Golden Ocean Group Ltd (GOGL) 2015 Q3 法說會逐字稿

Many thanks, and welcome to the Golden Ocean third-quarter 2015 presentation. We go through the agenda. It's as follows: we go through some highlights. And Birgitte will take you through the highlights, recent developments, financials, fleet information. And then I will briefly take you through a macro update, and we open up for Q&A in the end.

So then, please, Birgitte.

Thank you. The market improved in the third quarter, relative to the first half of the year. This led to an increase in the net time charter revenues of $13.4 million. The increase is mainly explained by higher rates in the Capesize segment, but also our ice class Panamax vessels had stronger performance due to profitable contracts in the third quarter. However, offsetting the higher earnings was several negative effects, including one-off items as impairments and negative mark-to-market movements on interest (technical difficulty).

The Company has taken further steps to improve the cash position during the quarter, both through further delay in the newbuilding program as well as conversion and sale of two newbuilding contracts. As of today, the fleet of Golden Ocean consists of 52 sailing vessels, including one in a joint venture, and 21 newbuilding contracts, of which five will be sold.

If we look at the fleet development during the quarter, we took delivery of the first of the four vessels that have been sold to an unrelated third party. The sale was concluded in August, and gained sales proceeds of $46.8 million, including extras. Also in September, the Company took delivery of Golden Finsbury from JMU. We paid $41 million on delivery, and drew $27.2 million of debt.

During the third quarter, we completed a transaction with Ship Finance for sale leaseback of eight vessels. The vessels were delivered more or less evenly spread during the quarter. And you could say that, on average, each vessel were owned half of the quarter; and on time charter, approximately half of the quarter. The transaction freed up around $83 million, net of debt paid.

Also, due to delay in the newbuilding program, we have agreed with RWE to amend the contract after charter of 10 vessels for 7.5 years, instead of 15 vessels for five years on index linked time charter contract. On the newbuilding program, we have agreed with yards to postpone delivery of three Capesize vessels from September and November this year until four -- to February through to April of next year.

Also, the Company has agreed with the new times to convert two Capesize vessels to Suezmax vessels, and subsequently to sell those contract to Frontline. The net proceeds received from the sale is $1.9 million. In addition, the Company has reduced the capital commitments with $93 million. This is equivalent to a sales price of $47.5 million per vessel, had the Company constructed the vessels and sold them on delivery. The transaction is expected to close late in 2015, and we expect to record a loss on disposal of $9 million in total on the two vessels.

We'd also like to mention that for Golden Aso, which was delivered on June 30, we drew down $26.4 million in debt, early July. The Company had its annual general meeting in September, and it was approved to reduce the share premium account to zero and credit the same amount to the contributed surplus. And this was carried out in Q3.

If you look at the results for the quarter, operating revenues are up by $16.4 million; but, at the same time, voyage expenses are up $3 million. So net time charter equivalent is up by $13.4 million from the second to the third quarter. Operating expenses is slightly higher in the quarter, mainly due to increased drydocking activity in the third quarter, as well as a few more sailing vessels. Charter hire expenses increased due to the delivery to Ship Finance, and also due to a [prohibition] for on res contract of $1.8 million.

Admin expenses are down by $1.7 million in the quarter relative to the second quarter, mainly related to extra cost that was incurred in Q2, following the merger between the former Golden Ocean and Knightsbridge Shipping. There is a loss on sale of a newbuilding of $2.3 million related to Front Atlantic, and at the same time we had taken an impairment of $7.1 million related to the three following newbuildings that are sold in the same transaction. These vessels are constructed by us and will be delivered to the new owner upon completion from the yard.

It's important to note that for the Ship Finance transaction, which is classified as an operational lease, the higher paid is partly booked as charter hire expenses, which is the bareboat element of the higher of $10,600 per day; and partly as operating expenses, which is the actual operating costs incurred on the vessel.

The net operating loss for the quarter is $24.8 million. And other income and expenses, which are mainly finance-related items, is negative at $15.9 million, giving a net loss of $40.7 million for the quarter. On the financing, there is a negative mark-to-market of $5 million in Q3 related to interest rate swaps, which dropped during the third quarter.

If you look at the balance sheet cash, including cash classified as restricted cash, is $190 million at the end of the third quarter. Most of the restricted cash is related to our cash covenant in the loan agreements, and is not restricted as such.

The vessels increased with delivery of Golden Finsbury, and decreased with the sale of eight Ship Finance vessels. The debt decreased due to the repayment of vessels sold to Ship Finance. And this transaction also reduced the short-term debt as part of the facility related to those eight vessels were due within one year as of June 30, and thus they are now paid back. The short-term portion is related to running debt repayment. We also drew debt on Golden Aso and Golden Finsbury during the third quarter.

On the newbuildings, following the postponement of the three vessels to next year, we will not take delivery of any vessels to our fleet during the fourth quarter. One vessel will be delivered and sold to new owners during the fourth quarter. Based on the conversion and sale of two contracts, the remaining newbuilding program -- that will be taking delivery of to the Company -- it's 13 Capesize and three Supras. The conversion has removed the financing need for two Capesize vessels, and the Company currently has three Supramax vessels outstanding to finance.

When looking at the exposure, the majority of our fleet is still trading spot. We have [fixed] some of our ice class Panamax vessels for the winter season, and we also have some cargo contracts on the ice class vessels.

For the operating expenses, we have split out what is seen as ordinary operating expenses and what is related to drydocking. For Q3, the numbers are based on 50 vessels in total. Two Kamsarmax and one Capesize were docked in Q3, and in Q4 we expect one Capesize to dock. In total, it will also include vessels docked in former Golden Ocean during the first quarter. The Company had docked eight vessels this year; but for 2016, we only expect three vessels to be docked.

The operating expenses, including management fee paid to ship managers, is stable around $4,700 per day for Supras, $5,500 per day for the ice class vessels and Kamsarmax vessels, and around $5,400 per day on average for the Capesize vessels.

Many thanks, Birgitte. I will be a little bit briefer than usual on the macro side, not because we are giving up; but it's -- we just -- there is not that many changes really from last report, apart from the fact that fourth quarter has been a big disappointment for owners of dry bulk assets. And I will try to explain what is really going wrong at the moment on the demand side.

Looking into the global economy, at first glance it doesn't look too shabby, in a way. IMF is still expecting growth this year of about 3.1%. But, obviously, looking into what is happening in China and the 6.9% growth, it's where that growth is coming from, which is a growing concern given that, I'd say, the softer sector's services are taking a bigger share. As an example, the GDP growth in second quarter and well into third quarter, and the contribution from financial services was about 25% of the GDP growth in China. And on top of that, as we all know, questions continued to be asked about the quality of numbers presented from the Chinese authorities.

And on the next slide, I think that illustrates quite well what I just said about what is happening in China. We are hovering around zero growth in most important areas for dry bulk. We have, however, seen a small pickup in year-on-year change in investment in real estate for our space. We have seen, at least in Tier 1 cities, that prices have gone up slightly. And usually housing starts is lagging six to nine months compared to, say, price hikes. But there is a lot of uncertainty still related to overcapacity in real estate in China. Steel output, more or less the same. Car sales, still in negative territory, year-on-year. And electricity output is basically at zero.

That takes utilization at the moment slightly above 80%. We see now that we will have -- and I'll come back to that -- we will still be struggling with quite a few newbuildings are expected to be delivered first half 2016. But just six months ahead of time, the supply will look much better than it does right now.

Looking again, then, on the imports quarter-to-quarter: we call that been -- continue to be the big negative; I'm not surprised anymore, but the biggest negative element. We have seen a small pickup in iron ore. But, year on year, iron ore is more or less flat. Grain is slightly up, and others are slightly up, but we don't see a demand growth this year; I think, this case, will be around 1%.

Again looking out at iron ore and coal, it looks -- apart from, say, October -- was slightly disappointing, but it seems that coal is presently stabilizing, at least for the last two months. Iron ore, more or less the same. What has been the biggest contributor on the smaller size has been the steel products, which is mainly then Chinese steel exports. I expect China to export around 110 million tons of steel this year, which is the biggest contributor to the fact that steel production in China is more or less flat, while the consumption is down.

But all in all, the China drydocking ports is down 4% year-on-year. And the coal, on its own, is down 65 million tons so far this year, while India's imports are a positive 25 million tons. So, India has not been able to catch up with the shortfall of Chinese coal imports.

Global steel production, flat or slightly up, maybe 0.5% down. And it goes -- China goes along with the rest of the world, so -- its global steel production is slightly off, so far this year.

I think the most interesting part -- and I apologize for not mentioning this before -- but the source for this presentation is Clarkson Platou, where they have updated a base case on Chinese iron ore sensitivities. And if you see there, in their base case, they expect steel production to be the same in 2017, which is as today -- at which means that the total iron ore demand should be 1.2 billion tons.

But at the same time, they expect the substitution factors seem to be there, backed by lower commodity prices or iron ore prices. Which means that iron ore imports should increase, according to Clarkson Platou, by another 75 million tons over the next two years, which is basically about 2% per annum.

In their downside risk scenario, where they have reduced their steel production from 830 million to 810 million tons and less substitution, iron ore imports will be more or less flat going forward in the next two years.

Generally, coal is obviously under threat, and the threat from many reasons: first and foremost, from an environmental perspective. However, I'm a little bit cautious optimist when it comes to coal imports to China coming months, mainly due to the annual affect. There are many analysts who have different views of that. But at least we notice that the [water SORs] are still fairly low. And a cold winter and dry winter in China will support coal imports. But overall, I think we should not expect Chinese coal imports to increase going forward, or at least at a very small scale.

Then again, looking a little bit on what we contribute -- or what is contributing to their energy generation in China -- obviously coal is still the major contributor. But, year-on-year, coal contribution is down, year-to-date 2.3%, while natural gas is up 33%, obviously from extremely low levels. But there is a shift in sourcing.

But looking ahead, we know that most of new capacity over hydropower, it's kind of installed; so we don't expect a lot of new capacity coming. And if we believe that China will increase their power generation by 2% over the next two years, then coal will have an impact. But again, the sourcing is the big question mark. Are they going to import, or are they going to use domestic coal?

We know that also it's not only international coal producers who are struggling at the moment. Chinese domestic producers are having a tough time. Major layoffs in one of the major coal-producing companies is top-listed one. And the big question again: are the Chinese authorities there to subsidize the domestic coal? But they will have to use more coal over the next few years; that's something most analysts agree upon, and this is according to National Energy Board of China.

And the next is just showing what we have been discussing many, many times, this sensitivity in Chinese coal year imports, that only 6% of their demand is covered by imports. So we all understand that on the 3.7 billion ton production, just a small change from the domestic to imported, or the other way around, has a major impact on demand.

India -- again, according to official Indian sources, India is going to be self-supplied by coal within the next 7 to 8 years. We don't really believe in that. And I think I'm in line with what Clarkson Platou is saying here, that we'll expect India coal imports to increase gradually, and add another 50 million tons over the next, say, 2 to 3 years.

Supply, that's -- if the forward curve materializes right now, as an example, Capesizes -- the FFA market for Capes for 2016 and 2017 combined is trading at around $7,500, $8,000 per day. If that is happening, I think the supply side will -- it's forced to repair itself faster than most analysts really are able to catch up with.

Still, the official order book is at around 16.8% in deadweight ton [on] number of investors 15%. But really [distinctly] I think this order book is more like 11% to 12%. And if you take the -- in the market scenario, which is reflected in the today FFA market, I think any Capesize older than 15 years is a potential scrapping candidate. And which means -- and if you look at the total order book, realistic order book for Cape, all Capes older than 15 is more or less balanced.

Which is also you can see, in the next graph, is just showing the breakdown of each year of delivery. And obviously what we have seen, what was ordered in 2012 and 2013, that was the last [burn shell] orders the market didn't really need.

To conclude, Clarkson Platou is expecting demand growth to peak up slightly next year, more or less par with the feed growth. And then demand growth will gradually overtake supply growth through 2017. I think that's more or less what most analysts are saying.

I think it's a fair chance that the supply could look better than what is illustrated here. Maybe that demand could also be slightly worse. But, all in all, I believe that we will be struggling with oversupply, next 6 to 12 months. As a consequence, the focus for Golden Ocean obviously is to do whatever possible, all means possible to repair or to take actions to protect both the cash and the balance sheet. Of course, as we have said a few times, I think Golden Ocean has the backing, both through the shareholder base and support from our lenders, to be the last man standing if the FFA market should materialize.

Personally, I think it will -- the first six months will be challenging. But then I think we'll see gradual improvement through -- from second half of 2016 and through 2017.

So that ends our presentation, and then we open up for any questions the audience might have.

(Operator Instructions). Clinton Webb, GMP Securities. (Operator Instructions).

Fotis Giannakoulis, Morgan Stanley.

Herman, you talked about the backing from your banks and your major shareholder and the focus of the Company on liquidity. Can you give us a few examples of how this liquidity can be further enhanced? Are there any sale and leasebacks or additional debt financings that you are considering? Or that might include also equity issuance?

At this stage -- I mean, this is a work in progress. As you saw, Fotis, we were able to do something now in November. I'm not going to go into details about the support from our lenders, but we feel that we have strong support. We are not considering equity issuance at present stage. We are working more on alternative solutions, like for example, the sale-leasebacks could be one option. But this is -- since this is kind of a work in progress continuously, it's not easy for us to comment upon it in more detail. Sorry about that.

I fully understand, and I fully respect that. But I'm sure you have run some stress case scenarios. And given the weaker market, and given the current FFA curve -- based on these scenarios and the solutions that you have in mind, how long do you think that the market can stay at that current levels before you need to have some equity support? Is this something that can extend beyond the next 12 months, or even two years?

It depends very much on how successful we are on the present actions we are taking. So that will be a little bit to speculate. So, our target is obviously to run through 2017 without -- given the present market -- without raising equity. That's our target. That remains to be seen. It depends obviously on how successful we are on what we are working on, as we speak.

That's great. Thank you. I want to ask about your sale and leaseback. There are -- obviously, right now, the sale and leaseback is in a territory which is generating negative cash flows. Are there any thoughts? Or have you explored the possibility of arranging the terms, at least in the near-term, probably lowering the rate that you are paying for a couple of years, and then giving some other form of upside to seek finance? Is this something that can come on the table?

Not at the present moment, Fotis.

Thank you, Herman. And on the market, you talked about -- you think that the market is most likely going to be weak for the next 12 months. I want to understand, how much of this downturn do you consider part of a cyclicality? And how much is because of some structural issues that the steel and coal industry might have? I understand that the fleet is growing still by more than 2%, and the demand is pretty much flat. And there is also some excess capacity that needs to be absorbed.

Can you give us some steps that you think are necessary for the steel market to start producing more iron ore imports, and the coal to start getting in a positive territory?

First of all, I think it's -- right now, looking at the commodity prices, I think generally that it's still -- if you look at the stock price -- I looked up the stock price day before yesterday, and I don't see any reason for the importers to restock with the present backwardation. I think you need to see some signs of stronger iron ore prices. We saw some [micro] that didn't help the iron ore prices at all. I think somebody were expecting that to happen.

But I think, right now, it's also -- believe it's not a sentiment. It seems that a lot of owners are just psyched out, in a way, that give up too easily. So because we feel that, right now, like yesterday the activity was quite brisk. But certainly you have an owner is just giving in because they are happy to -- when last ton was $425 on the [stocks trade], they are happy with $440 instead of holding back a little bit. So it's a combination of a few things. But I think right now there is a potential for some restocking if iron ore prices move -- has a shift.

And then, as I said, I think it's going to be quite interesting to see what's happening this coming winter on the coal in China. That could be within the next six months on the demand side; I think the only positive upside for the way I see it, really.

Structurally, on the iron ore, I think it's -- we cannot expect more than 1% to 2% growth. But on the supply side, Fotis, I think there are -- it's fairly dramatic here, what we are facing. So I think there will be further delays and cancellations, and people are willing to leave money on the table to escape from contracts.

And you mentioned that your order book, in your view, is much lower than what brokers are showing and analysts are projecting. I think you said around 10%, 11%, versus 17%. Can you give us a little bit more color from your discussions with the shipyards? And how much stress is out there from the private owners? Obviously, your company is not a typical example. You have a much stronger -- the strongest backing that you could have.

But what is happening in the rest of the market? And if you also think that the asset prices -- that they have declined dramatically, have reached the bottom, or there is a risk of another round of declines in vessel values.

I think on vessel values, it's still under pressure. I think from a risk/reward perspective, I would love -- if we are ever in a position to, I would love to have bought vessels at present asset prices. But we are not in a position to do that right now. And there are so many rumors all the time; what is substance and what is rumors, it's hard to call them.

I'd say that I think the order book, if you look at it, every year the -- what is actually delivered compared to the official order book, it's -- this year, most likely we end up with something like 65%, 66%. You can just look at the order book for the remainder of 2015, and that everybody understands that's not going to be delivered, another 50 million deadweight capacity. Who wants to take delivery in November and December?

So I think it's -- and then I'm afraid that we will have quite a few vessels coming into the market in January, February, as we experienced last year. But I think, again, then scrapping will pick up back to the levels we saw between, say, March and June 2015 of this year. But I think it's a fairly messy situation for the entire shipbuilding industry at the moment. It's not only with dry bulk; it's -- we know other sectors who are struggling even more.

So I think, from what I understand, some of the Korean yards are under pressure from the authorities, or through KDB and whatever, what have you. I think 60% of the private Chinese yard haven't built a vessel since 2012. I think it is, particularly on the Supras and Panamaxes comes from [outside]; I think there will be a lot more cancellations internally in China.

Thank you very much, Herman. Thank you, Birgitte.

Rune Sand, Nordea Markets.

I really just have six fairly short questions. First, with respect to the Front Atlantic, is that one of the three vessels that were to be taken back on 6 to 12 months time charters? Secondly, are there any more impairments or capital losses that you expect to take on the remaining three Capes that you sold in April? And then, thirdly, are there any more (multiple speakers)? Yes, sure, go ahead.

I can take those two first. Yes, Front Atlantic is on six months time charter.

And then are there any more impairments you expect to take on those?

No, we don't expect any more impairments. Okay, third question?

Yes. Do you have any more conversion candidates, like the one -- the Frontline deal you recently did? For instance, the vessels you have with delivery in 2017, can you do something similar with those?

At the moment that's -- we are not looking at that right now.

Okay. And also in your cash flow statement, you have an item there you have called purchase of investments, which is some $12 million. Can you give us more color on what that is?

No, not really.

Okay. And then my fifth question is your restricted cash position. It's down by $10 million in the quarter. Is this also equivalent to -- or minimum cash covenants. Are they all -- is that also then down by $10 million?

This is due to lower debt. So of the cash covenants, it's 5% of the debt.

Okay, get it. Okay. And then the final question is --. What you said, 5% off --?

Interest-bearing debt.

Yes. And then the final question is related to the interest-bearing debt you have. So, in the long term debt, you have also included the convertible. But is it included at par, or is it market value? And if you were to -- if you have adjusted it, then if it were to be included at par, what would the long-term debt be?

The convertible is, at end Q3, around $167 million. It was valued at the time of the merger of $161 million. And then we are amortizing it up to $200 million at the time of repayment through an extra interest charge. So there is an effective interest rate of around 6.5% to 7% on the bond.

Okay. But it's recorded in the balance sheet today at $167 million.

Yes.

Yes, so if I were to include it at par, then add $33 million?

Yes.

Yes, okay. Thank you. That's it for me.

Erik Stavseth, Arctic Securities.

My question relates to the debt that you've drawn down on the Capes. You draw down $27.2 million on the Finsbury, and $26.4 million on the Aso. Initially you had indicated that you could draw down as much as $30 million per vessel. Is this indicative of the max amount available to draw down on future vessels?

No. We expect that we can draw closer to $30 million. There is a drawdown test at delivery, but there are some discussions around that. Of course, it depends on where the values are, but we are planning on closer to $30 million.

And then, secondly, just a brief follow-up on that one. Was the KSL Aso the last vessel under the $420 million facility?

Yes. Correct.

And then lastly on the loan to value covenants that you have, or the different facilities you have -- are any of those closing in on a breach? And potentially how much must values drop before you may have to pay additional cash to amend them, or to be in compliance with them?

There are no loan facilities in breach as of September 30. We are closing in at some point, but it's not significant amounts in the near future.

All right. And could you -- would you give us any indication of which of the facilities which would be first to be de-breached? Is that the $284 million facility, or is it one of the other ones?

No, it's not that one (laughter).

Okay. No, that's fine, fine. Okay. I think that's all for me. Thanks.

Marius Furuly, Carnegie.

Unfortunately, Erik from Arctic just asked a very similar question to mine. But could you please tell us if you are planning for a potential loan-to-value covenant breach or not?

No.

We're not planning for that. But what do you mean?

I mean, Herman told us just recently that he sees downward pressure on vessel values. And is it likely that you would need to pay down debt earlier than your base case?

We run scenarios on sensitivities, but that's -- yes.

As Birgitte said, there's still some room there on -- asset values are under a certain pressure. But obviously this is -- we are not planning on it, but we are focusing on it. But we are managing it, to put it that way.

Got it. Thank you for answering.

Magnus Fyhr, GMP Securities.

I just had a question on the remaining installment payments on the newbuilding program. How much of the $632 million are equity payments from Golden Ocean?

You have to deduct the $46.2 million, times 3, that we will receive upon sale. Then we have the financing under the 425 facility for 13 vessels. Likely to be in the area of $395 million, but as I said earlier, that's depending on the test. Then we have to finance the three Supramax vessels. And then you can make your assumptions on the rest, I think.

Okay. So if you use about $30 million per Cape going forward, that's about $70 million, I think. If you use $27 million, maybe $100 million. Is that in the ballpark? Between $70 million to $100 million of cash payments?

It's less than $500 million if you deduct the sale proceeds from the three Capes. Then if you say you get close to $400 million on the 13 Capes, you have $100 million left. But then we also have financing to draw on three Supras. So it's in the range of $50 million to $60 million-ish, depending on values.

Okay. And on the -- you had mentioned earlier, you have some of the tests to obtain financing. What are some of those tests? It looks like, at $30 million, you are close -- you are at a pretty high level.

Yes, we are (multiple speakers).

Basically, how much can you borrow on these vessels? $30 million is (multiple speakers).

I refer to my previous response, where I said that we expect to draw close to $30 million per vessel, but it's discussions that are ongoing.

Okay. All right, that's all I had. Thank you.

Amit Mehrotra, Deutsche Bank.

Just had a few follow-ups. First on the remaining deliveries: are all the facilities susceptible to LTV test prior to delivery? And is it 60% to 70%, or are some of the facilities higher than that, or maybe connected to bareboat leases that are fixed to the contract price? If you can just provide some color on that, please.

I think I've tried to answer that question two times. There are tests --.

Okay, well, I'm asking again; so I guess it wasn't very clear, so that's why I'm asking it again.

Okay. Yes, I'll try again, then.

Thank you.

We expect to draw close to $30 million on the Capesizes. We are in discussions on that. On the three Supras, we haven't concluded any financing yet, so we are not there to give you a specific item.

Okay. Let me ask a couple industry questions. One is just on the comments about additional cancellations. We've seen others making announcements in terms of productive discussions with the yards. I just want to see that -- how much more room there is for some relief there, or have the yards basically given all they can at this point? Or, Herman, was that really just a comment on basically cancellations of orders that really weren't there to begin with?

I think on the order book, going back to that official order book, it seems to be very easy to add vessels on the order book, generally; but to take them out, it's more complicated. So I have been constantly questioning the size of the order book. I think, still, in Japan obviously we all make assumption because they have internal transactions, particularly say at the [art like hemibody], where they have backed by their own [owning] facility. And I have just been to Japan, and they are continue to scale down on production and push things out in time, and they don't seem to be very desperate. But most of what is on order in Japan will most likely be delivered, one way or the other.

Then, in China, I think still there is -- have in mind that half of the order book is on dry bulk -- or even more is in China. And I think there are quite a few of the internal Chinese deals that will be canceled still. I don't see that many conversions anymore, really because there are not that many yards who can do conversions. And if you look at the order book in 2017, it's fairly [pinere]. And most likely some of what is in 2016 will be delayed into 2017, and even 2018.

In Korea, as I said, Korea presently are under certain pressure. So, Amit, what we see now the gap between resale prices and official, what the yards are offering, is massive. And I don't think the yards have much room, to be honest with you. I think it's very difficult, even for a Chinese yard, to offer a Capesize newbuilding much below $45 million or a [standard spec 880,000] deadweight. But I think it's -- you know, if the most bearish analysts are right in their assumption in their forecast in a 6,000 -- nobody can live with that. It's not a sustainable market for anybody, really.

So that means that there will be -- it could be a little bit [calculated] situation around at the yards. And I think the yards are willing to restructure and try to just get what they have on the book going one way or the other, and do further delays.

Right. That's enormously helpful. Thank you very much. Just one last question related to the industry: certainly, the silver lining here is that scrapping can hopefully reach historical levels. But I just wanted to get your experience and perspective on the logistics behind maybe 10%, 15% of the fleet going for scrappage, really, all at the same time. And just wanted to understand, is there some level of scrapping capacity that, once reached, there's a little bit of a pause until that is digested.

If you could just provide -- I guess there's endless amounts of beaches in this world, especially in Southeast Asia. But is there any level of scrapping capacity that we should keep note of before we think all these ships at once are going to go at the same time?

Whenever I ask those who are involved in scrapping, it seems that capacity is not really -- probably saw what happened in April; it was massive. But I'm more that I think if -- again, I think you will see in the market, in a low market, that scrapping will start to pick up again. And then you have regulations coming into place. And I think any owner who has a vessel that is going through special survey, older than 15 year, will take a long, hard look even at the scrapping price of $250 to $300 instead of investing $2 million to $3 million in steel renewals. But I don't see scrapping capacity as a major issue.

Okay. All right, gentlemen, thank you very much, and good luck with everything. Appreciate it.

(Operator Instructions). Ole Stenhagen, SEB.

Just very quick question: do you have any ambitions to increase your segment reporting in your future reports? Compared with the other companies with the same main owner as you, you provide little detail on your relative performance in the various segments.

[You] think about time charter per day, earnings per --?

Well, every dollar for ship type; or performance, total performance per ship type; or spot performance per ship type, or whatever you comfortable with.

We will consider it, Ole.

But you have been considering for a long time.

Yes, but if you like to have it -- we are presently working on a different type of reporting, Ole, so --.

Okay, great. I look forward to next quarter, then.

(Operator Instructions).

Okay?

Okay, then, I think we end there. Thank you, everybody, for attending. And we catch up again in Q4.