BW LPG Limited: A Strong Finish to 2024 with Record Earnings and Fleet Expansion

BW LPG Limited (NYSE: BWLP), the world's leading owner and operator of Very Large Gas Carriers (VLGCs), has reported a strong finish to 2024 with record earnings and a significant fleet expansion. The company's acquisition of 12 modern VLGCs from Avance Gas Holdings Ltd. has solidified its position as the industry leader and opened new growth opportunities.



Financial Performance

In Q4 2024, BW LPG reported a Net Profit After Tax (NPAT) of US$40 million, yielding an annualised return on equity of 9%. The company's earnings per share were US$0.22, and the net leverage ratio increased to 32.7% due to the cash consideration for the Avance Gas transaction and an increase in lease liabilities from new and extended time charter-in agreements.

The Board declared a cash dividend of US$0.42 per share, representing an annualised dividend yield of 14%. This dividend consists of 75% of Shipping NPAT and dividends from BW Product Services.

Market Outlook and Fleet Expansion

The acquisition of 12 modern VLGCs from Avance Gas has increased BW LPG's fleet by 40% to 53 VLGCs, including 22 LPG dual-fuel vessels. This expansion has further solidified BW LPG's position as the world's largest owner and operator of VLGCs, with a balanced chartering strategy targeting 35-40% fleet capacity coverage using time charters and Freight Forward Agreements (FFAs).

The acquisition was partially funded through the issuance of 19.282 million new BW LPG shares, diluting shares by approximately 15%. However, the transaction structure, involving share issuance, cash, and sale-leaseback vessel novation, demonstrates sophisticated financial engineering that preserves capital flexibility.

The timing of the acquisition is strategic, given the current spot rates in the $40,000s per day and anticipated growth in North American LPG exports. The expanded fleet of 53 VLGCs, including 22 dual-fuel vessels, positions BW LPG to capitalize on increasing environmental regulations while achieving economies of scale.

Chartering Strategy and Market Outlook

BW LPG's chartering strategy has contributed significantly to its financial performance. In Q4 2024, the company had a fleet utilization of 96% with an average VLGC freight rate of US$37,900 per available day and US$36,700 per calendar day. This high utilization and strong freight rates have translated into a Time Charter Equivalent (TCE) income of US$128 million for the quarter.

For 2025, BW LPG has a balanced chartering strategy, targeting 35-40% fleet capacity coverage using time charters and FFAs. As of February 2025, the company has 31% of its fleet exposure covered by time charter out at US$44,800 per day, and 2% covered by FFA hedges at US$50,600 per day for the calendar year 2025.

This balanced approach to chartering allows BW LPG to secure stable income through time charters while maintaining exposure to the spot market through FFAs. This strategy helps the company mitigate risks associated with volatile freight rates and ensures a steady cash flow.

Looking ahead, BW LPG's chartering strategy is expected to continue contributing positively to its financial performance. The company's strong market position, combined with its balanced chartering approach, should enable it to capitalize on favorable market conditions and maintain a robust financial outlook for 2025.

In conclusion, BW LPG Limited has reported a strong finish to 2024 with record earnings and a significant fleet expansion. The company's acquisition of 12 modern VLGCs from Avance Gas Holdings Ltd. has solidified its position as the industry leader and opened new growth opportunities. With a balanced chartering strategy and a positive market outlook, BW LPG is well-positioned to continue its strong performance in 2025.