Hafnia Limited reported second-quarter net profit of $277.8 million on August 28, marking its strongest quarterly performance since the third quarter of 2022. The tanker shipping company achieved time charter equivalent income of $372.9 million with an average fleet TCE of $44,093 per day, translating to a 44.6% annualized return on equity. The results reflected elevated freight rates sustained by geopolitical disruptions in the Persian Gulf and Red Sea over a six-month period.
The company’s balance sheet strengthened considerably during the quarter. The net loan-to-value ratio declined to 13% from 20.2% in the prior quarter, driven by operating cash flow and $39.3 million in gains from vessel sales. This improvement triggered the maximum payout under Hafnia’s dividend framework, with the board declaring a $250 million distribution at the 90% ratio, equaling $0.5003 per share. Combined with the first-quarter payment, first-half dividends totaled $0.788 per share, representing an annualized yield of approximately 21% based on a $7.5 share price. Net asset value climbed to $4.4 billion, or $8.89 per share, while total liquidity reached $631 million against net debt of $527 million.
Management outlined structural market changes affecting the fleet composition. Clean LR2 tanker availability fell 27% below historical averages due to migration into dirty crude trades, while the effective clean fleet contracted 3% since the year’s start despite the addition of 10 new MR vessels to the build program. Depleted global oil inventories, which declined 69 million barrels in July, provided potential support for a restocking cycle extending into 2027.
Looking forward, executives cautioned that current market conditions carry expiration risk. The company noted that normalization of traffic through the Strait of Hormuz and Red Sea would likely eliminate inefficiencies currently supporting ton-mile demand. Third-quarter revenue coverage stood at 80% of earning days at $30,716 per day, while second-half coverage was 53% at $28,917 per day, considerably below second-quarter spot rates near $50,000. Management also identified potential headwinds from the expanding order book starting in 2028, Russian clean product exports that could resume following refinery damage from drone strikes, and uncertainty surrounding China’s export volumes.
A leadership change took effect following the earnings call. Hedge fund ownership declined modestly to 23 funds from 24 the prior quarter, while short interest remained minimal at 1.53% of float. The stock traded at a forward price-to-earnings multiple of 11.65 as of September 4.
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