Operator. Welcome everyone to the first quarter 2023 earnings conference call for 2020 Bulkers. As usual, I'm also joined here today by our Chief Financial Officer, Mr. Vidar Hasund. Before we start the presentation, we'd like to remind you that we will be discussing matters that are forward-looking in nature.
These forward-looking assumptions are based on the company's current views with regards to future events, they're subject to risk and assumptions subject to uncertainties. As such, actual results may differ materially. With that, I'll move over to the highlights for the quarter. 2020 Bulkers generated a net profit of $0.8 million in the first quarter.
Although this is not a very high number and the market certainly points to better times ahead, we're happy to maintain the unbroken track record of profitability every quarter since we got our first vessel in operations. Again, we outperformed the Capesize Index and achieved time charter equivalent earnings of $17,500 per day compared to the Baltic Capesize Index, which was approximately $9,100 per day in the quarter.
We did a number of contract extensions and short-term conversions from floating rates to fixed rates during the first quarter. This to ensure that we would secure a positive cash flow during what's usually the weak season. The weak season now seems to be firmly behind us, and as this fixed charter coverage rolls off, we will have significant exposure to the improving market we're seeing for the balance of the year.
For the months of January through March, we made total cash distributions of $0.04 per share. Today we announced a cash distribution of $0.07 per share for the month of April. With that, I will leave it over to Vidar for the financial highlights.
Thank you, Magnus. 2020 Bulkers reports a net profit of $0.8 million for the first quarter of 2023. Operating profit was $3.5 million, and EBITDA was $6.4 million for the quarter. Earnings per share was $0.04. Revenues were $12.6 million for the first quarter, and the average time charter equivalent rate was approximately $17,500 per day gross.
Vessel operating expenses were $5 million, and the average operating expenses per ship per day was approximately $6,900 in the first quarter. G&A for the first quarter was $1 million. 2020 Bulkers charged Himalaya Shipping $0.4 million in management fee for the first quarter. Interest expense was $2.7 million in the first quarter.
Shareholders' equity was $154.7 million at the end of the quarter. Interest-bearing debt was $217.6 million at the end of the first quarter, down from $221.3 million at the end of the fourth quarter, reflecting scheduled debt repayments. Cash flow from operations was $4.4 million for the first quarter.
Cash and cash equivalents were $15.9 million at the end of the quarter. The company declared total cash distributions to shareholders of $0.04 per share for the months of January, February, and March 2023. That completes the financial section, now back to you, Magnus.
Thank you, Vidar. We continue to show strong commercial performance, not only relative to the Capesize Index, but also relative to the TCE results announced by our public peers who break out their separate earnings for the Cape and Newcastlemax segment. This reflects the additional earnings power of a scrubber-fitted Newcastlemax relative to standard Capesize vessel.
Here we take a look at our illustrative dividend capacity going forward in conjunction with our current charter coverage. As you can see, the fixed rate charter coverage we had earlier in the year is rolling off going forward, offering us good leverage to an improving market.
The FFA curve for the balance of the year currently sits around $21,000-$22,000 per day, which would imply, in theory, if we locked all our ships into fixed rates today, around NOK 12 in free cash flow per share for the eight months remaining from May till December. Taking a look at the market so far this year, it started out with the usual seasonal weakness in January and February.
This, we think, was also exacerbated by the first Chinese New Year in two years without COVID restrictions, where the Chinese population was traveling and industrial productivity came down. Since late February, we've seen a strong recovery in rates, largely driven by strong Chinese iron ore and coal imports, as well as strong bauxite volumes.
Yesterday's import figures out of China showed the new all-time high import of iron ore for the year-to-date period, and the same for coal. Taking a more detailed look at the Capesize trade this year, we see that overall ton-miles sailed on Capesize vessels are up around 5% year-to-date relative to 2022. This is mainly driven by a 30% increase in ton-miles for bauxite.
For iron ore, ton-miles are up 2.7%, and for the coal trade, ton-miles are up 3.9%. We also find it reassuring to see that congestion levels are back to more normalized levels after having significantly higher than normal congestion levels during COVID. This does not represent, in our view, a downside to the market, but rather the opposite should we get disruptions in the market.
Now over to have a look at the steel market. The global crude steel production for the period of January through March was up 0.5% compared to the same period in 2022. The world ex-China was down approximately 7%, while Chinese steel production increased around 7%. As I mentioned, looking at yesterday's import figures from China shows an all-time high year-to-date import level of 385 million tons, which is up around 8.6% year-over-year.
This is the highest recorded and around 7.5% above the five-year average. It's particularly interesting to view this in context of the iron ore inventories, which as you can see, have been dropping and are at levels both below last year and the five-year averages.
Based on the collective guidance from the largest iron ore producers, we expect an increase in output this year compared to last year, which should be supportive for shipping volumes. We don't have a graph on coal here. It's also worth noting that Chinese coal imports were up 90% year to date compared to 2022. This is around 45% higher than the 5-year average.
Looking at the supply side, the order books keep shrinking, and we're now down to 4.8% of the existing fleet on order in the Capesize segment. This, in combination with Chinese yards still having very little capacity for new orders before 2026, means we have good visibility of three years ahead with historically low fleet growth.
Looking at it more broken down by year, Clarkson expects deliveries of around 12 million deadweight tons this year, dropping to 7.2 next year and 3.9 in 2025. Scrapping year to date has also picked up compared to the same period last year, with around 1 million scrapped compared to 0.85 million deadweight tons for the same period last year.
We're also seeing reported around 5%, five ships circulated for scrap for the time being that we expect to be taken out of the market. Lastly, we'll repeat the message that we have environmental regulations that's coming into the industry now that will have an effect. It's hard to quantify exactly, but on the margin, CII and EEXI will be tough for older, less fuel-efficient ships.
Clarkson's data suggests that 67% of large bulker fleets may face non-compliance by 2023. We find this a very interesting picture, looking at it in context with the low order book on the previous page. With that, I will conclude the presentation and leave it over to the operator for questions.
Thank you. If you have a question for the speakers, please press five star on your telephone keypad. To withdraw your question, please press five star again. We will have a brief pause while we are registering questions. The first question will be from the line of Frode Mørkedal from Clarksons. Please go ahead. Your line will now be unmuted.
Hello, Ole.
Yes. Thank you. Hi, Magnus. Yeah, I noticed that. Well, I find it interesting that in February rates, Cape rates were basically $3,700 today, I think, as an average for the full month. It's interesting, I think, to note that the stock price was basically the same as today.
Now, of course, Cape rates are well above $20,000 per day, and you have this great outlook. I guess the question is given your background as investor and shipowner and former banker, what do you make of that?
Well, I don't think you're going to get us to give any advice on the stocks, but I guess it's for everyone to see. There's a lot of uncertainty in the world right now, which seems to be more in. There's many reasons to be concerned, but I still think that, you know, the recession and commodity demand destruction that people have been expected to kick in tomorrow for the last few months, we're yet to see.
I think definitely China started out slow in January, but they have been moving at a complete different pace than the rest of the world, at least with regards to imports for February, March and April, as we showed on the iron ore imports, the coal imports.
Steel production, although that's come a little bit down on the higher frequency data, there's been a quite good rebound in steel production from the lows early in the year, till now. I think if I were to share my two cents, this probably has to do with the general, you know, uncertainties in the world, whether that's recession fears or whether it's fears of the debt ceiling in the U.S., I don't know.
So far the trade flows are good, and as I pointed out, ton-miles for Capesize is up 5% this year, which we think is a pretty healthy picture. I think why didn't the stocks drop when rates were just a few thousand?
Maybe it had to do with the fact that asset values have been moving up in the same period. you know, if you look at your own values, Clarksons reported weekly values are significantly up from November to the first quarter. Maybe people have been looking at that and looking through, and I guess in a sense, maybe the asset market's been looking through.
There's been a couple of transactions for Newcastlemax, modern Newcastlemax over the last month or two. Yeah, well, I defer to you, the analyst, to say what you think the stock is worth, but I note that on your latest weekly reports, we are at around 30% discount to NAV. I guess we need to do a better job at communicating with our investors.
Well, it seems to be a general
We're not the only one, though. Yeah, I mean, it seems we're not the only one. I see a lot of the dry bulk names are trading at discounted levels, so.
Yeah. No, it seems to be an opportunity, I think. It's, as you said, like asset values are up, rates are up. Yeah, it's sentiment is what it is, I guess. Anyway, I'm just curious in February, when you had this very low rate, now you actually did pay a dividend, but were you at any time concerned at that time that you wouldn't be able to pay a dividend?
I think what we do, and I guess if you follow the company over a few years, you've seen we are very focused on not deteriorating cash, even if we think the market is gonna turn, and we're focused on being cash flow positive.
We have, we did during Q1. We came into Q1 with some fixed coverage, and we did add to it a bit in Q1, I think luckily without giving up too much of the balance of the year. As you can see now, we are kind of at, I guess we have three ships on fixed contract through May at okay rates, and then that drops to two ships. Then we are fully open towards the end of the year.
It's similar to, if you remember back in, back when COVID struck, when the market went to very depressed levels. Of course, even if you don't think those are sustainable, we are not the type of company that takes a gamble and says, "We'll just see what happens." I guess we take some insurance, and maybe you pay a little bit of premium if the market turns in the near term, but we are very focused on generating free cash flow and not deteriorating our cash balance.
I think if my memories serve me right, I think when Capesize were at $3,700, you actually generated something like $15,000-$16,000 in February, right? I guess it could be useful to remind people on how you generate this premium, right? Maybe you can talk about the Newcastlemax benefits. Yeah, that could be useful.
I If, of course, if you are looking at, if you're following this market and reading any of the analyst reports, when they refer to Capesize rates, that's a standard Capesize, which has an intake of 180,000 deadweight tons. Our ships can take more cargo, 208,000 deadweight tons capacity. They don't particularly use more fuel, and they cost the same to operate.
If you can carry more tons, you get more paid. The second part is the reference ship is an non-eco ship which burns more fuel than our ship. Combined through that, we get the premium. I think the last on levels in the market for our vessels or similar are around or just under the 140% mark.
We get the premium for the scrubber, which we share 75% our way and 25% with our customer. That's how our ships make a bigger premium or bigger earnings than what you see referred to as Capesize rates. We, of course, use our conversion options.
We are, as a base case, you should think about us as trading on index-linked charters, where you literally get then the Baltic Index times our premium plus the scrubber spread every day. We have the ability to convert to fixed rates for shorter or longer periods on the basis of the FFA market. I guess you use it two ways.
You use it either somewhat defensively, like we've done in Q1 this year, or you use it more opportunistically if you have a really good market and the forward curve is high, and you wanna lock in those levels like we did in the fall of 2021. It can be used from two angles, I guess.
Got it. Good. You mentioned the discount to NAV, and that's been, that's large, right? I guess, how do you view share buybacks at this time? Or do you believe that continued paying dividends is still beneficial or more beneficial, I guess?
I think that's clearly, first of all, that's a board decision. I think it's natural if a company trades at a significant discount for a prolonged period of time. You have to look at alternative ways of returning capital and other than cash distributions or dividend, and then buybacks is certainly one.
I can't give any guidance to that. I think any sensible board, if you were trading at a large discount for a longer period of time, would look at that tool in the toolbox. We haven't used it so far, but I can't say anything about the future either. We are aware of the tool.
Good. That's it for me. Thank you.
Okay. Thank you.
Thank you, Frode. As a reminder, please press five star on your telephone keypad to ask a question. We will have a brief pause while questions are being registered. As there are no further questions at this moment, I will hand the work back to the speakers.
Okay. Thank you very much for those dialing in, and thank you for the question from Frode. Feel free to reach out if you have any questions, and if not, we will see you again on our next quarter report. Thank you. Bye-bye.