Himalaya Shipping (NYSE:HSHP) reported a stronger fourth quarter of 2025 as the company benefited from higher charter earnings and continued to emphasize its index-linked charter strategy and dividend framework.
Quarterly results and cash distributions
CEO Lars-Christian Svensen said the company generated net profit of $13.5 million and EBITDA of $33.3 million in the quarter, with gross time charter equivalent (TCE) earnings of approximately $39,600 per day. The company declared total cash distributions of $0.30 per share for the months of October, November, and December 2025.
Cost and balance sheet commentary
Hasund said vessel operating expenses were $7.0 million versus $6.8 million in the prior-year quarter, primarily due to higher costs for spares, consumables, and service fees. Average operating expense per day increased to $6,400 from $6,200.
G&A expense increased to $1.2 million from $1.0 million, driven by increased management fees and payroll accruals, partly offset by reduced D&O insurance costs. Interest expense was $12.7 million, down $0.4 million year over year, which the company attributed to a lower average loan principal outstanding due to loan repayments.
At quarter-end, cash and cash equivalents were $32.4 million. The company noted a minimum cash requirement of $12.3 million under its sale leaseback financing. Outstanding balance on the sale leaseback financing was approximately $700 million at the end of Q4, down from $707 million at the end of Q3, reflecting scheduled repayments. Cash flow from operations was $24.8 million for the quarter.
Charter activity and commercial strategy
In prepared remarks, Svensen highlighted several charter-related actions. The company converted index-linked time charters for four vessels to fixed rates at an average of approximately $27,700 per day for the period from January 1 to March 31, 2026. Himalaya Shipping also entered a new time charter agreement for Mount Elbrus through June 30, 2026 at a fixed rate of $30,000 per day, which will then convert into an index-linked rate that management said reflects a “significant premium” to the Baltic 5TC Index. In addition, the company executed a time charter agreement for Mount Ita for a period of 11 to 14 months at an index-linked rate that also carries a premium to the Baltic 5TC Index.
Management reiterated that its preferred approach is to charter out the majority of vessels on index-linked charters to capture upside when the market strengthens, while maintaining the flexibility to convert to fixed rates when it sees value on the forward FFA curve. Svensen also said that, currently, five of the company’s 12 ships will be on fixed rates until March 31, after which 11 of 12 vessels will be exposed to the spot market.
Svensen said the company’s vessels have traded at an average 48% premium to the Baltic Capesize Index since inception and a 25% premium to peers, attributing this to “extra cargo intake” and the fleet’s speed and consumption design. He added that the company’s all-in cash break-even equivalent to the Baltic Capesize Index is about $17,400 per day.
Market discussion: demand, supply, and dry dock outlook
On market conditions, Svensen said 2026 had the best start for the Capesize and Newcastlemax market since 2010, crediting strong iron ore export volumes from Brazil amid a warmer, less rainy January, and the absence of large typhoons in Australia that had affected conditions around the same time in 2025.
Management pointed to year-over-year increases in ton-mile and commodity flows, including a 9% year-over-year increase in Capesize ton-mile in Q4, driven by a 21% increase in bauxite from Guinea and a 12% increase in iron ore trades. Svensen said iron ore exports in Q4 were up 18% from Brazil and 9% from Australia year over year, while bauxite from Guinea rose 30%.
The company also discussed supply factors, noting that the Capesize and Newcastlemax order book stands at 12% of the existing Capesize fleet, which management described as a 25-year record low. Svensen said active shipyards are down 60% from the 2008 peak. He also highlighted an aging fleet profile and increased dry dock activity tied to mandatory special surveys, estimating 1.4% additional off-hire on the total fleet in 2026 due to dry docks alone, excluding potential congestion and waiting time.
Subsequent events and Q&A highlights
Following the quarter, Svensen said the company achieved TCE earnings for January 2026 of about $32,400 per day and declared a $0.06 dividend for the month.
He also noted that in February the company entered into an agreement with 2020 Bulkers Ltd. to purchase an additional 4,200 shares, raising its ownership to 54% in 2020 Bulkers Management AS for NOK 1.1 million, effective April 1, 2026.
During Q&A, Svensen addressed questions about pricing power and premiums on upcoming charter renewals, saying the company historically can obtain higher premiums when market rates are low, while premiums tend to be modestly lower when negotiating in a stronger market environment (such as $30,000 to $40,000 per day). He said the company is seeking to time renewals with shorter durations in higher markets to potentially improve premiums later. He also said that for now the company is “sticking to the old” index because FFAs are traded on it and the fleet is linked to it, while expecting a gradual transition over time as new indices become more common.
About Himalaya Shipping (NYSE:HSHP)
Himalaya Shipping Ltd. provides dry bulk shipping services worldwide. The company operates a fleet of vessels. It serves major commodity trading, commodity and energy transition, and multi-modal transport companies. Himalaya Shipping Ltd. was incorporated in 2021 and is based in Hamilton, Bermuda.
