Operator
Welcome to Himalaya Shipping Q2 2026 conference call. For the first part of this call, all participants will be in a listen-only mode. Afterwards, there will be a question and answer session. To ask a question during the Q&A, please press 5 star on your telephone keypad. To redraw your question, you may do so by pressing 5 star again. This call is being recorded. I'll now hand it over to CEO Lars-Christian Svendsen. Please begin.
Thank you, operator. Welcome to the Q2 2026 conference call for Himalaya shipping. My name is Lars-Christian Svendsen, and I will be joined here today by our CFO, Widerhausen. Before we start the presentation, I would like to remind you that we will be discussing matters that are forward-looking. These assumptions reflect the company's current views regarding future events and are subject to risks and uncertainties. Actual results may differ materially from those anticipated. I will now continue with the highlights of the quarter. We reported a net profit of $24.6 million and an EBITDA of $44 million. The time charter equivalent earnings for the quarter was approximately $50,600 per day. We entered into a new index time charter agreement for the Mount EMI for a period of 12 to 14 months at a significant premium to the prevailing index. We also converted four of our vessels from index to fixed rate contracts for the month of June at an average of $56,500 per day. Cash distributions for the quarter totaled 59 cents. In subsequent events, we achieved time charter equivalent earnings for July 2026 of about $51,200 per day, and we declared a cash distribution of $0.22 for the month. We also entered into a new time charter agreement for the Mount Aconcagua for a period of 16 to 18 months at an index-linked rate, also at a significant premium to the Baltic Cape Size Index. Lastly, we converted two of our vessels from index links to fixed rates from 1st of August until 31st of December at an average rate of $51,200 per day. And with that, I will now pass the bird to Vidar.
Thank you, Lars-Christian. Himalaya Shipping reports a net profit of $24.6 million and earnings per share of 52 cents for Q2 2026, compared to a net profit of $1.1 million and earnings per share of $0.02 for Q2 2025. Operating profit was $36.7 million and EBITDA was $44 million for the quarter, compared to operating profit of $13.6 million and an EBITDA of $20.9 million for the same period last year. Operating revenues were $53.7 million for Q2 2026 compared to $29.9 million for the same quarter in 2025. The increase in revenues is due to higher time charter equivalent earnings achieved which is up from $28,400 in Q2 2025 to $50,600 in Q2 2026. Vessel operating expenses were $7.1 million in Q2 2026 and unchanged from the same period last year. The average OPEX per day per vessel was $6,500. GNA for the fourth quarter was $1.9 million compared to $1.5 million in Q2 2025. The increase is due to consolidation of Peak Maritime Management AS, which was previously named 2020 bulkers management IS. Interest expense for $12.4 million in Q2 2026, which is a 0.4 million decrease compared to the same period in 2025 due to a lower average loan principal outstanding in Q2 2026 as a result of loan repayments. Cash and cash equivalents were $34.8 million at the end of the quarter. Minimum cash requirement under a sale leaseback financing is $12.3 million. Outstanding balance on the sale is back financing was approximately $688 million at the end of the second quarter, down from approximately $694 million at the end of the first quarter, reflecting scheduled repayments. Cash flow from operations was $34.2 million for the second quarter, compared to $8.3 million for the same period in 2025.
Himalaya Shipping have declared total cash distributions to shareholders of 59 cents per share for the months of April, May and June 2026 That completes the financial section and back to you Lars Kristian Thank you Vidar Before I will guide you through our market section, here are some company updates Our fleet of 12 modern Newcastle Maxis with dual fuel LNG is in the top 1% emission rating for large bulk carriers The attractive financing, combined with a very clear capital allocation structure, has led to 31 monthly consecutive dividends. In Q2, 2026, this amounts to 59 cents. Most of our fleet is fixed out on long-term index-linked contracts with conversion options. And the all-in cash-break-even equivalent to the Baltic Cape Size Index is about $17,500 per day. i.e. every time you see the Baltic Cape Size Index above $17,500, Himalaya shipping is making money. Our preferred commercial strategy is still to charter the majority of our vessels out on index link charters. That allows us to capture the upside at each given market rise and also gives us good flexibility to convert to fixed rates with our solid counterparts when we see value on the forward FFA curve. Currently 10 out of our 12 ships are exposed to the spot market to capture what we believe will be a continued strong second half of the year. To illustrate our fleet and commercial performance we have the last three years traded at an average 48% premium to the Baltic Cape Size Index and a 25% premium to Piers. This is achieved by extra cargo intake on our vessels and top tier speed and consumption design on our fleet. We always strive to have as many tools as possible to navigate this volatile market so that we can turn our position quickly from long to short or vice versa should we see a clear trend. Here you can see our dividend capacity based on various rate scenarios for a standard capesize vessel. When the Baltic capesize index trades around today's levels at about $40,000 per day the company will yield about 18 percent. When we see moves around the $60,000 per day range we will produce a yield of around 34 percent. And when we see $100,000 per day on the Baltic Cape Size Index, Himalaya will yield close to 65% on the current share price. Now, let's have a look at the market. Q1 started out with the best Cape Size in Newcastle Max market registered in 10 years. Q2 did not want to fare any worse, and we have had the best Q2 on record in 16 years. iron ore exports are at an all-time high for the season and the continued flows from guinea with bauxite and now also iron ore has been key drivers to maintain momentum the structural ton mile change in the cape size and newcastle max trades over the last few years has proven capable of lifting the floor of the market to a new level ton mile in q2 for cape size and newcastle max increased 4.9% year-over-year. The bauxite volumes from Guinea contributed a 7.7% increase year-over-year and the global iron ore trades assisted with a 2% increase. In the current geopolitical landscape coal has now also returned to Capesizer and Newcastle Max trades with a 15% tonne mile increase year-over-year. Looking at the pure export data year-over-year iron ore exports from Brazil was up 4%, and Australian iron ore volumes were up 5% in Q2 on the back of fewer weather-related logistical interruptions and solid demand from China. As discussed in the previous slide, we saw the global iron ore exports are continuing to increase. To put this in perspective, the Chinese seaborn iron ore imports hit an all-time high for Q2, as you can see on the top right graph. This again emphasizes the Chinese hunger for high-grade iron ore, which can be found outside the country's borders. In addition, the Chinese imported iron ore inventories are down from the peak and below the 12-month average in the same period. As we have discussed in previous reports, the domestic iron ore content is reported to be around 15%, but the imported volumes from Brazil and Guinea contain an iron ore content on mid to high 60s. This has led to a slowdown in domestic Chinese production, and high-grade iron ore from overseas still remains a preference. The unsunged capeside hero bauxite is continuing to impress. After record bauxite output from Guinea in 2025, new export records have been registered so far in 26, which you can see from the left graph. In conjunction with the increasing volumes departing the country, you can also see that the bauxite is taking over more market share from the other commodities and is now responsible for 18% of the total cargo transported on capes in Newcastle, Maxxis. This plays directly into the structural tonne mile story that we see unfolding and that we believe will be a driver for years to come. The Simandhu mine is now up and running, and the first iron ore volumes from its mine commenced in November in 2025. Target remains at 120 million tons of exported high-grade iron ore per annum to the market. As you can observe from the right graph, export volumes accoled momentum in 2026. A 15 to 20 million ton projected contribution in the first year of operation has so far created further tightness in the Atlantic Basin. We are also monitoring closely the capacity increase from Valle, which can add strength to an already focused Atlantic Basin to boost Tonmile further. We have seen from other segments that order books can increase quickly. However, in Cape Size and Newcastle Max, this has been a slower moving operation. We currently observe a 16% order book of the total existing Cape Size fleet. The active ship's yards are still preferring to build tankers, LNG carriers, container and car carriers to maximize profit margins. As a comparison to other shipping segments, you can see from the right graph that a Cape Size order book to fleet ratio is still the most compelling in the large shipping space. In addition to the low order book, the current Cape Size and Newcastle Max fleet is aging fast. Around 46% of the total fleet was built between 2009 and 2015. That means that 26% of the fleet will be over 20 years of age in 2030. As of now, we have visibility on the supply for the next two years, making it difficult to add any meaningful large dry bulk capacity in time to deal with the rapidly aging fleet and the additional strong vessel demand from the market. We continue to see a significant increase in dry docks due to mandatory special surveys required on merchant vessels every five years. 12% of the entire Capesize fleet was delivered in 2011 and will have to undergo 15-year special surveys in 2026. There will be 5- and 10-year special surveys as well, meaning around 24% of the total cape size in Newcastle Max fleet will be competing for dry dock space this year. We estimate a total of 1.7% additional off-fire on the total fleet due to dry docks alone in 2026, not factoring in potential congestion and waiting time. So far, though, only 30% of the scheduled dry docks for 2026 has been completed, which means that about 70% of the required vessels will seek dry dock before year-end, which could further tighten the Newcastle Max market. Thank you very much. And with that, I will now pass the word back to the operator and welcome any questions you might have.
Operator
Thank you. We'll now start the Q&A session. If you wish to ask a question, please press 5 star on your telephone keypad. To redraw your question, you may do so by pressing 5 star again. There will be a brief pause while questions are being registered. Our first question will be from the line of Ivan Kalsko from Clarkson Securities. Please go ahead. Your line will now be unmuted.
Thank you for taking my question.
So, I think you have a compelling story for the second half of the year. But I have a question related to the first quarter of next year. Because if you just look at, so you have the Sinodin mine obviously wrapping up. You have the exceptional coal trade as this 22nd quarter. And if you look at the first quarter for coal shipments this year, it was pretty weak. So I guess you have some upside there as well in the first quarter of 27. And then on top of that, you have the potential effect from El Nino and potential drier Brazil and even better shipments from Brazil. So how do you think about this first quarter of 27? And we saw you took some coverage for the second half of this year, but at what point could you consider taking coverage for the first quarter of next year?
Thank you. Thank you for the question. I think as we saw this year, Q1 has become more correlated to the other quarters than we've seen in the past. As much as you mentioned, the bauxite volumes and now also the Simandu volumes coming on stream. So we think the market as an all overall when it comes to the quarters will be more balanced than what it's been in the past. When the timing is right to lock in Q1 or not, that depends. But if you see now the value of the whole curve for 27 is around $29,500 and Q1 trading at $25,500, the spread is not daunting at all. So for now, we'd like to ride it a little bit longer. But timing is always difficult to call. With the second half, we think it has more legs to go. We also think the Q1 contract will move up in time.
So right now, it's too early to cover, in our opinion. got it and then just on the asset side because you've seen or this spot market is obviously super strong time chart rates handled up but in the signal market there's been very few transactions and values at least broker values have been uh have remained fairly flat so how do you see the asset market today are there why is there so little or few transactions and where do you think the next transaction price will be compared to today?
Challenging question, but asset prices, albeit flat, they have been flat at a very high level. We don't think asset prices will come off any time soon. But of course, to take the next leap up from where we are now, it also requires higher freight rates than what we see. Right now, we see market trading around $40,000, and I won't be surprised that you see asset prices moving higher. if the second half performs the way we think it will.
Okay, thank you for your answers. That's all for me.
Operator
Thanks, Ivan. As a reminder, if you wish to ask a question, please press five star on your telephone keypad. We'll have a brief pause while questions have been registered. As we have no questions in the queue, I'll hand it back to Lars-Kristian Svensson for closing remarks.
Thank you all very much for dialing in and we hope to address you again in a quarter's time and hopefully the market has improved even further. Have a nice day.
