Wallenius Wilhelmsen Asa

Good morning and welcome to our quarterly presentation. It's great to see so many people here today. A warm welcome to all of you and a warm welcome to all of you watching us online. So, Anders, what can we expect today?

Well, I think we're going to hear how we have maneuvered in a volatile world and we'll get an update on the results for the quarter.

Very soon, as usual, we'll start with our CEO, Lasse Kristoffersen, who will take us through the market and also how we have delivered this quarter. He will be followed by Bjørnar Bukholm, our CFO, who will take the financial highlights. Lasse will then be back and, as usual, again, take the market outlook. And then, Anders, you will take the Q&A session. So what do we need to know about that?

Well, for the online audience, please post questions in the Q&A box. Be aware it takes a while for the questions to arrive, actually, in the digital world. So post them as early as you can in order to make sure that we can answer them. And there will also be a possibility to answer questions here in the audience, and we'll send around a microphone.

Perfect. I think we're set then. Are we? We should be all right. So with that, Lasse, the stage is yours.

Good morning and welcome. And I must admit, when I got up this morning and thought about this presentation, I was a little bit surprised by the fact how fast we forget. Second quarter was maybe the most uncertain, volatile, and in many ways, outlier in global economics and global trade. And there was a constant change in what was the reality was and how volumes moved. And then looking back on how we have performed as a company, I must say I'm really, really proud of the team and the numbers we can present today. And we'll give you some more details of why we've been able to do so. But starting with the headlights or highlights, more importantly, We are delivering another strong quarter. One of the strongest quarters we have ever delivered in Wallenius-Willemsen. We have an EBITDA of $472 million, which is up 2% since the last quarter. And we see that the demand is still firm. We had strong demand during the second quarter. That continues into the third quarter. We are paying a dividend of $1.10. This is in line with our policy where we pay up to 50% of our net result, but we're also paying out the full proceeds from the sale of Mirat. And for those who don't remember, Mirat is a terminal in Australia that we have built up over the last few years. And that transaction shows the underlying values we believe sits in our logistics portfolio. We also took note, of course, of the announced trade deals. But we are very firm in saying that these are not signed yet. And there are still some uncertainties on where they will end. But the fact that there seems to hoover in around 15% is a very strong signal to our customers and at least reduces uncertainties. Looking forward, we expect EBITDA in 2025 to be in line with 2024, and we expect 2025 to be another very strong quarter. And in this report, we're also updating that we are changing some of our financial metrics. Bjørnar will cover this in detail, both what we do and why we do it. But one noticeable one is that we have now set a very clear and up to our target in terms of return on capital employed to 12%. And this is due to the performance we have seen over the last few years and also the target performance that we have going forward. So then let me dive into some more details, starting with the market. What is really driving this around us? And where do we see both headwinds and tailwinds? In general, you could say that the demand for cars in the world, the production of cars in the world is muted. And most likely we will see a less number of cars produced or equipment produced in the world in 25 than in 24. But still there is growth in the deep sea, meaning that those who are further from the market are still relatively the winners in production. And we see this in particular out of Asia. And this is a story that is just continuing, mainly driven by China. The growth is for sure coming out of China, both on autos, but also on high and heavy. And then that is supported by a quite firm, at least flat and somewhat up also from other exporters in Asia. And both Korean and Japanese OEMs are performing relatively well in the year and in the quarter. While the Western OEMs, in particular the Europeans, have seen their competitiveness falling over quite a while. And for the European OEMs, there's kind of a double whammy in the quarter. They have for a couple of years seen that their market shares in China are dropping. And remember, one out of three cars in the world are sold in China. Roughly you can say one out of three is sold in China, one out of three is sold in Europe and US together, and one out of three in the rest of the world. That's the market. So losing significantly market shares in China is critical for European OEMs. Adding to that the increased uncertainty in the quarter from the tariffs into US really created a hammock for European OEMs. and some of them even paused exports, some of them delayed exports, and that meant that the volumes out of Europe are both on a structural down, lack of competitiveness, but also on a cyclical down or volatility down in the quarter due to tariff uncertainty. We have seen though that the activity out of Europe is now maybe trending a little bit up into the second half. We see that on the volumes in our terminals. We see that on the bookings forward out of Europe. So we might have the bottom behind us, but still there is a fundamental difference in the competitiveness of Asian versus European and also US car manufacturers. And this creates an imbalance in the trade. So although in the previous one you saw there was a marginal increase in deep sea, the increase comes out of Asia. And that means that we need more capacity to solve that because we don't have the volume going back. So all the growth in volume adds extra demand in the market. When I talked about tariffs, this is a quite, let's say, messy graph. But the main point here is to show on the right side of the two graphs that it seems now that we are zooming in somehow on 15-70%, depending on stacking or not, on cars. But what has hit the actual bill yet is only 9%. because of delays in imports, time to market, and so on. So we have not yet seen the effect of the high tariffs of 2025. So this is now being worked into the market. So nobody knows the effect when we sometime probably end up around 15% if that's put also into ink. So we are quite careful in forecasting the effect of the tariffs because they have not really affected yet. In general, you could expect US production to go up based on following these policies. We have not really seen that. We are seasonally up, but we're down year over year. And this is relevant, of course, for our logistics business in the US, where we are sitting at the back of many factories. And of course, as in any market, some producers are doing better than others. But in general, the production in the US is, relatively speaking, a bit muted. And we have not seen a surge in those production volumes yet. I think it's noticeable, though, that you can see that the production is very steeply down on what we call heavy and medium trucks. Those are for commercial use. So there is certainly a decreasing sentiment when it comes to more the business driven demand for cars, while on the private market, they're still strong, but it's down. The fleet is growing and it has been a theme in our industry for a while that quite significant amounts of vessels have been ordered, which is true. What we saw so far this year is that close to 40 vessels have been delivered. Despite that, we experience a very balanced market. And then we expect more or less the same amount of vessels delivered in the second half of this year. And then we're adding some more vessels going forward. But we have not yet seen a shift in the market balance due to new vessels being delivered. So then when we take all this, the market around us, so how does that affect and how are we positioned as Wallenius Willemsen? We are a leading player out of Asia and we believe we are very well positioned for the growth that comes out of Asia and we are for sure winning our share of that business. We have been able to manage the volatility in the US. We said in the first quarter that we saw a drop in revenues, but we were not able to adjust costs accordingly. Now we are seeing that those costs are coming down in line with activity level. And we're also able to shift capacity from the Atlantic into ex-Asia when we see volumes are slow. So the fact that we are global and truly global enables us to adapt to where the demand is. And we still experience a balanced market, and there's no doubt that the peak for rates are behind us, but we still experience strong rates when we do short-term business in the market. Jumping into the segments, shipping ended at $411 million, which is one of the strongest quarters we have had on record. Logistics seems to be very much down, which they are, but the main factor in terms of the reduction on EBITDA comes from the sale of Mirat. Mirat was a strong generator for us. The underlying business in logistics is actually slightly up, quarter on quarter, and Bjørnar will come back to this. On government services, there is quite some periodical effects. So don't look too much on the slower second quarter versus the first. Year-to-date, we're ahead of year-to-date last year. And we see strong demand for government services out of the US. Looking into the details on shipping, volumes were up in the quarter. And that was partly also supported by stronger high in heaven volumes. I will come back to that. And we see that this is again driven by ex-Asia volumes and strong growth in ex-Asia volumes. Then back to more details on that, you can see that we have quite a steep incline in the volumes out of Asia. And largely speaking, this is driven by two factors, the growth of China, but for sure also our increased market share of Korean exports. As you might remember, we increased from 40 to 50% in the contract with Hyundai and Kia. At the same time, we see that the volumes out of Europe are dropping, and this is partly due to lower exports and partly also due to a business that we have decided not to renew due to the terms in the business. But largely, this is driven by market demand. I mentioned that we saw a quite steep rebound in the high and heavy numbers in the quarter. We do not see this as a start of a rebound in high and heavy. This is more periodical periodization effects of some cargo being front loaded, but also the fact that we have customers that are winning market shares and our biggest customer in high and heavy are doing extremely well. And we see that they're Export numbers are strong and we are carrying more or less all of those volumes. So this is more an underlying trend with some customers, but also a periodization effect. We do see though that our customers still repeat that they have strong confidence that things will improve into 2026 for high and heavy. And then in particular in public infrastructure, defense spending, energy and mining. On rates, we have more or less a flat development. If you look on the repricing, quarter over quarter, it's flat. Repricing year over year shows that the contracts rolled in this year is slightly higher than those last year. There is a small negative effect from customer mix, meaning that we relatively speaking had more volumes from lower paying customer contracts in this quarter. That typically equals out over a couple of quarters. And then for sure, the trade mix shows that the rates are up. But this is important to understand that this is because we are doing relatively more out of Asia, better paid, relatively less out of Europe, less paid. But normally we do this on a round voyage. So it's certainly not positive for us to have less out of Europe. But it certainly shows that we have higher net rates because we have more of the volume with a higher paying cargo. In general, we would say that the net effect quarter over quarter is more or less flat, but certainly a positive development due to some repriced contracts since last year. If you go to logistics on volumes, I mentioned it earlier and also in the last quarter, we saw the volumes dropping in Q1. We were trying to adjust costs accordingly. We were not able to. We have been able to do that largely in this quarter. So you can see that despite more or less flat volumes, for instance, on autos, we have been able to increase our margins by taking out cost. Still in high and heavy, and we see this on the ground in the US and other places where we have what we call EPCs, basically production facilities completing high and heavy equipment, that the new equipment is moving slow. Storage is still high, and the flow is still quite slow when it comes to high and heavy. Our customers and the dealers also see still no rebound in volumes, and that means that we also have a quite low volume on our processing. On the terminals, we saw a drop, partly due to myriad effects, but also for sure that we had slower volumes out of Europe and then into the particularly east coast of the US. We have added some more information on contract and book of business in this presentation, and we will do that on a regular basis also going forward. For 2025, if you can see on the left hand side for shipping, we're more or less sold out. And roughly speaking, we're 90% covered for next year when it comes to capacity and volume. And this is completely normal. So we are not stressed by not having 100% now. There's constant renewals and that's showed all the way to the right. So we are announcing all contracts above 100 million, but we do a lot of contracts below 100 million. So just in this quarter, we added some $300 million worth of contracts for shipping, non-announced. Similar for ship for logistics, $200 million. So in this quarter, just by renewing business, winning smaller business, adding business here and there, we have added $500 million to our book of business. this is normal business this is normal procedure and that's why you will not see them in big announcements but we are quite firm that we will be able to fill that gap also at least most of that gap into 2026. the duration of our contracts are for shipping if you wait if you have it based on net freight it's 3.6 years while it's 7.8 years for logistics So we have a strong book of business. We're sold out this year. We have a strong book of business for next year and it's growing and we are constantly adding to that book of business. A couple of developments in the quarter that's worthwhile noticing. We sold an old vessel and we also exercised some purchase options. And these are very attractive transactions. The purchase options are well below the market. It's end of time charter deals. And we were able to sell an old vessel that didn't fit in our trading pattern anymore to current market rates, which are, in our view, quite sound. Then we also announced a quite exciting project. In a way, Valerius Williamson is coming home to Norway. We are setting up a facility together with Bert Lohsten in Drammen. This will be a state-of-the-art, we think actually state-of-the-art in the world, but certainly in Norway, in terms of processing of cars coming into the Norwegian market. We are, if everything goes as planned, we will start building early next year and be in full operation in 2027. We'll be in Drammenport, and this facility can process up to 35,000-40,000 cars a year, and will be most likely the best and the most modern entrance into the Norwegian market, and we're quite excited to do this together with Bertelusten. On sustainability, in the last quarter, we saw some of our safety statistics jumping. I told them and I repeat now that this is based on very few incidents and hence we have big periodization effects. So that what we saw in this quarter was that it fell down significantly on shipping. And we are happy with the average performance we have on safety. And we're now continuing our positive trend of reducing our incidents. And we are working very actively with both safety management, but certainly also on safety culture. And this seems to be paying off. On emissions, we are still doing quite well in reducing emissions in terms of actual emissions from our vessels and the distance they sail. However, we do see that our EEOI, meaning that the emissions per car, to put it simply, is increasing. And this is due to the increased trade imbalance. So when we have one car from Asia going to Europe and we have no car taking back, that single car needs to have the full emissions for their own voyage. If we have one car going west, one going east, each get 50 percent, meaning that that structural imbalance increases the emissions per car. However, the emissions from the vessels are continuing to go down. The emissions on vessels, if you divide it by the ton miles they do, are continuing to go down. And this is what we can control. And we work really hard in continuing that trend. And then we also updated the market that we have in our Shaper class new building project. We have taken half of the vessels and made them ready for ammonia, meaning that we are putting in tanks that can do both LNG and ammonia. And we're also, through that, being able to source LNG and bio-LNG. And through now having seven of the vessels ready capable of doing methanol and seven other vessels ready to do ammonia and LNG, we're now able to tap into all different fuels of the future. And we think this is absolutely critical. We believe that we need to be able to tap into all kinds of biofuels in the short to medium term, that means biodiesel, biolng, biomethanol, and then the medium to long term into all e-fuels, and that means ammonia, methanol, and possibly others that we don't know of yet. And now we are well positioned to do so. So with that, I'll leave it to Bjørnar to take you through the numbers.

Thank you, Lasse, and good morning every day. And also thank you, Lasse, for no jokes today because I was clearly not prepared for that this morning, although I was thinking about it before we started what can Lasse figure out today. But thank you, Lasse. Jokes aside, I will cover the financial update as last time. Starting with financial targets, as Lasse mentioned earlier in his presentation, we have updated the financial targets now to better reflect where Valenius Williamson stands today in terms of financial performance and also the financial solidity of the company and also where we see that performance should lie going forward longer term. On a high level, the changes in financial targets reflect that we have increased ambitions for returns, reduced leverage and improved management of liquidity. If we look into the details of the changes, starting with the return on capital employed, we have increased this from 8 to 12%. where roughly the first half of the change is explained by the change in accounting treatment for the UCOR put call option that towards end of last year, the put option, the price for the put option was classified as a liability on our balance sheet, hence reducing capital employed. The second part of the change is reflecting over ambitions for financial performance over the cycle and improved balance sheet management. Moving over to the equity ratio, we have kept it unchanged at 35%. Leverage ratio, we have reduced from less than 3.5x to less than 3x with a clear ambition for the company to have a moderate debt level and solid liquidity reserves as this will allow us and give us the flexibility to invest and return capital also in software markets. Finally, we have introduced a new target for minimum liquidity of $1 billion, consisting of operational cash and RCF capacity to allow for quick decisions on investment needs, financing needs, etc. It's important to highlight that we don't consider the financial target as restrictions. This is rather aspiration of where we want to be, guiding principles. then moving over to the highlights for the quarter and as already mentioned for lasa it's a new very very solid quarter for valenius williamson and we are proud of the strong results diving into the details starting with revenues revenues ended at 1.35 Up a couple of percent compared to last quarter due to stronger revenues for the shipping segment. Comparing to last year, largely stable revenues. Shipping is up while the logistics segment is somewhat down. Moving over to adjusted EBITDA, 472 million, up 2% quarter on quarter due to strong performance for shipping, slightly down for logistics and for government. Compared to last year, there is a drop of 25 million. That is explained by the logistics segment. I'll be coming back to that. Very strong net profit, 403 million, of which 135 million relates to Mirat, the sale of Mirat, and a sales gain from that transaction. Adjusting for the sales gain, we have a net profit of 268 million, up 8% quarter on quarter, with improvement driven by the stronger EBITDA and somewhat lower tax expense in the quarter. net debt 1.75 billion that is up 90 million in the quarter that is explained by the strong dividend of 524 million that was paid in april parts love set by strong operating cash flow and also proceeds from the immediate transaction that was received in may Moving over to the right-hand side, financial targets, proud to present yet another quarter with return on capital employed on around 20%. Equity ratio up to 41%, up 6-7% on the back of the strong net profit. Leverage ratio remains below 1x and liquidity reserve stands at nearly 2 billion at the end of the quarter. Moving into the specifics on the segments, starting with shipping services, revenues of 1 billion and 33 million, up 7% quarter-on-quarter due to strong volumes, partially offset by somewhat weaker net freight rates. Solidly shown by Lasse, volumes up 8%, driven by increased volumes out of Asia, partially offset by lower volumes out of Europe. Net freight rate down 2%, that is due to customer mix. It's a neutral effect from repricing and the trade mix. If you look at EBTA, 411 million, 6% up quarter on quarter due to increased revenues driven by the volumes, partial offset by somewhat higher cost, mainly to carry additional volumes. Looking at cargo expenses and OPEX, which is typically the variable cost, increased by 25 million. That is due to more volumes. Then we also had vessel OPEX and charter expenses up by a total of 4 million. That is due to two additional owned vessels during the quarter due to utilizing the purchase option mentioned by Lasse, and then also somewhat more chartering activity in the quarter. SG&A is up by 10 million. We had some additional project cost expenses in the quarter, and then we also had the effect of salary adjustments in the second quarter. But all in all, another very strong quarter for the shipping segment. Moving over to logistics, revenues came in at 273 million. That is down 3% compared to the last quarter. That is fully explained by the sale of Mirat. Adjusted EBTA, 32 million. It's down 12% quarter on quarter. Also here, this is explained by Mirat. If you adjust for Mirat, we actually had an improvement on EBTA of 3 million quarter on quarter. with improved performance for the auto segment or the auto business area and the high and heavy business area on stable revenues. But we were able to take out quite significant cost in the quarter that improved the margins for that business. And this is a continued focus area for logistics area going forward. Terminals came in flat, improved performance in the U.S., And in South Korea, well, the European terminals was somewhat softer, which is linked to the export volumes that is already mentioned by Lasse. When we look at the development for EBTA compared to the same period last year, we see a big drop. That drop is explained by Mirat, and it's explained by weaker results for the Otto business area, and it's explained by weaker results for the European terminals. Moving over to government services that delivered another very strong quarter, although somewhat down compared to the same period last year, but note that this is seasonal and year-to-date. We're actually performing better than last year. Revenues, as you can see, largely stable both quarter-on-quarter and year-on-year. EBITDA, 41 million. That is down roughly 15% compared to the same period last year and also quarter-on-quarter. The difference lies in the type of volumes that we have lifted. So the cargo mix is impacting this. And we also have two extra vessels, part of the fleet in this quarter, which were previously on commercial charter with other parties in the group, which is increasing the cost. But underlying results for government service remains very, very solid. Moving over to liquidity, liquidity rate remains strong, stands at close to 1.4 billion at the end of the quarter. Yes, it's down close to 20% quarter on quarter, but that is due to material debt repayments and the dividend that I already mentioned. Investing cash flows of 164 million, positive due to the proceeds from Mirat. Partial set by CapEx of 64 million, of which 40 million is related to the new building program. Financing cash flow, negative 923 million. Regular repayment of vessel loans, and then we also had a voluntarily repayment of an RCF of 205 million to improve our liquidity and cash management. And then again, we had the dividend. Quickly on the balance sheet and over solidity, already mentioned this, so I'll be brief. Equity ratio, 41% materially up due to strong net profit for the quarter. Net interest bearing debt, 1.7 billion, slightly up compared to last quarter due to the dividend. And then leverage ratio remains below 1x. Liquidity reserves. close to 1.9 billion, 1.4 billion almost in cash. And then we have RCFs under on offer on $500 million. A few changes on the RCF side took place in the quarter. We terminated our facility in WW Ocean of 150 million. This was a short-term facility with limited value for us. And then we repaid 205 million for the facility we have in WW Solutions. Moving over to dividends, yesterday, August 11th, our board approved a total dividend of 465 million, equivalent to $1.10 per share for the first half of 2025. The dividend is based on 50% of the underlying profit for the first half of the year, and by underlying profit, we mean the net profit minus the sales gain from the Mirat transaction. And then we had an added element linked to the full cash proceeds of USD 210 million from the sale of Mirat. So all in all, this represents around 75% of the net profit for the period compared to a dividend policy that indicates 30 to 50% of net profit, but with an opportunity to extraordinary dividends if there is something special, which Mirat clearly is. The strong dividend, we see that that's a testament to the very strong performance of the company and also the very solid financial position of the company. uh finally a couple of words on the new building program from a financial perspective in the second quarter we secured post delivery financing of 300 million for four shaper class vessels at very attractive terms the loan is split in two parts is a used 250 million terminal which is green Actually, the first one in our company, that is green. And then we have 150 million sustainability linked revolving credit facility. What the revolving credit facility actually do is that it gives us increased flexibility on drawings on the debt, which helps us to optimize our liquidity management going forward. Ten years for the loan is five years from the delivery of the last vessel. With this financing in place, we have attractive financing in place for 10 out of 14 Schaefer-class vessels, and we will manage financing for the remaining vessels in due course. Over to CAPEX. At the end of the second quarter, remaining CAPEX for this program is roughly 1.5 billion, and we have paid 43 million so far. Lasse commented on the change in fuel for seven of the vessels. That came with an additional capex of USD 80 million. That's especially the LNG tanks are very, very expensive, but it positions much better for the future in terms of flexibility for fuel sources. With that, I will hand it back to Lasse for the prospects.

Thank you. And let me just get to it. We are experiencing strong demand and utilization, in particular in shipping, and we see this continuing into the Q3. There is still a strong demand and a good balance in the markets, and we expect 2025 to be in line with 2024. This is, as I said, driven by the growing exports out of China into basically all markets of the world but the US. We expect that to continue. We're also seeing some signals that European volumes might come up somewhat in the second half of this year. We do not expect yet a rebound in high and heavy despite the strong volumes we have, but coming into 2026, signals from our customers are strong. So we are maintaining a strong outlook for the year, and we believe 2025 will be another very strong year for Wallenius-Willems. So with that, I ask Anders and Bjørnar back to the stage.

All right. Just as a reminder, if you have questions via the web, please post them in the Q&A section of the webcast. First, Lasse, the market is good. How long can we expect it to last?

Well, the current market momentum is certainly continuing into Q3. But with the current volatility and when we speak to our customers, even they don't know what's happening in Q4. But we still think that this year will be a strong year. It's too early to call 2026. But the momentum that we are experiencing are currently continuing into certainly the third quarter.

And Bjarnar, you're paying out $1.10 in dividend. Just a reflection of how is that split up and why that amount?

Yes, thank you and thanks to the audience for letting me repeat a good message. So the way we are thinking about this is that we have the net profit and then we consider what is the underlying net profit of the business and that is what the business delivers minus the sales gain for Mirat. We took 50% of that amount, which is in the upper end of our dividend policy, and then we added an element to that, which is the full cash proceeds of 210 million from the sale of Mirata took place in the quarter. And that adds up to 465 million. Yes. Thank you.

We'll start off with questions from the audience, if there are any. Anyone? There seems to be no questions from the audience, so then we'll start with the questions from the web. There is a question around our new building program. If demand dips, what is our plans in terms of recycling of old automates when new vessels are delivered?

Of course, normally we plan for running a vessel in 30 years. Now the demand has been so strong that we have decided to take a couple of vessels through that 30-year renewal in terms of class and run them older than that. But in general, I would say that we will probably see that vessels turning 30 are more candidates for scrapping going forward. When it comes to a new building program, this is to replace or core fleet where that makes us, it kind of is a secret sauce. large vessels that can take have huge flexibility on high and heavy brake bulk and cars and these will create competitive advantage for us when they are delivered we are very happy to get them in but we have a huge need for capacity also in 29 and 30 and beyond so this is a start of a renewal program it's not growth it's renewal of our fleet and of course when we renew our fleets we will phase out old vessels as new vessels are being delivered

Then there is another question relating to logistics. In terms of demand per region, how has that evolved? They're asking for terminals, SOTO, and high and heavy.

Okay, that was many dimensions. Let me start then east and going west. Demand out of China in terminals, in logistics, strong. Volumes are going up on both auto and high and heavy. And we talk a lot about the auto growth out of China, but the similar numbers are for high and heavy. And we do some logistics activity there. We are well positioned in Australia. We see growth in Australia. And we are now actually also entering, we've done a lot of more on the high and heavy in Australia. And we're now coming into the auto segment as well and growing with, for instance, Chinese players coming into the market. In Europe, I would say it's a somewhat softer sentiment, both on high and heavy and cars in the quarter and right now. And this is more due to uncertainty, but also some structural decline where we see a bit less numbers, although the momentum has picked up a little bit into Q3. in the u.s and north america it's extremely hard to say one answer some producers are doing extremely well others are losing market shares for instance in this quarter i think if i'm remember right gm gained 10 percent market share while one of the some of the others lost 10 to 15 percent in volumes so it's very big difference in the u.s but in general i would say that that the activity on the east coast terminals are a bit softer

west coast terminals are an activity is very full canada is going extremely well and i would say mexico is going surprisingly well and delivering good volumes and numbers despite the uncertainty on tariffs thank you that was a elaborate answer so on the fleet there is a question around you know do we have plans to sell any additional older vessels and how is the charting market are we looking at adding tonnage

We are constantly looking at our fleets. And if we see that there is value in selling vessels, we will sell vessels. We have a book of long-term charters that are producing good purchase opportunities for us in terms of options. We are utilizing those. We did in this quarter, we'll do going forward. We saw in this quarter, we had an opportunity to get what we consider a good price for a very old vessel that was non-core. And if we see those opportunities again, we will take them. in general we do not do long-term charters now we do not do long-term tcs we have the capacity we need although we see that there are fluctuations in the need for vessels so we do some short-term charters but that's just sound for this industry we saw for a while that that market didn't function now it's functioning again and we could typically take in a vessel for one voyage x asia or for five weeks or something like that but no long-term chartering activity at the moment

Then one for you, Bjørnar. On the increased return on capital deployed, how much can be assigned to the put option and how much is reflecting the current market?

Thank you. As we split, as mentioned, we basically split this in two parts. So the increase from 8% to 10%, that is based on the change of accounting treatment for the put option. And then the second half is due to our ambitions for financial performance over the cycle and also improved balance sheet management. So 50-50 split.

Okay, then on port fees, do we have any additional information?

Unfortunately not. What has happened is that there was another round of comments being collected from the industry. We added comments to the USTR, which is the body that runs this process. Nothing has come out of that yet. We have no idea of how we will conclude, but certainly our aim is to make sure that we get port Jews in the US that are at least in line with other segments. And if you remember well, car carriers were singled out as a segment where there were also proposed Jews on non-Chinese built vessels, which is not in line with the intention of this regulation. So we have added our comments, but we don't know the outcome yet.

Then a question on rates. In the quarter we saw the trade mix or the customer mix actually having a negative impact on rates quarter over quarter. How is that expected to go forward?

Well, in general, there are always periodization effect. You could have, if we, for instance, have quite some contract volumes in a quarter from one specific customer, that affects our customer mix. Over a year, this equals out. So the customer effect from customer mix shouldn't really add much during the year. What will add to this year is that we are facing in and we're now faced in fully new contracts, for instance, with Hyundai and Kia at new rate levels. And we see the structural imbalancing continuing, meaning that you could be a little bit fooled by seeing that some net rates are increasing because you have less return cargo that takes down the that reduces the averaging out of lower rates coming from Europe. But when we look at our book of business, we have very solid rates in all our contracts right now. And there is still historically strong rates when we do short-term business out of Asia, although we are certainly not at the peak levels we saw a year or two back.

Then there is a question on fuel. We opted to switch to LNG slash ammonia for some of our vessels. What was the driving force behind that decision?

we explain a little bit about how we feel about that and prices etc there were the main rationale for doing that was to get access to all types of fuels and if you look at the current at the design we had we did not have access to bio lng and we did not have access to ammonia we believe that for the next five to ten years we will source significantly amount of biofuel but biofuel meaning sustainable biofuel that is not competing with food or anything else but actually bio waste that you use for fuel this will be a commodity that is in high demand and we need to be able to source all type of biofuels we do biodiesel today we are already looking at biomethanol and now we can look at bio lng And more importantly, we believe in the future where we'll have E-based fuels, methanol or maybe eventually ammonia. And we want to be positioned to be able to capture also ammonia as a fuel on the Schaefer class. So this is about preparing for optionality in the future and both for biofuels and let's call it sustainable fuels. Okay, thank you.

Then there is a question on fleet growth. You touched upon it in your presentation. Fleet growth is substantial, but how do you look at the demand side of things? You touched upon it, but you can elaborate a little bit more.

Well, as the balance is still strong, obviously demand has been able to fill the vessels that have been entered this year, close to 40 vessels so far. We see still a strong demand out of Asia. We do not speculate on how this was balanced out. but for now we're still in a good good balance there is no doubt that there is a big order book coming online and that for sure that will increase the supply side most likely faster than the demand side but remember what drives our earnings is not short-term supply demand We have long term contracts with industrial customers as long as they ship volumes. We have an agreement on doing it on fixed rates. So the most important thing for us is not really the short term growth in fleet. It's the actual ability for for exporters to export cars. And that still looks firm.

Thank you. One again for you. There are a few, but not too many. It goes on on the outlook. is that including the gains from mirat and vessel sales etc or is it when we talk about the outlook we are focusing on ebta and not net profit and certainly not extraordinary events like the sale of middle i think that was clarifying then on to something that we haven't talked about in a while wind powered vessels Is that going to be a reality or is that still a fiction?

It is a reality. There are vessels out there that are using wind as a power source. If you ask my personal opinion, for sure, wind is a massive energy source we will need to capture. However, it's not easy, and they're still in an early phase. For Wallinus Willemsen, we are still working on our CEL wind project, which is a EU-funded project with a lot of partners to see how much wind can we actually capture on a vessel. But very specifically, short term, We are working on installing one big sail on one of our vessels. The pilot installation is soon up in Sweden and we will put it on one of our vessels this year or probably the next. So we are already working on harvesting wind and we will continue to do that. And I'm sure that our fleet and the world fleet will find new ways, new technologies and better ways to capture wind. And it's going to be a major supplement for energy in the future.

uh most likely for most trades for most vessels and for most ship types it will not be the primary energy engine energy source but it will be a very very strong supplement thank you we're starting to get towards the end here but a final question is chinese oems are building vessels is that a threat or an opportunity

Well, in my view, it's an opportunity because we see that this is subscale. They don't have the organization. They don't have the size to operate what they need. And I think these were decisions made in a time where capacity was really, really short. So we expect that you will see a consolidation of the players out of China, as we have done in other markets. And of course, we want to be part of being a strong player out of China.

uh but we are not scared of our customers becoming our competitors uh but of course we see new competitors coming out of china being operators like costco but we are ready to compete with them all right uh if there are questions that haven't been answered we'll try to answer them uh via via emails and other means but a few words running off lasso before we end the presentation

Yeah. As I started, I would nearly say I'm surprised of how well we've been able to do in a market that has been extremely volatile. Although we see now a good momentum. The momentum is continuing into Q3. 2025 will be another strong year. We are adding contracts to our book of business, unannounced contract worth $500 million just in the quarter. So we in Valenos-Williamson believe that we are well prepared for a future, even though uncertainty is much higher than we saw a year ago. Thank you.