Compañía Sud Americana de Vapores S.A. ($VAPORES)

Good afternoon, everyone. And welcome to our second goal of the year. Now first, regarding the results of the first Q of 2026. My name is María Elena Palma, the person in charge with the relationship with investors of Corporate Affairs. Joining me, Roberto Saenz, CEO of the South American Company of Vapores. Now for those who need the translation, towards English. You can find it on the globe-shaped icon, and you can change the language there. With that, we'd like to welcome everyone. We're going to do a short presentation of the results and also regarding the situation of the South American Company of Vapores giving half [indiscernible] results. And at the end, we're going to have a section for Q&A. [Operator Instructions] So just give me 1 second to share the presentation with everyone.

Okay. So now we can start within the first Q of 2026, there were several disruptions in the market that have [ affected ] the entire industry and around the world. [indiscernible] without in context, it is important to review this in further detail regarding the Q. Now the beginning of the year was not really good. The [ hypo drop ] was important, we share that, and it is explained by all the disruptions that we discussed the Middle East and also climate conditions were very difficult in supports that meant logistical issues and costs that we have to face. Now the other thing is the operations with Maxim Gemini that has been developing well. And it allows that this scheduling is still high except with the problem in March that the indicators went down, but Hapag-Lloyd with [ me ] leading the front. The other important thing is the ports business. And there was an increase of cargo. A new port was opened, and we're trying to find synergies with this new society that [ happen ] manages in the ports. Now regarding [ SIM ] in the purchase of this company, we keep making progress with the shareholders, and we are still working for the authorizations, competencies and with the government that are ones that are missing in order to finish this project in last which is also very important. Are the perspectives or forecasts that Hapag-Lloyd provided at the beginning of the year with these [ sorts ] they got it. It didn't go up or down, but it was kept because of this geopolitical issue that we are facing. Much better. If you see the results, as a group, Hapag-Lloyd, the liner business in the ports terminal, we can see that we had a drop in sales, and this is explained basically by the drop of tariffs, which was 9%. And those volumes were almost no, but this is explained by the drop in tariffs. We need to consider that this drop was on an industry level, not just Hapag this please January and February. The narrow started opening in the Suez Canal. And this made the tariffs dropped in 2 months. And in March, we started seeing other problems and that's when the logistics started changing, and we started to face all these problems. So the drop in tariffs is aligned to Hapag-Lloyd and what we see in general from the market. Now when it comes to volume, we can see that it's lower than the petition because last year, Hapag was alone. And now it is being compensated 1 year with another. Now in terms of EBITDA and EBIT, this was negative because of the increase in costs [ then ] we witnessed the EBITDA is positive, it's almost half of Q1 last year. But -- and we showed in Q4 that we share Q4 also because there's a trend in the previous quarter. In the last line in next quarter is [indiscernible] negative versus the 469 from previous year. Now in this slide, we can share the reliability of itineraries. To the right, you can see a fake orange line that is Hapag-Lloyd that up to the beginning of the year was almost 90%. And now we see that it dropped to an 80%, but it's still more important than the rest of the market, which are the two lines at the bottom. They are the ones that have the worst reliability and the [ worst ] that have the best reliability. And they are moving around between 50% and 80%, 60% or 70%. So it is maintained despite the disruptions and that is a good indicator. Now regarding what happened in terms of whether the affected, it was in Europe, there was a drop in exports that had an impact in volume. And this very severe weather condition that disrupted North America and Europe that disrupted the vessel schedules and terminal operations that made a certain ports were in [ excess ] able. Therefore, we had to hire storage houses, take them by land, hire other means of transportation to keep the schedules, and it means over costs. Now regarding the Middle East, given that it started in March, Hapag-Lloyd and all vessel companies suspended translate on the Suez Canal that was resuming and the same thing happened with because of the reasons that we all know we have to start operating there. In the case of Hapag, specifically, 6 vessels were retained in the channel. In the canal in the Strait of Hormuz, and they were able to leave because of our American associates and 5 that were rented. One ended up the charter contract. So it was delivered in the [indiscernible] area the [ rule ] was affected by a missile. And but they weren't attacking the ship. It was just intercepted and there was a little fire and that is being repaired in the area. So there are three vessels that are in operation. They are still retained there and this is affecting Hapag-Lloyd. Now regarding ports. Between March and April, the vessel to that area was suspended because they were not ready to receive all the cargo in the [ Salalah ] port and people from India started grabbing that cargo. But that was fixed, and we can see it in the map, the boards that are being used right now in the Red Sea in Saudi Arabia, and through trucks, it's just 1,000 kilometers to reach the other cost. That's how we are supplying the rest of the countries, the Emirates are using vessels and putting the canal within the Strait. They are also working for other countries. So logistics in the resiliency is becoming more normal. Ports have been more saturated and ports [indiscernible] also, but they are operating. So but it, of course, costs more because there are some contracts and some trucks, but at least in that area, we have the containers, and we are analyzing other [ returns ]. We have seen now that by the end of February, we have the signing of the agreement in purchasing this company, the time was not great because at the end of February and then March, we started the conflict in that area.

And of course, [ Same ] is an Israeli company. And that's the one that's in this purchasing process. But regardless of this, the shareholders approved this. The transaction was yielding in a 90% majority. And what is left is the approval by ministries of the State of Israel and then, of course, the different countries that operate the antitrust issue now timings there are different and we need clear solutions and clear answers from the State. Now when we zoom in the results of Hapag-Lloyd by business line, we can see that the shipping business, which is the most important one, you can see they have lower results than the first quarter 2025. What [ Roberto ] was saying is very important because we need to separate what happened in the quarter because one thing is January, February affected by storms bad weather in a market in the north of Europe and in the East Coast of the United States. These are markets which has over representation in the market. And this is why we see the results of other liners. There were other three liners that had negative results. and there were others that had better results. And the implication of why CapEx results were worse, was because weather during those months. And ultimately, this should be reverted in the market, was a quarter that we can still see good results in terms of volume. The market in the first quarter grew around 4% and therefore, the forecast for the midterm when you see volumes of April and May are positive. And the bad weather situation was reverted. So these are particular things. They are part of the problems of this logistics team needs to adapt to. And this is what happened in January and February. And during March, and by the end of February, we saw the beginning of the conflict in the Middle East. So in March, global volumes, the entire industry, all the competitors tended towards zero. And on the other hand, with an important increase of costs, the cost of [ people ] duplicate. And this is something that's not seen in this result because we're going to see the breakdown of expenses for fuel because we had steel storages or marks. This is why we don't see it here, but it is showing the cash flow. The cash flow in terms of fuels for Hapag-Lloyd, it's 100,000 tons of fuel a week and the challenge of fuel that they consume $400 in high prices. It's additional costs that during that quarter still haven't been captured in terms of those results, but they haven't been captured in the over costs for clients, and that is something that we're going to see during the second and third quarter. Now when you see tariffs. There is this [ old ] normalization in the lower range 9% almost 10% regarding the [ drop ] regarding the first quarter of the previous year, and this has to do with the market condition. Beside the fact that the market is still growing, the entering offer of the last period have been larger. And this means the balance it has more offer than demand. So the tariffs have been lower. Now regarding the Q4, we see an increase in giving all these over costs are start transferring, especially regarding fuel, we should expect that this is also going to increase in the next quarter and we have to see what happens when [ the ] margins. And when you really see when we were explaining our volumes, an almost flat volume, but the main drops are in the growth from Europe and Europe to America, been business in the Atlantic that was very affected and Hapag-Lloyd has more share than the rest of the market. The cost line is relevant during this period. The cost basically went up 100 per TEU, and that's basically what you make in a year, the total margin. And when you look at the lines caused by [ cost ], you don't see an increasing fuel impact fuel drop from to less, and this is going to start rising in the next period. However, the cost increase that we saw in Q1 that has to do with what Roberto was saying, more storage more fees, more trucks because of the congestion in bad weather, all of this will go down, but it's going to be compensated with fuel. So we don't expect that on a global level, if you see the cost by [indiscernible] can be lower. And this is also going to depend on volume as long as we see a strong bond as we are seeing now, that is going to help indicate that there's capacity that we are not using that allows us with the safety that we have, we can fill more of the ships and the vessels and then the vessel in voice and depreciation will go down. Now when you get the terminals business, in terms of entering this is going to increase and we need to consider that one the transfer volume of cargo increased an 11%, which was very positive, but this also is not just for the terminals and [ comparing ] that with the first Q in the first quarter, but also from February, we started consolidating the entire operation for [indiscernible] to containers. Logistics and terminals of one of the branches, which is the [ vaccine ], which is the terminal branches and manage containers in India. So this is also going to increase in the consolidation of the results of Hapag-Lloyd. The volume was also good in Latin America. And when we compare order with another quarter remember March last year, we purchased a participation in a terminal in France. Therefore, that period, the entire participation share of the contribution of the quarter versus last year that only reached 1 month. Now when you see how the perspective is for the rest of the year, 2027, 2026 in terms of supply demand, we still hold that were growing at 2% to 3% in Q4. So this slide is a bit lower, especially in the last quarter, but that's not what we've seen in April and May. In fact, when you see this [indiscernible] going up at on one hand, it is cost and [indiscernible]. Significantly, it has to do with the big season -- they have been their own routes through Africa with Suez Canal that's still with our cost and last periods have tended to less distances. But when we look at the year, a good brand, 3% is a good indicator. And with the supply base going to grow around 4%, half of that has already entered this month. So it is a good balance for this year, but also we should consider that when you add both 8%, 10%, 7% of supply that has entered this year, we are in a year of balance, but that we've been accumulating a supply entering of 5%. So the expectation for '26 was not very positive because of this effect of a lot supply. In the spot, as I said before, has grown, the CCSI, it's also a price indicator that includes spot and contracts, they are also rising. So that's the message. During the following periods, we can start recovering the high increase of costs in fuel in the charges and also we've applied all the charges related to Baltic areas also related to specific contingencies. So the results, they might not be really positive this first quarter, they will be compensated in the next quarters and given all the facilities that we have guided [indiscernible] because I see agreement industries. We have to see how much it's going to go on [indiscernible] to be normalized, but there's still [indiscernible]. So many uncertainties to estimate the question [indiscernible] this can see the ranges of expect results there wide in this [indiscernible], having we want to make is regarding welcome a couple of [indiscernible] Now if we consolidate [indiscernible] on the [ CA ] level, we can see the results of Q1 was negative. And the last line was 89 good [ time ]. is explained by the [indiscernible] results. Now if you see it by line, of course, investments, CapEx results was less. This was an important impact because of what has happened in the financial result was better this year because we had more cash flow available because of the cooperation that we had last year. And the exchange difference, for example, the dollar versus the euro, Roberto, given that we had a lot of free cash flow in growth, we had some utility regarding last year. So the dollar now is negative and taxes go along these same months. Now you can see graph that we are around $150 million which is explained by Hapag-Lloyd's results. In the next slide, Here, we -- the grades that we had was $55 million in this move. And of course, we have access to recover and see the situations in this slide. This is happening now. We are going through it right now. We had to collect $112 million in Germany in the regular tax operation that [indiscernible] there every year, that we know. During April, all these tax are recovered. And when we get it, we integrated. So in March, we see that gone, but we can see new one because of the dividends that we divide, we see two more which are the divisions that we brought in. One was the recovery of $112 million and the other one was Hapag-Lloyd's dividends. You see that I have a [indiscernible] of some of retention. We have EUR 41.7 million in Germany which can be compared to the EUR 112 million. So if you see it in May, we're going to see it [indiscernible] EUR 65 million to [indiscernible] around EUR 55 million and they're going to go down to EUR 35 million to EUR 36 million. We would also like to share the latest initiatives that we've been doing in Port City, which is purposely pillars that we have within the company. This is a multisport score we were going to open in the next 2 weeks in a public school. The thing about this [indiscernible] in San Antonio, we said we have a technical specialty of ports operations. So it is a school that is free and connected and half of these [ schools ] either are [indiscernible] or cooperation. And that makes they are probably going to be as they are going to or able to our workforce in our industry. Therefore, we are [indiscernible] provides a space. The infrastructure was very damaged. It rained now they are going to able to do their outdoor activities throughout the year. Also related to another school. Another public school. And this is the specialty of climate and refrigeration. We created an entire room. We still need more things to add there, but it's building of a room that was abandoned when these students now probably maybe tomorrow and get to the logistics [indiscernible] and they can do preparing especially in [indiscernible] containers or not [indiscernible] to the space where they can change and it can be qualified to be part of our own workforce. And we also had different activities over summer camp. It's the third year in a row that we do it 100 kids have done with us during the summer and their parents kept working [indiscernible] so much that everyone disciplines for the summer to do summer camp so we are seeing our slots, and we're trying to see how to [indiscernible] more for next year, the same initiative. And we are also doing some more with the goal for a development of University [indiscernible] of last [indiscernible]. One to take the university selection test. And secondly, it helps them with the change to university. So some of them participated this year. Now they're participating again, and we can see some new children are initiating this gap. And we've seen a lot of great results, and we can see the results, of course. These are the best students of the school. But when you see the results in comparison to their peers. It's really an important difference in the standardized [indiscernible] test. And I would like to invite everyone to our website. We have a form to attend the [indiscernible] lectures that we are doing. We have the first 1 in April. It was really fun. You can see the curator of the National Maritime Museum and he did an entire lecture about [indiscernible] culture. And also he shared the [indiscernible] around the objects that we have in the company that has a lot of history are all [indiscernible] exciting. We're going to keep doing more sessions. Is not some part of the [indiscernible], the time development tool -- it is in the San Anotnio terminal, to kids here have the opportunity of visiting our facilities. [indiscernible] conduct for part of our team. And with that, we wanted to wrap it up. It can be more simple than you need to understand that the results are not positive unsatisfactory. However, projections for the next quarters should improve, which is start to cover our costs. Gemini, on the other hand, is still operating quite well. Trust in this schedule is coming back to levels that exceed 80%, which is also very positive. And on the CCAP the recovery line [indiscernible] was low. It is [indiscernible] recovered that and it's being distributed to the shareholders. And now we have future recoveries rose future recoveries of $66 million plus some taxes because of foreign credits. Still, we need to have clarity about the tender at the beginning of [indiscernible] distributed dividend more [indiscernible] shareholders in one that the cash flow should increase so that we can heat and appropriate [indiscernible] in the company for the 2 years so that we can keep distributing that we can keep approving the dividends by the Board, and we can still receive the float here and for [indiscernible] in the future. And now we can move towards the Q&A section.

The last question, what is the probability of approving the [indiscernible] share by the state of Israel. And when should that happen?

Well, the timing, as we said at first, is not great because it was just before the war. But there are some things that we need to understand about this. Today, [ thing ] is a company involved in the American stock and the important investments already with the company. So we might say that this is a liner that has its headquarters. It's on Israel, but their owners, sorry, is really. And they are in the nonstock market. But in terms of work conflict, they take care of some of the vessels but given how the business is articulated, [ fund ], [indiscernible] will operate with the bank with the vessels class vessels and that should be the strategic rounds. So they would be covering in the operation that they see as risk [indiscernible] would cover those companies for that division and rest of SIM without that is what have good [indiscernible], which is the same with the Rest of the World. So we think it's very well structured, and we shouldn't see any problems in its approval, but it's addressed by the work cost now regarding the deadlines. It's around 1 year when they have to answer. So by the end of the year, we might see something. But the minister that is in charge of this leaving. So that might [indiscernible] the decision or leave it to someone else. That the time we will have the analogy is at the end of the year, this should be done. And hopefully, this can work out because there is this is well structured.

There is a question regarding costs. had announced by the middle of last year, [indiscernible] plan of cost reduction of removing $1 billion of the cost accounts of the company. Then according to this plan [indiscernible] the low. And that is related to the usage in volume. Basically, a year ago, we started with the Gemini operation and this cooperation implies to have exceeded as capacity within the alliance. If you define the size of your alliance, if you want to grow, it's very difficult. So given that Hapag intends to keep [indiscernible] itself as a growing company, during last year, we had a higher capacity than when volumes grow. So throughout the year, as we are seeing in Hapag really grew and grew 8% last year versus the world that grew 4%. So we are earning market share and that was not shown in the first quarter. But as the volumes are still falling and are still growing. I mean, important part of the structuring of the efficient in terms of costs is related to the [indiscernible]. But at the same time, in the industry, there are so many costs that are moving because of unpredictable events that is difficult to see a decrease for TEU this year. But the important thing is that regardless of the growth cost increase is compensated by the revenue, the margin maintained and increased. But it is difficult to expect droppage in cost. The relevant thing is that through contracts, we can recover and we can reupdate the fuel indicators, and that is something is done every once in a while, it's not immediate. And therefore, we're going to start recovering that in the next quarters. Question about cost of oil.

Okay. We can remember here in this business could sell [indiscernible] hours about this. Spot tariffs are reflected increase at the beginning of March and in April because of the conflict between China and United States in the 30-day tariff, an appeal was made in 50 days that it was not accepted until the end of April, beginning of B, the spot was supply and the increase of the tariff should be reflected and now contracts that would depend on the contract.

The contract have is if they have the clauses regarding oil prices in the readjusted quarterly. So given that this happened during March, it is reviewed in Q2, and it started to be seen in Q3. And there are clients that understand the problem they can anticipate for Q2. But during Q3, I think that's where we're going to see the adjustments in tariffs with clients that didn't have a contract. And then we as going to be market tariff. And just to give you some notion about the TEU tariff cost by 2025, the total cost of fuel was around $2.8 trillion. But now if the entire year had this level of price, this will grow 50% when you look at it by the new cost level in the first year, as I said, it's not reflected it's not reflecting the increase in fuel prices. It's around $200 by TEU. So if this increases, it would be $100 more just on fuel alone that, give or take, the notion of the [indiscernible] of this fuel increase. $100 in TEU may be the entire profit of the euro in North. This is why it's so important to start resuming the contracts and start recovering that we only saw in cash flow during March. But we are going to see it in the second Q, and we're going to seek out reflected and we're going to be compensating that with revenue. Now regarding the bond perspective, we need to have clarity because in part, the industry didn't grow, that was because of the Middle East. But we do see the end growing [indiscernible] growing back. When you see the complete volume of half of 2025 related to the Middle East, it's around 6%, 7% of its total volume. But in reality, there are things that are in India. There are things that are related to the area, but not specifically to this call. So in reality, 6%, 7%, real affected percentage is just 3%. And that is the dimension of the dropping of volume if this was maintained. But we need to remember that bookings were canceled since the conflict began. We closed on March, April. And in May, we've already resumed bookings and the [indiscernible] was showing is very interesting how the industry -- this adapting very aggressively and very quickly. Today, we have ports to transfer trucks a day. Now they are outseeing 7,000 [indiscernible]. So the areas set the ball and this drop in volume from a cable would be recovered now but now means a higher cost. [indiscernible] if the conflict continues more than a decreasing on because of the affected area, which I think might be more limited. We need to start to think about increasing state world in GDP because the [indiscernible] the IMF is anticipating less growth for the year at [indiscernible] affecting volume because of fuel. This is all assets are going to increase and we're going to see an effect of inflation and this makes an effect in global more and more than specific cargo. That's it.

Now some final comments. We were not a good Q1, but the forecast that we see for the future, we [indiscernible] where with the [ analysis ] of the year. We are seeing the conditions are giving [indiscernible]. It's important. And hopefully, this will not be resolved. But -- the market is moving towards improvement. So we're just waiting for that improvement in what's left of the year. Thank you for participating. If you have any questions or comments, we are fully available for you. So let's see. Have a great afternoon, everyone. Bye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]