Hamilton, Bermuda, February 20, 2025
Himalaya Shipping Ltd. ("Himalaya," "Himalaya Shipping" or the "Company")
announces preliminary unaudited results for the three and twelve months ended
December 31, 2024.
Highlights for the Fourth Quarter of 2024
* Total operating revenues of $29.6 million, which is an average time charter
equivalent ("TCE") earnings of approximately $27,800 per day, gross[1].
Average Baltic 5TC Capesize Index was $18,301 per day.
* Net income of $1.0 million and Adjusted EBITDA[2] of $21.3 million for the
fourth quarter of 2024.
* Declaration of cash distributions for September, October and November 2024
of $0.10, $0.04 and $0.01 per common share, respectively.
Subsequent Events
* Declaration of cash distributions of $0.005 per common share for each of
December 2024 and January 2025.
* Entered into a new time charter agreement for Mount Norefjell for 14 to 38
months. The vessel will earn an index-linked rate, reflecting a premium to
the Baltic 5TC index that is higher than the average premium on our current
charters.
Contracted CEO, Herman Billung commented:
"The average Baltic Capesize Index (BCI) for 2024 concluded at $22,593 per
day. After nine months of relative stability, the BCI experienced a decline,
averaging $18,301 per day in the fourth quarter of 2024. The first three
quarters of 2024 saw growth in ton miles: a 6.7% increase in iron ore, a 13.7%
increase in bauxite, but a 4.6% decrease in coal, leading to an overall
increase of 5.5%. However in the fourth quarter of 2024, ton miles declined by
0.8%, primarily driven by an 8.6% decrease in coal. This decrease can be
attributed to the splitting of Capesize coal cargoes into smaller sizes for
transportation by Panamax vessels, as evidenced by the 4.2% increase in ton
miles in the fourth quarter.
As we enter the first quarter of 2025, the Capesize market continues to face
challenges, with BCI rates averaging $8,807 per day. This decline is partly
seasonal, but the ongoing cannibalization of the coal trade in favor of
smaller ships remains a negative factor.
Despite the short-term pressures, we maintain a positive long-term outlook for
large dry bulk ships. The current order book of new Capesize vessels stands at
a historic low of only 7.2% of the existing fleet, and yard capacity is down
50% from its peak. Additionally, 20% of the entire fleet will be 20 years old
by 2028, which is the earliest opportunity for meaningful fleet expansion.
Furthermore, 23% of the total Capesize fleet will require drydocking in 2025
due to 5, 10, 15 and 20-year Special Surveys compared to only 13.6% in 2024.
The Company remains optimistic about significant growth in ton miles, driven
by increased iron ore production capacity in the Atlantic from Guinea (120 MT)
and Brazil (50 MT), both producers of high-quality iron ore. Should these
volumes replace domestically produced iron ore in China, we anticipate a need
for an additional 232 Capesize vessels, which is nearly 60% higher than the
current order book. Additionally, we expect continued growth in bauxite
exports out of Guinea, further fuelling the demand for ton miles.
In the long-term, we expect rising global population and industrialization,
coupled with the growing distance between raw material production and end
consumers, to lead to sustained demand for large dry bulk vessels.
Historically, ton mile demand for Capesize vessels has increased by 5.9% since
2002.
All of our 12 vessels are employed on index-linked charters, earning on
average a premium of 42.5% over the Baltic 5TC index, with profit sharing of
any economic benefit derived from operating the vessel's scrubber or running
on LNG. As a result of our long-term financing, our breakeven point is
approximately $16,000 per day on a Capesize index equivalent basis. Most of
the excess cash-flow above this threshold is expected to be returned to
shareholders through monthly dividends."
[1] The Company uses certain financial information calculated on a basis other
than in accordance with accounting principles generally accepted in the United
States (US GAAP) including average TCE earnings, gross and Adjusted EBITDA.
Average TCE earnings, gross, as presented above, represents time charter
revenues and voyage charter revenues adding back address commissions and
divided by fleet operational days. Please refer to the appendix of this
release for a reconciliation of this non-GAAP measure to the most directly
comparable financial measures prepared in accordance with US GAAP.
[2] Adjusted EBITDA as presented above represents our net income (loss) plus
depreciation of vessels and equipment; any loss from equity method investment;
total financial expenses, net; and income tax expense. Please refer to the
appendix of this report for a reconciliation of Adjusted EBITDA to net income.