All right. Good morning, everyone, and thank you for attending today's presentation. Welcome to the presentation of Q4 results for Odfjell SE and the preliminary results for 2021. Today, we are broadcasting this on, let's say, a standard Teams call, and we are unable to broadcast from our studio because of some COVID incidents on our team, but I'm sure that we will do fine. In the last two years, I think everyone has learned how to live with these team meetings. I will, as usual, present the highlights, then Terje Iversen will come on and talk about the financials, and then I will come back with an operational review and an update on prospects and markets.
We are happy to answer any questions that you have in the end. During the presentation, you can pose questions by clicking the small bubble on the top right-hand of your corner, and we will take those questions towards the end of the presentation. If you're not watching this presentation live, you are, of course, always welcome to contact us afterwards, and we'll take your questions as well. Let's just get started with the presentation. The highlights for Q4 is that it was an encouraging finish to a difficult year. We use the word encouraging because first of all, it's encouraging to see that the markets reacted positively, which is an indication that the fundamentals are strong.
The second reason why we use the word encouraging is that we are encouraged by our ability to capture such an upturn in a fairly short time. It was an encouraging finish to a difficult year. The time charter earnings for Q4 for Odfjell Tankers came in at $136 million, which is up $11 million compared to the last quarter. The net result from Odfjell Terminals was $3 million, which is up $2 million compared to the last quarter. Our EBIT was $35 million, so that's up $42 million compared to the last quarter.
If you adjust all these figures for one-offs, then Q4 net result was $10 million, and that's up $14 million compared to an adjusted net profit the last quarter of -$4 million. Also, during Q4 , that was the peak of our COA renewal season. We renewed a large part of our portfolio with an average rate increase of 2%, and the average for the year is also 2%. I'll dig more into those details a little bit later to give you a little bit more granularity on that number. Our COA rates continue to be on an upward trend.
Also during the quarter, we took the final investment decision for Bay 13 at our terminal in Houston, which will increase the capacity for that terminal by 9%, to a total of 412,000 cubic meters. The highlight for the full year of 2021 was that it was a disappointing net result of -$33 million, mainly due to a very weak chemical tanker markets in the West. Of course, also a year that was still impacted by various COVID challenges and so on. Otherwise, we continue to operate well, both in terminals as we did in tankers.
Finally, in highlights of 2021, we concluded the exit from our short sea trade in Asia, and we also concluded our exit from the gas carrier segment by selling our 2 last ethylene carriers. Under the quote on the right-hand side, you can see that we're saying that 2021 was another challenging and unpredictable year for Odfjell, impacted by a weak CPP market and a weak market in the West and by the COVID-19 pandemic. We continue to operate well despite these challenges, and we are also ahead of our ambitious plan to reduce emissions. While we are not satisfied reporting negative results, we are encouraged by the quick recovery seen in our markets during Q4 .
In terms of guidance, we are saying in line with seasonality, the chemical tanker market has seen a slightly reduced activity over the holiday period into Q1 , and we therefore expect to report slightly lower results in Q1 . At this point, I will hand it over to Terje Iversen, and then I will come back during the operational review and the market forecast.
Thank you, Kristian, and good morning to all of you. I will, as usual, start with P&L for this quarter. Starting with the time charter earnings, we see that increased from $125 million in Q3 to $135.9 million. The increase is kind of easily explained with higher contract volumes and also stronger spot rates across all the trade lines. Time charter expenses ended at $7.5 million, a slight increase since Q3 . Reason being that we have more vessels on shorter term charters being less than 12 months tenure. Operating expenses ended at $47.7 million, very much unchanged since the previous quarters.
While we see that share of net result from associates and joint ventures being our terminal business increased from $1.1 million-$2.6 million in this quarter. Main reason being insurance proceeds related to the fire we had at the terminal in Houston last year and also the Texas freeze. We also saw some result improvements throughout the various terminals in the quarter. G&A ended at 12.2 compared to 16 in the previous quarter. Main reason being that we reversed some provisions in the fourth quarter, ending a bit lower than average for this year.
Under operating other operating income, we booked $6.2 million as income related to the distribution received from the Norwegian War Insurance, which we also flagged in Q3 reporting. That leads to an EBITDA of $77.3 million compared to $58.2 million in Q3 . We see that the depreciation and amortization at very much the same level as the previous quarter. We got a capital gain of $1.7 million in Q4 related to sale of the last gas vessel that was delivered in Q4 . That leaves an EBIT of $35.3 million compared to -$6.8 million in the third quarter.
Net interest expenses continued to be decreasing due to a reduced level of debt, and that's $17.3 million. We had other financial items being negative mark-to-market development of some of our derivatives of negative $2.0 million. We are at a total net result of $15.4 million compared to negative $25.3 million in Q3. Of course, we have to mention that Q3 also included an impairment on the three regional vessels that we divested under the sales agreement in Q3 .
If you adjust the results for one-offs, being the distribution from the Norwegian War Insurance, the capital gain from sale of the gas vessel and also the other financial items with $2 million, we are at the adjusted net result of $10 million compared to -$4 million adjusted net result in Q3 . Next, please. The balance sheet. Most notable is that we see that ships and new building contracts are very much unchanged due to no new CapEx, only limited CapEx related to dockings and the smaller CapEx project on the vessels and reduced then due to the depreciation that we enter into each quarter.
We see that cash and cash equivalents increased from $54.6 million - $73.5 million due to the improved results and also the one-offs that I just mentioned. If we include undrawn commitments on the RCF, we have available cash at around $109 million end of Q4 . Other current assets decreased from $213.7 million - $193.3 million. Main reason being the gas vessel that we delivered in Q4 . We still have the three regional vessels included in the $193.3 million as held for sale end of fourth quarter. We expect all three vessels to be delivered in Q4 this year to the new owners.
Equity, we are at 548.6 compared to 531.9 at end of Q3 . We have an equity percentage adjusted for right of use of assets around 30% compared to 29.4 at the end of Q3 . The debt side, we see that we continue to reduce debt. As you also have noticed, in November, we did last year, we also did a tap issue on the September 2023 maturity and used that to repay, buy back a large part of the bond that is maturing in June this year. I come back to that in a few slides. Next slide, please. Cash flow statement.
We see that due to the increased results, also operating cash flow is increasing from $35 million in Q3 - $62 million in this quarter. That is, as I mentioned, driven of course by the improved results, but also saw a positive development in the working capital, leading to increased cash flow from operation in this quarter. Cash flow from investing activities. Most notable is that, we enter into sale and delivery of the last gas vessel, increasing the liquidity or getting positive investment cash flow from investment around $10 million. Then we had the investment in non-current assets being docking expenses and a smaller CapEx project of $7.9. In total, we had cash flow from investing activities at $3.9 this quarter.
On the financing side, I just mentioned the buyback and the tap issue that we did. That is why we have new interest-bearing debt. That is the tap issue, and we use that, as I said, to increase the repayment of interest-bearing debt in this quarter, increasing from $33.8 million - $62.7 million in Q4. That leaves us with the financing activities total cash flow of -$46.8 million. For the total quarter, we have done positive cash flow of $18.8 million. Next slide, please. This is more showing how has the free cash flow developed through the last eight quarters.
As you can see, we have had a quite positive development, at least throughout 2021 due to the fact that we have very limited CapEx project for the group. In the fourth quarter, we had a free cash flow from operating activities and investing activities at $66 million, compared to $37 million in the third quarter. If we also then exclude debt repayments related to right of use asset actually being done time charter payments on the kind of long-term time charter agreements, we are at free cash flow at $50 million. However, we should remember that that is, sorry, a bit inflated by the fact that we had the cash distribution from the Norwegian War Insurance with $6 million and also the sale of the gas vessel contributing with $10 million.
The normalized free cash flow is a bit lower than the $50, but even though, we see a positive development excluding those factors in this quarter. In line with our financial strategy, we will use the free cash flow to continue to reduce our debt, to deliver and ensure that we are delivering positive cash flow to the equity throughout the cycle in the long term. Hopefully not too far into the future, to be able to also establish and communicate a predictable and sustainable dividend policy. Next slide, please. This is showing how the time charter earnings developed compared to the free cash flow. The free cash flow in this regard is the cash used for OpEx, G&A, debt service, smaller CapEx, and so on.
If we are able to deliver time charter earnings above the cash break-even, then we should be able to distribute cash to the equity. In this quarter we ended with time charter earnings of $20,868 per day compared to $96,654 in the third quarter. The time charter only being slightly below the cash break-even 2020 to 2021 average at $21,192 per day. Going forward, we expect the cash break-even for 2022 to be a bit higher than for 2021. Reason being that we have divested some vessels. We have divested the short-sea vessels and also divested the gas vessels.
On the other side, we should expect to see a higher average time charter earnings because we have divested smaller vessels, and we have a fleet of larger size vessel in our fleet going forward. We continue to be stating that our long-term target is to have the cash break-even in the area of $18,000-$19,500 per day to be able to deliver positive cash flow to the equity throughout the various cycles. Next, please. As most of you have seen, the bunker cost has increased, the bunker expenses, oil price and also fuel price has increased, continued to increase throughout 2021. We also saw that in the fourth quarter.
We saw that the total gross bunker cost for Odfjell increased from $63.4 million - $70.5 million in this quarter. However, we continue to see that we have hedging through our bunker adjustment clauses, and so we have financial hedging positive contributing to a lower cost for us as a group. Even though the total bunker cost was $70.5 million, we got a positive effect from the bunker hedges that we have done with $3.2 million, and we also got positive effect from the contract portfolio with the bunker adjustment clauses with $9.4 million.
If you then exclude third-party vessels from the equation, we are left a net bunker cost of $44.9 million, only being $1 million higher than we saw in Q3 . Next, please. This is the usual picture we show on the debt side. On the upper part of this slide, you see, for the next two years, the quarterly repayments, both installments and maturing balloons on our debt side. You see we have some balloons maturing in this first quarter this year, that is related to the vessels that we have divested, the three regional vessels. That has more or less been taken care of. We had the bond maturing in June.
Due to the buyback we did in November, we only have $39 million outstanding of that bond. We are considering various options how to take care of that. That could be a combination of several initiatives. Using cash from our balance sheet, we could refinance some vessels, and we can also do a possible tap issue. We will look how the market is developing and also our cash flow before we finally decide to do that. We think the $39 million is absolutely manageable for us as a company.
Lower part of this is the more kind of illustration on how our debt can develop in the coming years if all loans that are maturing are just repaid and also we only to a smaller extent are refinancing some loans with lower leverage. Of course, whether that will materialize or not will depend on the markets and the results and the cash flow that we are generating in the coming years. That was my part of the agenda or the presentation, and I will leave it over to you again, Kristian.
Thank you, Terje. If we start with the operational review on the first slide, we are looking at our COA and volume development. As you can see on the bottom left-hand corner, our COA coverage during Q4 was up to 55%, which is in the middle of the sweet spot we have defined between 50% and 60%. It's a combination of more COAs being renewed, but it's also an effect of having more nominations under the existing contracts. As you can see in the middle, the contract that we have renewed in Q4 were up by 2%, so continuing a firming trend, but it's lower than it was in the preceding quarters. It is though, we have cautioned about this before.
If you only look at this percentage in isolation, you might not get the full picture because the revenue from contract is a function of both, whether it's a front haul or back haul contract, how big a volume it is, and so on. If you just measure the rates, we are up by 2%, and we see that continues the positive trend in our COA rate development. On the right-hand side, you can see that the volumes carried also in the fourth quarter were up, 4.4 million tons, where 3.3 was related to Odfjell's own tonnage. As I said, we have seen an increase in nomination under the existing COA, so there's a good activity level. Next slide, please, Torbjørn.
If you look at the ODFIX compared to the Clarksons Chemical Tanker Spot Index, the ODFIX was up 6.5% this quarter compared to Clarksons Spot Index of 1.1%. The difference in those numbers, it will vary a little bit over time, but in general, we're seeing more exports out of Asia, as I'll show you on the next slide, which means it's a little bit easier to combine and get the ships back into the front haul businesses, although it's then slightly more difficult to get the ships out, fill the ships out on the front haul. In total, we have been able to combine the spot and the contract coverage quite well, and the current level of COA coverage fits nicely into that.
If you look at the different markets, it is on specialties and easy chemicals, we are seeing activity picking up, and a fairly good positive picture, whereas the veg oils and the CPP are of course heavily influenced by the very depressed product tanker market and the swing tonnage continues to be a factor that's teasing us. If you look at the fundamentals for the chemicals, we see fairly good activity levels. On the next slide, on tank terminals, fourth quarter EBITDA was $10 million compared to $8 million in the third quarter. The improved result was mainly reflected insurance proceeds that the Chairman mentioned in OTH, and that came after the Texas freeze.
In general, we also saw an increase in commercial occupancy, which was 96.1% compared to 93.9% in the previous quarter, driven mainly by the terminals in Houston and in Antwerp. The U.S. terminals had a good quarter with a strong uplift in commercial occupancy and a pickup in activity levels. In Europe, we were full, and Antwerp was 100% full and continued high activity levels. In Asia, our terminal in Ulsan had a moderate increase in occupancy, but had a significant uplift in activity levels. All in all, a good picture. We are close to being full across, and we are seeing activity levels and throughputs through the terminals picking up. Next slide, Torbjørn.
Just one slide on the expansion project in OTH Bay 13, as we mentioned earlier. If you look at the picture on the right-hand side, you can see some low buildings with a white roof, which is right in the middle of the terminal. That's what we call Bay 13. The buildings you're looking at there, they are now gone. That used to be the old control rooms, and we have moved that outside of the middle of the terminal, and that's where we intend to build 9 new tanks. As you can see, when you build tanks in the middle of a terminal, you can use the infrastructure in general in the terminal.
Even though the construction price and the material price for those tanks has gone up in the recent time, we think it's a good investment, and it will add positively to returns by the time that these tanks become operational. As I also mentioned in the beginning, this will increase the capacity of the OTH Houston terminal by around 9%. Next slide, Torbjørn. Turning to prospects and market updates. The first slide, as we say, as you can see here, we're saying that the market is still driven by soft U.S. exports, whereas the exports out of Asia to the West remain strong.
We do see, however, if you look at the the graph on the left-hand side, which is exports from the U.S. by trade lane, you are seeing exports to South America and exports to Europe picking up towards the end of 2021, whereas the exports from the U.S. to Asia has still not recovered. Whereas on the right-hand side, you are seeing that as a counterbalance to the lacking U.S. exports to the Far East, you are seeing that those are volumes being replaced by exports out of Asia, East of Suez. As you can see, that has gone up quite dramatically, more than doubled in 2021 compared to the previous year. On the next slide, you can see that same picture reflected in the rates.
These are rates reported by Clarksons Trade by Trade. On the left-hand side, you can see that the picture during 2021, the rates West of Suez has been on a declining trend in the beginning of the year, and they started picking up in the fourth quarter. Of course, there's a bunker element here, but there's no doubt that that market is picking up, and we are seeing that also in the activity level. Whereas on the right-hand side, you're seeing the rates East of Suez, and they have been on a firming trend throughout the year, and that trend also continues. There is a firming rate environment both in the Western and the Eastern hemisphere, which is helping us. The fundamental demand story, there's actually no change in our view on that.
We have mentioned this a number of times, so I'm afraid that I'm sounding like a broken record. We do have a fairly positive view on the long-haul transportation of chemicals. The ton-mile demand, we expect to grow around 4% per year compounded. That's driven by a strong GDP growth. It's still driven by new capacity being added in the Middle East and in the U.S. It's driven by record margins by our customers who are turning record profits, and they have a very good demand, fundamental demand for their products.
There is a general positive picture in terms of demand. I'm repeating myself with this, but we do see that demand growing by around 4% per year compounded in the next couple of years. On the next slide, when you're comparing those 4% with the supply growth, also not a lot of changes to this picture. We have record low order books with the 6.7% of the current fleet. We have an aging fleet with 15% of the fleet becoming recycling candidates within the next couple of years. You have owners hesitating to order new ships because what decision do we make today about new technology?
The swing tonnage, as I mentioned earlier, continues to be a factor, but so we are dependent on the product tanker markets to pick up. What we are not factoring into this picture is the effects of the EEXI regulations that's gonna start coming in from 2023. When you start slow steaming, you will naturally take some capacity out of the market, and that may come in addition to this picture. The picture as it stands is a 0.7% increase in supply of ships. Depending on how much effect will come from EEXI, that may even be a flat or maybe even a contraction in supply. 4% increase in demand and a flat supply picture in the foreseeable future.
That's what we mean when we refer to the strong fundamentals. If we try to translate that fundamental picture into an average fleet utilization of the chemical tanker fleet, you are getting to a point where we, in 2022, believe we will cross through the 90% utilization rate and going up to a 91%, and that will increase further in 2023 with the picture we're looking at today. On this picture, you can see, going back to 1998, that the last time we were above 90% fleet utilization for the global chemical tanker fleet, that was in the beginning of 2002 and 2003, and that was the beginning of an upturn. We're not saying we're heading into a super cycle.
We are just stating the fact that last time, historically, when you are above 90% utilization, you are in a high cycle or in a tight market. It has all the right components for our markets to start a firming trend. You, of course, can ask yourself, okay, so what stands in the way of that upturn to come? We have tried to do a little bit of math on this picture.
The slide is a little bit busy, but what we have tried to do is when you look at what happened in 2021 to both the bulk carriers and to container ships, you saw those markets skyrocketing with the transportation cost for iron ore, for bulker going up from $21 - $56, which means an increase of 172% in transportation costs. Then we have tried to calculate, okay, so what does that transportation cost do to the finished cost, to the cost of a finished steel plate? That freight element has only a 2% increase in price and cost for that steel plate.
We did the same math for a container ship that carries Nike shoes and saying that if an average container cost in January 2019 was $2,000 from east to west, and that today is $7,300, it's actually much higher, but if you just take that, then it's a 270% increase in freight costs. What does that do to the final delivered cost of those pair of sneakers to the consumer? That effect is only 1.1%. There's quite a lot of elasticity in the value chain, quite a lot of room to capture the increase in freight rates, both for those two segments.
What we did all the way to the right here is we tried to use the same logic for chemical tanker, saying that some of the chemicals we transport that's used in the final polyester, in production of polyester that goes into those Nike shoes, if our markets go up by 10% or 25% from, let's say, $60 a day, $60 per ton to $76, which is a 25% increase in our markets, well, that only has an impact of around 0.5% on the cost of that polyester.
We are seeing pretty much the same picture as you're seeing for the other commodities, that the value chains and the value in that chain for those finished products has quite enough padding to carry an increase in our markets. When you see that, and you see that our customers have record high margins, and you're seeing the tightening market, then we think that just adds to the story that we have a positive view for the markets going forward. I think now is the last slide. I want to repeat the headline that it was an encouraging finish to a difficult year.
It was encouraging because the markets picked up, and it was encouraging because we were able to capture it in the short term, which means that the efficiency of Odfjell and the fact that we have the most efficient fleet in the world, that quickly translate into a bottom line, a result that's measurable. It was a satisfying quarter in Q4 . TCE increased by $11 million compared to the previous quarter, and a net profit of $15 million is driven by those improved markets. Our COA nominations improved. Our renewals of our, the rates on our COAs improved. The, let's say, interaction between the stock market and our COA portfolio worked quite well throughout the quarter. On terminals, they had another good quarter.
The terminals are full. The activity levels are picking up. Throughput levels are picking up, so that's a good sign. We are adding capacity both in Antwerp and in Houston. In terms of the market outlook, as I just spoke about, we have a positive view on the market. In terms of guiding, we did see, of course, that normally during the holiday season, there will be a slowdown of activity, and we have seen that this year as well. That has affected our markets, slightly reduced activity in the beginning of 2022, and therefore, we expect to report slightly lower results in Q1 .
All in all, a very positive picture we, I would say, and we are happy with the way that Q4 panned out and the way that a difficult year ended. I think that was the end of the presentation, and I'm not sure if we had any. Bjørn, Kristian, you should be looking at the questions if there's questions that I and myself can answer.
Yeah, there's currently two questions. Starting with one for you, Kristian. With regards to taxes on carbon, how do you see this impacting Odfjell and the chemical tanker market? And will this be a cost you will seek to pass on to customers?
Yeah. The tax on carbon and emissions trading schemes and so on. The last part of the question, whether we can pass that on to our customers, I think history has shown also when we went from heavy fuel oil to low sulfur fuel oil, that's just the way our industry works, that will be filtered through to our customers. We think that will be passed through. It will impact Odfjell in a way that the less you burn and the less you emit, the less carbon credits and the less carbon tax, of course, you have to pay. Our fleet is proven to be the most energy efficient fleet in the world.
Our customers shipping with us, once you have to start buying carbon credits, they will just have to buy less of those credits when they ship with Odfjell compared to the rest of the industry. This will really be the first time that you can quantify the effects of having a more energy efficient fleet. I think it will prove the competitiveness of our fleet in a very visible way once that starts coming into effect from 2023.
One question for Terje. Could you give some details on the financials involved related to your FID on Bay Thirteen in Houston?
Yes, sure. The final investment decision has been made, but the final outfitting of the tanks has not been decided yet. We are talking about an investment around $60 million on a 100% basis. Of course, our share will then be 51% of that amount. We are talking about an EBITDA of around $7 million-$8 million, depending on what kind of products we are going to store in those tanks. If you're looking at returns, we're talking about unlevered returns between 12%-14%, again, based on what will be the final investment cost and what will be the kind of product we are storing in the tanks in the end.
One question. Congratulations on strong cash flow and results. When will you consider starting with dividend payments?
Terje, we're gonna answer the same thing, so it doesn't matter.
It's a really good question. As we have shown here, we have increased our results during the end of 2022. Even though we are signaling a bit slower start to this year compared to last year, we expect that we should see improved results in 2022 compared to last year. That will also lead to increased cash flow. As we also have shown we are quite close to a scenario where we have a positive cash break-even. If that happens, and we have kind of some visibility about the future and expectations, we should get closer to that stage. Whether that is this year or is next year, that is a bit early to answer now.
Hopefully we can communicate more about that in the capital market day in June. Again, it's of course dependent on the market and earnings that we will deliver in the coming quarters.
Yeah. There's one question here, but that has already been answered. Other than that, there's no further questions at the moment. I'll hand it back to you, Kristian, for some final remarks.
Okay. As I mentioned to begin with, if you have questions that you didn't feel was answered correctly or that you didn't get the chance to ask, or you're watching this offline, please never hesitate to contact us. We'll be happy to take any questions that you have about the industry or Odfjell or the results. In the meantime, I just wanna thank everybody for listening. I hope that you can stay safe. Thank you.