Qatar Navigation Q.P.S.C. (QNNS) Earnings Call Transcript & Summary

Good day, and welcome to the Qatar Navigation Q4 2020 Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Akram Iswaisi, EVP, Finance and Investments. Please go ahead.

Thank you very much. Thank you, everyone, for joining our call and your interest in Milaha. I will start off with our consolidated financial results, a brief summary on the full year results and then get into the segment results. After that, I will turn it over to Sami to go over our outlook. And in the end, we'll open it up for questions and answers. The key highlights of our financial results. Milaha's operating revenues came in at QAR 2.27 billion for the full year 2020 compared with QAR 2.42 billion for the same period in 2019 for a decrease of 6%. Operating profit came in at QAR 279 million for the full year 2020 compared with QAR 283 million for the same period in 2019 for a near decrease of 1%. Net profit for the full year 2020 was QAR 59 million compared with QAR 547 million for the same period in 2019 for a decrease of 89%. And lastly, our earnings per share were QAR 0.05 for the full year 2020 compared with QAR 0.48 for the same period in 2019. 2020 was an extraordinary year. It was also a very, very challenging year for the whole world, and thus, on Milaha as well. COVID-19 impacted us both on the cost side, with increased expenses related to health and safety, but also on the revenue side in certain segments of our business where client demand decreased due to temporary shutdowns or slowdown in operations. In addition, the shipping market and OSV markets in the past few years have been going through significant challenges. This was made worse in 2020 by the COVID-19 pandemic, which also significantly impacted vessel valuations. Accordingly, Milaha's vessel valuations decreased and nonrecurring impairment charges were made that reduced our profitability in 2020. Milaha results, excluding impairments, would have been QAR 801 million. This adds credence to the fact that our business is sustainable, resilient and strong. In our investor presentation, we have added a new slide showing our EBITDA trend over time, which is a good barometer on the health of our results, especially before impairments, and I hope you'll find it useful. Now getting into our business segments, I'll start with Maritime & Logistics. Top line revenue decreased by 10% or QAR 92 million, driven mainly by bulk logistics and to a lesser extent, our container shipping business units. The COVID-19 disruptions had a negative impact on our logistics business as client demand decreased due to temporary shutdown of certain client operations. However, at the same time, we have managed to pick up new clients as well as increased volumes at Milaha Logistics City. Our bulk unit had a drop in revenue due to the discontinuation of charting activities earlier in the year, which was the first step in Milaha exiting the bulk shipping business. The final step was concluded earlier this month with the sale of our sole bulk vessel. On the expense side, we saw an QAR 83 million drop overall, which correlates to the revenue drop as most of the expenses are highly variable in nature. Despite increases in COVID-related costs and the loss of certain client volumes, Maritime & Logistics only saw a drop of QAR 8 million in net profit relative to 2019. Now moving on to Offshore. Top line revenue grew by 1% or QAR 10 million, mainly as a result of increased vessel capacity. We earn more from chartered in third-party vessels as well as the addition of a new vessel added to the fleet in 2020. We did see a drop in our services revenue prior to COVID-19, where some vessels were temporarily off-hired due to the outbreak. Operating expenses increased by QAR 26 million, and this was attributable to increased bad debt provisions and higher depreciation and amortization expense. The depreciation amortization expense increase was actually related to the third-party chartered vessels and how these expenses are treated according to IFRS 16/lease accounting. The nonoperating income and expense levels is what drove the overall performance as reported for the segment, which is where QAR 345 million in increased impairments were recorded relative to last year. As opposed to our Maritime & Logistics and Offshore segments, the Gas & Petrochem segment was not severely impacted by COVID-19. Top line grew by 3% or QAR 10 million as a result of higher utilization in our LNG vessels and increased time charter rates on our gas carrier. Operating expenses dropped by QAR 50 million, which is directly related to the fact that we had fewer vessels in 2020 versus 2019 with the sale of key tankers and 1 gas carrier. On the nonoperating level, income declined by QAR 64 million due to the 4 main moving parts: QAR 13 million drop in vessel impairments compared to 2019. QAR 60 million in increased profits from our associates, mainly Nakilat. A drop of QAR 15 million due to lower gain on sale of assets. As I mentioned just a few minutes ago, we sold 2 tankers and 1 gas carrier in 2019 and posted gains on those. And lastly, QAR 119 million drop in our VLGC joint venture, Gulf LPG. The JV recorded on its books impairments on the 4 vessels and had a QAR 127 million negative impact on our side. On to our Trading segment, we posted a drop -- an QAR 86 million drop in revenue. We sold fewer heavy equipment, vehicles and less bunker, which is primarily driven by COVID-19 and the weakened demand. Our bottom line, however, remained flat versus 2019. Finally, Milaha Capital. Investment income increased by QAR 9 million with QAR 3 million in lower dividends and held for trading income more than offset by QAR 12 million in bond income. Real estate revenue was down by QAR 53 million, attributable to lower rent income. At the nonoperating level, we recorded QAR 82 million in gains on the sale of 5 properties, along with a onetime QAR 163 million impairment related to one of our properties. And this wraps up the segments, and I will now turn it over to Sami to discuss our outlook.

Thank you, Akram. Starting with Maritime & Logistics, we expect overall volumes to remain steady at Hamad Port, which is the main driver of our new terminal share of profit. In Logistics, utilizations are expected to continue increasing in the warehouse, which would have a positive impact. And we're hopeful that client sites that have been shut down or temporarily shut down throughout 2020 will reopen. On the Container Shipping side, trade volumes have picked up, and we expect this to continue throughout the upcoming future. In Offshore, we do have many dry docks scheduled in 2021, but believe the positives from having the worst behind us in terms of COVID-19 expenses will more than offset the negatives. In Gas & Petrochem, aside from our tankers and VLGCs, the rest of our business is fairly predictable and should be in line with historicals. On the tankers and VLGCs, we're cautiously optimistic that rates will hold or increase. On to Trading. We are seeing a lot more activity in terms of pricing requests and tenders. We're hopeful this will translate positively on the numbers. And lastly, with Capital, on both the investments and real estate fronts, we don't foresee any major changes up until the new tenancy contract on our villa compound, starts up in Q3 of this year, which will obviously have a positive impact. That's the segments and the outlook. And with that, we'll now open up for the questions. Operator?

[Operator Instructions] Our first question comes from Jonathan Milan from Waha Capital.

I have a couple of questions. First of all, why did QTerminals see such a big drop in net income? Is it simply COVID related? Second question, why did Offshore see a drop in EBITDA in Q4 specifically? And third question, will you benefit from the North Field expansion? I see that GDI is already deploying rigs there so I'm wondering if you will be servicing them. And if so, how many vessels do you expect to commit, say, over the next 5 years?

Okay. Thank you very much for the question. The answer to both questions are related to COVID-19, where 2 terminals incurred significant costs associated with basically additional procedures, money spent on preventative measures. So there was a big impact on QTerminals as it relates to COVID-19, like everybody else in Doha and like -- even Milaha, we've had to incur additional costs and operating expenses to continue operations. So QTerminals was largely impacted by that. Now in terms of Halul as well, the same thing, we've had to incur additional operating expenses associated with our crew that came in towards the end of the year. So the big impact basically towards Q4 as it relates to Halul has to do with operating costs associated with COVID-19. So those are -- basically, it's related to COVID-19. The last question -- the third question was what? I'm sorry, repeat that again.

The third question was will you benefit from the expansion in the North Field because GDI Gulf's drilling is already deploying the rigs there?

Okay. I mean from a macro perspective, we will on multiple fronts. Our Logistics business is involved from -- obviously, we do a lot of project logistics work so there will be potential work for us. And now I'm not speaking about contracts that we haven't had. But the way we're looking at this is there's going to be benefit to Milaha on the Logistics front and potentially on the Offshore side as well. So we do see potential as a result of that expansion.

Okay. And just -- so basically with QTerminals post-COVID, I'm guessing these costs will go away, but they'll probably remain in 2021. And on Offshore, why in Q4 specifically? Why didn't these extra costs hit you in Q2 or Q3?

Do you want to take that, Sami?

Yes. So Jonathan, on the QTerminals, yes, the cost will definitely be there probably for the majority of the year up until the government of Qatar and when COVID situation really gets under control. So a lot of those costs have to do with the PPE. They have to do with the living quarters of the workers. So obviously, you need to segregate the stevedores. In some cases, they spend a lot of money on hotel accommodations while they were trying to separate the crews. A lot of that's going to continue, probably not to the same extent, but definitely, you will have some expenses related to COVID into...

If I may Sami. Jonathan, one of the things that we have to deal with this year is we had to split our crew laborers and put them in separate camps. And so to reduce concentration risk, we had to put people in hotels, which are additional operating costs we didn't incur before. We have to invest in new camps as well to separate people. So there was a significant amount of cost. On top of that, we put restrictive measures around people's movements. And as a result, we also have to incur operating costs to keep people happy. So a lot of expenses were incurred. That's aside from, let's say, investing in masks and preventative measures, COVID tests and nonstop health checks and creating clinics and so forth. So these are additional expenses. But on top of that, in terms of lodging and accommodation, everybody that has a marine operation, especially in Qatar had to deal with that. Everybody that has a labor force had to start splitting -- diversifying the labor force, moving them into different locations so as not to have a significant concentration. In the event that there is an outbreak in one location that has a large concentration of manpower, it could have a significant impact on any company's operations. So we're an investor in -- we're a partner and investor in QTerminals and I think that's as far as we will say, I think, in terms of the general trend, which also applies to Milaha as well. Some of our costs had to do with that. Even when you look at Halul, at times, we did have -- had to spend additional money, bringing in crew and putting them up in a hotel. And the quarantine cost as well has gone up, putting people in hotels and quarantining crew for 1 to 2 weeks is cost prohibitive. So again, when you look at even those costs coming in at 1 period versus the other, that also has to do with the rotation of the crew. So these are some of the large explanation for some of the increased costs. And they are significant. Now these are additional costs that we were not incurring before. And so they have hit our P&L this year. And I know for a fact, and I know how a lot of companies have struggled with that, especially companies that have operations that have to do with manpower, construction and so forth. So this is sort of what we see in the business, and this is what QTerminals as well has had to go through. Hopefully that helps, Jonathan.

Okay. And 2021 -- yes, it does. So in 2021, they'll exist probably maybe at a bit of a lower pace. And then after, let's say, everyone's vaccinated, after COVID is over, probably it won't recur again in 2022, and you can see those margins go back up again.

Well, to some extent, yes, but we also have to follow country regulations. So depending on what are the quarantine requirements and the quarantine restrictions, for example, in Qatar and in other countries as well where we operate. Crew change regulations as well, that impacts us. That also may impact our operation or impact costs. So we believe that the impact will subside next year. But I think, nonetheless, 2021, there will still be an impact, maybe not as bad as last year. Because I think we've learned last year, now we're getting much better, much more efficient, but there still will be a cost in 2021. But again, that also depends on regulation.

Okay. And one last question. I mean despite all that, your clean EBITDA has continued to go up. You've received more dividends from EV entities. Your cash flow generation has strengthened even further during a year like COVID. But the dividend seems to be the same at 30 fils. What would it take for you to increase the dividend? I mean, again, you've improved your cash flow during one of the worst years for many companies or -- and yet you haven't increased the dividend. Your cash flow increased, your cash increased, your investments increased, loans to joint ventures increased. What would it take for you to increase the dividend?

To be frank with you, I can't really answer that. The only thing I can say is like everybody else in the world today, and if you look at most companies globally, everybody has been conserving cash and managing liquidity to be able to get through the next couple of years. And so we've done a good job of managing liquidity, managing our balance sheet to be able to manage this turbulence this year and next year, I mean, 2020 and '21. So nobody knows exactly what '21 is going to look like. So for us, it's important to have a strong balance sheet and to be disciplined about liquidity for 2 reasons. One, nobody knows what the next couple of years will look like. I don't think I have a crystal ball, neither do you. At the same time, we want to invest in the future. And if you look at what we've done so far, which is we've divested from noncore assets. This year, for example, we've sold land bank. That was non -- that wasn't yielding any returns. We've shut down the travel agency. We've shut down the bulk chartering desk. So we've been divesting from noncore business, and we have been investing and looking at how we can enhance yield overall in our investments and improve our operations. So the Board is focused on growing the business. But I think if you look at 2020, the focus was on managing the balance sheet, managing the P&L, surviving through COVID-19, which -- and I would say, I'm very proud to say that we've done an exceptional job in 2020 of managing the turbulence because as an operational company, whether you look at the Logistics operations, the Shipment operations or the Offshore operation, it's -- there was a significant amount of maneuvering and work that we had to do to be able to continue to serve our clients in a very, very difficult market. So from our perspective, globally, I think everybody has been looking at conserving cash, managing their balance sheet and to be able to ride this for the next couple of years because nobody knows what this year and the year after looks like. And that's all I can say on that question.

All right. And yes, indeed, I mean, you did manage this fantastically well, and the results show that, the improvement of the balance sheet strength shows that and that's just why I thought you could do -- you could afford about your dividend, but I understand your point. And again, congratulations, thank you for wonderful results this year.

[Operator Instructions] We now have a question from Divye Arora from Daman Investments.

Just a question on the opening of borders that we have seen between Saudi, Qatar and UAE. So can you just comment on what sort of impact this would have on your operations going forward? That's number one. And number two is on the vessels business that you have for the LPG and LNG, could you talk about the -- a bit more about what you faced in 2020 in terms of the -- first of all, just want to understand the business model of this division. Are these maybe long term charters? And what sort of an outlook you see for this business in 2021 in terms of rates?

Okay. I'll take the first question and Sami will take the second question. I mean, listen, from the opening of the borders perspective, I think at this point, we don't know exactly -- it's too early to tell. We don't know exactly how this will play out. Obviously, from a -- we have an enterprise risk management framework within the company, a very proactive framework that we use to manage risk around the company. And we've been looking at all possibilities, including opening of the border, what does that mean from a risk perspective and also from an opportunity perspective, what does that mean for us? How does that impact certain aspects of our business? And what is the potential upside for us? So we're constantly evaluating these things. And we don't have the view, to be honest with you. But that view is right now, at this point, we don't know exactly how the opening of the borders will materialize. There's still a lot that's not clear. But again, what you're talking about is a very, very -- our labor is a very, very large market and presents a significant amount of opportunities for any company. So there is potential for growth. And that's, to be honest with you, all I can say at this point. I think there's potential. And so we're waiting to see what's going to happen, but that presents as the largest -- substantially large market, a lot of potential for a company like us, and we're cautiously optimistic.

Sorry, just to ask another question over here. So historically, were you negatively impacted when this happened in -- back in, I think, was it in 2015 or 2016, when the borders were closed? And which particular segments were impacted? And now going forward, when you say the market is large, then which segment you expect to benefit from this? Is it the Maritime & Logistics business, even the Offshore business?

Well, I mean, I think, obviously, as -- when the blockade happened, we were obviously impacted. A lot of volumes coming to the border disappeared. But, obviously, a lot of that volume ended up coming by sea. So it's -- let's say, the mix has changed, right? And so you lose it in one area, but you pick it up in other areas. And so now if you -- if -- when I look at what's the potential. I mean, Milaha -- I mean, over the past several years, we have developed a tremendous amount of capabilities, whether it's on the Offshore. I mean if you look at the Offshore, for example, historically, we have been an asset owner, but we have expanded capabilities, taking our capabilities to provide services to complement our asset base because that's basically how the business and the market is changing. So over time, we've been expanding into services to complement our asset base because coming to our client with a portfolio approach allows us to increase our share of the wallet, and at the same time, improve margins because the offshore market has changed over time. So our capability in Logistics, Offshore have increased tremendously, and that gives us more tools and more chances of expanding into larger markets. So I can't comment on whether we have plans or not, but what I'm saying is it is a large market and it presents opportunities for a company like Milaha or any other company.

Okay. And the -- and you're saying net-net -- so you lost business in one segment, but you gained in the other segment when this blockade happened. But in general, your point is that you were not negatively impacted at all when it comes to the bottom line impact?

Well, I mean, listen, I mean, it's -- I can't say that we haven't been negatively impacted, but we didn't just sit there and take it, right? We have changed our business. We have expanded our business in Qatar and as well as geographically. So there's been a significant push to diversify our revenue base. So yes, there has been some impact, but we have worked hard. I mean when you lose your income, you work hard to substitute that income elsewhere. And this is exactly what we've done. So I think the removal of -- the opening of the border presents opportunities as well that not only Milaha but any other company will potentially look at. It's a large market. But overall, like I said, it's -- the business is like a motion picture, it changes. You get hit somewhere, you pick it up somewhere else. But overall, we focus on diversifying our revenue base and we kept pushing outward. I mean if you look at -- and our container shipping business has expanded into new geography. We've been doing business elsewhere on other continents and other countries. So we just didn't sit there and take any potential losses or an impact on business. We've worked diligently to try to replace our income. And that's -- and so far, we've done a good job. And to be frank with you, we've also invested in capabilities. And I think we're very well postured to take advantage of opportunities as they come in our region. As things change in our region, I think there will be plenty of opportunities for a company like us with our capabilities.

And so now if the mix again shifts, if it happens, if the things start to move away from the sea and comes from the land, then you think it sort of creates an overcapacity in one segment and under capacity in other segment where you have to invest again?

Where we have to invest again -- what do you mean where we have to invest again?

So you were saying the mix shifted last time, right? From one segment to another and you adapted. You must have done some changes -- must have done some mix into your instrumentation or your capacity. So you've invested in the newer capacities to handle the change in the business model. But now as the business models starts to switch again, would that create -- make excess capacity in, let's say, in the Offshore segment that you have to increase more capacity somewhere else and affecting -- from where the business is shifting -- to the segment where the business is shifting from the Offshore. In that segment, you have to invest more? Or you already have the excess capacity already over there?

I think that depends on the business model, right? I mean if you look at Offshore, there's already a lot of capacity in the market, a lot of supply vessels available. So whether you buy or charter in, there's plenty of assets in the market. If you're talking about Logistics, again, Logistics, it depends on your model. But the uniqueness of Milaha is that we're not a pure play -- we're not -- I mean we're in Offshore, we're in supply chain. We're -- when you look at supply chain solutions, we're in ports, we're in container shipping, catering primarily, 3PL, warehousing. So the ability to manage a portfolio like this allows us to weather storms, to change the mix depending on the market. So that's the uniqueness of Milaha. So we're not simply, for example, a freight forwarder. We're not a -- we just don't provide warehousing or we're not simply a theater company. We're a supply chain provider. So being able to provide supply chain solutions to clients allows us sometimes to make money in certain legs or certain segments of that supply chain and lose money on others or breakeven, but that's how the world works today, right? And so it's more from how you serve the client rather than, "Hey, I have a truck and that's what I do. I deliver products and then cargo." We provide supply chain solutions to clients, and that's how we manage it. And that's how we focus on making money.

And when you play -- looking at your Milaha Offshore segment, you were saying that you are not only a fleet operator, you have -- you provide some additional services also, and you're very well integrated. And so who are your competitors over here in this segment which are at your level?

In Doha, I think we're the leader in the market. In Doha, we are the leader. We have the largest market share in Qatar. We are a leader. We have been close to our clients. We have a very strong and solid infrastructure here in Qatar. As I said, the industry overall has moved from being simply an asset provider because back in the days, you can -- when oil was over $100, you can buy an asset, charter it and make fantastic returns. Those days have changed. Today, you have to look at a different model where you really have asset ownership, combined with services, allows you to generate better profit. And this is the model that we have been pushing for. And building capabilities. So we've invested in capabilities. We invested in people. We financed the projects where we can build that experience as well. So -- and this is key for us. [ And we are the leader in Qatar ].

Okay. And when it comes to the Milaha Maritime & Logistics business. We are looking at it, it has -- the business at the operating profit level has been unprofitable from -- even in 2019. If you look at it, you had a QAR 71 million negative operating profit and then you had around [ QAR 18 billion ] negative this year in 2020. So can we understand what is the turnaround strategy for this business? Or are we having any one-offs over here which we have to adjust?

Listen, the -- a big part of this has been the turnaround of the warehouse operation. We've invested in Milaha Logistics City. And with [indiscernible], there was an impact. But again, in 2020, utilization for Milaha Logistics City has increased significantly. And so we were able to pick up new clients. And so if you think of any business, we have invested in the infrastructure of supply chain infrastructure. And now we're focused really on increasing utilization and pushing more contracts and more clients and revenue through that pipeline. So -- and that's basically -- and in terms of that business, you -- we'll see some changes. I'm optimistic that we'll be seeing changes over the next couple of years. The leadership of that business unit is focused on optimizing returns on assets, working leaner and, again, increasing utilization and returns on assets, including the warehouse. So I think just sit tight for the next year or so, and we'll see an improvement in these numbers as well. I mean, it's -- that business is changing. Those capability is also changing. And even our service offerings in that business unit have changed. And I think this...

So what are we expecting, let's say, EBIT -- sorry, I was saying, are we expecting an EBITDA breakeven in the next couple of years from this business?

I can't comment on that.

But there has to be a business plan, right? If you're talking about -- [ that would be modeling to use your ]...

That's very -- there is business plan, but -- yes, there is a turnaround plan, but I can't give you an EBITDA number. There is a turnaround plan. There is a cost optimization plan, which has already started, that's in place as well. But I can't give you an EBITDA number.

So don't give us a number, just tell us when you want to be EBITDA positive, 2 years, 3 years, 5 years, what's in your plan?

I think within the next 2 to 3 years you'll see significant improvement in EBITDA. You'll see a significant improvement in EBITDA.

And when it comes to utilization, you were saying, obviously, you have invested in your capacity. How much are you utilized in this particular segment? How much is the more supposed to go up? Are you at 50%, 60% right now on the blended basis?

No, we're close to 85% to 90% now.

Okay. And if you can go up to 100% in the business?

Well, from an operational perspective -- so they'll tell you that there's -- you never reach 100% simply because of the movement of cargo. There's a lot of cargo moving in and out. But there is potential depending on how you maximize the space within the warehouse, but you never go to 100%. But because this is a -- [ the big ] warehousing, it's either you look at the real estate model where you simply rent space or the warehouse where it makes money is around turnaround. So the more inventory moves in and out, the more you touch the inventory, the more you add value add services. That's where you begin making money. So -- and that's the key. And this is one of the areas we're focused on when we look at our business as well. The movement of inventory, how do we increase movement inventory, how do we increase value add services. So again, when I tell you that we've, over time, changed the way we look at the business, we've increased significant amount of capabilities. I mean if you look at the team right now, it's seasoned logistics professionals focused on turning this business around. I think I'm optimistic that over the next 2 to 3 years, we'll see significant improvement in EBITDA.

So moving inventory means you have to go with the -- you have to rent it out to the high turnover businesses, maybe grocery, retail, e-commerce? That's where you're looking at right now?

Well, I'm telling you that's how the industry looks at it. So I'm not telling exactly that's what we're looking at it. I'm just telling you that's what the industry looks at. I can't disclose too much because we do have competition in the market, but I'm telling in the industry, typically. I mean if you're talking about low movement of inventory, you're building -- it's a real estate model, you build the warehouse, you rent it out, you don't care about movement. We're in a different business. We are not a -- we're a supply chain solutions provider and where we make money is around movement of goods. And that's the story.

So this -- yes. So basically, the losses that we are seeing, obviously, one of the reasons you are saying is utilization has to improve, maybe the mix has to change. But in general, in the industry, your competitors, is it like an industry which is highly competitive and even the competitors are losing money in this business?

That depends on our -- that depends. Our competition losing business. It depends on what stage they're in. I mean, I think, what you're trying to get to is, I think you're trying to get to our strategy right now. And I can't really disclose too much of that, but it depends on the...

No, no, no. Not your -- no, sorry, not your strategy also. I'm just trying to get to the market. Is the market really very competitive that even if you have a very good strategy, when the market is like that, there is so much excess capacity and then that is leading to losses for a lot of players in the industry. That's my point.

Well, I mean, listen, it's -- if you look at Logistics, it's -- in any market, it depends. It's tied to movement of goods, it's tied to -- I mean when you look at growth, it's tied to correlation of -- it's tied to GDP, movement of TEUs. So it's all about movement of cargo, and that's how you begin to understand really where is the potential in Logistics. So there is still a lot of potential in Qatar, and the economy in Qatar continues to change and evolve. And so we still see an uptrend. But from our perspective, we're looking at it on 2 fronts. I mean if you look at -- somebody asked the question about the North Field expansion. Again, there is potential Logistics work there. And there are significant amount of projects coming into Qatar as well. And these are also opportunities. So in general -- you've got FIFA coming up. So there is a lot of potential. There are a lot of projects. And so there's still a lot of potential in Qatar for Logistics storage opportunities. We're not just looking at the market domestically. We're also looking at geographic expansion as well. So we're looking at this on both fronts.

So currently, what we see is...

If you don't mind. Let me jump in, if you don't mind. Yes. Sorry, if you don't mind, just for the sake of other callers, I'm not sure if there's other questions. But may I suggest we take the conversation off-line. You can reach us if you go to our website, milaha.com, go to the Investor Relations and there's a Contact Us e-mail. That e-mail will come direct to me. We can establish a one-on-one relationship, and we can answer any other questions that you might have. I think that's a better forum to discuss these kind of questions.

I agree. Yes, I think for the sake of everybody else, yes.

Operator, is there any other callers?

Yes, we have one more question in the queue from Shabbir Kagalwala from Al Rayan Investment.

It's actually [ Akber ] from Al Rayan Investment. Just want to touch on Slide 16 of the presentation where you're talking about the outlook for trading. Can you just give a bit more color on that, please?

Yes, [ Akber ], this is Sami. We're talking about trading here. We're saying cautiously optimistic as tender and RFQ volumes have increased. So we are getting a lot more inquiries. A lot more customers are coming in and asking us for pricing. We're seeing a lot more tenders floating around than we did last year. That's what the comment refers to. Last year, as you know, because of COVID, there was -- a lot of companies were in lockdown, a lot of things didn't happen as people thought they were going to happen at the beginning of 2020. And the way we see it is, things are -- the sentiment, I guess, is driving a lot of request for quotations and request for pricing of sales of equipment in general.

Sure. That's great to hear. I mean I was asking because it's -- in the past even before COVID, this wasn't a trading business. So I'm just wondering, it's not that this business was hit by COVID. It was just a difficult business. So it's great to hear the things are -- sort of -- what sort of area is the demand coming from?

Sami -- never mind, I'll take that one. Listen, I think you're absolutely right when you say this business has been impacted the past few years because we focus primarily on construction equipment. And obviously, our heavy truck business as well has been impacted, depending on the volume of construction projects in the market. But if you look at -- as I mentioned earlier, we have a big focus on providing asset-light services. We are -- a big focus of Milaha right now on services. So this business right here, if you look at it, it consisted of bunkering and lubricants, we have marine engines. And there's a big focus right now on serving vessel owners and yacht owners in the Qatar market. So we've sort of started shifting the business around to focus on providing services, be it ship chandlering, bunkering, lubricants, primarily focusing on the marine sector, which is a market that we see in Qatar needs a structured or where we see opportunities for creating a structured supply chain. So -- and so when you ask what is it that you're looking at? This is sort of how we're looking at it. Because, again, our focus on -- again, going back to what I said earlier, rather than saying, "Hey, we have an asset, we have a vessel." We are looking at serving clients, and this is our model right now. And our model here is serving effectively vessel owners, yacht owners in terms of lubricants, chemicals, ship chandlering in general, bunker, and this is sort of where we're beginning to see opportunities and really focus in 2021 and beyond. Does that answer your question?

Right. Sort of, it does. And the other question is in terms of -- well, our shareholders are now very used to seeing impairments happen on a regular basis. Are we anywhere near the end of these? Or should we expect this to just be a recurring line in the P&L going forward?

I like expected that question to come up. So thank you for bringing that up. Listen, I think this year...

I didn't want to disappoint you.

No, no, but thank you. Obviously, this year, we took QAR 742 million in impairments versus last year. And I think this is the most that we have taken in any other year. And as I mentioned earlier, it's a function of really how the market has changed and the segments in which we operate have changed and their impact on vessel valuations. From our perspective, I think, really, the worst is behind us. I think -- I don't expect this in the future. And obviously, by virtue of having still to go through the accounting exercise every year to evaluate impairment of vessels, there will still be some negligible or minimum impact going forward, obviously, depending upon how the market plays out. But in general, we don't expect to have an impact of this magnitude going forward. I think the worst is behind us. And again, I think 2020, COVID-19 sort of made this exercise much, much worse. And so from our perspective, again, we are optimistic that the worst is behind us. Again, going through the accounting exercise and assuming markets don't get any worse than this, and we're hopeful that they're not, I think this is -- 2020 has been a very, very challenging year. And I think from here on, things can -- should continue to improve, and we start seeing better days. So that's our view on it.

We have no further questions in the queue.

All right. Well, thank you very much, everyone, for your interest in Milaha. Really appreciate it, and we look forward to seeing you Q1 2021. Thank you very much, and have a good day.

Thank you. This concludes today's call. Thank you for your participation, ladies and gentlemen. You may now disconnect.