BW LPG's Q3 2025: Contradictions in Time Charter Strategy, India LPG Shift, and Panama Canal Impact

Date of Call: December 2, 2025

Financials Results

• EPS: $0.38 per share; net profit after minority $57 million; annualized earnings yield ~11% vs end-September share price

Guidance:

• Q4 2025: ~USD 47,000/day fixed for ~91% of available days (guidance).
• Full-year 2026: ~35% of portfolio secured with time charters/FFAs at $43,600 and $47,500/day; time-charter portfolio expected to generate ~USD 182 million.
• All-in cash breakeven ~USD 24,600/day; operating cash breakeven own fleet $19,400/day and total fleet $21,300/day.
• Board declared Q3 dividend of $0.40/share (75% payout of shipping profit).

Business Commentary:

* Revenue and Earnings Growth: - BW LPG Limited reported a profit after tax of USD 57 million for Q3 2025, equivalent to an earnings per share of USD 0.38. - Revenue growth was supported by strong demand and favorable market conditions, despite geopolitical uncertainty in the shipping segment.

• Product Services and Dividends:
• The Product Services division reported a realized gain of USD 15 million for Q3, contributing to a net profit after tax of USD 57 million.

• The Board declared a dividend of USD 0.40 per share, representing a 75% payout of shipping profit, aligning with the company's dividend policy.

• Fleet Utilization and Time Charters:

• The company reported a TCE income of USD 48,700 per calendar day and USD 51,300 per available day for Q3, slightly below guidance.
• BW LPG secured about 91% of available fleet days at an average rate of USD 47,000 per day for Q4, reflecting strategic coverage through time charters.

• Market Dynamics and Trade Volatility:
• Geopolitical events and market disruptions led to increased volatility in the shipping segment, impacting headline rates and fixing activity.
• The company navigated this volatility by maintaining a balanced trading portfolio and securing long-term contracts, ensuring stability amidst market uncertainties.
  

  Sentiment Analysis:

  Overall Tone: Neutral

  • Management reported a net profit after tax of USD 57 million and a Q3 dividend of $0.40/share, noted TCE of USD 51,300 per available day (below guidance of $53,000/day), and disclosed Product Services' net loss after tax of USD 29 million. They highlighted a strong liquidity position of USD 855 million and reduced net leverage to 29.7% while warning of market volatility and recent negative MTM impacts.

Q&A:

• Question from Petter Haugen (ABG Sundal Collier): What is the targeted TCE coverage for 2026 and similarly for 2027?
  Response: Target is roughly 40% fleet coverage via period charters and/or FFAs; coverage is built gradually and may be increased if attractive multi‑year charter rates are available.

• Question from Petter Haugen (ABG Sundal Collier): Is the ~40% coverage intended as the entering‑year coverage for 2027/2028 and will you avoid ramping coverage only at year‑end?
  Response: Coverage is managed on a rolling, quarter‑by‑quarter basis as contracts renew; the company does not fix all ships at once and reports granularly each quarter.

• Question from Petter Haugen (ABG Sundal Collier): What are current transactable price points for ammonia‑ready newbuilds and 5‑year‑old VLGCs?
  Response: Management sees dual‑fuel newbuilds around ~$116m and 5‑year‑old VLGCs near ~$90m, but liquidity in the 5‑year‑old market is limited.

• Question from Kevin Whelan (Unknown): How did the Avance Gas fleet acquisition contribute to quarterly profit and day count (additional days vs prior year)?
  Response: Avance added 12 vessels; only two were on short‑term charters and ten traded spot, so the transaction had minimal impact on time‑charter coverage; management will follow up with exact incremental day count.

• Question from Kevin Whelan (Unknown): Could the Russian 'dark fleet' returning to activity dilute VLGC time‑charter pricing into H2 2026/2027?
  Response: Management said Russian exports are mostly smaller vessels and historically not part of the VLGC market, so they see negligible impact on VLGC time‑charter pricing.

• Question from Clement (Unknown): Will the Board consider distributing Product Services' realized gains post year‑end (YTD plus Q4) and could payout be ~75%?
  Response: Dividend decisions are at the Board's discretion; Product Services has YTD realized trading profit of about USD 53m and has historically contributed materially, but no commitment on payout ratio was made.

• Question from Clement (Unknown): Have you added further time‑charter‑in exposure recently and should we expect the India JV to grow in coming quarters?
  Response: No material recent increase in time‑charter‑in fleet; management is gradually reducing it and will only increase if attractive opportunities arise; India JV expansion is possible but no decisions have been made.

• Question from Chrysis (Unknown): How do your spot bookings for Q4 compare versus the Baltic benchmark?
  Response: Q4 bookings are closer to the Baltic index and consistent with the ~$47k/day guidance, but waiting time and repositioning costs mean realized result is slightly below a pure Baltic reference.

• Question from Ernest (Unknown): Please explain the increase in average daily OpEx per vessel and G&A.
  Response: OpEx rose primarily from integrating Avance vessels and changing ship managers (transition/change costs and higher crew costs); G&A increased partly due to accruals/bonuses linked to Product Services' realized trading results.

• Question from Axel Styrman (Kepler Cheuvreux): Does the slight decline in Chinese imports reflect supply constraints (Middle East can't replace US propane) or weaker Chinese demand, and is China returning to the US market after the truce?
  Response: The decline is largely supply‑driven—Middle East can't fully replace US propane volumes—activity from China has increased post‑truce but remains below prior‑year levels and trade is still more hesitant (10% tariff persists).

Contradiction Point 1

Time Charter Coverage and Strategy

It involves the company's strategic approach to securing time charters, which is crucial for cash flow stability and fleet utilization, and affects operational planning.

What is the targeted TCE coverage for 2026 and 2027? - [Petter Haugen](ABG Sundal Collier Introduce)

2025Q3: We aim for about 40% of our fleet capacity to be locked in on period charters and/or FFAs, but this depends on securing attractive rates. We report on this quarterly as it's an ongoing process, not a fixed target for 2026 or 2027. - [Kristian Sørensen](CEO)

Are extension options included in your existing time charter contracts, and if so, are they reflected on Slide 21? Given current market conditions, would you prioritize increasing TCEs or expanding routes in your time charter portfolio? - Unidentified Analyst(Clement)

2025Q1: We have an aim to increase the share of time charters in our shipping portfolio. So we are constantly working to try to increase the number of time charters and also its share of the fleet exposure that we have. And as I have mentioned before, I think if we can come back to a level around 40% we had before the Avance Gas transaction, I think we will be quite happy with doing so. - [Kristian Sørensen](CEO)

Contradiction Point 2

India LPG Terminalling Business Strategy

It highlights a shift in the company's strategy regarding its investments in the India LPG terminalling business, which could impact future growth and market positioning.

Will the India joint venture continue to grow in the coming quarters? - Unknown Analyst

2025Q3: The India JV depends on opportunities in the new year. We may consider dropping further vessels from the conventional fleet if attractive time charters emerge, but no decisions have been made yet. - [Kristian Sørensen](CEO)

What is your strategy for the India LPG terminalling business, and why are you exiting contracts with Ganesh Benzoplast and Confidence Petroleum given the shift in LPG volumes from the U.S. to India directly? - Unidentified Analyst(Kushal)

2025Q1: The terminal investment for BW LPG is estimated somewhere between $10 million and $15 million, which is compared to the balance sheet, a relatively modest investment for our company. And like in any other greenfield infrastructure projects, there is a certain complexity, of course when you construct a terminal. And given the challenging market environment and geopolitical turmoil, the management has had to make the decision to focus on the core value drivers of our company, which are shipping and trading. So it is not an easy decision we have made, but it's simply because of the circumstances where we have to focus our attention and resources and time on our shipping and trading activities. - [Kristian Sørensen](CEO)

Contradiction Point 3

Panama Canal Congestion and Impact

It involves differing perspectives on the impact of Panama Canal congestion on BW LPG's operations, which could affect market expectations and strategy.

Does easing Ukraine-Russia tensions pose a risk from the Russian dark fleet? - Kevin Whelan

2025Q3: The impact of Russian LPG exports is negligible in the VLGC segment. Russian exports historically involve smaller vessel sizes and are not a market factor for VLGCs. - [Kristian Sørensen](CEO)

Are the U.S. government's recent actions affecting Panama Canal congestion? - John (indiscernible)

2025Q2: The congestion is mainly due to the increased presence of container ships, ethane carriers, and other prioritized ship types. - [Kristian Sørensen](CEO)

Contradiction Point 4

Time Charter Coverage Strategy

It shows differing approaches to time charter coverage as a strategy to mitigate market risks, which could affect operational and financial planning.

What is the targeted TCE coverage for 2026 and 2027? - Petter Haugen (ABG Sundal Collier Introduce)

2025Q3: We aim for about 40% of our fleet capacity to be locked in on period charters and/or FFAs, but this depends on securing attractive rates. - [Kristian Sørensen](CEO)

How does Panama’s restriction on registering vessels over 15 years impact the global gas carrier fleet and BW’s business? - Thomas Christiansen

2025Q2: BW LPG is protecting its downside by increasing its time charter portfolio to 40% of its capacity. - [Kristian Sørensen](CEO)