Good morning, everyone, and welcome to the fourth 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 the presentation into three parts. I will start off to give you a brief summary of the quarter. Liv will follow, giving more details of the financial and sustainability performance, and in the third part, I will look through the market development and the outlook for KCC for the coming quarters, and as always, please use the webcast solution to write in your questions. We hope this time we'll get a lot of questions, but first, let me remind you who we are.
We have a fleet of combination carriers, two types that are both dry bulk and tanker vessels that compete against standard MR and LR1 product tankers, and Panamax and Kamsarmax dry bulk vessels. We create value through three main drivers. We are more efficient as we combine the cargo of the standard dry bulk and standard product tankers with a fraction of the time empty. We deliver higher earnings and a substantially lower carbon footprint. By trading in both the tanker and the dry bulk markets, we have a diversified earnings base that creates opportunities and also gives us a good downside protection. Thirdly, our ships are more flexible, especially our Cleanbu. That gives us more opportunities to optimize the market and gives us the possibility to shift capacity between the markets that are the strongest.
So then, before we look at the fourth quarter, I would like to just summarize the highlights for 2024. But first, the fourth quarter, we have disappointing, rather disappointing product tanker and dry bulk markets, where the expected strengthening fourth quarter effect in the market didn't come through. And also the dry bulk market was weaker than the seasonality should suggest. But in this market, we succeeded to deliver reasonably strong earnings with average time charter equivalent of $28,500 per day, resulting in an EBITDA of $20.2 million and an earnings before tax of $8.6 million. The CABU kept up well earnings, while the CLEANBU fell back mainly due to the weaker product tanker market. This was the reason why we ended around $1,000 below the guidance we gave back in October, where the markets were expecting a stronger fourth quarter for the product tankers.
In this market, the board has decided to pay out a dividend of $0.10, which in fact is a small anniversary. It's the 25th consecutive time we have paid out dividends since we took the company public in 2019. The $0.10 distribution counts for around 6% dividend yield, and it's as much as 158% payout ratio due to the high drydocking cost we had in the fourth quarter, again showing that we live up to our policy of paying a minimum of 80% of the adjusted free cash flow as dividends. But as I said, before going into more details, I would like to summarize the 2024 year of KCC, which has been quite fantastic. We have had the strongest ever time charter equivalent of the fleet, which has ended up with a very strong EBITDA of $126.5 million and an earnings before tax of $81.4 million.
That is close to the record in 2023, and this gives a return on capital employed of around 16%. We also showed good progress in continuing to build resilience of our business, increasing market share for our CABUs in Australia, and building further strong customer support for our CLEANBUs with new approvals and new customers. We also live up to our promise to pioneer low carbon shipping by implementing more energy efficiency investments on our ships, and we also took the decision to install the first suction sails on one of our CABU III new builds. In markets where we have more optimistically traded our ships to get the best out of the very strong product tanker market, we have been able to maintain performance and remarkable performance through the year.
Going into the markets, looking at the graph here, the blue line shows the LR1 product tanker market has weakened considerably through the fourth quarter, earning around one third down compared to the third quarter. The main reason has been the lower long haul east west product tanker product shipments. We see that the downward development, we had a small upturn in September, October, but it moved down consistently. The dry market has, as illustrated with a dark blue line, the Kamsarmax earnings have continued to weaken in the fourth quarter and compared to the third quarter, which is partly seasonal effects. How was KCC's performance on this market backdrop? We have taken into account the market development. We are fairly pleased with the results of $28,500 per day.
As we see from the graph, we deliver the higher earnings premium compared to the spot market product tanker and dry bulk spot markets, which is, of course, a reflection of the smaller earnings difference between the dry and tanker market. So the graph illustrates again the lower, the more stability of earnings of our company compared to the underlying markets. And again, that we are able to improve the value creation over the best performing underlying market when the earnings difference narrows. Looking on the CABU, we had a very hectic caustic soda shipment program towards the end of the year.
In 2024, we had a bit uneven distribution of caustic soda cargoes, a little bit too few cargoes in the second and third quarter, and too many cargoes in the fourth quarter, meaning that we had to ballast more ships to service our customers, meaning that we ended up with a proportion in the tanker market around 58% versus 44% in the third quarter. The fact that we ballasted more ships, of course, ended up that the ballast percentage increased in the fourth quarter, and also, as we don't count caustic soda shipments where we ballast as part of combination trades, the increase in combi trade was only quite marginal, so despite the weaker markets, we maintained earnings for the CABU, earning at around $29,000 per day, around $700 down from the fourth quarter.
We had a positive impact of the high tanker trading and got more limited negative effect in the quarter from the weaker dry market, where they had a higher proportion of fixed rate contracts in the quarter, which also was positive. But even the floating rate caustic soda contracts earned substantially more than the dry trading in the quarter. Looking on the clean boost, we had a very high proportion of the clean boost days in clean petroleum product trades, 72% of the capacity. This was partly impacted by that we used the flexibility of the ships to make two ballasts in December to take advantage of the very strong Atlantic product tanker market at the end of the year.
But also, we have in the quarter maintained the fixing of vegetable oil cargoes out of South America, again using the flexibility of our ships to arbitrage between the dry and the tanker market in the trades out of South America. So as a consequence of this trading, the ballast percentage ended up in the fourth quarter, and also the share of the capacity in combi trade ended lower. It has to be added that we also had one suboptimal trading on one ship after completing a dry dock that also had an impact both on earnings and on the trading efficiency of the fleet. Earnings fell back from around more than $10,000 per day, mainly, as I said, as a reflection of the weaker product tanker market, but also as a reflection of a bit longer waiting time and also the suboptimal trading on one ship.
So then, Liv, it's up to you to give us more details.
Thank you, Engebret. Let's see. I'll first go through the Q4 numbers, and then I'll jump into 2024 in total before I go into the sustainability efforts at the end. If we then have a look at the EBITDA comparison between Q3 and Q4, you here will see that Q4 in total was $20.2 million. This was a decrease of close to 40% Q on Q. The CABU TCE earnings kept up, as Engebret mentioned. We only had a TCE decrease of $700 per day, despite the very weak underlying markets, and this amounted to a negative Q on Q effect of $0.4 million. The CLEANBU TCE earnings fell by $10,600 per day, a total effect of $6.7 million Q on Q negative, and then we dry docked quite some vessels in Q4, while we had very limited dry docking in Q3.
So this means more off hire, and this had a negative Q on Q effect of $4.1 million. The other income slightly negative effect was a loss of hire insurance payment in Q3, and then OpEx increased as well by $0.8. This I will come into more details on later. SG&A quite stable Q on Q, and that's the main drivers behind the decline in EBITDA. If we then go into the income statement as well, you will see depreciation slightly up by three%, while net financial items or the cost increased by $0.5 million. The main driver here is foreign exchange. Profit after tax for the quarter, $8.6 million, a decline of 60% from last quarter. The result of this is a return on capital employed on an annualized basis for the quarter of eight% and return on equity annualized of 10%.
Engebret mentioned that the dividends per share for the quarter is $0.10, down from $0.30 last quarter. This is 157% of the adjusted cash flow to equity, so well above the minimum requirement in the policy of 80%. And on a payout ratio basis, it's close to 80%. So the reason behind the large deviation between the payout ratio and the percent of the cash flow is then the dry docking element mainly. If we then look at 2024 in total, this was a fantastic year. EBITDA of $126.5 million, slightly down 6% from 2023. So even though Q4 was much weaker than the first three quarters, the total for the year was very strong. CABU TCE earnings were slightly down. That had a year-on-year effect of $5.6 million. That was after a record strong 2023.
CLEANBU, on the other hand, had a record high TCE earnings in 2024, and year-on-year, a $7.8 million positive effect. So the total TCE of the fleet in 2024 was record strong. However, we had a much larger dry docking program with in total six vessels in dock, a negative year-on-year effect of $7.1 million, and then as well higher operating expenses of $4.6 million. So while the revenue was record high, this was more than offset by more dry dockings and higher costs for the year. If we look a bit more into the operating expenses, we saw an increase of 9% year-on-year. There are mainly three drivers behind this increase. It's general cost increases. It's higher maintenance and higher crew cost.
The latter, both due to overlapping crew as well as the introduction of traveling squads, as we wanted to improve the quality, especially of the older vessels. We had very limited unscheduled off hire in 2024, 1.3 days per vessel, while scheduled off hire was 408 days related to six dry dockings. This as well includes some delays for several of the vessels, especially related to two vessels. We plan to dry dock seven vessels in 2025, and the estimated number of off hire days are 343 days, so down compared to 2024. You can find more information related to dry dockings in the appendix. Okay, then over to the income statement for 2024, depreciation slightly down by 4% approximately. The deviation between the different years here, that's mainly related to depreciation of dry dockings. So that is not evenly distributed between the different years.
Due to the quite heavy docking program, both in 2024 and 2025, we expect the depreciation to increase somewhat in 2025. Net financial items was down by approximately $1.6 million. We had lower interest costs, but then we as well had some positive one-offs in 2023 related to termination of derivatives. But all in all, an improvement year-on-year. Profit after tax for the year, $81.4 million, a decline of 6% approximately from 2023. Return on capital employed for the year, 16%, and return on equity, 23%. So very strong underlying return figures. Dividend per share for the year, $1.05. This equals approximately 95% of the adjusted cash flow to equity for the year, so well above the minimum dividend policy and a payout ratio of close to 80%. Then over to the balance sheet. As you can see here, equity was down by approximately $10 million Q on Q.
The profit and the positive other comprehensive income amounted to approximately $9 million, but this was more than offset by dividends of $18.1 million, as well as share buybacks of $1.2 million. Total assets, quite stable Q on Q, $614 million, and the equity ratio still very solid at close to 59%. The cash position ended the year at $56.1 million. This was an increase of approximately $5 million Q on Q. EBITDA contributed with close to $20 million, and then we had positive working capital changes of close to $12 million for the quarter, following a negative change in Q3 of approximately the same amount, negative $12 million. Capital expenditures, $8.3 million. This includes approximately 75% dry docking and technical upgrades. 25% of it is energy efficiency investments, and then we had a small portion related to new builds as well.
Debt service, as usual, between $9 and $10 million, and then we draw on the revolving credit facility capacity that we have, $10 million positive, and dividend for Q3 paid in Q4, $8.1 million. We as well initiated our share buyback program in December. We have finalized that program on the 10th of February this year. We have purchased $1.2 million shares with a total amount of $7.9 million, whereof $1.2 million in 2024. As you can see here, available long-term liquidity, $171 million, and this includes commitments related to new builds and energy efficiency investments going forward, so a solid cash position as well. Here you see the debt maturity profile. As you notice, we have no due dates in 2025, but we have one facility falling due late 2026 and one in early 2027.
We as well will take delivery of three new builds next year, and we will initiate the debt financing of these vessels this year. We had the first steel cut in January this year, and then we will have one more in Q1. And the total CapEx commitments related to the new build program for 2025 is estimated to be around $55 million. This has been funded by an equity raise that we did in 2023, and then we have used these funds to regulate the RCF capacity to keep debt and costs down. And we will now again start to draw on the RCF capacity to fund the CapEx. Then over to our sustainability performance or decarbonization performance.
In the graph here, you see the carbon intensity measured by the EEOI, which is based on actual cargo carried and not the dead weight of the vessel for the KCC fleet this year, and then compared back to 2018, which is the base year for us. As you will see here, EEOI increased slightly from 2023 to 2024, and we did not reach our target of 6.4 for the year, but quite interestingly, if we adjust for the vessel that has been out on TC for the entire year and trading as a pure product tanker, we would have reached the 6.4 target for the remaining 15 vessels. There are many drivers behind this change. We saw in total for the fleet increased cargo intake and reduced time in port.
We as well saw effect of the energy efficiency program that we have rolled out on a large part of the fleet. But then we saw increased speeds, especially related to the Cleanbu fleet, and then aging hull coatings. So a mixed picture here. But let's dig a bit deeper into the Cleanbu fleet over 2024. If we start with the graph to the right, you will see the correlation between TCE earnings and speed. And as you can see in Q1, the Cleanbu fleet had fantastic earnings of close to $47,000 per day. And then we decided to speed up to capture value of this very strong market. But then you will see that that has normalized and so has speeds. So when markets are more normalized, the benefits of sailing fast is outweighed by the increased fuel costs. So that's part of the reason for the EOI.
More interestingly is the graph to the left. Here we have compared the best performing vessel and the worst performing vessel in 2023, sorry, 2024, when it comes to EOI. So Bass, as mentioned, out on TC trading as a pure tanker, $10.2 in EOI, while Balzani had an EOI of $5.4. So the main difference between these two vessels, that's the ballast percentage. But then we have other positive effects for Balzani as well: cargo weight, lower speed, and better coating condition. But I think the point here is that this really illustrates that combination trading is definitely part of the solution for decarbonization and for us to bring down the carbon intensity. So we will keep on working on this in 2024, both when it comes to trading efficiency, optimizing voyages, as well as continuing investing in energy efficiency measures. Over to you again, Engebret. Thank you, Liv.
So forming a view of the outlook of the shipping markets in the current geopolitical high-risk situation is difficult. We have increased uncertainties with the new U.S. administration. We have continuing wars in Ukraine, Middle East, the attacks on fleet in the Red Sea, and on the top, we have the uncertainties on the macroeconomic side, especially in China. So we have a lot of moving pieces more than normal, and these could have both positive and negative effects. On totality, we are reasonably optimistic both for the dry bulk and the product tanker market for the year. But let's first give you four examples of how the uncertainties impact our markets. Trade wars will definitely be negative for the world economy, but it could be positive for both the dry bulk and the tanker market.
We see if China buys soybeans from Brazil compared to the U.S., it increases the tonnage demand in the dry market. If the U.S. buys oil products from Europe instead of Canada, it increases tonnage demand for product tankers. A peace in Ukraine, which we all hope for, will be negative for the tanker market as part of the trades will normalize. At the same time, part of the shadow fleet, which is pretty old, accounting today for 20% of the product tanker fleet, could be phased out. There are increasing or tightening sanctions on the shadow fleet trading Iran and Russia, which limits supply, effective supply. And this seems to be continuing for some time. And with the maximum pressure of the new Trump administration on Iran, it will continue. The Gaza situation may be one of the triggers for a normalization of the Red Sea.
When it will happen is highly uncertain, and the net effect, as I will come back to, is rather uncertain. China, as it's a superpower both in the dry bulk and the tanker markets, and as the world's factory, a trade war will have an impact on the Chinese economy and also on the shipping markets. So the key question is, how effective will the stimulus of the Chinese that has been decided that will be introduced have for the Chinese economy? So, as I said, we are pretty optimistic for our markets. We don't expect the booming markets in 2025, but on the totality, it looks pretty good in our mind. And I'll give you two examples why this could be the case, two for the tanker market and two for the dry market.
Starting up with the Red Sea situation, it's been debated what will be the net effect, especially for the tankers. The graph shows again the effect on product tanker trade flows after the escalation of Houthi attacks in the early part of last year, where the blue line is showing the reduction in transit through the Red Sea and the black line showing the increase in Cape of Good Hope passage. When eventually trade resumes through the Red Sea, we believe that the net effect in terms of tonnage demand may not be that dramatic as some people believe. In fact, it could be really fairly marginal. One reason, as you see on the graph, is that part of the adjustment in tonnage has already happened through the much lower east-west long-haul product tanker product shipments that have taken place over the second half of the year.
So when the markets normalize, the fall in tonnage demand will be less. At the same time, you should also remember that more efficient trade through Red Sea and Suez will impact costs for our customers. That could have a positive effect on the east-west product volumes that could partly offset the negative effect of the normalisation on tonnage demand. Looking on the crude market this year, with knowing that the crude tankers have less than half the order book of product tankers and positive prospects for long-haul crude shipments, it seems that crude tankers look to be overperforming the product tankers in 2025 and 2026. Given the strong interlink between the markets, if we have a strong crude market, we also are likely to have a reasonably good product tanker market. I'll give you two examples of an interlink.
The VLCCs and Suezmax have the ability to clean up and to enter the clean petroleum market, as we saw during the third quarter. It depends on the relative earnings difference between the markets, as we have seen in the fourth quarter. Much of the VLCCs and Suezmax that entered the clean market in the third quarter has returned back again to the dirty market, as the crude tanker earnings have improved relative to the product tanker earnings. Another example is the LR2 product tankers that are, in fact, coated Aframax crude tankers. These ships, a big portion, switch between the clean and dirty trading depending on the relative strength of the markets. And the black line shows again the share of the LR2 trading in dirty that has increased over the recent year after the product tanker earnings have decreased.
So just for an example, saying that there could be potential of, let's say, 20% further switching capacity, so 20% of further 20% of the LR2 tanker fleet switching to dirty trading, that actually counts for half of the current LR2 order book, which will be delivered over the coming years. And having in mind that the LR2 accounts for more than 50% of the product tanker order book. So if you believe in a strong crude market, you should also have confidence in the product tanker market for the next years. Turning over to the dry market, one of the reasons for the weak dry market in 2024 was the weak shipments of grains out of South America, especially Brazil.
This year, we have reported a record soybean crop a bit later than normal, with a strong harvest, which should support strong grain shipments out of South America and Brazil over the next six to eight months. Reported sales and lineups demonstrate that this will be the case. After extremely weak Chinese grain imports, as you see on the blue line to the right, the market and imports fell down substantially in the fourth quarter. It looks likely that we will get strong Chinese soybean and grain imports this year. The stock levels of soybeans are record low, and prices for soybeans are increasing in China, which is the best starting point for an increase in the Chinese imports, so the combination of strong soybean crop and increased Chinese imports looks good for the front-haul Panamax demand.
A second thing, as China accounts for around 40% of the global demand, tonnage demand, when Chinese celebrate the New Year and the country more or less shuts down, it impacts the dry market. In this graph, we have indexed the average Kamsarmax dry market according to the date of the Chinese New Year. You see the development in markets that the markets weaken in the weeks before the Chinese New Year to rebound after the Chinese New Year. You see in the gray range the range of the years 2018 to 2024. The green line shows that this actually happened even this year, where we have, after a fairly early Chinese New Year this year, over the recent weeks, the market has improved, but still is at fairly low levels and supported by the grain season out of South America.
The upside potential, as the graph shows over the coming months and weeks, is high. So looking at with this market backdrop, how the outlook looks for KCC. Let's first start up on the booking we have. So looking on the carbos first, we see that for the first quarter, we are getting close to be fully booked. For the rest of the year, we have a solid contract coverage, both on the dry and on the tanker side. So around 50% of the dry capacity is fixed for the year. A bit more than 30% of the total capacity is fixed rate. Looking on the tanker side, which is basically the transportation of caustic soda to Australia, we have 90% of the capacity booked, of which around 30% of the total capacity is fixed rate.
We have, over the recent months, as previously mentioned, renewed the caustic soda contracts with our Australian alumina refinery customers and the traders, and we're ending up slightly lower than in terms of number of ships compared to last year, but that also fits pretty well with more dockings of the carbos this year than last year. The earnings on the fixed part of the contracts are slightly lower than last year, but at historically high levels. Looking on the clean boost, again, as the carbos, we are more or less fully booked for the first quarter. We are around 50% of the capacity on the dry side is booked for the remaining three quarters, while around a bit more than 20% of the tanker capacity is booked.
As you will see, the booking for the next three quarters is more or less only index or floating rate contracts, meaning that the Cleanbu are very much exposed to the underlying spot markets in dry bulk and tankers, for good and bad. But the important thing with our Cleanbu business is that we're able to keep the ships running in the best combination trades with these efficient and flexible ships, create value, and deliver premium earnings. We have been successful over this year, as mentioned, to expand the customer base and to improve the trading. And I think we are targeting to expand on this basis contracts in the main contract segments in the main trades that will further improve the resilience of the trading of these ships in the trades where they can create most value.
Looking at the first quarter, it will be a relatively weak start of the year for KCC due to the weakening of the product tanker market and also weakening of the dry market. The graph shows the LR1 tanker market weakening in the fourth quarter, which is around one-third down from the, sorry, 20% down from the fourth quarter. The MR tankers have been performing much better than the big LRs and are on a global basis around, in fact, a little bit better than in the fourth quarter. The black line shows the weak development of the dry market, which is, in fact, as mentioned, weaker than what the seasonality should have suggested.
So for KCC, the main negative effect comes from the weakened dry market, and especially this relates to the Cleanbu, where the Cleanbu are trading back and forth to Australia, meaning in the Pacific dry market, having in the first quarter around 57% of the capacity in dry, and two-thirds of the days are based on floating rate contracts or being in the spot market. So if you look to the right, looking at how the Panamax Pacific market has developed to date in the first quarter, you see the spot market has been around 50% of the fairly uninspiring levels we had in the fourth quarter. On the Cleanbu, we are also hit by a weaker dry market, but to less extent, given that a smaller part of the capacity is in the tanker market.
And also, given the more geographically even trading of the ships, we are less impacted by the weaker Pacific market. So hence, first quarter will not be a good quarter for KCC. But I have to remind you that that has been the case in most of the years we have had, except for 2023 and 2024, due to the seasonality in the dry market. We guide the CABU earnings for the quarter between $20,500 and $21,500, and the CLEANBU between $21,500 and $23,500, based on a booking of 83% of the CABUs and 86% of the CLEANBUs. I have to remind you that comparing this with the average spot earnings of tankers to date in the quarter, we are 1.2 times the underlying spot markets. And compared to the dry market, we are closer to 3 times the dry market, illustrating the weak dry market.
But when you are looking at our company, you have to look beyond one quarter. And we believe there is a good upside potential based on normal seasonality and based on moderate expectations for the dry bulk and the product tanker market. And you have to remember that both in the dry bulk and the tanker trades are delivering premium earnings. So if you look on the market potential of the underlying markets, like a dry market, if the dry market increases by $1,000, the earnings of our CABU CLEANBU's in the dry trade will increase by $1,500-$1,600 per day. So we have over time delivered year after year a demonstration of the overperformance. And you have seen this graph before. And it's been proven in good markets and in bad markets.
And looking on the recent three years, where the product tanker market has boomed, we have been able to deliver earnings matching the product tankers and being twice the dry bulk market as an average over the three years. In periods of time where the two markets are more even with less difference, irrespective of levels, we are able to outperform the best market with a higher multiple. So in this period, we had, versus the product tanker markets, a premium of 1.6. So going forward in 2025, we are determined to prove that in a more normalized market we are likely to have in 2025, we should be able to deliver increased premiums compared to the standard markets, to the product tanker markets, which will reduce the effects of weaker markets compared to last year. We are also going to work actively to improve the performance of our fleet.
We are going to work actively on getting the benefits out of the change of ship management with OSM Thome. And we are totally going to prove that we have a lower risk business model than most of the other shipping companies in dry bulk and tanker space, which we have shown over the years since we listed the company. And to end, I have my favorite graph, which I wanted to show you, proving that this is the case. And here we compare the other listed product tanker, dry bulk, and chemical tanker companies in terms of quarterly return on capital versus the volatility in the quarterly returns. And the further up to the left you are, the better relation you have between risk and returns. And the updated graph taken for the period 2019, including 2024, shows that KCC's position is the best relation between risk and return.
So going forward, we are confident that we should be able, through our efficiency of our fleet, the diversification between the dry and the tanker market, and the flexibility of the ships, to continue delivering to our shareholders the best risk-adjusted return in dry bulk and tanker shipping. So that finalizes our presentation, and we very much look forward to the questions from our listeners.
Do you see more interest from your cargo customers around CO2 footprints, given the overall focus with FuelEU Maritime and IMO discussions for a global levy?
I think despite the headwind of the CII, generally, we see continued focus by customers. I think that many of our customers look beyond the current noise in the markets.
They may not be willing. They do quite are focused on reducing the cost of their decarbonization, which is what we can deliver, given that we deliver substantial low carbon footprint without increased cost. So in fact, to answer your question, yes, we see that it may not be an increase, but we see the focus of our main customers continuing. And we believe it will improve as we see, hopefully, get confirmation from post-confirmation from IMO of the new short-term measures that hopefully will be announced in April.
Thank you. After the sale of KSM to OSM Thome, now having your assets managed outside the Klaveness Group, do you see any potential for future risks or opportunities arising from this?
I think on the risk side, I think we have a very strong model in the way that we have kept all the key people in the organization sitting here in the office in Oslo, working more or less exactly the way they did before the sale of the company to OSM Tuma. This relates to the frontline employees that are the ship managers and the vetting people. So that creates the stability in terms of experience. The same is the case on the crew. And the experience we have shown since the change is that this works well. So I'm not concerned about risk. I think we have planned it well, and the transfer and the transition has been successful. When it comes to the opportunities, we believe that utilizing the scale of OSM Tuma will give benefits to KCC.
We already see it on part of the cost picture, and we are going to work together with OSM Thome and Klaveness Ship Management to get further benefits cost-wise and quality-wise out of this new setup. So we can come back to that going forward, but that is a main target. Thank you. Could you give some insights on the earnings potential for the different CABU designs? As the older CABUs are replaced with the new CABU 3s, if any, how will increased cargo capacity and more efficient vessels affect CABU TCE earnings on a like-for-like basis? I can't give you exact figures because then I have to look more into my notes. As the question points out, we get delivery of three CABU 3 new builds next year. In fact, the delivery seems to be a bit earlier than we expected, which is good.
The new ships have around 25% higher earning capacity than the old ships that are exiting. And that is partly the higher capacity of the ships and partly the higher fuel efficiency of the ships. So that means that everything equal, the time charter equivalent of the fleet should increase considerably when the new ships are delivered.
Thank you. Can you also say a few words about the new builds in general? Is everything going according to plan?
Yeah, as mentioned, we have got, in fact, yesterday an update that the two first ships will be one to two months earlier. We have the site team up and running with high-quality people in China. And of course, we know the shipyard well from the previous contracting. So everything looked fine.
As you probably also have noticed, we did the steel cutting of the first ship three weeks ago, which again demonstrates that everything is moving well forward.
Thank you. How should we think about the financing of yard installments before delivery for the new builds? Is it fair to assume that you will draw on the RCF for each installment?
Maybe Liv, that you could answer that one.
Yeah, sure. I would say not for every installment, but in total for the year, we will probably draw approximately the same as the CapEx for the new builds.
Thank you. We have another question regarding the new builds. What is the plan for the older CABUs when the three new builds are delivered?
The quality of the ships, the old ladies, are good given that we have had the ownership of the ships since delivery.
We have an agreement with our customers in Australia that the ships can trade in that trade until they are 25. So that means that we don't expect the ships to be able to trade to Australia beyond their 25th anniversary. So we are continuing to see whether we could find an alternative trade for the ships. But given the weakening of the market, of course, the probability of success on that is slightly lower than we had half a year ago. So the base case at the moment is that we will either sell the ships for continued trading, and then, of course, we need to be sure that the ships will be traded as a dry ship for some time, but probably the most realistic case would be that we would recycle the ships at a green recycling facility starting up in the s tart of 2026.
Thank you.
And that's all the questions for today.
So thank you all to all listeners for joining in. And you know where to find us should you have further questions. Thank you.