period of last year, but still extremely profitable. I pass it on to Carlos.
Thank you, Federico. Perfect. We continue now with the market overview and some strategic considerations. On the CapEx commitments, this is the usual slide we show, just summarizing a few key points. We have been quite active with investments over the last few years. Fortunately, we could do so at very attractive prices because of the purchase options we had. We have invested almost $264 million since 2022, mostly in relation to the exercise of six options on modern Japanese MR2 vessels, which we had on time charter in from the delivery of the yacht, but also for the 50% stake we bought on a JV we had with Glenco, which controlled four MR2 vessels. This figure includes also the 20% we paid, which represents the first installment on the four LR1 vessels we ordered at Yangzijang for delivery in 2027.
Therefore, in relation to these new buildings, the overall investment is $235 million, of which $191 million still to be paid to the yachts in the coming years, mostly in 2027. On the purchase option on the lease vessels, we do not have many news here for you. We still have these two vessels, which can be exercised with three months' notice and which are well in the money. We, however, have refrained from exercising these options because they are fixed-rate deals at very attractive implicit costs of financing. We prefer for now, given we are still in a very high interest rate environment, delaying the exercise of these options. If and when interest rates do start coming down, we are likely to be exercising these options.
For the ETC and vessels, the options that we exercise, the difference between the market value and the book value as of 30th of June is still very significant, although slightly lower than this delta at the time in which we exercised the options. We do have a good level of coverage, especially for the second half of the year. We had planned to increase this coverage and we executed on this plan. We obtained some good contracts which allow us to have a good blended rate, a very profitable rate of around $23.6, $23.7 on these contracts for the second half of the year. We are a bit more exposed to the spot market in 2026. We will be gradually increasing the coverage also for 2026.
Most of this additional coverage is likely to come towards the end of the year as we renew some contracts we have, which will be terminating in Q4. We might also find some opportunities to take coverage before then. With the disposals of the Glenda vessels Federico referred to, the percentage of our ECO fleet will rise to around 90% by the end of this year. We are controlling an increasingly competitive fleet. The markets are still at historically high levels, both on the freight front, TC front, and on the asset values front, although these have softened somewhat over the last few months. There has been a stabilization, and actually, I would say on the spot market, an improving trend over the last few months, with the market now at this very moment at quite attractive levels.
The Ukrainian war continues being a major factor affecting the market for the reasons that we have discussed already several times before, so I will not dwell too much on this slide. This is another slide which we usually present and we have modified slightly. We have included on the upper right-hand side here the total ton days for both east to west and west to east CPP. What we see here, what we are trying to show, is how the disruptions in the Bab al-Mandeb Strait were initially very positive for the market. We show the red line there, which is the average CPP ton days on these routes in 2023. The yellow line, horizontal line, shows the average for the first nine months of 2024.
We see there is this big jump relative to the levels in 2023, which is associated with the longer distances which the vessels had to sail through Cape of Good Hope rather than transiting through Suez. However, in the last quarter of 2024, we have seen a big drop in these ton days to a level which was actually lower than what we had seen in 2023. Already in the last quarter of 2024, I would claim that the disruptions associated with Suez were not positive for the market. They might have actually been a negative. This became even more so in the first six months of this year, where you see the gray horizontal line, which is even lower than the green line and much lower than the red line. Why is that? Initially, refining margins were extremely high in the first half, in particular, of last year.
Therefore, these arbitrages were wide open, and it was profitable to transport these refined products from the Middle East to Europe, even when accounting for the higher transportation costs associated with going the longer route through Cape of Good Hope. However, as refining margins came down and as refined stocks in Europe increased, these arbitrages closed. Therefore, this additional cost associated with sailing the longer distance meant that products stayed more regionally rather than sailing this longer route. It had a negative ton mile effect on the market. One positive aspect to highlight here is that at this very moment, as we will see later in the presentation, this arbitrage is again open, and this should help the market going forward.
Another important point to make in relation to this slide, which is not immediately apparent here, is that although, for example, in July and August, there were important volumes transported, they were mostly transported, or mostly, or a large portion was transported on a non-coated tank. Here we are looking at CPP ton days, but not necessarily at the vessels transporting this CPP. If we were to look only at the product tanker vessels transporting this CPP, then we would have seen already a decline in the summer months last year, which explained why the market started correcting in the summer months last year and then continued correcting further in Q4. Going on to the following slide here, we do see the proportion transported by vessels which are uncoated of the CPP trade, long-haul CPP trade.
We see here that there was this big increase over the summer to around 13%, then it fell, and now it's again at a high level, but much lower than it was last summer. Unfortunately, there are still Suez Maxis and VLCCs, in particular Suez Maxis, transporting refined products, CPP products on these east-to-west routes. This year, I would say, it is mostly new buildings because there is an increase in the number of Suez Maxis new buildings being delivered this year. For them, it is, of course, a very attractive proposition to be able to transport these clean petroleum products on their maiden voyages. If we look at the economics of cleaning the dirty Suez Maxis today, it is actually not particularly attractive relative to transporting the same cargoes on LR2 vessels.
There are these new buildings being delivered, and therefore there is this cannibalization which is continuing, although to a lesser extent than last year. Here we see that the refining margins have been rising, in particular for diesel. We see in jet fuel on the left-hand side where we have seen this spike over the last few months. On the right-hand side, we see also U.S. Gulf Coast refining margins, blended refining margins, which are also very attractive. They have driven an increase in refined volumes in the U.S. Gulf Coast. Refinery utilization currently is at around 96%, almost 97% there. Therefore, we have seen an improvement very recently in rates out of that region.
A lot of the cargoes were moving from the U.S. Gulf to Europe, with some also from the U.S. Gulf to Brazil, which is because of the sanctions that we will look at more closely later, has been importing less from Russia as had been anticipated. Going on to the following slide, here we see also, this is a new slide, we see that gas oil stocks in ARA, in the ARA region, and also jet fuel stocks were very high at the beginning of the year, and that was dampening these arbitrages into Europe that I was referring to. They have since fallen markedly and are now well below where they were last year and also below where they were in 2023, both for gas oil and for jet fuel. That is what is driving this positive arbitrage, which we see on the right-hand graph at the bottom, where the more negative the line is, the wider the arbitrage is.
Here, this is the discount of buying gas oil east relative to west. This discount is at quite a high level, implying a positive arbitrage to transport this gas oil to Europe. That, coupled with the continued disruption in the Suez Canal, which actually got more pronounced recently because of the two vessels which were sunk recently by the Houthis whilst transiting about the Bab al-Mandeb Strait, could contribute to an important strengthening in the market going forward. Of course, if these arbitrages stay open for long enough, and if these additional volumes are not transported mostly on non-coated tankers, then I think this could be very positive for the market. The sanctions are a very important factor and an increasingly important factor.
We now have 500 vessels, almost 600 vessels which are sanctioned. There has been a big increase in the number of sanctioned vessels in the recent package announced by the EU. Sanctioned vessels now represent more than 10% of the deadweight tonnage of all tankers. EU sanctions are possibly not as effective at halting trade altogether on vessels as the U.S. sanctions. Nonetheless, they do tend to lead to a reduction in the productivity of the affected vessels. Many operators and importers cannot charter these vessels sanctioned by the EU because they have interest in the EU. Therefore, we do expect that these additional sanctions will have an important impact in the market. The first vessel sanctioned, it was easier for them to find alternative employment in trades such as those linked to Iran or Venezuela. There is only so much tonnage these trades can absorb.
Therefore, as the number of sanctioned vessels increases, these sanctions become more effective at hampering the exports, the Russian exports, and also they tend to lead to a stronger tightening effect on the supply-demand balance for the market. Going on to the following slide, there is not much new here in relation to the U.S. port fees on Chinese vessels. The positive side, as we will see later, is that as intended, these fees are already dampening interest for new builds in China. On the refining throughputs and oil demand growth this year, the projections are not spectacular. Refining throughputs were actually quite depressed in the beginning of the year. Now, finally, in July, they are expected to be higher than they were last year. Overall, for the year, the increase is expected to be only around 500,000 barrels per day.
This low figure masks a more pronounced increase in non-OECD crude volumes runs of 700,000 barrels per day and a decline in OECD runs of 200,000 barrels per day. Oil supply is abundant. It was expected to exceed the demand growth at the beginning of the year, where it was not anticipated that OPEC would return volumes to the market so rapidly. Its decision to unwind cuts at an accelerated pace means that oil supply growth this year is going to be even stronger and well below the demand growth we saw forecasted in the previous slide. There is a strong chance that as we move into the second half of the year and into Q4 in particular, the market will be oversupplied and we could see the forward oil price curve move into contango.
It is currently backward dated still, but there is this possibility that it might move into contango, which creates some positive short-term dynamics for the market. Not particularly healthy dynamics, but nonetheless positive dynamics short- term. Overall, refined product stocks are well below the five-year averages, and we see here that demand growth is driven mostly by naphtha and jet fuel demand increase, with a good contribution also of gasoline. On the naphtha front, here we see that a lot of this naphtha is ending up in China, where the petrochemical industry is expanding fast. In addition, they have placed tariffs on imports of U.S. LPG, which was an important supplier of LPG to petrochemical plants in China. Naphtha is a competing feedstock, and therefore it is benefiting from these tariffs. We see this sharp increase in imports over the course of the first six months of this year.
This slide highlights how, as we had anticipated, the positive dynamics for the crude tanker sector has meant that a lot of the LR2s which were trading clean have dirtied up. As of January 2024, or rather July 2024, we had 63% of the fleet which was trading clean. As of July this year, it's 57%. There is a 6% decline in the fleet which is trading clean, which is quite an important reduction, which has supported the clean tanker markets. This is a trend that we expect to continue going forward. Despite the deliveries of LR2s over the course of this year, we actually saw a contraction in the number of LR2s trading clean because of this switch into dirty trades. There are good fundamentals for the crude markets going forward, which should ensure that this trend continues in the coming months.
Here we see both new refineries coming on stream in the Middle East and Asia, and also refinery closures in the OECD, in particular in the Americas and in Europe. The closures this year were even higher than had been anticipated, 1 million barrels per day. It is very difficult for refineries, some of them very old, that are located in these regions to compete with the new refineries. They are also subjected to much tougher environmental regulations, in particular the refineries in California, in the U.S., and those in Europe. That is driving these refinery closures and the decline in refinery utilizations in certain regions, with these volumes being displaced by those from the newer, more competitive refineries being built. The fleet continues aging.
If we look at the MRs and LR1s on the left, at the end of 2024, we had the order book, which was pretty much aligned with the proportion of the fleet which had more than 20 years after the substantial orders that had been placed in 2023 and 2024. The decline in new build ordering this year and the fleet age profile meant that the fleet continued aging quite rapidly. We have 18.3% of this fleet, which is more than 20 years, and only 15.1%, which is accounted for by, which represents the order book. There is this delta of 3.2%, which is, I think, a very positive indicator for the market going forward again, especially if interest in new buildings does not resume soon.
We see at the bottom that we have a very high proportion of the fleet which reaches 25 years of age from 2028, and which therefore is very likely to be demolished. This is both if we only look at MRs and LR1s, but also if we look across all tankers. Deliveries are rather low in the first nine months of this year, with an acceleration expected in Q4 and then next year. That, of course, is not a positive. We will have one or two years of quite fast deliveries ahead of us, but there is ample scope for demolition to compensate this. Here we see that there were only 18 vessels, MRs and LR1s, ordered in the first six months of the year. If we analyze this, it is 36, which would still be amongst the lowest values since 2007. It was only lower in 2009 and 2016.
Fleet growth, yes, it will be accelerating in 2026, but potentially still manageable. Here we are assuming quite limited demolitions, and we are not taking into account the effects of this increasing number of vessels which are being sanctioned and which is reducing the available fleet for compliant trades. Finally, this slide here where we look at the NAV discount of our fleet, which is still very big, not as big as it was in December, but still a 50% discount to NAV. Our NAV has declined slightly since December, but it's still close to $1 billion. I think that is it for now, and I pass it over for you to the Q&A.
Thank you. This is the conference operator. We will now begin the question- and-a nswer session. To enter the Q4 questions, please click on the Q&A icon on the left side of your screen. When announced, please click continue on the pop-up window. If you are connected in audio -only, please press star and one on your telephone. The first question is from Massimo Bonisoli of EQUITA. Please go ahead.
Good afternoon, Carlos and Federico. Thank you for taking my questions. Two questions. One, in your slide on page 26, you showed almost 600 vessels were sanctioned, representing about 10% of total tonnage. You already briefly discussed it, but I would like to hear your thoughts on the effectiveness of the European Union and U.S. sanction on the fleet transporting crude oil from countries under sanctions. The dark fleet in general, it seems that the fleet owners are quite able to escape sanctions somewhat. What is the real underlying effectiveness of this sanction? The second question, more for Federico, just if you can give us some guidance or indication for the depreciation cost in second half and also for financial cost in the second half. Thank you.
Thank you, Massimo, for the questions. I believe that in the past, the first sanctions were not particularly effective, but they are likely to become more effective going forward because there are less trades available where there are players willing to continue working with these sanctioned vessels. Of course, there are some private companies in China, in the Santee Port refineries in the Shandong province, which continued receiving sanctioned vessels. The first sanctions meant that vessels were slightly more limited at targeted vessels in how they could trade. They could not maybe triangulate as much as they used to. When they were not transporting sanctioned cargoes, Russian cargoes, or sanctioned cargoes from Venezuela or from Iran, they were ballasting, basically. There is only so much volumes that can be absorbed by these trades. As the number of sanctioned vessels grows, it becomes increasingly difficult for them to find employment opportunities.
I think that these latest sanctions will have a bigger impact than the first sanctions had. In addition, what we have not commented on is the fact that there is also, from January next year, sanctions placed by the EU on products refined from Russian crude. That will also lead to a change in trade flows. It's hard to predict how that will affect the market, but it will affect the market, probably creating other inefficiencies which potentially could be positive for the market. There is the possibility that the U.S. also might decide to impose even tougher sanctions on Russia. There has been recently a change in posture by Trump. Of course, he's changing posture all the time, so it's very hard to read it.
Most recently, he has changed posture in relation to Putin, and he has shortened this deadline for a peace agreement to be reached in Ukraine to 10 days. That was announced a few days ago. It is shortly coming, this deadline. We will see what are the implications of a peace agreement not having been reached by that deadline very soon, whether there will only be a further extension or whether there will be some initiatives to penalize Russia. If there are, then that could also have a major impact in the market. Let's see how that plays out. I think that the patience of everyone with this situation is ending. It is also a very costly war, also for the countries backing Ukraine. Therefore, the willingness to take even tougher action against Russia to try and bring them to the negotiating table is increasing. Federico, I pass it over to you.
Yeah, going to my question. Hi, Massimo. I mean, in terms of the remainder of the year, I wouldn't expect appreciation to be in the second half of the year and also financial cost very different than what we had in H1. I would assume a pretty stable figure in H2. Potentially, both figures could decrease in 2026 and increase again potentially in 2027 when we will get the delivery of the first ships. To answer your question, in H2 2025, I would expect a very stable situation compared to the first half of the year.
Very clear. Thank you very much.
Thank you, Massimo.
The next question is from Gian Marco Gadini of Kepler Cheuvreux.
Hi, Ron. Thank you for taking my question. Just a quick one on the cost side, on the operating cost, particularly given that we saw that they were pretty stable year- on- year. I was wondering whether there were some effects derived from the denomination of such costs. Euro denominated costs that translated in dollars should be higher. I was wondering whether there are other moving parts that were not clear. Thanks.
Sure. Hi. Hi again. It is right what you're saying. Even though on our cost structure, there is a higher impact on our G&As because we have several G&As, a big portion of our G&As in euros, given the fact that we have people and offices in Europe. The large majority of our OpEx costs are in dollars, even though there's certainly a portion that is also in euro. The reason for the increase relative to the previous years is really inflationary pressures that we saw on many, in particular, on many costs, so salaries of crew members and on insurance, a part of which is also related to the fact that vessel values went high. Vessel values have increased compared to a few years ago. Of course, you pay a higher premium relative to a higher valuation of your vessel. We had also some inflationary pressure on some of the spare parts that we had on the technical cost side. The main driver is certainly the man-in cost and the insurance cost. Consider also that man-in is a big proportion of the total OpEx cost that we have. It's probably almost half of the total OpEx cost that we have.
Here, thanks.
Hope that answers your question.
Yeah, that's great. Fine. Just a quick follow-up. We can expect this level of cost to remain also throughout the rest of the year.
Look, it's not great, unfortunately, to analyze daily OpEx cxost or OpEx cost in general on a quarterly basis because there's always a big timing effect, especially when it comes to technical costs. They should be really looked at on an annual basis. On an annual basis, we don't expect daily OpEx at the moment to be much higher compared to what we reported in H1. We expect here a pretty stable situation.
All right, thanks.
As a reminder, if you wish to register for questions, please click on the Q&A icon on the left side of your screen or press star and one on your telephone. For any further questions, please click on the Q&A icon or press star and one on your telephone. Gentlemen, there are no more questions registered at this time.
Thank you very much. I wish a great summer for everyone and hopefully also with a good market for us. I think that there's a good chance that it will be the case given where we stand right now. See you soon after the break, for I hope most of you will be able to enjoy.
Thank you. Bye bye.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.