Wallenius Wilhelmsen Asa

Good morning and a special welcome to everyone here in the audience. Also a warm welcome to everyone watching us online from all over the world. I'm here with Anders Redding Karlsson, who is our head of investors. So Anders, I will start with you. What can we expect today?

I guess not a good quarter is basically what we're delivering. So it's a bit boring, but it's good.

It's good. And we will do the usual drill. We'll very soon start with our CEO, Lasse Kristoffersen. He will do the business update. He will be followed by our CFO, Bjørnar Bukholm, who will do the financial update. And then Lasse will conclude that part. And then, Anders, you will run the Q&A session.

Yeah, so if you have any questions in the audience, we will open up for that. But also on the webcast, please post your questions in the Q&A session of that, and we'll address those questions as they come. And do remember, it takes a little bit of time before they arrive, so put them in ahead of time rather than later.

Good, then we're ready.

Then we're ready.

And then, Lasse, the stage is yours.

Thank you. Good morning and thank you for tuning in and listening to us. I will jump straight to the headlines and then take you through some more details. Afterwards, so all in all, as said this morning, we are delivering another strong quarter and adjusted EBITDA of $471 million that is adjusted for a sale of a vessel. We still see that there is strong demand for our services and in particular, the growth out of Asia continues. And I'll come back to that to some detail. We're also growing our network in logistics. We are partnering with more customers in logistics, and we're proud to announce that we opened three new facilities in Australia in the quarter. I'll go back to that too. sell the vessel with the gain of 16 million dollars and then of course as most have heard in the quarter there were announced port fees in the us they were increased for what we thought was 14 dollars to 46 dollars per net ton and that has an impact on our operation on our customers and our possibly on our financials and i'll come back to that um But if you look at the underlying business, that is still strong. We're expecting another strong quarter in Q4 in line with Q3 before we take into account any effect of the US port fees. So all in all, Wallenius-Willemsen is performing well. We're delivering well on most parameters, and we also expect to do so in 2025 and into 2026. Let me then give you some updates on the market. I'll talk you through some highlights from the business and the quarter and also touch upon sustainability as we always do in the quarterly presentation. Three themes for the market review this time. I will share with you a little bit more about the growth and where does it come from and what can we expect going forward possibly. I will touch on both the tariffs and the US port fees and also the utilization and the balance in the market. So let me start with the overall demand. Deep sea volumes are increasing and are expected to increase in pure volume this year with 3%. These are in most trades, but there's no doubt that the general trend is that the growth comes out of Asia that continues, while the volumes going back to Asia, principally out of Europe and the US, are reducing. So this is what we have alluded to earlier, that we are seeing an increasing imbalance in our business, meaning that we are fully loaded vessels and we have full utilization and we allocate all our capacity that we can out of Asia, but we're not able to fill up the vessels going back as much as we have done in the past. The growth story out of Asia is China. China has seen a massive growth in exports of cars over the last few years. Since 2021, they've had an annual growth of 33% every year. They're approaching close to 6 million cars, maybe 5.7 million cars exported this year. If you look on the forecast for 26 and 27, and we use S&P as our main source for that, they believe that the export will fall into 26 and into 27. We are challenging that assumption, and I'll share with you a little bit why. On the right side of this slide, you can see that there are quite some achievements made by Chinese car manufacturers, and I think we need to start rethinking why do the Chinese car manufacturers succeed. Historically, China was a cost arbitrage. Western OEMs moved production to China to reduce cost. Then there were Chinese OEMs coming online with a cost advantage. Now, the reason why Chinese are winning market shares is because they innovate themselves. And if you look on the... Left side of this graph, this is a third-party assessment of technology leaders in the industry. And as you can see, we've taken out the names for sensitivity, but as you can see, out of the top five, four are chinese that means leading in technology and that's uh ev technology and and drive train technology but not least digital computing and and the cloud technology so the chinese producers have gone from being uh cost leaders to now being technology leaders They are also, many of them, fully integrated end-to-end and have full control of their supply chain and they have their own developed computing capabilities. So we believe that the Chinese competitive advantage in the car market is still there. We expect that to grow and our base case is not that exports out of China will reduce over the coming years. And then, last comment on China. We cannot think of China as one thing. In China, you could very simply talk about China in two ways. One, you have established OEMs already at scale, not being technology leaders. They are at the bottom of this slide. And then you have new players, not at scale yet, but are technology leaders. They are typically at the high end of this. So some of these players need to get to scale to survive, but they are growing fast. And that's why we are focusing in a lot on being a partner to these Chinese companies. And this is where Valenius Williamson comes at its best. If you're a new start at the OEM, you are starting your exports. You need presence abroad. You need terminals. You need shipping. You need processing. You need distribution. And we're a one-stop shop. And we are quite unique in offering that to the Chinese market. The other key story, of course, in the quarter are the tariffs. One are the tariffs on the cars. And just to put this into perspective, the tariffs on cars have an effect of maybe four to six thousand dollars per car imported into the U.S. while the port fees have a cost of maybe $300 per car. So these are of very different nature. The problem is that the last comes on top of the first. And of course, this comes also on top of OEMs that are struggling with their performance, with their market shares, and also with their financial performance. Generally speaking, although it's not fully implemented and carved in stone, it seems like we have come to a conclusion. UK has concluded. EU seems to be concluded as well. They need to approve it first, but that is expected to happen. And both Japan and now Korea has confirmed 15% tariffs. And then there is still uncertainty where we will end on Canada and Mexico. But what you will see later on is that that export still is strong. On the other hand, on the USTR, that was announced on, I think it was October 10th. And then it was implemented on 14th. And remember, 13th was a day off in the US. So basically, the day before implementation, this was announced. And we might have been the first company in the world paying a port fee. We did that on the 14th of October. There are some exceptions to this. US-owned, US-flagged vessels, we have some of them. And also we can mitigate through different measures. One is that there is maximum five, I mean you can only get five port fees a year on the vessel. Meaning that if you are circulating vessels more than five times into the US, you can get an exemption for the last entries. Then last week there was an announcement that the whole scheme will be postponed one year. We have not seen anything confirmed, we have not seen any details and I can assure you we have made quite a few calls to figure out. So this is not confirmed and concluded yet but that can happen anytime soon. But until that we are assuming that these port fees are here to stay and I'll share with you later on a little bit of the effects of that. Generally in the US, there has been a strong sentiment on car sales. So the import tariffs has not changed the appetite for new cars in the US. The recent growth is probably driven a lot by the end of EV incentives, but still there are quite a good level of sales in the US. And we also see now that the production in the US is starting to pick up. We're not on historic peaks, We're still below historic highs of the last few years, but we are seeing that domestic production is growing somewhat. While on the import side, we see different markets performing differently. In general, you can say that the Mexican and Canadian volumes and the Asian volumes out of Korea and Japan are more or less flat. They have decided to keep on pushing for market share and delivering volumes to the US and have not really taken any stance or stopped when it comes to the tariffs. The opposite is the case for the European OEMs. As you can see, throughout the year, they have been declining in volumes into the US. And this is a trend now that maybe recent months have started to stabilize, but still they are significantly down from what we saw last year. So the losers so far in market share has been European OEMs in the US market. Last item I want to touch on in the market is the food utilization and also the new building deliveries. As most will know, there is quite an extensive order book in the Roro segment that is starting to deliver. This year is the, call it the strongest year, the highest year in terms of deliveries. We also have another year next year where there will be more volume coming in. But the update so far is that we are still seeing high utilization. And we have not yet seen a direct negative effect of the new vessels coming in. And to the right, you can see Clarkson's assessment of fleet utilization. And in 2025, they're still expecting 96% utilization. And then when you see the 100%, of course, that's a theoretical max. But the reality was that... For the last few years, the demand has been higher than supply. And that has caused a lot of cars to go into containers. We see that is coming back now. So in reality, we have had a utilization well above 100%. Even though we have a lot of vessels coming in, according to Clarkson, they expect utilization close to 90% over the next couple of years. Historically, that is a good utilization of the fleet. So if you look on the market assessment, there is not going to be a massive reduction in fleet utilization. And through that, you can expect the market to hold up somewhat. There's no doubt that we are beyond the peak. If you look at the more spot numbers on freight coming out of Asia, they probably peaked a year ago, but they are still historically strong. So as you can imagine, there's quite a few things happening around us. And we have here just shown you what it's like to be global infrastructure. But Ernest Williams and we are global infrastructure. Whatever happens in the world hits us. And the good news is whatever happens in the world, we're able to manage. And I will not take you through all this. But as you can see, there have been massive disruptions. imports, in trades, in tariffs, now in porters, but we're able to manage through, and as you can see, an amazingly strong and stable financial performance throughout these things. And this is due to a couple of things. One, we have a fantastic book of business. I would claim, and that's my claim, that we have the strongest book of business with the best customers in the industry. I think we have the best team, being able to adapt to whatever happens. And I can assure you, if something happens like USTR, well, Innes Willemsen is at its best. And then last but not least, we have a global presence across the full supply chain. So we're an integrated part of our customers' logistics, and they need us to deliver. So that leads me into the performance for the quarter. And Bjorn, I will give you more of the numbers. I'll give you more on the business side. Very briefly, you can see we have relatively stable performance throughout the years. Strong performance in both shipping and logistics and government. And all of them are, well, both shipping and both logistics and government are slightly up, while shipping is marginally down. I'll come back to some of these factors that has caused this. We are continuing to adding to our book of business with the contract negotiations ongoing. And what we expect to renew this year, we expect 2026 to be another sold out year. We have added around $300 million of contracts in the quarter. And we have now a total book of business on shipping on $7.8 billion and a duration of 3.4 years. And in logistics, it's around $3 billion. So when I talk about our book of business, this is our book of business. This is what we're going to live of in 26 and into 27. Very little of what we do will be short-term spot market cargoes. But of course, we do that as well. On shipping, we saw a slight decline quarter over quarter. That was due to somewhat lower volumes. And there were a few reasons for that. One is that our biggest customer in Korea, HMG, they had a strike for a few little periods and they had somewhat lower volumes. And also the fact that we have less volumes going east from Europe and North America, meaning that the total volumes are decreasing, although we're completely busy and have full vessels going west. And on volumes, we also see that we have probably passed the bottom on the high and heavy. And for those who don't know, high and heavy, that is excavators and harvesting machines addressing mining, construction, and agricultural industries. We see that agriculture is still weak, mining still strong demand, and we are now seeing signs of somewhat recovering in the construction sector. So we are not expecting the high and heavy volumes to go up fast or steep, but we do think that the bottom is behind us. So what countered the lower volumes in the quarter was somewhat higher rates. Quarter on quarter, the rates are more or less stable, and you should expect there's not big things happening. But if you look year over year, you can see that we have been able to reprice our book of business, adding close to $2 per netton in terms of higher rates. And also we see that we have more trades out of Asia, which pays better than the return cargo from Europe and North America. We have also done some transactions in the quarter, and I wanted to bring this in to show you the value of the book we have on vessels. We have sold vessels with good book value margins, but also we have a significant portfolio of up to 11 vessels, on time charters where we have purchase options or purchase obligations, all of them largely in the money. So there is quite a lot of value hidden in our time charter book that we showed some of that value in this quarter, where we declared a purchase option for a 15-year-old vessel below $15 million. And at the same time, we sold two vessels 30 years-ish for a total number of 40 million. So basically we're buying half the age for less money. And we have plenty more of these opportunities going forward. Quickly on the US port fees. We are maybe the biggest player on the US market. We're certainly one of the biggest, but we believe maybe the biggest player on the US market. Significantly bigger than other players out of the same region, let's say Norway. So we have shared now the numbers of what is our exposure. And our exposure this year is expected to be up around $100 million. These numbers are not accurate. As I said, this just came to the market. We don't know yet how many calls we will have and when they will hit the US and so on. But in the range of $100 million, that's our exposure. Next year, the total exposure, in other words, in theory, what we can be exposed to paying in fees is somewhere between $350 and $400 million. So you can imagine these are substantial numbers for us. And then the big but is, of course, we are working actively on reducing this bill. We know we will do that. We know that we will not be in 350 to 400 million in actual cost next year, but we don't know how much we can mitigate. and on top of that we are working together with our customers for them to recover these costs for us and our target is to recover all of these costs minimize the cost as much as we can and then recover what's left with our customers it's hard for us to say how much we will succeed and where we land but so far we see strong understanding from our customers that this is something that we simply cannot carry and a cost that we have not brought to our customers On the logistics side, we see somewhat increasing performance. I'll start at the bottom because that's the main reason. We have strong performance in our terminals. In general, we see good volumes and good activity, except for two things. That's the auto side in the US, which has been a little bit softer, and also in the high and heavy, in particular in the US, where we see that the market currently is soft. But generally speaking, we see strong volumes, high activity in logistic sectors, and also increasing margins both on the auto side and on the terminal side. While on high and heavy, the margins are falling, and that's basically because we have much more storage than we have actual processing, completing of equipment. And that's really where we make our money, and that's where we should make our money. Okay. I told you that we are growing our business. We have previously shared that next year we will start up in Gothenburg with the terminal. We have shared that we are likely investing together with Bertil Osten in a new facility in Drammen. This quarter, we opened three new facilities in Australia. We are, generally speaking, one of the leaders, maybe the leader in the Australian market, both on shipping and logistics. We have grown tremendously over the last few years and that will continue. In the quarter we made a major breakthrough with a very fast growing Asian car producers. Then you can imagine where they come from, but I can't tell you. And we are now doing their shipping. We are doing their processing, meaning finalization of cars in Australia, distributing to dealers. We're basically their supply chain out of their manufacturing country into the Australian market. And this will add somewhere in 25 to 30 million dollars worth of revenue that contract alone per year. And we see further growth opportunities with new players coming in. And to us, this is a very good example on how we are uniquely positioned with growing OEMs that need help to establish an overseas presence and also to get to overseas markets with shipping. Quickly on government service. This is how our business volume and our commercial volumes comes in. So the majority of what we do are US flag required business, meaning government moving cargo requiring a US flag to move it. Then we have income from the stipends. The stipends meaning that we have support from U.S. authorities to run on the U.S. flag. And then there's an element also on top, which is the commercial cargo, meaning the cargo that the government business gets from the rest of the Wallenius Wilhelmsen system. Normal cargo. And as you can see, we had a good development in terms of of the volumes and revenues into this quarter, although somewhat down from the same quarter last year due to a technicality with US activating one of their reserve fleets, which we believe will come back to rest soon. So in general, we would say that the government segment is performing well and we see high demand of US flag cargo. Before I pass to Björn now, let me touch on sustainability. Every conversation in Valerius Williamson starts with safety. We have on top of our strategy to be a leader in safety, security and compliance, and I think we are increasingly getting there. We are never happy with our safety scores. We believe that we can avoid any accident happening, but we do see that what we do, how we work and how we invest in culture, on safety helps and we are improving our performance and we are well below our targets for the year. On emissions, we are also doing well on the stuff we can control, meaning the emissions per call it nautical mile we're traveling. Although due to the increasing imbalance, we have less cargo on our own voyage, meaning that we have higher emissions per cargo unit. That's the EOI on the right hand side. The absolute emissions are going up, but that's simply because we have more activity. If you look at the emission per vessel and per nautical mile travel, it's down 0.1%, and we've been consistently reducing our carbon footprint and increasing our energy efficiency for quite some quarters and years in a row. With that, Bjørnar, the numbers.

Thank you, Lasse, and good morning, everyone. It's great to stand here today for the third quarter and really, really seeing the consistency in our performance despite the market turmoil and the numbers we are showing. I'm really, really impressed by the organization and everything that we're actually able to deliver in such challenging times. So with that, let's look at the numbers. Revenues came in at around $1.3 billion. It's down 1% quarter on quarter, largely driven by the shipping segment, and we had lower fuel cost surcharges and also slightly lower volumes on seasonality. If you compare to the same quarter last year, also revenues down 1%. This is driven by the sale of the Mirat terminal that we sold in April this year. EBITDA came in at 488 million, 3% up quarter on quarter, but that also included an exceptional item with a sale of one vessel when we had a gain of 16 million, and then vessel was delivered to her new owners in the third quarter. When we adjust for that vessel sale, we had an EBITDA, adjusted EBITDA of 471 million, That's on par with the previous quarter. Slightly weaker contribution from the shipping segment and then somewhat better contribution from logistics and the government services. When we compare to last year, there is a drop of around 30 million. 20 million is explained by underlying slightly weaker contribution for the three main segments. And then 10 million is explained by the mid-terminal that we had last year, but we didn't have it this quarter. Moving over to net profit, $280 million. Adjusting for the sales gain, it's $263 million, which compares to $268 million in the previous quarter when we adjust for the $135 million sales gain from the sale of the mid-terminal. It's slightly down quarter and quarter. This is explained by taxes. We had higher tax expense in this quarter as we upstreamed cash or took dividends from our operations in EUCOR in South Korea and then we need to pay withholding tax. That was 6 million. That explains the difference. So very, very stable quarter and quarter. Also comparing to last year, 259 million. So very, very stable performance in a challenging market environment. Moving over to net debt, net debt position increased by 150 million in the quarter. This is explained by the dividend of 465 million in the quarter, partially offset by the very strong operating cash flow we had in the quarter and had for many quarters in a row. Moving over to the financial targets on the right-hand side, again, very pleased to see that we deliver return on capital employed in the area of 19% to 20%, nearly two times what we have over the cycle, a long-term target of 12%. Stable equity ratio at 40%, leverage ratio remains around 1x, and then liquidity reserves at the end of the quarter was 1.7 billion, and note that this also includes undrawn credit facilities that we have at our core. Then some details on the shipping side. Revenues came in just north of one billion dollars. It's down two percent quarter and quarter. Largely explained by lower fuel surcharges due to falling bunker prices. Then as Lasse commented on, seasonally somewhat weaker volumes, factory shutdowns in New York, a strike with our key customer out of Korea. But this was partially offset by a net freight rates being up one percent compared to the previous quarter. But please note that this was due to trade and custom mix. The underlying prices of our customers is relatively stable, so no repricing effect in the quarter. if you compare to the same quarter last year it's basically flat very very stable volume slightly down rates are up moving over to adjusted ebta 407 million it's down one percent quarter on quarter A couple of reasons for that. One is slightly lower volumes. The second effect is a retroactive charge of $12 million related to increased stevedoring cost in the U.S. following substantial rate increases in certain UN ports, double-digit rate increases in percentage terms. So this is actually dating back for the last previous 11 months. So it's a one-off hit. in this month. Recurring costs going forward on a comparable basis around $1 million extra per month, certainly not $12 million extra per month. Then we also had a negative effect as the fuel surcharge just went down $21 million, but the fuel cost only went up $50 million. Over time, we are fully covered more or less through our bunker adjustment factors, but from quarter to quarter, there may be swings as the bunker prices are moving up and down. Compared to the same quarter last year, we see also that our EBITDA is slightly down. This is related to volumes partly set by net freights, and then we had these, let's say, extraordinary items in the quarter on the cost side. I know some of the analysts have picked up on the vessel cost actually was down in the quarter. This is also largely explained by a one-off event that we got a recovery of $3 million on damage repairs in the quarters. It's relatively underlying. It's relatively stable on the vessel OPEX. But all in all, a good quarter on the shipping side. Moving over to logistics, revenues, flat quarter on quarter. If you adjust for the sale of Mirat, we actually see that revenues are up in the quarter. And if you compare with the same period last year, yes, it's down 7%. But if you adjust for the sale of Mirat, it's largely stable compared to last year. EBITDA came in at 34 million. It's up 6% quarter on quarter due to the strong performance for the terminals. If you adjust for the cellular mirror, we actually see that result is up 10%. If you look at the various segments in our business, we continue to see that the auto business is performing below our targets. That is driven by the US. While we see that our operation in Canada, in Mexico and the rest of the world is doing well. Similarly, on the high and heavy side, we have a big footprint in the US. The high and heavy market in the US has been sluggish. You're seeing some signs of recovery as mentioned, but for now this is impacting our results in the US. For other parts of the world, we see that the performance is relatively good. terminals that was the shining star in this quarter even without mirat in the quarter we actually had three million dollars better performance from the terminals in this quarter part of that related to underlying strong performance across all of our terminals and then part of it related to specific events we had some price increases in southampton with effect dating also back in time And we have the government grant for our terminal in PRT in South Korea. So help to boost already strong results on the terminal side. Moving over to government services, where we continue to see that the activity level is good, the results are solid. Revenues were up 6% quarter on quarter. That was driven by seasonality. Q3 is typically a stronger quarter seasonally for the government US cargo that we carry. When we compared to last year, our revenues were actually down 5 million, as Lasse pointed out. This was due to a specific event. Some of the cargo that we typically carry was carried by a government-owned vessel. We expect that to be a one-off event. We typically don't see this type of reactivation of older vessels. This also impacted over EBITDA in the quarter when you compare it to last year as we were missing some revenues that we expected to carry and we had the capacity to carry those volumes. But still, we see that EBITDA of 44 million, it's up 7% compared to the last quarter. And that is due to the seasonally stronger volumes, despite losing out on some volumes that we hoped to carry. The dollar note, government services continues to perform very, very well. Moving on to the cash and liquidity position it remains very very solid. At the end of the quarter we had a cash balance of close to 1.1 billion. It's down 21 percent quarter on quarter due to the dividend payment of 465 million during the quarter and then we have also done some voluntarily repayment of our debt during the quarter. Operating cash flow 482 million with a stellar cash conversion rate of more than 100%. Some of you may ask, how is that possible with more than 100%? That's a technicality until we calculated. We calculated that at just EBITDA versus the operating cash flow and not EBITDA versus the operating cash flow. So that's purely a technicality, but it's very, very strong. Investing cash flow, negative 23 million. So we have capex on our new building program and we have certain other capex, but then we had the sale of one vessel that partially offset this capex. And on the financing side, it's been a very eventful quarter, negative 740 million. Of course, a large part of that is explained by the dividend. Then we also had the regular payments and over bank loans and over vessel payments. leases and terminal leases but in addition to that we did a 100 million dollar or 98 million dollar repayment on a credit facility. After that we have no drawn credit facilities in the group and we bought back 26 million in the bond maturing in March 2026. The reason for doing this is that we want to improve our cash management and liquidity management and not having drawn debt when we have excess cash in the group. Although some of the cash is not placed where we want it due to the relatively complex structure we have with UCOR, government services, logistics and the traditional WW Ocean shipping side. Finally, our balance sheet. As you know, we continue to have a very, very strong financial position. Strong equity ratio of 40%. Moderate debt level continues, will continue. Leverage ratio remains around 1. Then we have liquidity reserves of 1.7 billion. It's down 200 million quarter on quarter. This is explained by cash down 300 million, mainly due to the dividend. But then the credit facility part is up by around 100 million as we repaid the only drawn facility we had during the quarter. With that, I will leave it over to you, Lasse, for the outlook.

Thank you, Bjørnar. And I will make that short. And we have touched it already. Generally speaking, we see that demand is still strong, both demand for shipping and for logistics in general. There are some weaker signs of auto and high and heavy in the US. But in general, we expect these activity levels to continue into Q4. and that we will have an underlying performance in Q4 in line with Q3. And that is before any effects of the USTR, and we have shown you a little bit of what that possibly could be, but we are optimistic that we will be able to mitigate and recover most, if not all, parts of those fees. And then we expect anytime soon any confirmation on whether they are still applying or not. Maybe already today we will have news in that regard. We expect 2026 also to be another year with high utilization, thanks to a very strong book of business, long-term partnership with our customers. And then again, the uncertainty for 2026 is largely linked to the USTR port fees, the size, if they apply, and also our recovery. So with that, we'll stop the presentation and on to invite for questions.

Okay. Just again, if you have questions, please feel free to post them in the chat on the webcast. We'll start with a few ones. Lasse, you deliver a very strong Q3. Focus is now on the challenges for Q4. What's your thoughts around that?

Well, I think what we can control in our company are working well. And we believe that Q4 will be largely in line with Q3. And also that we will have another strong year in 2026. And then factors on USTR we cannot control. But I would say this organization has been exceptional in the past on making sure that we have minimal impacts of these events. We showed that on the historic line. And we also believe that the impacts of the USTR will be manageable. So generally, overall outlook for Q4 is in line with what we've seen so far this year, and we expect another strong performance into 2026.

One for you, Bjørnar. You're now three quarters into being a CFO. You came from the company previously, but what are your key takeaways from the current period?

Yeah, I think that's a very good question. And I'll probably say it's a combination of two factors, if that's allowed. So I didn't expect, and you didn't tell me, Lasse, that the world was going to be this volatile with tariffs, US port fees, some customers struggling, some customers doing really well, a lot of capacity coming into the market. So I didn't really expect that. So thanks for that, Lasse. But what I Neither didn't expect that in this very, very special market conditions, the ability for Valenius Williamson to deliver such consistently fantastic results with Q1, Q2, Q3 actually being exactly at the same level, plus minus $5 million. And then you are saying, Lasse, that Q4 should be give or take in the same area before any potential impact.

You are telling me, Bjørn.

Yeah. We agree that Q4 will also be a good quarter before any potential impact of the USDR portfolio. So that surprises me that so much volatility in the world, but Valerius Williamson keeps on delivering.

Okay, we can start off with some of the questions from the audience. Jørgen Leon has some questions here. Firstly, he asked about our ability to mitigate and how can we mitigate the effects of the USDR portfolio?

Yeah, so the mitigation by mitigation, and he means how much can we reduce the fee before we claim it from our customers. And there are a couple of things we can do. As I mentioned earlier on, we can put specific vessels into strings so we can have more than five entries during the year. Then you are exempt. We also are in a unique position with having a US flag business that we can that we're already using in our operations. And then also we can do other measures so we make sure that every time we go to the US we can have full vessels. And as you know this is a cost per net ton of the vessel meaning that whether it comes in empty or full doesn't matter. So if we can bring more cargo into the US and not least more cargo out of the US that would also affect it. So that's the three main areas. And then I think we have a list of 15 measures that we are looking at implementing and starting to implement to mitigate these costs.

He's also got a follow up in terms of what can you share about our conversations with customers in terms of recovery?

We are fortunate. We have customers who consider us being their partners and we consider them being our partners. And when things like this come up, we have sit down and we have a good conversation. Those conversations are constructive. They are positive. Our customers largely understand that this is a cost we cannot carry. And then we're currently in the discussions on where do we land it? How do we do it? How much is it really? But I would say, generally speaking, we have constructive, positive dialogue with all our customers.

Finally, he's questioning our math skills. Math skills, okay. Because if we add up 100 million in Q4 in port fee estimates, we say 350 to 400 million for the year. How do you make that?

I was hoping for that question because it's an elegant one. And was it Jørgen? Yeah, it was Jørgen. I mean, you could have figured this out, Jørgen, but I'll tell you. So the thing is that the port fees start to apply from 14th. So any vessel arriving from October 14th and later will pay a port fee. quite a few voyages started before October 14th. So for every voyage starting before October 14th, when they get to the US, we pay a port fee. And then for every voyage that starts after October 4th, we need to take into account when you calculate the result of a voyage, the expected future port fee. So you get the full port fees for the period from 14th of October until the end of the year, prorated for all the days we have. And then also we have the addition of the voyages starting before October 14th. So this represents more than a quarter or short of a quarter of costs. I hope that was a good answer.

Yeah, I think that was a good answer. We shed some light on purchase options. What are our thoughts around those and what do we do about them?

Well, of course, we're not sharing our commercial decisions upfront. We have some purchase obligations, meaning that we will buy the vessels, and we are happy to do so because they are very attractively priced. When it comes to purchase options, that's something we love. We love optionality. In a market with uncertainty, we can choose what we will do or not. The good news is that we have options which is far below the current market. And for some of these vessels, these are vessels in our core trades with core capabilities, unique capabilities. So we expect to have several of these coming in and that we will actually declare the options when they come due. But that depends, of course, on the market and the need at that time.

Okay, there was a follow-up on that as well in terms of our fleet, but it was related to new builds. Do we plan to order any new builds?

We have no plans to order any new new builds as of now, but of course as a long-term player, vessels being trading for 30 years and we are positioning ourselves for future competitive advantage, we always look at how can we develop our fleet. But for now, we're more than happy with the SHAPER program that will deliver 14 vessels. We will have the biggest, we think, the greenest and the most cost-efficient vessels in the industry. Half of them being 9,300 and the other half close to 12,000 CEU. And these will really put us in a strong competitive position in 26, 27 and 28.

Thank you. Next one is for you, Bjorn. The question is, what do we plan to do with all our cash? Is the USTR port fees impacting our dividend?

So the boring answer is that the USTR port fees will not impact our dividend policy. When we set our financial strategy, I think we had three clear targets. One is we want to deliver stable earnings. Two, we want to have a moderate debt level. And three, we want to deliver consistent returns to our policy in line with the policy. We are not changing that financial strategy and those policies because of the USTR port fees. The impact may be, if we don't recover all that, it will impact net profit. And if net profit is impacted, of course, dividends will be impacted because our dividends is based on 30% to 50% of net profit. But we are not changing the policy or the financial strategy.

Next one is on markets. First of all, what share of our cargo is linked to the U.S.? We haven't disclosed that in a big way, so I think we'll keep that to the fact sheet. But the second part is, what are our expectations in terms of growth for the coming years?

Well, as we alluded to earlier on, we believe that the growth out of China is more structural than just short term. So our expectation and what we position ourselves for is to grow with the exports out of China. Both, of course, Western OEMs producing in China, but increasingly so, Chinese OEMs growing out of China. This goes for autos, but also, less noticed, for high and heavy. The growth out of China on high and heavy is also very strong, both with foreign OEMs and Chinese OEMs. We think that will continue. And that is adding a lot of ton miles, and that's what matters for us. And every marginal volume coming out of China requires a new vessel. because that vessel does not have return cargo on the marginal counting, meaning that every volume coming out of China will need to be counted on demand on their own voyage basis. The vessel goes maybe all the way to South America and back. So that growth we will think will continue. We see there's still good demand into the U.S. from Asia. So these key trades are still performing well. We see growing demand coming out of South America, of the Middle East. So the big one to watch, of course, in our industry now is also the supply side of the equation. So far, we have not seen that that has deteriorated the market balance. But that is to be, you know, consider going into 26. But in general, we have contracts, we see strong volumes, and we expect 2026 also to be a year of high utilization for us.

Okay. Next one goes back to USDR port fees and our calculation about, you know, for next year, 350 to 400 million. What's the number of port calls and what's the average cost per vessel that is behind?

If you take the average typical vessel in the world fleet, and not just talking about us, and we are not, I mean, we're relatively similar. It's just north of a million dollars. Let's say 1.1 million dollars every time a vessel comes into US territory. Not every time you call a port, it's one time on every string as we call it. So one time when you're good in there. So roughly speaking, the average will be north of $1 million. And then maybe we can challenge Jörgen Beck and then do the math in terms of the exposure and the cost per vessel.

The next one goes on customers and their ability to capture these costs on top of high rates.

What are your thoughts around that? There's no doubt that for quite some of our customers, this is a big challenge. Having said that, and I showed it earlier on, there's a zero in difference in terms of the tariffs impact and the export fees impact, but it comes on top of everything else. And if you look on in particular maybe European OEMs where they struggle with market shares in Asia, they are stating themselves that they are running quite some extensive cost cut programs, of course this is a challenge. Then you have other players, maybe out of Asia and other places in the high and heavy, certainly in the breakbook, where they don't really see this as a problem, where we have already reached agreements. So in general, I would say that our customers, of course, are not welcoming these extra costs, but they are accepting them, generally understanding, and they are at the level that they will be able to accommodate, although there's a commercial agreement to be made with each one of them.

Then we have some questions about our book of business. Why is it down quarter over quarter and why is there so few contracts being signed during the quarter? I think that's a relevant question.

We have quite some big contracts. And some of them come due and some of them do not come due. I mean, we had a major renewal with Hyundai and Kia. We have had major renewals with our biggest customers on high and heavy and auto previously. And those contracts are going for quite a year, quite some years. And of course, you eat a quarter of that backlog every quarter. So unless you do all of these big things often, then you will see changes in the book of business. But generally speaking, wherever we are trying to renew business, we are renewing business. And if anything, we're growing in volumes with our customers.

Then there's a relevant question more on the composition of our fleet. What number of ships do we have that's US flagged?

We have a total of 11 US flag, where of 10 are qualified under the MSP scheme.

There are also a number of questions here that we'll respond to in email later on because they're kind of very detailed. But here's one. I think it must be an employee that's asking. Because Johannes Wilhelmsen has a great reputation of being a great place to work. How will you describe your culture and your employees' dedication to transforming and innovations?

Oh, that's a good lead. Well, let's start with what I referred to earlier on. I think these organizations, the commitment of our people, the competence of our people, the expertise of our team, I think is second to none. The global reach is second to none. So when things happen Friday night, this organization mobilizes over the weekend. meet, work out, and figure out how do we solve this USTR problem. And Monday afternoon, we had a plan. So I think I've never been in an organization being so agile in managing all these things that get thrown on us. And as you saw on the timeline, we've had quite a few, but our performance is just rock steady. And then of course in a very volatile environment where we're really running after one challenge after the other, we're also trying to build a future fit company. We're investing quite a lot into modernizing our technology and we have said in our company that the digital in carbon out is core to our strategy. We will continue to do that. So for those who work in Valenius Williams these days, we're trying to do two things. Keeping up performance by making sure that we are keeping sales up, we have cost control, and we are managing the yield of our assets. At the same time, as we're running a big transformation program, because we need to become much more digital, much more, even more agile, and much more data-driven to be successful in another 5, 10, and 20 years. And we've been around for decades, and we will be around for decades going forward.

There is another one on our fleet, and it's from Petter Haugen on our new building options. Do we still hold any new building options? And if so, when can it be delivered?

I don't think so. I have to look out. Can I get some help in the audience? I don't think we have new building options on our hands. And that probably tells you that if we had, we wouldn't be very active in discussing them. But I must admit, top of my head, I don't think we have more options.

Yeah. Then there's one from an investor saying that, you know, in our contracts with customers, do we have the ability to pass on these USTR fees? And if so, you know... It varies.

And these are for lawyers to conclude. But we never start with a legal approach with our customers. We've been serving the likes of John Deere and Hyundai Motor Group and Mercedes for decades. We will continue to serve them for decades. And we want to find solutions together. So every dialogue with the customer starts with the relationship and trying to find a commercial solution. And very rarely we need to bring in the lawyers to figure out what does the contract say. And in general, I would say that our customers are understanding of this cost. They understand that we cannot carry it. And then there are still discussions on how and when and how much can they carry.

uh questions are starting to run out there is one about you know what uh what information do we have around the postponement i guess we said that quite clearly we don't know

And we need to act on confirmed, granular information. We had, not that last week, we had an indication that the intention is to postpone 301. And there's no doubt that that's the intention. When we call the senior people involved with this, they also tell us that they don't know yet exactly how this will play out. We do know that they are planning to come out with a specific guidance on this and ruling on this anytime soon, could even happen today. But the general read is that the 301 is paused for one year until November next year. But until that is confirmed and what that implies, we are acting as if it's still port fees in the US.

Whilst we wait to see whether there are more questions, are there any questions from the audience? Seems to be, yeah, there's one back there.

Hey, I just have a question about the expansion to Australia. Hold on a second. Sorry. My name is Lars. I'm a student at BI and just an investor in your company. Really exciting to be here. You mentioned the expansion to Australia. I was just wondering what metrics do you use to make sure that it's demand driven and not ahead of the market or too soon?

Thank you for that question. And that's, of course, a balance you need to do every time in this specific occasion. we had developed a plan on growing the auto side of the business and we triggered that when we got a contract. So we have a contract now with a fast-growing Asian OEM that are securing us 25-30 million dollars worth of revenue into these processing centers already. We started in Q3 actually. And then we have set them up so we can grow more. We can have more customers coming in. And we see that our unique integrated offering on bringing freight from Asia to Oceania, managing all transport in Oceania, completing the cars, making them ready, and just for them to bring them to their customer is a unique offering. And many of these fast-growing companies ask for that specific integrated service. So I would say we have already a contract in place, but there is room to grow, and we expect that to grow.

Some additional comments or questions have come in. One is on our fuel consumption. Cargo volumes are flat, but fuel consumption is actually down quarter of a quarter. How can we explain that?

Because we have invested systematically over years in energy efficiency, we do that on technical measures, changing bulbous bows, we're optimizing painting on the hulls, we have operational procedures, and we even use AI, as we have explained earlier on, to optimize speed on the vessels. So I'm extremely impressed with what the marine operations team together with ship managers are able to do. And we have consistently, more or less every quarter, we had a reduction in our energy consumption measured towards the activity level. And then, as I said, the emissions per unit transported goes up simply because we have less units going back to Asia. And you need to distribute more or less the same, but slightly less emissions on fewer cargo units.

Okay, then there's one on logistics in Australia, slightly or a little bit of the same, but is our growth quarter over quarter on logistics entirely linked to the Australia operation?

No, it's not. And the Australia operation just started off in Q3, and we will see the full effects from Q4 and into 2026 of the new auto. So in general, we see very good performance in Canada. We see good performance in Mexico. You saw that export still is strong out of Mexico. Europe is a bit more volatile, but also some strong performance there. We have strong performance in Korea, in China. So generally speaking, if you take out the auto volumes in the U.S., also affected actually by the cybersecurity incident with JLR, and the soft demand for construction machinery generally in the U.S. logistics is performing relatively good.

The remaining questions are mainly things that we can address via email. So, you know, it's something we'll do. Summing up, Lasse, what is your thoughts around the quarter?

Taking a slightly bigger perspective, as you saw on this graph, we're global infrastructure. Validus Vilnius is hit by everything that goes on in the world. Despite that, our performance has been very strong and very stable for many quarters. And this is what we also expect going forward. And then the uncertainty now lies with how can we recover and minimize the cost of USTR if that scheme remains. But we are still expecting strong demand. We have a strong book of business and we are writing new business at the moment, which have very strong earning potential in it. So generally speaking, we're in good shape. We expect the underlying performance to continue as we see it today. But of course, being a global infrastructure, there's always uncertainty.

Thank you.

Thank you.