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Edited Transcript of ODF.OL earnings conference call or presentation 6-Nov-19 8:30am GMT

Q3 2019 Odfjell SE Earnings Call

Bergen Nov 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Odfjell SE earnings conference call or presentation Wednesday, November 6, 2019 at 8:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Kristian Verner Mørch

Odfjell SE - CEO

* Terje Iversen

Odfjell SE - CFO

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Conference Call Participants

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* Ole G. Stenhagen

SEB, Research Division - Analyst

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Presentation

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Kristian Verner Mørch, Odfjell SE - CEO [1]

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All right. Welcome to the presentation of the third quarter results for Odfjell SE that we're presenting here in Oslo today. We are also broadcasting the presentation live, so if I can kindly ask you to wait with the questions towards the end where both Terje and I will be available for a Q&A session.

Well, let's get started. The agenda for today is I'll just take you through the highlights of the quarter. And then Terje will, as usual, come on and take you through the financials, and then I'll come back and take you through the operational review and the strategy and other updates, and then we will finish with a Q&A session.

The headline for this quarter is that it was a quarter where we were impacted by, I would say, lower-than-usual seasonality swing in volumes, but the good news is that the firming trend of the market in terms of dollar per tonne has continued also in the third quarter. But that you will see in the coming slides as well.

So the chemical tanker earnings were seasonally weaker this quarter. The volumes, as I said, were lower but the freight rates were stable and actually on a -- continued on a firm underlying trend. EBITDA for our -- for the company was $51 million, which was down $6 million from the previous quarter at $47 million (sic) [$57 million]. And all of that was a drop basically in top line on tankers that had an EBITDA drop from $50 million to $45 million during the quarter. Terminals were stable at $6 million. And if you include the sales gain that we had on the terminal in Jiangyin, the quarter came out at the bottom line of minus $1 million. If you net the Jiangyin effect out, it will be $15 million or so. On a comparable basis, it was down $5 million compared to the previous quarter.

Also during the quarter, we refinanced the outstanding -- we didn't refinance the bond, we repaid the bond without going back into the bond market, but we did also secure other attractive financing so as part of our efforts to delever the company. We concluded the sale of the Jiangyin terminal, as I said, that brought in $21 million in cash and a $14 million gain.

We also took delivery of the Bow Orion, which is the world's largest and most efficient stainless steel tanker in the world. A couple of days ago, we took delivery of her sister, the Bow Olympus. And actually, the Bow Orion has been nominated for Ship of the Year. So for those of you who have not done so far, you can go online and give her a vote. It will be great if we could win the Ship of the Year award because it truly is an amazing ship.

So the -- on the right-hand side, what we're seeing is the third quarter again was impacted by a seasonal slowdown in volumes, but the underlying firming trend in the chemical tanker market is still visible, we think. The -- we're encouraged also to see the crude and the product tanker market pick up dramatically. We'll talk a little bit about what that means for us in a minute. At least, if you believe in history repeating, there will be a spillover effect into the chemical tanker side, so that will help us as well. And we are optimistic for the fourth quarter, and we expect to improve our results in the fourth quarter and beyond that.

I think that was the highlights, Terje, so I'll leave it over to you.

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Terje Iversen, Odfjell SE - CFO [2]

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Thank you, Kristian, and good morning to everyone. I will, as usual, take you through the financials this quarter. I will start going through the business areas with the tanker division. We saw that gross revenue ended at USD 214 million, which is a decrease of USD 9 million compared to the second quarter. We show that we have the stable waste expenses, including bunker expenses this quarter. And then at the pool distribution, we ended at USD 113 million compared to USD 118.7 million in the second quarter.

Time-charter expenses and also OpEx and G&A, very stable also this quarter, which led to an EBITDA of $44.7 million compared to $49.9 million in the second quarter. Of the depreciation and also depreciation of operating leases, we ended with an EBIT of $8.7 million compared to $14.4 million. And after net interest expenses of around USD 22 million, of which around $3 million is calculated the interest on the operating leases, we ended with a net finance of negative $23 million and a net result for the tanker division of negative $14.8 million compared to negative $8.0 million in the second quarter.

Looking at the terminals. We see that there's a slight reduction in the gross revenue. That is mostly related to the terminal in China in Tianjin, which we divested in the beginning of the third quarter. Operating expenses, slightly down, a G&A reduction from $4.8 million to $3.5 million. That's mainly related to the restructuring we have done now of the corporate functions for the terminals previously headed from Rotterdam and also parted from Singapore. That has now been slimmed down quite substantially. We have a much leaner terminal corporate overhead in Bergen, which then is leading to a decrease in the G&A in the terminals going forward.

So then we ended with an EBITDA of $6.0 million, very much in line with the preceding quarter. And then we have the capital gain on the sale of the Jiangyin terminal around USD 16 million in gross. We had a tax on that at around 8 -- $1.8 million, meaning that we had a net capital gain of around USD 14 million from that divestment. We ended with an EBIT of around $16.6 million, including the capital gain. And after-tax, we had a net result of $13.2 million compared to negative $2.7 million in the second quarter. But as mentioned, we have to be comparable and need to reduce the -- take out the capital gain, the net capital gain of USD 14 million to have comparable figures with the second quarter.

The balance sheet, we see that the total assets are around USD 2 billion. We have a slight increase in the values for ships and newbuilding contracts that is related to the delivery of Bow Orion, which Kristian mentioned. We also see that investments in associates and joint ventures decreased from $169.8 million to $161.2 million. That is related to the sale of the Jiangyin terminal again. Out of this $161 million, approximate $145 million is related to terminals, remaining is on the gas joint venture we have. Out of this $145 million, around USD 110 million is the book value of the terminals in the U.S. and in Europe, meaning that remaining USD 35 million is then related to the book value of the terminals that we still own in Asia, in Korea and China.

Cash and cash equivalents and -- very much comparable to last quarter. Even though we have repaid the bond that matured in September, we're around USD 60 million this quarter. We see that current receivables decreased, meaning that we have improved our working capital quite substantially compared to the last quarter, which is then increasing the cash flow.

Looking at the debt side, we see that there's a reduction in noncurrent interest-bearing debts and also short-term interest-bearing debt, meaning that we are taking care of our debt portfolio, and we are refinancing the debt as it comes along. But of course, we also increased the debt when it comes to delivery of the newbuildings in the coming quarters through 2020.

Cash flow. We had an operating cash flow -- or cash flow from operating activities around $45.5 million. That is heavily influenced by the improved working capital in this quarter. So that was an improvement from last quarter compared to $17.2 million from operating activities. Investing activities, we have been quite active, taking delivery of Bow Orion, which are then reflected by the negative $57.7 million. And then we got the cash proceeds from the sale of the Jiangyin terminal with $20.7 million, leading to a net negative cash flow from investing activity at $36.2 million.

Also on the refinancing side, we have been quite active, taking up debt on a new vessel but also refinanced a large part of the debt, replacing that with more -- currently with long-profile debt and also with some sale and leaseback structures. So we had a net negative cash flow for financing activities around USD 2 million, which led then to a net cash flow from the quarter -- for the quarter of positive USD 7.0 million.

Bunker expenses. As I mentioned, voyage expense is quite stable this quarter compared to the preceding quarter and that we booked bunker expenses of USD 40 million, even though we saw a decrease in the Platts Rotterdam with around 12% compared to previous quarter. You also have to consider that we are bunkering in other ports. I think Rotterdam is around 12% of the total bunkering in this year so far. And also, we have this first in, first out principle, which means that you are still burning the fuel. That's where it cry out the higher price than what is indicated by the Platts Rotterdam.

Going forward, we have done some hedging also for this -- the last quarter this year but not done any financial hedges for 2020. But through the contract of affreightment, we estimate that we have secured around 45 -- 55% of the bunker expenses for the coming quarters also based on the contracts that are renewing, also linking the bunker adjustment clauses to IMO 2020 and the new fuel regulations.

Debt development, as I said, we have been quite active. This is showing that we have still a balloon in fourth quarter, but that has been taken care of after the end of the quarter. So going forward, we have a balloon around USD 50 million at third quarter of 2020, and then we have a bond maturing at first quarter 2021, but this shows that we have quite a lean profile on the repayments for the debt going forward, and we are kind of taking care of that portfolio in a quite good manner, I would like to say.

Gross debt, we have indicated before that, that will increase somewhat in 2020 because of the delivery of the Hudong newbuilds. From that point of time, we expect to see a decreased leverage. But of course, that will be depending on the earnings and to the -- to what degree we are able to do the deleveraging that we are intending to do according to our strategy.

This is a slide that we showed on Capital Market Day, and we have tried to guide on that on a continuously basis. As we have said, we want to deleverage and we want to reduce the cash breakeven for the group, being able to provide also dividend throughout the cycles. So we have a target to reach a cash regime of around USD 18,000, USD 19,000 per day, which is down, actually below what we had of annual average time-charter earnings for many, many years. We are working on that. But of course, the pace will depend on the earnings going forward. But so far this year, we have been able to produce a cash breakeven a bit around USD 400 per day, but we are still ways to go compared to our target of around USD 3,000 a day in reduction.

CapEx program, not that much new to report on. Just said that we still have 5 newbuildings from Hudong to be delivered, all have been financed, so we have no equity installments to be paid for the newbuildings. One of these 5 has been delivered already 1st of November, meaning that they now have 4 vessels to be delivered throughout 2020. That is, as I said, taken care of by external banks. We have, of course, some cash outlays for CapEx going forward related to dockings and also some expenses related to ballast water treatment systems and so on, but there's quite limited need for equity injections to take care of all the CapEx for the coming few years.

On the terminals side, we are a bit cautious to guide too much on that. As we have said earlier, we are in the process now with the new owners or joint venture partners in Houston to agree on a strategy for especially Houston, hope to develop that and hope -- for us, we are going to work on developing that terminal and divest and grow that asset. So we are all including here the maintenance CapEx that we are quite confident will take place in the coming years. And then we have to come back on the CapEx side when we had decided on the future strategy for the Houston asset.

Okay, Kristian, I give the floor to you again.

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Kristian Verner Mørch, Odfjell SE - CEO [3]

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Thank you. So operational and strategic items on the agenda. What you are looking at here is our COA coverage. And as you can see on the top line, in this quarter, it was down to 55%. It has been reduced throughout 2019 because we have taken quite a firm stance in terms of extending contracts. We -- in many ways, we are a big part of the market, and we cannot wait for the market to change by itself. So if we don't have the courage to price our services reasonably, then we can wait forever. And that means that some of those negotiations have been tough, and we have been losing some contracts that we did not -- because we did not want to extend loss-giving contracts.

That's not a bad thing, especially not if the market -- if we're right about the market actually coming because what you will see is, of course, as the more you reduce the COA coverage, the more exposed you are to that market. That's one thing. But the other thing it does is it gives you a little bit more flexibility in terms of how you schedule the ships. And so on the bottom graph, you're seeing the light blue bars, that's the spot rates that we have booked. If you try to compare those spot rates to what Clarksons, for instance, are reporting, you will not see this picture. The general market might not have been up or in the same pace. But at least we have managed in the last couple of quarters to increase the average freight rates of the cargoes that we book compared to the market. So there's more flexibility in the system. So we think a target coverage on COAs of around between 50 and 60 is the right target and probably towards the bottom of that bracket in the coming quarters.

What you also see on the bottom graph is that the dark blue bars, they're the important ones, I would say, that is the contract rates. It looks like it's dropping a little bit in the third quarter. I think that's because of the way that they were nominated. But the general picture is that of all the contracts we have renewed this year so far, they are up on average 6.1%. And at the same time, 6.1% might not sound like a lot, but we're also passing on the risk of the compliant fuel to our customers. So I think that's really a good sign that things are tighter because, otherwise, we would not be able to achieve those increases.

Here, we are comparing the ODFIX with the Clarksons Index, and I want to say a small piece of me dies every time I present this because actually we are comparing apples to oranges. The Clarksons Index is a market index. So quarter-by-quarter, you will see some strange swings. On the right-hand side, we talked a lot about volume this quarter. When you're looking at the top graph, you're seeing that the volumes booked in the third quarter were down from 3.7 million to 3.4 million tonnes. That's a drop of over 8% -- around 8%. And then on the bottom, you see that our -- at the same time, our number of days dropped from 7,100 to 7,000. That's a drop of 1.5%. So the volumes are dropping faster than the number of days, and that's why you get the effect that we have seen in the -- during the third quarter.

We are 54 days away from IMO 2020, and it's astonishing that the industry does not have a better understanding of what's actually going to happen. I attended the Global Maritime Forum in Singapore last week and it was, of course, the main topic, but it is astonishing. When you -- we are no longer concerned about the availability of compliant fuel, but we are concerned about how the pricing will be. So we have done quite a lot of work in terms of trying to understand what happens. You can say, in many ways, the fact that we have 55% of our exposure to that being passed on to our customers puts us at a slightly more comfortable place than most others, but it could still have a big impact on us if we have, let's say, runaway pricing on compliant fuels.

We don't think that's going to happen, though. On the left-hand side, you are seeing the current quote for gas oil, compliant fuel and HFO. And we compare that to the right-hand side, which is the forward curve for 2020, this one, to see how -- kind of how does the current market compare to the forward curve. And the biggest difference you will see is not surprisingly that the forward price for HFO is dropping and more ships will not be able to burn it, so market will dry out. Only the people with scrubbers will be able to buy. So we are -- it's not surprising to see that the forward curve for that will drop.

But you are also seeing a picture, more importantly for us, that the curve for compliant fuel doesn't seem to change that much. It is, of course, priced as a derivative of gas oil as it looks on this picture. But the general trend is, if you compare it to the dotted lines in the yellow and the red, it puts actually the forward price of compliant fuel almost at the exact same price that we have been paying for HFO in the last 2 years on average. So that means that in terms of fuel cost, all else being equal, it does not seem to be a very scary scenario in terms of the fuel cost.

Another interesting thing that we did this quarter, we looked at -- on the bottom right-hand corner, we looked at what has been the historic correlation between compliant fuel as 0.1% (sic) [1.0%] in Rotterdam compared to the HFO over a 5-year period. And that, that spread was only $40 in that period. So at least if the markets -- if you can read anything into this, I mean it kind of suggests that the market will just adjust, and the oil companies will find a way to supply compliant fuel to big bunker market. So I think it's something we watch very carefully. We are 55% hedged. And at least the early indications is that the pricing might not be as scary as most people have -- or some people at least have been trying to -- have been predicting.

Terminals, stable utilization during the quarter. EBITDA margins are improving slightly, mainly because of cost savings. We have closed our global terminal office in Singapore and in Rotterdam, and we now manage the terminals with a smaller team based in Bergen, and we are having more independent geographical joint ventures on the terminals. That -- I think that's a much cleaner and more effective way of operating them.

At the same time, Lindsay Goldberg still remains to exit 3 terminals: 2 terminals in China, 1 terminal in Korea. We say here that we may consider to tag along on the Chinese terminals if the price is attractive, if there is a deal. We have not made that decision, but we remain open-minded to that happening. It's not the same thing in Korea. That's a strategic terminal. But at least in China, we might consider it depending on what happens. Those 3 terminals, we expect in the next quarter may be a little bit longer, but then it will be solved and Lindsay Goldberg will be out. And we would have completed the restructuring of our terminal division, which is something that I think we are all looking forward to moving on. Our most important terminal in Houston is still 100% full, so it's doing well. And we have, as we have flagged before, plans for how to improve that terminal and use the land bank that is available to us.

EGS -- sorry, ESG is gaining a lot of attention at the moment. It's becoming very visible, it's in everybody's lips, with green bonds and what-have-you. But it's not a new thing. It's something that we have -- that is completely embedded in how we work. And I just wanted to highlight a few of the things that we have been working with and continue to be working with.

In terms of energy efficiency, we have been reducing since 2009 our average CO2 per tonne transported 1 mile by 33%, and more than 1/3 of our vessels will go from energy rating D to energy rating A+ because of the investments we have done. We have active weather routing, which saves us quite a lot. In 2018, that saved us 2,000 tonnes of fuel, heavy fuel that would otherwise have been burned, which is 6,000 tonnes of CO2. We have a very structured approach now to propeller polishing, which gives huge advantages in the efficiency of the ship. We are investing in a fuel cell project which is a new technology. And we believe that within 2 years, we are going to have a prototype auxiliary engine fuel cell installed in one of our ships, which will effectively make it a 0 emissions ship while in port. It will reduce the fuel consumption around 35%, but it will reduce the CO2 emission by 50-plus percent, both SOx and NOx almost completely eliminated. As with every new technology, we'll see how that goes, but it's a very promising technology.

When people talk about ESG, we also often forget to talk about retention rates of seafarers. I think those of you who have seen the videos online of the explosion onboard the Stolt Groenland and our ship that was moored next to it, and we'll understand that having seasoned seafarers onboard and people ashore who knows what they're dealing with is an important thing. So we are very proud to have a very high retention rates of our seafarers, which is something also that helps us in our efforts to achieve these things.

And then lastly, on the bottom part, I mean we do take an active role in various ESG initiatives. I mean, there are more initiatives out there than anyone can count at the moment and quite a lot of people falling over themselves a little bit, but there are some important ones. We have listed some of them here: the UN Global Compact, of course, The Getting to Zero, Poseidon Principles, and so on. They are things that we actively take an active part in.

We've included a little -- what was also a little snapshot of one of the ESG rankings. This is from a company called Sustainalytics that has been looking at various shipping companies. And you will see in the -- out of the very detailed rankings on businesses, corporate governance, carbon and so and so on, we scored fairly high out of the 17 companies that they have done a deep dive into scoring. And then overall, when they look at the shipping industry, they have been looking at 65 shipping companies, and we ranked #5 out of that. Rankings and awards are nice, but my point with all of this is that this is something we have been and will be working with -- have been working with for quite a while and something that's close to our heart.

Prospects and markets update, the tightening market in VLCCs and product tankers is, at least if you believe in history repeating itself, you will see that, that has a spillover effect into our markets. Now the VLCC market is not $120,000 or $300,000 as it was for 1 day. I think the latest one is probably around $65,000 or whatever, which is probably a healthier level. And -- but you're seeing at least that the entire market kind of bumped up. And as you see in the bottom right-hand corner, we try to look at the historic correlation for annual average earnings between VLCCs and MRs and the Odfjell deep-sea TCE market, and that correlation is quite high. It's 0.5. So historically, it has had an effect. This is annual leverage. Had you taken that down to a monthly correlations or quarterly, you'll see a slightly smaller correlation, of course, but there's no doubt that the fact that the product tanker markets are picking up will -- is already having an effect on our markets.

Tonnage swinging in and out of different commodities and also the general sentiment in the market is quite bullish. So I think that apart from the fact that we have very strong fundamentals in chemicals, this is going to help us as well. I'm not sure what the guy in -- the black guy in the corner is, but we need to send him a nice bouquet of flower, I think.

When you look at the other things that has affected the demand, we talk about the swing tonnage, that's the top graph you're looking at. In September, you had 27% of MRs trading in chemicals. But that was before the market really took off. So it's going to be really interesting to watch what happens. The red bar on the right at the end of it is kind of the October numbers. We believe there will be a swing-back of tonnage back into the product markets. And also, don't forget the term reverse swing tonnage because this will also allow us to start trading in the product tanker markets when -- on backhauls and so on. So there will be an effect of the tonnage swinging.

Palm oil is also a derivative of the product tanker market. That is picking up, and that will suck up tonnage as well. And then the final thing that affects demand in the short term is the chemical -- the planned maintenance of the -- and the unplanned maintenance of chemical production plants. That was very high in the third quarter. And we expect virtually 0 downtime during the fourth quarter. So that will indicate that there would be a boost in volumes again.

The order book is close to historic low. Order book stands at around 6-ish percent. That indicates that for 2020 and 2021, the net addition of tonnage will grow by around 0.6%, 0.8%, and that's very, very limited -- sorry, supply, a very limited supply growth. And if you look at the number of new orders, of course, you're seeing the same picture. I mean the limited number of orders that are there are people who do replacement orders like ourselves. It is the traditional players. It is -- I struggle to remember when there was the last speculative order by anyone in the stainless steel market. There might have been a few, but it's not something we're seeing, and we are not sensing that that's going to be a big wave of orders. So I think the supply picture is pretty much under control in the coming, say, 3 to 4 years.

I mentioned a number of these things already, but putting it together, we think that the third quarter was seasonally impacted by lower demand, higher maintenance -- lower volumes, higher maintenance in the chemical plants. The key directional drivers for fourth quarter is that now we see ramp-up of capacity -- new capacity. We see lesser downtime of the production facilities and the pickup in product tanker markets will affect us in the fourth quarter.

Unfortunately, it is not all rosy because there are some real macro concerns. We have an inverted yield curve, which has at least historically been a precursor for recessions. We have trade wars. We have Brexit. We have Germany into recession. We have quite a lot of things on the horizon. So how that's all going to play out is difficult to say. But at least, if you look in isolation the demand for long-haul chemical transportation and compared to supply of ships, we're seeing one of the strongest pictures we have seen for quite a while. But I think the macro factors kind of makes us a little bit cautious. On the order book, I am repeating myself again here, but we expect that to grow by less than 2% in the coming years. So it's a fairly strong fundamental picture.

Lower earnings in the third quarter was mainly driven by lower volumes. Rates continued on an upward firming trend. That might be accelerated by what's happening in the product tanker market. COA rates are up. And that's really, for me, the most important thing that we are seeing that our ability to price our services forward is up because that really indicates the tightness. Terminals is a stable performance. We need to finish the last exit for Lindsay Goldberg in the coming quarter, I hope. And then it's all about focusing on Houston really. And the market outlook, yes, we're optimistic for fourth quarter, and we think that we are past the bottom.

I think that was what I had. So why -- can we now open it up for questions? There must be some questions. No? Yes, that's good. I can always count on Ole.

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Questions and Answers

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Ole G. Stenhagen, SEB, Research Division - Analyst [1]

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So you're happy that nobody is contracting, but what are the shipyards doing? I mean they're running -- when Hudong finishes yours a lot of it next year, what are they going to do, et cetera? What's happening?

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Kristian Verner Mørch, Odfjell SE - CEO [2]

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It's a good question. It's a really good question. I think they still have some orders. I presume that the pickup in product and the pulp markets and so on will -- because actually, when you look at the order book on crude and products and so on, it's actually not dissimilar for what we're seeing on chemicals. So I think most of the demand will come from there. Some of this -- I think some of this stainless steelyards will struggle to find new orders, also including the Japanese ones, because the Japanese have been providing quite a lot of the stainless steel tonnage. And they have been providing it based on kind of a tax-based investment scheme with owners. And the demand for long-term charters from the West has dried up. I mean nobody goes to Japan and takes 8-year charters anymore. So I think that -- I struggle to see that there'll be a wave of stainless steel ships. But the last optimist has not been born yet, so they might be. But I don't think it's going to be from the chemical side, that most of the demand is going to be there.

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Ole G. Stenhagen, SEB, Research Division - Analyst [3]

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So I was maybe not listening well enough, but why is your achieved COA rates down but your nominal renegotiations are up? Is that because people aren't using the contracts? Do they sort of have them in the background there, but they prefer not to use them? Is that...

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Kristian Verner Mørch, Odfjell SE - CEO [4]

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No, it's -- I mean when you take average COA rates, it's an average of 125 COAs, some are short sea, some are deep sea, so every freight rate will be from between 40 to 80 in some of these contracts. So what we're seeing here is just the pattern of nominations we saw in this quarter was just from overweight on maybe some of the slightly lower-paying contracts because of different rates. It's not a sign that we are extending contracts in general at a lower rate. Those are nominations on the existing contracts.

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Ole G. Stenhagen, SEB, Research Division - Analyst [5]

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So my last question then. In preparation for IMO 2020, a lot of the stuff that's going to be compliant fuel is going to be blends. So that means that they're going to be putting different stuff into fuels that we hadn't thought about before. I mean some of those, I guess, would be chemicals. So are you seeing new cargoes? Are you seeing stuff that didn't used to be carried or new trades happening? Because I think one of the things that most of us looking at this, we're seeing the spreads move. We're seeing local spreads come out. But I think we're probably, given that it's -- you said 54 days until IMO 2020. I think we were kind of expecting to see a little bit more of a bar fight out there with getting the volumes in place, and we're not seeing it. So are you seeing something?

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Kristian Verner Mørch, Odfjell SE - CEO [6]

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I mean we are not in -- to my knowledge, we are not transporting anything that goes into fuel blending or components that go into it. I think they come from different sources.

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Ole G. Stenhagen, SEB, Research Division - Analyst [7]

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So it will be product tankers then.

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Kristian Verner Mørch, Odfjell SE - CEO [8]

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It will be product tankers, and it'll be on the refining side that they do different blends. Some of it will -- might do transport or most of it will just be blending by the refiners, I would assume, but there are 13 VLCCs sitting outside Singapore with compliant fuel on it. So I mean, it's not like it doesn't suck up any capacity.

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Ole G. Stenhagen, SEB, Research Division - Analyst [9]

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We're banking on that.

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Unidentified Analyst, [10]

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But you do often do some on the glycol side.

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Kristian Verner Mørch, Odfjell SE - CEO [11]

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Yes, we do some, but I think that goes into like a gasoline type blend, yes. That's right.

Okay. No final difficult questions that I can answer. All right. Okay. So -- but then thank you for coming, and thank you for your time and interest in the company. Thank you.