Hafnia Ltd (HAFN) (Q2 2026) Earnings Call Highlights: Record Net Profit and Strategic …

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• Net Profit: $277.8 million for Q2 2026, the strongest quarterly result since Q3 2022, compared with $75.3 million a year ago.

• TCE Income: $372.9 million for the quarter.

• Adjusted EBITDA: $287.3 million in Q2 2026.

• Gain on Vessel Sales: $39.3 million recorded from the sale of one LR1, two MRs, and three Handy vessels during the quarter.

• Dividend: $250 million, or $0.5003 per share, based on a 90% payout ratio of net profit.

• Net Loan-to-Value (LTV): Decreased to 13% from 20.2% in the previous quarter.

• Cash Balance: Increased to $271 million.

• Gross Debt: Reduced to $798 million.

• Net Debt: Declined to $527 million at the end of Q2.

• Return on Equity (ROE): Reached 44.6% on an annualized basis.

• Return on Invested Capital (ROIC): 35.2%.

• Fleet-Wide Average TCE Rate: $44,093 per day, with average spot rates close to $50,000 per day.

• Q3 Coverage: 80% of Q3 earning days covered at $30,716 per day as of August 17.

• Second Half 2026 Coverage: 53% covered at $28,917 per day.

• Fee-Based Business Contribution: $8.8 million for the quarter.

• Dividend Income from Investment in Tour: $9.9 million received.

Release Date: August 28, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Delivered the strongest quarterly net profit of $277.8 million since Q3 2022, with a 44.6% annualized return on equity.

• Declared a dividend of $0.5003 per share, marking the 18th consecutive quarter of payouts and an annualized yield of around 21%.

• Reduced net loan-to-value to 13% from 20.2% in the prior quarter, driven by strong cash flow and vessel sales.

• Fleet-wide average TCE reached $44,093 per day, with spot rates near $50,000 per day, reflecting robust market conditions.

• Strategic positioning in the US Gulf and Far East markets, along with LR1 and MR segment outperformance, supported by early tonnage migration decisions.

• Effective fleet supply decreased by 3% since the start of the year due to clean-to-dirty migration, tightening the clean tanker market.

• Strong forward coverage: 80% of Q3 earning days covered at $30,716 per day, and 53% of H2 2026 covered at $28,917 per day, well above breakeven.

• Completed vessel sales with a $39.3 million gain in Q2 and an additional $13.3 million gain from JV sales in Q3, optimizing the fleet.

• Maintained a strong balance sheet with net debt of $527 million and total liquidity of $631 million, including undrawn facilities.

• Positive outlook supported by expected inventory restocking, rebounding exports, and an aging fleet that may reduce supply.

Negative Points

• Market remains disrupted due to the Persian Gulf conflict, with volumes east of Suez constrained and the Hormuz Strait reopening agreement breaking down.

• Clean products on water remain 12% below pre-conflict levels, equivalent to 180 MRs of displaced demand.

• Dirty loadings east of Suez are still roughly 30% below pre-crisis levels, with recovery dependent on Arabian Gulf exports returning.

• Global clean departures are still about 10% lower than pre-crisis levels, indicating incomplete recovery.

• Potential risks from the order book, which could have a stronger net impact from 2028 onwards, and the unwinding of LR2 migration could add to clean fleet supply.

• If Hormuz and the Red Sea reopen for normal traffic, markets could lose inefficiency effects such as ship-to-ship shuttle services and longer ballast legs, reducing ton-mile demand.

• Chinese export volumes may not meet 2025 averages due to domestic demand and inventory constraints, limiting product trade flows.

• Russian clean product exports remain constrained by refinery disruptions from drone strikes, removing about 0.8 million barrels per day from the market.

• Dry dock and off-hire days totaled 392 in Q2, reducing available earning days, though expected to decrease in Q3 and Q4.

• The market is highly political and volatile, with changes occurring weekly, posing uncertainty for future earnings.

Q & A Highlights

Q: Can you explain the main drivers behind Hafnia’s outperformance in the LR1 and MR segments during the quarter, and are these factors repeatable?A: Soren Winther, VP of Commercial, attributed the outperformance to strategic positioning. Hafnia had already shifted tonnage toward the US Gulf market at the end of 2025, anticipating a smaller turnaround season due to high refinery margins. This positioning was amplified by the Middle East crisis. Similarly, LR1 tonnage was migrated from east to west early in the year, capitalizing on spikes in the European, Mediterranean, and Red Sea markets. The company also benefited from its exposure to the Panamax segment, which overachieved. Winther noted that the beginning of Q3 has been favorable for US Gulf exposure, and the company is satisfied with its current East-West tonnage balance, suggesting these strategic factors could continue to support performance.

Q: How much more disruptive and supportive would a tightening Panama Canal be for the product tanker market, given the concurrent Red Sea and Hormuz disruptions?A: Soren Winther, VP of Commercial, explained that the Panama Canal issue, when layered on top of existing disruptions, has a larger effect. With transit costs reaching up to $1 million at auction, exports from the Far East are likely to be redirected to the US West Coast, adding ton miles to a region already short on tonnage. While it remains uncertain if transits will halve as they did in 2024, the trend is clear, and the combination of factors is significant for the market.

Q: How well do you think the tanker market will develop over the next 6 to 9 months?A: Soren Winther, VP of Commercial, stated that disruption is the primary driver. The current scenario is potentially worse than the beginning of the Middle East crisis, with a more closed Strait of Hormuz and rising China exports gravitating the world toward longer ton miles. The outlook is constructive for the balance of Q3 and through Q4, with the caveat that the environment is politically driven and changes can occur weekly. He also highlighted that depleted inventories entering a potential El Nino winter could kick-start earlier transportation demand and market spikes as Europe attempts to restock.

Q: As this is your last call as CEO, what do you think the market is still underappreciating about Hafnia?A: Mikael Skov, CEO, highlighted Hafnia’s strong focus on capital allocation and discipline through the cycles. He emphasized that having a major shareholder with a long-term perspective allows the company to time investments and capital allocation decisions optimally, rather than being forced into panic decisions by short-term market conditions. This long-term thinking capability is a key strength.

Q: What were the key financial highlights for the second quarter of 2026?A: Perry Van Echtelt, CFO, reported that Q2 was the strongest quarter since Q3 2022, with TCE income of $372.9 million and adjusted EBITDA of $287.3 million. Net profit was $277.8 million, including a $39.3 million gain on vessel sales, bringing half-year net profit to $457.5 million. Return on equity reached 44.6% annualized, and return on invested capital was 35.2%. The balance sheet improved significantly, with net debt declining to $527 million and net LTV dropping to 13% from 20.2% in Q1.

Q: What is the company’s dividend payout for the quarter, and what is the current leverage position?A: Mikael Skov, CEO, announced that with net LTV at 13%, below the lowest threshold in the dividend framework, Hafnia will declare a dividend based on the maximum payout ratio of 90% of net profit. This translates to a dividend of $250 million, or $0.5003 per share. Combined with the Q1 dividend, total dividends for H1 2026 amount to $0.788 per share, representing an annualized yield of around 21%. This marks the 18th consecutive quarter of dividend payments.

Q: What is the current market coverage and outlook for Q3 2026?A: Perry Van Echtelt, CFO, stated that as of August 17, 80% of Q3 earning days were covered at $30,716 per day. For the second half of 2026, coverage stood at 53% at $28,917 per day. These rates are well above the operational cash flow breakeven. Estimated earning days for Q3 are around 9,376, with dry dock days expected to fall to approximately 225 in Q3 and 110 in Q4, increasing available earning days.

Q: What are the key factors supporting the tanker market, and what are the main risks?A: Soren Winther, VP of Commercial, summarized that on the supportive side, depleted inventories, rebounding exports, demand recovery, and a tight clean fleet are key pillars. On the risk side, the order book could have a stronger net impact from 2028 onwards, and the unwinding of LR2 migration could add to clean fleet supply. If Hormuz and the Red Sea reopen for normal traffic, markets could lose inefficiency effects like ship-to-ship shuttle services and longer ballast legs that are currently absorbing tonnage supply.

Q: How is the company’s newbuild program and future leverage calculation expected to evolve?A: Perry Van Echtelt, CFO, noted that the newbuild program now consists of 10 MRs, with CapEx payments beginning in Q3 2026. From 2027 onwards, Hafnia will calculate net LTV on a fully committed basis, including remaining newbuild capital commitments in the numerator and adding the broker-assessed market value of the newbuilds to the denominator. This provides a more comprehensive representation of underlying leverage.

Q: What is the status of the CEO transition and the company’s strategic direction?A: Mikael Skov, CEO, confirmed that this is his final earnings call as CEO, with Soren Steenberg Jensen taking over from September 1, 2026. Skov is expected to join the Board of Directors subject to shareholder approval. He emphasized that Hafnia’s direction remains unchanged, with a focus on disciplined commercial execution, operational excellence, and prudent balance sheet management.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.