Good morning, everybody, and welcome to the presentation of Odfjell's first quarter results. This presentations follows a traditional pattern. I will present the highlights. My colleague, Terje, will present the financials. I will give an operational review of the quarter behind us, and we will conclude this session with a general market update and prospects going forward. Going to the highlights. The firm chemical tanker market that we saw in 2022 continued into the first quarter. Our time charter earnings ended at $181 million, and this compares to $187 million in the fourth quarter 2022. That produced an EBIT of $68 million, which compares to $73 million in the fourth quarter. Our net result was $47 million.
This is slightly lower than the fourth quarter. That result, adjusted for one-off items, was $46 million, compared to $50 million in the fourth quarter. Our contract rate renewals were up 32% on average, and this covered 35% of our estimated annual contract volumes. The majority of these contracts were concluded towards the end of the quarter and therefore had limited impact on the earnings in the first quarter. The net result contribution from Odfjell Terminals increased to $2 million. This compares to $0.2 million in the fourth quarter. This was primarily due to firmer activity levels, higher tank lease rates, and increased commercial occupancy rates. During the quarter, Odfjell has taken delivery of one new building.
We have on time charter, we have declared two purchase options on chartered-in vessels. We have also signed two additional Japanese long-term leases. We concluded the sale of a J19 that will be delivered during the second quarter of 2023. The proposed deletion of treasury shares was concluded and approved at yesterday's annual general meeting. By that, I conclude the presentation of the highlights and give the word to Terje to present our financials.
Thank you, Harald. I would, as usual, start with the income statement this quarter. As you saw, and also Harald explained, we saw time charter earnings decreasing somewhat this quarter at $181 million compared to $186 in the fourth quarter. We saw that the volumes were marginally up. Harald will come more back on that. The main driver behind the slightly reduced time charter earnings is that we saw a softer spot market, and we had fewer days in this quarter compared to the fourth quarter. Operating expenses, quite stable compared to the fourth quarter, ended at $49.5.
Even though it was a bit higher than we expected, we had some more cost on technical accounts this quarter than we expected, but even though quite comparable to the fourth quarter. Share of results from joint ventures ended at $2 million, up from $0.2. I would say that we are more or less back on track for terminals with that, the results, because we had some one-offs and negative impacts in the fourth quarter that impacted the result then, and we are more kind of delivering results as expected in this quarter. G&A ended at $18.6, down from $19.7 in the fourth quarter. Main reason for the decrease is that we had some additional cost in the fourth quarter that did not reoccur in the first quarter.
We ended with an EBITDA of $110 million, compared to $112.8 million in the fourth quarter. Depreciation slightly up because of delivery of new vessels, ended at $41.7 million, and that leaves an EBIT of $68 million compared to $73 million in the fourth quarter. Net interest expenses decreased from $22.4 million to $21.6 million. Main reason for the decrease is that we had some additional financing costs in the fourth quarter, which did not reoccur in the first quarter. We are more on a kinda expected level, I would say, in this quarter. After other financial items and taxes, we are then left with a net result of $46.7 million.
If you adjust for non-recurring items, being the other financial items, we have a net result of $46 million compared to $50 million in the fourth quarter. Time charter earnings per day, quite stable compared to the fourth quarter, ended at 30,118, slightly decreased of 3% compared to the fourth quarter. Even though it's well above our annual cash break even, which for first quarter ended at 23,673 per day, which also is very much the same level that we expect for the coming quarters.
We saw a slight in-decrease in the cash break- even this quarter, but even though we see that we are on a higher level than the last 12 months rolling, which is $23,147. Main reason for that is that we have seen the increase in interest in the market that, of course, is impacting our cash break even. Looking at the balance sheets, most interesting to note is that we saw a increase in right-of-use assets as we took delivery of one vessels on time charter in the first quarter, and we also sent a notice of exercise of purchase option for one chartered-in vessels that will be delivered later this year. That increased from $208.7 to $263.3 this quarter.
On the cash side, we see a decrease in the cash from $117.7 to $86.2. Main reason is of course that we have paid dividend this quarter of $48 million. If you add undrawn loan facilities, we have available cash around $150 million. Other current assets increased this quarter, main reason being that the working capital had a slightly negative development. That is of course something we see vary from quarter to quarter. Equity ended at $688.6, slightly down.
Even though we delivered positive results, of course we paid a dividend, impacting the equity ratio, but even though we think we have a quite solid balance sheet, compared to where we were some years ago. On the debt side, we saw that delivery of the new vessel on time charter and also the purchase price for the option has then been classified as short-term debt and has increased both current debt right-of-use assets and also non-current debt right-of-use assets this quarter. Cash flow statement. We saw that the operating cash flow decreased from $86 in the fourth quarter to $71 in this quarter.
Of course slightly impacted by the negative development in the net result, but main reason being that we had the increase in working capital this quarter, which is something that could easily kind of vary back or fluctuate back in the next quarter. That depends on the closing date for the balance sheet, what is then receivables and payables at the end of the quarter. Then we're left with the cash from operating activities at $71. Looking at investing activities, we have then paid for the one vessel that we took from our time charter portfolio and acquired. That is included in the $28.7 in addition to dry dockings and also investments in the quarter. And then with the.
After other, we had a negative cash flow from investing activities of $29 million this quarter compared to $9.88 million in the preceding quarter. On the debt side, most thing to note is that we then took a loan on the new vessel that was delivered, the time charter vessel, of $14.4 million. And if you include then payment of installments on our debt and also repayment on the lease debt and dividend, we had a negative cash flow for financing of $73.4, leading to the kind of the cash going from $117.7 to $86.2 end of this quarter. As mentioned, if you include undrawn loan facilities, we are around $150 million in available cash.
If you look at the free cash flow on a longer term basis, we see that this quarter we had a positive cash flow operation, as I said, that's $71, and negative from investment and $29, that leaves us with a free cash flow of $42 this quarter. If you look at the 12-month rolling, we are at $66 million. Also if you adjust that for payments, debt repayments related to right-of-use assets, it's reached $49 million compared to $51 million end of the fourth quarter. We used the free cash flow in this quarter to paying dividend and also scheduled debt repayments on our debt.
As I said, we also had a negative impact from the working capital, which increased with $12 million in this quarter. Going forward, we have limited CapEx. As I mentioned, we have declared the purchase option for one vessel to then be delivered in third quarter. That will be, of course, financed externally. Besides that, we don't have any material CapEx commitments, meaning that if we continue to deliver strong financial results, that should also lead to a strong continued free cash flow going forward. Looking at the debt maturities, we have some, I would say a nice portfolio of loans maturing going forward.
We have that of course on the agenda, and we see that we have a strong interest from banks and leasing markets, so we don't see any issue with refinancing those. It's quite the opposite. We see an opportunity to continue to get more competitive financing cost for our balance sheets. Worth noticing the bond that is maturing in September this year. Our game plan is still to repay that based on the cash from our balance sheets, and that is in line with our finance strategy to reduce debt and also reduce the average cost of capital. We have also noted here that a refinance may be considered if terms are attractive, but as I said, based on the situation today, we are most likely just repay that based on the cash we have available.
Looking at the debt development, forecasted going forward, we have a nominal interest-bearing debt around $989 million end of the quarter, including derivatives on our bonds. That is projected to decrease to around $160 million end of 2023, which is well below our target, which was set to $900 million a few years back. I think I will leave the word to you again, Harald.
Thank you. Thank you, Terje. I will continue with a review of our operational performance during the quarter behind us. If we look at the ODFIX Spot Index versus the Clarksons Spot Index, then we saw that the ODFIX increased by 1.1%, and during the same period, the Clarksons index decreased by 0.8%. Our core activity is the transportation of specialty chemicals, and we continue to renew this contract at healthy increases, and we also saw solid contract nominations during the quarter. Easy chemicals, here we saw a somewhat softer market and particularly in the markets east of Suez.
We saw an increase in the share of vegetable oils and the biggest contributors here were soybean oil and UCO or used cooking oil. CPP is mainly used in Odfjell for repositioning of our vessels, and we saw a further reduction of our involvement in the CPP market during the quarter. As previously mentioned, our contract coverage reached 49% after an increase of contract volumes of approximately 200,000 tons. That's an increase of approximately 3% compared to the fourth quarter. Our contract rate renewals increased by 32% in the quarter, and we renewed approximately 35% of the estimated annual contract volume.
The strong demand from our charters, combined with limited new orders, provides a solid outlook for the chemical tanker segment going forward. I'm also very pleased to inform you that for the first time, since we started reporting our carbon intensity, we are this quarter reporting a reduction in our carbon intensity of more than 50%. Compared to an Odfjell baseline of 2008 at 15, we are now down to 7.4 in the first quarter. By that, we have reached our 2030 target to reduce our carbon intensity by 50%. That does not mean that we will not continue to reduce our environmental footprint.
We have initiated several products that we believe will further reduce the our AER or the carbon intensity, and we hope to roll out these projects either by the end of 2023 or early 2024. This slide shows the transition of the Odfjell fleet over the past eight years. What you can see here is that we have divested or exited the regional trades that segment is down to a minimum. We have also sharply reduced our exposure to the J19s. At the same time, we have seen a similar development on the J25s , where we have seen a sharp increase in number of vessels.
That's also where the majority of our future deliveries will be centered. We've also seen an increase in the large stainless steel tanker segment, and we have seen an increase in the super segregator segment. At the same time, we have discontinued all our coated pools. On the terminal side, first with our financial performance, our portfolio experienced a quarter-on-quarter EBITDA increase of $1.2 million. This is mainly related to an increase in commercial occupancy and tariffs, and also non-recurring costs in the fourth quarter that we didn't see in the first quarter. When it comes to market development, our terminals in Antwerp and Charleston ended the quarter with an average commercial occupancy rate of 100%. This is in line with previous quarters.
Our terminals in Houston and Ulsan experienced a quarter-on-quarter increase, and the average commercial occupancy rate for terminals ended at 97.2% in the first quarter, and this compares to 96.1% in the fourth quarter. The demand for terminal storage remains strong. This is partly due to European and US producers securing storage to improve the security of their supply chains. We expect the commercial occupancy rates to remain resilient for the remainder of this year. Compared to the same quarter last year, throughput was stable compared to the previous quarter, but it was moderately down compared to the first quarter of last year.
We do see that the macroeconomic and geopolitical situation for 2023 is uncertain, and we remain vigilant with respect to the activity levels going forward. I would also like to point out that we have two tank pits under construction, one at our terminal in Houston, and we have one tank pit being constructed at our terminal in Antwerp. Both those terminals are expected to be completed within 2023, and they are financed through the local balance sheets. We will continue with a general market update and our prospects for the quarters going forward.
The Atlantic, we start with the markets west of Suez, and here we saw that the Atlantic market continued on a strong trajectory, leading to a sustained growth trans-Atlantic. We also saw flat rates from the US Gulf down to South America. The trade lanes to Asia weakened, and we saw a reduction in the trade from the US Gulf to the Far East and also with veg oils out of Argentina. We saw a reduction in rates east of Suez, but here we have to remember that this is a reduction from historically high rates. We saw improved rates in the Far East US Gulf lane.
This was partly due to stronger chemical demand in the US compared to the Asian markets. We also saw a spillover effect from reduced CPP earnings east of Suez, and that decline spilled onto the chemical tanker markets. We continue to see that swing tonnage is swinging out of chemicals and into CPP. Since the end of last year, at that time, the percent of product tankers lifting chemicals was approximately 8%, and it's now down to approximately 3.5%. If we look at the order book, we see that we today have an order book which is approximately 4.5% of the current fleet.
We also see that the average fleet is 13 years, and 16% of the total fleet is already 20 years or older. The order book for the larger segments is presently extremely low. External factors impacting the world's demand for liquid chemicals, we see that the inflation rates and interest rates are still impacting consumption. There is slow economic growth, but there is still a growth. There is geopolitical instability, and we also see that there is a tightening oil supply. We see that an improvement of the energy markets in Europe, we did see during the first quarter that the EU import ban on Russian CPP and crude oil had an impact. We now see that a slow reawakening of China.
On that basis, we do expect that the demand outlook will be stable, there will be stable production, and we also believe that the ton-mile production will be stable. On the supply side, we continue to see, a negative fleet growth. We continue to see that swing tonnage is swinging out of chemicals. We continue to see that older chemical tankers are being sold and deployed in, trades outside our core markets. We also see that the IMO regulation, is effectively, introducing a speed cap for vessels trading internationally. To summarize, this presentation, when it comes to our results, we saw that, the firm market seen in 2022 continued into the first quarter, despite the fact that we saw slightly weaker spot conditions east of Suez.
Odfjell Tankers delivered strong earnings at the back of higher contract volumes lifted in the quarter and also continued increases in our contract renewal rates. We expect these two factors to continue to support earnings in the coming quarters. Odfjell Terminals, here we had a net income from our terminal business that was back to normalized levels. These were showing positive developments in the first quarter compared to the fourth quarter, which had a temporary business interruption in the US due to extreme weather. The market outlook, we believe that supply and demand fundamentals will remain favorable, and that will support the outlook for a firm deep sea chemical tanker market in 2023.
We have seen a slightly slower spot market, it's still at healthy levels, and we continue to renew our contracts with at favorable terms. This should translate into time charter earnings in the second quarter, which are in line with or slightly above the first quarter. Before we turn to the...
Question session, then I would like to remind you that Odfjell is inviting to the chemical, to the capital markets day, on the 22nd of May in Oslo from 10:00 AM to 1:00 PM at the Hotel Continental. If you want to attend this session, please report back to my colleague, Nils Jørgen Selvik, not later than the 18th of May. We sincerely hope to see you there in a couple of weeks time. Then, Nils Jørgen.
Yes.
Are there any questions?
There are a few questions. I think the first question goes to Terje, and it's a question about our TCE breakeven target. We showed a TCE breakeven target of $19,500 per day compared to a range of $18,000-$19,500 per day.
Mm
last quarter. Is there a reason for this difference?
Good question. As I said in the presentation, looking at our cash breakeven, we have seen that as gone up somewhat in 2022 and also in 2023. Main reason being that LIBOR, the interest market, in the market, LIBOR-SOFR, has increased quite substantially. We see partly inflation on both OpEx and also partly on G&A. I think it's still doable for us to reach that target that we set a couple of years back, but it may take a longer time. What is important, I think, is that we just continue to reduce our debt, and we have done that quite substantially. Reduce our debt and also refinance debt at more competitive levels.
We, I also think we have been quite successful in that, and we will continue with that. Whether we have to reset our cash breakeven target at some stage, that may happen because of the, as I said, inflation and interest levels being higher, but we are still working kind of towards that original target that we set a few years back.
Thank you. A question to you, Harald. We have reduced our emissions for our fleet significantly over the last couple of years, and illustrated well in this quarter by a more than 50% reduction now of our AER compared to 2008 IMO baseline. Is it possible to reduce further without addressing speed?
First I would like to say that this is a milestone in Odfjell's history. We have reached a target that we set some eight years ago. The target was supposed to be met in 2030, now in 2023, we are already touching the limit that we defined. The commitment in Odfjell to improve our environmental footprint is impressive. Although we have reached this target, we are still determined to reduce our fuel consumption even more. We have initiated a couple of very interesting projects. We hope to roll those projects out hopefully by the end of 2023. Maybe it would be early 2024.
I am very positive that we will further reduce our carbon intensity. The answer to that is yes.
Excellent. The next question goes to you, Terje. As we announced in the presentation and in our report, it has been decided that we will delete most of our treasury shares. At the same time, we retain the ability to purchase our own shares up to a maximum of 10%. What is the motivation behind this?
I think we were close to 10% of our total shareholding with our own shares. It has been our intention for a long time to terminate or delete those shares. We have kept them for a while for kind of more contingency measures. Today we don't see any reason for that. We have decided to delete them, and that was approved by the general assembly yesterday. It will be effectuated in five or six weeks, I think. We asked for a new authorization to buy up to 10%, as you said. The reason for that, we are not planning to start any buybacks out in the market, but we want to have the flexibility if we see any good opportunity at some stage.
As I said today, we don't have any plans to use that authorization.
Okay. Good. The next question just came in here. I think this goes to Harald, and it's on our COA portfolio. The question is, as most of the renewed Q1 contracts were renewed in the latter part of the quarter, when will we see full effect of these in our TCE rates? Second quarter, third quarter?
some of these contracts take effect already, took effect already from the 1st of April. I think we will gradually see that those contracts are kicking in, I would say through the second quarter. By 1st of July, I think that all those renewals will be in effect on in our fixtures.
Yeah. Excellent. I think, there's one final question here. It's a bit more general, and I think this also goes to Harald as it sort of touches on our outlook. As we have presented today, the outlook is solid. At the same time, what are our biggest concerns these days?
I will start with the positive side. We have an extremely favorable supply situation. There are hardly any new buildings coming up, and we also see that the time period for a new building to be contracted, to be constructed, and delivered is probably 2-3 years before those vessels come into the market. We have a favorable supply situation, and that supply situation is quite relatively predictable. The uncertainties relates to the demand situation.
Also here, what we have seen during previous recession periods and previous periods with low global activity, we've seen that the chemical tanker market has been, I would say, much more resilient to those changes than what we've seen from other vessel segments. Our base case is that we will have a stable demand situation. We might not see any big increases, but it will be stable. That in combination with the supply situation that we see, that turns into in our view, a positive outlook for the chemical tanker segment.
Very good. Thank you.
Thank you.
I think that concludes the Q&A. Thank you.