Dampskibsselskabet Ord

Welcome everyone to this webcast with a presentation of the Q2 2025 report from NOAN that was published this morning. In the first part of the presentation you'll be in a listen-only mode which will be followed by a Q&A session. During this session you'll be able to ask questions by pushing the pound key or hashtag followed by five on your phone's touchpad. If you're watching this webcast online you can ask your questions in the chat below. With that, I'll hand over to CEO Jan Rindbo and CFO Martin Bergstedt from Nuon. Please go ahead.

Thank you very much and also a warm welcome here from my side and thanks for joining us on this presentation of our Q2 results. So let me just start by sharing some of our group highlights. So we have in the second quarter delivered a group net profit of $52 million and a return on invested capital of 10%. And this is driven by sales gains combined with possible contract cover in what has been weaker markets. And these weaker markets have been challenging for ship operators, but we've at the same time seen pretty resilient asset prices that has been favorable for ship owners. And that is also reflected in the diverging results for our two business units. We raised the lower end of our full year guidance and we are now guiding for a full year profit of between 70 million up to 130 million dollars. The NAV has been pretty stable when you correct for exchange rates and we are now reporting an NAV of 337 Danish kroner here at the end of the second quarter. In the second quarter we have been extremely active also continuing all the Asset transactions that we've done year to date. We've now had 38 transactions. We have sold 20 vessels, realizing a lot of value in the portfolio. But at the same time, also taking in new lease agreements with purchase options. And we continue to pay out our profits, distribute our profits to our shareholders. We have $20 million. here in the second quarter which will be to a dividend of 2 Danish kroner per share and a share buyback of 10 million dollars.

Diving a little bit more into our business units starting here with our freight services and trading. We made an EBITDA of minus 8 million dollars in Q2 which was on par with the period from last year and it was a little bit mixed bag actually with improvements year over year in the dry operator activities and also in logistics, but somewhat weaker numbers in the tanker operator. So in tanker operator, we made minus $2 million, mainly as a result of a much lower spot market compared to last year, but also because we still have some high charter costs from vessels taken in when the markets were higher. Logistics made $6.6 million, also a big improvement over last year. Some of it was related to reversal of provisions from prior periods, so not all of it can be expected to be recurring, but still a good performance there. And we actually also landed a small new logistics project in Australia with an existing freight client, helping them with BART services in their internal supply chain. In the dry operator, let me start out by saying that we've made small adjustments to the way that we report our dry operator activities. So we have decided to merge our handy size activities with the projects and parceling activities under the new header, dry operator small vessels. And the old dry operator is now called dry operator large vessels and then includes the remaining SupraMax, Panamax and Cape size activities. And you can see in dry operator, we made a loss of small, in the small vessel segment, we made a loss of $5 million, mainly as a result of fairly high period rates in the handed size activities. In dry operator, our last vessels, we lost $7 million as the new activity that we are generating is both low in volume, but especially also low in terms of contribution margin, which actually fail to cover all costs. It does show that, as Jan was alluding to, it is a tough market for operators with the tonnage costs as expressed by TT rates. It's fairly high compared to the spot rates that you earn from actually transporting cargo, making it tough to generate acceptable margins. When you add these two together, generating minus $12 million in the two-drive operator segment, That is a big improvement over last year, but of course it's not satisfactory. So we have taken a number of steps to ensure improved performance from 2026 and onwards. We have, for instance, appointed Annie Jensen as new COO to drive performance and profitability in the FSC business unit. We have implemented a new profit center structure with clear P&L accountability and commercial focus. And as I mentioned before, we have merged handicized and NPP activities to drive commercial synergies within that space. Turning to asset management. It was a good quarter for asset management. We were very active, as Jan said, in managing the portfolio. So we have made 20 vessel sales year-to-date, of which 13 were from declared purchase options. But importantly, we also actually made 18 new lease agreements year-to-date for high-quality vessels, including 10 MPP vessels. So that just goes to show that we are actually also still building the portfolio to position for future upside. EBITDA increased to $68 million in Q2, both as a result of higher sales gains, but also due to good contract cover, especially on the dry owner side, and slightly better tanker spot rates, which actually also benefits the tanker owner. By the end of Q2, Norton had still 67,000 extension option days and 85 purchase options, meaning that we're actually at the same level of purchase options that we were at the beginning of the year. And 33 of these are still in the money and can be declared within the next two years. Turning to markets which were in general quite challenging, you will see from the graph on the top here that the supermax spot rates were down significantly over last year, down 33% in fact. And surprisingly, asset prices actually remained quite firm. Driving, the spot rate weakness was quite weak demand growth. The total tons transported up only 0.5%. With some distance effect, the ton-mile effect was a little bit better, but still. And this was driven by the rest of the world, while China was actually negative in the period. Especially weak was the coal trade during the first half, but that turned around at the beginning of Q3. And obviously, the bauxite trade was super strong at the first half, but was actually stalling towards the end of the first half. Near term, we see actually a market that is quite tight based on stronger coal and bauxite trade, and not least the upstart of Simandu iron ore exports at the end of the year. In the longer term outlook, we still believe that it is quite attractive to be in dry bulk shipping based not least on favorable supply dynamics. We see a fairly low order book, an aging fleet that needs to be scrapped, and fairly limited yard capacity. On the tanker side, tanker spot rates were down 38% versus last year, but actually coming from a very high level, it was actually still a decent level in Q2. There's continued support to the overall market balance from global fleet inefficiencies, mainly driven by a combination of sanctions, safety concerns, and an aging fleet. For the second half of the year, we do see stronger crude trade based on OPEC plus volume increases for exports. And that will add support also to product rates in the near term. However, looking beyond 2025, we do see some rate weakness expected from gradual increases in new building deliveries, mainly in LR2 and in MRs.