Klaveness Combination Carriers ASA (KCC.OL) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the Klaveness Combination Carriers Capital Markets Day. My name is Haley, and I am the Head of Corporate Communication at Klaveness. We are so pleased to have all of you here at our headquarters here in Oslo, and also welcome to everyone who is joining online. So this is a milestone moment for KCC as it is the first time that we are hosting a Capital Markets Day. And we are really looking forward to giving you a deeper look into our long-term strategy as well as kind of tell you a bit more about who we are and how we think. So as you'll see from the slide behind me, we have a packed agenda today. You'll hear from several members of the KCC management team as well as some external panelists that will come on and speak during panel sessions in a couple of the sessions today. And also, if you're staying for the lunch, which I hope you do, there will be a CABU III newbuild presentation that will happen during the lunch. So you won't want to miss that. You also noticed that we have a Q&A scheduled towards the end of the program. So if you -- if there's time permitted in some of the individual programs or individual presentations, then we will take a few questions. But otherwise, we will designate them all towards the end. Okay. And for those of you joining online, you will -- you can use the chat button at the bottom right-hand side of the screen to submit questions. And hopefully, we'll get to most of them during the Q&A session. Okay. With that, I think we can go ahead and get started. Our first session today is called Redefining Shipping, Proven Performance, Clear Strategy and Sustainable Growth. So welcome, CEO, Engebret Dahm.

Thank you, Haley. And again, welcome to all of you to this Capital Market Day. It's our first, as Haley was saying, and we hope that you will learn more about what we're doing, how we are improving our business every day and how we can possibly grow it going forward. So our business, the core of what we do is to develop and to run shipping solutions that give large efficiency gains to our customers and to the maritime supply chain. And we have developed, over the years, 2 concepts. We have our CABUs, we have our CLEANBUs that are unique shipping solutions that are both tankers and dry bulk vessels. The same to same when it comes to efficiency comes mainly from the fact that they are able to solve large efficiency problems in international shipping today. Some may say large waste in today's shipping. There are large regional imbalances in trade and -- which leads that standard ships are sailing long distances without any cargo on board, sailing so-called ballast. Our solutions, we combine -- and our ships combine the ships, the cargoes that are transported by standard tankers and standard dry bulk vessels with minimum time going empty, going ballast. That leads to -- we transport more cargoes. We have far lower fuel and carbon emission between transport. This is common sense efficiency improvements. Main part of the efficiency improvements that we deliver, in fact, are due to the fact we had dared to deviate from the standards in the international shipping markets. Shipping is very much standardized, and our fleet competes against 2,200 standard and MR and LR1 pro tankers and close to 3,000 standard Panamax Kamsarmax dry bulk classes. They all look alike. Our ships are unique. There are 24 combination carriers existing in the world and including newbuilds, and 19 of them are ours. So combination carriers is not a new concept. If you look back on this graph, showing the deliveries of combination carriers, large fleets of combination carriers at the time called OBOs, ore bulk oil carriers that were delivered during the '70s, '80s and early '90s. But as you see from the graph, very few combination carriers have been built since the mid-1990s. And you may ask, why? And the main reason for this was the fact that oil companies introduced strict requirements after a number of accidents with transportation of oil in the '90s. Someone remember maybe Exxon Valdez. So what happened was that oil companies, association called OCIMF introduced the so-called SIRE system that introduced rigorous inspections and transparency and performance of oil tankers and combination carriers. Actually, the combination carriers at the time didn't live up to the standards that the industry required. The way they operate, the way they maintain, the way they were built. In KCC, we have maintained -- in Klaveness, we maintained our dedication to combination carriers ever since. We have a strong belief in this solution. And if you look closely at the graph, you see that we have built ships throughout the time. We operate the ships throughout the time. And most of the ships that has been delivered over the last 25 years is built by us. And we also believe that there's a possibility to expand this business going forward. The potential is not anywhere close to what you saw in the fleets that were in the '70s, 90s but the trigger is the efficiency and the value that provides. And we believe this efficiency will be increasingly important in the years to come. And partly, it's linked to fuel cost because the value efficiency is higher, the higher the fuel costs are. And that was actually the problem looking back in the 1970s and 1980s. The shipping industry had fuel costs for many, many years below $100 per tonne. And look at the graph. Over the last 20 years, we have had fuel costs between $300 and $800 per tonne. And we believe that as the shipping industry, despite the headwinds we are seeing lately, we need to decarbonize over the coming years. Fuel costs are likely to increase further. We saw that IMO was close to introduce the net zero framework 1.5 months ago. It may be delayed, it may be diluted, but the industry needs incentives to carry through the decarbonization, And the best incentive goes for carbon taxes that adds to the fuel cost of shipping. So hence, the industry likely is facing higher fuel cost and efficiency pace, the efficiency we can deliver pace, and that's why we believe we can expand this going forward. But I would have to say to you, it's not an easy task. It's not easy to introduce non-standard solution in a very standardized market. And what we have we shown over the last years since we -- throughout the history of Klaveness and since we put the company on IPO in 2019, that it is possible. If you have the internal competency, commercial and technical and you have the stamina to keep going and to convince customers that the reason prevails, that quality can be delivered with non-standard solutions, it is possible. And if we take a short look back what we have achieved since listing in 2019, we had the traditional CABU business. We have made it better. We're operating in both Brazil and Australia. We focused on Australia. We have substantially improved our market share. We have renewed the fleet and partly expanded it. And for the old ships, with the press release we sent it yesterday, we hope we can keep them going for a couple of years longer. We have contrary to what I think, 99% of the industry thought, we managed to introduce successfully the CLEANBU fleet based on strong technical and commercial performance and which is now widely accepted throughout industry. And we have established ourselves as a market leader when it comes to low-carbon shipping being in the front of introducing innovative energy efficiency measures and operational energy efficiency measures. And we believe this would become more and more important going forward. And throughout the period, we have delivered shareholder value. We have delivered strong dividend distributions, as I think the only product tanker and dry bulk company, we have delivered dividends every quarter since 2009 -- since the IPO in 2019, paid out $228 million in dividends. That has partly due to the way the market has been moving, but also performance through the share price appreciation and dividends, having high total shareholder returns. And at the same time, we have managed to strengthen our balance sheet, having capacity internally to do part of the renewal and expansion that we hope will come. So this year, we have used extensive time to develop the strategy for the next 5 years. We are now at the end of the first strategy period after we got IPO. We have challenged everything we do based on thorough analysis of our performance and based on how we see the world going forward. And the strategy headline is redefining efficiency and sustainability in shipping, in tanker and dry bulk shipping, just underlying our belief that efficiency and sustainability will continue to be important and be even more important. And the main -- the target is very much a continuation of what we have been doing for the last 5, 6 years. We believe that we -- based on what we have achieved on CLEANBUs, we can grow this business over the coming years, very close to have the trade and the customer support where we can actually grow it. Secondly, with the delivery of the third-generation CABUs now in next year, with the likely change in the trade pattern, we believe we can diversify the trading regions of the CABUs that could be -- there could be synergies with the CLEANBUs, and hopefully, we can also succeed to expand the CABU business. We continue to have a target to develop new combination carrier solutions. It takes time. There's a lot of things that need to be in place, but we worked a lot on it, and we hope that, that would be possible over the next years. We are -- as mentioned, we are very much committed and are strong believers that when it come -- that decarbonization is necessary. And by strengthening our capabilities in this respect, we will improve further our competitive advantage. But we'll have to do it in a smart way. With the headwinds we are seeing in the industry and the delayed implementation of global regulations. And to our shareholders, we will prioritize shareholder returns. We will have the discipline to -- and focus on the medium- and long-term value creation for our shareholders. And again, as the headline of the video, to give our shareholders the best risk-adjusted return in shipping. So that ends up my introduction. And I think we are ready to go to the next step. So Haley, you would introduce that part?

Okay. Oh, there it is. Okay. The next session is our decarbonization session. Let's get to the slide here. Yes, here we go. It is called Leading smart, turning emissions goals into business gains. So the first part will be a panel discussion with Helene Tofte, who is the Executive Director and Department of International Corporation and Climate at the Norwegian Shipowners Association; and the other panelists will be Martin Wattum, who is the Head of Energy and Operational Efficiency at KCC; and Liv Dyrnes, the CFO and Deputy CEO, will be moderating the panel. Welcome.

Good morning, everyone, and welcome, Helene. Thank you for joining us today and giving us some insights on what's going on, on the decarbonization regulations. So just to give a short background. In April, IMO agreed on a net zero framework, regulating the GHG intensity of fuel consumed by shipping. And then in October, they were supposed to vote on whether to adopt the framework or not. And actually, we were quite confident before summer and into August as well that this would actually happen. And I think the Norwegian Shipowners Association thought the same, but then things changed. So in October, Helene, what happened?

Well, thank you and a very good morning to everyone. Yes, it was a meeting quite unusual for the IMO and just to put this into some perspectives. When the IMO meet, there is almost 180 countries that are to agree on regulations for shipping. So the good part about that is that if you manage to agree, you have regulated global industry, and everybody has to adhere to the same regulations. But obviously, it takes some time to get there. But we had -- there was an important breakthrough back in 2023, actually, in which the IMO decided on the climate targets. And then the work since summer 2023 has to come up with a regulation that would take us to those targets, which include shipping being net zero in 2015. And as you were saying, in April this year, we had sort of the first voting on the net zero framework, which was a positive one, and there was a majority in favor of the framework. Already then, it became clear that the U.S. was not in support of this framework. Back in '23, they had been sort of one of the leading countries negotiating this through and sort of pushing to have a common framework. But it became obvious with the new president and with the new authorities in D.C. that they were not in favor of this, and the work to stop this from being finally adopted escalated throughout the summer. So I think most countries, most IMO states, including us, after April was quite certain that this would come through, and that there will be a 2/3 majority in favor of these regulations in October. But when it came -- sort of when we came closer to the meeting, it became very obvious that the U.S. was very strongly against this. They were escalating their work to stop this from happening. And they gained more and more support for their position. I think it's true to say that a lot of what happened was not about shipping as such, it was about geopolitics. It was about how the world looks like it right now. But at the same time, we also have to acknowledge that also within the industry, there were different views on the net zero framework. There has been a lot of writings about what happened and sort of the drama that took place throughout these days. So I don't think I have to go into details. But as you were saying, it ended up with a postponement of the whole process. So there were a clear majority to postpone the whole process, meaning that we will not pick up on sort of the net zero framework before October 2026.

But will it happen in October? Or will there be a vote next year? Or what will happen? Is everything up in the air? Will member states start to renegotiate the framework itself? What do you think?

We don't know yet. We don't know yet. I think it's very hard to see the net zero framework being voted through in a year. And the reason why I'm saying that is that the opposition was so strong at the end of the meeting. And also from the U.S. side, there has been statements after 17th of October saying that if you try to do this again, we will vote it down one more time. So I think it's very hard. The way the world look right now, it's very hard to see this being voted through in October. But what will happen, we don't know. And I think all sort of the major IMO member states are sort of trying to come together, try to find a way forward. But how that way forward would look like, we don't know yet. And I don't think anyone knows yet how that will look like.

And what about you, Martin? Because you talked to a lot of shipping companies, and you primarily maybe talk to the ones that are believers such as us, right? So maybe you have a skewed like a view on this. But anyway, you talk to a lot of suppliers as well, providing decarb or energy-saving devices. So what's the take in the industry? And how has this impacted the industry?

I think for many shipowners, if you're able to calculate against a coming regulation that has a cost introduction, then you can make a business case of energy efficiency measures. And now without those regulations coming in, you see many forward-leading owners are waiting a bit because it's difficult to defend the investment case. But you also see others that this will come. We will still go ahead or they also trade in regions where we have regulations in place today where there is a financial gain to invest in the mission savings. So it is a bit of a mix, of course, when you talk with suppliers of these technologies, let's say, wind-assisted propulsion companies, there are 25 of them. They are saying that, okay, it was a bit of a breather, but we expect next year to be still a busy year, let's see. But what they say is also that the more regional trading owners are still there to buy this technology. So it's a bit hesitant.

But the hurdle is may be higher, but there's still a lot you can do based on the technology that is there today as well and of course, trading efficiency and more operational stuff as well.

Yes.

But what about -- you mentioned you have some regional regulations already. And if IMO does not adopt this framework next year, we might see more regional regulations maybe? Or what is your take on that?

Yes, unfortunately, I think that could be a consequence of this. And what we've sort of been saying to our members, including you, including Klaveness, of course, that not having the net zero framework in place means that you will not have the certainties that the industry has asked for, knowing what the regulation will look like going forward. Other consequences is we believe that we will have to live with the EU regulation for longer, the EU ETS and the few Maritime was supposed to be harmonized with the IMO regulations. Now when we don't have any IMO regulations in place, we have to prepare that we have to live with the EU regulation for longer. And also, unfortunately, a consequence of this could very well be that you see other regions, other nations coming up with their own emission trading schemes or similar schemes. And we see that happening already in African countries. We hear talks about China, Turkey, et cetera. So it will be -- it'd be interesting to see what happens. And sort of the longer the whole process drags on in the IMO to get something in place, that could be a consequence, of course.

But I think you said unfortunately. But I think if there is not -- of course, we all prefer global, like we are all on the same regulations, but if that doesn't happen, isn't it better that there are regional regulations instead of nothing or?

Well, we still believe in regulation or regulations through the IMO, and that's sort of what we've been tasked to work for, to have one set of regulations. And that is, as you said, that's -- I think that's preferred by everyone that you have one set of regulation no matter where you trade. So we are still sort of committed, and we will continue working for that. But I think a consequence of this might be that you see more regional national regulations popping up as well.

And of course, it's quite interesting that China is one of the nations talking about this.

There is mixed signals what we hear. So if it will happen, it's too early to say, but they already have a trading scheme in China. So the question is whether they include shipping or not.

What about infrastructure and production and innovation related to alternative fuels and the access for the shipping industry, is that impacted by us not having a global regulations?

Let's see, definitely, I think it's very difficult to jump on alternative fuels without that backing. And for the last 4 years, it was a lot of development on the main engine side and a lot of push for this and expectations of more and more uptake of alternative fuels. Let's see how that materializes in the future. I was at a conference 2 weeks ago, and 99% of the world's managing producers were there, they are, too. And what they are really interested in now is energy efficiency on their main engines and turbochargers and tuning to get 3% savings today, while, maybe 4 years ago, they were at zero emissions in 10 years. So I think people are trying to figure out how this will move, how the forces will move from the commercial side and regulations.

But what about the production of the fuel itself as well, like ammonia and methanol? It's probably impacted as well as the interest, the demand for the alternative fuels are not there, at least not as substantially as you would assume with the regulation?

It is likely that the uptake and the commercial interest will also affect the production. And yes.

Anything else before handing over the word to you, Martin, for the presentation, anything else we should mention?

Stay tuned to see what's happening. It would be a very exciting next year to see how this will sort of play out.

And I think you said in the earlier conversation that we had that it's all about geopolitics. So I guess that's the uncertainty related to this.

Yes.

Okay. So thank you, Helene and Martin. So we already have a competitive advantage. We had 35% lower emissions than our competitors. And of course, regulation would boost this competitive advantage further. But there's a lot we can do even with no regulations, Martin. So you will tell us a bit about our strategy and ambitions for the next years as well.

Yes. Thank you much. Yes. Okay. So as we heard a little bit of a setback on regulations, but in the long term, this is still ongoing work, so let's see what the future brings. I will go through the decarb strategy of KCC and our ambitions. But before I go into the figures, let's just brief summarize. Engebret went through this, but as you all know, we are around 30% to 40% more energy efficient than any alternative in our trade because the alternative is basically to ballast a large share. In this example, we see the Australia trade where we are busy with the full CABU fleet. The alternative on the dry side is to ballast almost the same distance as you go laden, while on the tanker, you typically ballast 30% on the return after you discharge with cargo in Australia. So we have a unique advantage already in the efficiency in the design. So when we went through the strategy, there are some key aspects you need to look at when deciding. You could either be a follower on decarbonization if you believe that regulations in the long term will weaken. The value of Scope 3 emissions is not interesting for anyone or that the fuel prices will be less. Those are external factors. There are also a lot of internal factors are having a long-term view on your assets. And are you able to capture the value from fuel savings? Or does it go in a charter party chain and you don't see the payback? If you want to be a leader, you would have the alternative. You believe that regulations will come or you see the value of it from the commercial side or you even have a long-term ownership picture and ability to capture the value from emission reductions. In KCC, we see that our decarbonization standing today is one of our core values. And we also expect in the long-term regulations to strengthen. We have owners that look at Scope 3 emissions as a more hygiene factor. And we also have a CAF in some of the freights that we do where we actually compensate it financially with lower emissions. You can read more about the CAF mechanism in all the published articles. So we see, we are forward-leaning in those. But also when looking at our fleet, these are specialized vessels. We have a long-term ownership. We operate these vessels. We burn the fuel. We pay for the fuel. So we also capture the value of emission cuts. So we would like to be a smart leader. By smart, we try to capture value where there is a return on the investments on energy efficiency. But we are cautious in investing in, for example, alternative fuels or other solutions where we struggle to see the financial support today. So let's have a quick look at the EEOI target. First, I will talk a lot about EEOI and others with spare me for that. But for us, EEOI is a very important indicator. It basically tells you how much you pollute per cargo transported per nautical mile. So it basically tells you 3 things. How good are you at filling up the vessel? How good are you at utilizing the vessel? And how good is your assets in burning fuel or burning lesser? This is what we try to achieve big cuts in. If you look at the history so far, we have achieved 20% cut since we started this decarb strategy. I will go back some examples on how. Looking ahead for the next 5 years, we hope to achieve another 20%. Half of it is from better utilization of the fleet and also the CABU III fleet renewal. It will be a presentation of the newbuildings later. And also further effects and rollout of seen energy efficiency measures as well as expected new initiatives. If we also see a change in the regulations or more push from customers, we may also find other initiatives such as more wind-assisted propulsion on the fleet or even biofuel blending. That would lead us to a new EEOI of 4.4. But today, the new updated EEOI as we look into the future, is at 5.1. Now again, comparing this with the alternative, if you're a cargo owner and you would like to ship something in our trades, you would probably have an EEOI of around 9.1. So our benefit today is quite massive, and we work to make it even larger. So going back, just one example on how we got to where we are, the 20% fleet wide cut. This is back in 2020 and the CABU fleet. So at that time, we had 16 years old CABU I. They had an EEOI of 8.3. And then we had a new fleet of CABU IIs that delivered 6.8. Maybe natural that there is a big delta, right, with the new fleet, new modern engines, larger intake, and older fleets. We have invested in any low hanging fruit and short payback energy efficiency measure you can think about on the CABU I fleet, and we have also improved a lot on the trading efficiency. The total effect of this is that, that fleet is likely to deliver a 6.6 EEOI this year, which is down 20%. What's also interesting is that a 21-year-old fleet today is more efficient than a 3-year-old fleet back in 2020. We have also done the same initiatives on the CABU II plus more long-term investments because we have a long-term ownership such as shaft generator, air lubrication, which will give us a 5.8 EEOI on this vessels for this year as it looks now, which is quite dramatic, considering this was a 3-year old fleet 5 years ago. Now it's an 8-year old fleet. Still massive improvements. And they were also quite good on the trading efficiency in 2020. So most of it is from investments that has a good fuel saving. So let's compare the new EEOI trajectory with the existing one that we made in 2022. As you see, there is a difference. In our base case, which is the lowest gray line in 2022, the existing one, we expected a large uptake of alternative or zero-emission fuels by 2026 due to regulations or more customer support. We no longer believe that, that will be the case. So the new baseline is without any biofuels compared to the old one. We also made, in 2022, an alternative line is the dotted gray. And as you can see, that is actually matching the new one in 2030. As I was talking about, if we do see some changes in regulations or customer interest, we may invest in more wind-assisted propulsion or other means that has a good payback or biofuels which will then push us down 14% closer to the old one but not quite there. And in the new target, we have also revised a bit on what we believe or expect we are able to improve from both energy efficiency investments and also further gains on the trading efficiency. So all of those learnings are also into the new 2030 trajectory. So as we see, it is less aggressive than the old one, but it's quite ambitious targets. We have already gone down 20%. We are targeting another huge cut in emissions and improvement in energy efficiency. So let's summarize the decarb session. Our strategy remains clear we would like to be a smart leader within decarbonization and energy efficiency in the deep sea segment. We remain committed to an ambitious continuous improvement in carbon intensity, building on the position we have today. We also see a competitive advantage in delivering on this. We see access to more customers. We will come back on that on the segments, which are increasingly recognize our position offering these kind of levels on the freight. Also finally, with our standing now with exceptional lower CO2 emissions per transported cargo and our ambitions to further drive on this, we are very well positioned for stricter requirements from customers or stricter regulations in the future to come. And we believe changes will be an opportunity for us going ahead. Okay. Do we have one minute, if there are any questions?

I think we can take one minute. If you have any questions in the audience or if not, we can hold them till the end in the Q&A session. Good. Thank you. Okay. The next 2 sessions that we have will be deep diving into our CABU and CLEANBU business. So welcome back to the stage, Engebret Dahm.

Thank you, Haley. So again, the CABU has been the traditional core of KCC and Klaveness Combination Carrier activities. Actually, this started off the business we have a start up in the late 1980s with some fantastic ships called the PROBOs that some of you may remember. So first, looking at how does the ships look like? So the CABUs due to transportation work of MR tanker, which we are competing against, which are around 50,000 deadweight. At the same time, a Panamax Kamsarmax dry bulk vessel. So each of our ships that have -- of the 7 cargo compartments, 3 of them can transport caustic soda. And why only 3? Because caustic soda has a very, very heavy -- it's a very heavy cargo. They have very high specific gravity, meaning that we don't need more than 3 cargo compartments to transport the quantities we need. So the main advantage of the CABUs are the efficiency, but at the same time, also, there are substantially higher carrying capacity when it comes to caustic soda than any other ship in the world. And here you see on the graph, you see that the standard MR tankers can transport 40,000 tonnes, while our old generation CABUs can do 55 -- around 55,000. And to the deepest port in Australia, our new CABU III can transport 63,000 tonnes. So why is this important? Because actually, the way we are running this business gives our customers the incentives to maximize cargo intake in the freight mechanism we offer to our customers, they get the substantial freight benefit if they can be able to increase the cargo intake. And as we build the new generation ships, they are even more efficient and reducing the cost for our customers. The business is centered on Australia. It's been basically all the time. We have, for many years, operating the CABUs back and forth to Brazil, from U.S. Gulf to Brazil. After 2022, we have concentrated our business into Australia. So what we do, we take caustic soda from the Middle East and the Far East, including China, into Australia, and more or less in every cargo we bring a dry bulk commodity back again. And of course, the sourcing in Australia is quite important for us because we are very competitive on the business of caustic soda shipment from the Far East and from Middle East, while the imports coming from the U.S. doesn't work well for us. And if you look on these graphs, you see that U.S. market share has fallen tremendously since 2021, and even -- it was even higher in the late 2018, '19. So you see China has a higher -- growing the market share into Australia and which suits us well. And also the Far East, Japan, Korea and Taiwan, keeps up pretty well in the market share. So this is a positive development for the CABUs. The industries we are serving are first and foremost, the alumina industry. So alumina, as you probably know, is the industry that refines bauxite that Australia has ample resources from in various regions. They use caustic soda to refine the bauxite to alumina, which is then sent on mainly to other regions where the alumina is smelted to aluminum. So there are 5 existing refineries in Australia owned by Alcoa, South32 and Rio Tinto. And in addition, you have the sodium cyanide industry, which produces chemicals for mining of gold. So it's a nice commodity. And thirdly, we have the lithium industry, where Australia also have huge resources of spodumene, which is the rock that you produce lithium. And this industry has just started and is likely to expand going forward. But as you see from the graph, the alumina industry is the dominant factor in the demand into Australia. We see that the sodium cyanide business is expecting to grow with expansion of one plant over the next years. And there's also an expansion of the lithium industry despite the headwinds that the lithium market has had over the recent years. So both markets -- in all the industries that we are serving with the CABUs are long-term sustainable and resilient. This one, we have stolen from Hydro, our neighbor in the other building and basically showing the scenarios of how the demand for aluminum will increase going forward with the expansion of electric vehicles, with solar panels and windmills and other features of the electrification of the markets. And here's 2 scenarios. Both again shows the expansion that is likely to come. And this, again, shows demand increase up to 2030, where, of course, the recycling will increase the share of the aluminum production. But still, we also see the strong -- rather strong demand increase for primary aluminum, which are coming from alumina. So it's a growing market. It's a growing demand for alumina in the world for sure. When it comes to lithium, we also see how the blue line shows the expected demand increase, partly by the electrification and electric vehicles. We see that the supply increase, which are -- have been built up over the recent years, but there are very little firm expansion plans in the industry, and part of the new capacity has been idled due to low prices over the recent years. There's a bit complicated graph. You see on the dotted red line, you see the development of the lithium prices that has fallen tremendously since 2022 to '23. This shows again that with limited new capacity coming online, the market balance is likely to regain. And again, the lithium price is likely to increase, which again hopefully gives the fundamentals to see a further expansion of the Australian lithium industry. So again, the markets which -- and industries we serve, are strong and resilient. But looking back on our business, we have -- since we -- we focused our business on Australia, we have succeeded to tremendously grow the market share in Australia. We -- in 2021, we had 35 cargoes into Australia. This year, we have 45. We have, as of this morning, we have booked 45 fixed cargoes. We are close to conclude contracts for another -- around 10 cargoes. Mainly that we have been able to show substantial growth of the business, market share that improves the efficiency of operation of the business. And we do business with all players. All the traders, the 4 traders and the 3 and receivers of alumina refineries. This is quite important for us because this one just shows the number of ships that we intend to use to Australia. And it consists of the 3 series. We have the older CABU I built between 2001 and 2027. We had a second-generation CABUs built in 2016 and '17, and we have the beautiful newbuilds coming next year. So next year, we will have effective capacity of 2 newbuilds as they come -- are delivering into the year, and we will start the phasing out of ships from of the older ladies. And of course, this phase out Australia will be step by step as these ships reach 25 years of age. Our customers, in Australia, they accept the ships up to 25 years. We don't expect that we will succeed to extend the life of those ships in Australia partly due to complexity of operating ships in and out of Chinese ports with many, many customers and stakeholders. So what we see how the fleet is, we have higher capacity in 2026 and '27. And given what we have booked on cargo volumes, we are confident that we'll keep them running at full capacity with -- based on contracts on freightment. As we phase out further ships in 2027, we are back to the fleet we have today, 8 ships. And then coming on into the early 2030s, we will see that the effective fleet in Australia will decrease. So we have then a renewal need. We need to find out what we're going to do. We have a full flexibility. We can use the CLEANBUs, we can contract more ships. So this depends on how the trade flows, how the industries we are serving will develop. And -- but in the meantime, we are very happy that we have now concluded the first contract for extending the life of the old ladies. These are ships that we have designed, built, maintained and operated in our business for 25 years. As the press release sent out yesterday evening, we did a 2.5-year contract with our neighbor Hydro for shipping caustic soda from Middle East into Brazil. In the start, these ships will -- this ship will operate more on a shuttle. We will, from time to time -- with caustic soda, we will, from time to time, take dry cargoes and has a potential to grow this further in our opinion. And again, this shows that having special ships that are run for the long term, with a long-term view, it creates optionality. And of course, I just made this graph here to show that this shows how many ships that capacity between 25 and 28 years of age that hopefully, we can succeed to keep running, that gives -- that are fully paid down, no debt, and well maintained with a fairly limited extra cost beyond the normal docking to keep them running for another 2, 3 years. So I think this is value creation for our business. We have done one. We will have to work hard to get the next ones going, but it is clearly a potential for the business. So the CABUs has been a very successful business for KCC and for our customers given the values we create to our customers. The business is clearly volatile in the sense we are -- both the caustic soda and the dry bulk business are linked to very commoditized markets. But again, as the graph shows, where we compare the average CABU earnings with the market earnings for MR tankers and dry bulk vessels, we have outperformed the markets year-to-year. But this is not only a market play. There is a couple of factors that I will mention to you, which we have, that we work on to improve and the levers for us to improve the earnings of our business irrespective of how the market develops. One is, of course, the efficiency. And of course, we -- our target is that for every caustic soda cargo into Australia, we should have a dry bulk cargo back in. Then, of course, there are uneven distribution of cargoes that makes that, from time to time, we need to balance the CABUs back from Australia into the Far East and Middle East to take the next caustic soda cargo. Of course, the most important thing is that our customers have their caustic soda on the tanks near their production facilities. So we have -- our target is to have below 10% ballast, which is -- has to be absolutely the most efficient trading in the dry bulk and tanker space. And I think with adding contract booking. I think we have a good potential to reach that target. Another lever is, of course, depending on the capacity we book in, if we have spare capacity or there is uneven distribution of cargoes, we fill up the capacity by taking so-called waiting cargoes. These are fairly low paid dry bulk cargoes that we take, they are short, which gives flexibility, but they are poorly paid. And here, we show the number of such cargoes we have had over the recent years. Our target would be to have 2 or 3, something like that, maybe 1 per quarter, maximum. And of course, that means also that we keep the percentage in combination trade well above 90%. And I think this year we'll end up with something like low 90s when we end up the year. Both these factors have quite an important impact on the earnings per day what the CABUs deliver. Another factor is are we able to fill up the capacity, are we able to utilize this what we call cargo-carrying advantage of the ships. And the good thing is that we are seeing that we, year-by-year, are able to utilize the full capacity -- a higher percentage of the cargo deferred capacity. A little bit on this year. And of course, this is -- there are certain what we call factors that are supporting that this is possible. Partly, we see that our customers are doing more throughput loadings because it pays to take one extra deviation in the Far East. Secondly, we are seeing that more and more plants are building up their capacity to service our bigger ships because it is a win-win for us with our earnings and the transportation costs for our customers. So again, these are the things we are working on how can we make our business even better and that is a big focus for us going forward. So looking ahead, the development of the CABUs, of course, depends partly on how our markets are performing when it comes to trade flows and volumes. We expect Australia to be fairly constant. Our biggest customers own -- have 5 alumina plants in the world in Australia, and 4 of them are in the -- in the lowest 1/3 when it comes to cost -- highest when it comes to cost competitiveness, but lowest on the breakeven costs. So you see the 4 pink layers, which symbolizes each of these plants. There are some uncertainties coming into the 2030s on part of the industry. And there's one old plant that you see to the right in the -- in this graph, that are uncertainty whether the -- how long that plant will keep running. And of course, will be dependent on how much investments our customers will put into the plant. There are growth in the lithium and the sodium hydroxide industry, that will partly offset the possible reduction in capacity. But I think the main point is when we look at it, taking into account the increasing market shares that we will deliver next year, we expect the volumes we will have well into the 2030s into the mid-2030s, which, I mean, frankly speaking, it's the longest we can have a view on is strong and stable. Quite interesting development is what's happening in Indonesia. Indonesia introduced some years ago, a ban on exports of bauxite. They wanted the producers to do the manufacturing in Indonesia. And there you see the expected growth in alumina industry production from 2024 up to 2029. It's a doubling. Partly, we expect this to replace the capacity of Chinese poorly low efficient plants and partly cover the increased demand in the markets. Also, Indonesia has an enormous nickel industry that also require caustic soda to refine the nickel. So in total, Indonesia is going to triple or double the imports of caustic soda. So our challenge is to find out how can we service this in the most smart and efficient way. There are some limitations on port restrictions that is -- which we haven't yet sorted out. But we believe with the volumes coming, we can get this moving and there are potential for the CABU fleet into Indonesia coming into 2027, '28. Another major change is the chlor-alkali industry. So the chlor-alkali industry is the industry that produces caustic soda. There are 2 products, they produce chlorine that is used for the production of PVC, which is used into the construction of buildings mainly, and it's the caustic soda. Now coming big expansions ongoing in India and Middle East over the next years. There are 3 big plants coming up where, in total, most of the capacity will be get to the export markets. China is also expanding. So this is the -- what we call the export plants increasing capacity. West of Suez, there are some small capacity increase in the U.S. Brazil, actually closes on one capacity. So you see this imbalance that is likely to come in the trade flows of caustic soda that we believe there's a fair chance could lead to changes in the caustic soda trade flows that will benefit what we do on the CABUs and CLEANBUs. The plants will -- the first one will open up in early 2027. We, of course, are meeting them. We ensure that the berths and capacity when it comes to cargo tanks meet what we can transport, so keeping the capacity and the possibility to use our CABUs efficiently. So now quite a bit of upside. So just summarizing the CABUs. There are -- we believe in the Australian market. We will do whatever we can to improve further resilience of the business, keeping our market share perfectly trading efficiency in the trades. We will hopefully succeed to diversify the CABUs trading based on trading in the -- changes in the trade pattern. And we would also use the old CABUs as a tool -- as a spearhead for the business development, which gives us a great flexibility when trying to grow this market. We believe if this comes when it comes to the trade patterns, there are improving synergies between the CABUs and the CLEANBUs, that will give us value. And thirdly, we will closely monitor how we're going to do with the fleet capacity, whether we will replace the 2 last CABUs, whether all the CABUs with new builds, so whether we will expand the fleet further. This is too early to say, but we are looking at this not every day, but maybe once a week, to see what we're going to do. So the CABUs has been a fantastic business, and largely is going to be a fantastic business for KCC for the years to come.Thank you.

Thank you, Engebret. So the final session before we take a quick break, which will be about 10 minutes, will be unlocking KCC's potential in large addressable markets. And welcome to the stage, Snorre Blix, VP and Global Head of CLEANBU Chartering at KCC.

Thank you so much, Haley. Mic is on, I hope. Good morning, everyone. It's -- if only you make the reference to the PROBO vessels. I was in charge all those vessels back in the days. I think the CLEANBU vessels are somewhat more sophisticated than the CABU vessels because we can carry oil in addition to chemicals. Now the PROBO, I think, were the naval engineers wet dream. The CLEANBUs are not quite there, but pretty close. The CLEANBUs is a combination or has a capacity of an LR1 tanker, in combination with a Kamsarmax dry bulk similar to the CABU vessels. As opposed to the CABUs vessels, the CLEANBUs carry wet cargo in all 7 cargo compartments in addition to -- and switching to dry in all the 7 cargo compartments. The vessel is -- we refer to them as an LR1+ tankers, meaning that we have higher carrying capacity, not quite as much as the CABU vessels, but it's a quite substantial increase for wet commodities, which is on the right trade, very beneficial to our charters and obviously, to our business. Now this flexibility allows us to play 2 markets, 2 main markets, the CPP markets, clean products markets and the Kamsar, the dry bulk markets and gives us the ability to minimize ballast substantially compared to standard tonnage. And it also allows us to -- this diversification lowers the earnings volatility and also providing a big downside protection. And that downside protection actually improves when fuel prices and emission costs increases. We started -- I mean we were -- in 2013, 2014, we identified an increasing short in Australia on CPP on imports of gasoline and diesel. And already being present there, we're very familiar with this market, and we started developing the idea of a more sophisticated combination carrier. So by 2019, we had the first CLEANBU vessel delivered. Before the delivery, we were having roadshows. We had brokers laughing at us. This concept will never work. We had prospect charters being polite, saying that, look, this is a great project, this is a great concept, but sorry, we can't use your ships. In 2021, we landed our first contract of affreightment for clean petroleum products with an oil major. And by 2023, we had carried multiple cargoes of jet fuel and naphtha with last cargo dry in addition to, of course, diesel and gasoline, the other major commodities in this space. So we are now basically established the concept as a concept that works in all major regions. In 2024, '25, we had -- we made 7 consecutive voyages on the Balzani running to and from South America and Middle East with CPP and sugar in combination. And why is this a milestone for us? Well, obviously, it's very much a proof of concept that actually works. Now quite recently, we did our first feature with ExxonMobil. That is not to say that they -- so they've been accepting our ships to their terminals for third-party accounts, but this most recent fixture with Exxon directly is a very important milestone for us. The oil majors play a quite significant role in the oil trading space. As I said, we started -- when we had the vessel delivered in 2019, we started basically from scratch. But we've had, as you can see from the graph on the left, we've had a very steady growth in terms of CPP cargoes carried until date. And not least and most importantly, of course, switches between dry and wet is now at 70 switches. So we were sort of well beyond the sort of, how shall I put it, critical mass. I mean we have a long, strong track record of switches without any cargo claims or any incidents whatsoever. And similar pattern on approvals. Approvals is obviously -- is very important in the oil industry. So what that actually means is the different stakeholders accepting the use of these vessels. So you can see from the start, and we've had a very steady growth in terms of charters through -- since the initiation in 2019. We have now sort of reached 21 charters. It's not a huge amount. We do a lot of repeat business. So we don't expect this to grow similar going forward although it will grow. But what's really important for us is to continue the work for getting what we refer to as concept approvals, meaning stakeholders, I would say, not only charters but also other stakeholders that is buyers and sellers of oil products and obviously, load terminals and discharge terminals accepting the ships because why is this important? This is important because the nature of the oil industry so that we -- they need this flexibility. Oftentimes, the cargo will not be sold when it's loaded. So it's very important that the charters have the optionality to send the ship basically anywhere. Yes. Now in terms of approval, there is no set process in order to get a preapproval of our ships. This is just an example of how this might work. And there may be other elements that could be added. And for some, it's much more simplified. For some, it's sufficient to make a proper desktop due diligence where they basically -- we basically address concerns that they may have. And as a conclusion, they accept the ships, and we can use them both with -- for their account or to the terminal or whatnot. Others are much more -- work more on a sort of step-wise process. So you may start with the due diligence desktop. We may address issues. Following that, they may want to inspect the vessels, maybe once, maybe 3 times as was the case for Exxon, for instance. And then we get to a point where, okay, that's fine. We accept the ship. We set the concept. It works with only -- we will not fix the vessel directly, but you can use the ships at our terminals. And that, as I explained earlier, is really a critical component for us. In the case of Exxon, for instance, they also -- a number of other -- not only Exxon, but a number of other majors also require this. They want a TMSA audit. So basically, the tracker management self-assessment that we do on regular -- with regular inflows in the company is being audited by the majors. So it's sort of looking into how our systems are -- how we manage basically the vessels from the shore side. And then another threshold, another step on the ladder is fixing directly. Obviously, fixing with a major, it's not only a quality measure towards that charter, but it's sort of within the industry, there's a lot of sort of peer references. So obviously, fixing with the majors makes an impact on dealing with other parties. And ultimately, we're looking to do contracts of affreightment. We've done that with a number of parties, BP and the Shell joint venture Raizen. So that's sort of ultimately our goal. As I said earlier, we can play the 2 markets: dry cargo, Panamax market; and the CPP markets, the sort of LR1 space. And as you can see, so basically, when one of the market is stronger than the other, we can sort of place more capacity in that market. Now as you can see from this, the line represents a difference between the dry and the wet market. So when it's positive, as you could see back in 2020, the market was -- the tanker market was about $14,000 a day better than the Panamax market. And then we sort of focused on placing more capacity in that market. The opposite effect in the year after, 2021, where the dry cargo market was stronger than the tanker market. And then you will see, as of the later years, we're focused on having tonnage in -- or capacity, I should say, in the tanker market. And we do that by also increasing tanker market exposure. We do that mainly through triangulation. So meaning that we can have 2 legs in CPP and 1 in dry as opposed to back and forth. And we do that also on some trades, we can switch between dry and wet by switching to veg oils instead of grains. We do that typically from South America into Middle East. An example, also the map -- the routes that you see on this map represents basically our key routes as of today. You will see that we sort of split the world into two. We have, the west of Suez is strictly speaking not only west of Suez, but it includes the westbound trips from the Middle East. And then we have east of Suez, which is basically from Middle East down to Australia and Northeast Asia down to Australia. Now as you can see on the graph to the left, we are skewed towards the westbound trades, west of Suez, and that is simply because it has worked very well for us. This is where we found the most efficient trades. So we have ended up doing a fair bit of that. East of Suez, we have some work to be done. We expect to increase our presence or activity in that region and thereby sort of reducing the other category you can see here. Other means basically trades that are not so efficient for us. So that will typically be where we have to ballast one or ballast more than we do in a combination trade. So one example of that would be, for instance, from Middle East on to East Africa, then we would ballast back into Middle East. And we had to do similar to the CABUs, where occasionally, we have to do those less efficient trips. Just one example. I mentioned Balzani earlier where we had made seven consecutive voyages. This is an extract of two of those seven voyages. So just to sort of demonstrate what kind of characteristics we're looking for in a successful trade. So in this case, we are open in Argentina after having discharge, CPP. We ballast for 4 days into Santos to load sugar. We stay there for quite some time after we are sort of ready to load. And then we load and we proceed to Jebel Ali in the Emirates, in Middle East for discharge, about 4, 5 days there. Compared to the standard tonnage, we have a 32% lower emissions. And the earnings multiple on this occasion was 1.6. So very favorable compared to a dry cargo vessel. On the return, we completed discharge in Jebel Ali and then we proceeded to Ruwais, which is next door on a 1-day ballast in fact. But yes, we also have to spend some time doing the cleaning and the conversion and then proceeding returning down to Argentina for discharge. And in this case, we have an even better carbon footprint with 47% lower carbon footprint than the standard LR1 and also a very favorable earnings multiple. So this is an example what we -- and as you can imagine, this is also why we sort of tilted westbound because this is a trade that actually works very well for us. Can it get better? It can absolutely get better. You will -- this trip -- both of these trips were about 65 days. If they had been sort of ideal or optimal, they would have been closer to, say, 50 days. So the inefficiency on these voyage is mainly the fact that port stay is too long. So the -- when we are in port, even on demurrage, we don't actually create value. We want quick port turnarounds in order to create value. So that's one aspect. For -- in general, for our concept to improve, we obviously want to optimize the trading. So that means those voyages where we do have to ballast, so ballast equivalent to the standard tonnage and also improve the pricing. So the vessels, we do trade to a discount compared to the standard ships. Different reasons for that, one being that we are the so-called committed tonnage. So we are actually in position. We're actually in the loading area when we load. And for that charter expect -- and that actually goes for standard ships and our ships. When you are committed tonnage, there is a discount. And then, of course, because we are a little bit odd compared to the standard ships. So for us, to improve on the pricing. It's getting -- improving our leverage, meaning improving our sort of base of customers, and it's also having a high degree of acceptance throughout the industry. And yes, those are sort of basically the main items. So for us going forward, west of Suez works very well for us today. We need to expand our customer base both in the U.S. and in South America. We are looking to renew our current contracts, and we are looking to renew -- or sorry, to conclude new contracts. And obviously, we need to verify the long-term regional outlook. For instance, how is the CPP short in South America going to be going forward? And how is, for instance, the alkylate trade into the U.S., how is that -- what are sort of the underlying demand for alkylate imports into the U.S. East of Suez, as I said, in order -- we need to sort of -- we increase our leverage in the market. So that happens through growing our customer base in Asia. And it certainly is to further expand our terminal acceptance and customer in general -- customer approvals in general. We also want to increase -- so currently between East and West Australia. We have -- we have had more cargoes into the Western Australia rather than Eastern Australia. We want to increase our trading into Eastern Australia because that works better for us. And we also want to -- we also are looking to build a triangular trade, which will allow us to play the market a little bit better and create a more flexible pattern in east of Suez. That's it for me today. If there's any questions...

Great. Perfect timing, Snorre. So now we are going to have a break for about 10 minutes. When we come back, we will have a session on the market as well as the finance session, Q&A and a wrap-up for the day. So see you back here in 10 minutes. [Break]

Okay. I think we will go ahead and get started with the next session, which is called Diversified Market Exposure: Built for Resilience. And so on the panel today will be Kristian Hauff, market analyst from Klaveness Dry Bulk and then, of course, Engebret, CEO of KCC; and here to moderate the session will be Petter Haugen, Partner Equity Research from ABG Sundal Collier. Thank you.

Okay. Happy to be here. Interesting times, as always. There is war, there is geopolitics. It's fundamental reasons for many of the moods. But -- okay, so we briefly spoke about what we should focus upon here earlier. Shorter is better. Around in the audience here, we're much more interested in what will happen in the next quarter and year, not the 2030, Engebret, I'm sorry about that. So we'll focus on 2026, I think. And you have exposure towards two of the very big markets, the dry bulk market and the product market. So we'll do it sort of in that sequence. 2026 is focus. Dry bulk we'll start with and as a market analyst here, Kristian, why is 2025 now sort of a tale of two halves, 2025 first half, not very good. Second half has been, in my opinion, at least or -- compared to my expectation, very good. Capesize rates currently still almost at $40,000, but Panamax rates also surprisingly high. Why so? Why is second half this good?

Is it on?

Yes, I think so.

Now I think if you start with '25, very briefly on '25, I think that we had a very negative -- most of us, including myself, were very negative going into and during first half and this sort of dis-incentivized investments, both physical and on the commodity side, meaning that very little investment were done to position the fleet for a better market and also with most commodity prices and in general, the sentiment in the world surrounding the increasing trade war and tariffs were pointing downwards. So from -- for example, if I were to buy a coal cargo, I would most of the time be better off postponing it until tomorrow rather than buying it today as it will be cheaper. And this sort of -- this lasted for most of the first half and then all of a sudden, everything turned first gradually. And then quickly as prices started increasing, people were running after it, particularly on the coal side, you saw that people were very short suddenly going into the summer with very high temperatures in Asia, increasing energy needs and then prices started picking up. We go into a contango market, and then we get this very strong run on the second half. And I think that's the easiest explanation that people were caught too short across all markets coming into the summer.

And that sort of expansion into the second half, do you think that is going to continue now into '26? Or will we see sort of a repeat here, a weak first half again?

Maybe we can go quickly on each market. Like on the -- because it's -- especially on the iron ore and steel side, there is a very -- a lot to discuss because you have sort of two camps. You have the one camp, that's very negative or concerned about the end demand side, especially in China, which is struggling still on domestic side, very thin margins, and no sort of clear path to growth. But on the other side, we have a very positive supply picture. And by supply, I mean, production of iron ore, which most -- I think most are aware that going into next year, we may have up to some 3% growth of 60 million tonnes, most of which from Brazil, Guinea, which adds a [ distance ] factor. And why I think that matters more is -- I will compare it to sort of oil and gas production. These are major investments done on the production side from the producers. Once you reach -- for an iron ore mine, once you reach full capacity, if you have a significant drop in production, you can efficiently only make it back at the end of the effective lifetime. So you lose like -- at least for the big production centers, you would lose most of the value by not producing. So -- and on top of that, we have a very strong iron ore price, currently at $105, some backwardation but still above $90 all the way through '27. So every producer is incentivized to produce and ship everything they have. And against that, we have this sort of weak demand side discussion. But if you, for example, look back to '24, where that looked even worse, we had a negative profit margin of still around $50. But if you compare that to the sort of underlying size of the economy in China, which is still around 30% of the economy's traditional industry, so if you compare say, $50 loss per tonne with 1 billion tonnes. That's $50 billion against the 30% of $18 trillion. So that's $0.01 [ on ] the dollar sort of [indiscernible] growth. So I like to put more emphasis on the supply.

Yes. It sounds like it. And on the supply side, I mean, most of the known supply now is going to the Capesize market, presumably, how do you think that's going to impact the smaller sizes?

Yes. And then going back to the -- this year, that's sort of connected a little bit, for me, to this year because Q3, Q4 in preparation of trade war with U.S., China bought some additional 20 million tons of soybeans from South America. Basically, they prepared to buy nothing from U.S.

And now they did.

Yes, they have bought a little bit but much less than usual, but the problem is that if they -- now they promise to buy some up to 12 million tons, so the time line is very vague, but at least from the U.S. side. But if they commit to this schedule, then currently, there is an oversupply in China. There is a very weak profit margins on the food industry surrounding food prices and a deflationary pressure. So if they continue to buy U.S. volumes they don't really need right now, then you sort of have the risk of pushing the oversupply can down the line, and you may see a slower import pace on the Brazilian system going into next year. So it will be a buyer's market on the soybean side, I think.

Let me sidestep. Engebret, to what extent do you actively in management sort of take these market considerations into consideration while sort of the dispositioning the ship -- the vessels, the ships next year? You haven't -- one more thing. If I remember correctly, your fixed exposure for '26 as of Q3 reporting was next to nothing. So you seem very bullish though. Nothing fixed, everything is spot. The only way is up.

I think, generally, I think the dry market has, what we call, over-performed, both in 2024 and 2025. With the maybe first half was very strong in 2024, second half weak, the opposite happened this year. And it seems that the analysts have underestimated the balance strength -- the strength of the balance in the dry market again and again, and the market has over-performed. But again, we are -- what we do on the dry side for KCC, you mentioned, we are -- we have had very little coverage in the -- at the end of the third quarter. We are likely to include some fixed rate contracts before the end of the year and then we...

What does that mean? 5% or 25%?

As it looks at the moment, we -- for some practical reasons due to the logistics, we only do -- for one of the big contracts, we will only do the first quarter. And then the intention is to roll it over to a year contract. Hopefully, we can get that going into the year. That will not happen before the end of the year. So it will be only for the first quarter for one of the big contracts. We may then decide to do some FFAs for the last 3 quarters.

To sell some?

To sell some FFAs given that we don't have that much fixed rate coverage and then we may turn that around if -- as we book physical contracts. So I think that the target for us would be next year to be 25% to 30% maybe fixed rate. Maybe we will be under that target from the start and then hopefully we can build on more. But again, you asked how do we position this based on the market expectations? We will -- of course, FFAs, we will only use in case of that we are -- we have a belief we are at a good level. Physical contracts, whether it's fixed rate or index-linked will, to some extent, be dependent on the customer. So that means we don't have that much, what we call, a possibility to decide whether we do it fixed or index-linked with those, but we could decide to go more spot on certain trades rather than new contracts. So it's -- the most important for us is to keep the ships running in the trades where they earn most money. And then the second priority will be what to do fixed and indexed.

Understood. Okay. As you said, Kristian, the commodities per sort of -- per commodity is a nice way to think about it. And the one commodity, which is perhaps most in the middle of dry bulk and product tankers is coal. And the coal trade has been, well, fairly overall weak, but it's been surprisingly better in the second half, perhaps. How does the coal trade develop into 2026?

That I think it's the hardest of all to predict because on the one side, you have a growing energy need in the world, but the coal share in Asia as well is in sort of a decline due to alternative energy sources growing faster. But from -- the more alternative energy add into the power mix, the more unstable the power production becomes. So you need -- actually you need more coal or gas or on-demand power to balance the grid at any time at -- when you need it. So the average burn becomes lower. But once you're in a shortage, you need more than before. So the volatility will increase, but maybe sort of the average growth will not be as strong, let's put it that way. At least from...

The 2026 coal trade, is that going to be higher or lower than '25?

I'm struggling a little bit to predict it to be honest, but what you saw this year was that when you rely more and more on variating power sources and they end up in a shortage, then you actually need a peak power that's higher than before on the coal side. And that's why you see China, they continue to install new capacity that have a lower average burn because once you don't have sun or wind, then you need more total capacity on demand. So it will be volatile probably and especially given the low import share of the total coal consumption, it's always like in a marginal trade, very margin-driven. Right now, the domestic price in China, probably they were a bit backward -- too much backward looking after first half. They addressed an oversupply into Q3, Q4, which suddenly was no longer there. Domestic prices increased from the summer until last week where it peaked. And now this marginal import margin comparing the import price with domestic price is turning down again. So then you may see the usual decline into Q1, which is also very normal as they complete their winter stocking. So I think most lines up, both on the grain and on the coal that we have a moderate period now as every year basically into Q1. But the supply is there on all commodities to have a very good year, next year overall.

Okay. And then going further into the energy trade and the product trades. You said it, Engebret, last year was -- in 2024, we had a very good first half and a pretty bad second half, vice versa this year, which applies to or -- to some extent at least, more or less the same, I would say, it applies to the tanker market as well. And right now, tanker markets are booming. And finally, we have also the crude tanker markets at very high [ rate ] levels. Do we sort of stand up here through the winter? Or will we see this coming down already in the first quarter of next year? So MR rates now are still -- well, in the 30s and the big tankers are earning more than [ $100,000. ] So how should we think about the sort of imminent future and...

I would think that seasonality normally goes well into the first quarter. So that -- there should be, we call, supportive seasonality in the tanker market into January, February. And of course, it seems to me that the crude market is the leading force. It absorbs a lot of LR2 tankers that of course, is supportive for the product tanker market. And of course, given the supply side on oil and the oil markets, I would think this looks for me to keep on going for quite a bit of time into next year. And then of course, it could -- the dance music suddenly could stop, just like we experienced in 2020 with COVID, when supply and oil on water was substantially higher than what -- the underlying demand. And now some signs that, that could actually happen. But who knows actually, how we look. What do you think, Petter?

Well, as you said, that there is -- there is a big question of demand. Kristian touched upon it on the dry bulk side. Do really China need to produce as much steel as the sort of big, big uncertainty in dry bulk for both the short and long term. And in tankers, yes, we see all-time high oil on water, oil in transit, also export levels above 50 million, on our numbers, 50 million barrels per day without demand. How long can that last then? It's a very, very valid question. Well, we think that the tanker markets will prosper in 2026, but it surely depends on that current production and export levels are kept up. If they are to decline. I mean, EIA is predicting 5 million barrels of oversupply in the total oil market in Q1 next year. That's 5 million barrels, more produced than consumed. It doesn't add up actually, I think. So we need the higher demand. That's my view. This wasn't about me, Engebret, this is about you guys. I'm sorry.

Come on, we have...

Okay. But we haven't -- so now we talked about the demand side. And there are definite uncertainties on the demand for commodities, while the supply of commodities is seemingly very, very healthy. On the supply of ships, there is a big difference, I would say, between tankers -- or product tankers and dry bulk ships. Fleet growth is going to be in the range twice as high in product tankers as in dry bulk, does stat concern you?

Absolutely, it is a concern. I mean we would have liked it to be fleet growth of 0. But of course, what we have seen at least is that despite very high, I would call, numerical fleet growth, the market has been able to absorb the fleet growth. I guess, that -- on product tankers, I guess, the peak is this year, maybe it's next year, but it's still at the same level of peaking deliveries. And the market has absorbed basically everything. It is the absorbation of electric tankers into the crude market, it is the effect of the shadow fleet that more ships go into -- older ships going to the shadow fleet and where the efficiency is substantially lower. So yes, I think it's a concern, but also the fact of the shadow fleet, the increasing number of ships, the age of the ships means that possibly if the markets will correct, there could be more scrapping and it could make the -- what do you call, the [ dive ] shorter. But again, it's -- because there are many, what we call, floating pieces -- moving pieces in the tanker market, and it's geopolitics, it's wars, it's hostilities. And of course, there could be positive and negative effects of both just like we see on our trade into Brazil. We are basically -- we have lost market share into Brazil because the Russian oil products went from 0% when EU stopped imports of Russian CPP, diesel, up to 80% and if that returns, of course, this trade will be -- which is maybe one of the best trades, will improve. So it is pluses and minuses on many of these factors. But of course, yes, there are uncertainties on both the dry and maybe especially on the tanker market into the second half of next year. And then as we talked about with -- on the dry side, we have the flexibility in our business concept that we can adapt capacity to the markets being the strongest, which we have actively did during the product tanker boom in '23 and '24. And then we have -- on the tanker side, we have a fairly high contract coverage going into the year. So you look -- you saw the graph we showed on the booking on the CABUs...

But those are floating, most of them.

No. Around 40% is fixed rate. So that means that -- and also given that we will overbook -- basically book cargoes also for the CLEANBU fleet in the caustic soda trade, we will likely end up with something like 25%, close to, on fixed rate for next year. And then, of course, you have -- if you add up the operational coverage, meaning you include the floating rate contracts, you probably are well above 50%, maybe 60%.

So you're -- yes, then implicitly, you say that you're more bullish on the dry side than on the tanker side, but I presume that it's also sort of business considerations that you need those products cargoes more than you would need the dry bulk cargoes?

It is. We are -- it is a matter of -- to secure again, as I said, the trading, the efficiency of the trading. And I think we -- even though, of course, we are not isolated from market turbulence, but we are -- we definitely believe we have a possibility to absorb more market risks given our model with the diversification between dry and tanker market.

Okay. Our time is up, unfortunately, we could do this all day long, I'm sure. But...

I can ask Haley to get another 10 minutes.

It does look like she's willing to give that actually. She's very much there. Thank you.

Thank you, Petter.

Thank you.

Okay. Thank you very much. Very interesting. So the next session we have today is the finance session. From cycles to returns, creating shareholder value that lasts. And so we have Liv back on stage representing finance, and then we will also have Hakon Moltubakk, VP, Head of Strategy and Business Development who will be part of the presentation. Thank you.

So I'll start by giving you an introduction to the finance section, and then Hakon will tell you more about the value creation for both segments. And then at the end, I'll go through at least part of it, the capital allocation, capital strategy, some more information about our debt. And then finally, I'll give you a sneak peek into what 2026 might look like. So if we summarize where we are today. We've had a very strong track record over the last years, and we are well positioned to continue to deliver shareholder returns going forward. This is based on a very solid balance sheet. We have an equity ratio of above 56% and available long-term liquidity of $127 million. This is per end of Q3. Then over the last years, we have delivered strong cash flows as well, supporting both debt service as well as the high dividend payments that we have had over the last years. As you can see here, we have also delivered high returns, return on capital employed of 12% and return on equity of 17% in average for the last 5 years. And finally, I think we have a very clear capital allocation strategy, and we have definitely delivered on these principles over the last years. And this, we have produced in a phase where we have scaled the company considerably. So we started 2018 before we listed the company with 8 vessels. And then we're now up to 16 vessels. So we have close to doubled the fleet since the start. And that is not all. I think very importantly here is that we have established a completely new vessel segment. So if you look a bit at the EBITDA here, you will see that CLEANBU started 2019 with a slightly negative EBITDA, and we reached $67 million at the top of the market so far. Then you will see here as well that the CABU EBITDA has been much more stable. And I think this also reflects nicely what you have seen from the CABU and the CLEANBU segments earlier today that we are more opportunistic, we have more market exposure for the CLEANBUs than for the CABUs where we have more the industrial approach. So of course, we have had some tailwind from the market as well, but this is also based on quite considerably business development over the last years. This has resulted in attractive shareholder returns over the last 5 years. This is total shareholder returns, so it includes reinvestment of dividends. And as you can see here, in NOK terms, we have delivered 30% per annum return and in dollar terms, close to 25%. And this is supported by a substantial dividend distributions through these years. And this, we show from time to time. So our ambition is to deliver the best risk-adjusted return in tanker and dry bulk shipping. And we like to illustrate that by plotting all the different peers or at least companies that we compare against ourselves. This is the time series from 2019 when we listed the company until and including Q3 this year. Where you see the return on invested capital on the vertical axis and the volatility in the return on invested capital on the horizontal axis. So the further up in the left corner, the better relations between risk and return. And I think this nicely illustrates that we already deliver on our ambition. And we believe we can strengthen this further going forward. So we can optimize trading. We can expand into new markets with new customers, which gives the more resilience into the concept and hence, also, we can improve this relation further. Then over to you, Hakon. Value creation, the most interesting part.

Oh, yes. Thank you. Yes. So a key feature of our ambition to create superior risk-adjusted return over time is our ability to earn a premium earning at a lower volatility than our standard tonnage peers. So time over time, I think we have shown that we are able to do this. In this chart, I show you the annual average fleet-wide TCE earnings -- our fleet-wide TCE earnings compared to standard tonnage of product tanker and dry bulkers. So in the period from 2013 to 2019, we had about 1.5x multiple to the product tanker peers. And in the highlighted box here, we have about 1.2x. And a couple of things I want you to be aware of when we talk about this is that, of course, in this period, 2020 to 2024, we have had exceptionally strong product tanker markets. And conceptually, when we have a market that outperforms the other substantially, we typically are not able to fully outperform that market due to that we use some more time in our trades to -- for the return cargo. So we then spend some time, of course, loading the vessel and doing the sort of the weaker market. As Snorre showed, we have been very good at compensating for that by increasing our share in tanker -- in sort of the tanker space when appropriate. The other thing in this highlighted box is, of course, we had the effect of the in-phasing of the CLEANBUs, which we took delivery of from 2019 to 2021. So a question we get from investors often is how does this sort of translate into economics. So we try to do some illustration for you guys where we have put up in the chart to the chart on left here, the left side bar is sort of the additional cost to operate a combination carriers compared to a standard MR tanker. In this case, it's CABU versus MR tanker. So we estimate at the -- given the price and the time we ordered the second-generation CABU II, we estimate that cost to be around $1,500 per day. That includes the additional OpEx, the additional maintenance and the initial vessel investment. Comparing that figure to the additional or the advantage, the additional earnings we have made over -- in this case, since 2018 year-to-date. We have earned about $4,300 more than a standard MR tanker. So we are able to comfortably outperform that benchmark. For the CLEANBUs, the picture is a little bit more mixed. We have a little bit more higher additional costs compared to the standard LR1 tanker, mainly due to higher OpEx in this case. And we have outperformed sort of the benchmark we use about $1,500 since 2019 when we took delivery of the first CLEANBU. So wanting to -- a couple of things to note here is that, of course, this includes sort of the phase-in effect, weak earnings in the start, in the beginning of the -- or at the inception of the project and also the historical very strong product tanker market. As Snorre mentioned, we do believe there is a potential to optimize and improve this further. So we believe there is substantial uplift to this figure. So that was sort of the premium earnings. The other thing I want to just talk to you a little bit about is the volatility compared to the standard vessel. So here we -- in this chart, we have ranked the earnings in the same period, as I showed you before, 2018 to year-to-date. And what you see here is that CABU would outperform a MR tanker in 70% of the observations. This with a significantly lower volatility and higher average earnings of $24,500 per day versus $21,500. And this is, of course, is something we try to reproduce with the CLEANBUs. We are not fully there yet, but it looks promising to sort of get the same sort of effect. So how does this translate into return? We have over the period, 2021 to year-to-date, generated an average return on capital employed of 12% and an average return of 17% of equity. So definitely solid returns, driven by, one, very strong markets, but also the ramp-up of the new business. The CLEANBU phase-in is, of course, a little bit dilutive to these figures because we -- due to the sort of the weak initial earnings. And finally, I just wanted to give you a little bit insight on what is sort of the return picture for our investments. So we have brought two examples here. The left-hand side is the CABU. This is a vessel Balboa, which was delivered in 2016. And at a sort of 5-year average earnings that would generate an estimated 13% unlevered internal rate of return. For the CLEANBU, we have the vessel Balzani, which is at the same sort of average rate, 5-year average rate of $30,000 per day will sort of generate a 12% unlevered return over the lifetime. And this includes what -- sort of the history of up to today. So I think that was it for me.

As mentioned, we have a clear capital allocation strategy, and it's based on two principles. One is to deliver attractive returns, and I think that's -- maybe I don't have to say it because that's why we are here. But I think importantly for us here is that a large part of it as well will come through direct return. So we introduced the dividend policy when we listed the company in 2019 and the policy is that we will distribute a minimum 80% of the adjusted cash flow to equity. That is EBITDA less maintenance CapEx and debt service. And the reason why it's important for us to deliver direct return as well is that we have limited liquidity in the share. We are still quite a small company, and the free float is limited. So I think providing direct return is important for us. And the other argument back in 2019 as well was that we have less volatility than standard companies. And we have downside protection to the diversified market exposure. So we should have higher payout ability through the cycle. The remaining up to 20%, we will use to accommodate the business strategy. So this is, of course, to build financial capacity and flexibility to withstand the weaker market, unforeseen events. And then, of course, we want to grow and believe that we can develop this company further, so we need some investment capacity as well. So I think we definitely have shown that we have delivered on this through the last years. So after delivery of the last vessel, the CLEANBU vessel in 2021, we have paid out between 86% and 97% of the adjusted cash flow to equity in dividends. And if you add on the share buybacks that we primarily did in 2024, we're -- for that year, we are above 100%. So this amounts to $228 million. And then we have clearly stated as well, when we have such high dividend payments, we might have to raise equity for large investments. So we have done that in two different situations over the years. First in 2021 when we raised $25 million in equity to fund energy saving devices. And then in 2023, we raised $50 million to fund the equity portion of two of the newbuilds. And then we used -- still using capacity that we have on the balance sheet to take delivery of the last vessel. Despite such high payouts, we have definitely built financial capacity and flexibility as well. So the equity ratio was above -- sorry, below 35% in mid-2021 when we took delivery of the last CLEANBU vessel, and now it's at 56%. And you can see the same picture for available long-term liquidity. And then in a capital-intensive industry, such as the shipping industry, of course, it's important to have access to competitive debt funding. So we have, for decades, I would say, before being listed as well, focused on building trust in the debt markets. When you, in addition, have a decarbonization high on the agenda, and you as well have downside protection through the diversified market exposure that adds value in the debt markets, definitely. So you see here that we have a very strong bank group, and we have added some names to this group over the last years as well due to the growth in the company. We have been present in the Norwegian bond market since 2013. So we actually tapped into that market when we were still a private company. And we have a solid track record of raising bond debt as well. After 2020, I think it was, after that, we have only done sustainability-linked financing, and we will probably do that as well for the facility that we just secured. To the right (sic) [ left ] here, you see the margin development over the last 5 years. The average margin has decreased by approximately 80 bps in this period. Of course, that's a general market trend but it's also impacted by the strong financial performance that KCC has delivered. So average bank or the weighted bank margin currently is 195 bps and including the bond, 230 when we adjust for the facility that we will draw on when taking delivery of the newbuilds. Yes. As mentioned, we are fully financed, and the maturity profile is quite well distributed over the next 6 years. The newbuilding facility we'll secured this year. It is a facility of $180 million, $120 million of that related to the newbuilds, $40 per vessel, approximately 60% of delivered cost and that's a fully revolving facility. Then we have $60 million in term loan that is used to refinance the existing CABU facility. We draw on that in October and November. So that is already done. And that improved the liquidity with approximately $10 million. The margin, 180 bps; tenor, 6 year and repayment profile, 20 years age-adjusted. And there's no minimum value clause actually in this facility, which I think is one of the other terms that we have negotiated this year. Yes. So here is a sneak peek into 2026. So cash breakeven, we have estimated that for 2026 to be $21,000 per day in average for the fleet. This means that the TCE earnings above this level, 80% of that minimum will be distributed as dividends. So in the graph to the right, you will see the dividend sensitivity based on different TCE scenarios for 2026. So if you include here the 5-year weighted average of $29,000 per day, the dividend potential will be around $0.70 per share and 8.5% dividend yield. And then, of course, the dividend yield is based on the current share price. And if rates go up, then probably the share price will go up, and that will, of course, impact the yield as well, but just to put it into context. But I think this nicely illustrates the potential for attractive dividends in 2026 as well at quite reasonable TCE levels. So to summarize the finance section. We are well positioned to continue delivering attractive returns. And I think the main points are that we have a solid financial and operational track record. We have -- definitely have financial strength to deliver on growing the company and expanding into new markets over the next years. And then we have a clear capital allocation policy that we have definitely stick to over the last years, and then that we have an ambition to continue to deliver on going forward. So that was it from finance.

Thank you. Okay. So we will have a final wrap-up from Engebret, Connecting the Dots: Strategy, Performance and Shareholder Value.

Okay. So I would like to start this wrap-up just by telling you a small story from an investor meeting I had some half year ago with quite important investor for KCC. And he was telling me, Engebret, why don't you make KCC a cult stock? And you may be laughing, cult stock, how can you make a transporter of raw materials a cult stock? And I was thinking around it. I mean, I said, "Cult stock? Maybe not." But actually, I think we have something unique to offer to our stakeholders that no one else does. We have a common sense producer that delivers value just by doing things smarter, just by being willing to do things that are not the standard. It's a win-win between us and our customers. We earn more money. Our customers have lower cost and a lower carbon footprint, which also is the effect of our high efficiency. We have lower risks due to our diversification and our flexibility. And also if you think ahead in time and the regulatory risks connected to the -- in our mind, a needed decarbonization of the industry, is much lower. And again, as Hakon was showing, also our ability over time to deliver premium earnings that more than offset the extra cost to build our ships and to run our ships compared to the standard solutions. So I think we -- so again, cult stock? Probably not. I believe we deserve it, but I think it's not where we're going to be. But again, we have built over the recent year since we got the listed in 2019, a strong foundation to continue improving the business we have, and which hopefully can trigger a growth in what we're doing. We are getting closer and closer to building the customer support and the trades to grow the CLEANBU business. There's still work to be done. But I think we are getting closer and closer. And it was a big milestone as Snorre was telling us then when you get ExxonMobil, the most demanding customer and oil industry, to use our ships, I'm pretty proud about that, to be very honest with you. The CABUs, a very strong position. We are the world leader in transportation on caustic soda, development in trades and fairly stable demand in Australia. We believe that could be -- likely continue to be a very strong business for KCC. Developing new concepts, hopefully, you can see that. And continue the focus and dedication to improve our carbon footprint in a smart way. And again, always prioritize the shareholder returns. We come from a family-owned ship owner. We continue having a conservative focus and approach to our business. We have talked about a lot in this session. I just wanted to mention a little bit more about a new combination carrier concept. We call it the XBU. Basically, a new concept that transports either new dry bulk commodities or new tanker commodities. The same concept creating efficiency by having these additional capabilities. We have developed over the last 3 years, two concepts. We have participated in tenders. We have come quite far with customers. We have talked to shipyards. We are not yet there, partly newbuilding prices, partly geopolitical risks. That, of course, makes it a bit more tricky for customers to commit long term. But there are certain, I would call, criteria for us to succeed. I just wanted to mention to you. It's nothing which is just around the corner. But I think it's likely we can achieve this over the next 5 years. So again, the trigger is, of course, that when we introduce this concept, it has to be substantially more efficient than existing standard solutions just the way we do it on the CABUs and the CLEANBUs. So our target should be 30% to 40% more efficient. It should -- the underlying trade flows have to be resilient and there has to be a potential to expand to more customers. And we need to have backup solutions for these concepts. We need industrial strong support, customer support in order to trigger it. So the first contracting will be based on the longer-term contracts. And of course, it has to deliver solid value creation, meaning that the extra earnings over the cycle compared to the standard ships should overcompensate the extra OpEx by building a more expensive ship and running more expensively. But with all the expansions we have talked about, it's not only a dream. We have achieved the growth since we listed the company. And also going back to 2015, we had 6 ships. Next year, we will have 19. Of course, some may disappear as we phase them out but up to 2030, 19, at least without an expansion, looks likely. And of course, we are dependent on the development in the newbuilding markets. We -- at today, it doesn't make sense. We -- after we contracted the CABU III, the market went up 15%. It's on the way down, how far it will fall, who knows. We believe that the added capacity in the shipbuilding industry and depending on demand, likely will -- that we can see opportunities in newbuilding markets. That could trigger, that we could expand the CLEANBUs, we could replace some of the oldest CABUs and possibly grow the CABUs and then possibly getting into a new combi concept. So why invest in KCC? Of course, the main point is, of course, that we do believe we can provide our shareholders with the best risk-adjusted return in shipping. It's a different, more sustainable approach to dry bulk and product tanker shipping. There are -- we maintain market upside potential with the lower downside risk. We talked about the disciplined industrial approach, the opportunities to grow based on our very strong balance sheet and the fact that we again have shown and will continue to show with our dividend policy to give a constant and high dividend distribution to our shareholders. So that ends the presentations, and we are now ready for a lot of questions. Hopefully, you have noted a lot of questions to us. So you will chair that.

Yes. Okay. You can stay on stage and Liv can come up. And first, are there any questions immediately from the audience? You can stand over there. Yes. Okay. I'll bring you the mic. Okay. Daniel will bring you the mic.

Okay. Quickly on the contract announced this morning, is it possible to say something specific about the economics on that?

I think the time we recorded the earnings that this contract will generate, I think corresponds well to how the MR tanker market prices 2.5 or basically 3-year ahead in time. So it's lower earnings then, I would call, the spot but it is earnings that gives a good return on investment in extending life and then for the next 3 years.

A quick follow-up then. In line with the sort of 2.5, 3 years MR market with the normal market or flat out?

The -- how the -- I would call the forward market prices, MRs for the next three years.

Okay. I can follow up on that then as well because it's -- you do have a couple of other vessels that are getting to the same age that you're working on. What's the potential to scale up that type of business in your view?

I think the potential for these ships, as I mentioned, it's difficult to keep them running into Australia after 25 years. So I think the main markets for these ships would be either Brazil or Indonesia. So we have had interest in both. Nothing is ready. I do believe there is a potential to keep the ships running. We will always evaluate the alternative that would be to sell the ships as a dry bulk ship. We will not sell them as a cargo ship. We sold one ship back in 2021. At that time, we got $14 million for it, for the ship. It was 21 years old, getting in value for the good standard. So maybe I didn't answer your question. But again, yes, there's potential, but too early to give you a precise estimate of probability, but we continue to work on it. And next ship that turns 25 is in October next year. So we have a little bit of time. So we are planning the docking, the life extension. We had -- we got good experience, the first ship left the dry dock after the 25-year docking. Everything is expected. We get the payback for the continuous maintenance we had. So no surprises. The ship is on its way to the Americas to start the contract. It would go via Australia and then takes a little bit of time to position. So early March, we will start the contract for Hydro.

Okay. And one more, if I may. On the -- because as you do get these vessels getting older and you want to maintain the exposure to Australia, we're getting pretty close, I believe, to the delivery slots in terms of getting new builds in place. So how does that availability look? And what would the price point be comparably to the LR1s, MR today?

I think that we still -- I think we still could get first half '29 deliveries. Given that, especially also if we go back to the shipyard that built them. All drawings are made, they don't -- they can just reproduce the ship. Newbuilding prices are still above the level we contracted in 2023. And so I think that -- and that means that for us, we will not do these contracting at this level. We would expect the prices to be -- should we act now, we should see lower price than what we did in '23.

Okay. We have a question that has come through online. So on decarbonization, how many of your larger customers are today willing to pay a visible premium for lower CO2 per ton mile? And do you see that changing contract structures or just improving stickiness?

I think the general rule is that our customers are not willing to pay extra freight for lower carbon footprint. We have this carbon adjustment factor with one customer. The compensations there for -- implied in this, linking the freight to the emission performance, it reflects the EU EUA pricing, but it still doesn't add up to a lot, but it helps a little bit. But I think as the world's move at the moment, it will be marginal effect for us. But I think the most important thing for us at the moment is basically to get this glued to the customer, this -- to get this relationship building, working closely with our customers, making the switching cost for our customers more difficult, building relationships and working together to tune the logistics. That is the most important. It's a tool for us to do these things, I mentioned, more than actually the earnings that will come later on when regulations come. If the IMO had been implemented, it would have been a boost for KCC coming into 2030s. It's uncertain with Trump in the office and what [indiscernible] told us about, but we are confident this comes, it's just a little bit of a pause at the moment.

Can you talk a little bit about the synergies between the CABUs and the CLEANBUs? Like for example, when you do an Exxon fixture on a CLEANBU, do your CABU customers also notice that?

I think, of course, they notice it, because again, in Australia, we are behind schedule when it comes to introducing the CLEANBUs into the market. So it's definitely a positive point. I think the upside potential is partly on the dry side. We get bigger volume that we can transport both on the CLEANBU and the CABU because the ships are equally sized when it comes to being a dry ship. Partly, it also creates scheduling advantages when it comes to -- we have more flexibility on the CLEANBUs. It could be that. We rather would take a caustic cargo with -- instead of CPP, a clean petroleum cargo, if that makes sense. So you have more choices. So -- and also we typically see into Australia, we will use part of the CLEANBU capacity for the caustic soda next year as a part to increase the contract coverage for the fleet and partly also it creates flexibility when we discuss with customers and to build this leverage that Snorre was talking about, we are still in a phase where we are working to decrease the discounts we give to our customers. We should always be cheaper, but we -- and we want to share the efficiency benefit. But clearly, we have had two high discounts on the CLEANBU business in the east of Suez. So that -- it helps us to build leverage and the flexibility in the trading of the ships.

Maybe just a follow-up on the CLEANBUs. Do you think you'll have either maybe a longer-term contract with Exxon next year or some other new oil majors coming into your customer list?

We are hopefully able to renew one contract, which will be a 3-year contract, which is linked to an oil major. We also do believe that we have a good chance to do another 3-year contract with one of the oil majors. ExxonMobil, it's too early to say. We just completed, was it last week or the week before, the first shipment. But at least it's promising. And we note that even though Exxon has not been very public about the decarb strategy, they are very much focused on that in their business. How can they improve their carbon footprint without spending too much money. And that's what we can offer. We can spend -- a big decarbonization at no cost, actually at a discount.

Yes, up here in the front.

Engebret, I think you said that the CLEANBUs are trading at a bit of a discount compared to standard LR1 vessels. And my original question was where do you think that, that differential will reduce over time? But I think I just heard you saying that you're actually using that as a competitive advantage to some extent, that you are pricing the CLEANBUs may be a little bit lower to track cargo. So how is your strategy on that going forward?

I think the first part of the question is that we have seen a substantial improvement in the discount level. It was part of what we did in order to get into the market. We were willing to discount the earnings. And we do it on the top level, if you have -- we do double-digit discount on the top level on dollar per tonne, it ends up with a pretty hefty discount on the net level. So we have seen a clear improvements, especially on the west of Suez. And we also see an improvement east of Suez, but that's some way to go. And I think the philosophy is, again, that as Snorre was talking about, given that how the market moves, if you have a ship and position as -- what we call it, Snorre? The committed tonnage in the region, you would -- it's expected than to give a discount. And it's also a little bit to the sense that you share the benefits of having a trade, which is complementary. So some discounts will be there and that is important for us to give the customers the incentives to work with someone that has a solution that's a little bit more odd, which gives other values. But again, no, it's -- we are into the stage where we are actually working to get it further down. And I think we have the progress that we can deliver on that.

Okay. I have a question here, and I think it might be addressed to Liv. What is your view on the continuation of the existing dividend policy and your ability to pay out 80% of cash flow and still have flexibility to fund growth investments?

And I think that's a balance you have to strike, right? But I think one thing is for certain, the dividend policy is a minimum 80%. So we will continue to pay out a minimum 80%. And when it comes to investment capacity, we have definitely built investment capacity over the last years. And I think if you add on the debt for the newbuilds now, we are at 47% equity ratio. And if we add an additional $100 million on top of that, you're at approximately 41% equity ratio. So I think there is some debt capacity as well on the balance sheet to invest. That being said, we, of course, also state that for large investments, we do have to raise money as well.

Are there any questions here? Any more questions from the audience? Nothing? Okay. I think we can go ahead and wrap it up then. Maybe, Engebret, you want to say the final word. And send everyone over to lunch?

I think we probably have told you too much, you're probably overloaded by information. But again, we are very thankful that you showed up. You come up, be -- showing interest in what we do and our stock. So thanks for coming. And hopefully, you will have an enjoyable lunch.

And very quickly because I didn't actually mention this, the lunch is just across the hall here.