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 Christian Mark. I'm the CEO of Odfjell SE.
And with me today I have Terje who is the CFO and Christian Roel, 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're 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.
Then Terje, he will come on and give you a more detailed run through of the financials. Then I will come back to speak about operational review prospects and markets update. And 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 for and these are the highlights for the fourth quarter. We had a stable chemical tanker market rates, but the very weak CPP markets and the increasing bunker prices has kept the pressure on our earnings.
Our EBITDA came in at $66,000,000 which is $6,000,000 down compared to the third quarter. And our net results came in as minus $3,000,000 compared to $4,000,000 last quarter, so that was a drop of $7,000,000 We continue to renew our COA rates based on ongoing rates 2.7% during the fourth quarter and 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 an Handy pool, where we are very happy to welcome two new pool partners to Odfjell Tankers. And 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 and 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, but, but the situation was handled. The fire was very quickly under control and we had no injury and no harm. And we do not expect that this, 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 it was a success.
And 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 Watfjell appreciate the ambitious climate plan that we have set for the company. On the right hand side, we say that the fourth quarter concluded the year with challenging circumstances. 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. So 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. But that's nothing that we believe is fundamentally concerning, and I'll speak about that on prospects. But 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.
But 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. And when we see how well we have operated and how safely we have operated, then I think it's it shows that we have a very strong and operationally capable platform.
Our EBIT came in at $120,000,000 is up $61,000,000 compared to the last year or it was double. And our net profit came in positively at $28,000,000 compared to a loss of $37,000,000 in 2019. I spoke about the largest fleet renewal program in the history of our company and also about the terminals. But 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, where we have a good cash position and we are 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.
And as you can see, we are on an ongoing 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. But 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 Thierry Ewersen, and then I will come
back to speak about operational update a little bit later. Thank you, Christian, and, good morning to to all of you. As normal, I will start with the chemical tanker business, looking at the last quarter. If you see the 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 to the fleet to the new crew arrangement that that Christian talked about. And, operating expenses, slightly up from 42 to 43.2 this this quarter. That was mainly driven by technical expenses, but also due to to increased fleets, the last new billings being delivered in the second half, and also some increasing the the traveling cost in in the fourth quarter. Then 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 newbuildings in the second half twenty twenty. And then we have an EBIT of 18,200,000.0 compared to €25 in the third quarter. Net interest expenses and other financial items are very much at the same level as preceding quarter. And then 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 the OTH or Houston terminal, with lower revenue, especially related to throughputs 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 kind of cost associated to that to have the terminal up and running again. And after G and A, we are then left with EBITDA of 6.6% compared to 7.8% in third quarter. As I said, the kind of, decrease in the EBITDA mainly then relates to the development at the Houston terminal.
But, as we also stated, the terminal is now more or less back on normal business normal operations, so we shouldn't see that continue going forward. We also had a small impairment at the Houston Terminal related to the fire of US0.9 million dollars And then after capital gain of US0.2 million we are left with EBIT of US0.3 million compared to positive US2.2 million in the third quarter. EBIT also included a depreciation of surplus values around US1.7 million related to previous restructuring within the Terminal division. After finance, we are then left with a net result of negative 600,000.0 and compared down to DKK1.5 million positive in the third quarter. Looking at the total, we then had an EBITDA of 66% compared to 71.7%.
EBIT went from 27.1% to 18.9% and net result ended at negative 2.6 compared to 3.9 in positive in the third quarter. If I adjust for, nonrecurring items related to mark to market of derivatives and also the impairment this quarter, we are then left with adjusted result of negative 100,000 compared to a positive result of adjusted positive result in the third quarter of $5,000,000 you continue with the the balance sheet, we saw that shipbuilding ships and new billing contracts increased because of the last delivery of the supersegated from Fudongyu Shipyard. We also see that the investments in associated joint ventures increased. That is related to the acquisition of the terminal share, the 25% share in the terminal in Korea. Then we also saw that cash increased slightly to $103,100,000 this quarter.
And if includes undrawn amounts under the revolving credit facility, we are around US145 million dollars 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 twenty twenty. Noncurrent interest bearing debt increased somewhat, and that is also related to the last new billing being delivered this this quarter. And we also see that we have a current portion of interest paying debts 2020 at 178.8.
And, of course, that includes also down the the bond that was refinanced January with a rate around 82,000,000 US dollars. That has been turned down to a lower lower level, turning the the 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. So we had the 39,300,000.0 in positive compared to 30,100,000.0 in the third quarter. Investments in noncurrent assets related to primarily on the last superstigator of 41,000,000 US dollar.
In addition, it was quite a busy quarter when it comes to drydocking activities. We booked around 15,000,000 US dollar in drydocking drydocking's in this quarter. Other of $60,300,000 is related to the acquisition of the share in the terminal in Korea. And then we are left on with the cash flow investing activity as negative 73,200,000.0 compared to $48,700,000 in the third quarter. On the financing side, new interest bearing debt related to the newbuilding, dollars 62,700,000.0.
That also includes, 23,000,000 in drawn debt on some vessels that was repaid end of, the the third quarter. So it's actually not adding any debt, but because the the kind of the vessels were refinanced into a new quarter, then it appears that we have increased the debt on these vessels this quarter. And then on $90,000,000 is also related to the acquisition of the share in OPK for Tokyo Korea. So net cash flow from the finance activities ended at 44.1 percent 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 Christian talked about, that is partly showing why we are delivering a slightly reduced result this quarter.
But even though when compared to the average last five years, we are still at the lower level, and we should also then remember that we have kind of went into using only low sulfur fuel oil compared to heavy fuel oil before end of last or before end of twenty nineteen. And we also see we get the effect positive effect from our bunker adjusted clauses, adjustment clauses that we have in our contracts and also partly the financial hedging that we do. So we don't see the kind of 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%. And we also have some finance financial hedging positions that have a positive market value 2020 that will help us also into 2021.
Cash breakeven has been on agenda for for some time now, and it will continue to be there going forward. Looking at the financial year 2020, we ended with a cash breakeven of 1,400. That is slightly up compared to previous year, but that is also related to new billings that we have taken delivery of and amortization of of, that financing. So we're still, kind of not at the target level that we have talked about around 18 to €19,000 dollar. But, 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 for the coming years.
End of twenty twenty, we had a time charter rate of around 21,000, very close to the cash breakeven. But as Christian told, towards the end of the year and also into twenty nineteen twenty twenty one, the beginning, we are at the lower level when it comes to the time charter rates that we have been throughout the last months and quarters. And also that we are guiding on, cash breakeven for next year is around 21,400 before we kind of continue with taking down the amortization profiles or extending the amortization 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 twenty twenty two.
The one highlighted on the left here in the first quarter was the bond of 82,000,000 US dollar that was refinanced in January. Quite a good timing. We we drew up the loan at the new loan, I think, two days before we repaid the maturing loan. So that is quite a good transfer. Normally, we would refund many, many months before, but this will, of course, then reduce our cash cost if we can kind of transfer make a smooth transfer as we've done here.
We continue to work on optimizing our debt portfolio. This is showing on the 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 breakeven for the four vessels we're talking about with around 4,500 per day. And 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 cash breakeven.
To reach to reach the indicator level here around $750,000,000 to $900,000,000 in debt end of twenty twenty three. Of course, that is also market dependent, based on how many of the maturing loans we are going to refinance or just redeem at, at maturity. The debt side has if you compare to where we were two years ago 2010 2018, debt has increased. That is, of course, then related to the newbuildings that we have taken to live up through these two years. So it has increased around $1,200,000,000 to $176,000,000 of that is related to newbuildings.
So 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 vessel that we have in our portfolio. And I know we have concluded a newbuilding program. As I mentioned, we should be able then to continue to focus on deleveraging and taking down the debts, going forward. A few words on on the end towards, related to the newbuilding or the the sustainability linked bond that we did in in January.
We started with that for more than a year ago, looking into how we could do that or we can structure that. So we are very happy that we succeeded in doing that, issuing the first sustainability linked bond in the in the shipping market globally and also the first in in The Nordics. We also then secured, of course, quite a good liquidity going forward, making sure that we have the kind of flexibility we need as company. And 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 for kind of traditional, financing of our fleets.
Most likely, use that in in kind of the the refinancing that we are looking into now and also going forward. And we also have ambitions to kind of get a lower capital cost including this, structure into the new financing that we are are going to look into. So that was my part, and I will leave the word to Christian 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. Please do. There should be a button on the top right hand corner of your screen.
So if you have any questions to us, we'll be happy to answer them after the presentation. So it's not too late to post these questions. All right. Operational review. I will start by speaking about our COA portfolio.
Our COA share of COA is now back at around 50%, which is the level where we kind of want it to be. But, you have to remember that at the same time, our fleet has been growing. So in terms of actual numbers, 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 affirming trend.
And I also caution you to look too much into quarter by quarter, because when you are extending a fronthaul COA and versus a backhaul COA, might be different dynamics. But I think the important point here is the trend is up going for the COAs and that's a sign that there's a tightness in our fundamental tightness for chemical tankers. If you look a little bit at the fleet growth, as I said, have completed the largest fleet transition in the history of our company. We are now up at 91 vessels, which is very close to target of 100 ships. So 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 also increased we have used pools as a part of our growth. And I'll speak about that on the next page. So two new pools on the coated side. And 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 the those pools.
So we operate four pools today. We have added, as I mentioned, the recently 13 coated ships. And, if you just pause for a minute and ask, you know, why is is Odfjell spending time on 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. So if we do well as a pool manager, we get a share of that upside. So 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.
So that's really important. 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. And 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. But I also want to say that Prus is not going to kind of take over from us.
We are not a Prus management company. We are a chemical tanker company. But 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 $7,000,000 which was $1,000,000 down. Let's say, he spoke about that slight impact from the OCH fire.
But other than that, there are two important highlights this quarter. First of all, we have acquired Lindsay Goldberg shareholding of the terminal in Korea, which means that we now own that together with a local partner in Korea. And when you look at the performance of that terminal, then the price of that was around 8x EBITDA, which we think is an attractive valuation 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. And for all practical purposes, that terminal is in operation again, but we do have some repair work and upgrade to handle. Okay. So that was the operational review and the strategy.
Then 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 tonne in the main trades in some of the main trades, you can see that it's a stable picture. But of course, with increasing bunker prices for spot business, then that will affect.
But 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. And 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%. So 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 parameter is up and so fundamental demand for chemicals is following the trend line that we have foreseen, which is a growth scenario. But 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. So so that means that the the demand for actual transportation of chemicals is contracting slightly in the period of July to October. But as I said, we think that this is kind of a temporary phenomenon.
We think that the strength 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%, 68% growth, that those volumes have not been eroded really. So we have a fairly strong and robust fundamental robust demand for chemicals. On the supply side, there's not a lot of new things to add. We have an order book newbuilding activity, which is far below historic averages.
It is far below product tankers and crude tankers in general. But in terms of real supply, we are, of course, as I mentioned already, taking a little bit of impact from the swing tonnage. Part of the reason for that is that we still have unwinding of floating storage for for product tankers, and that's that's what this graph on the bottom slide. So in terms of real supply, there is a little bit of turbulence going on. But fundamentally, it's a very strong supply picture, And we don't think that there's a risk of massive orders coming in the near future.
So 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 and demand for transportation is realistic, and we don't think that the supply is going to grow by more than 1%. But of course COVID-nineteen and the effects on the economy is still a joker. Think IMF still believes that there's going to be 5.5% growth in 2021.
Vaccines are being rolled out, but it's happening slower pace. And in many ways, the pandemic feels closer in the first quarter than it did in the fourth quarter. So but we can see light at the end of the tunnel. So whereas it might be a little bit difficult to see clearly an economic growth in 2021, then the underlying picture is a strong one as far as we see it. And as I said, supply is not going to surprise us negatively.
So summary on 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 are operating safely and efficiently. And it has been a true test of our platform. COVID-nineteen 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, but we may 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 a little there is the factor that 2021 has started on a slightly more challenging note than 2020, but the drawdown on stock in chemicals and the low CPP market and a higher than expected bunker prices are the main reasons. And 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. So I think we, the encouragement has worked, 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? And what portion of the COA portfolio do you expect per quarter in 2021?
I don't have the exact percentage, in terms of
the volume, but I do think that the vast majority of our COAs are being renewed in the third and the fourth quarter. So I don't think there are any significant portion, but we will have to get back to you on exactly what that percentage is. We 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 we don't think that that's that's going to go away with the tightness in supply that we're looking at. But I think, Bjorn Kraste, we'll just make a note and get back to you on the actual percentage in first quarter.
And then one question from David Bate. 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,
think, first of all, it's important to note that 50% of our business, which is the COAs, they are covered So we don't have any exposure for half of our volumes. And we have a hedge in place that covers another 25% of our on our exposed volumes. But the rest, we are really at the mercy of, of of what happens. And I think you can 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.
But when you come compact that into a shorter period, say, into a quarter, you're you're not seeing that. So when bunker prices go from 300 to $400, the the freight rate will not go from 55 to, say, 60 if that's what's needed to compensate. It'll probably jump just a little bit in the short in the short term. So we are exposed. And whether we can do anything to counter that, the only thing we can do is to take a further hedge.
I personally think when you when we as a company, we are hedged around 60% of our volume, you should be careful taking more hedging. I I personally, I struggle to understand an oil price of $60 in the current environment. So, but, you know, I don't wanna sound like an oil expert here, but but I think that taking more taking more coverage could have the opposite effect. So I think we'll just have to, let's say, accept the fact that that it is impacting us. But I and 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 that we have a very modern and efficient fleet. But we have, 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 02/1950. And that cannot happen without new buildings. But the problem we have is that the the technology or the designs, although the technology actually exists, it doesn't really exist on the scale that we need. So we need to we need to make sure that we know what we're doing when we when we pick the new technology.
And that's gonna take a lot of effort and a lot of time, I would say. So 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 newbuildings in the foreseeable future.
And one question from Lars Bastellenstring 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 twelve months? Well, I
think that could be a very long answer, and you're probably better at answering that, Bjorn, question. But one point I want to make is we don't need the CPP markets to boom. We just need them to normalize. And a normalized MR market, I guess, is, kind of $15,000 per day, you know, given around that number. And and and I think that that will make a big difference.
So it's it's important to note that we don't 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. And, as I said, a normalized market will fix that.
So 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, but the spot markets are dependent on it because we have added competition.
And
then on from Andreas Nieden, Igor and Kepler, how much is your share of remaining expansion CapEx in tank terminals post Q4?
Terry, can you, do you remember that number? Can you speak about that?
Around 30,000,000.
I don't know if you can hear that, but around $30,000,000, I'm told. I don't sorry. I don't remember that by heart. And it also it all depends a little bit on those those plans. I mean, we have not taken final investment decisions yet, so plans will change.
And and, I think, Bay thirteen, we referred to in OTH, have fairly good handle on. But when you start talking about what we call the point in Houston, it's it's a very different different situation. So so I think there's some uncertainty about how how big those investments, can be. But I 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, from Ocular C.
And one terminal question from Amnes Karsten 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?
I think when you when first of all, 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 three fifty thousand cubic meter, I think. But but in terms of EBITDA, Cheyenne, do you have that numb do you have a good answer to that?
We haven't. We have it's sort of that, but depends on the project, the size of it and the complex. Yeah. So two hours to say.
And one question from David Botton, SEB. Congrats on the new pool setup. How will growth in this business look? Any plans to grow And 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, the marginal cost of operating that pool is very limited. So 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. And 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. So we're open for selected growth, but it's not going to take over as the most prominent way of securing tonnage for Achillesi.
And then one question from Benik Engebressen 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. So and we haven't had that yet. So 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 nutshell. But I do also think that it's fair to say that delevering is a higher priority as far as we think.
We do have too much debt and we want to reduce that. And with the CapEx under control and with a self funded terminal division, I think and the market view that we have, I think we can do that and follow that plan. So we can both delever, but we should also be able
to have a transparent and, I would say, attractive dividend policy. But it is market dependent. So I hope I answered that question. And then one question here. Can you quantify how much weaker you expect the first quarter to be?
And could you offer any quantitative comments on 2021 results? That would be helpful. Yes. We
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. So I think we will just leave it at a weaker outlook. We are not seeing a collapse. Maybe that's the in any way.
But it is a weaker earnings picture. But I prefer not to be more specific than that.
One question from Thys London. 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, Thierry?
Yes. Happy to. Yes. Thank you. The the framework that we have in place, we have been using, I think, a lot of time and resource on on establishing together with our financial advisers.
And we also have third party kind of firm 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 02/1930. And 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. And 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 kind of paying a penalty if you're not reaching your targets, most likely we see a step down on the margin margin running to through the the long period. If you deliver according to plan, there will be a step down on on the margins. We actually get lower financing costs when we deliver according to the plan. But that is said, I also think that's kind of the framework itself is very, attractive. So the competition amongst the banks wanting to participate in traditional financing for FortiClare 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.
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