Wallenius Wilhelmsen (Oslo:WAWI) Q3 2026 Earnings Call

0:00 A very warm welcome to everyone watching us online from all over the world, and also to all of you who are here at Lysaker today. We have a quarterly presentation, and what have you prepared today, Anders?

0:15 Well, we've been through an active period since our last update, so we're going to hear a little bit about what's happened since we met last time. And, of course, we do the usual drill. First, our CEO, Lasse Kristoffersen, will take the market and the business. He will be followed by Bjørnar Bukholm, our CFO, who will take more the financial highlights. And then Lasse will take the prospects. And after that, you have prepared a Q&A session. So what do we need to know about that?

0:43 We're going to take Q&A from the audience, but there is also a possibility to ask questions through the Q&A on the webcast. So please put your questions down and we'll try to answer them as best as we can. And as always, it might take some time before the question survives this end, so please start your questioning as soon as you can. So I think we're ready. Are we? We are ready. Yes. So with that, Lasse, please welcome.

1:15 Thank you. Thank you. That was a very modest introduction. Thank you. Good morning and we realize we're not the headline news globally today and we're still happy that you are here and also that you are online watching us. We will take you through Q3. We have already shared expectations for the quarter and the general picture is that we deliver as expected and we also maintain our outlook for the year. But I'll take you through some more of the details and certainly also talk more about the market, which is very exciting and developing fast for us. Starting with a few highlights, the demand for our services continue to grow and we are now in a very active contracting period.

2:05 We have open capacity in our shipping business around 40% next year, which are now about to close. And we deliver a result as we expected. The Q3 EBITDA came in at 428 million USD, and that's driven by improvement in both shipping and government. And we maintain our outlook for 2026 of an adjusted EBITDA of 1.6 billion USD. As Anders alluded to, we have had some activities during the quarter. We raised $300 million. I'll come back to some more background on that. And we have also appointed John Folito as our new chief customer officer, as PIA is leaving the company by the end of the year. And that has also caused some other adjustments in the organization.

2:50 But we are continuing with the current structure, and we are really, really focusing on serving our customers in a market that is very, very strong. So, let's then jump into the market, and there are four main factors I'll try to touch today. It's China, it's the capacity in our shipping segment, the rates, and also the geopolitical scene. So starting with the big picture on the volumes, and as you can see on this slide, the growth continues out of Asia, and it continues to decline out of the West. And if you look out of Asia, we tend to focus a lot on China, and for sure, that's where the growth is. But it's also very important to note that both Korea and Japan are maintaining their exports, so they are not losing market shares, largely speaking, to the Chinese.

3:43 It is the Western OEMs that are losing market shares. And as you can see, both European and US manufacturers have reduced their export volumes. And you can also see that their volumes inside these markets, in particular in Europe, are declining. So the strong trend of a push out of Asia continues. And the main driver, as we said, is China. And if you look year over year, The export volumes on autos have grown with about 50%. And this growth, if you look all the way to the right, is across the board. This is not just Europe or not just Latin America, this is in all markets. Quarter over quarter, there are some adjustments because of capacity constraints and priorities. But if you look year over year, Chinese automakers are taking market shares in absolutely all markets, not least in China.

4:42 And if you see the report from European OEMs, More or less all of them report 30% reduction in their sales in China year over year in Q3. That is also partly driven by the fact that the demand for cars in China has fallen during the year and in the quarter. And this is another reason why we see a strong push out of China. And I came back from China last week. And I can say that there seems to be no end to the ambitions, at least, on exports. And more and more of the smaller companies are now also focusing on exports.

5:27 This drives an incredible demand for row-row capacity and in this illustration we are showing that the gap between the need for transport out of Asia and the available tonnage is just increasing. And we see that this results in more volumes going into other segments like container and even dry bulk. When we speak to our customers, and this is mostly happening in China, and we speak to the customers in China, I have not yet met a single one that tells us that they prefer container or dry bulk over Roro. Roro is cheaper, it's more effective, and they have far less damages. So the fact that we now leak some volumes into other segments, we do not see that as a long-term threat to the Roro sector, and I'll come a little bit back to that.

6:19 We estimate that maybe in the range of 3 million cars now need to find other means than Roro to get to their destination markets outside China. Due to this, rates continue to increase. These are proxies for the market, because there is a very limited spot market. To the left you see the spot market. It's up maybe 10-15%, but that's very limited volumes, but it gives you a feeling for how the market develops. Same on the time charter market. The time charter rates are increasing. Again, This is a bit of a proxy because there are hardly any vessels available to charter and for sure hardly close to zero for one year. But this still tells that the demand for vessels, the demand for freight is just continuing to outpace the available supply.

7:13 And that, as always in our segment and in shipping, that leads to ordering. We have seen a strong uptick in ordering into 2026, in particular in Q3. You can see there was an order of 49 vessels. The vast majority of that is for 2030, some in 2029. 2028 are probably options that are declared. And the reality now is that if you want to go to a yard and order a new vessel, the slots they can offer are in 2031. So the new building capacity for our segment, and I would say more or less in general for shipping, is sold out all the way into 2031. And the ordering activity seems to continue also into Q4, and we are currently now at 26% of the sailing fleet on order.

8:02 We had numbers like 40% two years back, so it's relatively speaking less, but then we also have to remember that we have a much bigger fleet now due to the deliveries over the last two years. These vessels will be delivered over the next few years, and as you will see, the rate of growth in the world fleet falls down. We have had the major growth behind us, but, and I would add a but, we don't live out of percentages, but absolutes. And in absolute numbers, we have more or less the same amount of vessels being delivered every year up until 2030. But of course, from a much bigger fleet, the percentage growth of the fleet is lower. And as we have seen so far, at least into 2026, all of these vessels have been needed and far more.

8:58 The last point on this update, we say we're around regulations and geopolitics, and we all read in the news that Due to this excessive growth out of China in many sectors, a lot of countries are putting in measures to try to control this growth. And we see that in EU, we see it certainly in the US where the Chinese don't have access, but basically all over the world. And then you have geopolitical issues. So generally speaking, we are living in a world where politics and security affect our business. But this is something we're used to. We live with this every day. We live with this for decades. And this is something we manage well. But of course, this also affects our customers.

9:45 So again, talking to in particular the Chinese auto manufacturers, we now see signals that they say we need to establish a more diversified production. They are moving some production into Asian countries like Thailand, Indonesia. They are also setting up some factory capacity in Europe and in Latin and South America. We do though not expect that this will affect the export volumes over the next year or two. The biggest news probably in the quarter that got some attention was that in EU they have made a cap on the hybrid cars. That means setting a maximum number of cars that can come in from China being hybrids.

10:32 This follows the regulations made a few years or the tariffs made a few years ago on EVs. EVs were selling strong in Europe. They put in tariffs. It flattened out, but now it's growing again. And in that... The Asian OEMs started to sell a lot more hybrid cars. Now that is capping, and we have here tried to put into context how much does this mean for all markets. And if we are saying that we have around 9-10 million cars exported out of China in relevant markets this year, You can see that today we estimate maybe short of a million cars into Europe being hybrids.

11:22 That's probably on the high end. Export quota of max 350 means that there will probably be around half a million cars not being exported from China into Europe next year. This is around 5% of the total export out of China. And the export out of China grew with maybe two, three million cars from 25 to 26. So we do not see this half million cars really affecting the demand. And we also see that cars not sent to Europe are sent to other markets. And we are seeing that there is a strong push on EVs into Europe from Chinese players. So we think this quota probably will impact what cars comes into Europe, but to a very marginal effect, impact the demand for our services, both in shipping and logistics.

12:13 So we have made a little experiment or a little analysis of what can we expect going forward. And today, as we have said, we believe there are probably around 3 million, between 2 and 4 million cars transported in other means. So if we see a significant reduction in the growth out of China, and remember the growth over the last three years, the annual growth has been around 37%. If that falls down to only 5%, still, we believe there is a massive overhang of demand that needs to come into Roro. So even in a close to zero growth scenario, we see a strong demand and a surplus demand for Roro capacity in our segment.

13:04 So with that, let me turn into the business and share a couple of updates from the last quarter. Bjørnar will take you through all the numbers, but generally speaking, we have a good performance in all our segments, strong improvement in shipping and government, and logistics continues a positive trend. have increased our new building program. I'll come back to some more of the details. But in that relation, we also raised $300 million in new equity during the quarter. And we're very happy to see that that was well received. It was significantly oversubscribed, and we were able to do that, we believe, in very attractive terms. So with that we have now built this more solid balance sheet and we are prepared to take on these investments into new vessels. And we are also having a balance sheet where we can take opportunities if and when they come by.

14:01 So in total now we have 14 vessels that were ordered some time back. They have started to deliver. The two first vessels, Arctic Turn and Royal Turn, are delivered. They are now trading. and we have more vessels to come into 2027 and 2028. Now we have ordered vessels, four firm vessels for 2030 and then we have options for additional vessels into 2031 and 2032. These vessels are designed by us and they are purposely built for trade. We see that we can drive real cost efficiency improvements with these vessels, around 25% lower cost per unit transported.

14:46 We get a lot of commercial flexibility. These vessels can do a lot of cars, but we can also switch them into doing the majority of high and heavy. They have what we call a big, strong ramp, so we have big flexibility of taking the cargo mix we have. and also in everything we do we look towards net zero and we are building in fuel flexibility into this fleet so we can into the 30s burn any fuel that we think are appropriate and we are increasingly burning alternative fuels in our fleet. To shipping and volumes, volumes were a little bit down. This is largely due to the fall of the volumes out of Europe. We are sold out and more close to full utilization every time we leave Asia, but we have less cargo coming back simply because of the lower volumes.

15:38 Also important to note is that we have seen a consistent increase in our high and heavy numbers. High and heavy is a very important segment for us. I think it's fair to say that we are the leader in this segment also and that share is increasing and these are cargoes that pay well and also are fitting very well into a trading system. Net freights are up 5%. Some of this is due to customer trade mix, which will vary between the quarters. But also close to $1 is because we had some volumes that were released from Korea due to strikes, and we were able to utilize that to sell more short-term cargo commitments at a better rate.

16:29 We're also actively managing our fleet. Typically, we can trade vessels up to 30 years. After 30 years, our customers start, well, quite a few customers are not willing to trade them, and typically they are sold into alternative trades, maybe used car trades in Asia. So we have sold one vessel, Asia Captain, in a very strong market, and we have a sales gain on $40 million on that vessel. And then we have a very attractive options program on vessels, meaning that we have the right or the obligation to buy vessels at the end of a long-term lease or time charter. Grand Uranus is declared and we have 12 more of this distributed over the next five years. If we compare that to market value today, these options are probably around $500 million above the declaration price if you look at the current market value.

17:23 So there's significant value in these options. As I said, logistics continues its improvement. We have seen a slowly and steady improvement in margins over the last few quarters. This is because we've been able to work more efficiently and we have had a very clear strategy of bringing in profitability in logistics. Now we work a lot also on digitizing the business and making it scalable and make sure that we can grow profitably in that segment. Government had a stronger quarter, partly because we had more capacity available. We had quite some dockings earlier in the year. But also we see some more of the US government volumes coming into Q3.

18:12 And as you can see from last year, typically Q3 is a good year for US government cargoes. The book of business, if you see here, the illustration is that we have around 40% of our capacity open for next year. We are happy that we have so because there is significant demand. We are at the moment prioritizing which customers that we are contracting with. And I can assure you that the demand for capacity is far more than we can offer. And we expect to be more or less sold out if we take the current volume assumptions For 2027 to 2029, by the end of the year, we expect to be more or less sold out on our shipping capacity up until 2029. That means that the vast majority of the contracts we do now are for three years, typically starting early or at the beginning of 2027.

19:08 We have announced two big contracts already. One with a global leading manufacturer. That's what we would call a high and heavy customer into construction industries, mining and others. And also a big logistics contract associated with that. This is a global contract over three years and really a foundational contract for us when it comes to high and heavy. And then we have signed a big contract with one of the big and fast growing Asian car exporters. Also here we have quite significant logistics and supply chain scope in Australia, in Europe, and possibly into other markets. But they were renewed at a slightly different timing. So we have already secured 1.7 billion of that open capacity going forward.

19:59 Sustainability. In Valenius Wilhelmsen we start every day and every meeting with safety and that's why we are really happy to see that underlying trend of how we perform is improving. Shipping has shown good performance for a while and logistics after a tough start of the year with some one and two events, we now see that they're also back to where we expect them to be and probably the lowest statistics or the best statistics on safety we've ever seen. On emissions, there are a couple of things to say. If you see the dotted blue line, we are increasingly introducing new fuels. We are burning more and more sustainable biofuel. We're also burning more LNG and bio-LNG.

20:44 That means that our total emissions are going down, despite that we increased the speed slightly in the quarter. We are also harvesting a lot from the fantastic efforts of our Technical team on energy efficiency and we are consistently using less fuel for the same work on the vessels. So with that I'll hand it over to you for the numbers Bjørnar.

21:10 Thank you Lasse and good morning everyone. Some of you probably recall this but the word that we used the most in 2025 that was strong. And to be honest, that's the word we're using this year as well. And that goes for the financials as well. Strong numbers, strong financials, strong balance sheet. It continues to be strong. So it's another good day to be the CFO today and probably good to be the CEO as well, Lasse. Good, so financial highlights for the quarter, $1.4 billion in revenue, that is up 7% quarter on quarter. Two main factors driving that, increased revenues for shipping and increased revenues for government services with more normalized activity in the Q3, following a relatively soft start to the year for that segment.

21:58 Moving over to adjusted EBITDA, 428 million, that's a whopping 18% improvement compared to the previous quarter, and this is largely driven by the shipping segment, but also supported by improved performance for government services. The reported EBITDA is $414 million, so it's a different share of $13-14 million, and that is driven by two things. We have this digital transformation program ongoing, and we also have some restructuring costs in the quarter related to the cost leadership initiative that we introduced some time ago that is clearly nearing its end. Moving over to net profit, 212 million, an improvement of 50% compared to the last quarter. This is largely driven by the improvement in the reported EBTA. Taxes, interest payment, depreciation, largely flat compared to the last quarter. Operating cash flow, $470 million. That's a massive improvement compared to the last quarter.

23:01 Two reasons for this, of course, reported EBITDA is up, but the main factor actually driving this is the improvement in working capital. In the last quarter, we took a hit as we had more inventory on our balance sheet, meaning fuel. This has now normalized going into the third quarter, and then we get a big swing on the working capital, which is improving the operating cash flow, and we have that 110% conversion ratio. Despite of that, net debt is up by $100 million. There is two reasons for that. One is that we had a significant dividend payment during the quarter, not only to Valenius Wilhelmsen shareholders, but also to our minority shareholders in UCOR, H&G.

23:47 And then lastly, we took delivery of the Arctic Turn, and we had to pay quite a big chunk of money to finance that vessel. Looking at the financial targets, I will not comment on them in detail. It's solid. It remains well above all the relevant thresholds. Then moving over to shipping, revenues up 8%, close to $1.1 billion. The main driver for the increase in revenue is increased fuel surcharges. As we talked about in the last quarter, bunker prices We also have a positive effect from higher net freight rate as Lasse talked about, but this is largely offset by lower volumes due to seasonally lower volumes out of Europe in the In the quarter. Moving over to adjusted EBTA, 355 million. That's up more than 50 million compared to the last quarter.

24:49 It's two main drivers for this. The biggest driver is net bunker cost, close to 50 million dollars. This is not because it's an improvement, but we are actually avoiding the big hit that we had in Q2. This is more normalized bunker cost we have in Q3, and that's the drive for the fact, not that we are really compensated for what we lost in the previous quarter. Net freight also up 14 million. This is driven by the higher net freight per cubic meter, but partially set by seasonally lower volumes. Then there are some swings on the cost categories. We are seeing that oil voyage expenses are up. That is largely driven by more space charter cost, of which a good chunk of that is internal between shipping services and government services.

25:38 But this is partially offset by lower charter expenses. So we have more on space charter and then less on charter. This is more of a mix effect. Let's look a little bit at the bunker cost. As you can see on this graph, what we're seeing is in Q1-26, and especially in Q2-26, we had a massive spike in the net bunker cost as the prices were increasing rapidly following the start of the conflict in Iran. If you look at Q3-2026, we had a net bunker cost of 65 million. I would say that is a normalized cost if you look over what we typically have in net bunker cost. during the last two years. So it was nothing special. It was normalized cost, but we certainly didn't get any benefits on the bunker cost. It was just normalized. So what we temporarily lost in Q1 and Q2, we did not recover that. We do not expect to recover that in Q4 either, because as you see on the graph, fuel costs has actually continued to increase.

26:43 So if anything, we get a little pressure on the net bunker cost going into Q4. The day we will recover this extra cost that we had in Q1 and Q2-26, that is the day when we start to see that fuel costs are moving down to the pre-conflict levels. Whether that happens in 27 or 28, that's for everyone to speculate. We just don't know. But don't expect to see that in Q4. If anything, there is some pressure on net banker costs. That's what we see right now, is prices are actually moving up again. Moving over to logistics, stable performance, I think is the word. It's the third quarter in the row where we have an adjusted EBITDA starting with four. Everything starting with a four in logistics and adjusted EBITDA is good. In order to make it great, it needs to start with a five, and that is the long-term target. But we are happy to see everything starting with F4.

27:39 Revenues declined slightly, but also costs declined slightly. And it's largely stable performance across all the business units. We continue to see a good activity level for auto in the US, and especially Canada, but also Mexico. Terminals continues to perform well, and we're seeing a slight uptick also on the high and heavy side of the logistics business. All in all, stable performance for logistics, and we don't expect any material surprises here going forward either. Moving over to government revenues, as Lasse has alluded to, increased sharply in the quarter. This is due to two main factors. Increased US government revenues in what is typically a stronger quarter for this part of our business.

28:33 And then we were also able to take on more commercial revenues as we had significantly less dry docking activity. As we talked about in the last quarter, We had quite a lot of dry docks but then reduced our opportunity to actually go after cargo opportunities and also support the shipping side of the business through government services. So the revenue side is what is improving the EBTA and more activity also means more cost and also on this side increased bunker cost is certainly part of the operational cost. Moving over to cash flow and our liquidity position. So at the end of the quarter, we had around $1 billion in liquidity.

29:18 Around 50% of that is in cash, and the other half is around credit facilities. Please note that this, of course, then do not include the private place or the equity raised during October, because that happened after the quarter. What we have done with the cash is that we have used the opportunity to repay credit facilities. In total, we have loaned credit facilities of 900 million dollars, meaning that around 400 million dollars was drawn at the end of the quarter, and we used the opportunity to repay 300 of those with the equity we raised in October. Operating cash flow, I've already touched upon.

30:03 This reflects the strong EBTA and also the improvement in working capital. Net capex, negative 150 million. This largely relates to the new building program and especially the delivery of the Arctic Turn. On the financing cash flow, the main drivers is the dividend to ASA shareholders of 258 million and also $28 million in dividend to HMG as a part owner in EUCORP. Net proceeds repayment, negative 106 million. This is largely driven by voluntarily repayments in the system of debt. Only 22 million is regular installments, and the rest is actually voluntarily repayments of debt, as we have a very solid liquidity position.

30:54 Moving over to the balance sheet, trying to award the use strong, so this time we rather use robust. It's certainly a very robust balance sheet, not a lot of movements from quarter to quarter. We start on the equity side, equity ratio 47%, it's down from around 49%. A couple of factors driving this. First of all, we paid dividends of more than close to $300 million when we include the minority investor in UCOR. And then we also had a re-measurement of the put option in UCOR of 20%. And any changes that goes directly over the balance sheet.

31:39 The liability on that 20% stake was increased by 78 million in the quarter. and the reason for that was that our fleet values as per external evaluations actually increased by 30% from Q2 to Q3 and the fleet values are then impacting the measurement of that liability. Please note that the earliest date for that liability to potentially kick in, and it's really potentially, and we have no expectation of that, that would be January 1st, 2031. So up until that, this is more like an accounting matter. Looking at net interest-bearing debt, $2.1 billion, already touched upon it, that increase is driven by the dividend payment and the delivery of Arctic Turn, and the leverage ratio remains well below the 3x threshold. Liquidity reserves, $1 billion, excluding the $300 million equity raise, so we have sufficient liquidity and more so.

32:43 So with that, Lasse, I will leave it back to you for the prospects. Yeah, and I will do that quick. I think we have covered most topics. We see that demand for our services across shipping and logistics continue to be strong. And as I mentioned, coming back from China, all the customers I met, they indicated somewhere between 20% and 100% growth into 27% in their ambition on exports. So there are all reasons to believe that the strong demand out of Asia will continue. We are now writing our book of business for the next three years. We expect that to conclude by the end of this year and of course at rates reflecting the current market conditions. And for 2026, no big news, we are maintaining our outlook of 1.6 billion dollars in adjusted EBITDA.

33:34 So with that, I invite you back to the stage and we can do the Q&A.

33:42 All right, we do have questions, so that's a good thing, although we have to stay for a little bit longer. But just starting off, Lasse, when we were standing here last year, you actually said that we had a strong outlook for this year, but the peak of the market was probably behind us. Did I say that? You did say that. And, you know, reflecting on that, where do you think we stand today compared to where you saw a year ago?

34:14 Yeah, I mean, and let's be honest, when we were standing here a year back, the sentiment was softer. And we were, of course, a part of that sentiment. And you saw on the numbers that the year-over-year rates are slightly down. We did write contracts at somewhat softer levels last fall than we had done previously. In hindsight, we were too much focused on the sentiment and too little on the fundamentals because there were nothing with the fundamental story of the growth out of Asia that stopped. So I think we underestimated basically that massive force of exports and we were more caught by the sentiment. And I can say now that that was not right. At that time, it was right. We had softer markets, but it has picked up this year and we are now renewing contracts in what I would say is a very strong market.

35:06 Thank you. And Bjørnar, this time around we say that we're going to release the outlook statement for 2027 in connection with the Q4. Why not earlier?

35:16 Yeah, that's a good question. It's a couple of reasons. First of all, I think what we're doing is actually aligning with market practice, which is to share the outlook for next year when we are finished. The second part is that this actually better aligns with our internal processes. And then thirdly, I think we have already given quite a lot of information for what we expect for not only 2027, but also 2028 and 2029 with contracting, which is ongoing.

35:44 Very good. We'll take questions from the audience first, if there is any. Please raise your hands. My glasses are not too good, but I can't see any hands. So I think with that, we go to the questions from the analysts. First a few from Sondre at Nordea. I guess this is for you, Lasse. On the East-West balance, with the increasing dislocation, how do we address that in terms of our are tonnaged, and do we see any big opportunities out of the West?

36:26 We'll start with the latter one. We don't see any big opportunities out of the West, but we are certainly into also a contract renewal there. And there are still volumes, in particular out of Europe. In the US, they are limited, but out of Europe, there are still volumes. In terms of capacity, what drives our capacity is the demand out of Asia. And we need to add a couple of days to pick up cargo going back, because you need to load, so you lose a little bit, a few days. But in general, the... From west to east volumes are not eating much capacity. So the capacity driving factor in our industry, that's out of Asia. And increasingly now, of course, and not only increasingly, but now fully we are pricing that on a round voyage, meaning that any additional volumes coming out of Asia, they need to pay for the full round voyage, also going back because there are no added volumes to come from the west.

37:20 And the second question on logistics. Given the increased amount of cargo coming out of Asia, do we see any synergies between our logistics operations and the cargo?

37:32 I would say that what we really see from the Chinese players is that they want one stop shop. Just last week we got another RFI asking, can you take care of everything from end to end? So we have already in Australia, in Northern Europe, we're looking into Canada and other markets. We are supporting our customers or are working on supporting our customers with end-to-end. And then, of course, the biggest logistics business we have that is in the US where the Chinese are not really relevant. So in terms of the total numbers on logistics, it doesn't affect that. But for sure, we see increasing demand and we are in reality now totally sold out in several of our European and other facilities due to the growth out of China.

38:21 If you look at the market now, it's very tight and it kind of compares to where we were back in 23-24. When we renew contracts, how is the environment that we do that today compared to that time?

38:37 Very different, I would say, very different out of two main reasons. One is that our counterparts are addressing the market differently. Only one year ago, the Chinese accounts were really looking for one year contracts. They were much more transactional and they were looking for shipping only. Now we see that they are doing longer contracts. We have written partnership agreement with several Chinese OEMs and they are changing their behaviors. I would say their approach to the market has We have changed a lot in this period. On our behalf, the priorities have become even tougher. We are making decisions every day on who should we offer capacity and who not. To be able to offer new players capacity, say less yes to existing. So this is really a challenge for the organization, but I think we're doing quite well in that, and we're trying to balance, making sure that we continue to be the strongest player out of Korea, a significant player out of Japan, and adding more capacity also out of China.

39:40 Thank you. I do have some questions for you, Bjørnar, but you have to hold your breath a little bit longer. From Jørgen at DNB Carnegie, We are saying that we are pretty much sold out through 2027 through 2029. Does this mean that our legacy contracts only expire around the same time?

40:04 Yeah, largely speaking, if you look through the announcement we have made, the big contracts are all extending into 29 or beyond. Of course, there are always some smaller contracts coming up, but generally speaking, with the current volume assumptions we have, and that is a big assumption, that volumes are not materially changed due to politics or other things. But assuming what we know today, the vast majority of air capacity is now will be contracted until 29. And that is because most of the big accounts for renewals have been done or are being done this year.

40:37 Okay. And a follow up on that is, do we see any In general, we are adding

41:11 Around 300,000 of CO capacity into the fleet every year going forward. And that's not close enough in terms of catching up with the growth.

41:22 Next one is for you, I guess, Bjørnar. One question is that why do we increase the fleet in government by two vessels?

41:31 That is more of a technicality, that in order to put vessels into the government service, they cannot be more than 15 years, and they can only be in that fleet when they are less than 25 years. So we need to plan ahead of time to ensure that some vessels that are planned to go out to the fleet during the next couple of years, we have to put in new vessels. And we had to do that now during 2026 to ensure that we had the vessels that were capable of being part of that government service part of the business. So this is moving in between the systems. So right now we have 12 vessels. In government services, that means that some of these vessels will be largely deployed for shipping services, but then being time charter agreements in between In between the two businesses. That would mean that in terms of looking at the numbers, everything else equal. We should expect slightly better results actually on the EBTA side in government services and then slightly less in shipping services as some of the capacities moved into government services.

42:42 But this is more like a technicality in between the companies than anything else.

42:47 And it's important to say that we manage the fleet within government services and all across UCOR and Valenius Wilhelmsen as one fleet, and we try to optimize across all vessels.

42:58 Okay, then there are a couple of questions on our new building program, or the new new building program. First one is loan to value, what can we expect, Bjørnar?

43:09 For a new financing? So what we typically do is that we finance the vessels with up to 70% depth, but I would say everything between 60 to 70 should be seen as quite normal.

43:22 And then on the optionality, when do we have to declare the option?

43:27 Yeah, well, these are part of non-disclosure agreements with our counterparts. In general, we have Very good optionality, both in terms of the number of vessels we want to build, but even more so the type of vessels. And we have, as I said, a very We have a dedicated fleet to the trades we are, so we can increase the optionality, we can make them even more high and heavy or car specific. So we are very happy with that optionality and we have had now a long relationship with the yard and thanks to that we found good mutual agreements on how we can make decisions as late as possible to make sure it fits the market. But in general we would say that our intention is to declare these options, but we have still quite some time to decide.

44:17 Okay, then there is a question from August at Pareto. Can you add some color around the share of 2027 volumes that started up in 2025? Were they mainly signed during 2024 or early 2025? And is it possible to say anything about the levels? that you're seeing now.

44:37 Yeah, well, I hope I understood that question. So when we are reporting a contract to be started in 25, that means it was written in 24. So if that was a question that the contract starting in 25, they were signed in the market and at the levels that were present in late fall 2024 typically.

44:59 Yeah, and what about the levels that we see today? I guess compared to those levels that we saw at that time.

45:07 Well, that depends a lot. It's different volumes, different trades. And we see more volumes not going to Europe, but to other destinations. And rates into some of these smaller markets are stronger than into the bigger markets. So I would say, largely speaking, we have a strong market, more or less in line with what we saw in that period in 2003 and 2004.

45:33 Okay, that seems to be the end of the question line. So any closing remarks from you, Lasse?

45:42 No, I think, as we have said, we think this is another good quarter. We expect 2026 to come in, as we have said, for a while. And we are very excited about the opportunities we see on contracting and the fact that we are able to serve our customers across everything we do with shipping, logistics and supply chain solutions. And we see that as a true competitive advantage when we are dealing with the new and growing OEMs. Thank you for coming and have a great day.