d'Amico International Shipping (Milan:DIS) Q3 2026 Earnings Call

0:00 Passcode has been confirmed. Please wait while you are joined to the conference. The leader has muted the conference. You will be joined in monitor mode. But it would explain why they are able to convince the crews to make such dangerous crossings, which have enabled them, as we see here, the shuttle volumes. These shuttle tankers are the vessels which are mostly controlled by these national oil companies. A great portion of the oil transitive compost for crude we are in September at 52%. We see here the evolution that the first country which was active in this respect was the UAE.

0:52 Then we had Kuwait, which came in, and then Iraq. in August, and then most recently also Saudi Arabia, the red bar here, has been more active with these shuttle transits. Of course, there are also some private owners which have a bigger risk appetite and which are transiting to Hormuz. We are not. and they are paying big premiums to their crews to convince them to undertake such dangerous voyages. And instead, well, another disruption that of course has been very important for the market has been the The Houthis, the situation had improved throughout the course of the last few years, but once again, the Houthis became more aggressive. This time, however, they have been targeted more specifically Saudi Arabian interests.

2:16 So other ship owners have felt comfortable returning through transit in Bab-el-Mandeb because they are not targeted by devotees. But vessels transporting Saudi cargo or controlled by Saudi Arabian companies are avoiding such transits. and which is that part of the product which would usually have sailed to Asia is now from the Red Sea, is now finding a home in other locations in the Mediterranean to avoid having to transit the strain.

3:04 But those cargoes that are still destined to Asia have opted to sail the much longer route around people. so which is very positive for . Russian refined product experts declined dramatically recently following a much softer decline in the first few years of the Ukrainian war because of the attacks, drone attacks by have been the sanctions which were imposed by Europe and the U.S.

4:01 More recently this agreement between the U.S. and Russia which would allow Russia to export a certain amount of diesel to the U.S. through a waiver of sanctions could lead to a slight increase in such exports, but it is being questioned. The legality of this waiver is being questioned because it goes against legislation approved by the U.S. Congress, which prohibits such exports. So some vessels which were listed, which had loaded in Russia, were listed to the U.S. upon already turned around.

4:47 and are not going to be delivering the cargoes to the US. So in any case, if this agreement were to succeed, unless it is expanded, it is not expected to have a meaningful impact on the market. Refining margins for certain products are still at record levels, as we see here, diesel in particular, jet fuel, not surprisingly, These are the commodities which are mostly talked about. So most people are aware that we are starting to face severe scarcities for these commodities with prices, of course, also heading with These very attractive refining markets for these products.

5:40 For gasoline, we have seen actually a different trend where refining margins have fallen recently. Diesel and jet stocks in the Atlantic Basin are very low. We see on the graph in the video here, well below where they were last year and over at any point in time over the last three years. This situation means that there is a very big difference in gas oil prices between the east of Suez and the west. And so we see that this delta in prices between the west and the east has risen to very high levels, which opens very attractive arbitrages to byproducts in the east and south and the west, even when Even if you have to pay very high freight rates.

6:36 So this is very positive for the market, which means that there should be more inputs by the West from Asia and over very long distances. So very positive for Tomas. What has been helping also the product markets over the last few months has been the resumption of exports by China, following some restrictions imposed at the beginning of the war in Iran. As the crude availability improved because of the rising transits through Hormuz, China relaxed these restrictions and volume exports of CTP volumes from China rose to over 1 million barrels per day, higher than they were before the war started.

7:38 There was some concern that these volumes could decline in the last part of the year, but recently the Chinese authorities provided a fourth match of export quotas to its refineries and mostly its state-owned refineries. And so unless other restrictive measures are introduced, given the very high Chinese margins, the expectation is that we are going to be seeing quite healthy exports from China also in the remaining two years of 26th. What happened with sanctioned oil on the water?

8:24 Well, it has declined very rapidly. There were waivers provided to Russian and Iranian oil to be sold at the beginning of the war. Iran in particular has been, because of also the environment which prohibits it from, which is stopping it from exporting more oil, today has been drawing down these stocks very rapidly. But as these stocks terminate, the impact of these sanctions, these embargoes on exports from Iran are going to be felt more severely by the country.

9:16 and I think that is probably the plan of course of the US administration in pursuing these tactics which they hope are going to allow it to reach a more favorable peace deal with Iran in the future. How much more pain has to be inflicted in Iran before a peace agreement which is more acceptable to the U.S. can be reached? I don't know. It is a question mark, but there is this possibility that, especially because the alternative of strikes doesn't look very viable.

10:10 that this will be the route pursued. And if that is the case, and this situation were to continue for some more months, that could be extremely positive for the product anchor market. The number of vessel sanctions continued rising over the last few years, mostly taxed to additional sanctions by the EU. Of course, as we know, The position of the U.S. has been more volatile and unpredictable. But these vessels which have been sanctioned, sanctions enforcement also by the EU became stricter over the last few years, which makes it harder for them to trade, reducing their productivity and limiting them to trade when they are able to do so, only within the sanctioned cargo.

11:13 And of course to those countries which are prepared to import such sanctioned cargo. The situation in Venezuela has also been very positive for the market. This oil, a large portion is being exported to U.S. refineries, which were built to process this heavy Venezuelan crude, and the expected ramp-up in production in the coming years in Venezuela would also be positive for the market, that this oil would be transported on Non-sanctioned tonnage, whilst previously it was being transported on sanctioned tonnage.

12:07 And it would be transported over long distances. So the additional output that would be hopefully coming out from Venezuela should be very rich in ton miles. And if a portion of it ends up in Asia, For now, it is not particularly reaching the miles because a lot of it is being absorbed by the US refining industry. But it's also positive that Venezuela is importing more NAFTA from the US because this is a very heavy crude that needs to be diluted for it to be transported on ships.

12:55 Just returning on the issue I was mentioning before, even if this oil were to terminate in the U.S., given the incremental production that we're going to be seeing in the future, this would still be positive for the market because it would free up the U.S. to export more of its own oil to more distant locations, probably in Asia. So it would still mean more oil from the Americas going to Asia. So The expected round-up in production in Venezuela should be positive. And this here is an important slide because a lot of the strength in the project tanker markets today is coming from the crude markets. The trade rates for the product tanker markets as we saw are again at record highs.

13:46 But what we are seeing in the crude markets is unbelievable and these rates are really and mostly foveas and psoas maxis, but also the aframaxis we see here, which are hovering over around $300,000 per day, which is much higher than the already very high rates which LR2 vessels can achieve, which explains why you have had this migration of LR2 vessels towards 30 trades of the yellow line on the graph on the left, with this decline in LR2 vessels trading clean. So despite the LR2 fleet having grown by 110 vessels between January 25 and October 26, the number of LR2s trading clean over the period has declined by 120 vessels.

14:38 So that means that since these are also the larger product tankers there are, that there was a decline overall over this period in the, Product Anchor Fleets Trading Clean, which explains that it's one of the reasons, and on top of those which we mentioned previously, explaining why the product anchor markets has been so strong. And here, this is on the left, the bottom left, this is this graph here. is also important because it shows the additional crew that will be coming from the Americas, the yellow line there.

15:25 So it will be transported over very long distances. And there's an expectation that there's going to be an increase in exports from the Americas to Asia of around 3 million barrels per day between 2025 and 2020. So that should be very positive for the crude tanker market and should help to absorb the additional tonnage which is going to be coming to the market, especially on the VLCC and Swissmax space, which otherwise would be a source of concern. The refining landscape.

16:10 This is only up to 27. We see these additions in the refineries in China, the East, and other Asia, which is mostly India, with the closures that we have seen in Europe and in the Americas. Africa is becoming a more important player and Angoda has recently also announced a plan to double the capacity of its existing refinery before the end of the decade, which would increase from 750,000 barrels per day to 1.4 million barrels per day. and they might also be building another refinery of a similar size, around 600,000,600,000,700,000 miles per day in the east of Africa and Kenya probably. So yeah, so these changes in the refining landscape continue supporting ton miles in the project tanker space.

17:19 So they are positive for our industry. Here the fleet, some statistics relating to the fleet. We show the percentage of the fleet which has more than 20 years of age. on the left for the MRs and LL1s on the blue line and you see that it has risen from 16% at the end of 24 to 20% at the end of 25 and it reached 22.5% at the end of October this year. So if you look at the figures at the end of 25, the increase in the percentage of vessels which are more than 20 has been faster than the increase in the order book rules from 14.4 to 16.2.

18:10 So despite the renewed interest in ordering vessels that we have seen this year, this was more than compensated by the aging of the fleet, which should bode well for the market in the coming years. The situation is not as rosy if you look across all tankers, if you include also crew tankers, because there the increase in the order book has been faster, with the order book reaching 26% of the overall fleet, with especially the order books for the Swiss Maxes and the LCCs, which are above 30% in the 33% mark.

18:56 having reasoned substantially and posing some concerns for the future. What is positive here is also that vessels, of course, they don't disappear after they become 20. They are usually demolished around 25 years of age. That is the case for the most product tankers. Actually, if you look at the larger crew tankers, the BLs and the Swiss Maxis, their average demolition age has actually been lower than 25 and sometimes closer to actually 20 years of age. So there is a lot of space for vessels to be demolished starting in 28 and until 2035 to compensate for the vessels that have been delivered.

19:45 And that is a very important factor which should mitigate the acceleration in deliveries that we should see in the coming years of time because of the vessels already ordered and because of the vessels that will likely still be ordered in the future as we also see, unfortunately, an increase in shipbuilding capacity in China. So we see here that in the first nine months there was, quite a lot of appetite for ordering MRs and NL1s with however the order book, the percentage order book not rising that much because of course in the meantime also a lot of MRs and NL1s were delivered so which left the order.

20:43 And here we show how the fleet growth should be accelerating. But this is the overall fleet growth. If you look at the sub-20 fleet growth in 27, it's actually much lower. And across all product tankers, we are actually, we have a slightly negative fleet growth in the sub-20 fleet. in 2027, and that is also very positive. And finally, here we show the NAV evolution. We show that the NAV per share has risen to almost $10 per share, and the overall NAD has risen to $1.4 billion, around $1.4 billion.

21:39 from around just over $1 million at the end of 25. So a big increase in the NAB with the shares, however, still trading at a substantial discount to NAB, especially after the correction we have seen in the last few days, which we struggle to understand personally, but maybe in anticipation that A more democratic Congress in the US might lead to an earlier termination of the conflict in Iran. I'm not too sure that is the case because the conflict in Iran will terminate Thank you very much. Thank you.

22:58 in that respect. So, and that could have more serious repercussions on the economy and might be a factor which forces the US to accept the less favorable terms earlier to end the conflict or normalize the situation in Iran. In terms of dividend policy, we have been increasing our payout ratio over the last few years and we have reduced our debt ratios. We are currently net cash and we announced now Our board today, and our expectation is that the payout ratio today, our expectation is that the payout ratio out of the 26 results will be at the same level as it was in 2025, so 55%.

24:13 But of course, that will be confirmed by the board and then by our shareholders next year. So that is it and I pass it over to you for the Q&A. We will now begin the question and answer session. To enter the queue for question, please click on the Q&A icon on the left side of your screen. When announced, please click continue on the pop-up window. If you are connected in audio only, Please press star 1 on your telephone. The first question is from Matteo Bonizzoni with Kepler-Chevreux.

25:00 Please go ahead. Thank you. Good afternoon. I have three questions. The first one is the following. How important were the ship-to-ship transfer in the Gulf of Oman to support rates over the recent weeks and months? Second question is as regards the supply side. So the order, as you have said, have reached 16% of the circulating fleet. And in slide 31, you showed that in 2026, the net fleet growth was pretty contained, 0.8%, but next year should accelerate to 3.8%. So maybe a little bit of color of what impact this could have on rates according to different scenarios. You have already commented, but maybe if you can elaborate more on these three percentage points of net feed growth is a sort of concern or not much. And the third and final one is on the dividend.

25:57 I have calculated that based on the net profit 2026, your earning per share should be not far from $1.3 per share. So in case you should distribute a final installment in line with the interim, You should reach around 50% payout on your net profit. Is this correct? Thanks. On the SDS, let's start with the SDS first. The SDS has been important. The absolute numbers have been growing.

26:45 but actually the percentage of the volumes transiting as STS was actually slightly lower in September than it was in August. So we have seen also more direct cargo was being transported from A to B. So I think that the most important thing here is that for the market is that volumes continue transiting. And in that respect, you know, the market, I think that this, the market has been doing quite well here. There was a bit of a dip here, but the trend is pretty, pretty steady of a increase over the last few months in the volumes that have been transiting.

27:39 And this despite a very aggressive stance by Iran, with a lot of vessels being attacked, but often not severely damaged. So they continue transiting. Some have had to stop for repairs, but you also have some private ship owners, which are attracted by the very profitable voyages that can be Thank you very much. What we are also seeing is that whilst in the beginning all the ship-to-ship, the large majority were occurring in the Gulf of Oman, more recently we are seeing also some ship-to-ship activity occurring in more distant locations because There were instances of attacks to vessels whilst they were performing ship-to-ship transfers in the Gulf of Oman.

28:57 So the fact that these transfers are occurring also in more distant locations makes this trade even less efficient and is also positive for the market. So that I hope provides some additional color on this ship issue. On the fleet growth, it has been, yes, I think I mentioned that, you know, it is accelerating. If we look at all EMRs and LL1s, it's like more than 3%, slightly more actually than 5% if we look across all tankers next year, that's assuming very limited demolition.

29:49 But what is important is that the fleet growth in the sub-20th across all product tankers is, however, actually negative. So you have more vessels turning 20 years, more that way tons, if this was turning 20 years next year, then you have that way tons of product tankers being delivered. So these vessels, as they cross the 20-year threshold, they start being brought in on more marginal trades. Of course, they don't disappear from the market, but a lot of them went into shadow fleet trades, sanctioned trades.

30:36 But there's a limit to this sanctioned trade, of course. Venezuela was one of the areas where these vessels were It's not a sanctioned trade anymore. Russia, of course, is an important sanctioned trade, but if it is done about the price cap, but the Russian exports have declined substantially, so there's a length of sanctioned vessels there. And so this... over 20-year-old market for vessels, which is going to get quite crowded in the coming years because of the aging of the fleet, which is going to be reducing the profitability for these vessels, reducing their productivity and encouraging their demolition.

31:36 So a lot of charters have the policy not to chart the vessels which are more than 20 years of age, the oil majors in particular, and some terminals also don't accept vessels which are more than 20 years of age. So, So I think that despite you cannot only look at the overall fleet growth, which could be a source of concern for next year, you have to look also at these other nuances. And if you take these other factors into account, the picture looks much more favorable for next year.

32:23 And yeah. Finally, on the dividend, I think that the market is very strong right now, right? I think that we provided a year some sensitivity on the Q4 and the fiscal year results for 26. So assuming $50,000 on the pre-dates, Our profit for the year would be around $166 million, right? Not something, you know, usually we use much lower figures here, right? So we included a higher variability here in the sensitivity this time because it refers also to 27 and 28, where especially 28, it's very hard to predict what the market is going to be at that point in time.

33:18 But for 26 in particular, we actually, you know, We feel that 50,000, it's not really a stretch. We could potentially actually do better than 50,000, given where the market is today, on the remaining three days. So we could potentially even do better than 166, right? So, but assuming it is 166, then 55% of this figure here is, would imply a dividend next year, which is higher. 91 million. So it would imply a dividend next year of around 50 million after the interim dividend of 40 million.

34:09 Okay, thank you. The next question. comes from Massimo Bonisoli with Equita. Please go ahead. Good afternoon, Carlos and Federico. I have two questions, one on the You have already fixed around 25% of the Q4 spot days at roughly $62,000 per day. Can you give us an update on where you are fixing the remaining spot days today? particularly in MR and LR1 and whether current market levels are still broadly consistent with the recent $70 to $80,000 per day market indications.

35:06 The second question is on the coverage for 2027. Given the strength on the spot market, at what TC level would you fix? or would you find attractive to lock in additional 2027 coverage? What is the hurdle rate here? Thank you. Yeah, thanks, Massimo. Good questions. On the spot. Yeah, the reason we mentioned just now to answering questions And then on EMR, Our tools. And that's why we have our exposure because our ML1s are covered.

36:18 Yes, it's between $60,000 and $80,000 per day, I would say, in the market today. So it's still very positive figures. When the markets are so strong, it's difficult to predict how long they can stay at these extraordinary levels. But, you know, if they stay at these levels for a few more weeks, we don't need them to stay for very long. We will basically have fixed the rest of the year, considering wages are fixed, you know. Thank you for your time.

37:25 So yeah, so we are quite positive for the rest of this year. The setup is very, very positive for the market. And I think that the outlook is also very good for next year. And that's why the period rates are so high. We will look to take some more coverage on some of our vessels. We will try to do it gradually because it's, you know, although period rates are high, spot rates are so high that by fixing vessels on time charter you are sacrificing a lot of upside.

38:14 and we already have quite a good coverage for next year. But I do expect we will take, we will fix some more vessels on time charter in the coming weeks and months, bringing this coverage for next year to more than 40%, maybe closer to 50% in the coming months. and then we will reassess our strategy and see whether we want to raise that coverage further. But we are in the market assessing opportunities all the time.

39:04 But we are not jumping on anything because the outlook for the market is very firm for the coming weeks. Very clear, thank you. The next question comes from Clement Mullins with Value Investors Age. Please go ahead. Hi, thank you for taking my questions. We talk a lot about the huge increase in LR2s trading as a firm access, but Have you seen a similar situation in the LR1 or Panamax segment? And secondly, have you traded any of your LR1s on the dirty side?

39:53 And is this something you would consider? Sorry, the last part of the question, have we seen? If you've seen any LR1s trading dirty, so like carrying crude, and whether this is something you would consider? Yeah, yeah, okay, good question. No, I think on the LR1 you have had less of this swing. You know, there's also very few LR1s being delivered. What happened is that with the prices of LR2s or Afra Maxes that went up quite a lot, The additional cost of making an LR2, an Aframax, also transforming an Aframax into an LR2 became quite attractive because as a proportion of the total cost of the vessel, having this additional flexibility, which comes from coating the tanks, cost much less.

41:00 as a proportion of the total cost of the vessel. So a lot of owners which always intended to trade their vessels dirty ordered LR2s instead. Then of course you also had this exceptional market for dirty trades and the Afromax vessels earning incredible money which has attracted a lot of LR2s which probably were not intended to trade there into that market. On the Panamax space, the Panamax fleet is, well, you have a smaller Panamax fleet, much smaller than you have LR1 fleet, which is the opposite when you look at Afromaxes and LR2s.

41:57 and often the Panamax vessels or the yellow ones which trade dirty, they are very old vessels. The fleet has been, hasn't been, there hasn't been a lot of investment in this segment of the market. A lot of them trade dirty in the Americas. and we have not participated in this market because also the design of our allowance are more suitable for because they have a very good cubic capacity for transporting lighter products. So they are very competitive when they have to transport NAFTA or jet fuel, but relatively less competitive when they have to transport the dirty products.

42:51 Also on the LA-1 Panamax space, you have these discrepancies, maybe less obvious in rates. And so we actually decided to dirty one of our LA-1s recently. And it's the first one we have dirtied. So it's a very good question, actually. And so we will see how we are able to trade this vessel dirty. But the first voyage we are performing is at a very, very good rate. And hopefully we will be able to do very well trading this peso 30 in the coming months. That's very helpful. Thank you. And this may be anyone's guess, but should the peace agreement between Russia and Ukraine be reached?

43:44 To what extent, and especially How fast do you think they could ramp up products exports? I don't know how severe the damage is to the Russian refineries and so how long it will take for them to make the necessary repairs to be able to ramp up exports. They might need initially to, even as they ramp up output, to keep some products domestically to rebuild domestic stocks before they are able to resume exports at similar levels to what they were exporting before this onslaught of attacks by Ukraine.

44:35 But unfortunately I cannot provide Thank you for taking my questions. As a reminder, if you wish to ask a question, please click on the Q&A icon on the left side of your screen or press star one on your telephone. Any further questions, please click on the Q&A icon on the left side of your screen or press star 1 on your telephone.

45:20 Gentlemen, there are no more questions registered at this time. Back to you for any closing remarks you may have. Thank you everyone for attending our call today and for the very interesting questions and look forward to speaking with you next year when we approve our full year 26 results. Thank you. Thank you. Bye. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices.