BW LPG Reports $35 Million Q2 Profit

BW LPG(NYSE:BWLP) reported second quarter 2025 earnings on August 26, 2025, posting time-charter equivalent (TCE) income of $38,800 per available day and net profit attributable to equity holders of $35 million, or $0.23 per share. Management guided that 90% of available days in the third quarter of 2025 are fixed at $53,000 per day and declared a $0.22 per share dividend, driven by robust shipping market conditions and firm liquidity.

Shipping market volatility boosts BW LPG results

Spot rates ranged dramatically between $10,000 and $70,000 per day, underlining market volatility, while the company’s time charter coverage mitigated downside risk. The board declared a dividend equal to 110% of shipping segment profit for the quarter, supported by retained Product Services results from 2024.

"For the quarter, we reported a TCE income of $38,800 per available day and $37,300 per calendar day, above our guidance of $35,000 per day. In a quarter with spot rates fluctuating between $10,000 and $70,000 per day, the time charter portfolio played a vital role in protecting our downside. After minority interests, the Q2 profit was $35 million, equivalent to an EPS of $0.23. And the Board of Directors has declared dividends of $0.22 per share, consisting of 75% of our shipping NPAT, topped up with retained dividends from Product Services 2024 results."

Prudent contract structuring gave BW LPG cash flow defensiveness and dividend reliability during unpredictable market swings and freight rate surges.

BW LPG secures future earnings through high contract coverage

The company fixed 90% of fleet days in the third quarter of 2025 at $53,000 per day and locked in 34% of second half 2025 days at rates of $45,200-$51,700 per day across time charters and freight forward agreements. The realized $6 million segment profit from Product Services and the $12 million increase in mark-to-market cargo positions are separate results, partly offset by paper trading losses.

"Looking ahead for Q3 2025, we have fixed 90% of the available fleet days at an average rate of about $53,000 per day. For second half 2025, we have secured 34% of our portfolio with fixed rate time charter and FFA hedge respectively at $45,200 and $51,700 per day. Our time charter out fleet is estimated to generate a profit of around $9 million over our time charter in fleet. On top of that, the balance of our fixed time charter out of portfolio is estimated to generate $74 million."

This high coverage shields the company from future spot rate weakness and is above the all-in cash breakeven of $24,800 per day for the year.

Industry inefficiencies and terminal expansions drive vessel demand

LPG trade inefficiencies, such as the rerouting of U.S. cargoes due to tariffs and recurring Panama Canal congestion, have absorbed shipping capacity and elevated spot rates, while only seven more Very Large Gas Carriers (VLGCs) join the 409-ship fleet in 2025. Further demand tailwinds stem from forecasted U.S. and Middle East LPG export growth tied to terminal expansions and increased production.

"The sudden shift of U.S. volumes toward India and Southeast Asia, combined with the redirection of Middle East volumes to China rather than India, absorbed considerable capacity from the VLGC fleet and pushed rates up. The short but intense Israel-Iran conflict also fueled spot rates for ships loading around that period in the Middle East. Now trade patterns are slowly returning to pre-trade workflows, but the Panama Canal has once again become a bottleneck as growing traffic from container ships, ethane carriers, and other prioritized or high-paying segments strains capacity. The consequence has been more VLGCs routing around South Africa, which significantly impacts the tonne mile for the global VLGC fleets, making fewer ships available, which, in turn, is pushing rates up. In addition, the global fleet growth is at a low level, with 409 ships currently in service and only seven more to be delivered in 2025."

Lingering logistical bottlenecks and limited net fleet additions underpin a tight supply-demand balance, extending positive rate dynamics for the company.

Looking ahead

Management guided that 90% of fleet days in the third quarter of 2025 have been fixed at $53,000 per day, while 34% of the second half is hedged or contracted at $45,200-$51,700 per day. The company's all-in operating cash breakeven for 2025 is $24,800 per day. No concrete quantitative guidance for 2026 or fleet expansion timing was disclosed, but management emphasized sustained disciplined coverage, tight market fundamentals, and continued scrutiny of fleet growth and terminal dynamics.

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