1.2 Hafnia: A Year in Review

A Letter from
the CEO

This time last year, I began my statement by referencing the challenges of 2021, remaining adamant on not giving up on hope. Yet here we are emerging from a post-Covid era into another global crisis – where livelihoods around the world are increasingly strained as a consequence of tension and conflict.

With the onset of Russia’s war against Ukraine in 2022, trade routes quickly adapted. Whilst the market benefitted, it is devastating for those in the path of the conflict. It is important as shipowners we remain mindful of the challenges we now face in navigating through a new world of sanctions, – where long standing relationships have come to a halt and the cost of living is on the rise.

Amongst the complexities of 2022, we delivered a record financial result, closing the full year with a net profit of USD 751.6 million. With an updated dividend policy, where we remain committed to shareholder value, Hafnia has paid out USD 402.7 million to its investors representing a payout ratio of 53.6%.

This is Hafnia’s best full year result to date, and I could not be prouder of our team’s future-proofing approach. Driven by talented people onshore and at sea, 2022 demonstrated the strength of Hafnia’s business model, where tangible results have been delivered – with an even firmer foothold in the product and chemical market.

"This is Hafnia's best full year result to date, and I could not be prouder of our team's future-proofing approach

Active Management

“Synergising our Fleet”

In 2022, Hafnia added 36 vessels and 13,000 trading days to our fleet, via our two strategic acquisitions, Scorpio and Chemical Tankers Inc. (CTI).

From where we started in 2011, these acquisitions saw Hafnia meeting an important milestone in becoming the world’s largest product and chemical tanker operator.

As part of the CTI acquisition, the chemical vessels allowed us to gain significant operational advantages. These chemical vessels transport both clean petroleum products and chemicals, allowing us to switch between cargoes and limit ballast time. 17% of the cargo carried on these tankers in 2022 were bioproducts – further underpinning our commitment to a more sustainable world in the shipment of renewable energy.

We continue to reap the benefits of these acquisitions through a strengthened balance sheet, where the 2022 net profit from the acquired fleet was above USD 190 million, including the gain from the sale of 8 of the CTI stainless-steel vessels. The acquired fleet has also increased by approximately USD 330 million in value.

Hafnia has a modern fleet with an average age of 7.9 years. In 2022 we divested 10 vessels as part of our fleet renewal strategy. These ships have been sold far before the end of their life cycle at a market optimal time, as part of our active management strategy of responsibly building a world-class fleet.

“Responsibility is Intrinsic to our Business”

At Hafnia, we investigate, we plan, we try, and we learn, to move with the times, considering simultaneously the short, the interim, and the long run.

ESG especially is an area where everyone now needs to come together and take responsibility.


“Getting to Net-Zero”

The maritime sector is increasingly under pressure to decarbonise, and I believe that Hafnia is at the forefront of such efforts. We are consistently working to reduce our environmental footprint by looking for vessel optimisation initiatives that reduce our emissions to the air.

In 2022, Hafnia launched its Climate Strategy (elaborated on later). We strongly commit to the International Maritime Organization’s (IMO’s) Carbon Intensity Targets, including its regulations on sulphur emissions and 2030 goals. Across our owned fleet, our carbon intensity of 5.23 grams/ton nautical mile (T-NM) was 7.4% below the present IMO baseline. We plan to deliver at least a 40% carbon intensity reduction by 2028 on our scope 1 emissions – compared to a 2008 baseline – meeting the IMO’s 2030 targets two years ahead of schedule. Our Technical Team have been hard at work implementing numerous energy-saving initiatives, resulting in overall fuel savings and improved efficiencies to help us achieve these goals even sooner.

In 2022 we prepared to take delivery of four LR2 newbuilds, via our Vista joint venture with CSSC Shipping. These vessels (which will be time-chartered out to long-standing customers Total and Equinor) mark another step forward in our decarbonisation journey. These vessels are equipped with dual-fuel high pressure LNG engines, which greatly minimise greenhouse emissions. LNG is regarded as a viable alternative marine fuel, until the time when ammonia and hydrogen engines become commercially sound.

“An Enduring People First Culture”

People are our most important asset. Beyond our promise to adhere to “Zero Harm” and impeccable safety standards, I stand by Hafnia’s unique culture, which I believe attracts the best minds in the industry.

I was pleased to see the result of our annual employee engagement survey, conducted across the Hafnia offices, where 93% of our team felt they could be themselves at work. The link is clear between this and the great ideas they bring to the table. I remain committed to the continuation of a workplace, where everyone can thrive and meet our business goals simultaneously.

“Leadership and DIBE”

Leadership comes out consistently as a topic we take seriously, and I think we always need to be working harder at it. Leadership is never perfected, it is a discipline which takes continuous learning and improvement.

In 2022 we continued our focus on our Ambitious Leadership program across our leaders, and also on how we could extend this at sea.

Diversity, Inclusion, Belonging and Equity (DIBE) remains high on our agenda, with 2022 seeing many exciting developments. This included, amongst other topics, meeting our onshore diversity targets, and Hafnia joining the All Aboard Alliance with myself as Co-Chair. This initiative gathers leaders in the maritime industry to collaborate and address the common challenges in a new era where diversity is
needed for all of us to thrive.

Hafnia ran its second Maritime DEI Innovation Lab (a reprise of the Women in Maritime Lab, now with a broader scope). It was an honour to count industry giants like Anglo American, RightShip, Thome Group, Wilhelmsen and Rio Tinto as part of this call. The winning idea, “SeaBuddy”, is currently in its pilot launch, and I look forward to this new mentoring support and knowledge platform for seafarers to
soon come to market.

“Operating on the Highest Governance
Standards and Business Integrity”

We continue to operate with the highest ethical standards, and see it as not just a business imperative, but laying the foundation of our culture – outlining what
is acceptable behaviour and what is not. Our strong “speaking-up” culture is what helps in preventing those innocent violations of ethics – strengthening our drive to act as a unified team and with integrity. Whilst I take pride in developments and efforts in risk management, compliance and ethics, I think there is still space for improvement in our industry coming together to tackle this topic.

The work of the Maritime Anti-Corruption Network (MACN) has been key in supporting its members (like Hafnia) on difficulties we still all face in certain areas. Imagine what we could achieve if we all pooled our efforts and resources to enforce corrective action on topics like this and others.

Looking Ahead: and Beyond our Fleet…

Despite a softer start to 2023, market fundamentals remain strong, laying the foundation for a positive year. With a low orderbook of newbuilds, growth in oil demand, and generally low oil product inventories in the western hemisphere, I am confident that utilisation of our modern fleet will remain steady on the back of increased trade volumes. With sanctions of Russian products now fully in effect, we also expect further alteration in trade routes. Currently, Hafnia is well positioned to take advantage of the elevated spot market.

Whilst Hafnia is a shipowner in our own right, operating in this volatile market, our value proposition remains much more than that.

Our integrated shipping platform is built on a robust and responsible business model with additional revenue streams from pool management, bunker procurement, asset and investment management – and we are always looking at opportunities to further grow to drive value in areas where it makes sense.

In 2022, Hafnia launched three more Pools across the Chemical and LR2 segments, thus extending our Pool offering across all product tanker segments. The Hafnia Bunker Alliance serviced more than 1,250 vessels, demonstrating the strength of its business model.

With that, I take this opportunity to thank my team and our trusted partners for making these excellent developments and results possible through their dedication and confidence. A special mention of gratitude goes to Hafnia’s seafaring community, who sail our flag across the important job of transporting our customers’ cargo.

Our colleagues in the Russian Federation and Ukraine have been particularly affected by the war against Ukraine, and on behalf of Hafnia, I extend my gratitude to you for being with us, and solidarity for the hardship you and your loved ones have had to endure.
These results are a true reflection of everything we have worked hard for.

Our motto remains to build on this strong momentum and produce even greater results and shareholder value via active management. We look forward to sailing into the Hafnia future with you, and hope you will find the information in our Annual Report 2022 insightful.

Mikael Skov, CEO

Operating Highlights

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