Looking more broadly at the global
economic environment, there are many
uncertainties. Extraordinary stimulus
measures starting in the US and extending
to China, Japan and now Europe, have
resulted in high levels of liquidity and
low interest rates. Oil prices halved in a
short period of time into the new year,
leading to a significant reduction in capital
spending plans amongst oil and gas
companies. The broader shipping industry
continues to be challenged by oversupply
and uneven demand.
Against this backdrop, the VLGC sector
stood out as the best performing shipping
segment through the year. Annual ROE of
23.7% in the Company’s first full year as a
stock listed company saw the company off
to a roaring start.
Whilst BW LPG only listed in November
2013, the Company has a long history in
LPG shipping which traces back to 1978.
During the past 37 years, the Company has
developed deep knowledge of the sector, a
large pool of highly experienced seafarers,
and strong customer relationships – all of
which have positioned the Company to
benefit from recent market growth.
We have also been growing our fleet
with modern vessels to meet increasing
customer demand for shipping capacity.
In November 2014, the Company took
delivery of the first in a series of eight
VLGC newbuildings from Hyundai Heavy
Industries in Korea. An additional three
vessels are being delivered in rapid
succession during the first half of 2015.
We are not alone in adding capacity to the
world fleet, and while we have posted record
earnings for the past year, we are mindful
of the need for a balanced approach to the
future. The strength of our balance sheet,
our relationships and our organisational
capabilities need to be measured over a
period longer than a few quarters. We have
maintained a healthy balance of fixed income
coverage, and continue to work on longer
range projects which can deliver returns in
adjacent sectors. Such actions will help to
ensure the company continues to deliver
through the cycle.
2014 was the first full year of operation as
a listed company, and the company has
benefited from the efforts of our shore and
shipboard teams. We are grateful for the
leadership of CEO Nicholas Gleeson, who
will in due course be returning to his role as
CFO of BW Group. Martin Ackermann will be
taking on the CEO role and work to further
strengthen our commercial position as the
leading LPG fleet. We are also grateful for
the support of all stakeholders – customers,
banks, investors, suppliers – who have
demonstrated their belief in BW LPG and
helped the company to grow.
2014 is a year in which we saw the global LPG export market
change dramatically with the United States, until recently a net
importer of LPG, becoming the world’s largest exporting nation.
This has resulted in a substantial growth in seaborne LPG, both in
terms of volumes carried and distance travelled, creating a very
positive environment for BW’s core business of LPG transportation
in VLGCs (Very Large Gas Carriers).