Svitzer Group A/S

to Switzerland's first earning call as a separately listed company. We're moving very much forward to presenting our performance for the first half of 2024. Just pay attention to the forward-looking statements on this slide. And then we have two presenters today. So it's myself, Kasper Nylaus. I'm the Chief Executive Officer of Switzer. I've been in Switzer since 2007, worked on different roles until 2020, where I took on the CEO position. So I've been in this position for a little more than four years. And I'm joined today by Knud Winkler, our CFO in Switzer. He has been CFO in Switzer since 2013. If we look At the agenda, then we'll start with a company overview. I will present that, then I'll go into the overall business performance before handing over to Knut, who will go into details on the financial review. Finally, we'll have a Q&A session and looking forward to answering questions on our business. All right, so if we start with the company overview, we thought since this is our first earnings presentation as a listed company, it would be good to just spend a little bit of time presenting Switzer. For some of you who have been following our Capital Market Day and our material, it may be a little bit of repetition, but we thought it was a good place to start as a relatively new company, or very new company, on stock exchange. So, Switzer is... is the global player in the toad market. We have exposure to both harbor and terminal toads that I will go into on the next page. In these numbers you can see here, our 2023 numbers, we have revenue of a short of six billion Danish kroner. We operate in 37 countries, the highlighted countries on the map, in 141 ports and 40 terminals. And we have 456 vessels and around 4,000 employees. So really the leading towage company. We operate in two business areas. They overlap. It's a harbor towage. So harbor towage is just short of 70% of our revenue. It's a business, we operate 141 ports. We have strong position in those ports. We service the volume are coming in, in half the ports we're the only operator and the other half we have competition. Our customers are typically shipping lines or cargo owners. Our customer contracts are reasonably short, between one and three to four years, and in many cases we have a license arrangement with ports that we can operate in the port. 69, 68% of revenue and around 60% of EBITDA. On the other hand, we have terminal storage, which is very different in the sense it's the same assets, it's the same skills, but the contractual setup is different. We have, for example, when we operate in the Angola NG terminal, west coast of Africa, we have one contract for 20 years with Angola NG. You win it through a tender process, and then you then have a contract, as I said, for 20 years, where you are paid a fixed day rate every day for doing the services required in the terminal. Prices are escalated typically every year with the inflation. So more or less the same assets, the same backbone that we use to run the operations, but the contractual setup is different. And it's a little bit, also the margins are different in the terminal church, also because it's newer assets, we have higher margins, which also means it's around 30, 31% of revenue, but up to around 40% of the . If we just go briefly through the key investment highlights for Switzerland, then the first one is that we provide mission critical port infrastructure services. The ocean-going ships that transport goods across the open seas, in most cases, they would not be able to go in or out of ports without trucks present. So completely critical service to keeping ports open and running and global trade flow. We are the global and leading tourist platform. We are a growing, resilient tourist market. We are the biggest. We are the one that is truly global. And the total market is fundamentally growing around 45% every year, and it's a resilient market that can also be seen when we look back in our numbers. It shows great resilience. We have a diversified exposure, which is something that is very fundamental to our business, that we are diversified across geographies. So we have many different geographies. We're diversified across customers, which also means our biggest customer, which is the Merz Group, is only 11% of revenue, and end markets being in both harbor tours and terminal tours. And these three different ways being diversified has the effect that it reinforces apicality. So you can have the port can go up and down every year in performance, but when you're present in 181 operations globally, different markets, different customers, different geographies, then you have a portfolio effect where it often balances out and we get this growing trend that we have seen. over the last three years. Then we're leading, so we have flexible business models, we have stable margins, solid cash flow, well-invested fleet. And then we're leading the ESG in storage, primarily within decarbonization. So we're focusing on decarbonization, and we're doing it because we want to do it, but we're also doing it because we see business opportunities in many cases. And some of the thermal storage contracts we have won recently, We have had an element of decarbonization in it that has been part of the winning criteria. We have a clear strategy in place. We target growth, stable margins. We also want to pay dividends. We know what we want to do to constantly optimize the business win, and we also know what we want to do to constantly grow our business. And then we have a highly experienced management team. executive leadership team of 11 people. All of us have been in the business for some time, many of us have been in the business for a long time, and worked in different geographies, in different positions. So we know we're in this world. And just recapping what we have gone through this year, we have gone from being fully owned by AP Modern Maersk, the listed company, to being a separated, standalone, and listed on the Danish Stock Exchange in our own right. So Merck announced on 8th of February the intention to de-merge and list Switzer. We came out with an annual report end of February. We had our Capital Markets Day on the 5th of March. And I would just say that all this material is still available on our investor webpage, switzer.com, and there is a lot of fundamentals around the market and Switzer, our history, how we make money, what our strategy is. But I would encourage people to read it if they're interested. Then we had the 26th of April. There was the extraordinary general meeting in Merck where it was decided and effectuated that Switzer actually demerged from Merck and became its own entity. And we had the first day of trading on the Copenhagen Stock Exchange on the 30th of April. And now, 14 supporters, we've come out with our first half-year report. If we then dive into our half year report, and we start talking about the business performance, then we had a good, or we're very happy with our first half report. We had a very good progress, so 11% revenue increase compared to same period last year in constant exchange rate, and 15% EBITDA increase for the half year. which we are very happy about. We are still doing the efforts, as I mentioned, the SD decarbonization, so we're converting trucks to biofuel in the Netherlands and Oman. On the other hand, we've also taken some trucks out of biofuel in the UK, and we're constantly seeking the opportunities for decarbonizing at the right price and with the customers. We started off in Australia, a new operation on the Australian West Coast in Port Hilton, the world's biggest iron ore export port. We have four out of five trucks already on contract for BHP. And then we have extended a critical contract in Australia with Smit Lamnalko for Harbour Toast in four ports. And we have also been awarded a five-year contract in the Panama Canal with two trucks that will start up in 2025. So good progress also on our commercial efforts. If we look at our contracts, I mentioned the Panama Canal opportunity, a five-year contract, the four-year contract with Smith & Malco. In addition to that, we have renewed all the thermal source contracts that were up for renewal in the first half of this year, which is, of course, critical and something we focus immensely on renewing our existing contracts. And we have also won, and of course there is constant inharbitors, a constant churn of renewals and new contracts and so on. But notable is that we have grown also in Brazil, and we've also won a few, hard towards contracts, but for FSIU terminals, natural gas regasification terminals in Brazil. So also still good progress in Brazil. And maybe just spending, just two words on how we do this, why we are successful in the commercial space. Well, as was also explained on the Capital Market Day, we have very much a focus on what we call passion for customers, so putting customers in the center. What does that mean? It means that we work closely with customer and port authorities to identify their needs, and the right solution for us to meet those needs at the right price. And we have seen really good traction on that, and it's something that is, I would say, fundamental to how we do business in Switzerland, that we keep the customer in the center. If we then move on to the key regional highlights, then we have seen progress in all regions. In Australia, our revenue increased by 11%. Mainly due to tariff increases, also some of these terminal total contracts I mentioned. We have increased cabex by 42 percent for these four out of these five trucks that we have so far delivered to our operations, the new one in BHP. And maybe just reiterating on Australia, we call it a region, it's also a country, but it is truly still, even if it's one country, it's still very diverse by exposure. We have significant presence in Harvard tours, but we also have significant presence in terminal tours. We operate with different customers in many of the ports under different regimes, so in a few ports we have, very few ports we have exclusive licenses, otherwise we operate on non-exclusive licenses. We also have a different crewing setup depending on if you are in terminal torch or harbor torch or even some of the harbor torch port. So still, even though it is only one country, it's still quite diverse. If we look at Europe, Europe is still characterized by being the most competitive area we are in. It's primarily harbor torch we do in Europe, although we did start up in the last year a new terminal torch operation in Greece. Europe has also grown revenue due to primarily tariff increases. EBITDA has grown less primarily due to still a competitive situation in the UK with the overcapacity still in the UK of TOX. So that is something we are constantly working on improving our UK operation. If we move to... America's region is really growing well. We've seen revenue increase by 20%, to a large extent driven by improvements in harbors, primarily Brazil, but also Argentina we have seen going better or actually well. We also had a few lucrative contracts here in the first half of the year that are, you can say, a little bit abnormal or not, something that will continue at least, so have given a little bit more of a boost in America than we would have seen if they hadn't materialized. But we, of course, always, except in addition to our fundamental business, we're always looking for, are there trusts we can deploy on higher paying opportunities in the shorter term, and we've been fortunate in America to identify one of these opportunities. If we look, which also explains the significant dividend increase we see. If we look at our Asian, Middle East, African region, the only terminal totes we do there, which is also explaining why we see a modest revenue increase, that and then the fact that Last year, we had our Russia operation in on revenue for most of the first half year. We are completely out of Russia now. So that's why the revenue increase is modest. So yeah, I don't think there is a lot more to say about EMEA. But yeah, so let's go to the next slide. And I will hand it over to Pilt on the financial review.

Thank you, Kasper, and thank you also. Welcome from my side to this presentation. I'll take a couple of minutes here to provide a little bit more color on what you've already read in the interim report that was published earlier this morning. If we start out looking at the revenue, the overall revenue growth was 11%. It was composed by a couple of different items. You can see there's the underlying activity, which is the growth in household volumes. underlying growth in each of the ports and the effect of the entry in the new port in Brazil. That, together with the growth in terminal tolls contracts, including the exit from Russia, that has provided 5.8% of the overall growth. And as you can see, most of that comes from the new terminal tolls contracts that we've entered into. The other component is on the pricing side. There is the annual escalation on our terminal torch contracts. There's the tariff increases in our torch, and then also there's the elements that Kasper mentioned, the higher paying top jobs in harbor torch related to view these opportunities primarily in Brazil. So that has pushed the pricing element up. And it's not all tariff increase. There are these special jobs that pull up a little bit more than just the tariff increases. How does this back up against what we originally were thinking? As some of you would recall in our capital market today presentation, we were alluding to the growth components, the growth in underlying number of vessels on the oceans. the growth in the size of the vessels, those two will contribute to the activity, and then the price increases. And we said the first two components would be around 3%. We have seen a 3% growth in our harvester volumes in the second quarter of this year, so that matches quite well. Whereas the price increases, we estimated those over the six-year period between 2024 and 2030. that that would be around 1.5 percent, and clearly the high inflation that we've seen has also had an impact on our ability to push through price increases. So that was on the revenue side. If we move on to the adjusted EBITDA, then that has increased by 15 percent, and I would say despite the continued high fuel prices. and I would say more unplanned maintenance than what we usually have. We've managed to increase the margin from last year, so it's now for this year 30.8% for the first six months. If we look at how that is, again, how is that composed, the activity growth that we're seeing, and this is predominantly, again, the terminal toll side, has contributed by 7.5%. growth out of the 15, and the pricing has been 4.1, and there's a few other items here that impacted. The adjusted EBITDA, as you can also read in the interim report, the adjustment is for this quarter only related to the separation and listing cost. We have 104 million kroner in the profit and loss that we adjust for, and those are They are one-off costs. They consist of fees to banks, lawyers, auditors, and also cost of setting up systems that were otherwise systems that were provided by the EpiModimers group before the separation. It's clear that the running cost of such new systems that is not included in this, that's going into the underlying normal EBITDA. If we then move on to the cash flow, the increase in EBITDA, of course, would have an impact on the cash flow from operations. The increase that we see is only 15 million compared to last year, and that is because we have paid taxes more than the taxes that are included in the P&L, you can say. So there's a settlement of a tax base from previous years that's been done in the first half. The gross capex is slightly higher this year compared to last year. It is very much related to the growth vessels that are being put into Brazil and Australia, but of course there's also the continuous investments in dry dockings. We have sold some vessels during the half year. The biggest part of this is the proceeds from the sale of the four vessels in Russia. So for this half year, the proceeds from sale of assets is higher than what it would normally be. So the net, the pre-cash flow, according to our definition, has gone from 288 to 303 million kroner in this quarter. Then looking at our dividend policy and leverage target, so we have a target to retain or remain at a two times adjusted EBITDA leverage ratio. And in this report, you will see that we are currently at 1.9, so slightly below. The net interest bank debt came down to 3,541,000,000. We started out the year at 3.745, so a reduction of a little more than 200 million in the net debt. The gross debt today consists of the long-term facilities that we have entered into, the 320 million euro term loan, the 200 million Australian dollar term loan, and then our revolving credit facility of about 8 million euros. All of them have a tenure of five years. At the end of the quarter, we had drawn 100 million euros on the revolving credit. And you will see that our liquid funds in the balance sheet is at 800 million. And that, of course, is something that we continuously work to optimize to reduce the gross debt so we pay less interest. We maintain the target of two times adjusted EBITDA to make sure that we have sufficient financial flexibility to seize opportunities that may present themselves, whether that is investments in growth opportunities of organic growth or it is investments in inorganic growth opportunities. Then if we go to the outlook, and as Kasper mentioned, I think we changed our outlook in June, on the 20th of June, and we upgraded it from the original outlook that was published with our annual report. So now it is revenue growth, 6.5% to 7.5% in constant exchange rates, and we've slightly modified the wording around it, so we now expect to end up in the upper end of that range, so close to the 7.5%. Similarly, on the adjusted EBITDA, we upgraded to 1.775 to 1.875 billion kroner. And we also here expect to end up in the upper end of that range, which is consistent with an EBITDA margin around the 30%, which is slightly higher than what it was last year. And this, again, is excluding the separation listing cost, as mentioned just a minute ago. When we look at the adjusted EBITDA expectations for the year, we now expect the currency, the exchange rates, to be flat compared to what we've seen in the first half year. So you might remember from early on that our original expectations for the year were a strengthening Danish kroner. We are now changing that outlook to be a flat development. When we look at the gross capex, that is maintained with an outlook of 900 million to 1.1 billion. And in the first half of the year, we spent 483 million, so roughly 50% of that. And we do expect that level to be the same in the second half of the year. Then just reiterating the key highlights, revenue growth 11%, EBITDA growth 15%, so that means an improvement in our underlying margin, largely driven by the tariff increases, but also the slight change of mix where we have a bigger part of our business now in the terminal storage. On the operational side, we continue on the decarbonization journey, finding more ports, more places to utilize the biofuel option. and we're also growing the business with the BSP operations in Port Hedland in Australia. Finally, we renew contracts, we win contracts, so we continue to grow the business and maintain the underlying customer relationships that we have. I think those were the words, and I think we are now ready to enter the Q&A session.

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A queue. Our first question comes from the line of Ulrich Buck from SEB. Please go ahead. Your line is open.

Yes, thank you for taking my questions. First one is on the contracts that you've won in the Americas. You mentioned that they were good contracts and that they might be a bit abnormal to what you usually win. So perhaps just elaborate about what kind of contracts it was. And as you grow, would it be a fair assumption that the margin should be diluted in the second half?

Yeah, okay, so we've won the right of service to EPSA use. I think we won one earlier this year. EPSA use of these floating regasification and storage units for natural gas. And those contracts are running in a hardware setup, so it's not a terminal to a setup, but it's additional work for a hardware business, but it's good work we can do with our existing business. Those contracts will continue for a number of years. Yes, this special one is a short-term stand-by charter. What we see in Brazil is we have, due to those regulations that require Tufts generally to be built in Brazil, there is a demand and supply balance in Brazil particularly where Tufts are a little bit difficult to combine. So you have these opportunities once in a while for short-term work at what we would call a very nice rate. And that is what we have seen, but it is truly short term. And that contract where we had those better rates has already expired in the current format. So it's a little bit icing on the cake. It's not the explanation at all for America's good performance. America has a very good, solid, underlying performance. But it is this icing on the cake that we sometimes see in our short term.

Understood. And a question on your return on invested capital. I see that you increased it to 8.6% for the past 12 months, which is up 7.6% versus year end 2023. Can you perhaps just provide the overall building blocks for this improvement and your assessment as to whether this is a sustainable level, whether there is upside or perhaps even downside? given your current contract portfolio and planned investments?

So the changes that make up the improvement compared to last year, that is the higher EBITDA margin, improvements in profitability. We're seeing, I think, slightly less on the Amazon construction lease. We have less vessels under construction during the year. We had most of our vessels delivered last year. All of those vessels that were delivered in the second half of last year, they are now into operation and generate a return. Is this the long-term level? We like to think that 8 to 10 percent is the range that we would operate within, and hopefully in the middle of that range. But for now, 7.6 is a good step towards that level, 8.6. Yeah, sorry, 8.6, yeah.

Okay, that's very clear. Then a question on these pricing escalation dynamics in your contract. Because given also your margin development, it seems like you've been able to increase tariffs more and perhaps even earlier than the impact of cost inflation. So just trying to understand the timing of these price escalations and compared to when you realize these increased costs.

Yeah. In general, our biggest cost is crew cost, and they would normally increase once a year. Most salaried employees get a salary increase once a year. It can vary a little bit with country you're in. And we would normally also increase our tariffs once a year, and those two dates are normally quite a lot. But crew cost is not the only cost element we have. We also have, of course, maintenance. We have bunker and so on. So I think the timing, what we have tried to do since the world started moving into this high inflation scenario is to be a little bit ahead of the curve. So trying to preempt some of the inflation we're seeing by being a little bit early on our pricing increases. For this year, for the performance we can see here, I don't think it's as much, it's not so much the timing, it's more the fact that we have been, you can say, good at explaining our customers and the ports we're operating in, what price increases we are seeing in our environment. We need to go out and do these tariff increases. So the tariff increase is just one thing. another thing is that some customers also on contracts where they are separated from the specific tariffs and there you also need to go out and get the price increase through which we have been we have been quite good at it as well so it is the reason we can we can do this and make it stick to this extent is is due to you know a lot of work hard work first of all we need to deliver the service of course so the customers need to be happy but it's also a lot of work from our commercial people, our customer facing people in explaining why is it that we need to increase the prices at the level we do and then following up and ensuring that we kind of get all the contracts to that level.

Okay, that's very clear. Then a question on your CapEx guidance. You reported each one CapEx, cross CapEx of 483 meaning that there is around about 400 to 600 left for the second half. Do you have a number already committed for CapEx at this point in time that you want to share?

Yes, we do, and I think it's already in the report in one of the notes. We have a number of vessels that have been ordered during the first half of this year, and there's a commitment to pay I can't just find a note right here, but I recall that is committed for the rest of this year, and then there's another 300-something for next year and another smaller amount in 2026. So there's already some of that that is committed. On top of the committed payments towards the new building program, there is, of course, the ongoing dry docking that will occur, you can say, continuously throughout the year.

Okay. That's very clear. And then some housekeeping questions. So your depreciation came in at 450 million for the first half. Is that, given your current investment level, is that a fair run rate for the coming 12 months?

It is a fair run rate level. I would say we will probably see it increase a little bit, not a whole lot, but a little bit because we do see that the dockings that we are undertaking or have been undertaking this year As you know, we capitalized and then depreciated over five years, so these dockings are somewhat more expensive than the previous dockings five years ago, so that will add to the depreciation. And then also, the vessels that we are taking delivery of are slightly more expensive than what we've seen in the past, also because of inflation. I think for the second half of the year, also with a few new additional vessels coming on, the depreciation would be a little bit higher than the 450, but maybe 460 or 475. But it's a fair level to be clear.

That's great. And then my final question on your net financial expenses. Could you perhaps split out what is financial income versus expenses, FX, hedging, what have you, just trying to understand what growth is high level for the first half?

Yeah, so for the first half, the net financial items of 202 million, I believe it is, there is a significant part of that that is related to FX impact in connection with dissolving the cash pools or exiting from the cash pools that we were in with Maersk. And going from a dollar regime to a Danish kroner regime, there's a slightly different way in the way you want to manage it. So that's one thing. The other thing is that from the 1st of January and until we settled everything based on Maersk by the end of April, We had a significant loan from them. We also had significant balances on the cash pool. However, the loan had a slightly higher interest rate than the deposit on the cash pool. So we ended up with a net interest cost on that one. I would say for the second half of this year, I would expect the financial items to be to the tune of 100 to 120 million kroner. And that will be sort of the level going forward with the debt levels that we're seeing right now.

Okay, perhaps just to follow up. So what are the FX dynamics going forward? So what should we look out for? What happens if dollar depreciates versus appreciates? Just to get an idea.

So the loans that we have, as you know, the biggest part of that is in euros, the 320 and the revolving credit is in euros. So there's limited FX exposure on that one. The other one, the Australian dollar, obviously, if the Australian dollar is strengthened then that would mean in Danish krona that the debt would go up and that would impact our financial items with a negative number. We do use the funding to fund our companies internally so that means we have loans to subsidiaries and they are always in the currency of the receiving entity right so if we If we lend money to a dollar entity, then the loan would be in dollars, right? And that's clear that any changes on that would then impact our financial items. But it would be within the group, and you could say the counter-posting to that would be on the translation reserve on our equity.

That's very clear. Thank you so much.

Thank you. We'll now move on to our next question. Please stand by. Our next question comes from the line of Lars Heindorf from Nordia. Please go ahead. Your line is open.

Yes, Monique. Thank you for taking my questions as well. The first one is still on the pricing and the mix between price and volumes. Uwe asked a little bit about it. those price adjustments that you have in the contract, are they following the calendar year or is it following the cycle of the contract whenever it has been signed?

Yeah, that differs. So in harbor tours, we typically increase tariffs at 1st of January. However, Australia is 1st of April. So that's in harbor tours. In terminal tours, then it differs. It can be September, January, you know, October. There is no kind of fixed date for that because it normally differs, as you also alluded to, to be one year after the start-up date. That's typically where it starts. And the start-up date can, of course, be any time during the year.

Okay, because if I, at least in HarperTorch, You've been so kind to provide the number of talk jobs. And if I could calculate correctly, the revenue per talk job is up by around about 7% in the first half. Does that sound roundabout fair? Yeah, it does. Is that likely to continue through the second half at the same pace, roughly?

Yeah, we think it is, right?

Yeah, I think with the one caveat, though, that in the Habertos revenue, you have these higher paying jobs in Brazil, right? So I would say the average revenue per job in Habertos for the first half of the year is probably a little bit inflated if you were to look at the, you could say, only the tariff increases, right? So if we don't have any of these attractive opportunities materializing in the second half of the year, then the growth might be a little bit less, or it will be a little bit less than 7%.

Okay. And then because in total, Linda, you have the terminal storage. The increase there appears also to be because you have 2% volume increase in harbor storage. So then you must have at least quite a bit of a price increase in the terminal tower as well. And with a 15% year-on-year revenue increase in the first half, and I then take the guidance range that you have, the six to seven and a half. And if I deduct, I take the high end of that, that would imply that you... Are you implicitly guiding for around about 4% revenue increase in the second half? Why is it when prices are going up as much as they are and you have been adding some new contracts that you expect that even taking the high end of the guidance range that you only expect around about 4% revenue increase down from 15% in the first half?

So the terminal storage revenue growth comes with the addition of vessels, right? And if we look at the vessels that have been added since 1st of January, it is not a lot, right? Most of the new contracts, they were started up early in the second half of last year. So you won't see that much of an impact from the growth in vessels. And a lot of the terminal total contracts are where the escalation factor is not necessarily very high. So the terminal total growth comes predominantly from adding vessels and not so much from the escalations. It's typically not a large number.

And then on income from JVs, which you include in your EBITs. 65 million in the first half. Is that the run rate which you expect going forward? 65, you say? I think, sorry. I was wrong. 72. In total, including a little bit of a gain.

So I've got my share of profits in joint ventures and social companies is 53 million for the first half of 24. And that is the run rate.

Okay. I'm not sure you're 70 million.

No, sorry, I was looking at the wrong number. Sorry, my bad. Yeah, 53 plus the two that you have. And then can you or will you disclose how many business you have in your terminal township? by the end of the quarter?

I don't think we have that number anywhere, but let's see if we can find that.

Yeah, yeah, yeah. We had it in the presentation last year, so yeah.

I'm sure we can find it. That was it for me.

OK. Thank you. We'll now move on to our next question. Our next question comes from the line of Anders Christian Prietzmann from Danske Bank. Please go ahead. Your line is open.

Yes, thank you very much. And hi, Kasper and Knut. And thank you for taking my questions as well. Just moving back to the margin and the performance in the different geographies here. So margins in Europe are down by almost two percentage points year over year. And you mentioned fewer talk jobs and higher time charter costs, and then you also mentioned some competitive situation in the UK. But how do you see this going forward? Do you expect any improvement to the margin in Europe for the remainder of 2024?

So if you look at Europe, you really, of course, as we all mentioned, it is really the UK where we have had to improve the numbers. Overall, you can say there is a competitive situation in the UK where you simply have too many trucks in the market. And that, of course, affects how many trucks you have to do per truck. On top of that, we also pointed out some increased M&I costs and some time charter costs to cover for vessels that are out of service. So all of that contributes to Not so great result in Europe from a marketing perspective. We are working hard to improve it. It's not something that goes away overnight when you have a competitive situation. It takes time for the market to settle, but it's something that is a focus area for us.

All right. That was very clear. Thank you. Then again, maybe the same question, but for the Americas. And I guess you already alluded to it quite a bit. So Americas are up three percentage points year-on-year on the EBITDA margin. And if we were to look at maybe the normalized margin for the Americas, if we excluded the lucrative contracts you mentioned before, can you give an idea of where that would be maybe?

I think that's difficult to do. There's a couple of different moving parts in those highly attractive opportunities. But it's clear that while these high-paying jobs have provided icing on the cake, the underlying profitability in the Americas region has grown. So it's somewhere between last year's margin and this year's margin that the truth lies. Whether it is in the middle, we can't really give an accurate answer to that, but it's clear that the current margin is higher than what we would expect to see going forward, but there is an underlying improvement in the probability, and it's not only Brazil, it is also Argentina, as Kasper mentioned.

Okay, yeah, that is fair. And then to my final question, back to the full year guidance for 2024. and the implied margin implications for H2 based on your guidance. So you expect an EBITDA margin between 27 to 29.7% for H2 to reach the guidance. And now, of course, you point to the upper end of this range. But this still, of course, indicates that you expect to see a lower margin in H2 compared to H1. And can you elaborate a little on your assumptions here and why that's the case? It's because of there not being any special contracts in the Americas for H2 or where you're at there.

Yeah, that's part of the explanation. But there's also the fact that if you look at, I believe, page seven in the report, you will see that the margin in the second half of the year is just historically, we don't necessarily see a lot of seasonality in the business, but there is this slight decline in the margin in the second half of the year. So that's what we're leaning on history to repeat itself, and we also see that there is a few things that will not be going as well in the second half of the year, not anything dramatic, but we just see that the revenue and the profit is going to be slightly less in H2.

All right, that was very clear. Thank you very much. Those were my questions.

Thank you. Once again, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We'll now move on to our next question. Our next question comes from the line of Chloe Fu from City. Please go ahead. Your line is open.

Hi, thank you for taking my question. So I see that the guidance for 2024 is 6 to 7.5% revenue growth, yet in H1, we had 11% revenue growth. So if we maintain the current run rate, could there be a potential upside?

No, I think as we have talked about a couple of times, the growth in the first half Of course, compared to the first half of last year, it contains a relatively large number of new vessels coming on contract and terminal toads, and that, of course, will not reoccur in the second half of the year as these contracts were initiated or commenced in the second half of last year. So by nature, pure mathematics, the growth rate will come down in the second half. So we will not see that significant growth repeat itself in terms of percentages.

And on the margin improvements due to the increasing terminal towerage portion, is that where we wanted to head in terms of a strategy to have a higher contribution from terminal towerage with winning more terminal contracts?

So we always have a range of growth opportunities we monitor. And we are pretty diligent around which one to pursue, which one we don't. We are happy to pursue harbor storage opportunities, and we're happy to pursue terminal storage opportunities. So it's not a priority that we go primarily for terminal storage, but it has just been the last, especially the last year, we won three big terminal storage opportunities. So it has expanded its presence in the schedule portfolio. But we evaluate projects on their merits, opportunities on the merits, and not whether they're halberdose and thermotose as a decisive factor.

And my final question is following the separation from Maersk. So how has this relationship has developed? Have you signed any agreement with Maersk following the separation?

Oh, thank you very much for that question. Yeah, so we have renewed contracts with Maersk since the demerger. So it goes, as you can see, we hope, that's also what we said before, the demerger, that Maersk is on market-conformed terms. And of course, as the biggest customer, they also have very good terms on places. And we expect that our good relationship with them as a customer will continue after the demerger, which is what we're seeing.

Thank you. Thank you. There are no further questions at this time, so I'll hand the call back to Kasper Nielaus for closing remarks.

Thank you very much. Thank you very much for listening in. As I said, it is our first investor call list or analyst call webcast since we listed. We're very happy with the results that we have performed so far this year. So thanks a lot for listening in and thanks for all the excellent questions.