Avance Gas Holding Ltd Reports Strong Q2 2024 Earnings
Avance Gas Holding Ltd Reports Second Quarter 2024 Earnings
Avance Gas Holding Ltd (OSE: AGAS) today reports its unaudited results for the second quarter of 2024. This period marked significant achievements and strategic moves that define the company's current market presence and future projections.
Key Financial Highlights
The average Time Charter Equivalent (TCE) rate on a discharge-to-discharge basis was $50,100 per day, demonstrating a decrease from $60,900 per day in the first quarter of 2024. For context, guidance indicated that 83% of booked days were projected at $48,000 per day.
On a load-to-discharge basis, TCE was reported at $46,700 per day, a sharp decline from $78,800 per day in the previous quarter. The load-to-discharge adjustments negatively impacted the company's finances, totaling a loss of $3.7 million or approximately $3,400 per day in TCE for the second quarter, contrasting sharply with a positive adjustment of $20.9 million or $17,900 per day in the first quarter.
The company achieved Time Charter (TC) coverage of approximately 25% at an average TCE of $50,100 per day, while spot voyages accounted for about 75% at $49,100 per day. The average fleet TCE calculated was $49,300 per day, excluding Forward Freight Agreements (FFA) gains which amounted to $1 million or about $800 per day.
Daily operating expenses (OPEX) declined slightly to $8,100 per day from $8,200 in the previous quarter. A net profit for the second quarter reached $60.6 million, translating to earnings per share of $0.79.
Strategic Asset Management
In addition to strong financial results, Avance Gas successfully executed several noteworthy transactions. The company completed the sale of Avance Pollux (2024) for a cash consideration of $120 million, resulting in a net cash inflow of $62 million after accounting for debt repayment and transaction costs. This sale marked the fourth vessel sale in 2024, generating a cumulative gain of $120.9 million and net cash proceeds of $188.6 million for the first half of the year.
Furthermore, on August 15, 2024, Avance Gas announced its decision to sell its entire Very Large Gas Carrier (VLGC) fleet to BW LPG Ltd for an impressive $1,050 million. The transaction is anticipated to yield a total gain of approximately $315 million, with $305 million categorized as a book gain and about $10 million to be recorded as reduced depreciation expenses. This strategic sale will transform Avance Gas to a holding of four dual fuel medium-sized gas carriers (MGC) capable of transporting full ammonia cargoes while also establishing a 12.77% stake in BW LPG.
Dividend Distribution and Future Projections
Reflecting its strong performance, the Board of Avance Gas declared a dividend of $1.35 per share, totaling $103 million for the second quarter. For the entire first half of 2024, total dividends amounted to $3.50 per share, representing approximately 30% of the current market capitalization of the company.
Looking forward, approximately 79% of capacity for the third quarter of 2024 is already booked at an average TCE per day of about $41,000 on a discharge-to-discharge basis. The expected market adjustments in load-to-discharge rates are forecasted to fluctuate around $1,000.
CEO's Insights
Øystein Kalleklev, Chief Executive Officer of Avance Gas Holding Ltd, commented on the transformative developments that 2024 has presented for the company. With the sale of four VLGCs yielding a total profit of $121 million, Avance Gas recorded its highest-ever half-year results of $207 million. This success has facilitated a significant distribution of $165 million, equivalent to $2.15 per share, an amount that matches the total dividends paid in 2023.
Looking ahead, Avance Gas is actively exploring optimal paths to maximize value from its remaining assets while adapting to changes in market conditions. As the company evaluates new strategies to enhance returns, it is confident in achieving further successes in both asset management and operational growth.
Frequently Asked Questions
What were Avance Gas Holding Ltd's key financial highlights for Q2 2024?
The company reported an average TCE rate of $50,100 per day, a net profit of $60.6 million, and declared a dividend of $1.35 per share.
What significant asset sales did Avance Gas conduct recently?
Avance Gas successfully completed the sale of its remaining VLGC fleet to BW LPG Ltd for $1,050 million.
How did the company perform in terms of operational costs during Q2 2024?
Daily operating expenses were reported at $8,100 per day, which is a slight decrease from the previous quarter's expenses.
What is the company's outlook for Q3 2024?
Avance Gas has booked 79% of capacity for Q3 2024 at an average TCE of approximately $41,000 per day.
How has Avance Gas Holding Ltd's performance changed since last year?
The company experienced a substantial increase in net profits, achieving its highest half-year results in 2024.
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