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Good morning, and welcome to Hoegh Autoliners First Quarter Presentations. My name is My Linh Vu, Finance Manager and IR, responsible at Hoegh Autoliners. With me today, we have our CEO, Andreas Enger; and our CFO, Per Øivind Rosmo, who will walk you through the last quarter business and financial updates.
If you have any questions, please send us an e-mail to our Investor Relations mailbox, ir@hoegh.com, and we will answer at the end of the presentations. So with that, I will hand it over to you, Andreas.
Thank you, My Linh. And welcome, and we are pleased to starting to be repetitive, but once again, reporting our best quarter ever. It is -- we're still operating in quite a turbulent environment, but I'm quite proud that our team have had the capability of exploiting opportunities and producing once again record results. Short, in figures that means an EBITDA of USD 171 million, 10% increase quarter-on-quarter, transforming into a net profit of USD 117 million. We now have a gross rate of 87.9%, a 2% increase, a stronger increase in net rates, as you come back to.
We have strengthened our fleet by taking delivery of two previously bareboat chartered vessels during the quarter at very attractive price. We are with this financial strength and with our outlook have decided to increase our dividends to the upper end of the range in our dividend policy, and that means 16 million of dividends for the first quarter paid in May. That is a dividend level that still allows us to continue our fleet renewal program with a strong equity component, and it allows us to continue to build resilience in the company. So we are very pleased that we're able to get there. We have an equity ratio of 62%, meaning that we have a very strong balance sheet.
Going through -- starting with a little bit on the market. Volume is fairly stable, slightly down. I think the main reason for a somewhat softer volume is that we are still seeing a market with heavy disruptions in many trades. Our trade to Australia, Oceania, which is one of our biggest ones, we have more than a week awaiting time per port call, which is obviously substantially eating into our capacity. And we have also had a vessel that for technical reasons, have been out of operation for a large part of the quarter.
So I must again repeat and reiterate that I am quite pleased and proud of how our trade team is able to constantly look for opportunities. And some of you have seen the couple of vessels that we've had calling [ Oslo ], which is not part of our trade structure, but is part of our continuous effort to make sure that we use all available time in our vessels in the best possible way, and that's part of what is producing a good quarter even with more a lot of lost time.
High and Heavy share, talked about that a lot. I think it's sort of less important as an indicator. It remains around 25%. We are -- we have a strong demand and are building stronger relations with many of our key heavy equipment customers. But we are, as you said, deselecting some of the more opportunistic lower value high and heavy cargo against other and better paid cargo. And that has then the contract renewals and our operating model has allowed us to increase the net rate by 9% quarter-on-quarter to USD 74.4 per cube.
I'm also quite pleased that I think we can say that we -- in the quarter or in -- during this year have had a breakthrough in our contracting dialogues with customers. We've said for about a year that we want to reserve capacity for 2023 and '24 to customers that are interested in engaging in longer-term relationships. We've had substantial contract renewals so far in 2023 with both a substantial volume and an average duration approaching 5 years, meaning that we're getting traction on the longer contracts.
More importantly, these contracts also are much more balanced in the sense that the commitments from customers and commitments from us are balanced. And that's obviously a very important feature for the sustainability of our contract structure and these contracts are also at rates that are accretive to our current earnings level. So it's a strong performance.
In the same line, I would sort of also emphasize that we do still have substantial volume of contracts expiring in 2024 and also into 2025 at rate levels that were set in a substantially weaker market that still gives us opportunity to improve our total -- our backlog by renewing contracts in a much stronger market.
The deep sea shipment of new vehicles is keeping up. China to Europe is the fastest-growing lane and is the key driver in the market. And it obviously consumes a lot of capacity, and it is -- it represents quite a good and attractive market.
High and Heavy, still at high levels. We experienced very strong projections from our key High and Heavy customers. It seems like mining might be about to level out, but it's again still at a high level, and we expect it to remain solid and a solid contributor and they will remain an important strategic part of serving the largest and most important equipment manufacturers in the world well.
Capacity is maybe the most repetitive. Time Charter Rates are high. They are at a level where I think we could -- we are able to think, transform maybe the current day rates, if we wanted to, but the charter rates today are substantially above the capacity cost for our newbuilds that starts coming in 2024, and charters are still made with fairly long duration, and we are continuing our policy of not entering into long-term charters at levels that are higher than our newbuild parity. But we are constantly working the market for trips and charter things because we obviously could benefit from having some more capacity. But our focus is to make the most out of the capacity we have by running it efficiently and creatively.
Obviously, there is -- we are getting closer to the point where newbuilds comes. I think those will be very welcome to the industry, very welcome to us because the current situation is not entirely sustainable. But -- and into 2025, '26, capacity situation will normalize, our expectation is that first that yards are sold out. So it's hard to add much capacity earlier and also with our customer dialogues and contracting that the increased environmental attention by customers and our strong newbuild program will also allow us to improve our contract structure in the years to come.
Fleet and Network is fully sort of optimized and utilized -- and we are not -- we don't have any charters up for renewal. As I said, we have newbuilds coming from late 2024 that building is now -- the first vessel is well underway, and it seems like all processes at the yard is working well, relations with the yard is good, and we have our team on site and see very good progress. So we are needless to say, looking very much forward to getting the Aurora vessels from late 2024.
Sustainability is taking an increasing role. We are -- have just renewed, and affirmed our corporate purpose and goals. I don't think the People, Planet, Prosperity is necessarily very creative, but it is the kind of dimensions that we are working on. And I think on the People side, the core theme is that we have a fully developed internal organization. We manage our crew, manage our own vessels. We do -- we are able to design newbuilds. We have strong local teams all over the world working with our customers. And nurturing and developing that team is very important, both value and a commercial priority for us because we believe that having that stable, robust, fully internally -- fully controlled organization is one of the things that helps us keeping momentum.
We've been through a pandemic. We learned a lot about promoting well-being, and we are working on making sure that we are continued -- continuing the focus of wellbeing of our people at sea and onshore, both are very important. And we are also actively working on digitizing our -- both our internal environment and our vessels, which is also something that is changing the mode of operation, both on board and in the offices.
Planet. Sailing for sustainability is one of our slogans, we have adopted what we call “30 by 30”. We are going to cut emissions by more than 30% between 2019 and 2030. We continue our objective and our goal of reaching net zero by 2040. And I would say we have the investment plans in place to have traction on that goal.
We are increasingly in dialogues with customers to partner to basically create decarbonized deep sea shipping services for the most ambitious and strongest brands in the world. And we are continuing to raise the bar in terms of asset life cycle management. And although all those scrapping of vessels is not on the agenda for the time being, it is a core part of our life cycle and environmental focus.
Prosperity is growing the business in a responsible way. And as I said, we're making some progress. We have a strong focus on developing lasting relationships with customers that shares our ambitions and the business philosophy. We are very focused on creating and ensuring financial resilience by the way we deal with financial leverage and risk and we are working continuously to optimize network and capacity to create value in a safe and sustainable way.
I think we are victim as many others in the current environment with lack of capacity and big delays. We have not been able to have particular traction on our decarbonization this year because we don't have the new assets, and we are running our current assets a bit more intensively. We are quite frustrated in many ways in the sense that we have the tools to reduce speed and fuel consumption. But most ports in the world still serve on the first-come-first-serve basis. So we have lots of things to do in the industry to be able to leverage those tools so that we're not racing to wait as it's called, to keep our place in the queue, knowing that we're going to wait for week at the end of it.
But I think the more important thing is that we do have a very strong carbon emission level relative to the industry. And I think we have at least one of the, if not the most ambitious trajectory. And I think importantly, we have the investments and the tools in place to actually deliver on that trajectory. So that's a very important part of our priority and our story.
That's -- my part of the story, I'm now going to leave to Per Øivind Rosmo to take you through some more details on the quarter financials.
Thank you, Andreas, and good morning, everyone. Just a short recap. The driver of our profitability is, as we have said before, it's the volumes and the net rates. And as you can see, we had a small reduction in volumes from Q4 into Q1. Main reason is, as mentioned, Andreas mentioned, delays eating up capacity. Also some technical [ fire ]. We also had some repositioning of vessels to optimize the network. And we -- to some extent, we saw somewhat lower utilization in the beginning of the year, especially in January. But for all practical purposes, it is now our capacity, limiting our ability to grow the volumes. All vessels are for all practical purposes fully loaded.
Net rate increased from Q4 into Q1 with 8.9% from 68.3 per CBM to 74.4 per CBM and in a historical perspective, this is the highest net rates that we have seen in our business. Transforming this into revenues, EBITDA and net profit, we see that the revenues quarter-on-quarter was more or less the same. USD 356 million in Q4 and USD 354 million in Q1. The reason why revenues is somewhat lower is the volume and, to some extent, also reduce the BAF compensation in Q1. But the increase in net rates made it possible to keep the turnover more or less at the same level.
Adjusted EBITDA increased from USD 156 million in Q4 to USD 171 million in Q1, increase of 9%. Comparing to the same quarter last year, we see that we have increased the EBITDA from USD 78 million to USD 171 million. This transformed into a net profit of USD 124 million for the quarter, up 3% from USD 120 million in Q4 and comparing it with Q1 2022, we see that the increase is USD 90 million. So if you look at the numbers here, you will see that basically comparing with Q1 2022, the increase in the top line is basically going through, so we have more or less the same increase in revenues, EBITDA and net profit comparing with Q1 2022.
If we look at the different elements in the change here and go back to Q1 2022, comparing with Q4 2022, we see that we had an increase in cargo revenue of USD 90 million. We had USD 17 million higher Bunker expenses, and then we were able to reduce our operating expenses by USD 5 million. We are running more efficient voyages. We have less port calls, and we have more volumes per port than we historically had given the strong market. That gave us the USD 156 million in Q4. And from Q4 into Q1, we had a small reduction in cargo revenue as we saw from the previous slide, but we were also able to reduce our bunker expenses with USD 14 million. And again, we are able to reduce our operating expenses. This is mainly port expenses and expenses related to handling of cargo and it all comes from more efficient voyages. So that took us to USD 171 million.
The balance sheet is, as Andreas said, very robust. Our net interest bearing debt was reduced again and we now have USD 310 million in net interest bearing debt, down from USD 379 million by the end of Q4. And the net interest-bearing debt-to-EBITDA ratio is down to 0.6. The book value of the equity increased to USD 1.136 billion, up from USD 1.063 billion and we have an equity ratio now of -- a book equity ratio of 62%.
Cash balance on the back of the strong operating results, we increased the cash balance from USD 184 million by the end of Q4 to USD 253 million by the end of Q1. And we have the unused RCF on top of that, and that was USD 90 million by the end of Q1. So our liquidity reserve is USD 343 million, including the RCF.
The cash flow from operation was USD 175 million, more or less the same as the EBITDA but slightly above, meaning that we were able to reduce the working capital somewhat during the quarter. We invested CapEx, USD 17 million; out of the USD 17 million, USD 10 million was an installment for the newbuildings that we are having under construction and USD 7 million was dry docking and other CapEx. We used USD 18 million for debt service, mortgage installments and interests. And we also purchased 2 vessels during the quarter. Hoegh Berlin and Hoegh Tracer, USD 87million in total for those 2 vessels. We paid USD 44 million in dividend and we took new mortgage debt of USD 83 million related to the vessels that we have purchased recently. And then we paid USD 21 million in lease and time charter higher, currency loss of USD 1 million. So that took us from USD 184 million by the end of Q4 to USD 253 million by the end of Q1. And as I said, in addition, USD 90 million in unused RCF.
And the balance sheet is strong. We have vessels and newbuildings of USD 1.2 billion we have cash and cash equivalents of USD 253 million. And then we have the remaining lease vessels that we have in the balance sheet is currently 4. We will buy another one in June, Hoegh Trapper so we will continue to reduce the right-of-use assets in the balance sheet and increase vessel and newbuildings. And we had Bunker and trade receivables of USD 129 million.
The equity was USD 1.1 billion, and we had the mortgage debt USD 335 million. and we have lease liabilities related to the right of use assets of USD 228 million. Current liabilities was USD 80 million and other noncurrent liabilities, USD 42 million. The book equity per share is USD 6 that corresponds to NOK 64.5 by the end of the quarter.
We also calculated the net asset value by replacing book value of vessels with market value of vessels and looking at the additional value that we have in the bareboat chartered vessels. And we have calculated the net asset value to be USD 2.1 billion, corresponding to USD 10.4 per share or NOK 112.
Looking at the dividend and how it has developed over the last 4 quarters, we started to pay USD 15 million for second quarter 2022. 30% of the net profit at that point in time. We kept it at 30% in -- for the third quarter, and we paid USD 20 million and then we increased the payout ratio to 40% in February, the dividend that we paid for Q4, that was 44 million and now we are increasing again both the amount and the payout ratio. We have increased to 50%, and we will pay USD 60 million in dividend later this month, estimated payment date is May 16.
That is all from the financial presentation. And Andreas will say a few words about the outlook.
Thank you, Per Øivind . Yes, at the end of a strong quarter, it's also fantastic to be able to report that we believe the outlook is continuing to be strong. There is a strong market. And we basically believe that we are still in a positive trend that will allow us to continue to reprice contracts and develop our business, and also increase duration of our backlog. And Q2 has started very well, and we expect it to be another strong quarter.
Clearly, this very positive view on the company is -- looks -- it's maybe somewhat in contrast to some other macro trends. We are closely monitoring a global macro. But the way our market works now, it continues to look like the depressed deliveries of vehicles and to some extent, equipment during the pandemic and during the semiconductor shortages means that we are upholding our volumes and business well also in a somewhat more challenging macro situation.
So for us, we still see a positive development. We see customers that have strong outlooks for their needs for deep sea shipment and we are looking towards another good quarter in the second quarter this year. Thank you.
That comes to the Q&A part. We have received one question from our analysts, Petter Haugen. Could we comment something about the rate level in the new contracts in context of the current net rate?
I mean, I don't think we would provide very much detail. It varies with directions and whatever, but we are entering contracts at levels that are available, our current rates. So the rate environment is strong. And that also goes for contracts with longer direction.
And the next question is from our analyst, [indiscernible]. And the question is about efficiencies, inefficiencies and waiting time. So in terms of the inefficiencies and waiting time, can you provide an update on -- about your fleet and the wider industry as well as your outlook for inefficiencies.
I mean -- I think there are two things that stand out in terms of inefficiencies. One is that Australia, Oceania, which is on our largest trades, has been, I must say, quite awful during the quarter. I also went under myself to sort of try to see what we can do about it, but it is a huge challenge. We are waiting more than a week per port call in Australia. So that is a big challenge that is impacting us and our customers in ways that we are struggling with finding good solutions there.
I think on the other hand, you can say that in the rest of the world, actually, waiting time has improved. So the total picture is -- but it's now much more focused on trades -- but it does impact when we have -- it takes -- it means that given that a large part of our trades have returned trades to Australia. It means that we have substantially longer voyages, and that impacts also our capacity out of Asia because of the delays.
So it is -- it is a big problem. It's partly driven by bugs and seeds and things that are also, to some extent, seasonal, so we can hope that it will ease a little bit in the summer season. But it is a recurring problem in winter, and we are working quite hard with our customers in cargo preparation to make sure that we minimize the problem. But it's also a lack of capacity and efficiency in the ports as such. So it is a big challenge. But I think globally, it has actually improved but it doesn't help us that much when we are so much -- so many days out of the round trip by being clogged up in Australia.
Okay. So as we mentioned, if you have further questions, please do not hesitate and send us an e-mail to our investor relations mailbox at ir@hoegh.com, and we will get back to you right away. And that brings us to the end of our presentation. Thank you very much for your attention, and we look forward to seeing you next time.