Good morning, everyone. I'm very pleased to welcome you to the first quarter 2024 result presentation of Klaveness Combination Carriers. My name is Engebret Dahm. I'm the CEO of the company, and together with me, I have Liv Dyrnes, CFO and Deputy CEO. We have split this presentation into four parts. We have in the first part, I will go through the market and the update of our performance for the first quarter. In the second part, Liv will go through the financial update of the company, and in the third part, she will give you an update of how we perform on our sustainability efforts. And at the end, I will be back to summarize how we look at the dry bulk and product tanker market and the performance of our company.
But I can't resist to update you on what we are and the value drivers for our company. So with our two type of combination carriers or CABUs and CLEANBUs, they are both dry bulk and, and product tankers at the same time, competing against the standard ships in these markets. They have three main value drivers creating value to our shareholders. Firstly, they are more efficient. We, as we transport the combined the CABUs transported by standard dry bulk and product tankers with a fraction of the ballasts, we transport more cargo on the same, the, voyage distances, having positive effect on earnings and on the carbon footprint. We are, as we are both in the dry bulk and product tanker market, we get a positive diversification. These markets tend to move in opposite directions over time.
Hence, we reduce risks and reducing downside risks. We have our fleet is also more flexible, especially our CLEANBUs can handle more type commodities in more trades, in very volatile commodity markets, giving an optionality to optimize the fleet position and our possibility to shift capacity to the market being the relative strongest. So I'm very pleased to tell you that these value drivers have again created value for our company in the first quarter. Of course, the earnings of our company in the first quarter is driven by the product tanker market on fire and also a surprisingly upbeat dry bulk market. But as importantly, a very successful dry trading. We demonstrate both our ability to deliver very high efficiency of our operation this quarter, probably the best most efficient quarter for our CABUs.
At the same time, as the high trading flexibility, our CLEANBUs again have been able to capture value in a very strong product tanker market. The average time charter equivalent earnings of $40,500 per day is around $3,700 higher than in the fourth quarter last year, and 10% higher. Compared to the guiding we gave back in mid-February, we're earning close to the midpoint in the range, and also the performance relative to the underlying dry bulk and product tanker market is successful. But how do our operating results look like and how is the dividend payout for the quarter? So the EBITDA for the company ended at $37.6 million, a small increase from the fourth quarter of last year.
The earnings were mainly driven by a very strong CLEANBU performance, but also the CABUs kept up reasonably well. The relatively marginal increase in the EBITDA from the fourth quarter is mainly linked to the considerably higher due to two long dockings during the quarter. This also mainly explains the difference in EBITDA compared to the first quarter, 2023. So based on the positive outlook and results, the board has confirmed a dividend payout of $0.35 per share for the first quarter, which is equal to the level in the fourth quarter. This adds up to total dividends of $21.1 million. This corresponds to 90% of the adjusted free cash flow, which is on which our dividend policy of 80% payout is based.
The running yield for, based on the, this dividend and last, trading day, performance and, and exchange rates give a 14% yield. So let's move to the first section where, where we look at, at the market and our performance in the first quarter. Starting here with the product tanker market, it strengthened considerably in the second half of December, driven by increasing attack on commercial shipping in the Red Sea, increasing deviations of product tankers around the Good Hope. Rates were kept up at extremely strong levels in January, coming down in mid-February, but popping back again in, in March.
It's quite interesting to see how, in the total context, relatively small disruptions have a huge impact on, on freight rates in the product tanker market, and how charters are willing to pay up, to secure tonnage when such disruptions are happening. The dry bulk market also had a positive development, during the fourth quarter, but calmed down towards the end of the year in the wake of the Chinese New Year, which is the low season of the dry bulk market. But the levels that have been in the fourth quarter, which is the strongest for fourteen years, except for 2021 and 2022, it's of course, partly affected by the situation in the Red Sea. So how was KCC's performance relative to the strong underlying markets?
The performance, I can tell you, was very satisfactory, here illustrated by the KCC time charter equivalent earnings and compared to the benchmark spot earnings for similar-sized product tankers and dry bulk vessels. The average earnings of $40,500 per day is the highest average earnings for the KCC fleet. Compared to the spot market for product tankers, we matched it pretty well, and it's 2.6 x the market for dry bulk for Panamax in the gray line. It illustrates also this graph, the good contribution we had from the stronger product tanker markets over the last quarters, and also the stronger dry bulk market in the gray line.
In fact, the increase in underlying markets for both product tankers and dry bulk market has been around 50% increase since the third quarter up to the first quarter this year. Let's dig a little bit into the CABU performance. The first quarter was very successful quarter for the CABUs in every respect. The tanker trading fell back from 53% in the fourth quarter to 49% in the first quarter, which was a reflection of more natural variations from quarter to quarter due to vessel positions. Trading efficiency was the strongest ever, with 96% of the capacity in a combination trade and ballast down to 8% of the full days.
The time charter earnings for the caustic soda shipments were slightly higher in the first quarter compared to the fourth quarter. That was also the case for the dry bulk earnings. But despite this, the earnings for the CABUs reduced by around $1,300 per day, which is only a reflection of a lower share of tanker trading in this quarter compared to the last quarter. And this is likely to change over the next quarters, having a positive effect on the CABU earnings ahead in time. Also, the CLEANBUs had a stellar performance in the first quarter. We maintained a very high share of capacity in the trade in the tanker market to take benefit of the strong tanker market.
We focused on veg oil in trades from South America instead of trading in dry, and we also did more ballasts in order to capture the trading opportunities in the tanker market. This had a negative effect on our KPIs for trading efficiency, with combination trading falling down to 61% and ballast increasing to 23%. This was made worse by an unintended trading inefficiencies caused by charterers using the options to redirect two vessels into European continent, where currently there are limited outbound cargoes for our fleet. We expect trading efficiency to improve going forward, and this trading efficiency is clearly below our long-term target. Nevertheless, our clean time charter earnings ended at $46,600 per day, more than $9,000 higher than in the fourth quarter, the highest ever for the CLEANBUs .
So then I hand over the show to Liv, which will bring us through the financials.
Yes. Thank you. Let's start by having a look at the financials for the quarter. EBITDA slightly up Q-on-Q, close to 3%. It's mainly driven by higher TCE rates, $3,700 per day. This amounts to $4.9 million. However, this was offset by less on hire days. We had in total 126 less on hire days compared to last quarter, and it's mainly driven by dry docking. This amounts to a negative Q-on-Q effect of $4.7 million. Other revenue relates to payment under a loss of hire insurance for an old claim, and after this, we have no outstanding claims. OpEx flat Q-on-Q, while SG&A is down $500,000. This is mainly due to a quite high SG&A in Q4 last quarter.
However, if we look at the average per quarter for 2023, Q1 this year is quite in line with 2023. So, slightly up, as mentioned, and anyway, a fantastic EBITDA of $37.6 million for Q1. As operating expenses are quite stable Q-on-Q, we will have a closer look at off-hire and dry dockings going forward. As you can see in the table at the bottom here, we had a total of 139 off-hire days in Q1. 130 of these days are related to dry dockings. The two dockings this quarter were delayed by 23 days. Barcarena was delayed with 17 days due to an increased scope of steel renewal. Baru was delayed six days due to unplanned repair of the propeller shaft.
Three of the CLEANBU vessels, the first three CLEANBU vessels delivered in 2019, were delivered with a water-lubricated stern tube. This system has been removed on the two other vessels, and is the root cause of the unplanned repair for Baru in dock. I think it's important to emphasize that this is not related to the energy efficiency measures that we do on the vessels, and we do not expect such large delays on the other dry dockings for the remaining part of 2024. In total for Q2, we expect 91 off-hire days, and it's mainly related to the three vessels at the top here, Baru, Banastar, and Balzani.
When it comes to the cost, the Baru docking cost is up $1.7 million, compared with the figure that we showed in the last quarterly presentation, and it's related to the repair. For the other vessels, the cost estimate is quite stable compared to what we showed last quarter. If we then have a closer look at the P&L for Q1, as mentioned, EBITDA up 3% Q-on-Q. Depreciation quite stable, and net finance cost increased by $900,000. $800,000 relates to FX, and $100,000 relates to higher interest costs. Profit after tax, stable Q-on-Q at $26 million. Return on capital employed, 20% on an annualized basis for Q1, and return on equity, 28%.
Fantastic return figures, which as well supports continued high dividend payments of $0.35 per share. No large changes on the balance sheet, Q-on-Q. We see normal variations in current assets and current liabilities. The KCC04 bond, or the remaining part of that bond, approximately NOK 200 million , falls due in Q1 next year and has hence been moved from long-term to short-term debt. We have a call option for the remaining part of this bond in August this year. Equity ratio up slightly from the end of last year, 58.7%, at the end of Q1. As for the balance sheet, the same for the cash flow, no extraordinary events driving the cash flow this quarter.
While the EBITDA had a positive effect of $37.6 million, we see normal variations in working capital, - $3.1 million for the quarter. Dry docking, including a small portion related to new builds, - $3.3 million, while energy efficiency CapEx was $1.2 million. Debt service normally is around $10 million, this quarter, $9.8 million, and then in addition, we repaid $7 million on an RCF, revolving credit facility, and we paid dividends of $21.2 million. Hence, the cash position is down from $68 million at the end of last year to $60 million at the end of Q1.
However, available long-term liquidity is stable at around $180 million, and this includes, the equity raised last year, that is committed to the new build program with deliveries in 2026, where the equity part of that program is fully funded. Okay, so let's have a look at our sustainability efforts with focus on emissions. The carbon intensity measured by the EEOI, which is based on actual cargo carried and not the dead weight of the vessel, ended at 6.9 for the quarter. This is up from 6.5 in 2023, and 6.3 in Q4 last year. It's driven by CLEANBU ballasting and speed, and I will illustrate that, on the next slide.
We see quite large variations from quarter to quarter in the EEOI. We have a limited size of the fleet, and single voyages can impact quarterly figures quite substantially. However, we expect 2024 to be better than 2023, and the long-term target is still 5.3 in 2026. The CLEANBU fleet illustrates nicely in Q1 the effect of trading efficiency on the carbon intensity. So in this chart, we have plotted the EEOI of each vessel, the CLEANBUs in the dark blue and the CABUs in the light blue.
The size of the bubble is the size of the EEOI, and on the horizontal axis, you will see speed for Q1, and on the vertical axis, a time and ballast in Q1. As you can see in the upper part of this chart, both the Bass and Bangor had very high EEOI this quarter, 13.7 and 11.7 respectively. Both vessels had substantial time in ballast this quarter. Bass is on a pure tanker TC, while Bangor ballasted quite a lot, both due to a suboptimal position and as well, us capitalizing on the very strong product tanker market, accepting higher ballast. Both vessels as well had quite high speed this quarter. But then you will see Barracuda. That's the smallest bubble in sharper blue, which had an EEOI of 4.9 for the quarter.
Very limited ballast, relatively low speed, and Barracuda is as well, the latest CLEANBU out of dock in late 2022, where we did some energy efficiency measures, which impacts the fuel consumption positively. So here you really see the importance of trading efficiency, to reduce the, emissions per transported, ton mile. Over to you again, Engebret for summary and outlook.
Thank you, Liv. So in this last part of the presentation, we will look at our view of the market and our outlook for our company over the next quarters. Let's start. One thing I wanted to stress, of course, that despite having a business model which are diversified and having lower risks than the standard players in the dry bulk and tanker market, we still are heavily dependent on the underlying market development. Let's start off with the product tankers. We continue to be bullish for the product tanker market. There's a positive outlook for demand growth in the oil markets, and this of course is helped by the fact it looks like the economy in both U.S. and Europe will have a soft landing.
We know that all the big agencies in the oil market is increasing the demand growth estimates for 2024, and also the demand growth in 2025 looks good, although a bit lower than in 2024. On the supply side, in the oil market, OPEC is still holding back production, which is expected to be eased over the next quarters, which will be positive for the crude and product tanker market. Ton-mile growth continues to be firm, with both increasing product shipments and as well as in longer sailing distances, partly caused by the situation in the Red Sea, but also which comes on the top of the effect of long-haul shipments over the situation in Ukraine and in Russia.
According to Kpler, we have the first quarter, around 10% increase in ton mile demand, which is very strong. This market will be impacted by the unwinding of disruptions in the Red Sea. It's still no signs, as we can see, of any easing, and it's quite unpredictable to see when that could happen. But at least as we've indicated by the yellow arrow, it's likely to at least happen coming into 2025. The tanker ordering is still high, but is falling back from the high levels we saw last year. Despite this, the supply growth in 2024 will be very, very low in the product tanker market, only around 2%.
It will increase coming into 2025 to around 4%, but it will be moderated by very low deliveries of crude tankers in next year. So the market balance in product tankers remain very strong in 2024, with demand surely outpacing supply. Market balance for 2025 also look firm, with solid demand growth, but with the likely unwinding of some inefficiencies and disruptions, it likely may be softer than what we see this year. We also think that 2025, the product tanker market could get some positive effect from an expected stronger crude tanker market, which has up to over the last years, underperformed the product tankers. Looking at the dry bulk market, we are also optimistic for the dry bulk market.
The year started very strong, with a 4.5% increase in dry bulk shipments, and driven by high bauxite and especially high iron ore shipments in the quarter. We believe that iron ore shipments will soften over the next quarters, partly due to lower Chinese steel production and high iron ore inventories in China. But we do expect grain shipments to increase significantly in the second half of this year and into 2025, due to very strong harvests both in the U.S. and in Brazil. So the canal disruptions has clearly also lifted the ton-mile demand in the dry bulk sector. We see that dry bulk transits through Suez has fallen by 50% compared to normal level, and also dry bulk transits through Panama is only at one third of normal levels.
Looking ahead, as mentioned, it is unpredictable when the situation in the Red Sea will improve, but we know for sure that the situation in Panama will improve over the coming quarters. Whether it gets back to the capacity it had before the disruptions, it's difficult to say. So optimism in the dry bulk market is very much linked to the very low fleet growth and predictability in this term over the next years. The contracting is moderate, in fact, lower than what we saw last year. The order book over 9% for of the existing capacity is low and especially favorable if you compare it to the share of the fleet being 20 years or higher, being 10% at the moment.
So the fleet growth in the dry bulk market is expected to be around 2%, both in 2024 and 2025, compared to more than 3% in 2023. And also 2026 seems to be low, in fact, falling below the 2024, 2025 level. So the supply-demand balance in the dry bulk market looks to be tight in 2024, despite possibly slightly moderating demand growth for the second part of the year, and eventually an unwinding of the disruptions in the Red Sea. Well, optimism is very much based on the fact that the very low fleet growth in the dry bulk market gives very little room for surprises and inefficiencies.
Either it's a later end to the disruptions, or it could be lower speed or increasing congestion. So we are optimistic. What about the freight derivative markets? How are they looking at the market development for the next 12 to 15 months? And here we see again the way the derivative market is priced in the upper blue, blue line. Priced the next five quarters, the second quarter this year to the second quarter next year. And it's pleased to see that the derivative market basically shares our optimism despite the normal backwardation pricing in these markets. So if you compare the average for the next five quarters with the actual 2023 level, in fact, product tankers are 10% higher in terms of time charter equivalent.
Dry bulk market for derivative pricing for the next five quarters is 25% higher than 2023. And this explains to us that if the derivative markets are right, both markets will be strong and, of course, being positive for the development in our company. So let's have a look on how KCC has positioned itself with our fleet and our contracts based on this market view. Let's start with tanker days. As you know, we normally split between planned tanker days and planned dry bulk days. So here from the middle of the graph, you see that we, for the second half of the year, we have around close to one third of the capacity fixed on fixed rate contracts or time charters.
That means that around two-thirds of our capacity is market exposed, either through index linked or what we call floating rate contracts or in the spot market. For 2025, we have only 6% fixed rate coverage for our fleet, meaning 94% exposed to the market. But we expect to build fixed rate coverage over the next quarters. Coming into the autumn, we come into the annual renewal season for our caustic soda contracts, and we expect that between 40%-60% of the contracts will be fixed rate for 2025. We also expect to increase the fixed rate coverage for our CLEANBUs.
For the dry bulk market, we normally operate with a lower fixed rate contract coverage for the dry bulk market, given it's the flexible element of our trading. So for the second half of this year, in the middle column, you see we have around 13% of the capacity, dry bulk capacity, booked on fixed rate contracts, meaning, 83%-87% of the capacity market exposed. We have no fixed rate coverage for 2025, but we expect to build some coverage between 15%-25% over the next quarters through renewal of our existing contracts and possibly adding one or more contracts.
So to summarize, the KCC's continued high exposure to the underlying dry bulk and product tanker market and a positive market view, which is in both markets, KCC is set to deliver strong results over the next quarters. We limit the guiding to the next quarter, so let's look on how the second quarter, 2024, will look like. We are pleased to see that the performance, the strong performance in the first quarter of the year continues into the second quarter. The CABU earnings is estimated to be between $36,000 and $37,000 per day, which is between $1,200 and $2,200 per day higher than in the strong fourth quarter.
This is mainly driven by strong performance of our floating rate contracts on the back of a very strong MR product tanker market in the Pacific from March and now through the spring. The CLEANBUs in the middle is also expected to continue to deliver solid earnings, backed by a strong but weaker than the first part of the year earnings for LR1 tankers. The second 2024 guidance of $37,500-$40,500 per day is around $6,000-$9,000 per day lower than in the first quarter, which is a reflection of the weaker but still strong LR1 product tanker market.
To summarize, our second quarter 2024 time charter earnings guiding of $36,700-$38,700 is rock solid, likely among the third highest performance of our company to date. With additional positive effect of estimated 50 days higher on hire days in the second quarter, it looks to be a great quarter. Before ending this presentation, I would like to remind you about the value drivers of our business and how it impacts the attractiveness of investing in KCC. As we like to show this graph where we compare KCC against all other listed dry bulk and product tanker, chemical tanker companies, in terms of average return on invested capital on the vertical axis and the volatility in returns on the horizontal axis.
And the further you come up to the left-hand corner of this graph, the more attractive the position of the company is. So the graph shows that KCC has the best relation between returns and volatility of any listed company in the dry bulk and the tanker sector, which we believe creates real value for investors in our markets, which are extremely volatile and heavily exposed to both geopolitical and macroeconomic risks. So through our business model, with focus on efficiency, diversification, and flexibility, gives the best risk-adjusted return in shipping and builds sustainable value over the shipping cycle. It's not only one quarter, but by quarter of, by quarter by quarter. And this, ladies and gentlemen, concludes this presentation. I'm sure some of you will have some questions, and I'll be very happy if you send in your questions on the webcast solution. Thank you.
Thank you, Engebret. So over to the questions. Could you please elaborate on which indices that makes up for the floating rates in both segments?
Yeah. So in what we do on the dry side, the dry market, we use a blend of the P5TC, which is Kamsarmaxes, and the P4TC, which is the Panamaxes, based on relation between CABUs and CLEANBUs. In the product tanker market, we use Clarksons long-term, long-term MR tanker earnings for the CABUs, and we use the average LR1 spot market earnings as given by Clarksons Securities for the LR1, for the LR1 tankers.
Thank you. I think that's all questions for today.
Well, we are lucky today, but again, you know where to find us, so if you have questions, please do not hesitate to contact us. And thank you for joining this morning. Thank you.