Himalaya Shipping Sails Into a Record Quarter, Doubling Down on Spot Exposure
Record TCE and dividend yield underscore a bullish structural outlook for Capesize and Newcastlemax markets.
HSHP · Earnings Call · 2026-08-11
Strong Quarterly Results, Stronger Outlook
The second quarter of 2026 proved transformative for Himalaya Shipping. The company reported a net profit of $24.6 million and an EBITDA of $44 million, with time charter equivalent (TCE) earnings jumping to approximately $50,600 per day, nearly double the $28,400 from the same period last year. “We reported a net profit of $24.6 million and an EBITDA of $44 million. The time charter equivalent earnings for the quarter was approximately $50,600 per day.” — Lars-Christian Svensen, Chief Executive Officer · 2026-08-11 This performance allowed the company to declare $0.59 in cash distributions for April–June, extending a streak of 31 consecutive monthly dividends. The market backdrop remains the key driver. CEO Lars-Christian Svensen emphasized that the structural ton-mile story is unfolding as expected, with iron ore exports at all-time highs and bauxite volumes from Guinea continuing to impress. The company notes that the global Baltic Capesize Index has lifted the floor of the market to a new level, and with 10 of 12 vessels exposed to the spot market, Himalaya is positioned to capture the upside.The Structural Ton-Mile Story Takes Center Stage
The company's prepared remarks laid out a compelling case for sustained strength. Iron ore exports from Brazil and Australia rose 4% and 5% year-over-year, respectively, while Chinese seaborne iron ore imports hit an all-time high for the quarter. “The structural ton-mile change in the Capesize and Newcastlemax trades over the last few years has proven capable of lifting the floor of the market to a new level.” — Lars-Christian Svensen, Chief Executive Officer · 2026-08-11 With the Simandou mine ramping up and bauxite now accounting for 18% of tonnage, the company sees a multi-year structural shift. Supply-side constraints add to the bullish picture. The order book stands at just 16% of the Capesize fleet, while a wave of mandatory special surveys will take roughly 24% of the fleet into dry dock this year, potentially tightening supply further. Dry dock space is already scarce, and the company estimates a 1.7% reduction in effective supply from these off-hire days alone.Capitalizing on the Forward Curve
Himalaya's strategy of index-linked charters with conversion options gives it flexibility to lock in superior rates when the FFA curve offers value. During the quarter, the company converted four vessels to fixed rates for June at an average of $56,500 per day, and two more for August–December at $51,200. CEO Svensen explained the advantage in the current environment: “When the timing is right to lock in Q1 or not, that depends. But if you see now the value of the whole curve for '27 is around $29,500 and Q1 trading at $25,500. The spread is not daunting at all. So for now, we'd like to ride it a little bit longer.” — Lars-Christian Svensen, Chief Executive Officer · 2026-08-11 The potential dividend yield is a headline grabber:This leverage is deliberate. The company previously noted in May that the market's skepticism presented an opportunity: “We've seen the tightness in Atlantic, which has also been a big contributor to the current high levels that we have. And I don't think we've seen that fully priced yet in the forward curve.” — Lars-Christian Svensen, CEO · 2026-05-21 And when asked about fleet growth, management reiterated its disciplined approach: “We are always trying to make accretive business for the shareholders and also to try and grow the company. But one of the reasons why we trade above our NAV, we have a very simple and transparent model.” — Lars-Christian Svensen, CEO · 2026-05-21 The big change this quarter is not the strategy itself, but the confidence in the market's durability. With a modern fleet, low cash breakeven of ~$17,500, and a clear capital allocation framework, Himalaya is turning the tide of cyclicality into a windfall. The question of when to hedge Q1 2027 remains a tactical call, but current indications suggest management sees more upside in the second half and into next year.When the Baltic Capesize Index trades around today's levels at about $40,000 per day, the company will yield about 18%. When we see moves around the $60,000 per day range, we will produce a yield of around 34%. And when we see $100,000 per day on the Baltic Capesize Index, Himalaya will yield close to 65% on the current share price.