Good day, and thank you for standing by. Welcome to the Avansca Holdings Limited First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.
And I would now like to hand the meeting over to your of today, Christian Sorenson. Please go ahead, sir.
Thank you, and hello, everyone, and welcome to the Avansgas 1st quarter presentation. My name is Christian Sorenson. I'm the CEO of Avansgas. And I'm joined today by our CFO, Randy Nadal and Chief Commercial Officer, Ben Martin. Before we get going, I'd like you to take notice of the disclaimer on Page 2 since the presentation is giving forward looking statements.
Next slide please. First of all, we want to again pay tribute to all our crew members on boarderships who have for more than 12 months now been facing challenging conditions in terms of delayed crew change, difficulties with disembarking crew members with critical illness, additional safety measures to protect them from COVID-nineteen infections and so on. We know that many of our sailors also are under immense stress not being able to return home to the loved ones with onshore family members being hospitalized and even dying. The safety and well-being of our crew is, of course, of the highest priority, and we are, therefore, very happy to see vaccination programs being initiated on U. S.
Port calls, and more are coming. It should also be mentioned that we as of this date have not had one single COVID-nineteen case onboard our ships. So moving on to Slide 3, showing the highlights of the Q1. The quarter was solid from a financial point of view with the TCE reported of $42,522 a day, a gross operating profit of $35,300,000 and our net profit, dollars 18,900,000 which corresponds to earnings per share of $0.30 From a commercial market point of view, the quarter was more like a roller coaster with rates dropping like a stone from $100,000 a day to OpEx levels around $7,000 $8,000 a day as the cold winter temperatures hit the U. S.
Our TCE of 36 $1,754 a day on a discharge to discharge basis shows strong commercial performance despite the market volatility, which is not for the faint hearted. In January, we contracted 2 dual fuel state of the art VLGCs, which in April were followed up by 2 more newbuildings, bringing our newbuilding order book up to 6 vessels scheduled for delivery from end November this year up to end 2023. This will allow us to take greater part in the anticipated strong market ahead and the newbuildings are also an important step for Avansgas to grow the fleet to optimize our commercial operations as well as reduce our environmental footprint compared to fees with conventional propulsion machinery. The equity portion of our 4.80 $1,000,000 new billing program is soundly funded through a private placement of $65,000,000 in the 2nd quarter, derisking our balance sheet. With a robust market outlook, strong cash position of $95,700,000 in Q1 and 146,000,000 As of today, we are pleased to declare a dividend of $0.14 per share, equivalent to 57% of our net profit for the quarter.
So I'd like to hand over to our CFO on the financial highlights. Randi, please go ahead.
Thank you, Christian. Turning to Slide 5. I would like to walk you through the financial highlights for the Q1. Despite the cold snap in the U. S, we have a strong chartering result for the Q1 achieving a TCE of 36,754 per ship day on a discharge to discharge basis, which is in line with our guidance.
With the rates declining at the end of the quarter, we had a positive effect of IFRS 15 of SEK 6,500,000 reporting a TCE rate of 42,552 on a load to discharge basis. This is up from 36,100 a day in previous quarter. Vessel operating expenses came in at EUR 9,440 a day for the 1st quarter, slightly up from previous quarter. Operating expenses still impacted by COVID-nineteen expenses as crew change, service and freight of equipment representing 800 a day. And further, we had the seasonal upstoring and maintenance representing another 800 a day, which is expected to phase out during the course of the year.
The gross profit for the quarter was €35,300,000 up 20% from previous quarter due to a strong market in January for the extreme cold weather in the U. S. Kicked in. The net profit was EUR 18,400,000 corresponding to an earnings per share of EUR 0.30 up from EUR 0.21 adjusted for write back previous quarter. Looking at the cash position, we generated EUR 38,000,000 in cash flow from operations in the Q1, offset by dividend payment of EUR 7,000,000, a scheduled repayment of debt of EUR 11,000,000 and we reported a solid cash position of SEK 95,700,000 at quarter end.
Today, we have a cash position of approximately EUR 147,000,000 as Christian mentioned. And based on the strong long term fundamentals, We expect to further strengthen our free cash flow generation. And we are happy to announce The dividend distribution for the 2nd time this year, the board declared a dividend of $0.14 per share corresponding to 57 percent of net profit or EUR 10,700,000, which includes issued shares following the private placement in April. The dividend runs at 10% annualized yield based on the market cap today. And in total, we have distributed SEK 17,700,000 in payment this year.
Turning to Slide 6. Looking into the remainder of the year, we have a revised cash breakeven estimate from 22,000 to 23,100 a day, including expected COVID-nineteen expenses impacting the operating expense. As Christian initially noted, we would like to emphasize that our highest priority is the safety of our crew, and we're proud to have a zero last time injury rate and no COVID-nineteen cases on board our vessels. Key subsequent events after the quarter end, the key takeaways is in April, We successfully completed a private placement of SEK 65,000,000, strengthening the balance sheet and fully funding the newbuilding program assuming a normalized debt structure at delivery. The transaction was strongly oversubscribed and And just a few weeks A go, we received a credit approval from commercial banks for the financing of the 2 first due to a few new buildings for delivery in Q4 this year and Q1 next year in NOK 104,000,000 facility with an average cash breakeven of 20,000 a day, reducing the average cash breakeven for the fleet with 300,000 a Day in 2022.
The transaction is subject to normal documentation and closing procedures. Looking into the quarter we're in now, we estimate TCE of 28,000 a day on a discharge to discharge basis contracted for 95% of vessel days. This includes the TC coverage of 32% at 30,000 a day. Turning to Slide 7. Based on the strong market outlook, we would like to give you an idea of the cash flow potential.
On the right hand side, we have illustrated an annualized cash flow and cash yield in various freight rates scenarios of our existing fleet. On an annualized basis, an increase in freight rates of 10,000 a day corresponds to EUR 57,000,000 in free cash flow available for the company to distribute. The market has rebounded from the big freeze in the U. S. And the freight rates has turned to normal trajectories, currently at 40,000 to 45,000 a day depending on the trade route.
But at current spot freight markets, We have the potential of generating $90,000,000 to $113,000,000 in free cash flow corresponding to 21% to 27% annualized cash yield. Turning to Slide 8. In December, the company will take delivery of the 1st of 6 dual fuel newbuildings capable of burning LPG, highlighting the company's commitment towards the decarbonization along with superior earnings potential. In 2022, we will add 2 dual fuel newbuildings capable of burning LPG with superior earnings potential and basis the current fuel spreads and the extra cargo capacity to dual fuel vessels will have up to 10,000 higher TCE per day versus a non echo VLGT. Assuming the whole fleet trading at current spot market level, we have the potential of generating an additional EUR 22,000,000 to EUR 26,000,000 in free cash flow and increased cash yield was 6% to 7%.
Next slide, please. By end 2022, we will have 4 dual fuel vessels on water, potentially increasing cash yield with 12% to 14% to our existing fleet assuming the current spot market level. Moving to next slide. In 2023, the 6 newbuilds will be delivered. And we can see that with 6 DuoFuels, we have the potential of generating between SEK 677,000,000 on top of our existing fleet.
Note that at even lower freight rate levels Closer to the cash breakeven, the newbuilds will have a potential of adding superior earnings as they're capable of burning LPG and have a lower cash breakeven. And with that, I would leave the word over to you, Ben, for the market update.
Thank you, Endy. So let's have a look at this at the market update. Q1 has been the perfect example of the VLGC market showing both its volatility and resilience in the same period. As we saw the market come from near record high exports in December and January to be completely flattened by the cold weather induced infrastructure collapse we witnessed in February and then showing remarkable resilience in March that culminated in record liftings in April. This really has been a very volatile period for all concerned.
On average, we've seen 67 cargoes loaded in Q1 versus 74 in Q4 last year, which, considering the seasonality and the weather issues, is a pretty solid performance. In line with these exports and as Christian mentioned earlier, rates have seesawed and we saw TCE earnings went from $100,000 a day down to OpEx levels And then stabilized back at around $30,000 a day in April. If you move on to the next slide, please. Looking at the Middle East Gulf region, the defining feature here has really been OPEC and post cuts, which have decreased year on year exports from 2020 by around 10%. Looking specifically at Q1, we do see more positive news as we're recording 54 cargoes a month on average versus 50 cargoes for the same period in 2020.
As oil continues to remain strong and if OPEC agreed to minimize their cuts, which it is suggested they should, we would expect to see increased production from the Middle East Gulf regions 2021 and into 2022. The next factor for production in the region will be when around volumes are allowed back into the open market and at which price they are essentially marketed at. Putting all this together with the West volumes, we expect global LPG exports to reach 130,000,000 metric tons in 2021. If we move on to the next slide, please. So if we jump for a moment to the demand picture for LPG.
With 80% of the global VLGC demand coming from Asia. It is therefore Asia where we focus our main attentions. Looking at the big importing countries, India is expected to grow and has shown real strength so far this year with 24% year on year growth. China, the often mentioned driver in almost all commodity markets, The story is also positive. We see LPG demand increasing with particular note towards the new PDH plants, which we expect to mean around 4 1,000,000 metric tons of incremental demand for 2021 alone.
The expectations for growth in Japan and Indonesia are relatively flat. Next slide, please. So now if we look at the production side of things, specifically in the U. S. From where we were viewing things back in Q3 and Q4 last year, production looks much more positive for the coming years.
The EIA, as expected, has continually increased its forecast for U. S. Production, and we now see growth expected for both 2021 2022 with around 3% increase Expected this year. We've also seen the bottlenecks of infrastructure in terms of pipelines and export terminals being removed with the U. S.
Adding a further 1,000,000 metric tons export capacity, which essentially means that up to 90 cargoes a month can be exported should product be available and the demand be there. These two factors, coupled with the expected flat domestic consumption being forecasted, leads us to believe we'll see a robust and healthy U. S. Export market for the coming years. Onto the next slide, please.
The order book and the subsequent fleet growth have been a hot topic of discussion of late as orders now total 66 ships in a fleet of 310, representing over 20% growth. Clearly, this is a large number. However, there are a few points to consider while assessing the impact of pure fleet additions. Firstly, we're tracking 20% to 25% of ships needing drydocking in 2021 2022, which will always have a tightening effect on fleet availabilities. These ships will typically be out of the market for 3 to 4 weeks per ship.
So this is a substantial drain on the ships available to charter. And then if we look at the fleet age profile, We have almost 10% of the fleet that is currently over 25 years old. And with scrap prices being high, you might see some of these older ships making their way to the breakers' yards. This could be of particular relevance for 2023 when we have the largest number of new buildings being delivered, which will coincide with around 25 ships being almost 30 years old, typically the longest lifespan for the LGC ships. A further point of interest and one that is almost as hot a topic as fleet growth is the impact of the forthcoming environmental regulations like EEXi.
Assuming these regulations get ratified by IMO this summer, we could see a substantial portion of the fleet, around about 150 ships, being forced to steam at around 30 knots or thereabouts in order to limit their power output and therefore reduce their emissions. This is a known unknown, but one that can have a significant tightening effect on the shipping fleet,
Okay. So let's turn to Page 17, please. I'd like to say a few words about our newbuilding program. Avansgas is committed to contributing to a greener and more sustainable Shipping Industry. And our newbuilding program is a cornerstone for us to meet the new emission regulations and to reduce our environmental footprint.
Although LPG as marine fuel brings us a long step in the right direction, it may not be the long term solution for the industry. Ammonia, by being such a dense hydrogen carrier, is by many regarded as one of the potential 0 carbon long term solutions for marine fuel. However, ammonia is a poisonous gas, which today has a very CO2 heavy production, which needs to be turned into blue and or green ammonia production before it can claim its 0 CO2 emission status. In addition, I would say that the infrastructure is relatively limited, and it must be expanded if ammonia is to become a real alternative in the future. Having said that, ammonia has been shipped as cargo on board LPG carriers for decades.
And if ammonia really becomes the clean marine fuel that many market participants and observers hope. The gap to bridge is relatively small for our VLGC newbuildings compared to many other shipping segments. Avanskar is therefore preparing our new buildings as much as we can for a potential future transition to Amaunee and Sur at the vessel's first 5 year drydocking. So this lies some years ahead of us. Next slide, please.
So to sum up the outlook. On the supply side, we are monitoring the growing order book, which we, for obvious reasons, don't want to grow out of proportions. But we believe the new regulations being enforced from 2023 onwards will offset much of the additional capacity as older vessels will become less efficient and eventually be phased out. On the LPG production and demand side, we maintain our positive view on the U. S.
Production and exports forecast, where also the seasonal Panama Canal congestion is anticipated to absorb fleet capacity like we saw previous years and fleet inefficiency and heavy drydocking schedule will underpin the market fundamentals. As mentioned, we are guiding on a TCL approximately $28,000 a day on a discharge to discharge basis for 2nd quarter, following the weak market in the Q1, while we maintain our bullish view for the balance of the year and into 2022, where we also will have New and More Efficient Vessels on the water. So on that note, I am pleased to open up for questions.
Ladies and gentlemen, we'll now begin the question and answer session. There are currently no requests coming through. There are no questions. Please continue.
Okay. Then I would like to thank everyone for listening in. And We round off the session as it is. Thank you.
That concludes the presentation. Thank you for participating. You may now disconnect.