Hafnia (NYSE:HAFN) reported that fourth-quarter conditions in the product tanker market were stronger than the company had expected, helped by tight effective vessel supply, robust seasonal demand, and shifting trade flows tied to geopolitics and sanctions.
During a Q4 presentation moderated by HC Andersen’s Tue Østergaard, CEO Mikael Skov said the company generated net profit of $109.7 million in the quarter and reiterated Hafnia’s capital return framework, which links dividends to its net loan-to-value (LTV) level. Skov also discussed the impact of the “dark fleet” and sanctioned tonnage on market balance, the outlook for vessel supply growth, and Hafnia’s views on industry consolidation.
Q4 results and dividend framework
Hafnia paid out 80% of Q4 net profit as a dividend, consistent with its stated policy based on net LTV. Skov said net LTV ended Q4 just below 25%, which places the company in the 20%–30% band that triggers an 80% payout. If net LTV drops below 20%, Skov said the payout rises to 90%.
On capital returns, Skov said any share buybacks would be in addition to the company’s dividend policy rather than replacing part of it. “It won’t be a mixture of the two,” he said, describing the dividend policy as “firm.”
Operating model and cost focus
Skov described Hafnia as a refined products tanker operator with close to 200 vessels owned and controlled, including third-party vessels, and said the majority of earnings come from the spot market. He also outlined adjacent businesses, including commercial management for other owners—about 80 vessels operated on behalf of third parties—and a fuel procurement joint venture with Cargill called Seascale.
On performance versus peers, Skov emphasized shareholder returns as a primary metric and said Hafnia has delivered the highest returns in its peer group over three years, citing 75.3% on the slide shown. He also said Hafnia seeks to keep fixed costs low in a cyclical industry, using variable compensation such as bonuses when markets are strong. Skov argued that a low fixed cost base helps the company navigate downturns.
Market drivers: crude strength, ton-miles, and geopolitics
Skov attributed Q4 and Q1 market strength to a combination of supply and demand factors. On the supply side, he said a “very strong crude market” has been pulling vessels away from clean product trades into crude transportation, tightening effective supply for refined product shipping. He also said fleet supply growth has been “almost zero,” a topic he later tied to vessel switching between segments.
On the demand side, Skov pointed to changes in ton-mile patterns linked to geopolitical uncertainty, some inventory building, and strong refining economics. He cited the release of Venezuelan crude flows as “super positive” for the U.S. Gulf and Caribbean region because barrels that had been restricted and moved on sanctioned or “dark fleet” routes shifted into the compliant fleet, increasing demand for conventionally traded tonnage.
Skov also said there was an element of concern about potential Middle East disruption that may have encouraged higher exports. He discussed the risk of escalation involving Iran and the Strait of Hormuz, describing a full closure as an “extreme scenario” and “not likely,” while noting that conflict introduces uncertainty and can affect trade patterns and oil prices.
He added that oil demand has been stronger than many expected and that seasonality matters: Skov said Q4 and Q1 are typically the strongest quarters for refined product transportation.
Sanctions, “dark fleet,” and effective supply
A key theme was the impact of sanctioned and non-compliant tonnage. Skov said markets are strong in part because a large number of vessels have shifted into sanctioned trades or the “dark fleet,” which he described as non-compliant trading patterns that may lack proper insurance and do not comply with international regulations.
He said the number of sanctioned/dark fleet vessels has risen to “massive numbers,” close to 1,000, and added an additional nuance: Hafnia is seeing signs that some of this fleet is being used less than a year ago. Lower utilization of those vessels, he said, can push more oil onto compliant ships, increasing demand in the mainstream market.
Looking ahead, Skov said uncertainty around sanctions enforcement is a major variable in the outlook. He framed it as a political question—whether the U.S. “comes down hard on Russia” and restricts transportation by such ships—which could force more volumes onto compliant tonnage. At the same time, he cautioned that it can be “dangerous” to lean too heavily on macro analysis when markets are unusually strong, noting that seasonality typically fades after the high season.
Supply outlook, consolidation views, and strategic projects
Skov argued that headline orderbook numbers can be misleading because vessel types can shift between clean and dirty markets. He said some LR2 deliveries that appear as product tankers often end up trading crude because LR2s can be equivalent to Aframax crude carriers, and owners may choose coated ships that can trade both. As a result, he said net fleet growth for product tankers was “way below 1%” last year.
For 2025, Skov said supply growth is likely to be higher than last year because ordering and deliveries are “tweaked a bit more towards MRs” (medium-range vessels) rather than LR2s, though he still expects some movement from clean to dirty trades. He also noted that newbuild lead times are long—he said ordering a product tanker today could mean delivery in 2029—and said shipyards have been more focused on higher-return segments such as gas carriers and container ships.
On operations, Skov said some of Hafnia’s LR1s have been trading crude as Panamax vessels in the Caribbean and described that as one of the strongest markets at the moment, citing rates “around $60,000” so far in Q1.
On consolidation, Skov confirmed Hafnia bought 14% of TORM, describing it as a “good investment” so far and another way to increase exposure to product tanker markets. More broadly, he said Hafnia believes larger scale can support valuation multiples, improve liquidity, and create cost synergies. He also said scale could matter longer term as the “energy complex” changes, arguing that larger, well-capitalized operators may be better positioned to finance fleet transition over time.
Finally, Skov discussed Hafnia’s “strategic projects” outside its core shipping operations, focusing on technology and energy transition preparedness. He highlighted its work with Complexio, which he described as using AI agents to automate workflows after first analyzing company processes. Skov said Hafnia has reached a point where it is now a paying customer and expects the initiative to generate savings, while stressing that technology investments should be tied to measurable returns rather than experimentation for its own sake.
About Hafnia (NYSE:HAFN)
Hafnia is a global shipping company listed on the New York Stock Exchange under the ticker HAFN. The firm specializes in the marine transportation of refined petroleum products, providing safe and reliable shipping solutions across key global trade lanes. Its core operations focus on the carriage of gasoline, diesel, jet fuel and other clean petroleum products, catering to the needs of oil majors, trading houses and independent refiners.
The company operates a modern fleet of double-hulled product tankers, managed to comply with stringent safety and environmental standards.
