Ernst Russ AG ($ERAG)

Ladies and gentlemen, we warmly welcome you to the Full Year 2025 Earnings Call of the Ernst Russ AG. Please note that this call is being recorded. I am pleased to welcome Ernst Russ Co-CEO and CFO, Dr. Christopher Eilers; as well as Co-CEO and CCO, Joseph Schuchmann, who will guide us through the presentation shortly. After the presentation, we will move on to a Q&A session. And with having said this, I'm handing over to you, Joseph.

Thank you for the kind introduction, Ingmar. Good morning, ladies and gentlemen. Welcome to the Ernst Russ AG Earnings Call for the fiscal year 2025. This is -- I'm not sure, if our first ever earnings call, but certainly for the last 10 or 15 years, the first ever earnings call. My name is Joseph Schuchmann. I'm the Co-CEO and Chief Commercial Officer of Ernst Russ AG and I'm joined today by my colleague, Dr. Christopher Eilers, who is also Co-CEO and CFO. So we run the company together. We're pleased to have you with us today, and we look forward to sharing our full year results, providing an update on our strategic progress, giving you an outlook on what lies ahead in 2026. As Ingmar mentioned, a few housekeeping notes. This call is being recorded. So we kindly ask you to hold your questions until after the presentation. And Ingmar will then moderate the Q&A session. First, some bedside reading for all of you. This presentation includes forward-looking statements. So please take them as such. Let me briefly walk you through today's agenda. I will start with an introduction to our business model and market update, followed by an overview of our fleet. Christopher will then take you through our financial results for the full year in more detail, and then we'll close with a strategic outlook and as I said, the Q&A in the end. So without further ado, let's dive in. Let me start with a brief overview, especially for those of you who are new to our company and new to our business model. What does Ernst Russ actually do? Ernst Russ is a so-called tonnage provider, an asset provider, which means we provide shipping assets to freight companies. So these freight companies can perform their services to their customers. In principle, a shipping freight company, example, Hapag-Lloyd or Maersk offers their customers a transportation network and in order to operate this network, they utilize both ships that they own and ships that they charter in from third-party providers such as Ernst Russ. So in essence, we are flexibility providers, and we provide 2 kinds of flexibility. We provide operational flexibility and balance sheet flexibility. Operational flexibility as in our customers might have a certain seasonality in their service or they want to grow a footprint in a certain area for a certain period of time. So they use the assets of companies such as ours for a temporary period of time to scale up their business or down their business as per their operational needs for capacity. The other kind of flexibility we offer is balance sheet flexibility. So if companies want to grow without committing capital on their balance sheet, they can structure long-term operating leases with us for their ships. The way we currently operate this structure is fairly lean. As you see in this graph, we outsource most of the operational management of our ships to subcontractors. So we're basically an asset holding company working with best-in-class partners that we have long-standing relationships with and that provide the day-to-day maintenance, the crews, the insurance, et cetera. In-house, we focus on the investments, the commercial management and the financing of the ship. And for the services we have subcontracted, we do the quality assurance to make sure our interest as an owner are protected. For chartering out our ships, we receive a daily charter rate from our clients for the time they use our ships and their service. They themselves get paid in a freight rate per unit. And this is an important distinction to make for those of you who are not from the shipping industry, they get paid a freight rate for their freight services, and we get a charter rate for the right to use our ship. Currently, our fleet is primarily focused on the container sector. So just a brief rundown on the market environment we faced in 2025. We have 2 main themes. On the one hand, we have scarcity on the supply side, and we have lots of volatility and disruption on the demand side, which is, in any case, underlined by a healthy growth in container trade globally. Most prominently on the supply side and for the last couple of weeks also for the demand side, we have the Red Sea and in general, the Middle East disruptions due to the ongoing wars that lead to extended rerouting of the fleet, limiting supply through these inefficiencies and longer routes. On the demand side, we have lots of -- or we had lots of volatility in terms -- in 2025 in terms of trading volumes as the administration in the United States, the new administration has had a significant impact on the global transport of good. The volatility in volumes due to this has also led to less efficiency and shifting trade patterns, increasing rates on certain routes while decreasing rates on other routes. So more volatility, but in general, a healthy development, a positive development in freight rates and charter rates for our ships. We do see this continuing in 2026 as the disruptions don't really end. And we do have to note that a prolonged closure of the Strait of Hormuz can also, of course, have a negative impact on global economy. And of course, shipping as such, is somewhat dependent on the global economy thriving and global trade growing. So we do look at this cautiously and monitor this every day. When you look at the current portfolio, our current fleet, we have 25 ships on the water with a market value of approximately USD 543 million. Last year, we ordered an additional 2 containership newbuildings. These are ordered backed by a 10-year charter to one of our existing clients and joint venture partners. In general, we intend to increase our exposure in non-container segments to diversify our cash flows further. As of now, our containership portfolio is complemented by one bulk carrier and one multipurpose ship. Recently, we communicated that we had entered into agreements to purchase 2 additional multipurpose ships on backed by a 7-year charter, and these will increase our exposure to this segment because we feel there is a fundamental value in that exposure. These will be taken over in the upcoming weeks so these will appear on our balance sheet shortly. When you look at the contractual relationships our ships have and the contract coverage for the fleet, we do note that we distinguish between the Ernst Russ's wholly owned fleet, which you see in this graph where the ownership says Ernst Russ and the joint venture ships that we operate with joint venture partners. In terms of value, just as a note, the majority of our fleet in terms of value is in the Ernst Russ fleet. So these are more valuable in terms of market value. When it comes to contract coverage, as you see for 2026, we're very well booked in terms of value adjusted. This is even higher, as Christopher will allude to later in his forecast. And just to mention this, the 2 additional ships I just mentioned on the multipurpose side, as they're not yet taken over, they don't appear in this forecast. One further thing that I would like to highlight before I pass to my colleague on the financial matters is that we also recently communicated that our largest ship, the Rome Express, we recently renegotiated an extension of her existing contract, and it now runs until Q2 2033. This really showcases a focus that we had in 2025, which was on strong counterparts, long-term coverage and good cash flow visibility for our shareholders. When talking about cash flow visibility and cash flows, I would hand over to my colleague, Christopher, and thank you very much. I'll be back later.

Well, thank you very much, Joseph. And also from my side, a warm welcome to everyone, and many thanks for taking the time to join us on our earnings call today. I would like to start by highlighting main figures of the last financial year 2025. Since earlier today, we published our financial results for the fourth quarter and the full year ending on the 31st of December last year. So the corresponding stock exchange announcement and the accompanying presentation are available in our Investors section of our website, so you can look into the detailed numbers also after this call. So let us start with the highlights. Overall, we generated revenues of EUR 158 million compared to EUR 172 million in 2024. This development is due to the fact that we sold some vessels in 2025, resulting in fewer trading days. I will explain in a little bit more detail in a moment when we're going into the deep dive of the numbers. So we ended the year with an EBITDA of EUR 126 million, which is significantly higher compared to EUR 93 million in 2024. So this represents an EBITDA margin of nearly 80%. So the improvement shows a very strong result and of course, is mainly driven by vessel sales. So looking at our balance sheet, our equity ratio stands at 79% as of year-end, and our cash ratio is at 192%, reflecting a very strong liquidity position. So all the above-mentioned development resulted in an earnings per share for 2025 of EUR 2.18. So summarizing the recent years on the right side of the slide, our average 3 years EBITDA ratio stands at 63%, and our debt-to-equity ratio remains low at just 12%. So we see a development over the last years, and that showcases our robust and conservative financial profile of our company. So on the next slide, I would like to move on and walk you through the main highlights of our P&L and the main performance indicators in a little bit of more detail. So as already mentioned, revenue for last year was EUR 158 million and therefore, roughly EUR 14 million less than in the previous year. The decline is primarily attributable to lower trading days in detail, 843 days less year-over-year, which is the result of a smaller average fleet size. However, this effect was partially offset by a higher average daily charter rates, which increased by USD 678 per day in comparison to last year. So as already Joseph has said, we see or have seen a strong market last year as well. So the strong development of the other operating income of nearly EUR 60 million in comparison to nearly EUR 20 million in '24 is the result of 2 major effects. So firstly, EUR 42 million is the result from the gains from the vessel disposal I just mentioned, and secondly, around EUR 10 million is the reimbursement from insurance. The cost of materials totaled at EUR 74 million and includes the 3 main drivers for our shipping operational expenses, which is crewing at nearly EUR 30 million, maintenance of EUR 21.3 million and the insurance coverage of our vessels with EUR 7 million for the financial year '25. So the decline of cost of materials is once again mainly driven by the reduction of the fleet in 2025 and in comparison to '24, the additional costs which occurred in '24 in relation to the grounding of our vessel Lodur. So the personnel expenses on group level increased slightly, in particular due to the new setup of the Executive Board, including Joseph and myself. And on the other hand, the reduction in the average employee capacity from 30 to 28 FTEs had an opposite effect. So taking all the mentioned aspects into account, the net result bottom line resulted in an EBITDA of EUR 126 million and an EBIT of EUR 96 million, which are both significantly above prior year and in line with our guided forecast. So moving on to the next slide. I would like to take a look into the development of the figures below the EBITDA -- the EBIT. So our nonoperating result of minus EUR 10 million of last year is primarily driven by the foreign exchange effects due to the U.S. dollar-euro development. In 2024, we experienced the opposite effect, resulting in the positive nonoperating result of EUR 2.8 million. So in '25, the financial result was EUR 8.7 million compared to only EUR 3 million in '24. The financial results includes the interest earned on our fixed term and overnight deposits as well as gains from the disposal of nonstrategic affiliated companies since it's part of our strategy to reduce the complexity of our corporate structure, which I will allude to a little bit later throughout the strategy. So as a result of the developments mentioned, earnings before tax rose from EUR 73 million to EUR 95 million and the profit before minorities increased by EUR 28 million to nearly EUR 100 million of last year. So if we subtract the minority interest of EUR 26 million, Ernst Russ Group realizes a profit after minorities of EUR 73 million in last year compared to EUR 42 million in 2024. So as a result, we ended the financial year with earnings per share, as mentioned, of EUR 2.18. So of course, many of you might ask which is this effect on the dividend this year. So on the 4th of June, the Executive and the Supervisory Board will propose to the Annual General Meeting a dividend payment of EUR 0.25 per share for the fiscal year 2025. So on the next slide, I would like to briefly summarize the key performance indicators year-over-year comparing the last 2 years. So EBITDA improved significantly by 35% from EUR 93 million to EUR 126 million and the EBIT from EUR 68 million to EUR 96 million. So as already said, the EBITDA margin for last year stands at nearly 80%. So it is important to note that this development '25 versus '24, the EBIT in '25 includes EUR 43 million in vessel sales gains, whereas in '24, it was only roughly EUR 2 million. So excluding the sales of the vessels, the underlying operational EBIT for '25 would be roughly EUR 53 million, which, of course, is still a very strong improvement year-over-year. So as the trading days declined from 10,338 to 9,495 in '24, we see the direct effect on the decline of the revenue. The OpEx improvement from EUR 70 million to EUR 60 million is, of course, the outcome once again of a smaller fleet and further disciplined cost management. Overall, last year, we completed 16 new charter fixtures during the year, which resulted in an increase of the average charter rate per day by 4% from USD 17,457 to USD 18,135. On the cost side, whereas the average OpEx per day decreased slightly from USD 7,080 to USD 6,918 and we were able to improve the utilization of our fleet from 69 to 97 -- sorry, from 96% to 97.7%. And this optimization of the core KPIs reflects once again our excellent operational result for the group of last year. So let's take a detailed look at our balance sheet as of the 31st of December last year. So total assets increased year-over-year from EUR 355 million to EUR 370 million, which is mainly driven by the slight increase in vessel values; in total, EUR 241 million and adding the payment for the first installment for our 2 newbuildings to the shipyard and the reduction of nonstrategic JV structures, we increased the ownership in certain vessels, which had a direct effect on the increase of total assets. The liquidity of the group increased from EUR 110 million to slightly to EUR 114 million last year. And on the other side of the balance sheet, we see that the equity position grew from EUR 266 million to EUR 290 million, largely driven by the strong net income for the financial year. And therefore, the equity ratio stands at 79%. And if we would subtract the liabilities to noncontrolling interest, the equity ratio would increase to 84.2%. So looking at the interest-bearing liabilities, they increased from EUR 15.8 million to EUR 36 million, while the liabilities to noncontrolling interest decreased from EUR 41 million to EUR 18 million as we continue to streamline our ownership structure. So the balance sheet overall leaves us with an almost no securitized debt and a cash ratio of 192% which forms, of course, a very strong basis for our continued growth strategy, which we will share in a little bit more time. So cash flows. On the next slide, as said, we wanted to briefly walk you through the cash flow straightforward. We started the year with EUR 110 million of liquidity, which was uplifted by our very strong operating cash flow of EUR 89 million and which is underpinned by our high EBITDA. So the cash flow from investing activities amounts to nearly EUR 24 million, which includes the mentioned proceeds from vessel sales of EUR 61 million on the one hand side. And on the other hand side, we partially offset by investments in the Shipping segment of around EUR 45 million, which includes the mentioned newbuilding installments to the shipyards and the increase of our stakes in existing nonstrategic joint venture investments. So the cash flow from financing activities was minus EUR 96 million, reflecting the dividend payments to both shareholders and mainly also to minority partners. And further, the cash flow from financing includes the full repayment of a loan. So after subtracting the already mentioned exchange rate effect and valuation effect of minus EUR 11.2 million, we ended the year '25 with a very strong liquidity position, once again of EUR 114 million. So after reviewing the development of the past, let us take a look into the future and the forecast for the financial year '26. So for the revenues, we are guiding a range of EUR 145 million to EUR 160 million. And in this context, it's importantly to note that already EUR 138.6 million of these revenues is already contracted as per today, which, of course, gives us a high degree of visibility and confidence in our numbers from the outset. So in order to set this in a little bit more context, in 2025, revenue came in at EUR 158 million, and the overall revenue backlog was EUR 448 million at end of last year. On the profitability side, we expect an EBIT in the range of EUR 34 million to EUR 44 million. So please allow me to be transparent on this matter. The 2025 EBIT of EUR 69 million included the vessel sales, which, of course, has a special effect on the results. And in our forecast, we do not anticipate vessel sales so that the underlying trajectory is solid and in line with our expectations. In terms of the fleet utilization, we are targeting 97%, which is more or less in line with the strong 97.7% we achieved in '25, but it reflects the planned off-hire for scheduled dry dockings, for example, which take place in our fleet in '26. So finally, our guidance is based on an assumed foreign exchange rate of USD 1.2 to euro compared to USD 1.13 in 2025. So the stronger dollar assumptions reflects current market conditions and market expectations, and this potential currency headwind is already factored into our range. So overall, we started the year 2026 with a high share of contracted revenue, a fully utilized fleet and a clear strategic direction. And since I already mentioned several times the clear strategic direction, please allow me to share our -- or use this opportunity today to give you a somewhat more detailed outlook of our strategic thinking. As you can see on this slide, our strategy is based on 3 distinct phases, each building on the progress of the previous one and showcase a strong dependency throughout the journey in between those phases. So in Phase 1, we call it transformation phase, which we started last year, we formed the basis for everything which now follows. So we initiated our fleet modernization program, selling older tonnage to rejuvenate our fleet while still focusing on risk mitigation through diversified counterparties and long-term charter contracts. So on the capital markets side, we significantly increased our Investor Relations activities, growing our research coverage from 1 to 4 analysts and stepping up our participation in investor conferences. I think Joseph and myself, we tried to attend as many as we can last year and we'll continue to do so this year. And further, we took the decisive step to reduce the complexity in our corporate structure by reducing the nonstrategic minorities in the fleet and disposing noncore subsidiaries further. So building on this phase, we are now shifting into the next phase, which we call disciplined growth phase. Here, our fleet focus is on a diversified yield generation with a strong emphasis on risk mitigation, reflecting in our order of the 2 newbuildings in last year with a 10-year charter contract and the acquisition of 2 secondhand MPP vessels beginning of this year, as Joseph already has mentioned, which starts operations with already a 7-year charter attached. On the capital market side, we are actively working on broadening our investor base to increase the liquidity of the share with a larger free float remains, of course, one of our long-term key objectives. So we strongly want to strengthen and intensify our Investor Relations measures by continuing these earning calls and offer them on a regular basis alongside our quarterly reporting. So what we already initiated is the implementation of IFRS reporting this year, which will, of course, take some time, but it makes the reporting more favorable also for international investors. And our financial setup is of equal priority, of course, since we really focus on a disciplined approach to our balance sheet management, and we want to maintain a sustainable loan-to-value level. So looking even ahead, the vision of Phase 3 in our strategic road map is the overall goal to become the leading listed European shipping platform. This means that a risk-diversified portfolio approach designed to ensure long-term stability, resilience and attractive risk-adjusted returns, combined with a clear dividend policy and an uplisting to the regulated market. So we also aspire, of course, to establish transparent and straightforward financial statement logic, where our earnings are simply defined as charter rates times trading days minus OpEx equals the EBITDA. So it can be as simple as that. So we are trying to achieve this goal over the next phases. And we strongly believe that this strategic road map provides a very clear and compelling path forward. And of course, we are looking forward updating you on our progress in the coming quarters. So before we open the floor for the questions, let me draw your attention to our financial calendar for '26. As I already said, we are now trying to be present as much as possible. So the key upcoming dates include the Metzler Small Cap Days in Frankfurt on the 14th of April this year. The MKK, the Munich Capital Market Conference on the 22nd of April, and we will publish our Q1 report and our next earnings calls on the 28th of May and our General Meeting on the 4th of June. It will take place on the 4th of June and the publication of the half year report and earnings calls will take place on the 25th of August. So we look very much forward to staying in close dialogue with the capital markets community, meaning, of course, you throughout the year and hope to see some of you in-person during our many capital market conferences. And coming to an end of our presentation, we would like to thank everyone for the continued attention and the general interest in Ernst Russ. And Joseph and I are now more than happy to answer all your questions, and we will now hand over to Ingmar to moderate the Q&A session.

Yes. Thank you very much, Christopher. Thank you, Joseph, for the presentation. And ladies and gentlemen, now it's your turn. We are opening the Q&A session. [Operator Instructions]. We have already a participant raising his hand and you are able to speak now and place your question, Mr. [indiscernible].

My first question is about the outlook for 2026. Maybe you can give some more flavor maybe also about your outlook about the charter rates. You said they are right now looking quite good. Do you expect them -- how long do you expect them to be quite well? And you also mentioned about the economic outlook. Do you think the charter rates will be influenced then next year already this year? And also maybe about the EBIT. We see right now higher average charter rates which means there will be probably some dry docks this year. Maybe you can also mention this.

Yes. Maybe I just take that regarding the market. As I said, in general, we are cautiously optimistic. Why cautiously? Every single day these weeks is a surprise, lots of volatility, lots of misleading information coming from multiple participants, obviously, in particular, from the White House. Maybe it makes sense to take a step back and look at what this volatility and the disruptions mean. The current environment -- 3 weeks ago, the environment was in container shipping and for the last 2.5 years, I think, heavily dominated by the rerouting around the Red Sea, in which I'm not sure if everybody is aware, but the Houthi rebels are shooting at ships in the Red Sea, which means basically the majority of the container fleet, at least and most of shipping in general, stays away and circumvents the continent of Africa, which means longer routes, less -- so sucking in capacity on the longer routes and then higher prices for freight and charter rates. Conversely, that situation was somewhat normalizing at the beginning of this year, end of last year. There was early signs that some of the bigger container carriers were continuing Red Sea transits. And that obviously would have an impact -- a negative impact on charter rates and freight rates. The new crisis now for the last 3 weeks has put that on hold. And hence, that sort of positive effect on freight rates and charter rates should continue for longer now. That being said, when you look at this new crisis, it has a lot more possibility of impacting the global economy as such. And if Europe, for example, as an economy is facing a prolonged downturn, then that obviously has an impact on global trade. And on the long run, we are simply also a function of global trade. Anyhow, since we are in the feeder space, we don't see a very big order book coming in and the underlying trade globally despite these crisis has been very healthy in 2025. So we are cautiously optimistic. We are -- the last fixtures we have done, the last elongations we have done on charter rates have been higher than anticipated. And we do see that for the foreseeable future to continue that we fixed at very healthy levels, but it's really touch and go in terms of macroeconomic activity. So we prefer not to give any sentiment on how long that will actually last because that's really not in our hands. I think -- I'm not sure what the second part of the question was. Maybe you can rephrase that.

Yes. Thank you for the first part. The second part was about the maybe dry docks, which will be in this year for the ships. I think there will be some more than last year, if I...

Yes, exactly. So there's 5 dry docks scheduled for this year. That is obviously more than last year. And also, we do have to take into account our ship sales last year, and we do consolidate the results, right? So I think I already saw in one of the other questions, earnings per share as we have bought into some of the ships that we operate in joint ventures and bought out our joint venture partners, that is then earnings per share, whereas previously, that was also only in the consolidated results. Maybe I hope that answers the question.

Yes. Maybe I can continue with another question. And now it's about the expansion strategy and also maybe some sellings for renewal of the fleet. Is there a specific segment where you have right now an eye on the last 2 ships were at the multipurpose segment? Do you feel there will be more opportunities in this segment? Do you think there are right now other segments which are more favorable?

In general, yes, we do see potential in the multipurpose segment. That's why we invested in it recently. The multipurpose segment, just as the feeder containership segments face a prolonged scarcity of capacity. The fleet is older on average than it has been historically. The order book is lower than it has been historically. So we do see very good opportunities there. That being said, in general, in shipping, we are currently in a rather high point of any cycle. So the asset prices are somewhat inflated. So we are very selective when it comes to investment opportunities because despite our solid financial position, we intend to make the right investments for the long run. And if that means selecting more decisively, then that may be the case. And maybe just to add, in other sectors, yes, there's certain sectors that we are -- we're looking at every sector, and there's definitely opportunities. And when the time comes, let's say, we will also inform shareholders about this. But obviously, there's -- this is a very liquid market, lots of things happening every day. So we are quite selective on how we approach this investment process.

Great. And you also said right now, some prices are inflated, so there could be also then a chance to sell some older assets, right?

Yes, absolutely. I think that's what we've done last year. I think for those of you who have attended some of the investor conferences that we attended, we've been always very clear, especially when it comes to our joint venture fleet that at any given point in time, we are assessing the rechartering or the sale of a ship. And if the expected cash flow from the charter is higher than a sale, then we continue with the ship. And if the sales price exceeds our assumptions for the future, then we are not very sentimental about letting go of assets as we showed last year. When you look at our joint venture fleet because I think that was also a question I saw pop up, maybe then I'll just take it there. We are assessing that in a continuous matter. And there's always 3 options when it comes to the joint venture fleet. It's either selling the vessel outright, which we've done last year, for example, EF Elena. There's us buying out our joint venture partner and there's them buying us out. All 3 things we've done last year. But as you can imagine, the process of that with the partner is an iterative process and the planning of that is somewhat not always straightforward. So we do try to take this on a selective basis.

Yes. Great. Appreciate it. I have one last question maybe about a recent charter agreement with [ Fati. ] When I compare it with other agreements, they were quite long and now we have a more short-term contract. Is it about diversification of the duration of the contract? Or what's your thoughts about that?

I'm not sure what [ Fati ] is.

I thought -- was it -- I think one of your container ships.

You mean, Faith?

Faith, yes.

Yes. So I think when you look at the fixture we have done for Rome Express, our largest ship, as I mentioned, that is a larger ship and the larger ships tend to have longer contracts than the smaller ones. And we do try to focus on longer-term commitments, but sometimes for the longer-term charters, there is a heavy discount on what you are able to get. So we are balancing this in terms of what is most profitable for our company and what is most sensible for us to secure cash flows. So this balance, we do try to do on every deal. And in the case of Faith that you just mentioned, this is -- this was the charter that was available. And could we have done longer or shorter? Yes. probably, but this was basically the sweet spot that we chose.

And we move on to Mr. Thomas Wissler.

Congrats to the great numbers. I just have a couple of questions. One has already been asked regarding the dry dockings in 2026. Can you maybe just give us some numbers what the P&L impact might be in 2026? And can you also maybe remind us how many dry dockings you had in 2025?

Yes. Maybe the financial impact, Christopher will take. From the top of my head, I think we had 3 dry dockings or 2 in 2025, but I can look that up and give it to you in a moment.

So I think for -- if I may add, I think for '26, there are 5 dry dockings planned. And by end of last year, we received dry docking budgets from our technical management. So they are reflected in the forecast numbers when we're looking at the budgets, which are already reflected in the cost of materials for this year.

Can you give us an idea how much you roughly have to pay for dry docking on average?

I mean, it depends on the age of the individual vessel and of course, on the size of the vessels and all the maintenance work which has been done before. So it's very difficult to mention the exact number per vessel because it's a huge difference if you're looking at the Rome Express being 13,000 TEU, whereas our smaller vessels have 800. So that really depends.

Maybe I can add to that. There is obviously also when you have a ship in China, that dry docking is cheaper than when you have a ship in Europe, for example, if you want just a broad number, dry docking for a smaller ship will probably start at around 1 million, and it will go up to about 3 million for bigger ships, so this is the range. And then depending on the age and the maintenance and the location of the actual dry dock, that is sort of a range that you can expect. In that detail, we don't really guide on that when it comes to ship per ship, but we can certainly look into that for the future if we can increase visibility for both our analysts and shareholders.

That already helps. Maybe one follow-up question, given that you have the slide open for your forecast 2026, you are forecasting your U.S. dollar-euro exchange rate of $1.20. Am I right to assume that this is a conservative approach on the one hand? And are you hedging your foreign exchange exposure to some extent?

So what we do normally in our budgeting process is that we approach several European international banks and aggregate their average expectation for the upcoming year. So we came to the conclusion that we budget the forecast with USD 1.2 per euro. Of course, the beginning of the year was below that. Nevertheless, some market participants also expect or guide USD 1.25 per euro. So we will see during the course of this year how this development is going. Of course, the geopolitical situation has a special effect, which we do not anticipate at the beginning of this year. So I think we are, as of now, happy with this guidance. And we, as a company, of course, we purchased the vessels in U.S. dollar. So all the income is in U.S. dollar or the majority of the income is in U.S. dollar. The cost is in U.S. dollar. So what we, for example, do is that at a specific point in time, we shift U.S. dollar portion into euro, for example, to pay out the dividend, that is like part of the policy. Nevertheless, the balance sheet as a whole is not hedged against the development of the exchange risk.

And maybe if I may, one last follow-up question. You mentioned or at least we can see in your P&L that you have made significant improvements in buying out your minority shareholders. If I look at your strategic road map, Phase 2 does not show any further minority buyout activities. Am I right to assume that this has been finalized? Or are you approaching that going forward with the remaining minority shareholders?

Well, as mentioned, we take this up very selectively. As Christopher mentioned, these phases, this is a structural approach. These phases are interlinked. We do have the majority in terms of value of our fleet now in whole control. So we do see a significant step made. I think we've communicated this last year that the -- there is minorities or joint venture partners that we deem strategic. If you look at our one joint venture that we also developed the newbuildings with, these are joint ventures we want to continue. There is a few joint ventures. I will not comment on the details that we are always assessing in terms of viability of that strategic list, and we will continue to do that. So if you want sort of a percentage on how much are we done on that, probably somewhere between 85% and 90%. And we do assess the situation continuously, and we will buy out further minorities or let ourselves be bought out if we do see or conclude on a price point that we deem attractive for our shareholders, right? Because this is always the balance that we need to strike. We are not buying out joint venture partners at top dollar prices only to buy out minorities, and we are not letting ourselves be bought out at lower price points simply to be bought out. We do balance that in terms of what is best for Ernst Russ shareholders as a whole.

Makes completely sense. And maybe just a quick follow-up question. Insurance coverage, do you see any development given the tension in the Middle East?

Well, in general, you do have to dissect the different insurances that we have. We have sort of hull and machinery insurance for the physical asset. We have P&I insurance for damages to others. And things that are related to the Middle East would be covered below war insurance. We currently do not have any ships in the area. So we currently do not pay war insurance. That being said, if a ship transits an area in which war insurance is needed, this is something that is usually a cost that is in relation to our charter as they go -- they direct the vessels operationally. So the impact -- to answer your question, so the impact, no. But in general, obviously, the insurance market as a whole, the maritime insurance market is interlinked globally as well. So there's always implications on one thing or another happening. But yes, the short answer is no.

Well, thank you very much, Mr. Wissler, for placing your question. And we move on to Mr. [indiscernible].

Yes. Just a question on the average remaining duration of the charter contracts, it has increased to 26 months, which is according to my understanding, largely related to the new ships, which are not yet delivered. How do you see or how did the duration develop including the active fleet? And how many contracts need to be prolonged in the current business year?

Okay. Maybe I'll take that. Yes, the newbuildings are included, but it's not only driven by that. It is also driven, as I mentioned, by the prolongation of the charter for our largest vessel, which goes to 2033. I mean when you look at this graph that we're showing here, the majority of our fleet is due in 2027 and 2028, which I would then assume an average that suggests 26 months, and then you have ships coming open in the next, let's say, 2.5 years, that is exactly what the average duration shows. So just 2 ships don't materially change the average. Obviously, they have an impact because it's a 10-year charter. The 2 ships that we have just acquired that will be handed over soon with 7-year charters will also have an impact. So that basically to that question. In terms of new charters this year, if you look at this graph, I can count 1, 2, 3, 4, 5, 6, 7 this year, which is -- that's why we are showing this graph. And as I mentioned earlier in the market comments, that is how we feel about the market, cautiously optimistic.

Well, yes. Thank you. And we move on to Mr. [indiscernible].

Yes, I have a silly question or 2 silly questions, please. Thank you, firstly, for the good presentation. I just want to ask you if you also see opportunities in LNG tanker or oil tanker, for example, because I'm not an expert in this one. I'm happy to talk to you guys because I recently just heard there's a deficit in the market for especially LNG tankers. And the second one is the dividend. So I really appreciate the strong results and the strong balance sheet. It's really great in my opinion. And that's why is the dividend -- I'd like to ask why is the dividend not, let's say, higher, for example, EUR 0.30 or EUR 0.35, I think, would still be very conservative in my opinion. So that's my question.

Thank you. Taking the first one, I think the second one, Christopher can take regarding LNG carriers and tankers. Yes, there is a forecasted shortage of LNG ships globally. If you look at FID for LNG export projects for the next 5 to 10 years, certainly a shortage of LNG tankers. Most of these projects are covered by long-term charters, 10- to 15-year charters. We are certainly interested in the LNG space. As we communicated, we are -- our strategic goal is to become a diversified company across various segments. You do have to take into account that one of these LNG carriers cost $250 million approximately in newbuilding. And it is a market that has high barriers of entry. So any entering into that market will -- or requires quite substantial involvement for a prolonged period of time. And we're certainly not excluding that in our midterm future, but it is quite -- in German, I think you're German, you would say it's the thickest bread. So we are, of course, looking at that, but it remains to be seen if that can be achieved. Just as a side note to that, the reason why all these ships are on such long charters is, of course, first, the security of the projects and the export, but also the unwillingness of owners such as ourselves to commit to a $250 million ship. And usually, you don't order 1 ship, but you order 2, 3, 4, 5 ships. Usually, people are not willing to enter that amount of CapEx without securing long-term cash flows first. If you look at the size of our company, obviously, any $250 million investment on a pure speculative basis would be also in light of our strategy, be a bit out of step. So that's how we look at LNG. Tankers in general, certainly a topic for us. When you look at -- what you're probably looking at is the current market environment when it comes to the Middle East, obviously, huge volatility and very strong earnings. When you look at our business model and our strategy of having long-term charters, then a seasonal spike or crisis-induced spike like we have today doesn't always have the impact on the long-term charter rates that it needs. So currently, most tankers are priced at a level that is reasoned with the current spot prices. So you can earn in the spot market very high earnings today. So the asset price is quite high. But on the long-term earnings, these do not reflect that price to the same extent. So this disconnect is something that we spend a lot of time on, and we're looking at it extensively. And then the second question for the dividend, I think my colleague will take.

Well, first of all, thank you for the question. And I totally understand the question concerning the dividend, looking at our strong balance sheet and the great operational result of last year. As I mentioned, we are in this transformation phase, and we mainly focus on shifting the portfolio. So we strongly focus on investing into new projects with long-term charters. So that the portfolio shifts into long-term secured cash flow to more like a yield play approach where the revenue visibility is far more on the longer-term side, which allows us at that point in time to really implement and established a long-term dividend policy. So therefore, the focus this year is to use the market opportunities which come up to really shift the portfolio. Therefore, we focus on that kind of dividend payout, and it was a slight increase to last year.

Okay. Thank you very much. And we now move on to some questions in our chat box. And maybe there is one concerning in which categories of vessels is further diversification of the fleet likely.

I think we've touched upon this. We assess our investment opportunities purely on the basis of that opportunity. We've touched upon tankers. We've touched upon LNG carriers. We do have a bulk carrier in our fleet. We have multipurpose, which we just extended. We are looking at most major segments in shipping. When it comes to a portfolio approach, obviously, there are segments that are less correlated than others. For example, the -- there's -- on the MPP or multipurpose sector, there is a strong overlap with some bulk carrier trades. So maybe the diversification effect there is not as large as, for example, between tankers and container ships. And on bulkers and container ships or bulkers and tankers. So we do look at that, and we look at the whole picture of our fleet. And now the increase in exposure in the multipurpose segment is a very good diversification to our other strategy and investment in tankers would be as well. So we are monitoring every segment daily, let's say.

Okay. Thank you very much. And there is a question from Mr.[ Gilbert ]. What are your basic assumptions for like-for-like the EBIT decline? EBIT adjusted by the EUR 42.9 million one-off was EUR 53.5 million. Are you guiding now midpoint, EUR 39 million, which is a sharp decline.

Yes. So if I may add, as I already mentioned, of course, in the guidance for this year, we do not include any possible vessel sales, which had a huge effect in our last year's numbers. So if -- and as Joseph said, we come to a conclusion looking at the renewals of our fleet that it makes more sense to sell them rather to charter them on long term, that, of course, has or would have a direct effect on the EBIT for this year.

And maybe just to add to this, obviously, a disposal in assets last year impacts the earnings capacity in this year and also the EBIT capacity. So any sale of a vessel is simply a sort of pulled forward cash flow to a one-off payment that you would have for the coming years. Sorry to interrupt.

No worries. And we move on and back to a participant raising his hand. Mr. [indiscernible].

Yes, I'm struggling with the technology. Sorry for that. But you're copying now, are you?

Yes.

Thanks a lot for being allowed to ask some questions. Very top line, if I may. I was very familiar with the industry and concentratedly invested until kind of the century rally caused by basically the only Chinese stupidity during the last 50 years in '21 and exited them. So basically catching up. First top line question. From your shareholder perspective, it's roughly EUR 60 million Free Float, the rest is owned by Döhle. They run 300 vessels, 100 of them belong to them. That is what I understand. EUR 60 million is roughly what you need for 2 or 3 boxes in equity. So from my point of view, there would be 2 strategic options, either to take the whole thing private because why bother for kind of 2% to 3% of the fleet to have a public company or to basically float way more than 1 in 4 shares. So which direction is the major shareholder going as of your knowledge? That is the first thing. Maybe you want to answer that and I continue afterwards? Or do you want me to continue?

No. Christopher?

Yes. I fully agree on how a possible positioning of the main shareholders could look like. We are very confident because Joseph and myself were hired to bring the Ernst Russ AG into the next phase. So it's more the understanding that, of course, to make the share more liquid and to increase the free flow that the main shareholders needs to dilute at some point in time. So therefore, the full focus is on establishing Ernst Russ into or bringing it into the future and being a relevant player on the German stock exchange market. So we have the full backing from the Döhle family to develop Ernst Russ into the future.

Okay. Second question relating basically to the discount. For not a fund manager, but for judicial persons, so kind of be it retail or family office, whatever, of course, the tax transparent structure is way more attractive for shipping because basically, you pay 0.2% instead of 26.38% if you take a nontransparent structure like you or Hapag or whatever a listed company. So that would have kind of to be offset by a discount. So I mean, I understand that the value of the ships is always mitigated by the charters and so it's hard to say. But can you give some rough ballpark figure about the market capitalization related to the net asset value of the ships considering the charters and the debt thereon just a rough ballpark figure. Is it -- am I looking at like 1/4 or 1/3? Or what am I looking at?

So when we're looking at the numbers, and we openly discussed this also in the last year's capital market conferences, there is a valuation gap between the market value of our vessels amounting up to roughly USD 560 million end of last year and the current trading of the share. So when you're looking at the peer group being traded in the Norwegian Stock Exchange market or in the United States, you always see that there is a certain discount to net asset value trading. Of course, it's our ambition to close this valuation gap for our existing shareholders. And we believe that by shifting the portfolio into the long-term secured cash flow games, we can uplift the share price on that end. When you're looking, for example, at the Norwegian player who follows a similar business model, you see that they are trading closer to NAV.

Okay. So you're going to close that gap to MPC Container, I suppose you're talking about.

I think for us, since we are not only focusing on one segment play, it is, of course, a risk-diversified approach to the shipping exposure. And since the company itself has not been active in the capital markets over the last years, we are now changing this, trying to educate also on the logic of our business model of the main KPIs and therefore, try to also close the valuation gap by exactly using this forums, for example, to share those ideas.

Okay. So considering education, which you just mentioned, do you think it's kind of dangerous to put more emphasis on the fact that you don't pay corporate tax basically?

I think when we talk about education, we're talking about education in terms of our business model and the way we operate. I think our P&L and balance sheet, our financial reporting can do the education on the financial and tax part quite well. So we don't really see an issue in that regard. We will continue to educate. I think this as our first earnings call, it looks to be quite extensively visited. The questions seem to be rather extensive as well. So we do see an interest in explaining what we do, explaining our business model and the financials will speak for themselves.

Okay. Well, still, I might add that from the point of view of an individual investor, the model is attractive in terms of risk diversification because the only kind of backside or the only drawdown of [indiscernible] is you can't offset losses. So if you have a mixed portfolio like yours, that's a clear advantage. And I'm not sure everyone understands that yet. Okay. So final question. I mean, with that century boom in '21, '22, a lot of especially large boxes have been ordered and they are basically coming into the market this year finally. So what trickling down effect from a presumed large drop in the charter rate of the large vessels do you see to your segment? I see you have no ships there that are not chartered out for a long time. So you don't have a problem in the segment. I understand that. But can you -- do you have different scenarios like a high case or a low case or a mid-case about that trickling down effect?

Yes. I think -- I mean, the reason we are focused on the feeder segment is, first of all, the -- as you mentioned, the order book is largely skewed towards the larger sizes and the smaller sizes, especially when it comes to sub-3,000 TEU, where our main focus is, are largely protected by physical restraints. I think when you look at -- when you zoom out and look at container trade globally, we do see besides the sort of headline supply/demand that is impacted by the incoming supply of large ships. We do see a fragmentation in global trade. We see a move towards more of a hub-and-spoke system on the larger lines. All these structurally require feeder ships. The feeder fleet is significantly older than the large fleet, which makes sense because the large fleet has only started being built in around 2008, '09, '10. So the maximum age for any very large vessel can only be 17 years. And that's why we feel fairly confident on the medium and short-term prospects for feeder ships. The trickling down effect to what we believe is more in a sense that 8,000 TEU ships become regional or intra-regional feeder ships, for example, from India to Southeast Asia. These ships get larger. And then the old Panamax ships, which is sort of the 4,500, 4,000 TEU ships, which we also have one. It's actually this picture right here, the [indiscernible]. They are almost becoming feeder vessels. But below that, you are really protected by barriers. If you look at the ships we ordered, they will trade between Iceland and Rotterdam and the Icelandic ports simply cannot take vessels a lot larger. So there's a physical restraint to the trickling down effect. I hope that sort of answers your question.

Yes, very helpful.

Excuse me, just to intervene Mr. [indiscernible] because we have already run out of time, and there have been some questions in our chat with I'll be forwarding to the IR team of Ernst Russ. And so therefore, we come to the end of today's earnings call. Thank you for your interest in Ernst Russ. And thank you, Christopher and Joseph for the presentation and taking the time to answer all the questions. Some remaining questions, I will forward to the IR team. And if there are any remaining questions from the participants, please feel free to contact Ernst Russ as well. And having said this, I wish you all a lucky and successful remaining week and hand over to Christopher for some final remarks.

Yes. Thank you very much, Ingmar. And once again, dear ladies and gentlemen, thank you very much for your time, Joseph and myself. We really enjoy this dialogue and feel it's very fruitful to have these discussions. And as Ingmar said, all the questions we were not able to answer as of now, we will provide the answers written directly to you. And as a sum up, we hope that we have given you a clear picture of last year's performance, but also very importantly, a clear vision of the future. And we continue -- we look forward to continue the dialogue in our earnings calls in several of the capital market conferences where we hope to see you in person. And if you also have any further questions which you didn't put out today, please do not hesitate to contact us at any time. So yes, thank you very much and wishing everyone a great day.

Thank you, guys.