Hapag-Lloyd Aktien

Ladies and gentlemen, welcome to the Hapag-Lloyd Analysts and Investors Full Year Results 2025 Conference Call. Today, Hapag-Lloyd is represented by Rolf Haben Janssen, CEO, and Mark Frese, CFO. I am Valentina, the chorus call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rolf Haber-Janssen. Please go ahead.

Thank you very much and welcome also from our side as usual and we appreciate you taking the time to listen to us. I think from our end I'll give as usual a quick introduction, talk about some highlights, Mark will take us through the numbers and then I'll try to say something about market and outlook and after that happy to take your questions. Maybe if we start with a couple of highlights when we look at 2025. I would say that a number of things to be mentioned. I think on the financial side I would say the results were solid, with as a real highlight that we have grown quite fast, significantly ahead of market, and we were able to keep rates at a reasonable level, also if you compare that to some others. We certainly had a lot of transition costs when moving into Gemini, but in the second half of the year, we also started to see costs coming out. On the fleet side, we've continued to invest in modernizing our fleet. I think that's just normal uh looking at 24 we ordered a fairly large number of ships we ordered some more ships this year um that is a process that will continue to to move ahead on gemini i think we're very pleased with where we are on gemini after 12 months i think if we go back a year and a half a lot of people were sitting on the fence and were in doubt on whether we were going to be able to deliver that 90 schedule reliability i think we've together with Merston, a really good job in doing that pretty much from day one. And we're also confident that going forward, we will be able to hold that up and that we'll start yielding dividends. On the terminals, good throughput growth. We've also been able to grow the portfolio with the terminal in Le Havre. And then we also signed an agreement in Brazil towards the end of the year. So good progress there, even if that unit is still fairly new. And then, of course, we signed the merger agreement with Zim. where we hope to conclude that transaction towards the end of this year. If we look maybe first at the terminal side of things, I think when you look at the terminal portfolio on page three, we've grown in Le Havre, as I mentioned. Operations started in March, being used by Gemini. It certainly improves our position in and out of France, good volume growth. We expect to see some more of that in the course of 26. Damietta, we've been constructing that port for quite some time, and it has now gone live in February. Really good start, good productivity pretty much from day one, but of course, volume will continue to grow. And then we have Aracus, where we signed the agreement in December, yes? and we will finish hopefully construction somewhere in the course of 28, and that will then become another important hub in our network, in this case, of course, mainly focused on the east coast of South America. So all in all, I would say on good track, and when you look at it on the right-hand side where we are these days, I think it's impressive what the team has done, especially keeping in mind that we established it only a few years ago. When we look at volume on page four, we've seen really good volume growth globally, 8% versus market, approximately five. Very strong growth on the Trans-Pacific, although admittedly, we had also lost a fair bit of market share there in the years running up to 23. In 24, we saw good growth and another chunk of good growth in 25. On the Far East, a bit ahead of market. Middle East and Africa also clearly ahead of market. And of course, if you would fast forward and would add in the potential acquisition of Zim, that would certainly strengthen our position in the market and would reinforce our position as number five, as that would mean that we grow to roughly 18 million TEUs. A few words on Gemini. When we look at the schedule reliability, I think we're really proud, as I mentioned in the introduction, about what we actually have achieved. And that is certainly a testimony to all the teams that have worked so hard on that. I know that when we look at the month of February, that we are a little bit down on the back of very bad weather in Europe. But we will get back to this 90% within one or two months. So I think the model that we have designed actually turns out to be quite robust, and I also believe it can still be improved quite a lot. We did a little survey in terms of how do customers look at this, and there I think you see that also when you look at NPS scores that the feedback from the customers is also very clear that when we look at Gemini that clearly outperforms the other alliances and of course that should help us to continue to grow hopefully a little bit ahead of market but it should also allow us to attract the best possible cargo mix and and I believe that in some cases we also see that that customers recognize that not only because we are more reliable but also because the standard deviation of when we deliver so much smaller that they actually can start to reduce their inventories which of course is a clear financial benefit, and that makes it possible to start thinking about how do we share some of that. On the modernization of our ships, we continue to work on that. We today have an order book of in total about 350,000 TUs with 32 vessels. In addition to that, we also have a number of strategic charters. I think our order book today has a decent size We, of course, had the 1217 case. We had the 129 case in there that we ordered in 24. And then in 25, we ordered some dual-fuel LNG 4.5 case, and we took long-term charters for some of the smaller ships. In the end, I think that underlines that we remain committed to not only modernizing our fleet, but we also do continue to focus on bringing emissions down We see that our AER is meantime down about 20% versus 2022, which I think is a really good achievement. We have about 50 ships with alternative propulsion by the year 2030. We have secured some green fuels based on long-term uptake agreements and also Good to note that despite all the skepticism that we sometimes see in the market, that last year we sold over 380,000 TUs via ShipGreen, which was 90% more than what we saw in 2024. And I think that's the third year in a row that we more or less doubled that. We hope to be able to grow that even more in 2026. We think that the growth will definitely slow down. But 380,000 TUs is not small and at least gets close to about 3% of the total volume that we move. Then a bit on cost savings. On page number 7, I think we see that those cost savings are starting to come. We do expect to get to full run rate by the end of 2026. If you look at where are they, a couple of categories mentioned here. Of course, the network has a lot to do with Gemini, but also has to do with reduction of third-party feeders and some changes that we make to the network in Gemini, but also outside of Gemini. Bunker efficiency because of the reliability, but also because of the money that we have invested in. Fleet upgrades. And then we have a whole bunch of other categories as well that we are working on. I think we've seen some real good traction on cost savings in the second half of 2025. We do expect more than a billion to materialize in 2026. It is also fair to say, though, that the first quarter has been a little bit tough. And we'll come to that later on when we talk about outlook because of extreme bad weather in Europe, especially in the beginning of the year. And, of course, we now also have to face the renewed crisis in the Middle East that causes significant additional costs for us, especially short-term, where, of course, we then need to see how to recover that over the upcoming couple of months. But in parallel, we stay focused on Ventus, and we still think that over time that will bring us a very material contribution to the success of Hapag-Lloyds. Then a few words on ZIM. You will have seen that we signed the merger agreement. Now we have initiated the process to try and get all the needed approvals. Of course, given the situation that we have today in the Middle East, that process may take a little bit longer because things simply move a little bit slower these days. reinforcing our deal rationale, securing our position, access to a very efficient and modern fleet, great people, good customer base in a strategy that's very similar to ours. And of course, in the end, also because we believe that we will be able to realize up to 500 million synergies per year. Timeline. We signed in February. We have the extraordinary meeting of the shareholders scheduled for the end of April. We have initiated the process by now to get the approval from relevant authorities, starting with Israel, but also starting in other jurisdictions and then Hopefully, we will be able to get all those clearances before the end of the year, which would then allow us to close hopefully towards the end of this year or later in the beginning of next year. So, so much maybe as highlights from my end as an introduction. And with that, I would hand it over to Mark, who will take us through the numbers. So, Mark, over to you.

Yes, thank you, Rolf, and also a good morning from my side to our fiscal year 25 result presentation. And let's begin with the overview of our key performance indicators. So for sure, 25 was marked by a very challenging market environment, yet we can say we continue to demonstrate resilience and operational strength across the group. as we delivered strong volume growth in both of our business segments. And although the market's backdrop remained demanding, we achieved an overall very satisfactory financial result, underlying our ability to operate reliably and efficiently even in these volatile circumstances and conditions. Free cash flow remained clearly positive, and our balance sheet continues to be a strong one. With ample liquidity, solid operational cash generation, and a well-balanced funding structure, we are well positioned to navigate the current uncertainty environment and invest in our strategic priorities going forward. And with that, let me walk you through the individual components in a little bit more detail. Revenues increased by 2%. in 25 mainly driven by higher transported volumes. As expected, earnings were lower year on year, and that is primarily due to softer freight rates and continued external cost pressure. For this year, Group EBITDA came in at $3.6 billion, EBIT at $1.1 billion, and Group Profit at $1 billion. Overall, the result landed at the upper end of our earnings guidance. and it was slightly supported by positive operationally cost, one-time non-cash effect in the fourth quarter of around $150 million, which were mainly related to an improvement in our system-supported process for revenue recognition resulting in the release of provisions. When we jump to our liner shipping segment, we saw They achieved strong volume growth. At the same time, revenues were impacted by softer freight rates, driven by rising trade imbalances and growing global tonnage supply. Operationally, new U.S. tariff policies continued security tension in the Red Sea, as we all know, and increasing port congestions, all added pressure on cost. Despite this challenging backdrop, we delivered a solid liner EBIT of $1 billion. Jumping over to rates and volumes, in 25, we transported 13.5 million TU's, and that represents a volume growth of 8%, which is well above the market. And this strong development reflects the successful implementation of Gemini Corporation, and the supporting expansion of our fleet capacity. Significant reduction in network delays was one of the key success factors that enabled this remarkable volume performance, as you might imagine. The growth is particularly noteworthy given the terrorist-driven demand volatility we had to manage in this year. While market volumes on the Trans-Pacific declined, Due to the sharp increase in U.S. import tariffs, we were still able to grow our volumes by double digits and gained overall market share. We also delivered above-market growth on other Gemini trades, such as Far and Middle East. On the Atlantic, volumes increased only modestly due to the softer demand between Europe and North America, and we all know why. while operational disruption in several ports limited growth on the Latin America-Europe trade. After that prolonged decline, the average trade rate increased by 5% quarter over quarter in Q3, supported by front-loading effects especially, but eased again in Q4 to US$1,310 per TU. And that is the lowest level since the fourth quarter of 23. For the full year, average rate rate stood at US$1,376 per TU, and that's representing an 8% decrease compared to the year before. Jumping over to our unit cost, they increased by 4% in 25 to US$1,328 to you, respectively. And several factors caused this. For sure, higher trade imbalances, fluctuating US tariff rates, and rising regulatory compliance requirements of which structurally increased our cost base. And a weaker US dollar further for sure amplified these effects just named. Operational efficiency also remained under pressure due to Red Sea rerouting and the persistent port congestions across key hubs. And as Rolf already mentioned, with our comprehensive cost savings program Ventus, we began effectively counterbalancing these elevated cost pressures in the second half of 2025 and more to come. Following the successful phase-in of Gemini, the structural benefits of the new network have started to materialize, supporting efficiency and service reliability as key quality factors. Jumping over to the T&I, so to our terminal infrastructure segment, That business delivered strong throughput growth and they benefited from the synergies between both business segments and they also benefited for sure from the acquisition and ramp up of new terminals. Revenues in the terminal segment increased by 18% to 514 million US dollars in 25. European and Mediterranean hubs in particular saw strong uplift from stable Gemini connectivity, as mentioned already before. Growth was further supported by our acquisition of the Le Havre terminal in France last March and the ramp-up of our terminal in Tuticorin in India. At the same time, the cost base was impacted by operational challenges, particularly U.S. tariff-related demand volatility in our Latin America terminals, as well as the unfavorable mixed effects, one-off items, and ramp-up costs associated with the new business segment. As a result, EBITDA remained broadly stable at $152 million, while EBITDA slightly declined to $66 million in 2025. Jumping over to the cash flow, Operating cash flow for 25 for the group amounted to $2.9 billion. We invested around $1.8 billion, especially in new vessels and containers, and also in the modernization of our existing fleet under our fleet upgrade program. These investments are, as you know, key for us to further improve our cost efficiency on the one side and reducing our CO2 emissions across the whole fleet. The net cash outflow from investment totaled to $1.4 billion, and that was supported by $390 million of proceeds from interest dividends and divestments we did. All in all, we generated another robust free cash flow of 1.45 billion US dollars. The financing cash outflows amounted to 3.1 billion US, results for sure of the dividend payment of 1.65 billion US dollars, but also from debt and lease redemptions and interest payments. Our year-end cash balance remained at a very healthy level of 4.1 billion US dollars. Looking at our balance sheet, and here you can see that we continue to operate from a very strong financial position which is really characterized by the liquidity we are having and our low leverage, including our highly liquid fixed income investments and our undrawn evolving credit facilities, our total liquidity reserve amounts to $7 billion. And this for sure provides us with substantial flexibility both to fund strategic investments such as the planned ZIM acquisitions and to navigate periods of heightened market volatility. Jumping over to the next slide, and let me, maybe before I conclude, take a moment to reflect on our recently celebrated 10th anniversary as a public-listed company. With our clear focus on quality, we are not only delivering an outstanding service offering to our customers, but have also generated tremendous long-term returns for our shareholders. Since IPO in 2015, Hapag-Lloyd has distributed more than 21 billion euros in dividends, and that's while consistently creating value and maintaining a strong balance sheet with a prudent financial policy. And to continue that and to continue sharing the success with our shareholders, the executive board and supervisory board will propose a dividend of 3 euros per share at the AGM in May. This represents a payout ratio of 57% of our group's annual net profit and a total payout of 0.5 billion US, and that is fully in line with our dividends policy. Having said that, I hand it back to Rolf for a market update and our financial outlook. Thank you.

Thank you, Marc. And yeah, maybe say a few words around the market, where in the end it's always about supply and demand. When I think, when we look at global container volumes, I think that the growth of our market has actually been surprisingly robust at least too many for the last two years. I think if we look at 24 and 25, we saw growth of 6 and 5%. But what's even more important is that when we look a little bit deeper into that growth, we see that the growth on the dominant legs, which actually determine how much capacity growth is needed, was even higher. When we look at the growth on the dominant legs, it was actually 10 and 8% in 24 and 25. which probably also explains why the perceived overcapacity in the market is probably a lot less than many people feared one or two years ago. When we look ahead into 26, we expect to see slower growth. Of course, there's a big unknown at this point in time about what the impact will be of the conflict in the Middle East. In all fairness, also for us, that is still very difficult to assess at this point in time. And as we look ahead into 2027, hopefully we'll see a slightly more stable market. So for this year, demand growth and capacity growth probably roughly in line. Sport rates were remarkably low in the beginning of this year. I think we saw a decline running up to Chinese New Year, which was much, I think rates were much weaker than one would expect based on the balance between supply and demand. But of course, at the moment, we also have the conflict in the Middle East that is definitely disrupting some of the key corridors, but is also causing sharply increased costs, and certainly some uncertainty on the rate side as well. Maybe if we flip to the Middle East, what have we done? We have suspended all transits through the Strait of Hormuz, also through the Red Sea, where we were actually getting closer to returning to the Red Sea. We stopped all the bookings from and to the Upper Gulf region simply because we cannot move the boxes. We are adjusting our network. We continue to offer the connections from Asia to the Middle East, even if in some cases it now goes with a different routing. Posts are increasing sharply. I mean, if we look at the impact that this has on us, Then we talk easily about $40 or $50 million per week that we are facing at this point in time, mainly related to bunker, but also insurance costs are up significantly, and so are costs related to storage and in some cases also inland transportation. We have introduced a number of contingency and emergency charges to try and recover that. But as you know, these things, if they come, will always come with a certain delay. And right now, our priority is to try and mitigate those costs, but of course, first and foremost, to try and take care of our people, both on land and on the ships in the Middle East. And that's going to remain our focus for a while. Then when we look ahead into 2026, um we expect a challenging start of the year because we have had very significant disruptions in january in europe north and south europe mainly because of extreme bad weather which disrupted our network for a fair bit during three to four weeks and now of course we have the situation in the middle east and in that context our outlook remains as we have put it together over the last number of weeks. And that's what you can see here, a group EBITDA of between 1.1 and 3.1 billion US dollars and an EBIT of minus 1.5 to plus 1.5. Very important to say here that for us, the implications of the conflict in the Middle East are at this point in time very, very difficult to assess. What we know is that the cost, the extra cost is definitely there. What that will do over time to market rates and when we will be able to recover those costs, most likely that will happen with a delay. And that means that we expect to see a soft first quarter, but we also see that the underlying demand actually remains robust And that's also why we stick to the outlook as we have presented it here, that in fairness has not changed materially over the last four, five, six weeks, as it is simply too early to assess what the impact could be net-net of the conflict in the Middle East. Our cost saving program will continue to lower that cost base, but admittedly, we won't see that in Q1 because we've had a lot of extra costs, but we stay on that trajectory, and in the course of 26, we will see that coming back. So what are our priorities for this year, but also beyond that? At the moment, clearly the safety of our colleagues, both on land and on the vessels in the Middle East, is a key priority, and we have the crisis team in place to to manage that as good as we can on a day-to-day basis. We'll continue to focus on delivering outstanding operational and service quality as we grow not only our digital offerings, but also as we continuously focus on delivering that 90% schedule reliability. We'll continue to strengthen our organization by developing our people, investing in training and education, and making sure that they get stronger every year. Cost management was already mentioned. And of course, a big focus for us is also the timely closing of the transaction with Zim, where we still need to get all the approvals that we are all aware of. And with that, I think I'll wrap it up from our end, and we'd be happy to take any questions that you may have.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Parash Jain from HSBC. Please go ahead.

Thank you for the presentation. I have two questions. First, if you can talk about how has been the upcoming contracts looks like. And in uncertain time, do clients want to enter into contract or they would focus on more of short-term contract? And if you can share about expectation, both on Asia, Europe, as well as in Trans-Pacific. Secondly, with the Middle East crisis, it's highly uncertain when and how it will end. But where do you sit? If this crisis lasts beyond several weeks, Do you see a demand destruction as a real possibility? And until now, have you seen any demand destruction as a result of this? Thank you.

Thank you. I think to maybe try to take them one by one in terms of contracts, I think we've seen a fairly normal contract season. Most of the contracts were also closed before the conflict in the Middle East really escalated. Both on Asia Europe and TP, we see similar levels of contracting. The volume that we've contracted is similar to what we saw last year. I think net-net, we see that rates are probably a little bit down. We have to see a little bit how that works with Parker, but net-net, I think they're slightly down. In terms of the Middle East, whether that can result in demand destruction, of course it could. I think if the conflict lasts long, that will not be good for global trade growth, even if I think that that will only be something which is temporary. When we look today at what we see, then of course we are missing the bookings to and from the upper Gulf, but when we look at the rest of our business, then bookings remain strong and healthy. I think our run rate over the last couple of weeks has been somewhat lower than planned because we missed those volumes from the upper Gulf, but the rest is pretty much on plan or even slightly ahead of that.

Just to clarify in terms of the contract rates, does that include the fuel or you have a mechanism to impose the fuel such as given the sharp rally we have seen on your contracts?

I mean, of course, normally all those long-term contracts have a fuel clause. And in our case, pretty much all the contracts have that. And, of course, there with the formula that we have, then the increase in fuel is going to be reflected in those prices, but with a delay. Okay. Thank you so much.

The next question comes from Alexia Dogani from JP Morgan. Please go ahead.

Yeah, good morning. Thank you for taking my question. Just to clarify, on Asia-Europe contract rates, you said a little bit down year-over-year. Is that low single-digit, mid-single-digit? That would be quite helpful. To clarify, secondly, you mentioned very helpfully that you're incurring $40 to $50 million additional weekly cost. I mean, if I analyze it, I get to something like $2.3 billion, which reflects predominantly the banker price increase we've seen to date. Obviously, you've given a guidance range. What have you assumed within that guidance range, given what you know today? Have you assumed that full cost hits you and you recover X percent? Can you just help us understand what you have reflected in your guidance? And then can you give us some indication of what your customers are basically saying about these emergency surcharges you are currently imposing. I think there is some discussion in the industry that perhaps there could be some double dipping because bunker adjustment factors will eventually catch up. I think you mentioned there is a lag. So putting an emergency charge today is slightly trying to double charge. So can you just give us an understanding of

what these customers discussions are focusing on um yes that's it for another mystery thank you okay let me try and give you an answer to this i think your first question was on rates in uh on asia europe on a like for like basis we talk about a single digit percentage that they are down um your second question was around no extra cost and how much of that will you be able to recover and how is that reflected in your outlook in fairness that is not fully reflected in our outlook because we did most of the work on our outlook several weeks ago before the conflict broke out. Right now, we see no reason to adjust that outlook, but the net effect of what that will mean in terms of cost and revenue is very difficult to determine. And to your last point on fuel surcharges, our ambition is clearly not to collect that twice. But what we do have is that because of the very steep increase in price that we have, we believe that it is fair that we can pass some of that on to the customers now. And in return, we would then pass on less later. I mean, if you go to the petrol station today, you pay more than you did four weeks ago. And that's not a delay of time. two or three months because we say that the guy in the petrol station just needs to absorb that and then we will pay more in q3 normally those type of adjustment formulas that we have you know with a couple of months delay work fine yeah but in a period where you see that costs go up with 60 70 80 percent that doesn't work because we just for us it is not possible to then just you know pre-fund 50 million dollars a week yeah in extra cost. And that's why we have that discussion with our customers with the clear intention to recover the extra cost, but not with the intention to collect that twice. And that's also why when we talk to customers, we ask them for the additional charge, but we also commit to then not take that into account when we have to recalculate the regular formula in a couple of months from today.

Thank you, Ralph. That's very helpful. And can I just ask a follow-up? When you look back previous situations where you've seen a supply shock to the old price, how successful have you been historically to recover the increased fuel costs? I mean, is it usually that you can recover 100%, 70%, 50%? And what is kind of the variable that defines how successful you are?

recover this increase i mean normally for all this is all about contracted cargo which is you know say 50 or so of the of the overall volume normally we have been very successful and i think that's also fair yeah normally we have through our formulas been able to recover that extra cost now we have an extraordinary situation because the increase is so steep and that's why we believe it's fair that we pull some of that forward but traditionally Because of the way that the formulas also work, I think this is an agreement that is fair for the lines, but also for the customers.

Thank you. And if okay, just one final one. In terms of the fuel inventory, do you hold any actual bunker fuel inventory, which means there could be a delayed effect on the price applied? And if there are shipping lines globally that don't hold an inventory, is there like a cash flow issue potentially because of the mismatched fuel price versus rate recovery?

I mean, we don't hold inventory beyond what we have on the ships.

Okay, thank you. The next question comes from Samuel Goldstone from UBS. Please go ahead.

Good morning and thank you for the presentation. On the topic of the last couple of questions and around fuel shortages, especially at ports in Asia over the next few weeks and months, are you making any contingency plans for fuel shortages or do you believe that this is not a problem that is likely to materialise? Thank you.

I mean, I think the short answer is that we are definitely looking into that because we also see that there is potentially a risk of shortage. Asia is not one of our biggest bunkering locations, but it is certainly something to keep an eye on. Thank you.

As a reminder, if you wish to register for a question, please press star N1 on your telephone. The next question comes from Andy Chu from Deutsche Bank. Please go ahead.

Good morning. Could I just ask questions around Q1? Just in light of, I know it's a timing issue, but the sort of run rate of 40 to 50 million of costs that just might be a timing issue. Let's say there's a month's worth of that. That could be triple digit millions of cost headwinds plus, weather disruption in Europe and North America. So it feels to me that Q1 could be a sort of very heavily loss-making quarter, albeit with timing effects. Could you just give us a steer as to what the weather effect is going to be and what we should be thinking of in terms of the print for Q1. Are you looking at sort of triple-digit million dollars of EBIT losses? Is that too negative or about right? Thank you.

I mean, it's still a little bit early to comment on what exactly the first quarter will look like. But the first quarter, I mean, we certainly have an extraordinary amount of headwinds because of the very bad weather that we had in January and parts of February. And of course, the extra costs that we are in disruption that we are facing now. So, you know, I think the scenario that you are outlining is certainly not impossible.

If I could just ask about demand, which is obviously difficult to predict. Obviously, you've got a tough comp, as you outlined, two surprisingly good years probably of growth, and you printed 8% growth last year. The comp's quite challenging. So against, I think there was a slide from an industry source saying market growth of 3% for this year. Where do you think you will land versus that 3%? Do you think you can grow in line with that? Or do you think you'll be now on the wrong side of industry, sort of 3%, if that indeed is the right number?

I think we will still be on the right side of industry, to be honest. Q1, I don't know, because we are a little bit overrepresented in Europe, which was particularly hard hit in January and parts of February. But when I look ahead into the full year of 26, then I would still expect us to be on the right side of industry growth.

Thank you. And then my last question is around the Middle East. I think you've got some ships that are kind of stranded. Could you just outline what capacity is kind of stranded at the moment in the Arabian Sea? And then in terms of ports, which of the Middle East ports are kind of shut? How much disruption is that causing you?

I think in total, we at the moment have six ships stuck in the Persian Gulf with a total capacity of about 25,000 to use. In terms of the ports that we cannot call, well, those are basically all the ports that are inside of the Gulf. But we are still able to use, for example, Salalah and others, and of course, also on the other end, Jeddah.

Right. Thank you very much.

The next question comes from Marco Limite from Barclays. Please go ahead.

Hello, morning. Thanks for taking my question. First question is on the outlook. So you are today providing an outlook with a 2 billion range. If I look at the outlook for 2025 at the start of the year, it was 1.5 billion, so clearly slightly wider than in the past. Key question, I guess, is what are your assumptions around the Red Sea? Is it fair to assume that the upper end of the range basically implies not Red Sea reopening for 2026? Would be my first question. Second question is, again, to go back to the surcharges, the fuel surcharges. So you have mentioned 40 to 50 million. times 52 weeks and divided by, let's say, volumes, I do get something like the amount of surcharges that you've been asking. So am I right to assume that you basically have got a bit of a headwind in Q1 just because of the lag, but then when we think about Q2, Q3, Q4, your surcharges fully cover the 40 to 50 million? Is that the way you have been calculating the surcharges? Please. And Yeah, probably the third question is on the cost savings. In the slides, you are talking now about $1 million cost savings in 26. I think with the Q3 presentation, you were talking about a similar number, but yeah, just to confirm that your view on cost savings this year has not really changed since the Q3 result presentation. Thank you.

let me try and take them maybe one by one start with the savings yes you're right i think our perspective that has not changed we've seen good traction towards the end of 25 so that gives us confidence that that 1 billion is indeed achievable in terms of fuel surcharge you are right yeah that there is a time lag how much that exactly is is always a little bit difficult to determine also because you just have some notes periods that you need to take into account in in some trades so For sure, we have a mismatch between cost and revenue in March. I think we'll still have some of that in April as well. But we do expect to recover that additional cost when we look at the full year. And in terms of the outlook, I think in terms of the Red Sea, I think right now it would not have been possible right to assume that the Red Sea opens up soon. So the scenario where that remains largely closed for 2026, I think is right now the most realistic.

Okay, and if I can ask you also to follow up on the upper end of the guidance. I mean, what can you tell us about the assumptions you have made on the upper end of the guidance? I assume Red Sea is not reopening, as you just said. about anything on volumes and rates for the upper end of the guidance. Thank you.

As I said in the beginning, I think it's almost impossible to give good guidance at this point in time. We try to take a good go at it. We think that if you want to get to the upper end of the guidance, then we need to see a reasonably strong volume where we are able to grow ahead of markets. And we'll also certainly need to see a normal peak season where we see a fairly good recovery of spot rates. And then it also assumes, of course, the recovery of the additional fuel cost.

Thank you very much.

The next question comes from Urlik Bak from Danske Bank. Please go ahead.

Yes, thank you for taking my question. Just on Gemini and scheduled reliability, can you perhaps share the level of scheduled reliability in the feeder network compared to the main trade lanes, which I believe is what the intelligence is tracking, which is the one you showed on the slide? And then also, secondly, can you discuss the robustness of this Gemini hub and spoke network in a situation with disruptions that we see at the moment compared to your previous network setup?

I mean, first of all, I think the schedule reliability as it's being measured includes the mainliners but also the shuttles. So there's actually not a material difference in the schedule reliability across the network. The second point on how robust it is, I think this hub and spoke network is definitely more robust than the network that we used to have in the past. If I look at the extraordinary disruption that we have seen in Europe in January, that in our case then led to a drop of schedule reliability to 80% more or less. But in April, we will be back to 90. So that has not taken all that long to recover that. If I compare that to the network that we had in the past, we would have dropped much, much more than 10 percentage points. And it would also have taken us a lot longer to recover. And in a way, if you look today at the number of holes that you see in the schedules of some of the other alliances, I think that also tells you a bit of a story, whereas we have barely had to blank anything. So to answer your question, the shuttles and the mainliners have a very comparable schedule reliability, and the network that we have today is significantly more robust than what we had in the past.

Thank you, very clear.

Once again, to ask a question, please press star and one on your telephone. We now have a follow-up question from Alexia Dugani, JP Morgan. Please go ahead.

Thank you for taking the follow-up. Just two questions on the Middle East situation. Clearly, you helpfully said you have six ships currently stranded. What's the plan to let these ships exit? Because clearly, we've heard from the UN that there's a bit of a humanitarian issue for the seafarers. Are you working actively to try to secure safe passage to basically evacuate those ships from the region? That's my first question. The second question, obviously the region represents something like 3% of global container volumes. How much is the region's demand impaired at the moment? So I understand critical cargo is getting in. But if you said, you know, it's kind of 75% intact, is it 50% intact? That would be just quite helpful to understand what is actually happening to demand near term. And then finally, just so there's no misunderstanding, what is your contract exposure? Is it 50% still? And is it fair to assume that if you are successful in passing on the fuel surcharges, Really, we will see it in the spot rate, and then the contract share will be adjusted through the bus. Thank you.

Maybe to take the last one first, I think our contract ratio is indeed still around 50%, and I don't expect that to really change. As far as the ships are concerned that are stuck in the Persian Gulf, we do everything possible to try and get them out, and we will explore every possibility that there is. But so far, we have not been able to find one. And in terms of volume, I mean, the volume that currently moves into the upper Gulf via sea is very, very low. And yes, there is some cargo that's being moved on a land bridge, but I don't know the exact numbers, but one should assume that the volume that moves there in and out is reduced very significantly.

Thank you.

I don't know the exact numbers.

That's helpful. I understood the point. I guess kind of on the contracts of exposure, one question is, obviously, the spot rates last week were flat week on week. What does that kind of say in terms of the industry's ability to pass these fuel surcharges currently? I mean, you can argue bunker didn't move that much week on week, but... Can you help us read the movement in the rate last week, please?

I mean, these things move every week. In the couple of weeks before that, they moved up quite a lot. No, I cannot. If I would be able to read what the spot rates are going to do, you know, then I would probably be in a different business, yeah. none of us really knows where those things are going. I think it's quite clear that capacity is reasonably tight at this point in time. It's also clear that costs go up. So normally one would expect those costs to trend upwards. Should also not forget, though, that this is more or less the slowest season of the year. And there is always a lot of volatility in short-term rates. post-Chinese New Year until May, June. So that's the period where it's difficult to assess. Overall, I would still say that, especially out of Asia, demand is still pretty strong. Costs are up, so it would be quite logical that those short-term rates also trend upwards. But on a week-by-week basis, that's very difficult to judge.

Okay, thank you very much. Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Rolf-Haben Janssen for any closing remarks.

Okay, well, nothing to add from my side. Thank you very much for all of your questions and thanks for making the time to listen to us today. I hope that was informative and then hope to see or speak to you again very soon. Thanks very much.

Ladies and gentlemen, the conference is now over. Thank you for choosing Coral School and thank you for participating in the conference. You may now disconnect your lines. Goodbye.