Dampskibsselskabet Ord

Good morning and welcome everyone to this webcast with a presentation of the Q3 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 the Q&A 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 questions written in the chat below. With that, I'll hand over to CEO Jan Rembo and CFO Martin Badstedt from NOAN. Please go ahead.

Thank you very much and also a warm welcome from my side to this Q3 presentation of our results. Let's dive into the numbers. In the third quarter, we delivered a net profit of $26 million. This was driven by asset management and vessel sales as we continue to realize values from our fleet portfolio. And what is also evident here is that with a rising market and rising asset values, we've seen our NAV increase by 7% in the quarter. With better than expected performance and also this rising market, we have raised our full year guidance on the 28th of October to a range now of between 100 to 140 million dollars. We've also had a busy year so far with 45 asset transactions. So this is one of the hallmarks of Norden, where we are actively using the asset markets to optimize our fleet portfolio. With that, I will hand you over to Martin Bester to take a closer look at some of our numbers.

Thank you very much, Jan. So looking first into the NAV, where, as Jan said, the NAV increased 7% since the end of June to now 362 kroners per share. You will see that from the table, two-thirds of our NAV, or the fleet value at least, is in dry cargo, whereas the last part is in tankers. And, of course, also supported by a fairly strong balance sheet with a net financial position of $375 million. We have added some sensitivity analysis here shown on the right hand side where we show what happens to the NAV if you change the underlying asset values or forward rates by 10% or 20%. And you will see in the upside bars here in the graph that a 10% change will actually give you an 18% upside and a 20% change will give you 37% upside in the NAV figures. Turning to the business unit, starting first with freight services and trading, we made a loss of $14 million in the quarter, mainly driven by poor performance, especially in cape size in our dry operator large vessel segment. Importantly, the dry operator small vessels actually did quite well and generated a profit of $9.1 million. And when you combine the two segments, we are seeing improved performance towards the end of Q3 and into Q4. Tenga operator made a profit of $2.4 million based actually on very good TCE earnings in our Tenga pool. And actually that led to a margin per vessel day of $1,700, which is a very strong number, although a little bit down on the numbers from last year, which were exceptionally strong. Logistics have actually improved its operating performance and have now delivered $1 million of positive EBITDA during the quarter. In asset management, we continue to do quite well in both of our segments. So we have made a profit of $62 million in the quarter. $27 million were from sales gains, still leaving $35 million in the quarter in operational performance. In dry, we benefited from high coverage taking on at times when the TC rates were stronger than now. And in the tanker owner, we benefit from the spot position that we have in a market that has been tightening during Q3. And as Jan said, we have been super active in managing our portfolio with 22 sales and 22 new additions to the fleet and actually also buying one vessel into our own fleet. And that means that even though we are selling quite a few vessels and realizing those values, we actually still have a strong portfolio of 83 options that provide good upside in potential tightening markets. Turning to the market development, you will see here from the graph that it was a fairly soft first half, and then in the beginning of Q3 the supermax rates spiked, as did CAPE size and other rates in the market, mainly on the back of strong cold volumes. This has actually continued so far during Q4. still on strong coal volumes, but actually also on a rebound in bauxite transportation. We actually think that the fundamentals are pretty strong in the market at the moment, and not least supported by all the uncertainty of geopolitical uncertainty and sanctions being in place, that generally is supportive of rates in this environment. In the tanker space we also saw improvements in Q3. You see here the dark line actually coming up above the line showing the rates from last year. So here also we are talking about geopolitical uncertainties, sanctions, trade skirmishes and so forth, which actually tend to lead to longer distances and therefore require much more tonnage to transport the same amount of volumes. After the end of Q3, we have also seen a very strong development in crew tanker rates based on OPEC deciding to add more barrels to the market, thus leading to more transportation. And even though we haven't seen so much trickle down into the product tanker rates so far, we actually believe that that will happen for the rest of the year and into 2026, leading to a strong market development also for our MR tankers. That does last, we think, into the first half of 2026, after which there will be some pressure from new buildings coming into the market towards the end of next year. And with that, I will hand you back over to Jan.

Thank you, Martin. So in markets that are driven by geopolitics and that are quite volatile, it's good to have a dynamic and flexible model to adjust to that kind of environment. So in Norden, we have four drivers in our business model. We have dry cargo and tankers, and we have also owner and operator activities. And actually within the dry cargo segment we are in multiple vessel classes and we also have our logistics business. So it means that we have a broad spectrum of activities where we can adjust our investments and exposure between. And what that gives us is over time it delivers better returns than more simple businesses and we can see here on the right hand side that Norden have been able over a rolling five-year period to generate superior returns on our invested capital. We have also seen, though, that we have a higher volatility in our earnings and specifically in our fake services and trading business. And here we do have a focus on generating a higher level of stability in those earnings, while, of course, at the same time, maintaining all the upside that we like from the optionality. and therefore move us more to the left side in the graph that you're seeing on the right hand side in terms of volatility. If we turn to the next page and look at the full year guidance. So, as mentioned, we raised our guidance on October 28th to a new range of between 100 to 140 million dollars. And if you look at our position below where we have the open days, you can see that we have a long position across the business both in dry cargo and in tankers, which means that we are currently benefiting from the sort of momentum that we see both in the dry cargo and in the tanker markets. So we continue to see good earnings in the asset management part of the business, and we are actually seeing an improvement in the operating earnings in the freight services and trading, where we are moving closer to breakeven levels here towards the end of the year. With that, we turn to the last page before we go to Q&A. And just summarizing that we've had a good first nine months of the year with a total profit of $111 million and return on invested capital of 10%. We have raised our guidance, as I just mentioned, on better than expected operational performance and also rising markets. which also partly has led to the increase in our net asset values that now stand at 362 Danish kroner per share. We've been extremely active in the asset markets where we've had a total of 45 transactions. And I think what is notable here is that we have also built a core feed now of multi-purpose vessels. Most of them will deliver in the future, but it is sort of positioning Norton in that segment where we see great upside, both from demand and a low order book. And then we have a range of actions to ensure that this improvement we are now seeing in FST will continue and push into 2026 onwards. With that, let's turn to the Q&A session.

Thank you. We are now ready for the Q&A session. To repeat, you can get in line to ask questions by pushing the pound key or hashtag followed by five on your phone's touchpad if you're dialed in. Should you wish to withdraw from the line, you can push the pound key or hashtag followed by six. If you're watching this webcast online, you can ask your questions in the chat below. These questions will not be published but will be asked to management by the operator. And we have a first written question here, that is, how is the market you operate in affected by the US tariffs?

Yes, good. Good question. And especially right now, of course, where we just had this meeting in Korea between President Xi and Donald Trump. So obviously, if we start in the helicopter, tariffs is not good for trade. It creates barriers for trade. But having said that, what we see in shipping is that trade flows tend to shift with barriers. So for example, using the soybean trade as an example right now, where China, instead of buying in the US, they have been buying a lot of soybeans in South America. And at least in our business, we can quite easily adapt to that and simply load the cargoes, move the ships to South America instead of the US. So I think that's the benefit of, again, having a flexible business model. Now, I think with the tariffs, that has created a lot of noise in the world. But when you look at world GDP growth and you actually look at underlying sort of economic developments, we have not seen a huge impact. You know, the world carries on. So at least so far, you can say the consequences of higher tariffs have not really been felt in the global economy.

Thank you. And then we have another question here. How is the balance between owner's market and charter's market developing?

This is actually still something that we are struggling a little bit with. We call it also a challenging operating environment. So, for instance, if you take some of the dry cargo vessels that we are operating, we are seeing that asset prices are very firm. Period rates are actually also quite firm. And it's still quite hard for an operator to take in ships on period and put them into the spot market and actually make a positive margin on that. It has probably improved a little bit during the quarter with the tightness of the market, where spot has also come up. But it is still a general challenge that we see basically across the segments, but probably mainly in the bigger segments.

Thank you. And another question here. How are you balancing market exposure long, short into 2026?

Yeah, so I think we showed on one of the previous slides, we showed the position where we are long across the group. I guess I can show the slide. here where you see at the bottom that we have a long position across both dry cargo and tankers and especially actually into 2027 because this is also the time where we will take delivery of some of the owned new buildings that we have ordered on Cape size in Japan and also a number of the lease vessels are coming into the portfolio at that time. Of course, if markets continue to go up and asset prices rise, we also have the choice that we can declare purchase options and keep the vessels and further build this position out in time. And we can of course also go out and do additional deals The challenge, I think, at the moment is that asset prices are high, new building costs are high. So to order a new vessel comes also with a pretty hefty price tag. So it's not a sort of a slam dunk decision, even though you have a positive view on the markets to go out and order vessels. They are at a historically high cost.

Thank you. And another question here. When do you expect to see positive margins across the segments in the freight services and trading division? And how do you see the margins developing into 26, 27?

I probably cannot comment directly on exactly what we see there, but what we have said in the report and in the presentation here is that based on the good trend that we are seeing in recent months, we are actually expecting that the FST margins will move towards break-even levels. for the reminder of the year and also that the initiatives that we have put in place to improve performance will take effect and work as we expect during 2026. So we are seeing we are on a good trend, but I cannot be more specific than that at the moment.

I think I can add just one thing and that is that what we did see in the third quarter was that three out of the four segments were actually positive. So the challenge, as Martin also said earlier, is mainly on the larger vessels. And that is, of course, where our focus is to turn that around.

Thank you. And to repeat, if you wish to ask a question, please type it in on the chat below. And another question goes here. What market effects have you seen so far from sanctions towards Lukoil and Rosneft?

I think it's a little bit early to actually expect the meaningful impact of this. There is also the element that when you sanction parts of a market, then flows and activity tends to move to other parts of the market. So I think it's still early days, but our view is probably that we shouldn't expect a big impact of that particular sanction package.

Thank you. There seems to be no further questions, so I'll leave the word to management for a final remark.

All right. Well, thank you very much for good questions. Thank you very much for your interest. And we look forward to see you again at the next presentation.

Thank you.