Hoegh Autoliner Asa

Good morning and a warm welcome to Herc Autoliner's fourth quarter presentation. My name is My Linh Vu, Head of Investor Relations. And with me today, we have a CEO, Andreas Enge, and our CFO, Espen Stubru, who will walk you through the last quarter, business and financial performance. As usual, we will conclude the webcast with a Q&A session at the end of the presentation. So if you have any questions, please send an email to our Investor Relations mailbox at ir.herc.com. So with that, I will leave it to you, Andreas.

Thank you, Mylin. And once again, welcome to our quarterly presentation, starting today with a picture of Hög Sunrise, one of our new build vessels that was named, had to celebrate its naming ceremony last summer with valued customers in the land of the rising sun. We are pleased to report another quarter, and this is also an end of a year with solid performance in, I think, somewhat we could justifiably call a somewhat turbulent year on the macro side, but has still translated into very solid performance from our part. EBITDA for the quarter, 145 million, translating into net profit 105, gross rate of 91.4. And we are now back on our regular full payout dividend policy of average. This quarter translates into 99 million dollars. One more new build delivered in the quarter, a solid equity ratio of 55%. If you look at the year, $621 million VBTA and 513 million net profits delivered, gross rate of 93.4%. We have We have declared for the year dividends of $424 million, maintaining our very solid dividend yield, taking delivery of three vessels, and we have a return on investment capital of 26%, all adding up, as I said, to very robust performances. I'm just going to go through some pieces on the market and sustainability and then hand over to Espen for a capacity financial before we end up with an outlook for the current quarter. On the market side, I think it's important relevant to emphasize the importance of China and Chinese car exports for our industry and for the capacity balance and clearly being the driver for vessels running full and delivering the performance. Europe remains China's clearly largest export market, but we also see strong growth in other markets such as the Middle East and South America. So the export boom is broadening. The Chinese OEMs are almost doubling their market share in Europe in 2025, now surpassing American and Korean OEMs. So it's a very, very strong continued growth from China that is the main driver in development of our industry. And that goes across also the cargo segments. Clearly, the main driver from China is new vehicles. where China has established clear position over the last few years as the dominant car exporter to the world. And that development is continuing at full force. Also importantly, we've had some fairly soft development in the high and heavy market over the last several years, but we are now seeing a change in that. But also that part is driven by a strong growth in the exports of construction equipment from China, with other exporters being largely flat. Then let's turn to our contract backlog. In the quarter, we have increased the contract share of volumes transported up to 84%. That is the result of our strategy over the last year to prioritize duration and robustness of contracts over short-term profit rate optimization. And clearly increasing the contract rate from 80% to 84% in the quarter is diluting to profit because we are actually leaving behind potential higher paid cargo to serve our customers as a part of our strategy. We believe that is a... what should I say, resilient, robust strategy in the current market. And we are pleased to, you know, continue to exercise that, even if it then leaves out some opportunities to take higher pay cargo. The average duration of the contract backlog is 2.9 years, almost three years. We are basically sold out for 2026. Also have... a very strong contract backlog into 2027. We have added $250 million of contracts during Q4, though being contracts below the $100 million threshold individually for separate reporting. But there's still been a solid contract inflow during the quarter. And when it comes to the 29% of contracts that are up for renewal during 2026, you know, those are 80% of those contracts. are with customers that has been with us for 10 years. So it's with very solid customer relationships where we basically expect good opportunities to renew most of all or all of those. And then obviously we have the other ones which we talked about, the rate agreements, which are, you know, non-committing agreements where we have, you know, clients and a structure where we unfortunately have had to do a little less of taking well-paid cargo. And just on the spot volumes, which is a small share of it, but I just also want to emphasize that our spot business is primarily a high and heavier break bulk business where, you know, the volume of sort of individual lots and spot cargo is larger. So 70% of the spot volume is in the high and heavy segment. On the sustainability side, we are, with the introduction of our new builds, delivering strong improvements on our carbon intensity. And this is to the... story we have around Aurora-class vessels that are delivering substantially better carbon performance, also on, you know, fossil fuel. It's in... And... So on that side, it is the Aurora class primarily that is driving our improvements. But we also had a fairly intensive docking cycle during the last year. And we do have extensive energy efficiency improvements scheduled for all our dry dockings of legacy vessels. So it's a combination of continuous improvement of energy efficiency improvements. on our legacy fleet, an introduction of very carbon-efficient new builds. We also have certified four of the Aurora-class vessels during the quarter for shore connection, so we are stepping up shore power as a source of reducing auxiliary engine use and carbon emissions in port. Then I'll leave it to Espen for capacity and financials.

Yes. Turning to the capacity market, we've had a couple of years now with relatively strong fleet growth. We had 75 vessels delivered during 2025 and 13% fleet growth. So despite quite a large number of ships being delivered, the charter market remains strong. Although the pricing is down from the elevated levels seen in 23 and 24, the pricing is still relatively expensive and has been stabilizing and moving flat over the last few months. And in fact, into January this year, pricing is up. So there are no idling ships. The capacity market is firm. And if you want to add a few ships over the next few months, there are very, very few candidates. Turning to the financial update, as Andreas already said, 2025 was another strong year for Högåtliners. Despite U.S. tariffs, despite the U.S. port fees, despite increasing imbalance in our system, and not the least, the growth in the net fleet. EBITDA came in at 621. That's down from 2024. Two main drivers. One is reduced rate, and the other one is increased charter costs. Okay. The rate is down about $5, as we can see here, from $85 net to about $80 year over year. That's following our strategy of adding to our contract backlog, taking on more contract business, long-term agreements, which has increased the share of contract business from 73% in 2024 to 82% in 2025. The increased charter costs comes from overall growth in volume. We increased total volume by 10%. That increased volume out of Asia by 40% year over year. And that comes with added charter costs. Turning to the quarter, the 2.4 volume came in at 3.9 million. That's down 2% on quarter on quarter. That's following us having two vessels fewer in operation. We redelivered two ships in the third quarter, two long-term chargers, and we also sold one vessel. So we had two ships fewer in operation. That's just a quarterly impact. As we had, as Andrea said, another new bid delivered in December and also one very early in January. We've seen very strong demand from contract clients, as Andreas alluded to, also towards the year end, which has increased the share of contract cargo in the fourth quarter and is reducing the rate by close to 2%. MBTR came in at 145 million, that's down $10 quarter on quarter. Five is related to USTR cost, while the remaining five is sort of a net impact of lower activity and somewhat lower rates. It looks like net profit is down 21% quarter on quarter. Just as a reminder, we sold one vessel then in the third quarter. So the third quarter net profit before tax includes 20 million from selling that ship. Interesting for that, the net profit before tax is down 7%. Looking at the EBITDA bridge quarter on quarter, you can see the drop in volume following fewer operating days and marginally lower rates. Lower activity comes with lower fuel costs and also lower voyage costs. However, in this quarter, the lower voyage costs was fully offset by the USTR cost, which is booked under voyage expenses, leaving us with 145 million in the fourth quarter. We have a strong balance sheet with healthy ratios and stable ratios. Net debt to EBITDA still at one times, equity ratio 55%, moving flat. And we end the year with 299 million in cash, somewhat up from previous quarters, following the change in dividend calculation that we announced in the last quarter. We also had close to 200 million in liquidity reserves at the end of the year from a revolver. That revolver was originally maturing in the first quarter of 28 and have been extended by two years. So we end the year with 299 million and we have decided to pay out cash in excess of 200 million, meaning we'll pay out 99 million in dividends in March. And we now paid out 90 NOK per share. Then I think we're at the outlook, Andreas.