AB KN Energies (KNE1L) Earnings Call Transcript & Summary

Good morning. Dear listeners, welcome to KN Energies' Investor Relations conference. I'm Emilija from NASDAQ Vilnius, and I'll be moderating today's event. We will start with the presentation, which will be followed by the Q&A session. Please be informed that this webinar is being recorded and will be available on the NASDAQ Baltic YouTube channel. I encourage everyone to submit questions in the Q&A section at the bottom of the screen. With that said, I am pleased to introduce today's presenter, Tomas Tumenas, the CFO of the company. Please, the floor is yours.

Hello. Hello to everyone. It's nice to welcome all the participants on this morning, Friday release -- financial release information of KN Energies' results of the last year. And actually, I'm really proud to present the last year performance of KN Energies because we had last year very work intensive, I would say, and let's start our presentation. So I would like to start from our financial main highlights, what happened in the last year. And actually, as I said, we had really good year in terms of our results, in terms of our profit earned, in terms of our revenues and achievements that we made, because we had interesting year, very labor-intensive year and many interesting events happened. And as you see, that also was reflected in our share price, which over the last year increased by 17% and our capitalization -- market capitalization reached almost EUR 90 million. It is actually by almost EUR 12 million more than we had in 2023. And as the company managed to increase the revenues, extra and better profitability margins was achieved. Our ratios -- profitability ratios also increased. That said, about return on capital employed. As you see, we had increased from almost 4% to 5.3%. Earnings per share slightly increased. Price-earning ratio remained the same. And if we took on the major metrics of financial performance, the revenues of the company reached almost EUR 94 million. This is 12% above of the previous year. EBITDA plunged by almost 40% to EUR 49 million. Net profit was EUR 15.4 million, and this is a 16% increase. And adjusted net profit reached EUR 14 million, actually twice higher than we used to have a year ago. Adjusted net profit, just wanted to clarify, this is the net profit without impact of IFRS 16 of this fluctuation of foreign exchange rates because we had -- as we had a liability towards repurchasing our FSRU vessel. And if we took basically on business segments, so majority of our revenues came from regulated activities, so we're calling LNG activities, as you see 60%. Also, this is the biggest contributor towards our profit and EBITDA. But worth noting that activities -- commercial activities, both liquid energy terminals activities and commercial LNG foreign activities increased during the year. And total size of contribution into the revenues of those business lines accounts already to 40% if we take revenue side and accounts to 32% in terms of the EBITDA. But if we're going down to the net profit, because those activities are much more profitable for the company, that share amounts to 50%. So if we take revenue size 40% and profitability-wise it's 50%, this is very remarkable achievement, I would say, because this is our major driving force of profitability of the company, and of course, enhancing our returns on assets and returns on equity. Major business highlights. It was, I would say -- as I said, many events. And a couple of them we would like to highlight. So one of them is that the company managed to sign O&M contracts in Germany, winning 4 out of 5 Germany state-controlled LGT (sic) [ LNG ] business terminals. So 2 global LNG contracts has been signed with DAT (sic) [ DET ], Deutsche Energy Terminal operator. We managed to prolong our agreement with ORLEN in our small-scale business line. This is also a very important achievement. Because of having contracts that we won in Germany, we established the company KN Energies Deutschland, which will be managing and is managing our business in Germany. Also, we had very important, even not only in company's history, but as well I would say, in all Lithuanian energy sectors' history because we acquired in our balance sheet under our ownership and our Lithuanian flag FSRU Independence vessel. So that acquisition took place at the end of -- at the beginning of the December. And also it's worth mentioning that due to this, due to the acquisition case, we managed to conclude very big transaction in capital market because we purchased dollars and sold our euros because the FSRU vessel is in dollars denominated. And that transaction resulted into almost EUR 8.1 million of savings that the company managed to have and had ability to receive very good spot rate in August. Also, a very important event that happened at the end of the December of the last year that the company managed to sign -- to prolong another one, 3 years' contract with ORLEN for our major activities in liquid terminals because ORLEN is the biggest client for oil terminals within the company and it accounts around 80% of all revenues flows from liquid energy business that flows from ORLEN activities. I would like to give some also information about what happened in the markets in 2024. And this is, I would say, key, let's say, metrics that we are following because those affects quite substantially into the performance -- financial performance of the company. So one is exchange rate euro versus dollar, because of that acquisition need of the vessel; then is the gas price; and also the carbon permit prices. If we take gas prices, so as you see, the fluctuation was quite high and the gas prices in the market fluctuated from EUR 31 to EUR 50 in different months. Currently, we have the prices around EUR 54 per megawatt hour. And even in February, we had a peak around EUR 62 per megawatt hour. Carbon permits also fluctuates a lot, and it more or less follows the gas price and the fluctuation was also quite high. Usually, this is very important, as I said, KPIs for our performance because gas, EU carbon permits and electricity accounts almost to EUR 6 million of the cost. If we take our total cost structure, which is with depreciation, amounts to EUR 70 million, approximately 10% goes to the variable cost, which the biggest part is gas, electricity and carbon permits. So for us, it's very important to look and to trace the market trends, what is going on and when to go and to make purchases of those materials and to make appropriate hedges in order to secure the margins. This is the basic situation. Also, please be reminded to the investors that, let's say, carbon permits, of course, they are reimbursed by a national energy regulator, but the company aims to find the best price at the market as far as it could because those prices are passed on later on to the consumers. If we take LNG market, also a short glimpse. I think it's very interesting. Average, let's say, utilization ratio of our LNG terminal in the last year was around 54%. The average utilization rate in Europe is 43%. Here, you see different LNG terminals with different utilization ratios at different years. We're taking 5 years', let's say, historical figures just for curiosity to see. And as you see, Klaipeda that this is we, this is our FSRU LNG Independence or [ Inde ], how we're calling as a nickname. So our utilization ratio last year was, as I said, 54%. If we take the LNG cargoes that coming into the Europe, so basically, the majority of LNG cargoes came from United States, it's around 48%. You can say roughly around even 50% came from -- I'm sorry, from Norway and it increased versus the 2023. Then 43% came from United States, a slight decline versus as you see last year. And then the third place occupies a very interesting country, Trinidad and Tobago. Also, as you are may be familiar and you're following one or another way the market, still we have LNG cargoes coming from Russia and Russia accounts to 3%. So actually, Russian cargo, despite of the war that has been started, despite of all this politician talks, et cetera, still is and exist in European market. While the market share is not so big, like accounts to 3%, but still some countries, some terminals are importing Russian cargo for their needs. This is, of course, is not the case at Lithuania. And of course, we don't have any Russian cargo and that I can assure you. So as you see, average utilization ratio, our was higher versus the market -- average of the market, so we think this is a very good achievement. Plus, taking into account that our vessel actually is booked till 2032, so the total capacity of FSRU LNG vessel is booked or sold to big market players till the year 2032. If we're looking on the price of the gas price, which I touched just a bit. So also a very interesting graph here, just for you to have an understanding how it correlates with -- how Baltic prices of LNG correlates -- Baltic -- sorry, gas prices correlate or not correlate with the TTF prices. And as a graph, as you see, of course, correlation is -- I mean, the trend is the same, but the difference exists. And that difference in the 2024, if we're taking, let's say, Lithuanian gas prices versus TTF gas prices, it fluctuates. But average difference is the spread is around EUR 3 per megawatt hour. There are some months where we have very close or very close to the market, let's say, prices the same or even it could be minus EUR 0.5. And of course, there are the days or the months or the weeks where the price difference increased to EUR 7. But basically, the price spread is around EUR 3 per megawatt hour. In the world, there are 47 FSRU vessels. So the vessels like our Inde, there are 47, and 45 of them are operationable and 2 of them are, let's say, on the pause/mute, meaning that if some prompt delivery will be needed in the market, they will be able to deliver. I mean, they will be able to make regasification or be in that port where it is needed to be done. Of course, if there is infrastructure allowing them to import the gas LNG products from vessels. So actually, the world consists of 47 FSRUs, I would say. There are some movements in the market towards increasing the number of those LNG vessels, but they are not so big. It's around maximum 4 vessels in the next couple of years could be in the market. So market is very, I would say, concrete, very precise and the size is 47. So we have -- Inde is one of our 47 FSRU vessels in the full world. If we're taking information, it makes -- it's worth mentioning about the stock situation, because sometimes maybe you are following the news what is happening. So everybody is talking about the stocks, how much the stocks of the gas Europe Union has and that, of course, affects directly the prices of the gas and eventually the prices of the production facilities, the prices for the end consumers. So it's very important the price of the gas in all, let's say, countries. So stock level by the end of the last year was around 72%. So storage facilities was filled by 72%. And today, for example, we have around 40%, and as you see, the natural gas import is, as you see, definitely less than we used to have in the previous 3 years. So this also is the tendency that, let's say, demand for the gas declined. But again, there are many reasons why it happened. And I would say, more importantly and more interestingly to see the future development, because many companies -- energy companies and as well industry and electricity plants, et cetera, really relies a lot on the gas and gas is one of the most liquid, and I would say, transparent energy sources. And analysts predicts that despite of the green movement, let's say, of the market, that the demand for the gas will rebound and will increase. So basically, the end of the year regarding the storage level was, I would say, quite okay -- average storage level. And today, industry representatives of various industries are arguing with the politicians, aiming to change some requirements. For example, currently, there are requirements that major electricity power plants should have till the 1st of November around 80% of the storage needed for the winter. Today, they are debating and trying to diminish that level from 80% to 70%. If that will be a case, most likely it will be a case, that will allow the market to have some fresh air and relief, and that should positively affect on the gas prices in the Europe. Okay. So we are coming to our business units. And as I said, the biggest one, which accounts to 60% of revenues and 65% roughly of the EBITDA is regulated business activity. This is our LNG vessel. And last year, despite of the, let's say, operational activities, for example -- as we giving here some KPIs of operational activities like how much we shipped vessels, it was 80 shipped vessels. It's high increase versus the last year. We managed to receive around 1.4 (sic) [ 1.8 ] million tonnes of LNG, and we regasified around 2 billion cubic meters of natural gas. Those figures are, as you see, slightly below the 2023, but this is mainly because our vessel was in the dry-dock before the purchasing and transferring the vessel into our balance sheet under our ownership. Vessel was standing in Denmark for almost 1.5 months. Definitely, it was not operated. And that, of course, directly affected the volumes that could be transshipped via our vessel and the regasification of the gas as well. After the beauty salon, as we're calling and joking internally, the vessel came into the Klaipeda port. And at the end of the December -- on the 6th of December, according to the law, the vessel has been acquired from Hoegh, our operator. And currently, it's under Lithuanian flag, and this is in our balance sheet. And that also going forward, our balance sheet metrics, you will see that because of this the long-term assets that company has increased. So that was very big achievements and big events for the company, as I said, as well for our Lithuanian energy sector. If we take another business segment, liquid energy market. So here, some also glimpse and view on the performance and situation of the market itself. So according to statistical data in the last year, Baltic seaports transshipped around 52 million tonnes of oil products, and this is -- and that is 17% below that we used to have in 2023. There are several reasons of that drop. And one is that that last year for oil refineries evidenced as quite tough year because the margins for oil refinery decreased versus 2023. And obviously, the oil refineries also looking for various solutions in the efficiency, they diminished the production of oil. Therefore, that was the biggest impact of -- affecting that decline of -- let's say, drop in the tonnes that has been carried through all Baltic ports. Here, we have Lithuania. And as you see, Lithuania transshipped almost 3.6 million tonnes of oil products, and this is, as you see, decrease. Latvia has an increase, and this is one of the reasons that they have the toll. It's a bigger trader, a big trade in the Latvian market and that trader had some products that he pushed through the ports, and that helped to increase the volumes transshipped in Latvia, Estonia as you see, shrinking. But what also tells that graph, as you see, that the Lithuania, I would say, is more or less on the stable level within the last 4 years despite of that drop in the last year. And as you see, we are transshipping around -- differently from 3.6 million to almost 5 million tonnes, and this drop was not very heavy compared to [ Latvia ] and especially to Estonia. So Klaipeda port transshipped 17% less various oil products versus the last year and only one port in Baltics, Ventspils, of the reason that I already mentioned, managed to increase the turnover and the volumes. So what is our share? KN's -- our share of the market. So KN is the leader -- obviously, the leader in liquid energy market between all the ports. And we are -- our share is around -- here the graph shows the market shares fluctuation per month. But in average, we are controlling around 48% of the market share compared with other Baltic ports. And of course, our aim is not to lose this market share and only to increase the market share. Therefore, the contracts with ORLEN regarding the oil transshipment for the next 3 years will contribute a lot to that performance, to the future of our flows, and to put, let's say, everything on the track to make plans regarding investments and et cetera things. So this is really good achievement that the company has all tools not to lose the market share, but to increase it even more. Basically, what I said, so some financial information -- I'm sorry, operational information. In the last year, liquid energy terminals in company transshipped 3.4 million tonnes of liquid product. This is a drop -- 17% drop versus the last year. On the revenue side, we managed to diminish -- to ease the drop to only 4% and revenue-wise decline was not so heavy. So the revenue was around EUR 27 million, and this was achieved because we managed also to negotiate very good conditions regarding our service, regarding our fees and partly offset the drop of the shipped products of the situation that we have in the last year. What is very important in that business segment, it's important that some products that are demand in the market, I would say, maybe future products, especially in biofuels, the market share, the size of those products increases and it has a tendency in the future to increase. Because biofuels is the products that has a rising demand from the various sectors starting from, let's say, not only trucks, heavy industry, but also the ships industry, the aviation industry. And ORLEN itself also is investing into their production facilities in order to have those products to be able to be sold into the market. And accordingly, KN Energies also needs to invest into our facilities to be ready to be prepared to serve those new products, because it requires different characteristics -- technical characteristics, other things. And our one of the, let's say, investment plans, CapEx, long-term until 2030 are designated towards investments into bitumen products and to biofuel products and methanol as well. Commercial LNG business was very, very successful. As I said, one of the reasons was that company managed to gain 4 out of 5 operated LNG terminals into Germany. As I said, we created the company towards there, and we made the preparation works. And in 2025, the real business, let's say, will start. We are taking care of all operational issues and commercial activities of those terminals. And also our Brazil activity was very successful, especially compared to what happened in the last year. And our small scale business was also profitable and viable and strong. So total revenues of that business segment increased by almost 60% from EUR 7 million to EUR 11 million. And also, as I said previously, that commercial activity is the biggest in terms of the contributor to our profitability. In New Energy -- New Energies are, well, let's say, as word says new. New Energy, this is a new business segment, which is -- actually currently so far doesn't have income. But this is our, again, future. And in New Energy, we see, let's say, maybe 3 basic lines where we are very as can interested in. So it's a carbon capture project, hydrogen carry project and flow batteries. And here is only initial stage of the development of those business, let's say, under that business unit business directions. And depending on how we will succeed, how those projects will be economically wise, what it will be the business cases -- real business cases, it will depend as well a lot on the development and the size of that New Energy business segment within the company's business portfolio. We count a lot, and we think we have not only like belief, but also the background -- strong background that those projects, especially carbon capture will materialize in the next 2, 3 years. What so far the company managed to do? The company had a consortium of interested parties in that carbon capture business unit. We got -- received a subsidy for the feasibility studies from EU amounting to EUR 3 billion, that will help us allow us to boost that feasibility studies. And then after when those feasibility studies will be finalized in 2025, we will see the next steps, how we proceed further, meaning if that business cases are in the line -- on the line, we will proceed further with further investments into carbon capture. So basically, I would say that in the New Energies, carbon capture is, let's say, the cornerstone of the projects that the company and the team within the company focus on. Also, we are looking and tracing what is happening in hydrogen market, especially in carriage, in transshipment and in logistics, because the hydrogen market should mature or should increase a certain level that will need some demand for transshipment and storage. Therefore, KN's role is in transshipment and storage of those various products. And we are following the market. Also, we're launching some feasibility studies. We are contacting our clients, possible developers. In other words, we're trying to hold and to be in the line what is going on within the market in order for us to be prepared to sell those kind of services. Some words about very important topic, sustainability. As you know, LNG is emitter, is one of, let's say, biggest emitters in Lithuania, but this is the price of what we need to have secure and stable energy delivery. And here, as a company, we invest into the various grades of equipment and considering investments into changing some raw energy sources, which we're using towards more climate neutral ones. We managed to decrease slightly CO2 emissions by 2% in the last year, but our goal, of course, is very ambitious. And again, depending how markets pull -- markets will go and will develop in the future. Maybe right now, you're reading in the newspapers and some already since, let's say, the changes in the United States administration happens after the elections, there are some different movements of the market. And the biggest companies, all exploration companies also they are reshaping their strategy towards the, let's say, climate neutral. And of course, the companies, as we are, we need to be very, let's say, in the right position here. Meaning, we need really to pay attention a lot on the green things, obviously, but also need to follow the market and to be prepared to react to the things. And let's say, the time and the efforts that the company is spending is quite a lot because our shareholders, our stakeholders are giving good, let's say, pressure in the good manner of the words towards our sustainability things and the company is following a lot of metrics. And also, we are heavily involved into the audit preparations of the ESRS principles. Despite the fact that those will be obligatory starting from 2026, company already decided to have those audits done and accomplished in 2025, so year before. Also as a part of our achievement is that we obtained "ESG Transparency partner" badge. And we received from NASDAQ quite high score 9.8 in sustainability index. So our attention towards sustainability and all topics are very, very on high level, very important ones. So coming back to wrap up to my presentation to the financial results. Actually, I already basically a lot of things mentioned. I will not repeat myself here. So really, last year, we had very strong in terms of all the KPIs, in terms of the revenues, in terms of EBITDA, net profit and adjusted net profit. Accordingly, having better results, our profitability ratios increased, especially versus the previous years that we had. And here, I would say maybe I would like to point out that because of the good net profit, our return on equity increased almost to 8.5%. So in our industry, let's say, in midstream industry, in heavy infrastructure industry, this is really high ratio. Making a short glance on our balance sheet, what is changes, if we take 2024 versus 2023. So long-term assets, here basically, our FSRU vessel, as you see, increased and the majority of our -- of course, our balance sheet comprises of long-term assets, accounts to EUR 430 million. Then on the working capital, basically, we have the cash, EUR 17 million and deposits EUR 45 million and only the minor part is the rest. So the company doesn't have any, let's say, issues -- big issues regarding the debtors or stocks. So basically, we have long-term assets and the cash. On the equity side -- on the liability side, we have our equity, EUR 160 million, and we have our financial liabilities, [ EUR 330 million ]. Those liabilities are long-term loans received by NIB and EIB. And those loans are long term, as I said, till 2044. And also, they are, of course, guaranteed by the states. KN is one of the few companies in Lithuania having the state guarantees. Meaning that, if we are analyzing the company's balance sheet and when we are talking with the financial investors as well with the various financial institutions, everybody understands and read slightly differently our balance sheet if it relates to the debt level or net EBITDA to debt level because our -- that loan is guaranteed. So basically, it's free of the risk. On the leverage metrics, already, as I mentioned, so the debt is only long-term debt, is guaranteed by the state. And the net debt ratio is around 5x. If I take -- if we took debt service coverage ratio, DSCR, it's more than 2x. So it's very high. Cash flow. Last year, cash flow was also positive and free cash flow, taking out dividends that the company paid in the last year for 2023, EUR 5 million. So we end around EUR 15 million of free cash flow. We had investments around EUR 22 million, excluding the vessel. Vessel was bought -- the price for the vessel was EUR 138 million. So CapEx out of EBITDA, excluding one-off, let's say, our vessel accounts for 45%, it increased a lot versus '23. And I would say, I would predict that the next following years the level of the CapEx out of the EBITDA will not be less than that figure because we are going heavily into the investment into CapEx program, which is quite intensive. We expect to invest, depending, of course, on various investment projects and feasibility -- economical feasibility as well, but our plan to invest until 2030 is around EUR 400 million, where approximately 25% should be company's own means, 30% various subsidies and the rest banking loans. So the company this year will start addressing the commercial banks to finance its activities. And so far, we have very good feedback and very big demand from our, let's say, financial institutions to step in and to finance companies' needs for the investments, which will, one hand, should be -- should enhance profitability and expansion of commercial activities. I just remind you that commercial activities accounts to approximately 40% of our EBITDA and 45% of net profit. Our aim is within the next 3 years to make a reverse from 40% to 60%, to increase the commercial activity part. So this is what we are looking forward and giving our efforts. And the rest will be invested into the, let's say, maintenance CapEx that the company needs to have it in order to operate the jetties, to operate the facilities, to operate the FSRU. So basically, this is it. And actually, I'm not going further on. I already mentioned everything. And thank you for listening to me and waiting for the comments and the questions.

Thank you for the very informative presentation. [Operator Instructions] The first couple of questions we received were regarding dividend policy. When will the company's strategy and stable dividend policy be updated? And how much are you planning to pay out in dividends this year?

Thank you. It's a good question. Of course, dividends -- dividend policy of KN is one of the key drivers or should be the key drivers for the share price. I would say, currently -- maybe I will comment in this way. Currently, we have government regulation, which is obligatory to all state-owned companies and I don't want to mention them those, and definitely you can find them. Meaning that, our dividends are calculated, basically speaking, depending how much return on equity we are earning. And so having that formula, we know pretty much how much we could -- we should pay dividends. This is one thing. Another thing, as I said, company needs to invest, and of course, company needs to secure its cash flows in order to finance its operations. So what it means, it means that the company will be going and trying to agree upon -- with our main shareholders upon the long-term dividend policy. Our aim is to have at least for the next 3 years. This is our plan. And to have some kind of agreement because, let's say, the major energy companies, if you're following or not, Lithuanian energy companies have certain -- let's say, certain different agreements towards the dividends -- the dividend policy. Ignitis has slightly different than EPSO-G Group controlled companies, Amber Grid and Litgrid also have slightly different ones. So we would like also to have a slightly different one. And if the company will be able to agree upon, we will announce as soon as possible our dividend policy for the next 3 years. So what relates to -- what regards to 2024, no, I would do not want to comment. But basically, let's say, regulation is in place right now and most likely we should follow. I see the question, if I may, Emilija, regarding the FSRU and the KN balance. In the future, there would be some differences versus the last year. And one is the big one. In the last year, usually, we had very huge fluctuation in unrealized ForEx, let's say, exchange rate because of that liability denominated in U.S. dollars. Of course, after acquisition, we do not have such, let's say, fluctuation anymore. So let's say our net profit will be very close to adjusted net profit. This is one thing. If we go on the operational side, operational side, meaning the OpEx expenditures. Here, it's not very straightforward answer because despite the fact that we have FSRU in our balance sheet, anyway, we are, of course, hiring Hoegh as operator because they have experience to operate this kind of the vessels and have that regasification thing. So they are our partners where we are paying their bills in other words. But our aim, of course, is to get more and more expertise here. And I would say that looking forward, maybe not to the next year, but to the next 3, 4 years, definitely to gain more. And of course, obviously, after gaining more, let's say, to have some efficiency solutions, that should lead to some positive impact into our, let's say, cost base related to the FSRU -- operation of the FSRU vessel. Carbon capture process is a technique. Let's say, where emitter, for example, is emitting the carbon emission. Then -- I'm not an expert as well or technician. But basically, you are -- idea is to use the technology to capture those emissions to, let's say, freeze them, put into the transportation and then transport into the terminal and then from terminal into the vessel and the vessel goes into the sea and simply they are burying into the sea. So this is -- in simplified version, this is the process. And that carbon capture process is -- this is not only that KN is doing at the moment. In the market, of course, in Europe, there are projects -- familiar projects that the companies are involved and in different phases. And taking into account the, let's say, -- no, I would say, not on clarity, but anyway, still a big mark regarding carbon emission itself, because right now, we can buy emissions if we are lacking in the market, these certificates. So the market in the future could change, meaning that you are -- those certificates should -- could be less and less. And that will be a pressure on the emitters what to do. Or they should need to close their production, yes, or they need to find the solutions how to capture those emissions. So one of the solutions, of course, if they will be economically wise, is this carbon capture, which I explained a couple of minutes ago. And I see that there are also a question regarding the dividend. So I don't want to repeat myself. And then I see the question are, any active negotiations for new commercial LNG projects? Yes, we are active. We're active. We're active a lot. And if we take Europe, Europe is, I would say, a natural at the industry. So here in Europe, we need to, I would say, to secure our contracts that currently we have and to maybe expand those because there is a room for certain services -- additional services that we could provide to our client. So in the Europe, we are trying to do this via expansion and via long-term securing of future contracts. And apart from Europe, other countries like Latin America, Asia, here, we see potentiality. And of course, it's -- they are long-term projects, not easy one. It's not like they are going and buying like in a supermarket, the chairs or tables or spoons. But of course, our team is working hard, and we have definitely under our pipeline certain projects that we really would like to scale it up. This is one thing. Another thing that really we're also looking and working hard that we would like to be a financial investor in certain projects with the big partners -- big oil companies. For example, as in Brazil, our partners are BP company, and Brazil, big energy company. So we're really also working here towards this possibility to be not only as a, let's say, service provider, but also as a co-investor into LNG facilities. So also, we are thinking and doing the steps towards here. Thank you.

One more question we received in advance. Are there any foreseen impact or changes to the company due to the change of the government in Lithuania?

Emilija, sorry. What was the question?

Are there any changes to the company due to the change in government in Lithuania?

No. No, no, no, there is no changes. Just I would like to remind you, our CEO has been appointed for the next 4 years decade at the beginning of autumn -- last autumn. So here, everything, let's say, is settled. Government, current minister, he's really professional, and he used to be the minister before. So no changes, and we really have very good connections, and from the good point of view, professional connections and relationship and we have a strategy -- energy strategy, Lithuanian energy strategy. So actually KN is a part of that. So definitely, we are following our national strategy and Lithuania is not changing it. And no, no changes, and we're really happy about really connections with the ministry and thanks for their support in the things because, of course, some of the things are -- anyway, this is state company, it's controlled. You need to be very cautious versus the market companies, et cetera, et cetera. And sometimes you need big support for the big movements. For example, the same hedge activity, it's not so easy. In market company, you can do easily. Here, we have certain regulations and things. And but when you're doing the things, you're achieving the results.

Okay. The very strong results in LNG segment were achieved, but it does not seem sustainable in the future. Any thoughts on that?

Let's see, if we are talking the commercial -- if this is commercial LNG business, I would say that the question is not maybe -- it's not about sustainability. Because our contracts -- let's say, in Brazil, we have contracts 12 years, in Germany from 2 to 5 years. And of course, our aim, as I said, to prolong them when they expire, and to expand. So I would say that it's not like unsustainable. If we are talking about 10 years period, this is really -- a really strong period. Only the question is how much you can increase and scale it up? So I would say what currently we have, we definitely we will not lose. That stream of the revenues and those, hopefully, revenues and the cash flow from those activities will be not at a less level that you used to have in 2024 for the next 5, 10 years. So I would say this is secure. And regarding scaling, this is another topic, which I already explained. We are looking forward a lot to scale it up. Current revenues, they are more or less secured for the next 5, 10 years.

It looks like we've covered most of the questions so far. If you have a question, please submit it now. It seems there's no more questions. On behalf of KN Energies and NASDAQ Vilnius, thank you, everyone. It was a pleasure being with you today. The recording of the presentation will be available on the NASDAQ Baltic YouTube channel. Thank you for a very informative conference, and have a great day.

Thank you. Have the same to you. Thank you, Emilija, and to all participants. Have a great weekend and a good finish of the Friday. So see you next time. Goodbye.