Hello and welcome to the second quarter results presentation of Cloudless Combination Carriers. I'm Henri Brattam. I'm the CEO of the company. Together with me, I have Olivier Dionis, who is the CFO. Questions, please use the webcast app to send questions and we will go through this after the presentation.
The safety, health and the well-being of our crew is our first priority. And in these difficult operational circumstances, we do whatever we can to minimize the risk of COVID-nineteen contamination coming from shore to the ships. And we're doing whatever we can to make the crew changes to ensure that our crew comes back to their families after minimum delay after the end of their contractual periods. There are difficulties in the operations and we are very thankful for the crew for their great job to keep the service running. We are a quite special type of shipping company.
We have our unique combination carrier solutions. We have two types, the Carbus, which can do both dry bulk and caustic soda. We have the Cleanbus, the new generation, which takes all type of more or less all type of wet commodities and dry bulk. Our business have three unique features. We provide the most carbon efficient transportation solution being 30% to 40% lower carbon footprint than standard ships.
We have over time managed to deliver substantially higher earnings than the standard vessels over the cycle. And thirdly, given that we have a differentiated market exposure, we have much lower volatility in the earnings compared to the standard markets. Looking at the second quarter, the results set new records for the company and shows the earning potential in a market situation where only one of three markets are strong. We had a booming tanker market for most of the second quarter, while the dry bulk market was very poor and we had low fuel prices. Under these market circumstances, we delivered earnings on the car boost over $21,300 per day and clean book earnings at around $31,000 per day, which gave an EBITDA of $900,000 23% higher than last quarter and a result before tax of $8,400,000 which is more than close to double the results for the first quarter.
The return on capital employed is around 10%. And mind you, this is in a situation where we still have five newbuilds under construction, where the capital linked to these newbuilds are not giving annual returns during this quarter. The Board decided yesterday to continue the dividend payments of $03 per share. During this quarter and to date in the third quarter, we have shown the value of our combination business. The earnings differentiation is important.
We show that after enjoying the boom months in the tanker market, the tanker market fell down, But just soon after, the dry market recovered. And to give you an example of that, the effects for us, we can show you one example from one of our dry trades from Australia. In the second quarter, the standard Camsemax has earned around $7,000 per day. Our modern vessels would earn more than $10,000 per day in this poor market in this trade. Looking to date in the third quarter, the standard Kamsarmaxes have earned about $12,200 per day.
We would, this market, on our ships, earn $18,600 per day, close to doubling of the earnings compared to the second quarter. Take a look on the spot market at the moment, it's very strong and again have a very positive impact on earnings. So the point is that the higher dry market helped by higher fuel prices, to a large extent offset the negative impact of a weak tanker market for our business and shows the value of diversification of the earnings. The second point I wanted to point to you is the fact that our industrial focus on our business means that we are we have a large share of contracts in our business. And we have the discipline that when markets are offshooting as tanker market did in the second quarter, we are increasing the coverage, charting our ships on time charter and using the derivative markets.
So coming into the second quarter, as you see to the table to the graph to the right, you see that we had quite a good contract coverage coming into the second quarter on the car business. The cleaners were open, but we chose to fix all ships on Tamshara, leaving only less than 20% of the total capacity in the spot market. But the point was for us to extend the duration of the tanker market coverage as long as we could in this very strong market. And you see the effects coming into the second half where 50% of the capacity we have tanker capacity we have actually is derived from what we did during one month in April, where we fixed the three time charters, we did contract renewals on two cargo contracts and we sold FFAs. And that is bridging the poor tanker market, which we expect to continue in the second half and also it shows the way we reduce cyclicality of the business.
So jump over to the car boost. We earned $21,300 per day for the car boost in the second quarter, up $1,000 per day from the first quarter. The main reason is the fact that we managed to have more or less the whole capacity of the fleet in combination trading and we also had positive effect of the booming tanker market on our index linked contracts. But mind you again, this is a market where the dry market was poor and fuel prices were poor. So first half twenty twenty results ended around $20,800 per day, slightly below the AMR tank index.
We have during the quarter succeeded to show a substantial increase in our track record on the Clean Booth. We have the number of terminal calls with good feedback from customers have increased over the quarter and this summer and as have the number of voyages. We're also pleased to see we have expanded the combination trades for the Clean Bus. This example shows one of the trades we have tested out where under the charter we took in jet fuel from Middle East to Europe and are bringing back cranes from Europe to The Middle East. We also have a second trade, which we'll come back starting up on the second trade, which we'll come back to you later on.
This graph shows the days and earnings in combination trades and outside combination trades for the cleaners. And over the previous quarters, we have seen that we have outperformed earnings in the standard markets substantially each quarter. This quarter, the second quarter is unique in the fact that we chose to fix the ships on time charter, which is here counted in as outside the combination trades. And we had few days in combi trades. It was only the last part of days on a grain voyage from Brazil fixed in a rather poor market.
So the earnings for the CleanBoost, 31,000 per day for the quarter, dollars 10,000 up compared to the second quarter. We are close to $26,000 year to date. If you compare it to the indices and estimates from brokers giving the average LR1 earnings, we are well below. It is difficult to beat such volatile market when the market is peaking and it gives some comfort to see on what other LR1 owners are delivering for the second quarter, all are well below this, what you call, broker estimates for the average tank Alawan tanker earnings in the quarter. But we expect to substantially outperform the standard markets in the second half and let's see what we end up with for the whole calendar year 2020.
The operation of both the Carbus and Cleanbus has been doing well this quarter. In this graph, we show the utilization, which is the sum of unpaid waiting days and off hire. So we had a 94 utilization in for the caboose. That includes off hire connected to one docking starting up in June and also some off hire linked to the crew change we have done during the quarter. The Killeenbus had 99% utilization, just a couple of days off hire.
We had during the quarter two incidents of COVID-nineteen on board one of the caboose this summer in July. There was two onsigners from The Philippines that brought COVID-nineteen on board the ships. The procedures we had to isolate the on signing crew and to get the affected crew to medical treatment onshore worked well. Two I'm glad to see that the two crew members are safe and healthy back in The Philippines. We succeeded retest the crew on board several times and also the accumulation unit was cleaned and disinfected, and we continued trading after fourteen days of fire in July.
So after all, this went pretty well, but it shows the exposure in this business at the moment to COVID-nineteen. The COVID-nineteen also impacts the delivery of our new builds. We took delivery of the fourth clean move, the Baleen, in early August, five months late. And it has been a big challenge to get the ship started up. It's today practically impossible to bring in crew to Chinese shipyards.
So to get the ship out, we recruited a Chinese crew, which will bring the ship to Korea and we'll send in our crew into Korea to do the crew change there. Due to delays due to quarantine and visa problems and all the other problems we are seeing in the world today, this delays the time the startup of operation. So now expect the Balin to start operation during late September, which is a substantial delay compared to the previous ships where we had used two to three weeks from delivery to start of operation. The fifth ship, which will be named the Bongous, will be delivered in early October. We do expect the same problems on that ship and probably have to recruit also Chinese crew to bring the ship out.
But we do hope we can optimize the crew change and bring down the time from delivery to start of trading. Operating cost has been more or less in line with expectations, a little bit over. We are expecting that the existing pre clean moves and the car moves will have a slightly lower cost in the second half, while the new clean moves being delivered will be higher during the first quarters as was the case for the existing three ships. This graph to your left shows the boom and bust in the tanker market, very poor market during the summer, but we other one market improved lately in the August, while the MR market is still very bad. The forward market, the FFA market, predicts improvement over the next months, but still at fairly low levels.
As mentioned, the VAT contract coverage for our business is high for the second half. We have 76% of the tanker days of the CABUS have been fixed rate contracts. And if you add the index linked contract, we are above 90% coverage for the second half. For the clean boost, the time charters we have on the three ships, where two were delivered in July, accounts for a bit more than 40% of the capacity. And if you add FFAs, we are about 60% covered for the cleaners.
So in totality of the total tanker days, we have fixed rate coverage for about 70% of the capacity for second half. The coverage for next year is much lower, but we are in the process of starting up discussions with our customers for extending contracts for next year. So we do expect the coverage to be much higher coming into the end of the year. And as normal, we always target to book the full Caribou tanker capacity with contracts on caustic soda. That's the target.
The dry market graph shows the weak market persisting through first and second quarter and quite nice recovery happening through the summer. The forward market predicts that the market to fall back over the fourth quarter and a seasonal low in the first quarter as normal, but still at acceptable levels. We have fixed and have contracts covering a little bit more than 60% of the dry capacity for this half second half of the year, the coverage for next year is very limited. As some of you remember, we presented our environmental strategy in January where we set a number of targets to decarbonizing our business. Firstly, we set targets to reduce the carbon intensity, the so called EEOI and also the average CO2 emission per ship by 20% to 25% up to 2022.
In addition, we set the target of step by step moving towards carbon neutral operation by 02/1930. And we are committed to this decarbonization targets. To show that, we entered into the first sustainable linked financing for the two last newbuilds this summer and this facility is then linked to the trajectory of our decarbonization targets. So we're moving on to reach the targets. The individual quarterly performance on EOI and CO2 is a bit mixed so far this year.
It's important to read to get a lot of sense also with the quarterly figures. You should look on more on an annual basis to see the trend. But I can comment that for the second quarter, we see on the carbon efficiency is less favorable due to problem mostly the time chartering out of the CleanBoost as standard tankers increasing the ballast. We have initiated a number initiatives so far this year, firstly, to improve the energy efficiency and operation efficiency of our ships. And we have then implemented anti foiling, which are fuel saving.
We have an ultrasonic propeller protection system installed on the ships and we're also implementing a new system for weather routing and speed optimization. We also this summer tested out the first sustainable biofuel on one of the ships and that is based on our ambition to use increasingly use biofuel on our ships. There are little biofuel available in our trades, but we do hope that we can stimulate suppliers to increase the supply in our traits and work together with customers to start using biofuel. And the first test was successful and it was 100% carbon neutral fuel provided by a company called GoodFuel in Rotterdam. In addition, we are progressing with our zero emission project and we this summer had four bright students from NTNU to look into the alternative zero emission fuels and engine technology.
And they presented two concepts, one which is shown here on the graph with something called the GreenBu, which is basically a concept where we use ammonia as fuel and you place the ammonia fuel tank just in front of the superstructure, moving the superstructure back without impacting the transportation capacity or training flexibility of the ships. So this study, even though we have a number of steps ahead of us, shows that we can implement zero emission solutions on existing type of ships, which I think for me at least was a real mindblower. So I think that's the end of my first part. So leaving the word to Lid.
Thank you. Good morning, everyone. This is a nice quarter to present the results, I have to say. Adjusted EBITDA ended at $15,900,000 That's an increase of 23% compared to last quarter and it's mainly driven by earnings. As mentioned, CABO earnings ended at close to $1,300 per day and an increase of $1,000 per day.
That's mainly driven by higher caustic soda volumes and it's not entirely reflected in the percent combination trade made for the quarter as we had one long positioning voyage carrying caustic soda. The Klimbu earnings ended at close to $31,000 per day and an increase of $10,000 per day driven by the TCs. Costs and depreciation, quite stable with some minor prioritization effects. Net finance costs, we see here an improvement of $1,200,000 when comparing the two quarters. That's mainly due to the bond refinancing in first quarter with one off costs of $1,200,000 All in all, earnings before tax for the quarter ended at a strong $8,400,000 an increase of close to ninety five percent and four million dollars Earnings per share $0.17 up $08 per share.
When we see the increase from last quarter to this quarter in EBITDA, we see that the CleanBu net revenues are the main driver for the increase. However, I think it's important to emphasize that the caboose have delivered two consecutive very strong quarters with about $20,000 per day in earnings. This segment has a higher contract coverage, less spot exposure and hence more stable earnings than the Klimbus. The Klimbus on the other hand used the strong tanker market and fixed all three vessels on TCs. We guided on between $18 and $19 or was it $19 and $20 per day for the caboose for the quarter and between $28,000 and $29,000 per day for the cleanboose.
We came in above this mainly due to higher caustic soda volumes than expected when doing the guiding. And for the CleanBoost, it's mainly driven by some adjustments in voyages made prior to entering the TCs. But all in all, we see a good combination of two different segments, leading to a strong close to $60,000,000 in EBITDA for Q2. First half EBITDA ended at $28,700,000 up from $9,900,000 in first half last year. However, there's a difference between these two periods as we have three no, two more clean booths on water this year.
For the car booths, however, it's the same fleet of nine vessels. The increase of $8,800,000 is mainly driven by two different things. It's higher caustic soda volumes, a substantially higher number of caustic days actually, and it's also a stronger tanker market, especially in Q2 this year compared to Q2 last year. For the CleanBoost, the net revenues consist of two different things. Approximately $10,000,000 is two more vessels on water.
Dollars 3,000,000 relates to Baru that was delivered last year in January. 2019 was hence impacted by the phasing of this vessel, both when it comes to costs of hire as well as earnings as we did the introduction in caustic soda before doing a tank voyage and later starting combination trades. CABO OpEx, mainly prioritization effects Klimbu OpEx, two more vessels on water and the improvement in SG and A mainly relates to one off costs related to the IPO in first half last year. Hence, we end at, as mentioned, close to $29,000,000 in EBITDA for first half. Equity ratio stable at 44% compared to first quarter.
It's a bit down compared to year end as we refinanced and increased the bond debt in first quarter. We have, as mentioned, secured financing for the last two newbuilds. We signed that facility in July, which means that we are fully funded and remaining CapEx equity wise is approximately $20,000,000 compared to cash by the end of the quarter of $72,000,000 and an overdraft facility of $10,000,000 Dividends, we continue to pay $03 per share as last quarter and total approximately $1,440,000 for the quarter. Return on capital employed on an annualized basis for Q2, 10%. And as Engibat mentioned, this is not adjusted for the new builds.
Then a reminder at the end. We still have five Klimbus under construction. So if we adjust the Q1 and Q2 EBITDA figures based on Clean Brew earnings of 21,000 per day and $31,000 per day respectively for the two quarters and adjust these numbers for the additional five vessels, we will see an EBITDA potential of between 70,000,000 and $100,000,000 on an annualized basis compared to an actual figures of 51,000,000 and $63,000,000 for the existing fleet. And of course, this will impact the financials for the company and the return potential for the company. Yes, that's it.
Thank you. So just to wrap up, we have a good progress on several fronts. We are seeing that we are after two of the cleaners are delivered from time charter, we are expanding the combi trading for the ships. We are showing performance with improving vetting results. On the carbers, we are booking more caustic soda contracts and the outlook looks good.
And we are progressing with our decarbonization targets. Despite the poor tanker market, we are guiding for positive outlook for the business for second half. The high contract coverage in the tanker side with 70% of the capacity booked at good levels, the stronger dry bulk market and also higher fuel prices will support the earnings for second half. Based on actual fixture made and estimates for remaining capacity in the second quarter, which is not too much really, We are guiding on earnings on the car boost between 17,000 and $18,000 per day and on the clean boost between $24,500 and $25,500 per day. The outlook is, of course, one should have in mind the COVID-nineteen risks, which are around.
Firstly, we have COVID-nineteen risks on operation. It's impacting delivery of our newbuilds that impacts the operation of our business. But I believe we have done a number of initiatives to reduce risks and have good control, but still there are a lot of things we can't control. When it comes to the underlying markets, COVID-nineteen also impacts, of course, the macroeconomics and the state of the three markets we are exposed to. It seems to us that the market fundamentals are improving despite COVID-nineteen increase in contamination in certain countries.
And we see the tanker market is rebalancing, we see demand is up. So we are hopeful that 2021 also can look well and that the world is improving after getting control of COVID-nineteen. So I think that sums up the second quarter results. And please, I look forward to hearing some questions.
First question from the person in the room.
Hi. This is Bendy Kang Blitzsson from Danske Bank. Thank you for taking the questions, and congratulations with a very strong record quarter. Very impressed by these charter rates you've been able to achieve. First question about the Kabu, the growth in EBITDA from the Kabu fleets, Olivier.
You mentioned that the Kabu fleet has scored higher earnings partly because of higher volumes in the 2020. Could you expand on which areas have driven this expansion? Is it how much has been related to Alunorte's reopening or regaining capacity? Could you expand on that, please?
I think the expansion of Alunorte capacity took place basically last summer. So we had more or less full volumes on Alunorte contract through the second half of last year and also first part of this year. So if you compare to last year, I think the effect of Alunorte volume is limited. So it's more that we booked before Christmas, we booked a lot of caustic soda contracts at good levels, which we have performed well over the both the first quarter and the second quarter. So I think the key on the carbon system to make sure that they get into the combination trade because they are a little bit less flexible than the cleaners.
And I think that's what we have shown in both the first and the second quarter. And
then just to emphasize that I also think it's partly that the first half last year, we saw quite low caustic soda volumes. So we see the rates were quite low and impacted by doing more dry bulk last year.
Yes, that's right. So again, comparing to the first quarter last year, you get that on and off that has a big impact.
Right. Okay. Thank you very much. And then back to the contract coverage that you now have, you mentioned that you had roughly on average roughly 70% of the 2020 covered. Now as you take more Klimbu vessels on water, you have two more vessels coming in late September and early October.
Will we be able to see the same extent of contract coverage in half a year? Is that a level that you try to approach?
I think when it comes to the car boost, when we're coming into the start of the year, the target for us is to have 100% of the nine ships covered on contracts, which can then be partly be index linked and partly be fixed rates. On the Clean Boost, it is a more a spot business, meaning that we are targeting to do contracts, but these contracts will index linked because that's the way the product tanker market is working. But we will try to utilize the FFA market to stabilize earnings, but that means that we will see a much lower, what you call, fixed rate coverage for the cleaners. But we expect to get the combi trading going. Our target is to do contract coverage, but as I said, we'll be index linked and earnings will fluctuate together with a spot market.
But again, you are depending on three markets. So that will even out even as you will both have the impact of the dry, the tanker and the fuel.
Sorry, yes. Thank you. Right. The one contract you have now on one of the clean vessels is, if I remember correctly, roughly nine months. Is that the length that you can obtain for these contracts?
Is that particularly long?
That is for the Tom Sharter. So of course, we that was basically what was available. I mean if we could have fixed the ships at that rate, could have fixed it for three years. Mean we would have done it at these rates. But I think when it comes to the contracts, I think there are at least where we are in the discussions with potential customers, we believe it is likely to book one or two or even perhaps three year contracts going forward.
But again, it has been important for us to show the performance of the ships before we are entering into a lot of contracts. And also we are in a process of exploring the combination trading possibilities for the ships.
Thank you. And then the final question about this incident of the virus on one of your ships. You mentioned that you had two crew members with proven infection. Is that something that took place in Q2? Did you book those costs in Q2?
Or will we see that in the next quarter?
You will see that in the next quarter. So that happened in July. So it impacted mainly off hire on the ships, but we also had to relet one cargo for one customer because of the delay, which was a small loss. But again, mainly off hire is the impact.
All right. That's it for me. Thank you very much.
Then we have a question from one of our webcast viewers. The first question is, with fewer clean views in combi trade due to being out on time charter, how is the development of industrial COAs going? Do you expect any contributor COAs in the near future?
I think we have as mentioned, we have in process of expanding the combi trading and we are testing out two new trades during the third quarter. And the next step would be to try to discuss contract of affreightment. I'm uncertain whether we would succeed to conclude one this half year, but it's a target that we I think we were likely to reach within the next twelve months. But I think it's been important for us to show performance before booking contracts.
The second question, with the newbuild program fully funded and strong rate coverage through 2020, what are your thoughts on using excess cash? Also, what minimum level of cash on the balance sheet do you feel comfortable with?
I think I'll take the first one and Lee will take the second one. I think the policy we have is that we will pay out 80% of the free cash flow to shareholders as dividends. That means that we have fairly limited flexibility when it comes to using the cash on the balance sheet to new projects, meaning that in reality we will need to raise more capital should we choose to expand the fleet further. So Lee, the other question Beth, you take?
Yes. Haven't guided on a specific level on minimum cash. But I think for a fleet of the size that we will have going forward, it depends on how stable the earnings for especially the clean boost are. So yes, I do not have a specific target at the moment.
That's it from, the webcast in terms of questions.