Flex LNG expects 2025 to be in line with last year

“stellar financial performance for the fourth quarter in line with our previous guidance.”

“We recorded substantial profits on our portfolio of interest rate swaps as we increased our interest rate hedging significantly during the interest rate slump at the beginning of September,” he said.

“During the fourth quarter, interest rates rallied, and we therefore booked $20.1 million of gains on these derivatives of which $5.1 million were realized during the quarter. Hence, adjusted net income for the fourth quarter came in at $30.8 million, corresponding to earnings per share and adjusted earnings per share of $0.84 and $0.57 respectively,” Kalleklev said.

The CEO noted that during 2024, and in the fourth quarter particularly, Flex LNG was able to secure new “attractive backlog which will insulate us from the current market weakness.”

In November, Flex LNG announced extension of the time charters for Flex Courageous and Flex Resolute.

Furthermore, in December, the company revealed a new 15-year time charter for Flex Constellation from 2026 to 2041 where the charterer has the option to extend the ship up to 2043.

“Flex LNG is thus very well positioned with 62 years of minimum charter backlog equal to about five years of contract backlog per ship, on average. Furthermore, this backlog may grow to 96 years in the event charterers utilize all their extension options,” Kalleklev said.

Outlook for LNG shipping “challenging”

Kalleklev said the short to medium-term outlook for LNG shipping is “challenging” given the numerous ship deliveries ahead of ramped up new export capacity.

“As such, we think 2024 to 2027 will probably resemble the period 2014 to 2017,” he said.

“There is one key difference, we will likely see a sharp increase in the demolition of older, less efficient tonnage, primarily steam tonnage which will prepare the ground for improved markets, similar to what was experienced in 2017,” Kalleklev said.

“In any case, Flex LNG utilized the upturn in 2021 to 2023 well to build both a fortress balance sheet and charter backlog and we are well prepared for the current weak market. We are therefore guiding financial performance in 2025 to be in line with what we achieved in 2024,” he added.