Odfjell SE

OSE:ODF

Earnings Call Transcript 2019-Q2

[Kristian Verner Mørch, Chief Executive Officer]

So good morning, and welcome to the presentation of the second quarter and first half result presentation for Odfjell SE. We are presenting here in Bergen. 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're a little bit late as we were -- everybody got 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 fresh because we released them about an hour, 1.5 hours 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 website 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'll 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 tradelanes 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, 3 things have happened. We announced that we had sold our indirect shareholdings in our terminal in Jiangyin, in China. That resulted in an equity gain of $14 million for Odfjell and a cash effect -- a 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.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. 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 kind of 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 you can please take them after the presentation and -- because of the webcast going on. Okay. Over to you, Terje.

[Terje Iversen, Chief Financial Officer]

Thank you, Kristian. I will then go into the detailed figures in the second quarter. I'll start with chemical tankers where we saw increase in the gross revenue from USD 218 million to USD 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 the volumes in this quarter. Voyage expenses is slightly down to $88.4 million, mostly is 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 USD 13 million to USD 16 million this quarter. Then we are left with time-charter earnings of USD 118.7 million compared to $115 million in the first quarter. Time-charter expenses decreases from $15.4 million to $10.7 million this quarter. That is twofold -- the reason for that is twofold. One is that we are replacing some kind of 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 million compared to $17.6 million. Part of that is due to the currency exchange rate between U.S. dollar and Norwegian Krone, where we have a lot of the G&A expenses are in Norwegian Krone, which has weakened towards the U.S. dollar, which is then impacting our figures positively in this quarter. So then we are left an EBITDA for tankers at $49.9 million compared to $39.7 million in the first quarter.Depreciations, very much at the same level as previous quarter. Then we are left with EBIT of $14.4 million compared to $5.4 million. We have net finance of negative $21.4 million compared to $19.4 million in the first quarter, included in this net interest expenses of $20.9 million as USD 3 million related to operating leases that has been capitalized and part of that is then booked as interest cost, so that is included in the net finance of $21.4 million. After taxes, we are left with a net result for tankers for negative USD 8 million compared to negative $15.2 million in the first quarter.If we look at terminals, you see a slight increase in the gross revenue from $17.6 million to $17.9 million. There was also a slight increase in the G&A from $4 million to $4.8 million while operating expenses are at the same level as in the first quarter. Then we are left an EBITDA of $6.2 million compared to $6.7 million in the first quarter.Then we have depreciation, same level as first quarter. And we have a small impairment of $1.6 million in the second quarter, impacting the EBIT, taken up into negative $0.7 million compared to positive $0.8 million 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 market interest and based on 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.Of the finance, we are left with -- on taxes, we are left with negative net result of $2.7 million compared to negative $1.0 million in the first quarter. As Kristian mentioned, we have sold one terminal in this quarter, that is 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 USD 2 million, and EBITDA contribution was around USD 1 million. So taking that out of the portfolio is not materially impacting our figures going forward in any material way beside the gain we will get from that transaction.If we now look at the total, we are left with the 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 $7.0 million in the first quarter to $14.4 million in the second quarter. After finance, we are left then with -- and taxes, we are left with a negative result of $10.2 million compared to negative $15.4 million in the first quarter.If you'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 bareboats leases with more than 12-months tenure, and that has been capitalized and is now being written out -- written off in the balance sheet and also decomposed into operating expenses, interest and depreciations. But we are showing comparable figures to hope the figures would have looked like before these new changes came in the accounting practice. So here we are showing second quarter, what we have reported and we are showing adjusted column showing what would our figures look like if we didn't change the accounting rules according to IFRS 16 on the 1st of January. Then we see that the EBIT -- 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. We also see that 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 has been -- would've been negative $5.5 million before IFRS 16 came into effect. As I said, they're 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 regulations 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 USD 12 million, interest of USD 3 million and USD 5 million in OpEx, but the actual cash layouts related to the time-charter payment was USD 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 2 new bareboat vessels being built in Japan. So that will slightly increase. And if you look at the short-term time charters, we paid this quarter around USD 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 markets.The bunker expenses, that is, of course, one of our main cost components. And even though we saw that the cost price increased around 5% or after down this quarter. We had actually a slight decrease in the bunkers cost for Odfjell SE being at $39.3 million compared to $40.8 million 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 have in -- 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 the actual price, how that is developing.Going forward, we have the bunker adjustment clauses in our contracts that is hedging a large part of the bunker exposure, around 60%. And we have 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. We see that right of use of assets increases somewhat. That is related to a new bareboat vessel being capitalized on the balance sheet. We see that the cash is decreasing somewhat from $138 million to $104.6 million. That is mostly related to kind of installments on external debt this quarter being quite heavily. And it's also according to our expectations.Looking at the equity, we are now at USD 564.2 million, around 28%. If you exclude IFRS 16 liabilities, which came into the balance sheet beginning of this year, we are 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 compare that to total current asset of $240 million, that's not a very pretty picture. At 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 kind of the right of use of assets, liabilities, was not included in the balance sheet before with around $46 million and we also have a 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 good control with 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 that 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 million to $17.2 million this quarter. At the same time, we have a negative development in working capital. We are increasing 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 you should normalize the working capital going forward. Cash flow investment activities under the negative $14.2 million that is related to installments on the newbuilds, around USD 6 million and then also for the investment in dockings for our fleets.Going on the finance activities, as I said, we had a lot of installments this quarter, around USD 25 million, also payment on lease at around USD 11 million. So that ended negative $36.7 million compared to $25.2 million in the first quarter and then leading to a net cash flow this quarter of negative USD 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 USD 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. 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 6 months. And there are no finalization phase, so that has been managed and taken good care, I would say.On the bottom on this page, 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 6 months, I would say, on the refinance side. 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 2019, 2020 and '21 refinance needs, that has been quite decreased during what we have done in the latest period. And also, we are happy to see that the daily breakeven for the vessels involved, we will reduce going forward around USD 1,000 per day because we also have a standard profile for many of these vessels in the new financing compared to the historical financing we have 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 to 320 basis points compared to a bond that now is maturing at 558 basis points above 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 is no need for us to be in any rush with that regard.CapEx, going forward. We have 6 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 this 6 vessels. All that have been secured by 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 6 vessels to be delivered. And we're also 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 USD 3 million. We expect that to increase, for sure, when it comes to especially Houston terminal where we have interesting 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 a more defined and clear strategy together with our new partners at that terminal. In addition, of course, we have maintenance CapEx. We also have docking expenses, which is estimated around USD 50 million per year. I think I'll leave the word to you again, Kristian.

[Kristian Verner Mørch, Chief Executive Officer]

Yes. 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 have had in the past year is 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 the 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 this 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 it's probably going to be around 50% going forward. The good news is that if you look at the bottom side and you look at the average freight rates, both for spot and the contract rates, the dark blue bars you are 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. It's -- we're probably going to get a lot of questions from analysts saying that wait a minute, the spot rates indexes has not gone up 7%, so how come margin 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 are -- have been going up more than other trades. So there is an average for Odfjell, not a -- it's not -- you cannot directly compare 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 in tankers has gone up in the second quarter. Observations that -- on the top left-hand corner, that's basically what I mentioned already. If you look on the bottom left-hand corner here, you are 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 Clarkson, 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 a spot index, one is an earnings index, but it makes sense to track this over time. Quarter-by-quarter, you will see some fluctuations. And I would like to stand here and say that we would be able to repeat that next month by ASCO -- next quarter, we're 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 2 lines stays wide, then we're doing something right and competing well in the markets. On the right-hand side, you're seeing our volumes carried. 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 2 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 the same distances at lesser cost for the ships. It is astonishing that the shipping markets are, in reality, 3 months away from the biggest change -- 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. The -- what you're looking at here is a comparison of the 3 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 2 quarters. But more importantly, for us, the HFO, which is a high sulfur fuel oil, that is the lightest of the 2 light blue bars, and the dark blue, which is the low sulfur fuel oil. So 1st of January, you can only burn low sulfur fuel oil on-board ocean-going ships unless you have a scrubber installed. There is 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 on our ships. But as I said, that the availability and the cost of that fuel is still -- there's still some uncertainty over that coming into the next year.This graphs actually shows that with the 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. What it also shows you all the way to the right is that the forward price for 2020 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 has had in the last 2 years. But what you're also seeing from that graph on the forward prices is that there's a gap between the high sulfur fuel oil and the low sulfur fuel oil. 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 that low sulfur fuel oil is still not trading in great volumes. So that 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 would 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 and the most important terminal we have is in Houston. And that terminal is 100% full. There's a little bit of a 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 on 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 up 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 and -- the terminals that we have left are performing better than they have done in the last 2 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 -- in total, we have now taken around $365 million of cash out of the terminal sales that we have done, that has helped us rebuild the balance sheet, 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 4 ones, but the Jiangyin terminal was sold at 23x EBITDA, which for any business is astonishing. I would love to tell you that's because we have 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 23x our money on that terminal, and it did make sense for us to tag along with Lindsay Goldberg on that investment. The Lindsay Goldberg, who is our partners and has been our partners in the terminals and continue to be our partners in Asia. That exit process has taken now 18, 24 months, and we are getting to the end of it. It's in place in Europe, it's in place in the U.S. I'd say it halfway in place in Asia because the Asian terminals, we have 3 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. We are hoping by the end of the year, we would have completed that exit, and thereby also completed the restructuring on Odfjell's -- 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're establishing the global terminal team here in Bergen, much smaller 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 Brexits and Germany and recession fear and everything else. But when you're fundamentals -- so there is some uncertainty if the recessions really, really should hit. But fundamentally, there are 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 are some things going on that might make it -- might make that impact less. The fundamental -- 3 fundamental drivers, first of all, 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 would just be another addition of -- reduction of real supply into our markets. So that's for us a good sign. The second thing is that the palm oil markets continue to be strong. That is sucking 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. 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 go, so a little bit more recession-proof that than normal trading volumes or 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 market. COA rates are up, which is, as I said, testament to the fact that also our customers see that this is maybe a beginning of a firming trend. The key directional drivers in the fourth quarter will be the start-up of the capacity 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 -- with 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 fact of the added tonne miles for the long-haul trades.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 did 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, 3 months away, we don't know what the effect is going to be, but it might -- very well the 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's 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. We're showing that in the second quarter. Spot rates and COA rates are up on 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 2 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. 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 is no opportunity to ask questions, but please don't hold back. We are available the rest of the day, call us and email 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.