Good morning, everyone, and welcome to the third quarter result presentation of Klaveness Combination Carriers. I am Engebret Dahm, CEO of the company, and together with me, I have Liv Dyrnes, our CFO. As always, please use the webcast solution to send in your questions, and we will go through it after the presentation. We are owners of Combination Carriers, being both tankers and Dry Bulk Vessels. In tanker mode, competing against LR1 and MR Product Tankers, and in dry bulk mode, competing against Panamax and Kamsarmax Dry Bulk Vessels. We employ our ships in trades where our ships, through combining the cargos of a standard tanker and dry bulk vessel, improves substantially the efficiency of the shipping in the trades they are employed.
We have a quite unique value creation to our shareholders and other stakeholders through being more sustainable, lower earnings volatility, and over time, higher profitability than the standard vessels in the tanker and dry bulk space, which I will come back to. Let's start off looking at the third quarter. It was quite an action-filled quarter in all the three markets which we derive our earnings. Dry Bulk Market fell back quite considerably. The Product Tanker Market continued its boom through the summer. Few markets peaked in June, but still ended at a higher level for the quarter as an average. In the quarter, we had, in fact, three strong markets.
It's close to the earnings of a product tanker, which is good, when you take into the contract base we have and the strength of the Product Tanker Market. We have an all-time financial results in the quarter where the EBITDA increased to $34.5 million, which is 30% up compared to the second quarter. This is mainly driven by extremely high earnings of our CLEANBU vessels. The board has decided to continue increasing dividends, increasing to $0.30 in the third quarter from $0.23 in the last quarter, a 30% increase. This is in line with our policy of distributing 80% of the free cash flow as dividends to our shareholders.
To date, the first three quarters in 2022, we have paid out $0.71 per share, in total 37 million in dividends. We are confident that we can continue to pay healthy dividends over the coming quarters. Our Combination Carriers cut waste and improve efficiency in the trades they are employed by combining the dry and the wet cargos. Standard ships sail empty over long distances without any cargo on board. Our ships through the combination transport both more cargos than the standard ships, reducing fuel consumption per ton transported and emission per ton transported by 30%-40%. We are targeting to improve this important competitive advantage further through a number of initiatives, including a large Energy Eficiency program.
We are targeting to have a business over the next years that are at least 50% lower carbon footprint than our competitors. We can show over the recent years a good improvement in over the effects of the initiatives we have started, and the average CO2 emission have reduced by around 17% over the last 12 months compared to the 2018, which is expected to meet our 2022 target. We have also learned that the Carbon Intensity, expressed in the so-called EEOI, has been more difficult to reduce. We are ending up now with around 6% decrease since 2018, so well above our target of a 25% reduction.
We have, for sure, learned a lot since we gear up our energy, and efficiency and emission reduction, initiatives in 2019 and presented our first environmental strategy in early 2020. We'll bring with us all this experience and learning points when we early next year present our new and updated environmental strategy with revised targets. I can promise you two things. One is that we will continue with our high ambitions on when it comes to the environment. Secondly, we will be honest and transparent on what we believe we can achieve. No greenwashing in this company. We have a diversified earnings base in our company, being trading in both the Dry Bulk Market, the tanker market, and also having a positive impact from higher fuel prices due to our superior efficiency.
If you look on the tanker and Dry Bulk Market, you can see that they are, in fact, moving in opposite directions very often. Starting up here with the Dry Bulk Market, the market for Kamsarmax this year peaked around $30,000 per day in April, May, falling back with some ups and downs to around $15,000 per day for Kamsarmax yesterday. Looking out on the other one, earnings, you see since this spring, this market has boomed with a bit ups and downs. This week, spot earnings lie around $40,000 per day.
If you add up the curve for the fuel prices and shipping, which peaked in June, still at extremely high levels, you get an impression of the risk-reducing effects of the diversification of three markets for our business. Looking first at the dry market, the underlying demand growth, as expressed in deadweight-miles, has been fairly strong to date, with an increase year-to-date of 5%, compared to last year. The main reason for the weak dry market is the normalization of the congestion, where you see that the part of the capacity import, as expressed in this graph, has reduced by around six percentage point since April, which effectively increased the supply in the dry market by 6%.
On a positive note, the contracting of dry bulk ships is very limited, meaning that the order book continues to reduce slightly, now down to around 7%. This implies a very low fleet growth over the coming quarters, coming years. In 2023, we expect a bit more than 1%. It will fall further down in 2024, and also 2025 is likely to be very low, meaning that this is definitely risk-reducing in the medium term for the Dry Bulk Market. A big upside potential in the dry market is the ongoing dislocation of Russian coal and also longer distances on grain shipments, in totality, increasing ton-miles in the dry bulk segment.
Panamax market, where 80% of the cargo is transported are either grains or coal, will be the biggest benefit, get the biggest benefit of this development. We know that the total demand in the dry market is dependent on the macroeconomic development and all eyes, of course, on China and the white line shows how the development and startup of new buildings in China, falling 45% over the recent month, which gives a good indication that we are set for some weak quarters in the Chinese economy. The blue line shows the trade-weighted Purchasing Managers' Index, which now stands at 50, which is the inflection point between expansion and contraction, which also indicates that the industrial production likely will be rather weak over the coming quarters.
In totality, we continue to believe that the dry market is fairly balanced, with it especially based on the low fleet growth in the dry market. We expect some weak quarters in the dry market ahead in time. We continue to believe that despite macroeconomic headwinds, that the tanker market fundamentals are very strong. The graph here shows, in the white line, the world production of oil is now exceeding the pre-COVID. The oil demand has improved substantially at slightly below 2019 levels because of the continued COVID restrictions in China. We see that, in the light blue line at the bottom, that the oil stocks is still at a very low level, despite increasing somewhat.
The order book stands, or product tanker stands at around 5%, which gives a very low fleet growth over the coming quarters, and year. Years expected to be 2%-3% in 2023. Looking at the total tanker market is expected to be between 0% and 1%. This is definitely improving the resilience of the tanker market for unexpected events. What's going to drive the tanker market, in our opinion, is the dislocation of Russian crude and products to Europe. Today, EU imports around 50% of their products from Russia, mainly from the Baltics. Up to now to February, EU has to replace this 50%, in total 1.2 million barrels per day, with longer haul imports.
The graph shows that we expect these imports to come from U.S. Gulf, Middle East, and possibly Far East. Just calculating the ton-mile effect of the total Product Tanker Market of this replacement, we end up an 11% increase, just by this effect, disregarding the effect of longer distances, of the Russian exports, which needs to find new buyers further away. We know that with this macroeconomic outlook and high oil prices, there will be the demand disruption in the oil markets. Looking back in time, as this graph shows, where you see the GDP growth and the growth in oil consumption, you see that even in the worst recessions, you're normally down 5%-6% when it comes to negative growth in oil consumption.
If you put these two together. We are confident that the effects we see in the tanker market, despite economic headwinds, will secure a very strong Product Tanker Market for the coming year. Take a quick look at the fourth quarter, where we are when it comes to booking. We are more or less fully booked for the fourth quarter, taking into account the index-linked contracts, both in the tanker market and the Dry Bulk Markets. We are starting to book contracts for next year, and I will come back to that later on. But we are certain that we will have the majority of our capacity out on index-linked contracts or in the spot market in 2023.
We have been successful to book a number of important index-linked contracts, in total, accounting for around 20% of our total CABU/CLEANBU tanker capacity and around 14% of the CABU/CLEANBU dry bulk capacity. Being a combination carrier trading in both tanker and the Dry Bulk market, we have been able to get the best of both of the two markets. Looking at the average earnings for year-to-date 2022 at $29,150, we are outperforming the product tankers by a factor of 1.1%, and the dry market with 1.2%-1.3%. Still over the last six, seven years, we have outperformed these markets by 1.5%.
Starting off with the CABUs, it's been a very strong year, quarter for the CABUs, despite a weaker dry market and also continuing large port congestions impacting our scheduling efficiency. After we have brought all our CABUs back to trading in the Pacific to and from Australia, we have the normal 50/50 mix between dry and wet cargoes. We are increasing the trading efficiency by having more than 90% of our capacity in combination trade and having ballasts below 10% meeting our targets.
The earnings of the CABUs of $26,100 per day is the second best over the last 10 years, but it's still 15% down compared to the second quarter, which is due to the weaker dry market, but also some negative bunker effects of lower fuel prices. The CABUs, due to the high contract coverage in the tanker space, has got fairly limited effects of the strong tanker market in 2022, which also explains why we are underperforming the tanker market for the CABUs this year with a factor of 0.7%, but are outperforming the Dry Bulk Market with 1.4% in the quarter.
The increase in earnings, looking at the year-to-date 2022, is around 26% compared to last year. Look on the CLEANBUs. It's been a fantastic quarter, both operational and freight performance has been strong. We have successfully improved our Combination Trading and also earnings are substantially up. As mentioned when we presented our results in August, we had a number of CLEANBUs completing discharge of dry cargoes and reloaded clean petroleum products during the early summer. Meaning that these ships have traded mainly in the product tanker space in the third quarter, ending up with a 72% of the capacity in tanker trades in the third quarter.
This is higher than what you can expect of the coming quarters, but of course has had a positive effect on the earnings in the third quarter. We are seeing again that we maintain a very high percentage of the capacity in combination trade, showing that we have been successful to expand the trading, build our customer base, and terminal acceptance. The ballast is slightly higher than our target, which is going to be around 10%, and we're optimistic we can bring that down. The earnings on the CLEANBUs at around $45,000 per day is fantastic, and of course shows the strong earnings capacity of these new ships in the efficient Combination Trading and in a strong tanker market.
We have had five out of eight ships trading in long-haul combination trades between Middle East, India to South America and U.S. East Coast, where we bring in petroleum products into Americas and bring back grains and sugar on the way back again. This is very efficient and has been very profitable. We are pleased to see that we have been able to outperform the standard LR1 by a factor of 1.1% and the standard bulk by 2.3%. Earnings to date this year is $31,100 per day. Liv, I think you take over the show.
Yes, thank you. Good morning, everyone. Over to EBITDA and some financials. EBITDA for the quarter was $34.5 million, an increase of 30% compared to last quarter. As Engebret mentioned, the main driver behind the increase is CLEANBU's TCE Earnings, which increased by more than $15,000 per day. In total, this amounts to a change from Q2 to Q3 of more than $10 million. The utilization of the two different fleets or segments offset each other somewhat compared to Q2, while CABU TCE Earnings were down by approximately $4,700 per day from last quarter to Q3. This in total amounts to more than $3 million. We saw a positive development in operating expenses of $0.6 million, mainly driven by lower CABU OpEx related to crew mainly, and some effects as well.
SG&A increased by $0.2 million from last quarter, mainly driven by provisions and partly offset by positive effects. Over to operating expenses per day. For both segments, we saw a decrease compared to Q2, and if we have a look at the average for the year, for the first three quarters, the average for the CABUs, here seen in the light line, is approximately $7,500 per day, and for the CLEANBUs approximately $8,600 per day. We do expect this to increase somewhat for the full year of 2022, and as well based on the global inflation that we see, high inflation, I think it's fair to expect that 2023 costs will be higher, as well.
If we then have a closer look at the P&L for the quarter, for the items below EBITDA, depreciation increased by $0.8 million. This is due to depreciation of docking and a shorter period where we depreciate the docking element. This was as well mentioned in the Q2 presentation. Net financial cost increased by $1.3 million, and that's mainly due to a positive one-off in Q2. That's a modification gain related to renegotiating terms on one of the mortgage debt facilities. Profit for the quarter, $22 million, an increase of 36% compared to last quarter. Earnings per share $0.42, and dividends per share $0.30. The latter is approximately a dividend yield of 18% based on close yesterday. Return on capital employed on an annualized basis for Q3, 17%.
At the bottom, you see the off-hire days, which increased by approximately 20 days from Q2 to Q3, and the driver behind that is dry docking. The cash was down a bit compared to Q2, and ended at $63.3 million at the end of September. In addition to the regular items such as EBITDA, dry dock CapEx, Debt Service , and dividends, we had a negative working capital development for the quarter of approximately $14 million. The reason behind this change is mainly trading pattern and type of contract as we operate in both the Dry Bulk Market and the tanker market, and there are quite different payment terms on these types of contract. This will temporarily have quite large effects. We have seen a very positive cash inflow for October.
All in all, available liquidity very solid at $113 million, when including both the short-term and the long-term available Credit Facilities. Equity Ratio ended at 46.1% at the end of September. That's an increase of 2.5 percentage points from the end of Q2. We have started the initial discussions related to refinancing of both the facility falling due in 4Q next year, as well as the short-term overdraft facility that falls due this year, with very positive feedback. Engebret, over to you for final remarks and outlook.
Thank you, Liv. So as you have understood, we are quite with high hopes for and expectations for the tanker and energy markets for next year. This graph show the historical development in the three markets, and the dotted line show how the forward pricing is in the derivative market at the moment. We believe especially for the tankers, product tankers and the forward prices substantially underestimates the potential in these markets. The blue line shows the dry market development where we agree the 2023 earnings will be substantially lower than in 2021 and 2022, but probably can underestimate the potential of recovery at an earlier stage than the line shows.
Hence we still next year will have two of three markets strong, which is sufficient to drive the earnings of our company and to secure a high dividend distribution and a competitive yield to our shareholders. Take a look on the CABUs. We have as mentioned, every year around the fourth quarter, we are negotiating extension of our caustic soda contracts to which a large extent are fixed rate for a 12-month period. In end of 2021, we fixed around 60% of our capacity based on the forward pricing at the time. And that is, of course, implied that this year we have only had positive effect of the strong tanker market through the 38%-39% of the capacity which are in index linked contracts or on spot.
This looks different for next year, where we expect a large increase in contract rates. We will continue to book fixed rate contracts. We have over recent weeks started booking one contract, representing around 18% of the capacity of the CABUs, and we expect over the coming months up to Christmas to be able to increase the cargo volume compared to last year, fully booking the capacity, tanker capacity of our CABUs. The earnings, the freight earnings, of these contracts, as is illustrated here by the development in the 12-month MR tanker time charters, will be high. We see how the blue line shows that compared to the same period last year, 12-month time charter rates for MR tanker is more than double.
This corresponds well with the time charter earnings we have booked through the one contract we have put on our books in the recent weeks, having earnings of around 2.5x the earnings we had in 2022, which I have to admit is a pretty bullish sign for the earnings of our CABU fleet for next year. As mentioned, the third quarter utilization with 72% in the tanker market was not fully representative of the average.
The fact is that a number of ships have completed discharge of product tanker cargoes at the end of the third quarter and early fourth quarter and will have a higher proportion of dry bulk trading in the fourth quarter, which will have a slightly negative effect on the earnings on the CLEANBUs, given the big difference between the tanker earnings and the dry bulk earnings at the moment. We have achieved the higher capacity utilization in the tanker market. If you look on the totality of the third and the fourth quarter, ending at closer to 60% of the capacity.
As said, this development will be a bit different from quarter to quarter, which is the natural consequence that we are trading these ships on long haul trades, and where we combine dry and tanker cargoes. Looking at the contract base, we have extended the contract we have with one of the oil majors, which for next year represents around 15% of the tanker capacity of the CLEANBUs. We are working to increase the contract coverage further in next year with 15%-30% coming up in around one-third to close to a half of the capacity fixed on index linked contracts. Meaning that the CLEANBUs as it looks today will be fully spot exposed in the Product Tanker Market.
The best thing we can do in order to secure the value creation and high earnings of our cleaner fleet is to ensure that they are trading in the most efficient combination trades where they create value. That's what we intend to do. Looking at the earnings indications and guiding for the fourth quarter, CABUs are expected to be flat between $25.5 and 26.5. The CLEANBUs with the guiding we have between $34.5 and 36.5 is then will be the second highest quarter in our history, but still will be somewhat below the record high earnings in the fourth quarter as a result of the higher trading in the dry market in this quarter.
In totality, we end at the guiding of between $30,200 and 31,700 per day for the fourth quarter, which is somewhat lower than the third quarter, but still likely to end higher than the second quarter. To summarize, we are entering into a period with high risks and uncertainties and probably high volatility, and we believe that especially in these times, our concept will prove its value. We have the higher efficiency and the lowest carbon emission solution will be more important going forward. We have more stability in earnings given our diversified base and contract coverage, and we deliver higher profitability over time. Thank you. Then that ends the presentation. We are now ready for questions.
Right. We have a couple of questions from the audience. The first one is actually more of a comment. Think 2023 product tanker predictions was a bit negative in your chart.
That's right, and we fully agree because again, it was not our predictions. This, as I mentioned, was the current forward pricing in the derivative markets. Yeah.
Two here. Considering the discrepancy in earnings and outlooks between dry bulk and tankers, could you consider trading the CLEANBUs as pure product tankers?
We are all the time evaluating whether the Combination Trading creates the value. When we get the efficient trading within dry with limited waiting time, it more or less always pays to go and to do the dry bulk trading instead of ballasting. Again, there will be instances where there will be waiting time for the dry cargo, which dilutes our efficiency advantage, where we may from time to time go straight into the tanker market. The concept is that it's a win-win over time.
Follow-up for this one is also, with all the changes in trading patterns, do you see any new trading opportunities for your Combination Carriers?
We have as the main trades we have had recent quarter is into South America, but also it's interesting that we have increased the trading into U.S. East Coast, bringing some special oil products from India into New York, which was the front page of our presentation. That is a trade we believe can grow for us, and also it's very efficient given the long-haul trading. That is a potential. We also see a potential for U.S. West Coast that could emerge. I think there are a lot of opportunities for the CLEANBUs in which we can efficiently combine the dry and the wet cargoes.
Another one here. How should we think about the TCE impact in $ per day from the renewed COAs for 2023 compared with 2022?
You can do your math yourself as well. If you end up with cargo Caustic Soda contracts of 70% of the wet capacity being 2.5 times higher than last year, you can do the math that it's going to have a substantial positive effect on the cargo earnings for next year. We haven't yet concluded everything. We have advanced far enough in the discussions to have confidence that we will see a big increase in earnings in the tanker earnings for the cargos next year.
Last question. Can you give us more details related to the Caustic Soda COA renewals?
That, I guess, basically, I have already answered. It's good to see that we see both increased cargo volumes and better pricing, which is essential to get the most optimal trading for the cargos. We may even have to use a little bit of the CLEANBU capacity into that trade if need be.
Thank you.
That summarizes the third quarter presentation. Thank you for joining, and I can promise you it will be exciting times ahead. Thank you.