d'Amico International Shipping S.A.

Hello, everyone, and welcome to D'Amico International Shipping Conference Call Presentation for Q1 2025. So as usual, I'll skip the executive summary.

Snapshot of the fleet as of the end of March 2025, D'Amico International Shipping had 32 ships, 32 product tankers, of which 28 were owned, three were bareboat chartered and one was time charter in. As we speak, one of the vessels -- one of -- the only vessel that is time charter in that it was time charter in at the end of March was actually exercised a purchase option on this vessel was exercised.

So now it's an owned vessel. Still young fleet, 9.4 years of average age against an industry average of 14.1 years for MRs and 15.7 years for LR1s.

84% of our fleet is ecodesign against an industry average of 37%. Moving to the next page, our bank debt situation, very straightforward for Q1 2025.

We repaid $6.7 million of bank debt in the quarter. We are expecting to repay further $20.1 million in the rest of the year of 2025.

We have no refinancing needs for 2025 and 2026, apart from a small residual amount of $3.2 million at the very end of 2026 in December 2026 that is expiring that we're assuming here in the graph to refinance for the same amount, slightly different situation in 2027 as we are going to have approximately $66 million of debt to refinance. In addition to that, we're assuming currently to refinance -- to finance our newbuilding vessels, the four newbuilding vessels that we have ordered for a total amount of $86.8 million.

On the right -- on the graph on the right, you can also see, as usual, our daily bank loan repayment, which, as you know, dropped significantly from the $6,150 a day of 2019 to $2,540 a day in 2025. Moving to the next slide.

Here, we give our usual rough guidance on how the second quarter of the year looks right now. So we have already fixed 51% of our days out in time charter at an average daily rate of $23,816 a day.

Also, we have fixed 27% of the days on the spot market at $23,000 a day. So we're talking about currently about 78% of our total days for Q2 fixed at an average blended daily rate.

So the sum of the spot and the time charter exposure that we have at an average of $23,500 a day. As always, you find on the right a sensitivity on the unfixed days that we have for Q2.

So should we make $18,000 a day or $20,000 a day or $22,000 a day on our fixed days, then our blended DTC would rise to $22,321,22,754 or $23,188. So we are expecting another profitable quarter for DIS.

Next page, estimated fleet evolution. We're expecting to have a stable fleet of around 32 ships, but with a much higher proportion of owned ships, given all the options that we have been exercising -- on the right, you see also our potential upside to earnings.

So our sensitivity relative to the spot market. So as we speak for every $1,000 a day rate that we make on the spot market, our sensitivity, our bottom line sensitivities of $3.4 million for the remainder of 2025.

And if you look at the bottom, should we run all the unfixed days or the three days that we have right now at a breakeven level, then our net result for this year would be slightly less than $60 million. And should we run the unfixed days for 2026 also breakeven level, then our profit for next year would be already of almost $19 million.

And again, if you still look at the bottom but on the right-hand side, if we ran the fixed days -- fixed days for 2025 at $80,000 a day or at $20,000 a day or at $22,000 a day then our net result would rise to $70 million or $76.6 million or $83.4 million should we make $20,000 a day as an average on the fixed days that we have at the moment. Temporary cost pressure.

On the cost side, we have been exposed, as you know, to some inflationary pressure both on OpEx and G&A. The G&As are obviously as we discussed in our previous conference calls, has been impacted by the variable component of our personnel costs, which are also obviously the reflection of some very good years that we have had.

On the OpEx side, we had a daily OpEx of $8,462 a day, which is approximately 8% higher relative to the same period of last year. However, we expect this to be mostly timing related.

We had some exceptional items that negatively impacted this number in the quarter, partially also due to some to the trading pattern of some of our vessels, which were employed in South America and some profitable voyages where, however, it's a little bit more expensive, for example, to do crew changes which are -- which we have to do for our normal crew rotation on board of our ships. So overall, we're still expecting some -- we're still seeing some inflationary pressures on our OpEx costs but we don't expect at the moment, this impact to be of 8% relative to the previous year.

We are expecting on a full year basis currently approximately 3% higher cost on a full year basis relative to 2024. Net financial position, very strong financial position for DIS.

At the end of the quarter, we had $114 million of net financial position. If you exclude the small impact that we have right now arising from the application of IFRS 16, our net financial position is only $111.7 million compared to fleet market value at the end of the quarter of over $1.1 billion.

So our net financial position to fleet market value ratio was 10% at the end of Q1 2025, so substantially very much in line with the figure at the end of 2024. And of course, if you compare this important ratio, this important financial leverage ratio, to what it was a few years ago, I guess the trend here is pretty impressive.

It was 72.9% at the end of 2018. And this is obviously, due to the very good cash flow generation that we had in the last years, together obviously with the significant deleveraging plan that we have implemented.

Q1 2025 results, we made a net profit of $18.9 million in the first quarter of the year, still strong EBITDA of $34.4 million against a total net revenue of $64.1 million, so very good margins. Of course, the results of Q1 2025 are much lower than what they were in Q1 2024 where we made a profit of $56.3 million.

The market, obviously, is still extremely profitable for us as you can see but of course, it's not at the same level where it was a year ago. Excluding some small nonrecurring items, our net result would have been of $19.2 million against $56.7 million in the same quarter of last year.

Going to our key operating measures. We operated in the quarter an average number of vessels of 32.7.

We had a contract coverage of almost 40% at a daily average of $24,567. We made on the stock market an average -- daily average of $21,154, which obviously compares to an average of $38,200 a day that we made in the same quarter of last year.

And our total blended TCE was of $22,500 a day for the first quarter of the year. And I pass it on to Carlos for the rest of the presentation.

Yes. Thank you, Federico.

Good afternoon. So as usual, we start this part of the presentation looking at CapEx commitments.

In the first quarter, we exercised the TC-in option on the one vessel which we had time chartered in since delivery from the yard the Japanese vessel, very good vessel for $34 million. And in April, we took delivery of another vessel.

Also, we had time-chartered in since delivery from the yard, also Japanese, for a similar amount, US$33.9 million. The investments we show here for 2026 and 2027 relate to the last installments for the four LR1s that we ordered in China, and that will be delivered to us in the second half of 2027.

Going on to the following slide, we have been very active over the last few years, exercising options on lease vessels. This year, we exercised the option for the Chart Houston, which however, will be delivered to us only in September.

And we still have two options to be exercised. One, the Discovery, can already be exercised since September last year, and the Fidelity will be exercisable from September this year.

As mentioned in the past, these transactions are at very competitive cost of funds for us -- very long-term financing with no financial covenants. As long as interest rates continue being relatively high, we are happy to keep these transactions going.

If we were to replace them with bank debt today, even taking into account the fact we can access very competitive terms today, we would still be paying more than what we are paying for these leasing deals here. But, of course, if interest rates were to come down more decisively, then things might change, and we might decide to exercise these options.

In terms of the time-chartered-in vessels, we have exercised all of them. We include in the two columns here the difference between the market value and the exercise price at the exercise date.

And for those that were already part of our books as of 31st of March, the difference between the market value and the book value, as I said. And vessel values did come down in the first quarter of this year, especially for older vessels, but there's still a positive delta there between the market value of the vessels and the book value of the same vessel.

So, looking at our coverage, we now managed to execute on our plan of increasing coverage for the second half of the year to reach 50% at least. And we're now just about at that level 51% in Q2, and then rising to 53% in Q3, and then once again 51% in the last quarter of the year at an average rate of almost $24,000 per day.

So, a very profitable contract, which, as Federico, illustrated previously, provides us some secured profits for the year, which we expect to be able to build on to generate even further profits. So, through the stock employment of the remaining vessels and eventually by taking more coverage during the course of the year, more with the objective of covering a larger portion of 2026 than of increasing coverage of 2025.

We are quite happy where we are today with our coverage in 2025. But, of course, it is very difficult to take forward coverage for 2026 without also taking coverage for 2025.

So, and in that respect, we have this year, when we did take coverage it was much easier to cover for periods of one year or six months than it was for longer periods. There are, here and there, opportunities to take longer contracts.

If they were to materialize, we would look at them quite seriously. That does not mean we have a bearish outlook on the market.

To the contrary, we're still very positive on the market outlook, but we recognize that there are a lot of variables which are outside of our control, many of them of a geopolitical nature, which are affecting the market. And over the last few years, they have all gone in our favor; that will not necessarily continue being the case going forward.

Some of the variables which we have benefited from could not be there in the not-too-distant future, and other variables could affect the market, which might not be as positive. And we will cover more of that in the following slides in the presentation.

If we look at where the charter rates are today and vessel values, charter rates have corrected, since the peaks reached over the last few years, but they are still at very high levels relative to historical averages and very profitable levels. Asset values have been more resilient, stronger correction for older vessels on a percentage basis as is to be expected, where while since that newbuilding prices have held up quite well.

We expect that to change in relation to newbuilding prices. We expect there's going to be a stronger correction in the coming quarters.

However, we might need to differentiate in that respect when we talk about Chinese newbuilding prices and Korean new building prices as we will cover in the rest of the -- some of the slides in the presentation. Here, we look at the -- what happened to Russian exports of refined products.

We covered this slide several times already over the last few years. Russia used to be a big exporter to Europe of refined products and now they are selling these barrels further away and Europe has replaced the lost Russian barrels with inputs also from more distant locations, helping significantly the ton miles for the sector.

We have no idea when the conflict in Ukraine will terminate. However, there seems to be some pressure within Europe and a recent proposal by the commission to become totally independent from energy exports from Russia.

So irrespective of what happens in Ukraine, Europe might decide, of course, that would be an expensive thing to do to refrain from importing energy from Russia even after a peace agreement, because Russia cannot be considered anymore a reliable trading partner. With regards to the Red Sea, a lot of uncertainty here too.

The peace agreement that there was in Gaza led to a gradual resumption of trade flows through the canal after bottoming in around December last year. But the end of this truce led to a decline again in April of the volumes transiting through the canal.

Whether -- to what extent the product tanker sector is benefiting from these longer saving from product tankers having to sail the longer routes through April hope, I am unsure of. In the beginning, it definitely was a very positive element and which contributed to the very strong markets we saw in the first half of last year.

Nonetheless, the additional cost of having to sail the longer routes meant that larger vessels became more attractive. And when we're talking about larger vessels we are talking here about vessels which are usually transporting crude like Suezmax and VLCCs as a means of transporting clean refined products.

It's something extremely unusual. These vessels cleaned up.

It's very expensive, but it's entirely time consuming for these vessels to clean up, but they did clean up last summer. and it was quite widespread phenomenon and they did transport large quantities of clean refined products.

Therefore, the volumes transported on vessels, which typically transport these products fell as a result of this disruption. And so the overall effect is definitely uncertain.

And a reopening of the Red Sea could increase the competitiveness again of the smaller product tanker vessels or product tanker vessels generally and because the flexibility might again become more valuable than the economies of scale offered by the larger vessels. So -- and the following slide covers the same topic.

And here we see what happened in the summer. The yellow line is the unquoted share of long-haul trade of CPP trade, which went above 12% last summer since then declined significantly, although it has risen slightly over the last few months.

And on the right graph we see that Suezmax is in particular continued transporting substantial amounts of gas oil around the Cape of Good Hope cannibalizing the market for product tankers. VLCCs there was much less of and that is not surprising and talking with companies which were involved in such trade those that did use VLCCs said that it was quite complicated to clean these vessels and there were contaminations.

However, some players they do control the whole chain. And they are also the receivers of the products.

So for them it's much easier much less risky to engage in such activities. And we are seeing some important companies which are still transporting -- cleaning up Suezmax to transport refined petroleum products.

On the sanctions now this is an increasingly important element affecting the market. Before Biden left office he sanctioned an important number of tankers.

And since Trump became President he continued doing the same targeting in his case more vessels which have been involved on Iranian sanctioned trades. Nonetheless, we see the blue line the vessels sanctioned by US authorities and then the red line the sanction overall number of vessels sanctioned by US authorities EU and UK authorities.

It's a very big number of vessels which represents a big chunk of the total tanker fleet. And there is scope for more vessels to be sanctioned, especially, when they are sanctioned by the US authorities it becomes very complicated for them to continue trading and many refrain altogether from doing so.

The US port fees, okay? This was a big threat for the sector big uncertainty relating to these threat and fees.

Fortunately, following consultation with the industry the proposal was streamlined and is much less impactful than initially. There were some important exclusions which were included some of them which are very important for us namely that vessels which are of the 55,000 deadweight tons or smaller are excluded and that covers most of our fleet with the exception of the LR1s, but however there is also another part of the proposed regulation which seems to exclude also vessels which -- with an individual bulk capacity of up to 80,000 deadweight tons where it is not clear whether that relates only to dry bulk vessels or also to liquid bulk vessels.

If it were to relate also to liquid bulk and therefore tankers also our LR1s would be exempted from paying such fees. And if that were to be the case since there are imports into the US, which are transported on LR2s this could be quite beneficial for the LR1 sector because the LR1s would then become the largest product tanker vessel size which could call US port without having to pay such fees.

And so some of these cargoes today transported on LR2s on LR2s could migrate to LR1 vessels. Furthermore, the uncertainty created by these fees and the risk of a landscape which is always evolving and which could further impact the Chinese shipyards is reducing the appetite from ship owners for new orders at Chinese shipyards and we expect that to continue being the case going forward.

And Chinese shipyards today control the bulk of the shipbuilding capacity for tanker vessels. As we see on the graphs on the right-hand side at the top 71% of the tanker fleet on order today has been ordered at Chinese shipyards.

So it's going to be very difficult for Japanese or Korean shipyards which are let's say the competitors in Japan there's very limited production capacity today for product tankers. It's really mostly Korea but -- and some other yards here and there for example in Vietnam there are some yards reordered that but controlled by Korean shipyard.

It will be very difficult for them to replace the lost output from the Chinese shipyards which is -- could bode very well for fleet growth going forward. And going on to the next slide, oil demand.

The International Energy Agency downgraded its demand growth forecast for this year by around 300,000 barrels per day to 700,000 barrels per day. Main reason for this decrease is the uncertainty created by the threatened tariffs and already imposed tariffs by the US, which is dampening consumer sentiment business sentiment on both sides of the Atlantic and I say worldwide.

So it is unfortunately creating some real tangible economic damage as we speak irrespective of what will be the final outcome of the negotiations which are taking place or will be taking place in relation to these places. Rep also should not be growing substantially this year 300,000 barrels per day.

The good news here is that this low figure masks some very different trends between OECD and non-ECD countries. Refined throughputs in non-OECD countries is expected to increase by over 800,000 barrels per day, whilst throughputs in OECD countries is expected to decrease by around 0.5 million barrels per day.

These decreases are mostly concentrated in Europe and in the US, whilst the additional volumes are coming from the Middle East Asia and Africa creating room for more inputs into Europe and in particular into the US, the closures of refinery recently announced in California especially could be quite positive for the sector because of the US Jones Act very expensive to transport them from other US ports for California to import from the US Gulf. So the needs -- the additional import needs of California are likely to be met with more imports from Asia on very -- so products which will be transported over very long distances.

So it should be very positive for the market. On the oil supply, here the market is looking increasingly oversupplied going forward not only we have quite strong growth now expected from non-OPEC countries.

Of course this growth now is being also downgraded because of the decrease in the oil price which we already have experienced and which is affecting investment plans drilling plans of US shale oil producers. But we are also now expecting more -- a faster more aggressive increase of output from OPEC.

The gradual increase of around 190,000 barrels per day which was initially anticipated from OPEC+ has now instead has been accelerated. And already in May, we saw an increase of over 400,000 barrels per day and a similar increase now was announced last weekend for June.

This of course are increasing production quotas not increase in output. So the actual increase in output is going to be much smaller than that.

The additional output is going to be coming mostly from Saudi Arabia because a lot of countries were already producing above that quota. And it is suspected that the reason why such an increase in quotas was approved is to penalize these countries which were not respecting the agreements and which upset very much Saudi Arabia.

There might be a second reason why a faster increase was agreed and it might be linked to the tougher sanctions which the US has been imposing and will most likely be imposing on Iran. And therefore this additional oil might compensate from -- for the lost Iranian barrels going forward.

So in that case overall oil output will not be much higher than anticipated initially, but the positive news here would be that we will have less oil from sanctioned countries, more oil from non-sanctioned countries, transported on non-sanctioned vessels so tightening the market for the non-sanctioned vessels. Finally, there is speculation that Saudi Arabia might have and OPEC might have agreed this recent quotas to penalize the shale oil producers has happened in 2015 and 2020, again already to bring that back, so that they reduce production.

And then later on they can – OPEC can then increase production again and sell their oil at a higher price. On the inventory side, we entered this possible scenario of oversupply of oil.

Fortunately with very low stocks and that in the press release issued by OPEC is one of the reasons why they mentioned they agreed to a faster pace of increases because they said that the market fundamentals were good because of the low inventory. So that is positive.

What has happened so far has already affected significantly the oil price curve. The front end of the curve is still in backwardation.

But from December onwards the curve is in contango. This curve here is a few days old and it's moving very fast but the shape should be more or less this one.

And if the front end comes down more aggressively we could have the entire curve in contango. If this contango is steep enough, it could create some incentives for the buildup of stocks.

We could create incentives for vessels to slow down because of course you're also stocking the oil when – during the sailing and you are able then to sell the oil later at a higher price. Eventually, once the onshore inventories are full it will also lead to higher floating storage of oil as we have seen in 2020.

So there is here depending on how this plays out to what extent the OPEC pursues, continues pursuing this accelerated pace of increases there is a good chance that the market can really go fully into contango and that can be very short-term positive for the market. Of course, it would not be long-term a positive thing for the market because eventually these stocks would then have to be consumed absorbed and that would then dampen at the later stage, demand for seaborne transportation as we saw for example in 2021.

Refining margins, they are moving finally again in the right direction. So they were very strong in the first half of 2024 and then they declined substantially from August, reaching a low around September last year but then they have been moving up since.

And US Gulf refining margins in particular are very strong today and at levels last seen around the summer, July, August last year even slightly higher. And in terms of breakdown of demand by product, naphtha is still expected to be the biggest contributor to oil demand growth this year, although there was a reduction in the estimated consumption growth of naphtha.

Slight increase in the estimated consumption growth of motor gasoline, quite a strong decrease in the production growth for – consumption growth sorry for jet fuel and a very strong also contraction in the expected demand growth for diesel oil. Especially, diesel oil contraction is not surprising, given the effects on the real economy of these tariffs and threat and tariffs.

So one positive aspect on the demand side we have seen again is the quite healthy imports of naphtha by China. China is – has invested over the last few years and is expected to continue investing in the coming years to develop its petrochemical industry.

So it's importing higher amounts of feedstocks for the industry. Naphtha competes with LPG as a feedstock for the petrochemical industry.

The tariffs recently imposed by China as a response to the tariffs imposed by the US on LPG makes naphtha more competitive as a feedstock and that probably explains the surge in imports we saw of naphtha in the months of March and April into China. And this is a trend which should continue going forward if these tariffs stay in place.

And – we are also seeing -- we also have a very good prospects for the crude tanker market. The order book did grow a bit since reaching a low at the end of 2022, but it's still at very low levels.

And the crude tanker vessels, which transport crude tankers have been doing relatively better than the product tankers in the first part of this year, as was anticipated. There is quite a big discrepancy in earnings today between the Aframax vessels, and the LR2 vessels in favor of the Aframax vessels.

This has led recently to a migration of LR2 vessels into dirty trades. So after peaking at 63% of the LR2 vessels trading clean in July 2024, this percentage has come down to 60% in April this year and it could decline further in the coming months, if this discrepancy continues.

And there is a good reason to believe that the crude tanker markets should continue doing well in the rest of the year especially, with the additional supply coming from OPEC and the number of the increasing number of vessels being sanctioned and the tougher sanctions, we referred to being imposed on Iran. And on the -- in terms of refinery, landscape there's not much new here to add to what we have already presented several times.

But we do see -- continue seeing that the growth is going to be coming mostly from the Middle East Asia and well in particular last year and the beginning of this year also from Africa and Nigeria in particular. And we see reductions in refining capacity in Europe and in the US, as we referred to previously.

The fleet continues aging quite fast. Good news here, looking at the graph on the top left, the order book after peaking at for the MRs and LR1s at 15.4% has been coming down.

And now it's at 15% while the vessels continue aging. So whilst at the end of 2024, 16.2% of the fleet was more than 20 years this percentage has reached 17.2% at the end of March.

So, now we have this 2.2% delta between these two figures, and we expect this delta to continue growing in the coming quarters. We also have a very high percentage of the fleet, which is already over 15 years of age more than 50% and rising.

Across all tankers, the picture is quite similar. The order book is slightly smaller.

It's only 13.7%. But the percentage, which is over 20 years is even higher it's 17.5%.

So there's a delta there of 3.8%, which is quite big and which is a very good indicator for the future market. And vessels are also starting to turn 25 years of age.

I mean these are the vessels, which were ordered in the last super cycle. And starting in 2027, the vessels which were delivered in 2002 and 2003 so forth will reach that 25-year mark.

And so there is an increasing potential for demolitions. In 2029 for example, 6% of the MR and LR1 fleet will turn or almost 6% will be turning 25, so there is, unless we see sustained ordering potential for the fleet actually to go into contraction from 2029.

And a similar picture, if we look across all tankers. And here we see instead the deliveries on the top, which are accelerating during the course of this year, which is not good.

But at the bottom we see, how demolitions were minimal over the last few years but they are finally starting to pick up. You see slightly more vessels, which were demolished in the first quarter of this year and we expect this trend to accelerate going forward.

Also positive to highlight here that only 10 vessels were ordered in the first quarter of MRs and LR1s ordered in the first quarter of this year. So if you analyze that, that is one of the lowest figures on record since 2007.

So that is not surprising. There are many reasons for this.

One, newbuilding prices are still very high. Two, deliveries are very far out.

Three, the market is profitable, but not as exceptionally profitable as it was a few quarters ago. And three, the order book also has already grown.

So there is of course that also forces shipowners to think whether other vessels are really required and that dampens their appetite. And also as we mentioned the port fees announced by the U.S.

on Chinese-built vessels is reducing appetite for orders in that country in particular which however controls the bulk of the shipbuilding capacity for tankers today. If we look at fleet growth, it is for MRs and LR1s accelerating in 2026.

But if we look at across all tankers it's still accelerating but it looks more manageable. And so here in these graphs we are not expecting many vessels are going to be demolished.

But if demolitions pick up substantially then there is a possibility that this fleet growth figures here could actually be even smaller than what we are showing. So that covers the market.

Finally, we go on here to the NAV evolution. We show overall NAV which has declined slightly after peaking in December but stays above $1 billion.

We are not accounting for the value of the time charter contracts that we have signed some analysts that into account in their NAV calculations. We are not taking that into account today.

And today we do have contracts which on average are higher than where vessels could be fixed today for similar period. So there is a value to such contracts.

It must be said that this picture is as of 31st of March. I would expect if we were to take a picture today of our vessel values, they will be slightly lower than what we are seeing here today.

So because there were some transactions on the secondhand market, which were done at lower levels than the valuations we received for our vessels as of 31st of March. We are, however, according to this picture here, trading at a very big discount to NAV.

And also we are trading at a discount to our book value which is -- consists mostly of vessels acquired at the low point in the market. I mean the 22 new buildings that we ordered in the last cycle, which were delivered to us between 2014 and 2019 they were really bought at the very bottom of the cycle.

So -- and also the options that we exercised were exercised with very attractive prices. So, we only have very few expensive vessels in our fleet.

And therefore the fact that we are trading at a substantial discount also to our book value, I think highlights the extent to which our shares are undervalued today. And here on the investment front I don't think I have much more to add.

We cover that in the previous slide and on the payouts well, yes, we have been quite generous on the dividend payouts. We did mention throughout last year that the intention was going to although we didn't have a dividend policy was to pay out dividends to have a payout ratio of around 40% including the buybacks, out of the 2024 profits and we did respect that.

And we have managed to do so whilst significantly lowering our leverage as mentioned by Federico with this ratio now net financial position to free market value which is 10%. So, I believe that covers the main slides of the presentation and I'll pass it over to you for the Q&A.

Thanks, and good afternoon. I have two questions.

The first one relates your attitude to leverage up a little bit your balance sheet, which is currently very healthy with a 10% loan-to-value. So my question is the following one.

You have basically completed all the charter-in activity. You have repurchased all the chartered in vessel and you have only one left bareboat vessel to be bought to be exercised this year.

Then it's true that you have material CapEx mostly in 2027 for the completion of the CapEx for the 4 L1. What's next?

I mean, in relation also to the market situation, which is currently a little bit softening. Are you, let's say, available to consider more activity for vessel maybe for delivery beyond 2027?

Or maybe you are in a standby and wait-and-see situation as regards fleet expansion and renewal. That's the first question.

The second one is a clarification on your expectation for the fleet -- the net fleet growth, which is the Slide 37. I was also reading the Clarkson report published in April.

But if I am correct, and correct me if I'm wrong, they were pointing to sort of 5% growth for the fleet. While here, I see more 2.7% this year and 3.8% next year for MR and LR1 so it's lower.

Can you clarify a little bit the difference between your projection and that projection? Maybe it's coming from removal, maybe from other factors?

Thanks.

Thank you, Matteo, for both questions. In relation to the first one on the investments, yes, we have been quite active, I must say, in terms of investments, and we do have still quite a lot of CapEx ahead of us in relation to the newbuilding vessels as we see here, the 16 -- almost $17 million in 2026 and the $174 million in 2027.

And we do have still two vessels actually on leasing, which we can exercise, one which we did exercise, but which was still not delivered to us. And so there is still a substantial amount of investments in that respect for us.

So we are not really in a hurry to make other investments at this stage. We will monitor, continue monitoring the market if particularly attractive opportunities arise, we might take them.

It might be investments linked to long-term contracts. If we are talking about new buildings, -- but -- or it might be also outright speculative investments on new buildings, but I believe at lower prices.

I mean, we still have to see a correction in the newbuilding prices. As you -- as we highlighted, very few vessels were ordered in the first quarter of this year.

So yards are still sitting comfortable because they have a big order book. But by the end of this year, if they don't see new orders coming in, they are going to start becoming a bit more nervous.

And they are very profitable today, the yards, right? So there is scope for them to reduce prices to entice new orders.

And so especially the Chinese yards. So -- which I think are going to be facing more difficulties given the U.S.

port fees. So there might be an opportunity to do something there.

Let's see. I mean we monitor, we monitor also the secondhand market, but we are not in a hurry to do anything.

We will only do something if we strongly believe on it. Otherwise, we have a very competitive fleet for still quite a number of years and when we are happy with what we have today.

That is on the newbuilding front. On the fleet growth, I believe the difference you are referring to, although I don't have the Clarkson figure report in front of me, refers to the fact that Clarkson's is looking at growth across all product tankers.

-- we have two different figures here. We were showing one, which is only MRs and LR1s, which is the sectors we operate in.

So it doesn't include LR2s. And most of the growth in the product tankers is in the LR2 sector.

And the reason we decided not to include the LR2s is because as we explained in the past, these LR2s, they do trade between the two sectors, the dirty and the clean, and they move really quite often according to convenience from one to the other. And a lot of the LR2s that were ordered in this cycle were ordered, we believe, to trade dirty.

So we're already seeing that the number of LR2s trading dirty has increased over the last few months. We expect more and that trend to continue going forward.

So if we do include the LR2s in the picture then we believe we should include all tankers. So that's why we have these two pictures one for the MRs and LR1s and one for all the tankers.

And then if we look at all the tankers and the fleet growth is actually smaller than if we look at the only the MRs and the LR1s. But I think looking at only the product tankers today gives a false picture of the market fundamentals.

Okay. Clear.

Thank you.

Good afternoon Carlos and Federico. Two questions.

A question about the old fleet in the market. There has been a general aging of the fleet in the recent years.

Is it reasonable to assume that the service life of the older fleet is unchanged from the previous period? Has maintenance allowed to improve the service life of the vessels?

And what is the reasonable breakeven stock rate for these old vessels? And the second question on ship values.

In terms of ship values clearly there has been a significant disconnect between where the equities are and tanker values. Obviously, not only for Damico but across the board.

In second quarter we have seen tanker rates rising as already evidenced by your slide. How are you thinking about where ship values are?

And why in your opinion asset values continue to decline in Q2?

Yes. No good questions Massimo.

Service life well a lot of the older vessels they are actually sanctioned. A lot of them have been involved in the Russian trades in the Venezuelan and Iranian trade.

So -- they have been very -- we suspect they have been very badly maintained. They have chosen often very flags registries which are very unrending and they have not been subjected to the same level of port state controls that vessels which are trading normally would usually have to comply with.

And not all of them have been sanctioned already. I mean the shadow fleet is estimated to be anything between -- depending on how you classify between 700 and 1,000 vessels.

And we saw the just over 300 vessels that were explicitly sanctioned. So there is the sanctioned vessels a lot of them will have to go for demolition especially if there is a contraction in the sanctions trades right?

And because for example the war in Ukraine were to terminate. And the other shallow vessels which are not sanctioned and which should not be sanctioned they would still have a hard time and many of them potentially continuing to operate for a longer period.

And regulations which are coming into force are increasingly penalizing the older vessels, which is also making them less competitive because now already within EU waters have to pay for the CO2 emissions. Then there's the fuel EU regulation which has less to do with the consumption more with the fuel type, which is burn.

But of course if you consume more you're more penalized than if you consume less. And then you now have the new regulations, which are probably going to be coming into -- are going to be finally approved in the autumn this year which were discussed at the MEPC 83, which would introduce a similar system.

It's a hybrid system. It's in between the fuel and the EU more similar to the fuel but at a worldwide level.

So our expectation is that for some owners who maintain their vessels properly there's going to be an opportunity to continue trading them for quite a long time still even longer than they usually would have. But generally speaking, if we look across the whole market then that is actually not the case.

And a lot of vessels will have to go for demolition possibly even at a younger age than they would otherwise go to because of the very poor maintenance that they have experienced over the last few years, which means that the upgrade required for them to then be able to continue trading normally once these sanctions trades are removed would be extremely, demanding so, that is to answer your question in relation to the service life. The breakeven of these vessels is difficult to know because often they don't have any bank debt, which lowers their breakeven, but they do have very high OpEx.

And we, across our fleet already -- I mean, this quarter was a bit exceptional -- but over the full year, we are expecting to be around $8,000 per day. So, I think these older vessels -- I wouldn't be surprised if they were at $10,000 or more.

They have to stop every 2.5-years for special surveys. If you include also the cost of these special surveys, then definitely they should be above $10,000, possibly approaching $12,000, if they are properly maintained, of course.

So, asset values -- why are they continuing to move down? Well, I mean, rates have improved a bit; they have bounced back from a low, but still they are much lower than they were a few quarters ago.

Asset values take longer to correct; there's inertia, because transactions take longer just to execute, and expectations take longer to readjust on the asset market also. And so we saw a very little liquidity actually over a number of months.

There were a few transactions here and there, but very little actually happening. Now, we are starting to see more liquidity in the market, which seems to imply that the secondhand values are starting to maybe find a floor are becoming a bit more of a reliable indicator than the secondhand values we were seeing a few quarters ago.

But yeah, that is my take on why the asset values continue moving down. What would stop asset values coming down?

Well, we would need to see rates move up even more and then find some footing at that level. Not a small spike that goes up for one or two weeks and then it comes down again.

If we want to see rates go up and then stay for a few months at a higher level, then I think the asset values could actually turn again and start increasing again.

Very clear. Thank you very much.

Thank you. Thank you to everyone who participated in the call today.

Looking forward to meeting you again, when we present our Q2 results at the end of July, and maybe before in one-on-one meetings. Thank you also for all the interesting questions, and good afternoon to everyone.

Thank you.