BW LPG Navigates Unprecedented Volatility in Q2 2026 Earnings Report
On a conference call to discuss its second-quarter earnings, BW LPG management painted a picture of unprecedented volatility in the Very Large Gas Carrier (VLGC) market. The company reported a shipping TCE income of $74,000 per available day, below guidance of $81,000 per day.
The discrepancy from guidance was primarily due to negative IFRS 15 and FFA adjustments of $16.4 million and $12 million respectively, corresponding to approximately $7,500 per available day. The Q2 profit after minority interest was $120 million, equivalent to an EPS of $0.79.
CEO Kristian Sørensen highlighted the extreme volatility in the first half of 2026, citing the Middle East war and the subsequent closure of the Strait of Hormuz as significant disruptors to regional LPG pricing and global VLGC trade patterns. He noted that new trade routes are driving pronounced changes in the global LPG trade flows and vessel supply.
The company's trading business, BW Product Services, generated a strong realized trading gain of $127 million during the quarter, while reporting a loss after tax of $31 million, primarily reflecting a large negative change of $145 million in the unrealized mark-to-market valuation of open positions. For Q3, BW LPG is guiding on about $88,000 per day fixed for 92% of its available days.
The company's dividend policy has also been met, with the board declaring a dividend of $0.95 per share, representing 100% of shipping NPAT. The dividend exceeds guidance set by the policy. Dry docking remains a priority, with 99 dry dock days reported in Q2 and 58 expected in Q3.
In other news, BW LPG has been busy selling secondhand vessels and fixing attractive time charter agreements. The company announced the sale of two vessels, BW Elm and BW Birch, sold at a similar price level. The sale will generate net proceeds of about $64 million, equivalent to a new building price of about $248 million.
BW LPG has also continued to build its robust time charter portfolio, fixing one of its 2016 built LPG dual-fuel retrofit vessels for a five-year time charter in the mid-high $40,000 per day. The company is working on various other time charter opportunities that will be announced later, provided successful conclusions of negotiations.
The global VLGC market remains highly volatile, with significant disruption to regional LPG pricing and global trade patterns caused by the closure of the Strait of Hormuz. BW LPG management's guidance for Q3 reflects this uncertainty, with a focus on navigating the unpredictable landscape. As the company continues to prioritize its dividend policy and dry docking needs, it also works to build a strong time charter portfolio that will drive long-term success.
The conference call ended with an acknowledgment of King Harald's passing, who was remembered as a great supporter of the Norwegian maritime community. The new King Haakon is wished well in his future endeavors."
