Hafnia (NYSE:HAFN) reported what management described as its strongest quarter of 2025, as seasonally firm product tanker markets in the fourth quarter helped the company close the year with a net profit of $109.7 million. For the full year 2025, Hafnia reported net profit of $339.7 million.
Quarterly results and shareholder returns
On the call, CEO Mikael Skov said the product tanker market “started 2025 on a softer note” but strengthened through the second half of the year and remained seasonally firm in Q4. CFO Perry van Echtelt said the quarter produced adjusted EBITDA of $149.7 million and net profit of $109.7 million, which included $9.5 million in gains on vessel sales. Fee-based businesses added $6.9 million of fee income in Q4, management said.
The company also emphasized capital returns. Skov said Hafnia has now paid dividends for 16 consecutive quarters and aims to keep payouts “sustainable and predictable through the cycle.” Based on its leverage policy, Hafnia declared an 80% payout ratio for Q4, resulting in a cash dividend of $87.7 million, or $0.1762 per share. For full-year 2025, dividends totaled $271.7 million, or $0.5557 per share, which management said represented a yield of about 10%. Including share buybacks completed during 2025, Skov said the company returned 88.1% of net profit to shareholders.
Fleet actions, pools, and asset base
Skov highlighted ongoing fleet renewal and commercial scale as core investment attributes. At the end of Q4, Hafnia said it owned or chartered in 123 vessels with an average age of 9.7 years, compared with an industry average of 14.1 years. The company’s net asset value at quarter-end was about $3.5 billion, or $7.04 per share (NOK 70.79), according to management.
Hafnia continued divesting older vessels “at attractive prices,” and Skov noted that early in Q1 the company sold two MR vessels and committed to sell two more MRs, four LR1s, and four Handysize vessels. During Q4, Hafnia also took delivery of the Ecomar Gironde, described as the fourth and final dual-fuel IMO II MR in the company’s Ecomar joint venture.
Beyond its owned and chartered fleet, Hafnia said it operates around 65 third-party vessels across eight pools. Skov said these pool activities contributed roughly $30 million in earnings for full-year 2025.
Market backdrop: demand, sanctions, and LR2 migration
Vice President Commercial Søren Skibdal Winther attributed 2025 market support to continued growth in refined oil exports and higher crude oil exports. He said one major dynamic was a “significant shift” of coated LR2 vessels into dirty trading, tightening supply within clean product trades.
Winther said both dirty and clean volumes “on the water” increased. He characterized dirty volumes as largely driven by sanctioned barrels awaiting buyers, while clean volumes reflected strong export flows out of the U.S. Gulf, the Middle East, and China. He also said reduced demand for Russian refined products increased demand for non-sanctioned supply and supported ton-miles.
However, Winther said the earnings recovery in Q4 was “more moderate,” citing heavy newbuild deliveries in 2025 and limited scrapping that left freight rates with less upside. Despite that, he pointed to area-specific tightness—particularly in the U.S. Gulf—as an important driver of strong clean product earnings.
On supply, Winther said product tanker net fleet growth remained limited in 2025 in part because crude tanker sanctions pushed a significant share of LR2 vessels into Aframax dirty trading. He stated that in 2025 around 80% of coated LR2 newbuild capacity (or the equivalent) moved into the dirty market, and that more than half of the coated LR2/Aframax fleet is now operating in dirty petroleum product trade. For the clean LR2 segment specifically, he said the competing fleet count is at its lowest in three years.
Winther also discussed sanctions tightening effective supply. He said the U.K., U.N., and OFAC collectively sanctioned more than 500 tankers in 2025, mostly crude vessels, and that the EU’s 20th sanctions package was expected to add another 43 vessels (with the names and classes not yet identified). He added that further sanctioning of the shadow fleet in 2026 could be anticipated and said there is broad consensus among insurers, major flag states, and government advisory bodies that sanctioned tonnage is unlikely to return to mainstream trade even if sanctions are eventually lifted.
Financial position, leverage, and coverage into 2026
Van Echtelt said Hafnia’s net loan-to-value (LTV) rose to 24.9% at the end of Q4 from 20.5% at the end of Q3. He attributed the increase primarily to Hafnia’s investment in TORM, which raised debt and was included at market value in the LTV calculation, partially offset by higher vessel valuations and strong operational cash flow.
Hafnia ended the quarter with $104 million in cash and $324 million in undrawn capacity, for total liquidity availability of about $430 million, according to management.
Operationally, van Echtelt said time charter equivalent (TCE) rates improved for the fourth consecutive quarter since Q4 2024, with momentum continuing into Q1 2026. In Q4, Hafnia reported TCE income of $259 million and an average TCE of $27,346 per day.
Results were affected by scheduled dry docking, which accounted for about 550 off-hire days—about 120 days higher than expected due to unscheduled repairs for three vessels. Van Echtelt said dry docking will continue into 2026, but off-hire days should decline significantly versus 2025. Hafnia dry docked around 40 vessels in 2025 and expects to complete around another 20 vessels in 2026, he said.
Looking ahead, management provided booking detail. As of Feb. 11, Hafnia had secured 76% of its Q1 earning days at an average rate of $29,979 per day, which van Echtelt said was well above its 2026 operational cash flow breakeven of below $13,000 per day. For full-year 2026, the company had 33% of earning days covered at an average rate of $27,972 per day, with management noting that most LR2s have secured long-term time charter contracts.
TORM stake and consolidation commentary
Skov said that in December Hafnia acquired 13.97% of TORM’s shares from Oaktree and has since engaged with TORM stakeholders, including its board, to explore the merits of a potential combination. He said Hafnia sees a strategic rationale including commercial, operational, and financial benefits, along with enhanced market presence and trading liquidity.
During Q&A, Skov said the TORM stake “on an isolated basis” had been a good investment based on the current share price versus Hafnia’s purchase price, and reiterated his view that consolidation could create “1 + 1 becoming three,” citing potential valuation uplift, synergies, and the need for scale amid industry change.
Winther also addressed why Hafnia is not moving more LR2 tonnage into dirty trades, saying the company has chartered out its LR2s on long-term charters as part of its “housekeeping hedge strategy,” rather than taking them into spot exposure.
On scrapping of sanctioned vessels, Winther said only “a couple” of ships had so far been allowed to be scrapped in India, but added that India appearing willing to accept scrapping of sanctioned tonnage was an important first step.
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.
