Okay. Hello, and welcome to the presentation of the Odfjell fourth quarter results and the preliminary 2020 results. We are live streaming it here from Bergen today. My name is Kristian Mørch. I'm the CEO of Odfjell SE. With me today I have Terje Iversen, who is the CFO, and Bjørn Kristian Røed, who is Head of Investor Relations and Business Analytics in Odfjell SE. If you're watching this presentation live, there should be a button on the top right-hand corner of your screen where you are able to post questions, and towards the end of the presentation today, we will be happy to answer any questions that you are posting. Let's just get going with the presentation itself. On the agenda, I will start to take you through the highlights both for the quarter and for the year.
Terje, he will come on and give you a more detailed run-through of the financials. I will come back to speak about operational review and strategy, and end off by prospects and markets update. As I said, towards the end of the presentation, we will take any questions that you have. If we start by looking at the highlights, and these are the highlights for the fourth quarter. We had a stable chemical tanker market and rates, but the very weak CPP markets and the increasing bunker prices has kept the pressure on our earnings. Our EBITDA came in at $66 million, which is $6 million down compared to the third quarter, and our net results came in as -$3 million compared to $4 million last quarter, so that was a drop of $7 million.
We continue to renew our COA rates based on upgoing rates 2.7% during the fourth quarter. That continues the firming trend we have seen in the last couple of quarters. Also, during the quarter, we have established two new pools, an MR pool and a Handy pool, where we are very happy to welcome two new pool partners to Odfjell Tankers. I'll speak a little bit more about that later on in the presentation. Also, during the quarter, we announced that we have acquired Lindsay Goldberg's indirect shareholding in Odfjell Terminals Korea, which means that we now own 50% of that terminal. I will speak about that transaction later on. Unfortunately, during the quarter, we also had a fire at our terminal in Houston. We view that as a serious incident. The situation was handled.
The fire was very quickly under control, and we had no injury and no harm. We do not expect that this fire has any impact on our financial results. Subsequent events. In January, we placed the shipping's first sustainability linked bond, which was oversubscribed, and it was a success. We are very happy as a company to go first on the ESG agenda, and we can see that our investors and the lenders to Odfjell appreciate the ambitious climate plan that we have set for the company. On the right-hand side, we say that the fourth quarter concluded a year with challenging circumstances, but despite the challenging circumstances, we continue to operate very well. We have completed the largest fleet renewal program in the history of the company. We have further streamlined our terminal organization. In every respect, the company is ready.
We believe in the strong fundamentals, although that we are saying that the first quarter is starting on a slightly softer note than 2020. That's nothing that we believe is fundamentally concerning, and I'll speak about that on the prospects. We do believe that the struggling CPP market and the higher bunker prices will mean that we will report weaker results for the first quarter. I'll get back to that in more detail a little bit later as well. The headlines for 2020, I covered some of them. It was a challenging year. We have been operating more or less by remote control, most of us sitting in our home offices. When we see how well we have operated and how safely we have operated, then I think it shows that we have a very strong and operationally capable platform.
Our EBIT came in at $120 million, which is up $61 million compared to the last year, or it was double, and our net profit came in positively at $28 million compared to a loss of $37 million in 2019. I spoke about the largest fleet renewal program in the history of our company and also about the terminals. We are today at a point where with zero CapEx on the tanker side and a self-funded terminal division, we have good visibility on our balance sheet. We have a good cash position, and we believe that the strong fundamentals will kick in, and we are prepared to take advantage of that when that happens. On the bottom of this slide, you can see in the last three years, we have been trying to compare the four quarters from an EBIT development perspective.
As you can see, we are on an upgoing trend, and I think that kind of supports our view that there are strong fundamentals in our market. The only word of caution I will give you when you look at this is that the second quarter was not a normal quarter. There was a major spike in the CPP markets and that hit us, so that kind of is a slight abnormality. The trend is clear from the other quarters, and as you can see in 2020, it was not a bad year for Odfjell at all. At this point, I will hand it over to Terje Iversen, and then I will come back to speak about operational update a little bit later.
Thank you, Kristian, good morning to all of you. As normal, I will start with chemical tanker business, looking at the last quarter. If you see the time charter earnings this quarter, that was slightly down compared to the third quarter. Reason for that's mainly being lower spot rates. Going back to figures, actually, we had larger volumes, especially spot volumes increased this quarter, but that also was related to more vessels coming into the fleet to the new pool arrangement that Kristian talked about. Operating expenses, slightly up from $42 to $43.2 this quarter. That was mainly driven by technical expenses, but also due to increased fleet. The last new buildings being delivered the second half, and also some increasing the traveling cost in the fourth quarter. We are left in EBITDA of $59.1 compared to $63.6 in the third quarter. Depreciation increased slightly also.
That is also related to delivery of new buildings the second half 2020. We have an EBIT of $18.2 compared to $25.0 in the third quarter. Net interest expenses and other financial items are very much at the same level as preceding quarter. We are left with a net result of negative $2.3 compared to positive $2.6 in the third quarter. Terminal business, quite stable revenue, but slightly down due to the fire at OTH or Houston terminal with lower revenue, especially related to throughput and other services. Other terminals, quite stable, actually, and also continued high occupancy at the various terminals. Operating expenses increased from $6.1 to $6.5. That is also related to the fire at the Houston terminal with the cost associated to that to have the terminal up and running again.
After G&A, we are then left with an EBITDA of $6.6 compared to $7.8 in the third quarter. As I said, the kind of decrease in the EBITDA mainly then relates to the development at the Houston terminal. As we also stated, the terminal is now more or less back on normal operations, we shouldn't see that continue going forward. We also had a small impairment at the Houston terminal related to the fire of $0.9 million. After capital gain of $0.2, we are left with EBIT of $0.3 compared to positive $2.2 in the third quarter. EBIT also include then depreciation of surplus values around $1.7 million related to previous restructuring within the terminal division. After finance, we are then left with a net result of negative $0.6 and compare that to $1.5 positive in the third quarter.
Looking at the total, we had EBITDA of $66.0 compared to $71.7. EBIT went from $27.1 to $18.9, net result ended at negative $2.6 compared to $3.9 in positive in the third quarter. If you adjust for non-recurring items related to mark to market on derivatives and also the impairment this quarter, we are left with adjusted result of negative $1 million compared to Adjusted positive result in the third quarter of $5 million. If we continue with the balance sheet, we saw that shipbuilding, ships and new building contracts increased because of the last delivery of the super segregator from Hudong-Zhonghua shipyard. We also see that the investments in associated ventures increased. That is related to the acquisition of the terminal share, the 25% share in the terminal in Korea.
We also saw that cash increased slightly to $103.1 million this quarter. If you include undrawn amounts under the revolving credit facility, we are around $145 million in available cash and liquidity. Equity ratio stands around 26%, and if you adjust for right of use of assets, then we are around 30% equity share per end of 2020. Non-current interest-bearing debt increased somewhat, and that is also related to the last new building being delivered this quarter. We also see that we have a current portion to interest-bearing debt end of 2020 at $178.8 million. Of course, that includes also then the bond that was refinanced January this year with around $82 million. That has been turned down to a lower level turning the end of the year or the beginning of this year.
The cash flow this quarter, we see that the cash flow from operating activities actually increased even though we had a lower EBITDA, mainly related to more favorable development of working capital. We had a $39.3 in positive compared to $30.1 million in the third quarter. Investments in non-current assets related to primarily then the last super segregator of $41 million. In addition, it was quite a busy quarter when it comes to dry docking activities. We booked around $15 million in dry dockings in this quarter. Other of $16.3 is related to the acquisition of the share in the terminal in Korea. We are left then with the cash flow investing activity as negative $73.2 compared to $48.7 in the third quarter. On the financing side, new interest-bearing debt related to the new building, $62.7.
That also includes $33 million in drawn debt on some vessel that was repaid end of the third quarter, which was actually not adding any debt, but because the kind of the vessels were refinanced into a new quarter, it appears that we have increased the debt on these vessels this quarter. Other on $90 million, that is also related to the acquisition of the share in OTK or Korea. Net cash flow from the finance activities ended at $44.1 and net cash flow for the quarter at $10.8, increasing this slightly down the cash from $92.4 to $103.1 during the fourth quarter. Bunker costs, as also Kristian talked about, that is partly showing why we are delivering a slightly reduced result this quarter.
Even though when we compare to the average last five years, we are still at a lower level, and we should also then remember that we have gone into using only low sulfur fuel oil compared to heavy fuel oil before end of 2019. We also see we get the positive effect from our bunker adjustment clauses that we have in our contracts and also partly the financial hedging that we do. We don't see the large increase in the bunker expenses on the back of the increased bunker prices in the market. Going forward, we still have quite a good coverage through the bunker adjustment clauses in our contracts, around 50%. We also have some financial hedging positions that have a positive market value end of 2020 that will help us also into 2021.
Cash break-even has been on agenda for some time now, and it will continue to be there going forward. Looking at the financial year 2020, we ended with a cash break-even around $1,400. That is slightly up compared to previous year, but that is also related to newbuildings that we have taken delivery of and optimization of that financing. We are still not at the target level that we have talked about, around $18,000-$19,000. Of course, going forward, we should be able to be more focused on that also based on we don't have any CapEx of any material size for the coming years. End of 2020, we had a time charter rate of around $21,000, very close to the cash break-even.
As Kristian told towards the end of the year and also into 2021, the beginning, we are at a lower level when it comes to the time charter rates that we have been throughout the last months and quarters. Also that we have guided on cash break-even for next year is around 21,400 before we continue with taking down the optimization profiles or extending the optimization profiles and reducing the debt for the company. This is the debt maturing in the coming quarters, both repayments, installments, and maturing loans and balloons. As you can see, we don't have any large maturities before second quarter 2022. The one we highlighted on the left here in the first quarter was the bond of $82 million that was refinanced in January. Quite a good timing.
We drew up the new loan, I think two days before we repaid the maturing loan, so that is quite a good transfer. Normally we would refinance many months before, but this will, of course, then reduce our cash cost if we can make a smooth transfer as we've done here. We continue to work on optimizing our debt portfolio. This is showing on the lower part what will happen if we continue to repay according to the repayment schedules and also repay the maturing loans. We will look into how we can further optimize our debt portfolio. At this stage now, we are looking into two finance leases that we have and also two mortgage financing that we are looking into a possible refinancing of. That could reduce the cash break-even for the four vessels we are talking about with around $4,500 per day.
That is the way we are going to look at the debt side going forward, look for opportunities to take down the cost of capital and also reduce the cash break-even. To reach the indicator level here around $750 million-$900 million in debt end of 2023, of course, that is also market dependent based on how many of the maturing loans we are going to refinance or just redeem at maturity. The debt side has, if you compare to where we were two years ago, end of 2018, debt has increased. That is, of course, related to the newbuildings that we have taken delivery of through these two years. It has increased around $1.2 billion. $276 million of that is related to newbuildings. If you exclude that, we have taken down the debt quite substantially throughout the two last years.
We have also reduced the loan-to-value for the vessels that we have in our portfolio. Now we have concluded a newbuilding program, as I mentioned, we should be able now to continue to focus on deleveraging and taking down the debts going forward. A few words on the end related to the newbuilding or the sustainability-linked bond that we did in January. We started with that for more than a year ago, looking at how we could do that, how we could structure that. We are very happy that we succeeded in doing that, issuing the first sustainability-linked bond in the shipping market globally and also the first in the Nordics. We also secured, of course, quite a good liquidity going forward, making sure that we have the kind of flexibility we need as a company.
We can also now focus on how we can further optimize our debt portfolio also using the proceeds from this new financing. The financing framework we have established now, we will also look into how we can use that for traditional financing of our fleets. Most likely we use that in the refinancing that we are looking into now and also going forward. We also have ambitions to get a lower capital cost, including this structure into the new financing that we are going to look at. That was my part and I will leave the word to Kristian again.
Thank you very much, Terje. I can see that we have not had any questions posted yet. As I said, if you're watching this presentation live, you have the ability to post questions and please do. There should be a button on the top right-hand corner of your screen. If you have any questions to us, we'll be happy to answer them after the presentation. It's not too late to post these questions. All right. Operational review. I will start by speaking about our COA portfolio. Our share of COA is now back at around 50%, which is the level where we kind of want it to be. You have to remember that at the same time, our fleet has been growing.
In terms of absolute numbers, as you see on the bottom part of this slide, our COA volumes actually have been growing in the fourth quarter, it also means that we are capable of increasing our COA share together with the growth that we are having. Another point that's important to note here is that the renewal rates for the contracts continue to go up, not as much as in the previous quarters, but it's still up and on a firming trend. I also caution you to look too much into quarter by quarter, because when you are extending a front-haul COA and versus a backhaul COA, there might be different dynamics. I think the important point here is the trend is upgoing for the COAs, and that's a sign that there's a fundamental tightness for chemical tankers.
If you look a little bit at the fleet growth, as I said, we have completed the largest fleet transition in the history of our company. We are now up at 91 vessels, which is very close to our target of 100 ships. We are pretty much where we would like to be on a fleet composition perspective. What you can see in this slide is that we have used pools as a part of our growth, I'll speak about that on the next page. Two new pools on the coated side. As you're looking at this slide, the more you go to the left, the more strategic the ships are for us, ships that we want to own and control ourselves.
Whereas towards the right side of the slide, they become more, let's say, commoditized assets, and we think that it's a very effective way of growing with those pools. We operate four pools today. We have added, as I mentioned, recently 13 coated ships. If you just pause for a minute and ask why is Odfjell spending time on growing via pools? I think there are a number of very important arguments for that. First of all, there's no downside for Odfjell when you have a ship in pool. We have an upside. We have a fixed fee and a management fee, and on most of them, we also have an upside in earnings. If we do well as a pool manager, we get a share of that upside. We are exposed positively to the market while we don't have any downside.
It brings us scale effects. It adds to the consolidation in the market. We are accumulating tonnage and doing it without really using our balance sheet, so it's a very capital efficient way of growing, and it positively impacts our bottom line in every market scenarios. That's really important, and that's what the small graph on your left-hand side is showing. It shows that you don't have exactly the same upside as if you took a ship on TC, but you don't carry any of the downside. When you then take the, let's say, strategic considerations about the consolidation into place and using our platform, so the marginal cost of doing that is very limited, then it's just a good business for Odfjell to be in. I also want to say that pools is not going to kind of take over from us.
We are not a pool management company. We are a chemical tanker company. We can see that with selected partners, good partners, then we can use that as a tool. On terminals, the EBITDA in the fourth quarter came in at $7 million, which was $1 million down. Terje, he spoke about that slight impact from the OTH fire. Other than that, there are two important highlights this quarter. First of all, we have acquired Lindsay Goldberg's shareholding of the terminal in Korea, which means that we now own that together with a local partner in Korea. When you look at the performance of that terminal, then the price of that was around 8 x EBITDA, which we think is an attractive valuation for that terminal, which is centered in the largest petrochemical complex in Asia.
The second thing to note about terminal is the fire that we had in Houston. I touched upon that previously a little bit. It was an incident that had the potential to become a much more serious incident, but our team in Houston handled this crisis very, very well and quickly got the fire under control. Although we did have to declare force majeure, then we were quickly back up and running and that force majeure has been lifted. For all practical purposes, that terminal is in operation again. We do have some repair work and operate to handle. Okay. That was the operational review and the strategy. I'll turn to prospects and markets updates. First of all, we say that in the highlights of this quarter that the chemical tanker rates were stable, and that's the picture you're looking at on the left-hand side.
If you take dollar per ton in some of the main trades, you can see that it's a stable picture. Of course, with increasing bunker prices for spot business, then that will affect. What has had just as big an effect on us is that because of the very low CPP markets, we don't carry any CPP or very, very little CPP, but it does mean that we are getting more competition from swing tonnage. That's the picture you're looking at on the right-hand side of the slide. You can see that the share of the MR that's capable of swinging into chemicals that is doing it is now back up at 22.1%, which is up from 20.7.
That does not sound like a lot, but with a fairly finely balanced market, it is something that is teasing us a little bit, and that's why it's affecting our earnings. One of the reasons why the slight resistance at the moment is not really worrying us structurally is this picture. Because what you're seeing on the left-hand side, industrial production is picking up, the chemical activity barometer is up, and so fundamental demand for chemicals is following the trend line that we have foreseen, which is a growth scenario. What has happened in the fourth quarter is what you're looking at in the middle of this picture, and that is that it has actually been based on stock drawdowns. That means that the demand for actual transportation of chemicals is contracting slightly in the period of July to October.
As I said, we think that this is a temporary phenomenon. We think that the underlying strength of demand for chemicals is strong and that we will be back in growth territory. It's also worth noting, when you look at the amount of growth that has happened in the past couple of years with 4%, 6%, and 8% growth, that those volumes have not been eroded really. We have a fairly strong and fundamental robust demand picture for chemicals. On the supply side, there's not a lot of new things to add. We have an order book new building activity which is far below historic averages. It is far below product tankers and crude tankers in general. In terms of real supply, we are of course, as I mentioned already, taking a little bit of impact from swing tonnage.
Part of the reason for that is that we still have unwinding of floating storage for product tankers, and that's what this graph on the bottom slide. In terms of real supply, there is a little bit of turbulence going on, but fundamentally, it's a very strong supply picture. We don't think that there's a risk of massive orders coming in in the near future. That supply picture is very much under control. If you put those two things together, nothing really that has changed our fundamental view that demand is going to outgrow supply. We think that 3% compounded growth on demand for transportation is realistic, and we don't think that the supply is going to grow by more than 1%. Of course, COVID-19 and the effects on the economy is still a joker.
I think IMF still believes that there's going to be 5.5% growth in 2021. Vaccines are being rolled out, it's happening slower pace. In many ways, the pandemic feels closer in the first quarter than it did in the fourth quarter. We can see light at the end of the tunnel. Whereas it might be a little bit difficult to see clearly on economic growth in 2021, the underlying picture is a strong one, as far as we see it. As I said, supply is not going to surprise us negatively. Summary and prospects. The fourth quarter, and indeed the full 2020 was a good year for Odfjell. We had stable rates. We had good earnings. We made a profit. We have been operating safely and efficiently, it has been a true test of our platform. COVID-19 is a challenge.
Getting seafarers around, changing crew on board the ships and being unable to travel and see, for instance, our terminals and our joint ventures and so on is a challenge. We make do with the tools that we have. We think that the market outlook is, in general, positive. Nothing has really changed our fundamental view. There is the factor that 2021 has started on a slightly more challenging note than 2020. The drawdown on stock and chemicals and the low CPP market and the higher-than-expected bunker prices are the main reasons. We don't think that there's anything fundamentally that shakes our belief in these markets are coming. When they do, then we are well prepared to take advantage of that. That was the presentation. I think the encouragement has worked, and I think there are some questions being posed.
Yes. Starting with one question from Anders Karlsen in Danske Bank. How is the progress on COA renewals looking into the first quarter? Are rates still up? What portion of the COA portfolio do you expect per quarter in 2021?
I don't have the exact % in terms of the volume. I do think that the vast majority of our COAs are being renewed in the third and the fourth quarter. I don't think there are any significant portion. We will have to get back to you on exactly what that % is. We think that there's a firming trend, and there continues to be a firming trend in the COA rates that we do renew, and we don't think that that's going to go away with the tightness in supply that we're looking at. I think, Bjørn Kristian, we'll just make a note and get back to you on the actual % in the first quarter.
One question from David Bhatti. Could you shed some more light on bunker cost impact on your results for the fourth quarter and how it will impact first quarter? Can you mitigate the impact if oil prices go significantly higher?
Well, I think, first of all, it's important to note that 50% of our business, which is the COAs, they are covered under bunker adjustment clauses. We don't have any exposure for half of our volumes. We have a hedge in place that covers another 25% of our exposed volumes. The rest, we are really at the mercy of what happens. I think when you look at the data and you look over a long period of time, there's a correlation between the markets and the bunker prices. When you compact that into a shorter period, say into a quarter, you're not seeing that. When bunker prices go from $300 to $400, the freight rate will not go from $55 to $60, if that's what is needed to compensate. It'll probably jump just a little bit in the short term.
We are exposed. Whether we can do anything to counter that, the only thing we can do is to take a further hedge. I personally think when we as a company, we are hedged around 60% of our volume. You should be careful taking more hedging. Personally, I struggle to understand an oil price of $60 in the current environment. I don't want to sound like an oil expert here, but I think taking more coverage could have the opposite effect. I think we'll just have to, let's say, accept the fact that it is impacting us. I don't think we will be taking significant hedges.
Given your current fleet profile and completion of the renewal program, when do you consider that you will need to start ordering new vessels again?
Not for a while. I think we have that luxury that we have a very modern and efficient fleet. We have been announcing our new ESG targets, which means we have to reduce our emissions by 50% by 2030 and be climate neutral by 2050. That cannot happen without new buildings. The problem we have is that the technology or the designs, although the technology actually exists, it doesn't really exist on the scale that we need. We need to make sure that we know what we're doing when we pick the new technology, and that's going to take a lot of effort and a lot of time, I would say. It will not be in for a couple of years, before we have to start ordering again, and maybe even longer, I don't know.
We are working on several concepts at the moment, but we don't see any investments in new buildings in the foreseeable future.
One question from Lars Bastian Østereng in Arctic Securities. You have previously outlined the connection between crude, CPP, and chemical tanker markets. How would you expect chemical tanker rates to develop if crude and CPP remains depressed for the next 12 months?
Well, I think that could be a very long answer, and you're probably better at answering that, Bjørn Kristian. One point I want to make is we don't need the CPP markets to boom. We just need them to normalize. A normalized MR market, I guess is $15,000 per day, given around that number. I think that will make a big difference. It's important to note that we don't need the markets to really boom. Also, in a strange way, as I said, we don't carry any CPP, so the effects for us is actually not on freight rates, it's on the added supply. As I said, a normalized market will fix that. I guess what I'm saying is that I don't think we are hugely dependent on it.
I don't think that our contract rates will be dependent on it. The spot markets are dependent on it because we have added competition.
From Andreas Nibe Nygård in Kepler. How much is your share of remaining expansion CapEx in tank terminals, post Q4?
Chad, do you remember that number? Can you speak about that?
Around $30 million.
I don't know if you can hear that, around $30 million, I'm told. Sorry, I don't remember that by heart. It also depends a little bit on those plans. We have not taken final investment decisions yet, so plans will change, and I think Bay 13 we refer to in OTH, we have fairly good handle on, but when you start talking about what we call the Point in Houston, it's a very different situation. I think there's some uncertainty about how big those investments can be. I think the main point for us is that the terminals we have, the joint ventures, they will have to be self-funded, so it will come without capital injections from Odfjell SE.
One terminal question from Anders Karlsen in Danske Bank. "Can you say anything more around the expansion plans at the Houston terminal and what the potential income effect could be long term?
We have two, I just mentioned, we have what we call Bay 13, and we have the Point, and I think from top of my head, we have the ability to grow Houston with around 50% compared to the current 350,000 cubic meter, I think. In terms of EBITDA, Chad, do you have that number? Do you have a good answer to that?
We haven't disclosed that. That depends on the project and the size of it and the context. It's too early to say.
One question from David Bhatti in SEB. "Congrats on the new pool set up. How will growth in this business look? Any plans to grow it further? What is the economic impact of the pool, the cost versus revenues?
The last part is easy to answer because we have taken in now 13 ships, and we do have to hire a few more people, but the marginal cost of operating that pool is very limited. Basically, the fee income and the profit shares we get under those pools, that would be straight to the bottom line in reality. I think it's the second part of that or the first part of that question about whether we can expect it to grow more. I think we are open to those discussions, but it's very important for us not to be confused about what Odfjell is, and Odfjell is a chemical tanker owner and operator, and terminals owner and operator. Pools, while they are very valuable, it's important to have the right partners and not to have too many partners and not to have the pools themselves take over.
We are open for selective growth, but it's not going to take over as the most prominent way of securing tonnage for Odfjell SE.
One question from Ben Nick in Danske Bank. "Congrats on a solid result for the full year. Could you elaborate on whether you will prioritize debt and cost reduction versus dividend payments going forward?
I think the dividend question is one that really is dependent on what the board recommends to the AGM. We haven't had that yet. I prefer not to comment on whether we have any dividend plans. What we have said is that we want to be attractive to shareholders, and we hope that the operation of the company will allow us to have a, let's say, transparent and attractive dividend policy in Odfjell. I do also think that it's fair to say that deleveraging is a higher priority, as far as we think. We do have too much debt. We want to reduce that. With the CapEx under control and with the self-funded terminal division, and the market view that we have, I think we can do that and follow that plan.
We can both deliver, but we should also be able to have a transparent and, I would say, attractive dividend policy. It is market dependent. I hope I answered that question.
One question here. Can you quantify how much weaker you expect the first quarter to be? Could you offer any quantitative comments on 2021 results? That would be helpful.
Yeah. We don't do guidance on the full year, and I think there are some uncertainty about what's happening in the market at the moment, which direction it is. I think we will just leave it at the weaker outlook. We are not seeing a collapse, maybe that's in any way. It is a weaker earnings picture, but I prefer not to be more specific than that.
One question from Thijs Berkelder. Nice achievement to realize the sustainability-linked bond. Could you share some insights into the possibilities you see of creating sustainability-linked traditional vessel financing and how this should work in practice? Thank you.
You want to answer that, Terje?
Yes. Happy to. Yes. Thank you. The framework that we have in place, we have been using, I think, a lot of time and resource on establishing together with our financial advisors. We also have third-party confirming the plan and the data in the plan that we have now established. When we structured the bond, we did that as a kind of, we have to deliver according to the plan to reduce the carbon emission rate by 50% from 2008 to 2030. We have to deliver according to that plan, not having to pay a step-up when the bond towards the end of the bond, when that is maturing. We are discussing to implement the same structure with the banks when it comes to traditional bond mortgage financing. We see there's a lot of interest amongst the banks to use that framework.
It will most likely be structured somewhat different than instead of paying a penalty if you're not reaching your targets. Most likely, we see a step down on the margin running through the long period. If we deliver according to the plan, there will be a step down on the margins. We actually get lower financing costs when you deliver according to the plan. That said, I also think that's kind of the framework itself is very attractive. The competition amongst the banks wanting to participate in traditional financing for Odfjell will increase, and we should also see a lower margin because of the increased competition.
Thank you. There appears to be no further questions for now.
All right. Thank you for your interest in the company, and thank you for your time, and thank you for the questions. If you haven't had a chance to ask your question or you're watching this offline, please don't hesitate to contact any one of us, and we'll be happy to answer any questions that you have. In the meantime, I hope that you stay safe and hang in there while we are seeing the COVID-19 situation hopefully improving significantly as soon as possible. Thanks for listening, and stay safe.