Welcome to the Q2 presentation for Höegh Autoliners. I'm Andreas Enger, CEO. With me I have also Per Øivind Rosmo, CFO, and we will take you through today's presentation, and it will be open for questions at the end. I will start by saying that this has been a strong quarter and a strong half year.
We are delivering good results, which we're going into in some details, but I think the most important is that we have been able to get good traction and have completed, I think, all the important things that we set out to do when we listed back in November. And we are also having a supportive market that allows us to execute our commercial strategy. If we go into the highlights, the EBITDA for the quarter is $99 million, giving a net profit of $53 million.
We have experienced an increase in net rates of 8.4%, and we've also been able to increase volume by 7.3% relative to the previous quarter. We have, during the first half year as a listed company, been able to develop a strength that allows us to commence dividend payments ahead of our original schedule, which I think is an important milestone for the company.
And we are further manifesting our leadership, not only in our segment, but I think in the shipping industry, on Deep Sea Decarbonization by signing contracts for another four multi-fuel, zero-carbon-ready Aurora-class vessels that will be the largest, most environmentally friendly in the industry, but also is showing the way with a clear path to zero-carbon deep sea shipping. And we now have a total of eight vessels, firm orders with delivery in the window between 2024 and 2026, which is important for our long-term strategy.
We've also made substantial progress on strengthening our balance sheet, obviously through strong earnings, but also through a comprehensive refinancing that has increased the financial flexibility of the company. And we've also secured financing commitments for all the 8 newbuilds at attractive terms. So we're going out of this quarter or the first half year with firm orders for vessels, strong results, and also a much more robust balance sheet that covers all the investment commitments. And we also completed the uplisting to Oslo Stock Exchange in May, which was part of the journey to a, which I say, fully listed company on the main list. So all in all, a strong quarter, lots of progress both financially and in business development and in the market. And we're going to go through some of the details.
I'm going to go through some of the market and capacity situation before Per Øivind takes over on the financial update, and we make some brief comments on the outlook towards the end. Starting with the market and the commercial update, we've, as I said, seen both volume growth, improved cargo mix, and a strong improvement of net rate. We guided in the previous quarter that there is an ongoing repricing in the market, and that has definitely also shown in the quarter. Just a small comment on the volumes.
We are normally in the current market running our ships full. We did, and I think we commented on the previous quarter, that we did some ballasting of vessels back from the Atlantic to Asia to benefit from the strong market and the strong volumes there in the Q1, and that's really the main driver of the volume growth.
I'm coming back to the growth opportunities on the volume side a bit later. But I think it's important to recognize that we've seen quite a fundamental change in our market during the last 12-18 months, and we're seeing opportunities to enter into better contracts, better price cargo.
And while we obviously are conscious of the macroeconomic instability and there are lots of sources of volatility, I think if we look into our own portfolio, we still have a substantial amount of contracts that have been priced in a different environment, and we have a regular sort of contract renewal path that also creates opportunities to also continue on a positive track on the right side. Looking at FNLV, new cars, it's clearly been a setback in volumes this year, not from demand, but really from production challenges, supply chain challenges for the producers.
There is some market expectation of growth. We see strong reports from our customers on the second half volumes, but I think it's also fair to say that we have been able to compensate for any loss in car volumes quite well during this year, and there is lots of cargo of all categories out there.
And I think if we look at the picture, clearly we see issues with increased interest rates and the macroeconomic situation, but we are starting from a situation where volumes are low due to supply constraints, backlogs on cars and orders are high, and there is an energy transition into electric vehicles that is driving replacement and is driving the need for shipments. So we are cautiously positive for this market, although we obviously follow the macroeconomic situation closely.
But I think the last several quarters have shown that we have flexibility in terms of our cargo mix that allows us to handle some volatility. And that is obviously also because the High and Heavy market is strong. Strong growth so far in 2022 from primarily out of Asia, really, really strong out of China. We know there have been COVID-related disruptions in Shanghai and elsewhere, but still the cargo flows are going.
There's also a strong mining market that is supportive to our High and Heavy cargo share. So we still consider the market to be strong. Obviously, some possibilities that certain markets might experience some volatility or weaker growth depending on the macroeconomic situation, but we are quite confident that with the supply constraints from the OEMs seemingly easing up, that volumes will still flow. And adding to that is the capacity picture.
The net fleet growth has been low to negative over the last several years. The fleet is aging, and there is really very limited capacity coming into the market before 2024, 2025. If we relate to analyst estimates that most of that capacity is also going into renewal in the sense that with the 30-year age of the fleet, 3%-4% is just basically covering the long-term retirement scrapping schedules. That has, as I think many of you know and have seen, created a real boost in time charter rates.
I think one of the important things of our business model is that we rely on primarily or almost entirely owned vessels or bareboat chartered vessels where we have fixed prices and also purchase options that are cost-based, meaning that our exposure to the charter market is low and our business model is to translate the strong market into improved earnings on vessels that we actually own.
So we have relatively low exposure to the capacity cost from our current fleet structure, and we obviously have a series of newbuilds coming in that are coming with very attractive and strong financing platforms that come in at very attractive cost points. So we are quite confident in the market and the fact that the supply side is going to remain constrained.
If you look at our vessels, we have, as I think I've previously said, clearly said that we are not going to enter into long time charter contracts with the current rate picture. We have over the years streamlined our fleet operating a fleet of roughly 40 vessels, and I think we plan to remain in the sort of 38-40 vessel range until we start getting our newbuilds and optimize our fleet around that. There is substantial congestion in ports that causes delays. We've actually seen more corona-induced delays recently due to the more contagious nature of the new variants.
So we also believe that there is some opportunity to improve capacity through streamlining the operations, although I think we also expect that the port congestions are not going to go away quickly because there are complex reasons behind that that is likely to take some time, but there is some capacity reserves in reducing delays still in the system. Making a short brief one on emission updates.
We're obviously reporting according to all relevant standards. Our main focus when it comes to emissions is obviously to drive the energy transition and build a zero-carbon future for ourselves and our customers, and we are well underway with that. But we also need to take care of the current efficiency ratios that we all follow. We've had over the year some improvements through some smaller actions on propeller polishing and how we deal with handle our vessels.
It's flat quarter-over-quarter, and we are still working consciously on it. We have had increased use of 100% biofuel and have 100% biofuel capabilities on several of our vessels that we can offer our customers that can improve the ratios short term, and obviously our new vessels will substantially improve the ratios longer term. So we have a firm look at it both in the short term on the existing fleet and in the longer term with the fleet renewal that will allow us to take greater steps. That ends the brief operational part of the presentation, and I will now leave it to Per Øivind to go through our financials in some more detail.
Thank you. Good morning. I will go through some of the high-level numbers in the following slides. We have uploaded the quarterly report with all the details to the financial statements to our web page, so a more comprehensive overview of the numbers is to be found there. Before we start looking at the number, just a recap on the volume development and the net rate development over the last quarters.
That is the main drivers behind our results. And as we see here, and as Andreas mentioned, we had an increase in volume of 7.3% compared to Q1, mainly driven by more efficient use of the capacity and increased utilization. We are actually able now to fill the vessel with a good cargo mix, and that is also improving the volumes. The net rate increased from 57.1 per CBM to 61.9 per CBM. That is an increase of $4.8 per CBM.
If we compare to Q2 last year, we see that we have an increase of $12.6 per CBM or 26%. The rate increase is continuing and has continued into Q2. This gave us freight revenues of $318 million, up from $266 million in Q1. The volume contributed with approximately $17-18 million, and net rate contributed with approximately $20 million. The balance there is increase in surcharges. We had an increase in the Bunker Adjustment Factor in Q2 compared to Q1 following the continuous rise in the bunker prices. Adjusted EBITDA is $99 million. That is up from $78 million in Q1 or 27%. The EBITDA margin is increasing to 31%. The net profit before tax increased to $64 million from $34 million. Out of the $64 million, we have an extraordinary item, and that is related to the refinancing.
We had to do a debt modification following the extended maturity and lower interest on the mortgage debt, and that gave a positive effect under all the financial items of $16 million. But as we see, a considerable increase in net profit there, and comparing to Q2 last year, it increased from $1 million to $64 million. The balance sheet is very robust following the IPO, the refinancing, and the strong results that we have had over the last quarters. Net interest bearing debt, including the lease liabilities, is $514 million. We see that we have a net interest bearing debt EBITDA ratio coming down to 1.7. The book value of the equity is $889 million. It increased with the net profit of $53 million from $836 million, and we have an equity ratio of 55%.
And again, comparing with the same quarter last year, we see that the equity has increased from $534 million to $889 million. Our cash balance by the end of the quarter was $61 million. I will come back to that. We used a lot of cash in Q2. We paid the installments on newbuilds $60 million. We bought a vessel for cash, and we also reduced the mortgage debt with $100 million. In addition to the cash of $61 million, we have an unused revolving credit facility of $100 million. So the liquidity reserve here is actually $161 million, but I will give you more detail on that later. If we look at the development from Q1 and into Q2, we had an EBITDA of $78 million in Q1.
Then the top line increased with $52 million, as I mentioned, a combination of volume, net rate increase, and surcharge increases. Bunker expenses increased quite considerably from Q1 and into Q2. We had $20 million more in bunker expenses than we had in Q1. We also had some increases in other operating expenses, and that is mainly driven by the increase in volume. If we compare with the same quarter last year and look at the development from Q2 2021, we see that we have the same picture. It's the cargo revenue increasing, bunker expenses increasing. What is interesting to see here is that if we look at it combined, the other operating expenses is actually reduced. It was reduced with $16 million from Q2 2021 into Q1 2022, and it increased with $11 million now.
But if you look at it on a yearly basis, we have actually been able to reduce our operating expenses. And that is mainly because we are able now to do more efficient voyages. We have less port calls and are able to load and discharge more cargo in every port. So we also see that we are able to control our expenses and at the same time increasing our revenue. Back to the cash, we started the quarter with $207 million in cash.
We generated $80 million in operational cash flow. We built some working capital during the quarter due to the higher bunker prices. The bunker inventory increased, and that is the main reason why we saw a small increase in working capital during the quarter. But $80 million generated from operation. Then we used $60 million first installment for the new buildings, number 5 to 8.
And we also had $4 million in other CapEx that mainly related to dry dockings. We repaid a total of $102 million of the mortgage debt, and we purchased one of the vessels that we had on lease. We had a purchase option on that vessel and decided to exercise it. The vessel was purchased for $22 million and have a market value of around $40 million. Other cash from financing activities is mainly lease payments and interest rate on the mortgage debt.
So that took the cash balance to $61 million, but we have, as I said, an unused RCF of $100 million. So the total liquidity reserve here is $161 million. And with the current earnings that we have, we are generating a solid cash from our operation. The balance sheet, we have vessels and newbuilds, $1.158 billion. We have right-of-use assets.
That is the leased vessels that we include in the balance sheet according to IFRS of $246 million. And we have bunkers and other receivables of $152 million. And then we have, as I said, cash of $61 million. The equity, $889 million or 55%, and we have lease liabilities of $291 million. The interest bearing mortgage debt is $284 million, and we have current liabilities of $113 million. Other non-current liabilities of $40 million here is mainly related to deferred tax. If we look at the value adjusted equity, where we basically take the market value of the assets instead of the book value of the assets, gives us, and then we also add the additional value of the leases that we have.
We have purchase options for all our leased vessels, and if we take the difference between the market value and our purchase option prices, we have an additional value, and that has been calculated to $155 million. The 1.286 here is basically the market replacing the book value of the asset with market value of the assets. So that gives us a value adjusted equity of $1.441 billion.
That equals $7.6 per share or NOK 72 versus a book equity of $4.7 per share. As Andreas mentioned, we did a refinancing in the end of June. We refinanced the legacy debt with 9. There are 9 banks in that bank syndicate. It's a combination of Scandinavian banks, 2 French banks, 1 Dutch bank, and 1 American bank. And you see them here. They are all well-known shipping banks. The new loan has 3 tranches.
It's a $300 million term loan that was drawn, and then we have the $100 million RCF that we decided to not draw, and that is, as I said, why the cash balance looks somewhat low in the balance sheet. In addition to that, we financed four of the eight newbuilds with the same bank syndicate. So we have a committed term loan of $280 million for four of the newbuilds.
Maturity was extended into January 2028, so we have almost six years now tenor on that debt, and we considerably reduced the annual amortization. The annual amortization prior to refinancing was $80 million, and as we have not drawn on the RCF, we are now having used all our $39 million in annual amortization on the mortgage debt. We have 14 vessels mortgaged under the loan. They have a total market value of $808 million.
We were able to release a lot of vessels from the security pack when we did the refinancing. We have now 13 owned vessels that are not mortgaged, and they have a market value of $474 million. We have also been working with financing of the new building program, and as I said, 4 of them are financed with a term loan from the same banks as we have in the bank syndicate for the legacy fleet.
In addition to that, we have entered into an agreement with Bank of Communications for committed financing for the other 4 vessels. That is still subject to final documentation, but the financing is committed, and we expect to finalize that process within the next couple of months. That is the end of the presentation. As I said, my presentation and all the details are now available on our web page. Back to Andreas, he will say a few words about Outlook.
Yes, thank you, Per Øivind . Yes, so I think what the presentation describes is substantial progress both on development of our business plan as we laid out in the IPO, but also on the running financial performance, which is good. If we look at what, say, the future looks like for us, we are confident in the general market fundamentals. They remain positive. There is a tight on the situation that will not be resolved for the next several years, and we do see continuous repricing of cargo in most of our trade lanes. So the underlying path is, in our view, positive. The volatile situation we've had in the first half related to delays and port congestions that obviously eat some capacity, we believe will remain for a while.
There are some fundamental issues that will take time to basically sort out, but it also, in the medium term, if we are able, as we are able to resolve some of it, will allow for some volume growth. The macro picture is of concern: increased interest rates, recession fears, and all of those kinds of things.
They have not yet impacted our business, and we believe that the car sales is on a low level due to other factors: supply constraints, the part constraints from the OEMs that is about to resolve. We see that our customers are confident in their volume expectations going forward, but we are following that closely, obviously, because it is something that is of concern to us and the entire world, and it may require some adaptations to how we work, and it might clearly impact car sales in certain markets.
But I think it's important that so far, in our current run rate and in the quarters we past, we don't see that impact. Most of the bunker price from increases earlier in the year will be covered by BAF in the Q3 onwards, unless there are further increases or spikes in the oil price, which will be supportive. And based on the current trading performance, we expect that the dividend that we have announced this quarter is going to be maintained at about the same level for the remainder of the year. I will also add that as a company, we have a deep commitment to transparency in dialogues with investors. Over the last several quarters, we've been asked if there is something we can do to make it easier to follow the running performance of the company.
So we have announced, and it is in the announcement, that we will start commencing in September to issue a monthly stock exchange notice covering our volume for the previous month and gross and net rate and our cargo mix to basically help investors and analysts to take an updated view on our progress and performance. So that will commence and is hopefully helpful to the transparency.
And we are also, along the same line, working on finding other ways to better explain and create more transparency and make it easier to understand our business model, where we are aware that the lack of public information makes it difficult to follow on a real-time basis. So that is important for us. And I think that is the end of the presentation. We have opened for questions. I don't know, My Linh, have we received questions to be answered?
Yes, we have received a few questions from analyst Petter Haugen. One of the questions is that, of the increased volumes, can you comment how much of that FNLV or H&H? Or I can just quickly comment on that. We can say that based on the data, you can see the majority of the increased volume is actually on the H&H and breakbulk sectors. And could you also give a general comment about the difference between the net rates between FNLV and H&H in the current market?
What we, in general, can say is we will not go into detail on that, but what we, in general, can say is that we have seen, I would say, a huge increase in rates for cars in certain markets, and car rates in certain markets have increased more than high and heavy rates in general.
So the gap that we historically have seen between rate for cars and rate for other types of cargo has, in some markets, closed somewhat. That is probably what we can say about that.
Yes. Yeah. And that's all we have for now. And if you have more questions, please do not hesitate to send a question to ir@hoegh.com. And thank you very much, and we look forward to seeing you next time.