d'Amico International Shipping S.A. ($DIS)

Good afternoon. This is the conference operator. Welcome, and thank you for joining the d'Amico International Shipping Full Year 2025 Results Web Call. [Operator Instructions] At this time, I would like to turn the conference over to Federico Rosen, CFO. Please go ahead, sir.

Thank you. Hello, everyone, and welcome to d'Amico International Shipping Full Year '25 Earnings Call. Skipping the executive summary and going directly to the snapshot of our fleet. We have right now 29 ships on the water, of which 6 are LR1s, 17 are MRs, and 6 are handy vessels. 27 of these ships are owned vessels, while we still have 2 ships in bareboat charter. We also have, as you probably know, 10 ships under construction, 4 LR1s with expected delivery in 2027, 4 MR with expected delivery in 2029, and 2 Handys with expected delivery also in 2029. Young fleet of 9.6 years compared to an industry average of almost 15 years for MRs and 16 years for LR1s. 93% of our fleet is Eco compared to an industry average of 40%. And basically, looking at our fleet, now only 2 ships are not Eco vessels. Moving to the next page on the debt side. You probably read our recent press release. We were quite active on the bank loan front, bank debt front. So as you know, we just repaid about $82 million of some old loans that we had, and we drew down new facilities for approximately $83 million at a considerably lower margin over the U.S. dollar SOFR. So right now, we have a weighted average spread on SOFR of only 1.6%, which is a very low number for us. And also the average duration of our debt was -- the average remaining maturity of our debt was 3.3 years at the end of September, and it is now 4.9 years. We also had a big chunk of our debt expiring in 2027, which is a crucial year for us because it's also when we expect to get the delivery of the ones that I just mentioned before. And we basically refinanced that debt now have just $10.9 billion of debt coming to maturity in 2027. This figure was $67 million before these transactions. On the right-hand side, you see also the evolution of our daily bank loan repayment on our own vessels, which was $6,100 a day in 2019, and it dropped to $2,446 a day in 2025, and we are expecting to be even lower in 2026. Moving to the next slide. As usual, here, we provide a rough guidance on Q1 '26, which, as you can see, looks very profitable. In addition to our time charter coverage of 63% at an average daily rate of $23,300 a day. We also fixed 35% of our days on the spot market at almost $33,100 a day. So the overall blended daily TCE as the sum of the time charter and the spot exposure, it's about $26,800 a day for approximately 98% of the Q1 days. We also provide here a sensitivity of the remaining few free days or unfixed days for Q1. So should we make on those days $25,000 a day, our potential blended TCE would be of $26,780 a day. Should we make $27,500 a day, our total blended TCE would rise to $26,831 a day. Should we make $30,000 a day, it would be slightly less than $26,900 a day. Strong earnings outlook. We provide, as usual, the estimated evolution of our fleet as it is right now. So as I mentioned before, we have now 29 ships on the water, and we're expecting to keep the same average in 2026. And of course, here, we provide also the evolution of our fleet, assuming not to sell any further vessel and including the delivery of the 4 LR1s in the second half of '27 and 4 MR2s and 2 Handys in 2029. On the right, up above, we provide a sensitivity for every $1,000 a day on the spot market, which is now $3.8 million for the spot days of 2026 and rises to $8.3 million for '27 and $11.7 million for '28. Looking at the bottom graph, our estimated net results based on the fixed contract days, both on the spot market and on the time charter side of our business and assuming basically to run at breakeven level for the remainder of the free days, our estimated net result will be $60.7 million in 2026 and already $16.1 million for. On the right, we also show a sensitivity for the free days that we still have. And should we make $20,000 a day in these free days in 2026, our net result could be potentially be slightly lower than $80 million. Should we make $22.5 on the free days, our potential net result will rise to $89.3 million. And should we make $25,000 a day over the remaining free days, our potential net result could be slightly lower than $100 million for 2026. Moving to the next slide on the cost side, we had OpEx of $8,129 day which is approximately 5% higher than the same than in the previous year. Here, we had some higher than expected technical costs, which are mainly related to some higher logistics costs to deliver spare parts to the vessels around the world. So it is really related to the specific areas of the world where our vessels were -- on the right, instead, we show our G&A, which were $26 million for 2025, quite similar to what we had in 2023, a bit higher than the previous year, and these are mainly the results of some higher variable personnel compensation, which is really the result of our strong financial performance in recent years. Net financial position, extremely strong net financial position. We had cash and cash equivalents at the end of 2025 of $183.9 million, net financial position of $27.4 million the effects of IFRS 16, it was $25.2 million compared to a market value of $1.65 billion. So our leverage -- our financial leverage calculated as the ratio between our net financial position and the fleet market value was of only 2.4% at the end of 2025. And I would like to remind that this figure was almost 73% at the end of 2018. On the income statement side, -- of course, very profitable year, $88.4 million, of course, lower than what we achieved in 2024 when we made $188.5 million. This is really the result of a spot market in '25, which was still extremely strong, but not at the same peaks that we achieved, especially in the first half of 2024. However, still extremely strong performance. We had an EBITDA of $152.7 million, which is basically corresponds to an EBITDA margin on the net revenues of 57%. Q4 '25 was very strong for us, better than the same quarter of last year and the best quarter overall in 2025. We achieved a net profit of $25.6 million in the -- on the right, excluding some nonrecurring items, which for 2025 were mainly related to an asset impairment that we booked on some of the old ships that we sold during the year, ships of $3.8 million. So excluding this effect, together with a few nonrecurring financial items, our net result -- our adjusted net result for 2025 was $91.6 million and our adjusted net result for Q4 '25 was $24.5 million. Key operating measures. We achieved a very strong daily spot rate in Q4 '25 of almost $27,100 a day best quarter of the year. You can see the constant rise in quarter after quarter of this TCE spot during the year. Overall, we achieved an average for 2025 of $24,228 as the average for the whole year. We had also a contract coverage of 50.7% in the year at an average of $23,600 a day. So overall, we achieved a blended TCE of slightly less than $24,000 a day in the full year '25. And as I mentioned before, Q4 was extremely strong, reaching a blended TCE of almost $25,000 a day. And I pass it on to Carlos.

Thank you, Federico. Good afternoon. Here, we look at our CapEx commitments. So this is both historical and future, and this has been rising over the last few quarters as we have ordered more vessels. So as Federico mentioned, our order book today consists of 10 vessels, 4 LR1s, 2 MR1s, and 4 LR2s for which we have outstanding commitments of $468 million with '27 and '29 being particularly important in terms of CapEx commitments and lower amounts in '26 and '28. The lease vessels we have, the Fidelity and Discovery are still the same. We have been waiting for the right moment to exercise these options. The interest rates and these are fixed rate cost financings and interest rates have been taking longer than anticipated to come down. Inflation has been taking longer than anticipated to come down and the latest geopolitical developments could further delay this decrease in interest rates and therefore, further postpone the exercise of these options. We continue monitoring the situation, of course, to exercise these as soon as we deem it convenient to do so. In relation to the time chartered-in vessels that we have already exercised at the time of exercise, the difference between the market price and the exercise price was around $57 million. Following their exercise, this delta decreased slightly relative to book value, but it's still very substantial at $49 million, the difference between market value and book value at the end of 2025. We have a good level of contract coverage for '26 as communicated to the market through a press release. We have now 54% of our '26 days covered at around $23, -- our 27 days are covered at a similar level at 22% of the available days. So our fleet is increasing the Eco, and we now have around 93% of our fleet. Only 2 vessels are non-Eco in our fleet today. Coverage does fall throughout the year. It's very high in Q1, 63% and then it gradually falls. We are quite happy with the coverage we have today. But as the year progresses and this coverage falls, we will be looking possibly for new opportunities to cover the last quarter, especially of '26 and '27, where we have lower coverage levels. And here, we see the -- we see that what has happened with the spot rates and TC rates and asset values. The yellow line on the graph on the left is the average of the market clean earnings. And according to this time series, these earnings are now at a record level. And this reflects, of course, the major disruption caused by the Iran war and some very important arbitrages, which opened up and the sharp increase in refining margins that are associated with this conflict. And as we will see later in the presentation, it's also important to highlight, however, that this improving trend in freight rates started actually quite some time ago, and we have seen freight rates improving throughout 2025, as was also highlighted by Federico when he communicated just now our averages for the spot market throughout last year, which -- where we saw this improving trend throughout the year. Asset values have also moved up, not so much newbuilding prices, but especially 10-year-old vessel prices on a percentage basis, they have moved up very markedly, but also 5-year-old vessel prices moved up significantly. The disruption caused by the war in Ukraine, well, we have been talking about this for some time now. What we have seen throughout '25 is a gradual decline in Russian exports. The trough we see here in October is linked to -- also to refinery maintenance. And that explains also why there was then an uptick in the last few months of the year. But the declining trend, however, is confirmed, and it is associated with the more stringent sanctions on vessels and also the new sanctions imposed on the oil producers, Lukoil and Rosneft, which are the 2 most important oil producers in Russia as well as the 18 sanctions package by the EU, which prevents import of refined products produced with Russian crude into Europe. So -- and of course, this declining trend is also linked to the attacks by Ukraine on Russian refineries and export -- oil export infrastructure. There is now because of the tightness in the oil market linked arising because of the war in Iran, a temporary relief on these sanctions for 30 days, at least by the U.S., which, however, these sanctions are most likely to be reimposed in full force once the Iranian conflict ends. The Red Sea attacks, as mentioned a few times already, they were a very positive effect for our market in the first part of 2024, where we saw this quite big increase in ton miles as highlighted here by the yellow horizontal line, which shows the average for the first 9 months of '24, which is much higher than the average ton miles in '23. Thereafter, however, we did see a decline in these averages in Q4 '24 and then a further decline in '25 and in the beginning of '26 as more product was traded regionally because of the higher costs associated with sailing through Cape of Good Hope. Not only ton miles decreased overall for along this route, but also a large portion of the product that was transported was transported on larger non-coated vessels on VLCCs and Suezmaxes, which quite exceptionally also cleaned up to transport clean refined products. That's very unusual. It's quite expensive and risky to do so because also the risk of contamination. But the economics, the incentives for cleaning up were very big. and therefore, some trading houses and some more risk-prone shipowners decided to do so. With the strengthening of the crude markets that we saw throughout 2025, these cleanups became less frequent. So after peaking in Q3 '24 at around 12%, the share of clean products transported on uncoated vessels declined quite markedly. It has been volatile, but it is much -- at a much lower percentage than it was in Q3 '24. And this is not surprising. What we have seen actually is the opposite effect is we have seen more and more LR2s trading dirty to transport dirty petroleum products because of the strength of the dirty markets as we will see later in the presentation. So tougher sanctions have led to an increase in the sanctioned oil on water. It is becoming increasingly difficult for this sanctioned oil, which is loaded on vessels to then be discharged. This leads to inefficient practices such as ship-to-ship transfers, which have led to this sharp increase in oil on water and sanctioned oil on water. And we see that the number of sanctioned vessels has risen sharply starting in April '25 and thereafter, this trend has continued. And we now stand at around 16% of the total tanker fleet that is sanctioned with some segments like Aframaxes where this percentage is as high as 30%. Venezuela, another geopolitical factor, new one that has been influencing the market very much. And we see here that Venezuela used to be a very important oil producer in the '90s, in the late '90s, they used to produce more than 3 million barrels per day. And since Chávez and then Maduro came to power, the neglect of the oil industry led to a sharp decline in oil production starting in 2016 -- and last year, their production was of only 1 million barrels per day. There is scope for this production to increase. They have the biggest oil reserve in the world. The big question mark here is if oil companies will want to return to Venezuela and to what extent make the necessary investments to ramp up this production. It will take time. Nonetheless, this oil, which is a very heavy oil will most likely a large share be sold to U.S. refineries, which, in many cases, were built to process this type of oil. And however, that will free up more space for the U.S. to export more of its own crude oil to the rest of the world. And more importantly, it will increase demand for compliant vessels because a lot of this oil was transported on sanctioned shadow fleet vessels, and it will now be transported on compliant vessels. So this will be positive for the market. We started seeing the positive effects of this on the market prior to the beginning of the Iran war, the Aframax market, which was already very strong, became even stronger as a result of the sanctions being lifted. And that drew in even more LR2s into these dirty trades, tightening the supply-demand balance for the transportation of clean petroleum products. And then here, we have this new slide here where we could have included many more slides on the presentation. But unfortunately, we don't have enough time to cover this that in depth, but because there are many other topics which are also influencing the market. But yes, the Iran war, of course, is a major disruption. There are almost 19 million barrels between crude and refined products, which used to transit through Hormuz, so around 18% of total oil supply, 25% of seaborne oil volumes. So there is the potential to reroute through some pipelines part of this production around 3.5 million, 4 million barrels per day, but that leaves still a deficit of around 15 million barrels per day and lost oil output, which cannot be easily replaced. So that is a huge deficit. And of course, it led to an important spike in the crude oil price and also because of the lack of the refined volumes, a huge spike in refinery margins. And as I mentioned previously, it led to the opening up of some important arbitrages, in particular, that for naphtha from the West of Suez to the East of Suez, where the profitability of this trade rose significantly and justifying the traders paying very high freight rates to transport these products from Europe or from the U.S. Gulf. -- to Asia and to China, in particular, which has been rapidly developing its petrochemical industry. 40% of the seaborne naphtha originated from the Middle East Gulf. So that explains why there is such a large deficit in this particular product. And therefore, what we have that in these new arbitrages, this sharp increase in refining margins is the factor which have driven freight rates on certain routes to record levels. We don't know -- we don't have -- it's very difficult to estimate how long this this work can last to try and rebalance a bit the market. The IEA announced yesterday that they are going to be releasing 400 million barrels of oil from the strategic petroleum reserves. That is a very significant amount. It's an important portion of the total strategic reserves of 1.2 billion barrels. I understand that it will be difficult to inject into the market more than 2 million barrels per day. So if they were able to inject the full deficit of 15 million barrels per day, this would equate to around 25, 26 days of -- would cover 25, 26 days of lost output because of the Iran conflict. But at the rate of 2 million barrels per day, -- it would take 200 days for this amount to be released into the market. But more importantly, it will only compensate for one fraction of the -- of the lost output because of the Iran war. So it is not enough to rebalance the market, unfortunately, which highlights the importance of finding a resolution as soon as possible for this conflict. Going back to the fundamentals, oil demand continues growing, although at a slightly lower pace than in the previous years, but it almost -- it grew by almost 0.8 million barrels per day in '25 and was estimated by the IEA in its latest report to grow by almost 0.9 million in '26. But of course, the most recent developments linked to the Iranian war could substantially affect these forecasts. Refining throughputs after rising by 1 million barrels per day last year, so much more than actually initially anticipated by the IEA, where they were initially expecting an increase of only 0.6 million barrels per day is expected to increase by another 0.8 million this year. And more importantly, this output growth is happening mostly in non-OECD countries. and in countries, a lot of that is geared towards exports. So Middle East, Asia and Africa. And oil supply was abundant until not long ago. The oil supply grew by, on average, 3.1 million barrels per day in '25 and by another 2.4 million barrels per day. It was expected to grow by another 2.4 million barrels per day this year. Of course, once again, here, the Iranian war completely changes this outlook here. So it will, of course, crucially depend on how long the war lasts, but also on the damage that was done, that will be done to infrastructure, oil infrastructure in these countries. how that will affect their future ability to export oil. We were expecting the forward oil price curve to move into contango if the excess oil supply picture continued this year, but this changed dramatically now and the oil prices rose sharply and the curve now is in steep backwardation. This is a bit dated. Of course, oil price is moving very fast. So -- but this is more or less the shape of the curve today and oil inventories are a bit above the 5-year average, but not very significantly. The growth in oil has been mostly at sea and mostly the sanctioned oil at sea as we saw -- in terms of demand growth, jet fuel is expected to be -- continue being an important contributor for oil demand growth, but also gas oil and diesel oil. Here, we show -- this is the trend that we were seeing of growing imports of naphtha into China. And as you see by the yellow bar here, which shows the imports coming from the Middle East, it confirms that there was a large portion of this product was coming from the Middle East. So this is a huge problem for Chinese petrochemical industry. Also because the Middle East is an important exporter of LPG, which is a competing feedstock for with naphtha and also that there are going to be deficits also of LPG. So -- and here, we show on this graph is the increase in the number of LR2s, which are trading dirty, which -- and this increase, which was ongoing throughout '24 and the beginning of '25, but accelerated around August, September '25 and the decline in the number of LR2s trading clean. So despite the growth in the LR2 fleet of around 50 vessels in 2025, there was a decline of 11 vessels in the number of LR2 vessels trading clean. And of course, here you see the crude tanker freight rates, which are surging. They have been improving at very profitable levels already at the end of last year, but then the most recent developments in Iran led to this huge spike of these rates to record levels. Another important fundamental, which has been supporting the market has been the opening of refineries, as we mentioned several times in China, the Middle East and more recently in Africa and Nigeria and the closures in Europe and in the Americas, in particular, but also Oceania. The Americas, we have recently seen some important announcements of closures of refineries on the West Coast, and there we expect to see more imports into that region from Asia in the future, and that should also be very positive for ton-miles. The fleet is continuous aging rapidly. Important to note that after the order book rising to almost 16% at the end of 2024, more muted ordering last year led to a decrease in the order book as a percentage. This is only for MRs and LR1s the percentage of the fleet to 13.5%. During the meantime, the fleet has been aging. So the percentage of the fleet, which is more than 20 years rose from 16.2% to 20.3%. So there's this delta here, which rose quite sharply between these 2 lines. And this is, I think, quite positive for the market going forward as long as we don't see another surge in ordering this year. The vessels are aging rapidly they are reaching -- crossing this 20-year threshold, but soon they will also be reaching 25 years of age. We see here from 2028, there's a rapid acceleration in the number of vessels and this is measured in terms of deadweight tons that are reaching that 25-year mark. So a lot of scope for demolition, which is something which we were actually already seeing in '25. So starting from very low levels, we almost had no vessels demolished in '23 and '24. We started seeing an uptick in demolitions throughout last year with 17 tankers demolished in Q4 '25. So still much less than the 39 tankers demolished in 2021, but -- and this was happening despite the strengthening market and very profitable markets that we saw last year. So it confirms that we should be seeing an increasing higher level of demolition going forward even in a strong market environment. Here, again, we show in '25, only 77 vessels ordered. So it's not such a low number if we look at the historical figures, but also must be noted that the fleet has been growing. So 77 vessels ordered last year is very different from a similar number of vessels ordered, for example, in 2010 or 2011. So -- and then here, we show the fleet growth, which for the MRs and LR1s is around 3.6% across all tankers, 3.3% for this year. This would have been a number which other things being equal should have led to a softening of the market. Of course, the geopolitical developments that we have seen recently have a much bigger impact than this fleet growth here. And it should also be noted that if we look at the fleet growth in the sub-20 fleets, so the vessels which are less than 20 years across all tankers, it is less than 1% in '26. So this is also very supportive of freight markets this year. Here in terms of NAV, okay, this NAV here is a bit dated. Vessel values, as we saw in the previous slides have been moving up together with freight rates and TC rates. So we calculated an approximate NAV as of the end of February. And if you use today's exchange rate, it would equate to around EUR 8.6 per share. So we are still trading at quite a big discount to NAV despite the strong share price performance last year and the beginning of this year. CapEx commitments, I think we already covered that. In terms of shareholder returns, we were able to confirm this improving trend here. We saw that our payout ratio increased from 16% to 13% and then to 40% out of '24 results. We were expecting this year, and that's what we communicated to the market that -- the Board was going to propose a similar payout ratio also for this year of 40%. But instead, they were -- because of the very strong deleveraging where we ended the year at only 2.4% ratio of net financial position to free market value, they were able to propose a more generous distribution dividend of $32 million -- around $32 million and which together with the interim dividend distributed in November, equates to a 55% payout ratio out of the 2025 results. Of course, the dividend is still to be approved by the AGM in April. I think that's it. So I'll pass it over to the Q&A.

[Operator Instructions] The first question is from Matteo Bonizzoni of Kepler Cheuvreux.

I have 2 questions. The first one relates to the potential -- the impact of the potential continuation of the current situation in Middle East, Iran. So first of all, I was looking at Clarksons that the week of the 6th of March, the MR spot rate, which they say is 590 -- can you comment on that also in relation to what you have seen in the market? And then more maybe interesting, you are mentioning in your slides, I mean, there was a spike, but then there is also the impact of the demand destruction. I mean -- so all in all, in a situation in which this should last weeks or months, do you expect a net positive or net negative impact on the rates for product tankers? The second question is supply fear. Supply fear 1 year ago didn't prove correct. And also Clarksons was pretty bearish, I think, on the fact that 2025 could have been already sort of engusted by this higher ship new building and so on. It didn't prove absolutely correct. But now also in your press release, you're mentioning a little bit of risk probably starting from 2026, you are mentioning the 6% fleet growth, which is the projection of Clarksons. But in your slide for your MR and LR1, you say 3.6% net. So all in all, your view is that finally, 2026 could be or not the year in which we could have some softening of the rates related to that higher capacity in the market.

Okay. Thank you for the questions. So starting with the Iran war, as I think I mentioned, it is very difficult to read the situation because -- we know how erratic these announcements from the White House are. There is, of course, a very strong incentive for the U.S. to end this war as soon as possible because it is detrimental to the world economy, but also to their economy despite being an important oil producer. And it can lead to higher inflation, and we know how unpopular that is in the U.S. and higher petrol prices at the pump, and we know how popular that is in the U.S. and there are midterm elections arriving soon. So there is a very, very strong incentive for this war not to last very long. And then, of course, there are also pressures maybe for a solution to be found, which would entail a change of regime, but that seems very difficult, at least to me. But maybe I'm mistaken. I don't know what's happening behind the scenes. But -- so if that objective is abandoned, I think that then maybe a more realistic approach can be taken, which would then mean that this war will actually not last that long because I think that even as Trump mentioned recently, there's probably not much more left for them to bombed. They have already bombed so much in Iran. So -- and the stakes from an economical perspective are huge, right? Because it's not only the oil for which that passage way is very important. It's also LNG, it's also LPG. It's also other urea, also some raw materials which are needed for the production of chips. So and vice versa, they also have to import food into that area, and they have -- so it will also be very, very complicated for them to continue this war for very long also from that perspective. And of course, there are also all the Gulf countries which are already suffering hugely because of this war, which have developed economic systems, which rely on tourism and wealthy people wanting to live in those countries and these latest developments is putting into question their economic model. So if this war doesn't last too long, the net effect is definitely positive for the market because the fixtures, there are some fixtures that we have already closed, some others that we are negotiating, we might be closing soon, which are really at levels we haven't seen before. We didn't see this not even in '24 -- in the first half of '24. So they are really very, very strong levels. And of course, there is a weakening happening in the East of Suez because of the lack of cargoes there. But as of today, it's much more than compensated by the very strong markets that we are seeing west of Suez. So that's in relation to the Iran war. Is the average $59,000? I don't know. I mean it's a bit too early to calculate averages. I mean, these averages because it takes time to fix vessels, right? So vessels are not immediately open, then so it is difficult to assess this. I mean you need a few months to really understand what has been the impact on the averages for the spot market. This is just one figure at a point in time, which takes averages of all routes, but it's not reflective today still of the averages we are achieving on our vessels. But if the market continues like that, it could be reflective of the averages we will be achieving of our vessels over a course of several weeks maybe. I hope I answered your question. Was there something else I missed? On the supply Supply growth, yes. The supply growth, as I mentioned, 3.6% can look like quite a big number if we look at MRs and LR1s and 3.3% across all tankers. But in reality, it's not that big an increase because the sub-20 fleet growth is of less than 1% and vessels which are more than 20 years old tend to be employed in marginal trades. And we are seeing -- we have seen a tightening in the supply/demand because of also the increasing number of vessels that are sanctioned and also a tougher application of this enforcement of these sanctions. -- with vessels being boarded. And so the sanctioned vessels, which continue to operate previously in quite a productive way are increasingly less productive, and that is also tightening the supply-demand balance. So irrespective of the war in Iran, which might last only a few more days, hopefully, the fundamentals that we were benefiting from are strong and should continue to support the market going forward. We were seeing an improvement in rates throughout last year. So Q2 was stronger than Q1, Q3 was stronger than Q2, and Q4 was stronger than Q3. And Q1 this year is stronger than Q4 last year. So -- and not only because of the -- even before the war in Iran, our averages for Q1 was stronger than Q4 last year. So there is this improving trend, which is linked to the growing number of vessels sanctioned to the lifting of sanctions in Venezuela to the increase in oil supply that we were seeing to quite healthy demand growth to the dislocation of refineries, all the factors that we mentioned usually in our presentation. So this other factor has led to these ridiculous freight rates, which, of course, are not sustainable longer term. They will not -- they might last another few weeks. But in the meantime, we are benefiting from this, too.

The next question is from Ariana Terazzi of Intesa Sanpaolo.

I would have 2 questions. In the recent past, you have maintained roughly a 50-50 balance between spot exposure and time charter coverage. You reached 54% for '26 just before the Iran war broke out. And now given the recent spike in spot rates together with volatility related to the geopolitical environment, I would ask you what is your updated strategy on contract coverage? And within this scenario, if you could add more color on how is interest from charters in securing vessels on longer-term contracts moving. And my second question is on the cost side. Could you help us in forecasting the main cost lines, particularly regarding your current expectations for operating costs and G&A as we saw that some cost lines have moved linked to the Iran war.

Thank you, Ariana. So I'll take the question on the coverage and the cost question I'll let it for Federico. So on the coverage front, we are quite happy where we are today in terms of contract coverage. So we are as an average for the year at 54%. So that is a good level, which is more or less really where we wanted to be. And -- but this declines gradually throughout the year. So as we approach Q3, we will be looking potentially for some more contracts to cover Q4, but not so much Q4, but '27. I mean our priority is now really to increase coverage for '27, where we are still only at 22%. But we are happy where we are now in terms of coverage. There's still a lot of interest potentially at quite high levels today, but not as high, of course, as the levels at which we can fix our vessels on the spot market today. So Yes. So that is the answer for the coverage question. I hope I pass it over to Federico.

Thank you, Carlos. On the OpEx front, as we speak, we don't expect higher cost relative to what we achieved in 2025. We think they should be what we can see right now more or less at the same levels, apart from maybe some small inflation effect. What I was saying before is that especially in the last part of the year, in the second half of the year, we had -- we saw higher logistic costs, which, as I mentioned before, were really related to the specific trading areas where these vessels were. And of course, we need -- as you can appreciate, we need to provide spare parts to these vessels that trade around the world, and you might happen in a situation in which maybe your vessels are in some parts of South America or India, where maybe it is particularly expensive to sell spare parts to and then you end up in this kind of situation, which are also a little bit hard to predict in advance or much in advance. So on the OpEx side, I wouldn't expect a significant increase relative to where we were in the full year '25. On the G&A side, also I would expect the cost to be pretty stable going into 2026. Then, of course, it's a bit early. As I mentioned before, a significant part of the cost of that -- of the variance compared to the previous years is also related to the variable component of the personnel cost. And of course, this variable component obviously rises when the company makes very strong results, but it's also a flexible component cost that obviously goes down, decreases when things change. I don't know if that answers your question.

The next question is from Massimo Bonisoli of Equita.

I have 2 questions. Back on the question on Iran. If Hormuz were to reopen in the coming weeks or months, do you expect trade flows to normalize quickly? Or could the market remain structurally tighter due to slower transit security checks, higher insurance costs or whatever? Would you be willing to bring back your fleet over Hormuz quickly? It seems to me that logistics behind refining is becoming a demurrer with Gulf upstream and downstream assets now stopped and tanker spot rates may stay high for a longer period even with the reopening of Hormuz. The second question is on the release on the -- by the IEA. They decided for 400 million barrels from strategic reserves. How much would be clean products of those 400 million barrels? And what are the implications for clean tanker market? I've been told those products are old and not suitable for current standard on fuels.

So Massimo, thank you for the questions. So I think we will -- well, first, one thing we didn't mention in today's call, but which is important is that we don't have any vessels stuck in the Persian Gulf. So that is already very good news. We had one vessel which was supposed to load the cargo when the war started, but we managed to reach an agreement with the charter and canceled the contract because it was not safe for us to enter. And we don't expect any of our chartered vessels to have any issues relating to having disputes because the charter wants to send the vessel in and we don't agree. I -- for the reasons I mentioned previously, I think there are very good reasons for the U.S., in particular, to try and solve this conflict as soon as possible. I think, yes, the change of regime looks rather complicated and potentially extremely costly economically, but also politically, I think, very difficult to sell domestically inside the U.S. So if the Hormuz reopens, we will assess very carefully the situation, of course, before sending our vessels, we want to make sure that there aren't any mines which could be hitting our vessels. But if we deem it safe, we will transit. Of course, our main concern is the safety of the crews. It's not that of the vessel itself because the vessel itself can be insured in normal circumstances. Right now, I actually understand that it is very difficult to obtain actually insurance to -- because of the escalation in the attacks that there was in the last few days, it's very difficult to obtain insurance to cross the strait. But if we do have a situation where flows come back, but with some sort of friction, that would be very positive for the market, of course, because it mean less efficiency, but it wouldn't mean that the market is undersupplied potentially with the release from the IEA plus the flows coming back. And I believe, unfortunately, they might not be able to come back at full speed immediately. The market, however, could be -- have enough supply, but in a much more inefficient way with a lot of oil still being supplied through the ports in the Red Sea and to avoid transits through the Bab-el-Mandeb Strait, these crude flows would then have to sail to, meaning very strong demand ton-mile-wise for crude tankers. And of course, a lot of crude moving from the Americas, where production has been growing fast and is expected to continue growing this year. It will crucially depend on how severely damaged also all this oil infrastructure is. We are reading headlines every day of new -- of refineries being attacked, of export terminals being attacked. So we really will only be able to assess and understand the extent of the damage, I think, when things come down. But there is -- I expect that when the war ends, unfortunately, we will not be able to see all the flows we were seeing before from this region. But this might not necessarily be too negative for the market if it is compensated with the additional releases from the IEA. And if this creates some friction, some inefficiencies in the system, which are very positive usually for the market. My understanding is that the strategic release, maybe I'm wrong, it's only crude. So this is stock to have stocks -- strategic stocks as refined products is not efficient, and it's also -- once products are refined, their stability is not -- is limited in time. So they are conserved as crude, the stocks. And then so what we will be seeing is crude stock release, which will create immediately more demand for crude vessels, but thereafter also more demand for product tankers.

Very interesting. If I may squeeze in another question, if you would consider selling additional older vessel if asset values would continue to increase going forward?

Yes, yes. I think that is in the cards. If we had more or less in our plans in any case to sell the 2 vessels in our fleet, which are 2012 built. So if we find the right opportunities during the course of this year, we are likely to be selling these vessels.

Gentlemen, there are no more questions registered at this time.

Thank you, Dan. Thank you, everyone, who participated in the call today. And well, we will be seeing each other soon when we approve our Q1 results, and please do reach out to us if you have any other questions in the meantime.

Thank you. Bye-bye.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your devices. Thank you.