Hello, and welcome to NORDEN A/S Q4 report for 2021. For the first part of this call, all participants will be in listening only mode, and afterwards there will be a question and answer session. Today, I am pleased to present CEO Jan Rindbo and CFO Martin Badsted. Please go ahead.
Thank you very much, and welcome to the presentation of NORDEN's full year results for 2021. Thank you for dialing in or following the presentation online. My name is Jan Rindbo, and I'm the CEO of NORDEN. Together with our CFO, Martin Badsted, we will today be presenting our full year results. You can follow the presented slides on screen or by downloading the presentation from our website. We will refer to the slide numbers for those of you dialing in. Turning to slide two, you can see today's agenda outlined. We will start with presenting the main results of 2021 on a group level. We will then go through results and highlights for each individual business unit. Following this, we will comment on the market outlook for dry cargo and tankers.
Finally, we will present our full year guidance and summarize the year before we open up for the usual Q&A session. Please turn to slide four. 2021 was a remarkable year for NORDEN. During a year where we celebrated our 150-year anniversary, we also achieved the best result for NORDEN in 11 years, with a profit of $205 million. NORDEN has delivered sustained profits over the past five years, while at the same time growing our business at an average of 16% per year. This is a great testament to our organization, business model, and performance over the period in volatile markets that only grow 2%-4% per year.
It is a good example of NORDEN's risk reward profile, where we are capable of capturing upside value in rising markets while protecting against downside in weak markets. We are pleased to share this great result with NORDEN's shareholders with a proposed dividend of DKK 18 per share for 2021, representing 54% of the adjusted result. In addition, NORDEN will initiate a new share buyback program of up to $30 million. Based on good positioning and active trading in a continued strong and volatile dry cargo market, NORDEN expects profit for the year to improve further to a range of $210 million-$280 million, including currently known vessel sales gains of $37 million. Turning to slide number six, we will take a closer look at our business units.
Asset Management generated a profit of $5 million, but created significant value that is not directly measured in this result. The portfolio of owned and leased vessels increased in value to $1.3 billion at the end of the year. Net asset value increased to DKK 262 per share. The business unit actively invested in cheap tonnage during 2020 and early 2021, and as cover contracts have been gradually renewed during last year, this will benefit results significantly from 2022. This comes on top of significant upside value on NORDEN's large number of extension and purchase options, which I will elaborate on now. Please turn to slide seven. NORDEN has a large number of purchase and period extension options on our leased vessel portfolio, and these are becoming increasingly attractive as market rates move above the strike prices.
At the end of 2021, NORDEN had more than 65,000 period option days, which corresponds to 180 full-year extension periods. We had 71 purchase options with a majority on dry cargo vessels. NORDEN has 37 extension options on dry cargo vessels and nine extension options on tankers that are callable before the end of 2024. This optionality adds to our risk-reward profile as an asset-light business that can operate more resiliently in volatile markets, having significant upside potential in both markets. Turn to slide eight, please. Dry Operator generated an outstanding result of $230 million and actively positioned itself to capitalize on volatile and rising dry cargo rates. Expanding vessel capacity early in the year enabled Dry Operator to profit on the large spot rate increases during the second half of the year.
Measured per vessel day, the result corresponds to a margin of over $1,900 per day. It is important to emphasize here that the extraordinary result is not purely market-driven. It is also a result of quick and decisive portfolio adjustments combined with strong operational performance across regions and vessel types. Turn to slide number nine, please. Tanker Operator generated a loss of $30 million for the year operating in very poor markets. The business unit continued to reduce its exposure and optimize its cover contracts while preparing for future rate improvements.
The business unit has focused on creating an optimal vessel portfolio for 2022, as we do believe the market bottomed out last year. This was mainly done through time charter contracts with one-year extension options, providing good upside potential in the second half of 2022 and 2023, when we expect better market conditions. At this point, I will hand over to Martin, who will provide an overview of our two consolidated business units, as well as an update on the market outlook. Turn to slide number 11, please.
Thank you again. From Q1 onwards, we will be reporting based on our two new business units which were announced late last year. Assets & Logistics focuses on NORDEN's investments and includes our Asset Management business, as well as the newly established Logistics and Climate Solutions team. This new team will provide our customers with an integrated service, combining port logistics with ocean freight as a new business area and growth opportunity for NORDEN . Our other business unit, Freight Services & Trading, is our asset-light business unit, which groups NORDEN 's short-term freight activities previously organized in Dry Operator and Tanker Operator. By consolidating our freight service teams across our two primary markets, NORDEN further strengthens its scalable platform. Freight Services & Trading would have generated $199 million in profit, which corresponds to the combined results for the Dry Operator and Tanker Operator during 2021.
We expect this simplified business unit structure will further enhance NORDEN's performance and enable NORDEN to continue its path of profitable growth to the benefit of our shareholders. Turn to slide 12, please. At the end of 2021, the estimated market value of NORDEN's combined portfolio of owned and leased vessels amounted to $1.3 billion. When adjusting for cash, debt, and other balance sheet items, this results in a net asset value per share of DKK 262. On top of this comes the long-term value generation from the combined operators, now integrated in Freight Services and Trading.
When looking at the net results over the last 12 months, this amounted to $199 million, and annualized earnings since 2019 amounted to $101 million, and an average net profit per vessel day of $638. This means our asset-light business is making approximately $100 million in annual profit historically, which would be equivalent to DKK 100 per share when applying an earnings multiple of six. Turn to slide 15, please, for our market outlook. In dry cargo, asset prices and period rates are expected to remain strong during 2022, although the escalating conflict in Ukraine, remaining COVID-19 disruptions, and macroeconomic uncertainties are expected to cause continued market uncertainty and volatility.
We expect congestion and other market inefficiencies to remain high during the year, and while there was a slowdown in Chinese imports during the end of last year, we expect their import levels to accelerate in the second half of 2022. Adding to this, we expect markets to a larger extent to be driven by rest-of-world activity. On the supply side, the slow supply growth continues to support the dry cargo market, with new building contracting remaining at around 4% of the global fleet. Container vessels crowded out shipyard capacity and in addition, increased new prices provide support to dry cargo asset prices. Therefore, global fleet growth is expected to remain low at around 2%-2.5% for this year and next. Please turn to slide 16.
If we look at the tanker market, fundamentals are improving, and we expect a better second half of the year. Seaborne crude and product volumes are back to pre-COVID levels, and oil inventories are record low. The main obstacle to improvements remain oil supply, which we believe will gradually increase. The ongoing Ukraine conflict and sanctions on Russia add significant uncertainty to volumes being exported from Russia, but may also lead to higher average transport distances and more ton-miles. For now, we think this will be marginally positive for rates. The low order book of product tanker vessels continues to protect asset prices, which have remained relatively stable and further supported by increased scrapping of vessels. Similar to the dry cargo market, container vessel newbuildings are effectively crowding out other newbuildings, while rising steel costs compound the situation.
Global fleet growth is expected to be around 2% in both 2022 and 2023. Now I will hand you back over to Jan to go through our guidance and some final remarks. Turn to slide 18, please.
Thank you, Martin. NORDEN expects profit for the year to improve further to a range of $210 million-$280 million, which includes currently known vessel sales gains of $37 million. Going forward, NORDEN will include gains and losses from vessel sales in profit guidance and actual profit for the year. The Assets & Logistics business unit expects much better earnings in 2022 based on high coverage at attractive rates on the dry cargo fleet entered into during 2021. High coverage on the tanker fleet means that the business unit is well protected against the weak tanker market. Vessel sales gains are expected to contribute positively based on the increases in dry cargo vessel values seen during 2021.
The Freight Services & Trading business unit expects a net result somewhat lower than the combined result for the two operators in 2021. The expectation is based on continued 5%-10% growth in activity and a margin per vessel day, which is higher than the average realized over the last three years, but below the record level for last year. For both business units, the distribution of earnings per quarter is expected to be more front-loaded than normal. Given the escalating conflict in Ukraine, remaining COVID-19 disruptions, and macroeconomic uncertainties in general, the market uncertainty and volatility is expected to remain elevated. New sanctions targeted at Russian exports may emerge, which on balance is expected to be slightly negative for dry cargo rates and slightly positive for tanker rates.
Our trading-oriented strategy means we are well-placed to deal with this uncertainty and are highly responsive to customer and market changes. Turn to slide number 19, please. To sum up, NORDEN realized the first annual result in 11 years with a profit of $205 million and a return on equity of 22%. NORDEN is building a strong track record of sustained profitability combined with activity growth over the past five years. With our consolidated business units, we expect recurring earnings with less volatility and new revenue streams based on innovative client solutions. We are pleased to share this great result with NORDEN's shareholders. The board proposes a dividend of DKK 18 per share for 2021, in line with our dividend policy of paying out minimum 50% of the adjusted results.
In addition, NORDEN will initiate a new share buyback program of up to $30 million. Since 2018, NORDEN has returned more than $260 million to shareholders. For 2022, we expect another great result, with profit for the year in the range of $210 million-$280 million. At this point, we will move to our Q&A session and open up for any questions you may have. Operator, please open up for questions.
Thank you. Ladies and gentlemen, if you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. There will be a brief pause while questions are being registered. Our first question comes from Magnus Järman with SEB. Please go ahead.
Hi, guys, and thanks for taking my question. Even though the focus might be a little wrong these days, I do have some questions on the conflict or on the war of Ukraine and how it may affect your business, especially in terms of timing. We know that the grain season starts in August mostly, and then do you see, like, that the impact on dry bulk is worsening as this drags out in time? Or how do you see that this will evolve if it lasts?
Thank you, Magnus, for a great question. I think with the very fluid situation we're seeing at the moment, then a lot of, you know, a lot of questions are arising on these topics. I think first of all, when we have disruptions to trade flows, then generally speaking, that leads to more inefficiencies. We are already operating, you know, with a world fleet that is, you know, facing bottlenecks around the world. This will further add to that pressure. The question here really is that if you're going to replace the Ukrainian and Russian grain exports with exports from other regions, then we will see longer ton-mile demand.
The big question here, of course, is to what extent will other countries be able to replace the volumes that we may or may not see out of the Black Sea. That is, of course, the key question, and I think difficult to answer today. At least for now, we are already seeing ships being directed to other regions. We have seen a very muted, I would say, reaction in dry cargo rates to the whole conflict. Despite the fact that we are right now not loading any ships out of that region, we have not actually seen a huge decline in freight rates.
I think it's fair to say that the world trade is still finding its feet in this, you know, uncertain situation. I guess it remains to be seen whether Australia, North America, and South America can step up and replace the volumes that we're not seeing out of the Black Sea. There may be some seasonal volatility that we will see. I think in our business model, where we are able to quickly respond to changes in trade flows, then actually we are well-placed to capture, you know, the volatility that will follow these changes.
Okay. Thanks a lot. If it's okay, I have one more question which goes to the implementation of EEXI and CII, which is come into force next year. How much do you think that you have to reduce the speed and how do you think the fleet will have to reduce speed? Do you see a lot of, like, capacity being taken out of the market as a result of lower speed in 2023 and 2024 and on?
That's a good question because clearly there are, you know, again a lot of uncertainties exactly how the world will deal with the new regulations. From our own analysis and when we look at this, we don't expect major changes. What we may see ships slowing down. Of course, we also now see very high bunker prices as a result of the conflict. That may actually happen already ahead of some of these environmental regulations that are coming in. The easiest way to deal with emissions in the world fleet in the short term is slower speeds, which will take out the tonnage.
Our own assessment is in the first round that the new regulations have relatively little impact. We should expect to see more and more regulations coming, and I think the response in the short to medium term for that would be slower speeds.
I see. I got it. Just a final one. Given that your numbers that you delivered today, that the amount is probably not very significant. You disclosed a week ago or so that you're investing in some logistics, and if you could give us some more color on that and how you expect revenue streams to come from those investments, and how you look at those investments going forward.
Yeah. The Gabon project is we find to be a very interesting one where we are engaging with an old standing client of NORDEN to help them actually optimize their supply chain, including the onshore handling of the cargo that is being exported there. We have made our first shipment down there, which was our first trial shipment. The investments we are making down there are sort of mainly in the barges that are needed to handle this import or close to port transshipment activities.
In the big scheme of things, it's not a big investment for Norden, but it is something, where we gradually hope to be able to build a pipeline of projects that will sort of increasingly become more significant and of course also, more profitable over time.
I understand. That's it for me. Thanks a lot for taking my questions, and congratulations on a great year.
Thank you, Magnus.
Yeah. Thank you, Magnus. As a reminder, if you do wish to ask a question, please press zero one on your telephone keypad. At this time, we have no further questions. I'll now hand back to the speakers for final remarks.
Thank you. This concludes our presentation of the full year results for 2021. Thank you very much for your interest in Norden and for dialing in. Thank you and have a good day.