TORM plc
Q3 2021 Earnings Call Transcript

Published: 10 Nov 2021

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining TORM plc Third Quarter 2021 Results Conference Call. Through our today's recorded presentation, all participants will be in listen-only-mode. The presentation will be followed by question-and-answer session. . I would now like to turn the conference over to the Andreas Abildgaard. Please go ahead.

[Andreas Abildgaard:]

Thank you. And thank you all for dialing in and welcome to TORM's conference call regarding the results for the third quarter of 2021. My name is Andreas Abildgaard, and I'm Head of Investor Relations in TORM. As usual, we will refer to the slides as we speak and at the end of the presentation, we will open up for questions. Please turn to Slide 2. Before commencing, I would like to draw your attention to the Safe Harbor statement. Please turn to Slide 3. The results will be presented by Executive Director and CEO, Jacob Meldgaard, and CFO, Kim Balle. I will now hand the call over to Jacob.

[Jacob Meldgaard:]

Yes, thank you, Andreas. And please turn to Slide 4. Thank you all for dialing in this afternoon. I'm really thrilled to be here today, as we've now published our results for the third quarter of 2021, as already mentioned by Andreas. And here in the third quarter, we were still impacted by the market downturn caused by the COVID-19 pandemic it has in general lowered the global demand for oil products. And our third quarter ended with an EBITDA of USD30 million and a loss before tax of $14 million. And here is the return on invested capital ended at minus 0.9%. The product tanker fleet in TORM realized an average TCE rate of $12,854 per day, and this was generally well supported by our largest segment the MR where the achieved rates $12,785 per day. Now looking into the fourth quarter of this year, we have so far secured bookings at $12,985 in a market that is showing clear signs of recovery, especially in the West. We've also now successfully integrated all of the team tanker vessels and the modern LR2 scrubber-fitted vessels we acquired earlier this year. And yes since the end of the quarter, we additionally secured operation lease financing for nine of our existing MR vessels with a sale and leaseback arrangement that will generate an increased liquidity of $76 million. Now kindly turn to the next slide to Slide 5 please, the product tanker market as I said was challenged here in the third quarter and MR benchmarks rates touched actually multiyear lows at the start of the quarter. Despite the significant progress with the vaccine rollouts here in Europe and also in the U.S. - that had a positive effect on mobility and also on oil demand recovery in the West. But an outbreak of the more - transmittable Delta virus in Southeast Asia led to renewed lockdowns in that region and subsequently lower demand for product imports. Here in the second half of the quarter, we also experienced that Hurricane Ida closed down several of the refiners in the U.S. Gulf, they were offline and that resulted in lower product exports from that region. This was further aggravated by the weak crude tanker market throughout the quarter. That also led to an increase in the crude cannibalization, which we've also seen in previous times of lower freight rates. Please turn to Slide 6. In recent months, we've seen relatively robust improvements in the global oil demand, which have resulted in draw-downs of the excess inventories built-up in the first half of last year. However, the recovery in demand has not been met by corresponding increase in supply resulting in a situation where all inventories have continued to be drawdown. And in some regions to levels which are even below pre COVID-19 lows. Much of the supply tightness is actually artificial. It results from OPEC+ having crude oil production quotas that are ramped up only gradually and they have not been sufficient to meet demand growth. As long as supply growth remains below the demand growth we’ll continue logically to see stock flows. We expect the inflection point to be reached over the first quarter of next year, with OPEC+ the gradual - supply increases, coinciding with seasonal slowdown in oil demand growth. However, this inflection point could be reached earlier if OPEC+ would react to the current political pressure from a number of large oil - importing countries in the wake of higher oil prices and release more oil to the market. It is also important to mention here that with inventories being drawn-down to solo levels, inventories will need to be built-up again at some point, which will then act as a demand boost to tanker demand, in addition to more normal trade flows. As already mentioned, we've seen a significant progress with vaccination rates in the West, which has allowed countries to keep their societies and economies open even as COVID-19 cases have moved higher. Even though many emerging economies in Asia are still lagging behind in terms of vaccination rates, significant improvements have occurred recently, which makes me confident to believe that large scale mobility restrictions, as a political tool will be less prevailing even if new waves of infection should occur as the political willingness to let the virus coexist has been increasing. Hence, the obstacles on transportation fuel demand recovery are largely being removed. Here, the demand for jet fuel is still lagging behind, especially when it comes to the international travel, but also here we are starting to see more signs of improvement with the U.S. having recently reopened international flights, and as an example, Singapore easing travel restrictions to visitors from an increasing number of countries with several other Asian countries planning to do the same. Furthermore, we also see that the potential gas to oil substitution amid the current natural gas shortage can give a further boost to oil demand over the winter. Please turn to the next slide to Slide 7. Part of the reasons supply tightness has been due to the effects of the aforementioned Hurricane Ida on the U.S. crude production and refinery runs. Hence, having a more temporary in nature, Hurricane Ida shaved off around 20% of U.S. Gulf refinery runs and product exports, but also resulted in significant product inventory draws in the U.S. East Coast, which needs to be built-up again, hence supporting transportation demand going forward. Here over the past couple of weeks we've seen a strong pickup in the product tanker freight rates in the U.S. Gulf as refiners are coming back from Hurricane Ida related outages and plant maintenance, resulting in strong recovery in clean product exports. We're well positioned to take advantage of the increasing exports from U.S. Gulf with about a quarter 25% to 30% of our MR feed located in the America's. Spot rates for the largest segment for LR2s has also been on the rise and TCEs are as of late above $20,000 per day for modern units. Please turn to Slide 8. To sum-up on the main demand drivers influencing the market, we can see that significant progress has been made from where we stood a year ago. And although in many cases, we are not back to pre-COVID-19 levels yet, the outlook for the next 12 months indicates further improvements, not least due to increasing vaccination rates that will be supportive of all demand recovery as also the increasing OPEC crude supply and global refinery runs at last, but not least, the need to rebuild depleted stocks in all consuming areas. And here, please turn to Slide 9. When we look at the more medium and long-term demand drivers, the COVID-19 pandemic has accelerated the pace of refinery closures with 2.5 million barrels per day of refining capacity having closed down or set to close, and another 1 million barrels per day potentially being shut down. Most of this capacity is located in regions, which are already large importers of refined oil products, such as Europe, U.S. West Coast, U.S. East Coast, Australia, New Zealand, and also South Africa. If we focus then on Australia, New Zealand, especially the closest are of significant importance, with two out of four refineries in Australia, and the sole remaining refinery in New Zealand, closing down. At the same time, more than 4 million barrels per day of new capacity is scheduled to come online, mainly in the Middle East and China regions, which already today are exporters of oil products. Both these developments are positive for trade flows and ton mile in the post COVID-19 world with only a few projects that are less positive for trade. Slide 10 please, our positive outlook for the demand for products hangers over the coming three to five years coincides with the supply side, which is the most supportive for at least 25 years. In the third quarter, ordering of products and crew tankers combined was at the second lowest quality level for 20 years, reflecting the record high new building prices, the limited shipyard space after record high container vessel ordering activity seen earlier in the year. Consequently, the order book to feed ratio for product tankers remained at a historic low level of 7% further supported by a similar historic low 8% order book to feed ratio for the crude tankers. Now on the other hand, the pickup in scrap prices have incentivized increased grabbing of product tankers, with more tonnage being removed from the market year-to-date than during any full year in the past 10 years. These two drivers are further supporting the case of a very modest fee growth in the next two to three years, which we expect to be around 2% a year, only half the pay seen in the past five years. Now, in my concluding remarks on product tanker market, we expect improvements in the key market drivers for the next 12 months with more oil supply coming to the market. At the same time as the impact of mobility restrictions on global oil demand is fading. The need to rebuild depleted crude and product inventories is adding extra support to the market and seen over a medium and long-term refinery dislocation, the low order book that I mentioned, that is still supportive to the product tanker market. Please turn to Slide 11. Now looking at TORM's commercial performance, we have outperformed the pier errors in 24 out of the last 26 quarters in our largest segment the MRs. And here as I mentioned, in the third quarter of 2021, we achieved rates of $12,785 per day. And here unfortunately, we do not yet have our peers performance to compare against. In general, I am very satisfied that our One TORM platform continues to deliver significant above market results on a day-to-day basis. Please turn to Slide 12. And here you’ll see a key deciding factor for delivering this above average TCE unit is driven by our continued focus on positioning our vessels in the basins with the highest earning potential. In the third quarter of 2021, we had an overweight east of Suez where we also saw an outperformance when looking at the full quarter. Now I'll hand over to my colleague Kim for further elaboration on our cost structure, liquidity position and balance sheet over to Kim.

[Kim Balle:]

Thank you, Jacob. Please turn to Slide 13. TORM has a constant focus on operating expenses since the origination of the pandemic COVID-19 has introduced new challenges to ship operators primarily driven by logistic challenges. During 2020 operating expenses increased from 2019, but because of one TORM platform, we have managed to reduce expenses to $6,467 per day in the third quarter of 2021. Looking at the first three quarters of 2021, OpEx per day has increased 3% compared to 2019. But when corrected for COVID-19 related crew expenses OpEx per day has been reduced by 1%. Slide 14 please. TORM has consistently through our performance generated liquidity to renew and increase the fleet to the now largest number of vessels ever. This has been done while maintaining a stable and conservative capital structure over time. After the end of the third quarter, TORM has successfully obtained commitment from a Chinese financial institution for the sale and operational leaseback of nine MR leases which will generate liquidity of $76 million and which will further provide some with the optionality to buy the vessels during and at the end of the leasing period if we deem that to be attractive. Please turn to Slide 15. As of 30th September, 2021, TORM had available liquidity of $186 million cash total $110 million and we had undrawn credit facilities of $76 million. The total cash CapEx commitments relating to our two new buildings were $78 million as per 30th September, 2021. With TORM strong liquidity profile, the CapEx commitments are fully funded. Please turn to Slide 16. After having finalized the larger refinancing in 2020, we have eliminated all major refinancing up until 2026, which provides c with financial and strategic flexibility to pursue value enhancing opportunities in the market. As displayed, we do not have any major repayments until after 2025. Further, we have in the third quarter secured stability in our interest rate expenses by increasing our interest rate hedge levers to approximately 75% on average over the coming five years. TORM's new sale and leaseback agreements are expected to add $1.6 million per year to the debt repayment schedule. Please turn to Slide 16. I would now like to sum up our financial position in terms of key metrics such as net asset value and loan to value. The value of TORM vessels including new buildings was just below $1.9 billion by the end of the quarter. Outstanding gross debt amounted to $1.053 million as per 30th September, 2021 and as mentioned TORM sale leaseback of 90 MR vessels will add $76 million to the outstanding debt. All in all, we have a strong and attractive price debt structure with reputable banks and leasing institutions. And we have hence demonstrated our strong access to diversified funding sources in the market. We are very satisfied without the position. Finally, as of 30th September, 2021, we had outstanding committed CapEx of $78 million related to our new building program and as mentioned our cash position was $110 million. The net asset value was at $938 million as per 30th September, 2021, which corresponds to $11.6 or DKK74.5 per share. And just before commencing this call, TORM shares were trading at just above DKK50. I pleased that our conservative balance sheet supports our strategic flexibility as well as our financial strength. With that, I will let the operator open up for questions.

[Operator:]

The first question is from the line of Jon Chappell from Evercore. Please go ahead.

[Sean Morgan:]

This is actually Sean Morgan and for Jon Chappell, he is out of the office today. So just housekeeping items on the Chinese leaseback so I was just wondering what was the gross amount borrowed for the two separate MR facility and then LR2 facility. Because I think you mentioned the kind of net liquidity raised, but there's probably some offsetting related debt pay-downs so just kind of wondering what the gross was. Hello?

[Jacob Meldgaard:]

Yes hi Sean. Good morning to you, and thanks for raising the questions so I'll hand it to Kim so.

[Kim Balle:]

Yes, so - I will answer like the LTV for the seller leaseback financing is 100. So, it's - I'll just get the number here it is, I think USD167 million to answer your question.

[Sean Morgan:]

Okay. So that's for both the LR - oh, okay sorry, go ahead. that's for the LR2s and the MRs both facilities.

[Jacob Meldgaard:]

Oh, the MRs no, for the MRs, the nine MRs.

[Sean Morgan:]

Okay. For the nine MRs great. Once you said okay. And then - so on Slide 7, you talked about just the kind of, maybe it's a new pattern or maybe it's just kind of a recent phenomenon, but just the number of natural you know weather related disruptions to refining in the U.S. And so just wondering if this is a pattern we're going to be seeing you know kind of recurring? Is there any trading volatility, arbs that sort of arise, that sort of offset some of the negative impact of refinery outages or should we just kind of look at that as just kind of a market negative whenever it happens?

[Jacob Meldgaard:]

And I think it depends a lot on the duration of the outage. And what was a little different with Hurricane Ida, was that I think that the industry, the energy complex at large, in the U.S. Coast was well prepared, as usual for safety measures, you close down. However, when you then had assessed, if there were any repairs, et cetera to come back into operation, the issue here was actually not so much physical on the refining side, but it was that there were a lack of electricity to turn it back on. So I think that was a bit unusual, I would expect in the future. These outages to be more short-term, you close it down and then you sort of turn the switch back on, within a relatively short timeframe. That is our understanding of this. So the difference here was actually duration of - the duration impact that you had.

[Sean Morgan:]

Okay. So the duration kind of, I guess, made it worse. And then just you talked about the order book being pretty favorable. And I guess a favorable order book amid low rates is something you might expect, but how responsive do you think the order book would be to kind of resurgence and an improvement in product tanker rates? You think there's a lot of sort of latent demand that could come to the floor if the market starts to improve or do you expect that kind of regardless of, future rates you'll see conservatism?

[Jacob Meldgaard:]

Yes that's a great question, Sean because obviously, in history, we have seen that, as you point to if freight rates, they increase that the ship owners and vessel respond immediately, and then fill the void sort of, and go and order a bunch of ships. And this time around, what is surely quite supportive, when we get - when we turn the corner and freight rates are improving - further from what they've already done. Then the lead time to ordering is today, at least two to three years. And even in that scenario, I think that - that is very clear that currently shipyards really favor different types of assets to be built. So I don't think even a strong and longer period of elevated rates would not immediately mean that you will have a very responsive ordering. Obviously, if this is and that we're not talking quarters, but yes, then it will be a different matter, because then the whole ecosystem of - also of shipbuilders and investors will find ways to get the contracts done. But sort of in the very immediate future I see the likelihood being low of a lot of new contracting taking place.

[Operator:]

The next question is from the line of Ulrik Bak from SEB. Please go ahead.

[Ulrik Bak:]

Just a few questions from my side as well. And you mentioned that you expect the inflection point for tanker rates to be during Q1 and positively Q4 if OPEC increases its output schedule. But based on this current output scheduled by OPEC, you expect it's in Q1, do you see any other significant factors then this input increase, which could either accelerate or slow this tanker rate recovery during 2022? And how do you see - the likelihood of either factor playing out?

[Jacob Meldgaard:]

I think that's a very, very good question. I think it’s always so that these events that trigger the market is very easy to see in the aftermath. So I wouldn't be able to give you a very clear, precise answer, I think markets generally have a tendency to overreact in both directions. And currently, what we are seeing is as there is a strong underlying demand for the larger tonnages as I mentioned. We're now experiencing rates well above 20,000 for the LRs which we've not seen for some time. What we would normally think is that freight rate environment for the larger ships can still push the rate higher, but obviously our customers, they will over time split these cargos into smaller stems, and that you’ll sort of have a filtering down into the smaller segments. But given that the smaller segments for instance, the MRs, that we're also experiencing freight rates at and above $20,000 as I mentioned in the U.S. Coast currently then you could argue. That it's already now teeing up for that if sort of the fundamental demand continues to build, then there's only one thing to do that is that the whole freight rate environment will go higher. So I'm not suggesting that we are in that reflection point. But I think it could happen anytime, that we'll switch on. The point about OPEC is obviously, that if you have a step change in the supply of oil to the market that will stimulate demand for oil, everything else being equal. I think oil price will then stay the risk of a significant further step up in oil price will be lower in that scenario. And at the same time, the need for transportation of all related products will also increase. So, I think that's a real switch on in the market. And that could put the market on fire, especially if it happens in the current freight rate environment where we are seeing rates push - being pushed up, and our customers more and more coming back asking questions related to our challenges.

[Ulrik Bak:]

And another question regarding whether you have any tailwind at the moment obviously, rates are very low at the moment, but we've seen in dry-dock and container space, that there's a lot of tailwind from congestion. Is that also a theme in the tanker space or is it not something you’ll see at the moment?

[Jacob Meldgaard:]

No, I think the - so there's two types of containers and I think it's a great point where that in the container wise rates especially it is related to the port infrastructure. And it's maybe then secondly, related to COVID-19 restrictions in relation to the crew that is on board. And we are not experiencing any of the - I think a big point to think about here is that currently, a lot of the oil that we consume on a daily basis is actually just taken off the shelf, it is taken from inventories. So that also means that the pressure that we're seeing in ports are not there. There's one exception, but that's not really a port, or COVID issue that is that currently in the Strait of Bosporus, larger vessels have waiting time, up between two and three weeks. So obviously, if you think about a relatively short durations, cargo movements in that area on larger ships, they are heavily impacted by that but that's a weather related issue. Apart from that we are not experiencing in this sector.

[Ulrik Bak:]

And then a final question to your liquidity position. You mentioned in nine sale and leaseback agreements that you've made, but - and in that context, how comfortable are you with the current liquidity position? If the tank of market does not pick up, obviously, everyone expected to pick up during 2022. But if that doesn't happen, what do you think of your liquidity position at the moment?

[Kim Balle:]

Thank you Ulrik for that question. We have - you seen our liquidity position as we just presented it here. And we have embarked on these nine sale and leaseback section for several reasons. One of them being what you're alluding to here or directly addressing that what if in these challenging markets things are not happening as we expect. And so, we've added this so we are very comfortable even if we enter into quarters that are not promising, but as we've seen in recent quarters. So that is one of the main reasons for doing that. Others of course also if we see markets pick up as we've seen adding to both the vouchers, but also the possibility to add on at strategic opportunities that would arise in the coming year. So, we are very comfortable with the liquidity position we are today and even more adding the nine sale and leaseback agreements into our infrastructure.

[Ulrik Bak:]

Okay. And is there more you can do in terms of adding more liquidity making more sale and leaseback agreement for?

[Kim Balle:]

Yes, if we wanted to, we could of course there still room to add more leverage to our balance sheet if we decide to do that.

[Ulrik Bak:]

Okay. Thank you.

[Jacob Meldgaard:]

This is what we are very comfortable with - this would like so this is what we see fit right now. This is exactly what we need.

[Operator:]

The next question is from the line of from Kepler Cheuvreux. Please go ahead.

[Unidentified Analyst:]

Just a couple of questions a little bit on following up on what you said Kim, in terms of opportunities. If you were to expand further beyond what you have done recently, what segments would that be and or if you have any preference and I guess that would be in the form of potentially adding on second hand TORMs?

[Jacob Meldgaard:]

Yes, I can give an answer to that. We do look obviously, at all the opportunities that are out there, and if I were to zoom it in a little, then as you point to, I think it will be existing units with modern features. So let's say a tonnage that are built within the last five to eight years, that would be our preference, and in the segments, we can appoint or anything. And I think the three segments that we are focused on as you can also see would be a MR, LR1 and LR2. And then it would really depend on the specific opportunity, we can't really design the opportunities ourselves. So we are open to study the opportunities out, there which fits with what I've just described.

[Unidentified Analyst:]

Okay. And then another question on the market. I mean, with the weak crude tank markets, I guess, you see some competition from new builds, entering the product tanker market as the first cargo. Are you seeing any easing off of that or is that still, you know an issue for you that?

[Jacob Meldgaard:]

Yes, that has been an issue throughout the year. Currently, there's a bit of an easing, but it's more actually because the number of, new builds have gone down a little and that will pick up again in the first half of next year according to the data we have. So I think if the prevailing markets remain, if the crude tanker market is not picking up from where we are, we will see a continued flux of cannibalization on maiden voyage from crude tankers also in the first half of next year. When there is a -- when there is the order book where you can say that it is relevant.

[Operator:]

The next question is from the line of and Security. Please go ahead.

[Unidentified Analyst:]

Just curious about the timing of this sale leaseback transaction bid, was this maturities that you had to refinance or yes -- what it…

[Jacob Meldgaard:]

Yes for this is Jacob, no, it was actually not specific maturity that we had to act. It was - it's a relationship that we, that we have been working on for a number of years. And where we've sort of with our counterpart, have, over time identify what would be a suitable size of a deal, what would be our first sort of structure that fits both on their side and an outside. So it was actually over time, just identifying a pool of assets. And as Kim mentioned, earlier, just shy of $200 million was sort of the sweet spot for them as sort of the first type of deal with us. And so this was a group of vessels where it made sense for us to also do it. So there was no pressure as such, but it was a strategic choice that this made sense to have this particular financing institution as part of our debt structure going forward.

[Unidentified Analyst:]

Yes, makes sense. I mean, you have a lot of cash now, basically right some €185 million or so?

[Jacob Meldgaard:]

Yes, even strategic choice that we're not I mean, this was not something we had to do. So we do feel very comfortable. In general as Kim also said, whether this is an - the scenario where this needs to be used as defense, or whether we have the locks which is use as offense in either direction this is a sizeable pool of cash that we can utilize to the means that we have. Currently, the markets as I mentioned, already are pointing in the direction that we have been waiting for of course, we would like to see that for more than two weeks. But it is there are really strong signs of fundamental step change in the market, currently. And then we have this cushion of cash as you point to.

[Unidentified Analyst:]

Yes, so how you think about investment opportunities now and then you're basically finishing off the scrubber retrofit program 53 vessels which, seems to be have been a great success, when I looked at today's scrubber premiums, at least, and you have only two new builds left on order. So how do you think about your fleet now and how are you going to position yourself in the upcoming regulations and yes in that sense, can you give something exact color about that.

[Jacob Meldgaard:]

It’s a good point. I mean, so we look at all of our future commitments. I think you point to that on scrubber. We've finalized that program and where maybe we if we had this call a year ago, there would be some conversation around was that really a sound choice because spread is between high sulfur and low sulfur were at that time. Well, below 100. Today, as we all know, it's come up again. So it's, I think over time, we're very comfortable with that investment and with that decision, and then there is volatility in the spread. They're currently very much to our - in our favor. Now, if we look at the fleet, and potential CapEx, yes we've got these two new builds that seem to be coming out of yards at an impeccable timing year towards the end of this year and early of next year, the LR2s, and then we don't really have anything. So if I were to script it, I think we would still prefer to up our investments in the larger vessel simply because strategically, we already today have a significant role to play in the MR. So if I could choose myself for I think investment opportunities in the in the LRs. But of course, at the end of the day, it depends on the pricing structure, and we don't feel that new-builds is the right way to go. And we don't need from a strategic point of view to go to elevated prices also because when we look at sort of our climate commitment, that there we feel very comfortable that with our own fleet, the fee compensation that we will well in advance of 2030 be meeting all of IMO requirement. And hopefully, we can even up the game on that as we progress, and as we make all the sensible investments into additional fuel efficiency gadgets on existing vessels. So we are very comfortable with utilizing existing vessels, both from our own fleet, but also obviously from potential new investments.

[Unidentified Analyst:]

Great. Would you also consider share buybacks given your discount to NAV, what do you think about that?

[Jacob Meldgaard:]

I think we need to think about it. But I think let's take that discussion, I mean first, I would like to have the discussion with our Board. Because so far, we have been careful around our movements including share buybacks for so let's see that the market really starts to return. And then, we have the distribution policy where we, every half year can pay back 50% of the net result. And that can of course be distributed in terms of a straight dividends or share buybacks. So I think that's the - let’s turn a few pages here in the calendar. And let's come back on that issue, when we've seen a couple of quarters of considerably higher earnings than what we experienced the last quarter.

[Unidentified Analyst:]

Just a final question for me on the market. I mean, it seems to be very strong refining margins, across regions. But still, there's fairly low refining utilization, you mentioned it coming up in the U.S. But what's keeping these refiners from basically processing more crude and producing more products do you think?

[Jacob Meldgaard:]

So that is actually the point that we also made around the Hurricane Ida having a profound effect was that there are outages and because of lack of energy, you see the same in China. That actually you see the government imposing restrictions on the utilization of energy and that is also hurting, for instance the Chinese refiners. It is also has been a problem in the refinery sector in U.S. at large that there has been a lack of energy, basically to for these big complex facilities to up the end, even though the economic rationale is clearly there. So let's see when sort of this energy crisis also organization finds its feet and there and you can release some of the energy again to the sector, then clearly there's an incentive as you point to, for them to ramp up their production.

[Operator:]

There are no more question at this time. I hand back to Andreas Abildgaard for closing comments.

[Andreas Abildgaard:]

Thank you. We actually have a question here on the on the webcast that we will just pick up on. So here is the question from , what is the total sum of the Chinese leasing for the 3 LR2s?

[Jacob Meldgaard:]

Yes, I can answer that. The sum is in total, just above million. So hope that's the answer you're looking for Hobart.

[Andreas Abildgaard:]

Okay, thank you. This concludes the earnings conference call for the third quarter of 2021 results. Thank you all for participating.

[Operator:]

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.