Odfjell SE (OTC:ODJAF) Q2 2019 Results Conference Call August 21, 2019 5:00 AM ET
Kristian Mørch - Chief Executive Officer
Terje Iversen - Chief Financial Officer
- KristianMørch - 首席执行官
- Terje Iversen - 首席财务官
So good morning. And welcome to the presentation of the Second Quarter and First Half Results Presentation for Odfjell SE. We are presenting here in Bergen, and I apologize that we have to do this in English, but we are streaming the presentation, live streaming as well, so people can follow. And for those of you watching online, I'm sorry we are little bit late as we were -- everybody got in into the room.
So as we normally do, I'm going to start giving you some headlines on the numbers for today. And then the Terje Iversen will come on and talk about the financials in more detail. Then I will come back with a operational review, and also some prospects and some market forecasts for the coming quarter. I also want to apologize that we did not bring enough hard copies of the presentation and the report. These are really for our speakers. We released them about an hour and a half ago, and we had the Board meeting this morning, so it's been an eventful morning so far. So I apologize for that. But you can find all the documents online on our Web site already.
So if we just start with the headlines, the headline for the second quarter was that the chemical tanker market continued to improve into the second quarter, and that has helped us. The EBITDA for Odfjell SE in the second quarter was $57 million, which is up $10 million compared to the first quarter. Those $10 million came from improvements in our Odfjell Tankers. The results from our Terminal division was more or less in line with what it was last quarter. So it was driven by the upturn in the chemical tanker market that I will speak about a little bit more in a moment.
The net result was a loss of $10 million compared to a loss of $15 million in the previous quarter. So there's no cause for major celebration, but it is nice to see that things are finally improving. As I said, the main reason for the improved figures is that our spot rates on the main trade lanes improved by 7% in the second quarter compared to the previous quarter. But I think more importantly is that our COA renewal, which is our contract portfolio, on average has been up 6% in this quarter. And that is kind of more a testament to the fact that the long-term market is also improving. Subsequent events after the end of the quarter, three things have happened. We announced that we had sold our indirect shareholdings and our terminal in Jiangyin, in China. That resulted in an equity gain of $14 million for Odfjell and a cash effect -- cash gain of $21 million, so that's helping us. That was a good sale and I'll talk a little bit more in detail under the operational review about the logic behind that and what our plans are for the remaining terminals in Asia.
Also, we were hoping today to announce that today we took delivery of the world's largest and most efficient stainless steel chemical tanker that has been postponed until Monday to make sure that she's as squeaky clean and nice when we get her. So it says that we will take delivery in August but we are very excited about the new series of ships that we're building in China.
早上好。欢迎来到Odfjell SE的第二季度和上半年结果演示。我们在卑尔根这里介绍，我很抱歉我们必须用英语做这个，但我们正在播放演示文稿，现场直播，所以人们可以关注。对于那些在网上观看的人，我很抱歉我们有点迟到了 - 每个人都进了房间。
因此，如果我们只是从头条新闻开始，第二季度的标题是化学品油轮市场继续改善到第二季度，这对我们有所帮助。 Odfjell SE第二季度的EBITDA为5700万美元，与第一季度相比增加了1000万美元。这1000万美元来自Odfjell油轮的改进。我们的终端部门的结果或多或少与上一季度的结果一致。因此，化学品油轮市场的好转推动了我将在稍后谈一点点。
最终结果是损失了1000万美元，而上一季度则损失了1500万美元。因此没有理由进行重大庆祝活动，但很高兴看到事情终于有所改善。正如我所说，数据改善的主要原因是，与上一季度相比，第二季度主要贸易通道的现货价格上涨了7％。但我认为更重要的是，我们的COA续约，即我们的合约组合，平均在本季度增长了6％。这更充分证明了长期市场也在改善。季度结束后的后续事件，发生了三件事。我们宣布已经在中国江阴出售了我们的间接持股和终端。这导致Odfjell获得1400万美元的股权收益和现金效应 - 现金收益2100万美元，这对我们有所帮助。这是一个很好的销售，我将在关于其背后的逻辑以及我们对亚洲其余终端的计划的运营评估中详细讨论。
And finally, we have -- it says here that we have secured attractive financing for the bond that gets -- matures in September, $61 million. That's not entirely true. It is true but it's not entirely the right way to put it. And we have not gone out and taken $61 million in debt to repay it. We can repay it with the cash that we have in hand, because we have had all the refinancings done. And whether we will go to the market for -- to replace that bond or not, time will show. We are not ready to do it at the current pricing. But Terje will talk more about that.
So the quote you're seeing on the right hand side of this slide is, we are pleased to report that the way we put it is the medicine is beginning to work. All the things that we have worked very hard on in terms of improving our efficiency and our cost base and the competitiveness of the company, efficiency of the fleet is beginning to work. And of course, now we're being helped by the markets are coming up. So it's really satisfying to see that that medicine is beginning to work and also the weather seems to be improving a little bit with the markets coming up.
At this point, I want to hand it over to Terje. I forgot to say one thing in the beginning. We are happy to take as many questions as you want. But if we can please take them after the presentation and because of the webcast going on. Okay. Over to you, Terje.
最后，我们已经 - 它在这里说我们已经获得了有吸引力的债券融资 - 这个债券在9月份到期，为6100万美元。这不完全正确。这是事实，但它并不完全是正确的方式。而且我们还没有出去拿走6100万美元的债务来偿还它。我们可以用现有的现金偿还，因为我们已经完成了所有的再融资。我们是否会去市场 - 取代这种关系，时间会显示出来。我们还没准备好以目前的价格做到这一点。但是Terje会更多地谈论这个问题。
Thank you, Kristian. I will then go into the detailed figures in the second quarter. I'll start with the chemical tankers where we saw increase in the gross revenue from $218 to $223 million this quarter. And as Kristian mentioned, that is mostly related to improved spot rates, improved contract rates and also some slightly increase in volumes in this quarter. Voyage expenses is slightly down to 88.4, mostly its related to lower bunker costs this quarter. While we see that the pool distribution, which is kind of the earnings for external vessels that are in our -- in the Odfjell managed pools, are increasing from $13 million to $16 million this quarter.
Then on your left time-charter earnings of $118.7 million compared to $115 million in the first quarter. Time-charter expenses decreased from 15.4 to 10.7 this quarter. That is twofold, the reason for that is twofold. One is that we are replacing some expensive time-charter vessel with less expensive time-charter vessels, but also that we are reducing the total number of time-charter vessel this quarter compared to the first quarter.
Operating expenses, quite comparable, and stable if you compare to the first quarter and also last quarters in 2018. G&A is slightly down to 15.4 compared to 17.6. Part of that is due to the currency exchange rate between U.S. dollar and Norwegian kroner where we have a lot of the D&A expenses are in Norwegian kroner, which has weakened towards the U.S. dollar, which is impacting our figures positively in this quarter.
So then we are left an EBITDA for tankers at 49.9 compared to 39.7 in the first quarter. Depreciations, very much at the same level as the previous quarter. Then we are left with EBIT of 14.4 compared to 5.4. We are net financed of negative 21.4 compared to 19.4 in the first quarter. Included in this net interest expenses of 20.9 is $3 million related to operating leases that has been capitalized and part of that is then booked at interest costs, so that is included in the net finance of 21.4.
After taxes we are left with a net result for tankers for negative $8 million compared to negative $15.2 in the first quarter. If you look at the terminals, see a slight increase in the gross revenue from 17.6 to 17.9. There's also slight increase in the G&A from 4 to 4.8, while operating expenses are at the same level as in the first quarter. Then we are left an EBITDA of 6.2 compared to 6.7 in the first quarter. Then we have depreciation, same level as the first quarter. And we have a small impairment of $1.6 million in the second quarter, impacting the EBIT, taking up into negative 0.7 compared to positive 0.8 in the first quarter.
The impairment is related to the ethylene project at the Houston terminal, which we have decided to not go through it based on lack of markets, interest and lack of comfort around the revenue side of that investment. So we have then expensed or written down all the project expenses that has been capitalized on that project.
After finance, we are left with -- and taxes, we are left with negative net result of $2.7 million compared to negative $1 million in the first quarter. As Kristian mentioned, we have sold one terminal in this quarter, the Jiangyin terminal, which will lead to book gain in the third quarter. And if you look into the historical figures for that terminal being the Jiangyin terminal, we had revenue -- gross revenue for that terminal in 2018 of around $2 million and EBITDA contribution was around $1 million. So taking that out of the portfolio is not material impacting our figures going forward in any material way beside the gain we will get from that transaction.
在融资之后，我们留下了 - 和税收，我们留下了270万美元的负净结果，而第一季度的负数为100万美元。正如克里斯蒂安所说，本季度我们已售出一个终端，即江阴终端，这将导致第三季度的账面收益。如果你看一下该码头作为江阴码头的历史数据，我们的收入 - 2018年该终端的总收入约为200万美元，EBITDA贡献约为100万美元。因此，从我们将从该交易获得的收益旁边，以任何重大方式对我们的数据产生重大影响并不会对我们的投资组合产生影响。
If we then look at the total, we are left with revenue increasing somewhat, mostly related to the tanker business to $243.2 million compared to $238.3 million in the first quarter. EBITDA is going from $47.2 million to $56.8 million, and EBIT is from $7 million in the first quarter to $14.4 million in the second quarter. After the finance, we are left then with -- and taxes, we are left with negative net result of $10.2 million compared to negative $15.4 million in the first quarter. If we're looking at earnings per share, we are down around $0.10 negative this quarter compared to $0.20 in the preceding quarter, negative.
This is a slide that we have shown a few quarters now. This is related to the changes in accounting regulations beginning of this year, where we had to capitalize our operating leases being time-charter leases and bareboat leases with more than 12 months tenure, and that has been capitalized and is now being written off in the balance sheets, and also decomposed into operating expenses, interest and depreciations. But we are showing comparable figures to hope the figures would have looked like before this new changes came in accounting practice. So here we are showing, in the second quarter what we have reported.
And we are showing adjusted column, showing what would the figures looked like if it didn't change accounting rules according to IFRS16, and the 1st of January. Then we see that the EBITDA, comparable EBITDA before this new accounting standard came into effect, would have been $36.3 million compared to $49.9 million, which we have reported this quarter. You also see that the EBIT is slightly impacted, but not that much. Positive $13.7 million with the figures been compared to $14.4 million as we have reported.
And also, net result slightly different. We are now reporting negative $7.9 million from the tanker business, while it had been negative $5.5 million before IFRS 16 came into effect. As I said, we've guided on this a few quarters now and this may be like last quarter we are kind of showing comparable figures before the new IFRS 16 regulation came into effect beginning of this year.
Here we're showing the time-charter portfolio, we have in the balance sheet. We are showing here the graph showing what we have on long-term charters, being charters more than 12 months tenure. And as you can see here, we booked -- in this quarter, we booked depreciations of $12 million, interest of $3 million and $5 million in OpEx. But the actual cash layouts related to the time charter payment was $21 million in this quarter. We expect that to be stable, slightly increasing through the next few quarters, because we are going to take delivery of two new bareboat vessels being built in Japan. So that will slightly increase.
And if you look at the short-term time-charters, we pay this quarter around $11 million, and expect that to be stable for the coming few quarters. But the overall picture is that we have a long-term view, long-term portfolio of time-charter and bareboat vessels that we have secured in today's market. The bunker expenses, that is, of course, one of our main cost components. And even though we saw that the cost price increased around, that will be -- or down this quarter, we had actually a slight decrease in the bunker costs for Odfjell SE being at 39.3 compared to 40.8 in the preceding quarter. The main reason is that we have this bunker adjustment clauses where we are compensated from the customer from increase in the bunker expenses, and also that we have slightly less days this quarter than we had in the previous quarter. And we also have a kind of effect from the FIFO principle that they use when we book the bunker expenses, so it might be a bit different between the quarters compared to what is actual price or what that is developing.
如果我们再考虑总量，我们的收入会有所增加，主要与油轮业务相关，为2.432亿美元，而第一季度为2.383亿美元。 EBITDA从4720万美元增加到5680万美元，息税前利润从第一季度的700万美元增长到第二季度的1440万美元。在融资之后，我们留下了 - 和税收，我们留下的负净结果为1,020万美元，而第一季度为负1540万美元。如果我们看一下每股收益，那么本季度我们的收益率将下降0.10美元左右，而上一季度则为负0.20美元。
而且，净结果略有不同。我们现在从油轮业务报告负790万美元，而在IFRS 16生效之前它已经负550万美元。正如我所说，我们现在已经指导了几个季度，这可能就像上一季度我们在新的IFRS 16监管在今年年初生效之前显示的可比数据。
在这里，我们将在资产负债表中显示时间租赁投资组合。我们在这里显示的图表显示了我们对长期包机的看法，包括超过12个月的租期。正如你在这里看到的，我们预订了 - 在本季度，我们预订了1200万美元的折旧，300万美元的利息和500万美元的运营支出。但本季度与定期租船相关的实际现金布局为2100万美元。我们预计未来几个季度将保持稳定，略有增长，因为我们将接收两艘正在日本建造的新型光船。所以这会略有增加。
Going forward, we have the bunker adjustment clauses in our contracts, that is hedging a large parts of the bunker exposure around 60%. And we also done some smaller financial hedging to increase the total hedging for our business. Kristian will come back to more on the IMO 2020 and how we look at that, and how we position ourselves towards that when it's coming into effect beginning of '19 -- '20, sorry.
Our balance sheet, this quarter is not very many changes compared to last quarter. Obviously, that's right of use of assets increases somewhat. That's related to a new bareboat vessel being capitalized on the balance sheet. We see that the cash is decreasing somewhat from 138 to 104.6. That is mostly related to installments on external debt this quarter being quite heavily, and it's also according to our expectations.
Looking at equity, we are now at $564.2 million, around 28%. If you exclude IFRS 16 liabilities, which came into the balance sheet at the beginning of this year, we're around 32% book equity based on the balance sheet per end of second quarter. Looking at also on the debt side, we have current liabilities, as you can see, of $366 million and if you compare that to total current asset of 240, that's not a very pretty picture. The same time we have quite good control of that.
And you also have to remember that included in current liabilities, we have now included and the right of use of assets, liabilities we've not -- was not include in the balance sheet before with around $46 million. And we also have large current portion of interest bearing debt that is considered as short-term, because it's maturing within the next 12 months. At the same time, and I will go through that in more details later that we are kind of in control of that. And we have, of course, prepared for that and making sure that we have a long-term view. And we have already refinanced a large part of the current portion of interest bearing debt.
The cash flow second quarter, quite comparable to the first quarter. We have an increase in the cash flow from operating activities due to improved results going from 11.2 to 17.2 this quarter. At the same time, we have a negative development in working capital. We are increasing the current liability -- the current assets, so that is taking down the cash flow somewhat. So we actually had a better operating cash flow than we are showing here, if should normalize the working capital going forward. Cash flow investment activities under the negative 14.2 that is related installments on the new builds around $6 million and then also other investment in dockings for our fleets.
Going on in the finance activities, as I said, we had a lot of installments this quarter around $25 million, and also payment on lease at around $11 million. So that's under negative $36.7 million compared to the $25.2 million in the first quarter, and then leading to a net cash flow this quarter of negative $33.6 million. Here we show the debt developments, going forward. We are showing here what we expect or plan to repay in the coming quarters. You can see there is a quite substantial amount in the third quarter, most of that is related to the bond maturing in September, around $60 million and the plan today, as Kristian mentioned, will be to redeem that based on the cash we have on our balance sheet per maturing dates.
展望未来，我们在合同中有了燃油调整条款，即对冲大部分燃油暴露约60％。我们还做了一些较小的金融对冲，以增加对我们业务的总对冲。克里斯蒂安将回顾IMO 2020的更多内容以及我们如何看待这一点，以及当它在'19 - '20开始生效时我们如何定位自己，对不起。
而且你还必须记住，包括在流动负债中，我们现在已经包括了资产的使用权，我们没有的负债 - 以前没有包括在资产负债表中，大约有4600万美元。而且我们还有大部分有息债务被视为短期债务，因为它在未来12个月内到期。与此同时，我将在后面详细介绍我们对此的控制。当然，我们已为此做好准备，并确保我们有长远的眼光。我们已经为当前有息债务的很大一部分再融资。
第二季度的现金流量与第一季度相当。由于本季度业绩从11.2改善至17.2，我们的经营活动现金流量有所增加。与此同时，我们的营运资本也有负面发展。我们正在增加当前的负债 - 即流动资产，这样就可以减少现金流量。因此，我们实际上有比我们在这里显示的更好的经营现金流，如果应该规范未来的营运资金。负面14.2下的现金流量投资活动是新建的相关分期付款约600万美元，然后是我们车队的其他投资。
Fourth quarter, we also have some balance maturing, that has been more or less also refinanced already today. And also looking forward into third quarter 2020 and fourth quarter 2021 where we have quite large maturities coming towards us. Most of that has been refinanced during the last six months and they are now in the [indiscernible] phase. So that has been managed and taken good care, I would say.
On the bottom on this stage, we show expected debt going forward based on what we have for today, what we have refinanced and what we are taking in new vessels, including the financing of those vessels. And we see it will increase somewhat in 2020 based on our increasing fleets and the debt related to that, but then we are expecting that to decrease for the years ahead. And also that is, of course, our plan to deleverage as we have communicated over to leverage our balance sheet in the coming years.
We have been quite active, as I mentioned in the last six months, I would say, on the refinance side, that we have secured attractive financing, I would say, which will reduce upcoming refinance needs and also the breakeven, the cash breakeven for our vessels. And we also have that -- through that secured more than sufficient liquidity to take out the bond maturing in September. So looking at the 2019, 2020 and '21 refinance needs that has quite decreased during what we have done in the latest period. And also, we're happy to see that the daily breakeven for the vessels involved, we've reduced going forward around $1,000 per day, because we also had standard the profile for many of these vessels and new financing compared to the historical financing we've had on these vessels.
We're also happy to see that the margin compared to the bond are more kind of on the positive side. We are now refinancing with a margin in the range of 250 basis points to 320 basis points compared to a bond that now is maturing at 558 basis points above the LIBOR. We are considering to -- we are following the bond market also, going forward. We may issue a new bond at some stage. We may also tap on existing bonds, if we find the price to be right for Odfjell. But today, there's no need for us to be in any rush with that regard.
CapEx, going forward we have six Hudong vessels to be delivered. As Kristian mentioned, hopefully, one of -- the first one will be delivered next Monday. Then there is also expected for a second vessel to be delivered this year, and then the remaining vessels from Hudong be delivered in 2020. We also -- of course, we have secured financing as we have reported earlier. Meaning that actually we have no equity installments needed to take over to these six vessels all that have been secured with external financing and having paid equity installments for necessary equity installments for all these vessels.
So actually, going forward, there are no equity needed for the six vessels to be delivered. And we also are looking at our balance sheet. We have rather limited needs when it comes to the terminal business. We've included our planned expansion over share for tank terminals for $3 million. We expect that to increase for sure when it comes to especially using terminal where we are interested in growth opportunities. But at the same time, we have to sit down with our new partner and agree on the expansion plans, going forward. We will come back and report the figures there when we have more defined and clear strategy together with our new partners at terminal. And listen of course, we have maintenance CapEx. We also have docking expenses, which is estimated around $50 million per year.
正如我在过去六个月中所提到的那样，在再融资方面，我们已经非常积极地表示，我们已经获得了具有吸引力的融资，这将减少即将到来的再融资需求以及盈亏平衡，现金盈亏平衡我们的船只。而且我们也有这种情况 - 通过这种方式获得了足够的流动性来取消9月份到期的债券。因此，看看2019年，2020年和21年的再融资需求在最近一段时间内已经大大减少了。此外，我们很高兴看到所涉船舶的每日盈亏平衡，我们每天减少约1,000美元，因为我们也为这些船舶和新融资提供了标准配置，与历史融资相比在这些船只上有过。
我们也很高兴看到与债券相比的利润率更具有积极意义。我们现在正在进行再融资，利润率在250个基点至320个基点之间，相比之下现在的债券已经在LIBOR以上558个基点到期。我们正在考虑 - 我们也在继续关注债券市场。我们可能会在某个阶段发行新债券。如果我们发现Odfjell的价格合适，我们也可以利用现有的债券。但今天，我们没有必要在这方面匆忙。
资本支出，未来我们将交付六艘沪东船只。正如克里斯蒂安所说，希望其中一个 - 第一个将于下周一交付。此外，预计今年还将交付第二艘船，然后在2020年交付剩余的沪东船。我们当然也按照我们之前的报告获得融资。这意味着实际上我们没有股权分期付款需要接管这六艘船只，这些船只都是通过外部融资担保的，并已为所有这些船舶分配必要的股权分期付款。
I think I will leave it you again, Kristian.
Thank you, Terje. So operational review and update on strategy and then finally, I'll talk about the prospects and our view on the markets. I'll start with this slide. What you're looking at here on the top graph is a balance between what we have in terms of spot market and our contract market. Compared to many other shipping segments, our segment is usually characterized by a high level of contracts. The problem we've had in the past years that those contracts have been under so much pressure price wise. And many of them have been at, let's say, breakeven levels or might even worse.
So as we have signaled in first quarter this year, we have said no to a number of those contracts, extending a number of those contracts, because we feel strongly that the fundamentals of the segment is healthier than that. And that means that we have reduced our exposure to -- reduced our contract portfolio and increased our exposure to the spot market. So in the first quarter that -- we were down to 50%. Second quarter, we were up to 55%. We expect that is probably going to be around 50%, going forward.
The good news is that if you look at the bottom slide and you look at the average freight rates, both for spot and the contract rates, the dark blue bars you're looking at is increasing somewhat. And that is what I started off by saying that on average, we have managed to increase our contract rates for the contracts that we did renew with around 6%. And the spot rates have gone up by around 7% in the second quarter.
We're probably going to get a lot of questions from analysts saying that, wait a minute, the spot rate indexes has not gone up 7%, so how come Odfjell is going up 7%. The picture you're looking at here is the spot rates that Odfjell has booked. And that's quite important, because we have also changed the mix between spot and contract. And we might have exposed ourselves to some trades that have been going on more than other trades. So this is an average for Odfjell, not a -- it's not -- you cannot directly compare it to the indexes that are out there. But the good news is that at least in the second quarter, we seem to be able to increase our average spot rates in our main trades. And that is the main reason why our earnings on tankers has gone up in the second quarter.
Observations that there's -- on the top left hand corner that's basically what I mentioned already. If you look on the bottom left hand corner here, you're seeing the comparison between the Odfix index, which is the earnings index from Odfjell and you're comparing that to the spot market index from Clarksons. And you can see that while the spot market actually went down 2.1% in the second quarter, the Odfjell index went up by 6.6%. This is a little bit comparing apples-to-oranges, because one is spot index, one is an earnings index but it makes sense to track this all the time.
Quarter-by-quarter, you will see some fluctuations. And I would like to stand here and say that we will be able to repeat that next month by Odfjell next quarter going up 6.6, while the market stays flat that is probably not going to be the case. But as long as we can see that the gap between the two lines is stays wide then we're doing something right and competing well in the markets.
因此，正如我们在今年第一季度发出的信号，我们对其中一些合同说不，延长了一些合同，因为我们强烈认为该细分市场的基本面比这更健康。这意味着我们减少了我们的风险敞口 - 减少了我们的合约组合，增加了我们对现货市场的投资。所以在第一季度 - 我们降到了50％。第二季度，我们高达55％。我们预计未来可能会达到50％左右。
我们可能会从分析师那里得到很多问题，等一下，现货价格指数没有上涨7％，那么Odfjell如何上涨7％。你在这里看到的图片是Odfjell预订的即期汇率。这非常重要，因为我们也改变了现货和合约之间的组合。我们可能已经暴露了一些比其他行业更多的交易。所以这是Odfjell的平均值，而不是 - 它不是 - 你不能直接将它与那里的索引进行比较。但好消息是，至少在第二季度，我们似乎能够提高我们主要交易的平均即期汇率。这也是我们第二季度油轮收益增长的主要原因。
观察到 - 在左上角，这基本上就是我已经提到过的。如果你看这里的左下角，你会看到Odfix指数之间的比较，这是Odfjell的盈利指数，你将它与Clarksons的现货市场指数进行比较。你可以看到，虽然第二季度现货市场实际下跌了2.1％，但Odfjell指数上涨了6.6％。这有点比较苹果到橙子，因为一个是现货指数，一个是收益指数，但是一直跟踪它是有意义的。
On the right hand side, you're seeing our volumes carries. And as you can see, the dark blue bars, is the volumes carried by the Odfjell portfolio. If you remember what Terje just said that our time-charter costs went down by around $4.5 million, $4.6 million in the second quarter, while these two graphs show you that the volumes that we carried and the days exposed we have to the market, that's the bottom part of the bottom graph, stayed flat. So that shows you that the time-charter portfolio we have is becoming cheaper and more efficient, carries same amount of cargo at same distances at lesser costs for the ships.
It is astonishing that the shipping markets are in reality three months away from the biggest change to the -- regulatory change to the fuel regulations that we have ever seen. And we really don't know what's going to happen to the price of the fuel and the availability to fuel. There's a lot of opinions out there. But the reality is that there's a lot of uncertainty still. What you're looking at here is a comparison of the three types of fuel that are reality, that are important. The dark blue bars is the gas oil that is what the --normally, what you would use in the auxiliary engines, not the main engine for the ships. That is effectively a diesel oil. And as you can see, that is coming down as the oil price has been dropping over the last two quarters.
But more importantly for us, the HFO, which is a high sulfur fuel oil, that is the lightest of the two light blue bars. And the dark blue, which is the low sulfur fuel oil. So first off generally, you can only burn low sulfur fuel oil on-board ocean-going ships unless you have a scrubber installed. There's a huge amount, as I said, uncertainty about availability and pricing of those fuels. In our field, we have taken a very clear decision that we are not -- we don't believe the scrubbers is the way to go. We are going to follow the intention of the rules, and we are only going to burn low sulfur fuel oil. So we are not installing scrubbers in our ships. But as I said, the availability and the cost of that fuel is still -- there's still some uncertainty over that coming into the next year.
This graph actually shows that with a drop in price, maybe the economic effect is not as scary as some people would tell you. As you can see, the red dotted line shows you the average cost of the HFO, the high sulfur fuel oil for the past years. And that shows you that the average is around 425, 430. But it also shows you, all the way to the right, is that the forward price for 2020 for price for low sulfur fuel oil is around the same level. And that means if you're a customer of ours and you're having a discussion with Odfjell, who should carry the risk for this fuel, suddenly, this picture is not very scary, because we are just adjusting our fuel, and our bunker surcharge clauses to include fuel that has the same cost that it had in the last two years.
But what you're also seeing from that graph on the forward price is that there's a gap between the high sulfur fuel and low sulfur fuel. And that's kind of the logic behind the scrubber installation that you can continue to buy high sulfur fuel oil and burn it, because you have a scrubber on board. And that gap, as it looks now, is $200 which I think would favor a scrubber. The big question is can you actually buy high sulfur fuel oil. And the other thing is the low sulfur fuel oil is still not trading in great volumes.
令人惊讶的是，航运市场实际上距离我们所见过的燃料法规的监管变化的最大变化还有三个月的时间。我们真的不知道燃料价格和燃料供应会发生什么。那里有很多意见。但现实是，仍有很多不确定因素。你在这里看到的是对三种燃料的比较，这三种燃料都是现实的，这很重要。深蓝色的条形油是什么 - 通常是你在辅助发动机中使用的，而不是船舶的主要发动机。这实际上是一种柴油。正如你所看到的那样，随着油价在过去两个季度的下跌，这种情况正在下降。
但对我们来说更重要的是，HFO是一种高硫燃料油，是两种浅蓝色条中最轻的。而深蓝色，这是低硫燃料油。因此，首先，除非安装了洗涤器，否则您只能在船上远洋船上燃烧低硫燃料油。正如我所说，这些燃料的可用性和定价存在不确定性。在我们的领域，我们已经做出了一个非常明确的决定，我们不是 - 我们不相信洗涤器是可行的。我们将遵循规则的意图，我们只会燃烧低硫燃料油。所以我们不在船上安装洗涤器。但正如我所说，燃料的可用性和成本仍然存在 - 对于明年的情况仍有一些不确定性。
So there would be quite some erratic pricing in these curves as we go forward. But it's too late for us at least in terms of scrubbers and even if it wasn't too late, we wouldn't go that way. We believe that the markets will adjust and we will be able to get reasonably priced low sulfur fuel oil, and our customers will pick up the majority of that risk during -- when they carry with us under contracts.
On the terminal side, switching gears here a little bit. The performance of the terminals was more or less in line with the first quarter. We are making a number of changes to the portfolio in the terminals. I'll talk about that in the next slide. But the strongest performance in the most important terminal we have is in Houston, and that terminal is 100% full. There's little bit of drop in utilization on our terminal in Korea and in Dalian, but we're seeing that coming up again. So all-in-all, we're seeing strong performance from Houston and we're seeing stable performance for the remaining terminals.
What you're also seeing in the top right hand corner is that we have an average EBITDA performance for the terminal portfolio that we have left around 35% to 40%. And you can see that is up, and it's even despite the fact that many of the terminals we have sold, for instance, the Singapore and the Oman terminal recently was some of the ones pulling that EBITDA average up. So the remaining -- the terminals that we have left are performing better than they have done in the last two years. And I think we are left with a healthy and more robust portfolio. It's a smaller portfolio, but it's a more robust portfolio of terminals.
This is the recent changes that we have done. I don't want to go back to 2016 and '17 and '18. But in all --in total, we have now taken around $365 million of cash out of the terminal sales that we have done. That has helped us to rebuild the balance sheet that is helping us to refinance the bond and stand on a much stronger platform than we were. On the right hand side, you're seeing the multiples at which these terminals were sold. There's nothing new in the first four ones. But the Jiangyin terminal was sold at 23 times EBITDA, which for any business is astonishing. I would love to tell you that's because we are great sellers. But the reality of that is that the biggest value out of that terminal was the peer, the infrastructure and that had more value to the buyer than it did to us, because they're building a huge LNG terminal behind it and they can use that peer as infrastructure. But it still doesn't change the fact that we got 23 times our money on that terminal, and it did make sense for us to tag along with Lindsey Goldberg on that investment.
The Lindsey Goldberg, who's our partners and has been our partners in the terminals and continue to be our partners in Asia, and that exit process has taken now 18, 24 months and we are we're getting to the end of it. It's in place in Europe. It's in place in the U.S. I would say it's halfway in place in Asia, because the Asian terminals, we have three remaining terminals to solve; it's Korea, in Ulsan; it's Dalian in China; and it is in Tianjin in China. And that process is ongoing.
您还在右上角看到的是，我们的终端投资组合的平均EBITDA表现为35％至40％左右。而且你可以看到它已经上升，尽管我们已经出售的许多终端，例如新加坡和阿曼终端最近都是将EBITDA平均值提高了一些。剩下的 - 我们留下的终端表现比过去两年表现更好。我认为我们留下了健康，更强大的投资组合。它是一个较小的投资组合，但它是一个更强大的终端组合。
We are hoping by the end of the year we will have completed that exit, and thereby also completed the restructuring of Odfjell's terminal portfolio, and we can finally start to move forward. Final comment is that as part of this restructuring, we are closing our terminal office in Rotterdam and in Asia, and that will happen by the end of September, which should have some impact on our G&A costs as well. And we are establishing the global terminal team here in Bergen, much more one.
Prospects and markets update. It is slightly strange to be bullish when you're looking at a world with negative yield curves, and the trade wars and hard Brexit and Germany and recession fear and everything else, but when you're fundamentals -- so there is some uncertainty if the recession really, really should hit. But fundamentally, there's some things that's changing in the chemical tanker space that makes us think that the demand picture is more, let's say, weatherproof to a recession. I'm not saying that we will not be affected, because we would if that happened. But what we're saying is structurally, there're some things going on that might make that impact less.
The fundamental -- three fundamental drivers, first off, is the CPP tonnage, the product tanker tonnage that's been playing in our yards, so to speak. They still do. We have, as you can see that the light blue bars, have been widening over time. That means that the part of the product tankers playing in chemicals has been increasing. We saw that reversing into the first quarter. And now we're actually seeing that widening a little bit again. But despite that, we have seen the chemical tanker markets improve. And that tells us that when the product tanker markets increase, which many people think it will, that will just be another addition of reduction of real supply into our market. So that's for us a good sign. The second thing is that the palm oil markets continue to be strong. That is stocking up both chemical tonnage but also product tanker tonnage. And we are seeing the prospects for the visual markets still being strong.
And finally more fundamentally, you're seeing the build out of organic chemical capacity and export capacity out of the U.S. really coming on stream now. And these are no longer plans on pieces of paper. I mean, the plans are coming on stream and the export is beginning, especially methanol and a huge amount of volume coming on stream. If the recession hits that capacity is still there and it's very, very competitive from a world perspective, because the feedstock in the U.S. is much cheaper than elsewhere in the world. So we believe that those volumes will continue to grow, so a little bit more recession proof than normal trading volumes, actually not a little bit quite a lot.
Big picture, demand and supply, spot rates are up. We believe that the markets have turned. It's not a massive increase still, but we are feeling more firmness in the markets. COA rates are up, which is as I said, testament to the fact that also our customers see that this is maybe beginning of a firming trend. The key directional drivers in fourth quarter will be the start-up of the capacities that I just spoke about and the palm oil season coming into play. And then, of course, there is the GDP scare and the recession scare that might change our views. But as I said, we -- what we know today, we're seeing a fairly strong demand picture. We maintain that the fundamental demand for increase will be around 4% plus, maybe a factor of the added ton miles for the long haul trades.
前景和市场更新。当你看到一个收益率曲线为负的世界，以及贸易战和艰难的英国脱欧以及德国和经济衰退以及其他一切的恐慌时，看涨是有点奇怪的，但当你是基本面时 - 所以如果存在一些不确定性经济衰退确实应该受到打击。但从根本上说，化学品油轮领域正在发生一些变化，这让我们认为需求图片更多，比方说，可以抵御经济衰退。我并不是说我们不会受到影响，因为如果发生这种情况，我们会这样做。但我们所说的在结构上，正在发生的一些事情可能会减少这种影响。
根本原因 - 首先是三个基本驱动因素是CPP吨位，可以这么说，我们码头上的产品油轮吨位。他们仍然这样做。正如您所看到的那样，浅蓝色条纹随着时间的推移而逐渐扩大。这意味着产品油轮中使用化学品的部分一直在增加。我们看到倒转到第一季度。而现在我们实际上又看到了一点点扩大。但尽管如此，我们已经看到化学品油轮市场有所改善。这告诉我们，当产品油轮市场增加时（许多人认为会增加），这将是我们市场实际供应减少的另一个增加。这对我们来说是一个好兆头。第二件事是棕榈油市场继续走强。这样既可以储存化学品吨位，也可以储存产品油轮吨位。我们看到视觉市场的前景依然强劲。
大局，需求和供应，现货价格上涨。我们相信市场已经转变。这仍然没有大幅增加，但我们感觉市场更加坚定。 COA费率上涨，正如我所说，证明了我们的客户也看到这可能是一个紧张趋势的开始。第四季度关键的定向驱动因素将是我刚刚谈到的能力的启动以及棕榈油季节的发挥。然后，当然，GDP恐慌和经济衰退可能会改变我们的观点。但正如我所说，我们 - 我们今天所知道的，我们看到了相当强劲的需求情况。我们认为增长的基本需求将增加4％左右，这可能是长途运输增加的里程数的一个因素。
On supply, we have seen the first orders of chemical tankers in more than a year in the last quarter. But the order book stands at 6.6, which from historical perspective is quite limited. And that means that the fleet ratio growth in 2020 will be only 1.4%, which is very limited supply growth. I just speak about the swing tonnage already. We believe that as the CPP markets will increase, that swing tonnage will disappear and build a stronger real supply picture in our markets. And then of course, IMO 2020, as I said, three months away, we don't know what the effect is going to be. But it might very well a strong argument, I think, towards a firming tanker market, in general, and I think that will be helping us. So on average, around 2% increase in supply. So it a pretty strong fundamental picture in our opinion.
Summing it all up. In terms of our results, we are very happy to see that the medicine is finally beginning to work. We do believe we have a very competitive platform and we are turning that into earnings. And we're showing that in the second quarter. Spot rates and COA rates are on up Odfjell Terminals. The Jiangyin sale was a good sale. $21 million of cash is helping us. And we hope that we are only a quarter or two away from completing the full restructuring of the terminal business.
On the market outlook, I'm not going to repeat myself, but we feel that it's a healthy picture. So what we're seeing is despite the fact that there's a normal slowdown over the July and August months, especially July, we believe that the third quarter will be in line with the second quarter. And so I think that was it in terms of guidance.
So I want to thank everybody who's listening online for following this presentation. Unfortunately, today, there's no opportunity to ask questions. But please don't hold back. We are available the rest of the day, call us and e-mail us and we will get back to you as soon as we can. And for those of you here in the room after we switch off the live streaming then we're happy to take questions also in Norwegian. Okay. Thank you for listening.
总结一下。就我们的结果而言，我们很高兴看到药物终于开始起作用了。我们相信我们拥有一个非常有竞争力的平台，我们正在将其转化为收益。我们在第二季度展示了这一点。 Odfjell终端的即期汇率和COA汇率正在上涨。江阴特卖是一个很好的销售。 2100万美元的现金正在帮助我们。我们希望我们距离完成终端业务的全面重组只有四分之一或两分之一。
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