Wilh. Wilhelmsen Holding ASA (WWI) Earnings Call Transcript

Good morning. Welcome to the Second Quarter Presentation for Wilh. Wilhelmsen Holding ASA. Christian, it's been somewhat surprisingly strong performance during the quarter.

It's tough to say, but we are both surprised positively by what's sort of happening in the second quarter.

Yes. I think at least at the start of the year and the end of first quarter, the world looked pretty challenging. And of course, that looked also to have an effect on our own operations. And at least I am, and I think we all are both surprised but also pleased with the performance that we've seen, very difficult geopolitical backdrop. We have operations all over the world. Of course, we are impacted. We have a large organization and operation in the Middle East. That, of course, has been impacted. Most importantly, of course, I would say that we've had no serious safety issues. And there's been, say, a lot of potential for challenging situations in that regard. So I think that's extremely pleasing.

Yes. And you could add sort of the words or impressed and a bit proud of sort of the organization on the deliveries in what we supposed should be a more difficult quarter.

Yes. And I think they have really risen to the challenge, especially in certain countries around the world where it's been hotter than normally. So that's been good. Another, say, topic that we've been touching on earlier is exposure to exchange rates. I think we -- at the outset, we thought that, that will be more challenging for our performance. But the basket of currencies has really, say, evened it all out.

Basically stable.

So that's been very good. And then we've had some significant improvement programs throughout several BUs, which have really been delivered upon during this and the previous quarter.

And combined with sort of the geopolitical disturbances, being able to sort of do improvements and improvement programs. That's, again, being proud of the organization and really sort of stepping up in what is a difficult situation globally.

Yes. And I think it really shows the organization and the values that we do have as a company. And yes, there's been instability, there's been challenges, but there's also been increased activity. So combining, say, efficiency programs in the midst of all this is quite impressive. So let's have a look at some of the numbers. So if we go to the performance as such, top line for the Group has been relatively stable compared to previous quarters. But we've had a strong increase in EBITDA, 30% year-on-year and more than 20% from last quarter. So we're very proud of that. I'm not sure if we can say, put the same trajectory going forward, but we feel that we are in a pretty good spot at the moment.

It's a solid point, but we cannot sort of put it in the pocket for the next quarters at that levels all the time.

No. And all in all, we also got $112 million from share of profits from our joint ventures and associates. I think that was relatively in line with what we thought would be our expectations, some sales gains, some, of course, abnormals in there. But all in all, it was according to expectations. NOK 20 paid during the first half in dividends to our shareholders. Additional NOK 8.5 potentially to come at the second half. We also carried out a share buyback of roughly 1% of the outstanding shares during the previous quarter, which is according to really, say, what we have communicated to the market and our shareholders. So all in all, it's been a strong quarter, a lot of challenges, geopolitical uncertainty, but an organization that has delivered under these circumstances. So if I were to go a little bit into the various segments, within Maritime Services, they have been, to a great extent, impacted by what's happening in the Middle East. We thought activity levels would decline quite significantly. But again, they have really taken on this challenge and risen to the occasion. And activity level hasn't been that bad. It's just been very different. So they've been able to work in a different manner. Cargo flows needs to go in and out, but it might happen in different ways and forms than what they used to. And because we do have operations in many of these countries, it has led to business in maybe, say, increased business in other areas than what we are used to. So overall, very solid performance in really all 3 segments within Maritime Services. We've had, again, from a safety perspective, of course, there's been difficult situations. Most ships that we have on management are now out of the Hormuz. It's all happened in a safe and orderly manner, which is by far the most important for us. There's been, as we mentioned earlier, efficiency or improvement programs being put in place in several parts of the segment that has been delivered upon, I think, very satisfactory. And areas of the portfolio that we've had certain challenges with last year and even in the first quarter has really turned around. That's also a big part of the improvement that we see for this quarter. In New Energy, activity levels is high on -- at NorSea basis. Oil and gas, especially in Norway is on a high note. But of course, increased activity also increases, say, complexity in certain areas. But still, they've been able to cater for that in a very, very good way. We have significant contribution from CCB during the quarter, Coast Center Base outside Bergen. They have delivered upon a very big project. So that's a one-off, but still, I think it seems that's been done in a stellar manner. When it comes to Edda, majority of the transaction, if I can call it that, has been concluded. All ships, but one has been delivered and taken over by new owners. We have received most of our proceeds, still some outstanding, 25-ish percent maybe 30% of the outstanding consideration, but we expect to see that at the, say, in the third quarter, maybe this coming period. So with that sale, that does not mean that we are, say, exiting the segment as such. New Energy is an important segment for us. We believe there are a lot of opportunities out there as there are in all the segments, and we are scouting for opportunities as we go. Within Holdings and Investments, the Car/RoRo segment really delivered according to expectations. There is significant activity especially volumes out of China and the increase in exports that the Chinese have, especially of EVs, but also on the High and Heavy segment that is tightening this market, and there's been significant rises and increases in time charter costs, et cetera, and the tightness of capacity, which is, say, both an opportunity but also a challenge for the industry. So -- but it looks to be tight also going forward. There's been quite a few new build orders and there is, if I can call it that, a higher concentration of volumes coming out of Asia in relative terms than what we have seen ever. Europe is on the decline. Asia is on the rise. This is causing imbalances in trade flows, which needs to be handled. But still, I think the industry will cope with this in a proper manner, but it will lead to a tight situation as long as we see the export volumes out of Asia. We have previously announced that there's been a takeover offer for Qube. We have a meaningful amount of shares in the company. It's been a very good journey for us as Wilhelmsen -- in many ways, we were party to, say, initiate and start the company with some investors many, many years back in time. This offer has been accepted and will go through some time now in August, meaning that we will sell our shares and we will receive the proceeds within not too long time.

Actually tomorrow.

Tomorrow. So that is good for us. So that means I will hand it over to you, Christian, to go into further detail on the numbers.

Thank you. We'll run through a brief overview. Just sort of picking up on Thomas' increase in top line, Maritime Services delivering growth. New Energy, a bit lower, but bear in mind that at least compared to the same quarter in '25, that was an extremely good quarter in NorSea. EBITDA, really solid, $39 million from Maritime Services and $25 million from New Energy, solid in all terms. And I'll come back to the Maritime Services numbers specifically that we started discussing a bit. Share of profits, a couple of comments. You could argue that it's a bit down. The numbers don't lie. It is a bit down from the same quarter in '25. And there are 2 very specific transactions or things to comment. One is that that's when the MIRRAT Port in Australia was sold to Qube. And number two, you did not have the same increase in bunker costs in that quarter. So all in all, a solid quarter also for the joint venture and the profits from them. In the net debt, it's sort of minus-minus, so it's positive on the $180 million. And as you can see at the last point there, NorSea in this quarter refinanced their credit facility in a very good and solid manner and even managed to sort of make it even more flexible and a bit tighter on margin, which is always good. So we are, as we will come back to later, really long-term funded in the balance sheet as we see it today. Again, solid performance and Maritime Services delivering a 7% increase, all areas increasing. Total income up, EBITDA up, all the 3 main activities increasing. EBITDA up at really high levels at 39%. And if you go to the graph on the right downside, you will see sort of a close -- a point close to 20%, which sort of -- it's a bus that sort of 20% should be sort of where we should be delivering. That's a really good number where we are right now. And if you see the line that is coming from Q3 '25, we do not expect a continuous rise. It's a battle to sort of get those numbers. And we will see some volatility as you have seen in the 3 years before. But we are really pleased with the numbers, and it's always good to see that we are able to deliver at that number. But it's not sort of a no-brainer continuing delivering those numbers going forward by far not, but really happy to see the numbers.