TTS (Transport Trade Services) S.A. (TTS) Earnings Call Transcript & Summary

Okay, everybody. Thank you so much for participating and welcome to all of you for this DNB's pre-call for the fourth quarter. I just want to like to remind you all that there will be no new information on this -- from this call. But this is just a reminder and from service to try to remind you of what we have communicated, which can have an effect on the Q4 results. We will also give you some updated macro data from Norway statistics and also from the Central Bank. As usual, I will start with the NII and the capital, and then Anna will take the rest of the P&L. Starting with NII, we all know there is no change in number of interest days from Q3. On the volume side, just a reminder, that in Q3, we reported a negative growth of 0.4 in the retail and a negative 0.3 in the corporate. Statistics On Norway is reporting a gradually lower credit demand for October and November for both household and corporate. For households, from 3.9% in May to 3.5% in October and 3.3% in November. And for corporate, from 6.8% in May, 3.3% in October and 3.0% in November. The Central Bank's expected credit growth to household for next year or this year 2024 is 2.8%. And as you all know, our focus is on profitable growth. I'll also go through some of the NII effects from the rate hikes versus Q3. We will have full quarterly effect from a 50 bps hike that was effective from the 7th of August. And we said at that point that the expected annual effect of this rate hike was NOK 2.2 billion. We will have partly effect from the 25 basis point rate hikes affective from, respectively, 27th of October and 26th of November. Last 25 bps rate hike announced in December will be effective from the 20th of February. We have guided tapering effects from rate hikes. And from Q3, we no longer guide a specific number. This is because we find it more challenging to distinguish between repricing effects and changes in the market dynamics, including changes in customer behavior. Still, we still say that there will be a significant effect -- positive effects from these rate hikes. Central Bank expects rate part now to be -- we have a rate -- interest rate Central Bank right now at 4.5%, which will stay stable until the end of Q4, or in this last quarter of 2024, and then gradual decrease to 3% in end of 2026. We have a small positive FX effect for the quarter because on average, the Norwegian kroner has weakened approximately 3% for us. On the capital side, in Q3, we reported a CET1 ratio of 18.3%. We completed a share buyback program in December and also then announced a new program in December of 0.75%, which will have a negative effect on the CET1 ratio of approximately 20 bps. As we also said in Q3, this quarter, we will adjust for actual dividend payout ratio versus 66% as we have calculated for the first 3 quarters. This is due to regulations from FSA. So this is just an average over the last 3 years. That's why we have used the 66%. Annual asset provided a release of 30 bps on the CET1 ratio. That means that NFSA's expected requirement is now 16.9%. On the capital side, we also have a small positive FX effect due to a strengthening of the Norwegian kroner, and that's the end-to-end period. But this is only 1.5%. That was the NII and the capital. And then over to you, Anna.

Sure. Starting with commission and fees. Investment banking, as you know, typically sees a seasonally higher activity level in the fourth quarter compared to the third. So a high activity level, driven primarily by DCM and M&A in the fourth quarter. Real estate brokerage, we have seen a market slowdown in Norway in the second half of the year. And there is a seasonally lower activity level in the fourth quarter due to the December holiday season. And the sale of newbuilds is still at record low levels. Asset Management, positive market development drives AUM higher, as shown by public market statistics for the month of November. Money transfers, we continue to see a high level of card use. Keep in mind, though, that the third quarter is typically somewhat seasonally higher given the holiday -- summer holiday season and corresponding international travel and card use. Moving on to net gains on financial instruments at fair value, starting with customer revenues in DNB markets or FICC continues to see a high activity level. The mark-to-market effects on the AT1 and the basis swaps were announced last week and totaled a negative effect of NOK 892 million. A reminder on the outstanding AT1 instruments, we have USD 850 worth of AT1 outstanding, and SEK 1.85 billion AT1 outstanding. Moving on to costs. A seasonally higher activity level as we typically see in the fourth quarter, all else equal, typically leads to higher costs generally. The Norwegian Central Bank has updated their expected wage inflation figures in the most recent December reports, updated somewhat higher than their previous reports. 2023 wage inflation for Norway is now expected to come in at 5.5%. And 2024 wage inflation to come in at 5.0%. And a reminder on normalized pension expenses, they are expected to be slightly higher than NOK 400 million in a quarter. And as we've said before, the compensation scheme is primarily linked to the development in global equities. Finally, impairments and asset quality. The portfolio is carefully monitored, and we are generally comfortable with the risk in the portfolio. As you know, impairments will vary from quarter-to-quarter, driven both by potential changes in macro input factors in the sales model, and/or company-specific events as you've seen in past quarters. Clearly, there is more uncertainty going forward given the current macroeconomic outlook and it would be natural to see more company specific events. But again, we do not yet see any systemic areas of concern in our portfolio. Very lastly, a kind request or a reminder to please submit your pre-Q4 consensus estimates to Andreas by close of business on January 18. And with that, I think we thank you for your attention, and wish you a good rest of the day.

Thank you.

Hello and welcome to our video conference. We are joined by several people. TTS presented a report on the 15th. And today, we are holding a meeting dedicated mainly to discussions with attendees. And we are happy that we are presenting good results, special results in light of goods transported on a Lower Danube. This morning, we had the EGSM for the approval of shares, and we're happy that today Ziarul Financiar celebrated 25 years of activity, and we participated in the discussions for that occasion. And now we have this meeting now. I would like to give the floor to my colleague to present a couple of questions that received beforehand, and then we can start the dialogue.

Hello, everyone. So we have a couple of questions received before the commencement of the video conference. I'm going to go through them one by one. And then we are going to analyze the answers. First question, can we estimate or approximate volumes for the fourth quarter.

Yes. So the answer is simple, as always, estimations in terms of figures cannot be done right now. But we can tell you that in the fourth quarter, we are going to continue what happened in the previous quarter and in the previous quarters.

The second question, what would be the factors that could lead to a recovery of volumes in terms of minerals and chemical products?

So factors, we have to analyze them one by one. Minerals currently -- as per the information that we reported at the end of last year and 6 months after the start of the year are influenced by the ceasing or a reduction of the 2 installations active in this sector that we collaborate with. Otherwise, things are going precisely as planned in our budget and as we have -- and as per what we have reported up until now. So everything is going according to the plan. If we are talking about [ Tulcha ], we don't have information right now in terms of production. They have a project in terms of increasing volumes. And Galati wants to start production, there is intent in that regard. We have some figures from them, but they want to start depending on the possibility to acquire raw materials and, of course, the development of the market in this regard. And the development in terms of raw materials depends on the cash flow of the installation. So in the next period, maybe even as of December, we envisage a slight increase, but that will not impress significantly the figures. First off, if we talk about transport, it's done via barges. And right now, we have insufficient barges, and we allocate them to various flows depending on internal factors, depending on clients and of course, operational efficiency as well. The second criteria relates to Decirom. Before August, when we included this aspect in the reports, we told you that we have a plan to collaborate with Decirom in this regard. We want to work on the barges on one hand and on the storage facilities on the other hand. So we have certain proposals in this regard. We have plans. So we could envisage a foundation for a slight change in terms of positive trend, increasing trend in terms of figures. So this is due to 2 reasons. I told you before, one of them capacity and allocation depending on capacity and optimization. And second off, Constanta, which is influenced by an overcrowding in terms of barges in general. And of course, this leads to huge delays in terms of deployment of barges. And of course, it also impacts acquisition power in general. So a recovery to the volumes from previous years will not happen quickly in our opinion. There are signs in terms of trend changes on the market and based on the strategies of those with whom we collaborate. But we have to see. This is the situation currently. Third question relates to navigation conditions. I'll take this one as well. So if you recall last year, we had 41 days of interrupted navigation in Zimnicea. This year, the conditions were good. They started to deteriorate in August, but we didn't incur a loss. We had restrictions that we had to tackle in terms of budgets on the southern area in Zimnicea. But there were no issues overall. Now navigation is almost standard normal. And based on the information from our colleagues from Galati, there is an increased trend in terms of the water and water flow, which is a good thing, especially in light of the fact that winter is coming. So for fourth quarter, the navigation conditions are optimal and standard.

The fourth question, if we envisage or if we have an estimation related to the development of tariffs in the following period.

The development of tariffs is going to follow the trend from this year. Fixed tariffs that are going to be funded based on -- based on contractual terms, but this was not the case this year. And we have inventory related tariffs that relate to opportunity in terms of negotiation, demand, capacity and how we can comply with orders. So we have goods that have huge tariff fluctuations, and we have goods that don't fluctuate in terms of tariffs. They have fixed tariffs. So it depends. We believe it's a standard level overall. We are currently discussing certain aspects. In the past period ever since the grain Odessa corridor was started, we have had discussions in this regard. So there was an increase. And 10 days ago, we had, for example, ships on that corridor. The price has increased, the goods price increased. Yesterday, we had another ship in terms of grains that also reached the corridor. So we're discussing about the middle section of the Black Sea. There was a slight reduction in general, not necessarily referring to us, in terms of Constanta flows. Oltenita as well has viewed -- has gone through certain reductions. But up to the end of the year, the tariffs are overall as they were this year. For next year, of course, we are negotiating in terms of renewal of contracts as of January 1 in light of the fact that we are currently having these negotiation discussions. And we're going to discuss next month about grains for certain goods volumes. And of course, there are goods that are valued up to the first quarter of next year. So when we can consider relating the negotiations. So it's the merchandise for Ukraine and with Serbia. And here, we expect that this year, we will have reporting on the stock exchange on the volumes. So you will be informed in due time.

The fifth question we have. It's about the [ spot ] operating utilization of the terminals. If we can see a further increase of the volumes in the spot operating.

This is a very important question. It's a complex issue and it's very hard to answer, but the short answer is yes. There are elements that are related to the infrastructure, equipment, but we have the floating cranes. And after the testing of these cranes they have a special performance and they sustain our strength in volume. And the merchandise that goes to the crane has to come in time we have in Constanta harbor. We don't have enough of them. And then the second reason, we cannot provide the merchandise to the cranes continuously at the speed of operating of the cranes. So the goods go to Constanta. It's the maneuvering stage. The terminal is overcrowded right now. So there's marginal hours of waiting. So we can state that where we're also using our own barges, the crane capacity is 50%. And we are happy when it's above 50%. Yes, we see an increase in volumes. This is also valid for other terminals in Constanta. We're talking about the commercial capacity. Canopus is going -- is performing extraordinarily this year because a lot of goods are transported by road, by trucks. So the conditions are a lot better than last year. And we are budgeting a record year from the volumes of growth that have been transported -- that will be transported. Again, the answer is yes, we will see an increase in volumes. I believe that I will also answer the next one.

If we have an overview about the investments in barges and the modernization of the Decirom cranes in 2024.

Before answering, I will state the fact that I believe that you viewers remember that in the issuance prospectus, we stated even afterwards that the Navrom fleet has the modernization phase in the planning. So we have the barges of 3,000 tons have been covered. And we have this capacity barges. The second program to increase and covering the barges of 2,000 tonnes. And this also increases the transport capacity. It's a lot more complex. It also entails the increase in volume of the barge, and we need to replace the ship 70, 80 are in the fleet. It's an old model the actually they're from the '80s, '90s, but they're obsolete. And we want to replace them all the barges in these barges, what we can buy -- acquire from the market, there was an auction and we bought a few barges there. We are talking about new buildings. And finally, we have facilities where to build these barges. So the second barge of the set of [indiscernible] this year was launched. And it was already launched on water. We don't know if the other 2 will be launched this year, but it's not at the beginning of the next year. We budgeted a lot more for next year, but 4 were accepted. New barges, brand new. The same, we are looking at the market if we can buy even more barges that can fit in our navigation system, we will buy them. If not, we will continue building barges also in 2025 as long as it fits in our development model. Our target is not to increase the fleet. Our target is to replace the ships with barges. So there will be less -- smaller [Audio Gap] for utilizing and there was also a big shorter periods of time in unloading and loading of goods. So there's a lot of manual labor there and unloading a barge can be optimized. So talking about modernizing the cranes from [indiscernible], the third one is operational. And we can see that in the development we do not consider now investing in other cranes in Decirom for the time being. We will work with what we have now. So we have the operations towards the shore and towards the sea with the current fleet and Decirom has direct operation in storage or directly to trucks. And in the following days the investments to the storage facility will begin because the project has been a bit redrafted. It was first thought in a traditional way of thinking, we redrafted the project. But about the concept and about the destination has been changed to a destination that's closer to [ Revolata ]. And in the following days, they will start operating the execution. And we see the storage facility being finished by the end of next year. And we will talk about equipment. So we cannot promise full operation process from next year. After this, we are going to analyze how we can start using the equipment. There are investments that have been carried out in mobile equipment such as accumulators, all sorts of specialized installations that we use in our operation activities. And we are going to include them. What we had envisaged in the program are functioning, and it's a long process. So it's going to take some time, and we don't want to rush it in any way. And I said that was the last question. We answered the last question as well. How do we envisage Decirom in the following year and years. So in terms of port operation, as we stated, we know that in this area, we don't open or shut off the light. A lot of investments with modest requirements. So please analyze the term one from a positive view in terms of relation to the investments. So in terms of Decirom, we see -- we envisage growth. This year, we have followed the monthly development, and we saw that there are higher revenues as compared to the same period from last year, but we are not trying to force the situation or the growth because any forcing of a situation leads to unbalance.

Thank you. Would you like to add something more? I was reading the questions we received in the Q&A section. So we have Zoom questions as well. Mr. [ Caos Rapano ] congratulates us for the results. He wanted to say Hi and thank you for answering these questions.

Mr. [ Mihano Delgo ]

Congratulations for your results. I have 3 questions. One, what will be the impact of the cranes that entered into production in September in the port operations segment? Should we expect a reduced increase of a 1-figure increase of port operation? Or are we talking about a higher increase, such as 20%, 30%, 40%, thanks to these cranes?

So part of the question was answered previously. So port operation is conducted based on 2 pillars. It's for a part of the goods, for example, goods from Ukraine. I told we -- we have told you about the situation. So transport is ours, maneuvering our, equipment ours. So things are going well in this regard -- in this is area of activity. These activities can substantially support gaps in terms of goods in the future. The second line of operations, we work with fleets belonging to third parties. And these third-party fleets we have a lot of collaborators with smaller fleets that collaborate with us in the sense of public service. But it's not a public service in the sense that it's conducted by the state, but the prices are good. So there are people who have smaller fleets and they collaborate with others. And we have an issue here because as I stated before, if we have used performance of 50%, we are happy. But here, we can't intervene when it comes to these third parties. Overall, the contribution of the 2 cranes cannot be computed at 10% or 40% because it depends on a lot of factors involved. If we are to analyze their nominal power and capacity, yes, we could say we have 2 cranes out of 10, so in addition to 8, we had, and we could say that they bring 10%, maybe over 10% increase in nominal terms. We're talking only about ourselves, not about the general activity. Nominal power is one thing. And what we achieve in our activity is something else. I want to give you an example. I had an experience in a terminal with a crane of our own, not one of the new ones, so one of the old ones, which are comparable to the new ones, of course. Still the crane worked 1 day. One crane care worked on a larger ship and another day on a smaller ship. And it worked 8,000 tonnes. So this happened on a barge for 1,500 tonnes of goods, it works 4, 6 hours for the respective barge. So it all depends in terms of how the facility works itself.

So the second question, what is the impact of the low level of Danube in October in terms of revenues and profitability for TTS?

No, we haven't done these calculations and we can't do them right now. We have to see the situation. We normally carry out computations in terms of average efficiency for 1 year. Based on this computation, we reach a tariff. And if there are certain differences, of course, we collect, we charge those surcharges, namely percentages that are applied in terms of each 10 centimeters decrease of the water level. So we have a protection option if the water decreases too much.

The third question has been answered. The barge is acquired from [ Severna ] will increase the fleet of barges of [indiscernible] or will they replace all their barges.

So we answered. We want to mobilize the fleet, and we want to eliminate the old obsolete part and, of course, have a more modern replacement.

Mr. [ Andre Pucaragio ].

Hello and congratulations for your results. How is the activity going in light of the continuation of attacks of Russia at Ukrainian ports and on the Danube? Is your position still the same that TTS activity is not affected?

Yes, it's a good question. So for over a year, we were under the impression that certain ports will not be affected by the war. On the day of the first attack on Reni report, it was a shock for us. It's a strong shock for us, but especially for those who have to reach that port. We have 2 advantages. The first advantage is that we don't have a lot of production going through that port. And the second advantage is that we do not have self-propelled ships. We only have barges. We have a mechanism. I'm not going to go into detail, but we have a mechanism. The barges stop in international waters, such as my port and Reni. And then they continue their maneuvers in terms of barges in certain areas. Of course, there are patrols and they intervene some tanks for maneuvers, but this is not a common occurrence. So this is the situation. We only had barges and people expose or not to -- of course, if we have issues, then yes, the situation is different. But in terms of procedure, we don't have any type of exposure in this regard. In the beginning, it was easier to say that we were not affected by the Ukrainian activity after Izmail and the other port, and we saw that navigation means were not affected. We slowly got accustomed, let's call it like that, the people there got accustomed to continue their activity, but with protective measures in place. So we don't expose our people to areas that are dangerous. Our people remain in Romania or neutral areas.

The second question. In the conference for the 6 months you mentioned that [indiscernible] works at full capacity on the first port and port operating income, which is the situation.

Now it's the same situation. And aside those ships, which are on hold right now, the fleet is working at full capacity. We don't have any bottlenecks. No, vessels are waiting to be utilized. 3 months was the period that some barge has waited in Constanta with the grain. It was a lot of time. And if we don't take into consideration the waiting time, the whole fleet is in full capacity. This is also valid for the floating cranes in Constanta. Of course, there are some wear and tear that need to be fixed. The cranes are being utilized continuously, and we have used a lot of this and those that were not used by Decirom, that were used in the transshipment directly between the equipment. So we did not use those both because they were not needed.

With the information available at this moment, how do you see [ 30% ] activity in Q4, but also in 2024?

We already answered this question.

Looking at the interventions past considering the flow situation after closing the war, you mentioned that the old route to be used might take 2 to 5 years? Do you still think the same?

This is an issue of board infrastructure. And we are basing our judgment on others and the optimists are saying 2 years that it might take this process, the pessimists 5 years. So this is the information we have at hand.

Hello and congratulations for your results. We also saw a decrease in the raw materials, expenses and top contractors, what happened?

A lot of the raw materials are close [indiscernible]. And we could see a decrease in the price.

So the future about the fuel cost is uncertain, of course. But despite that we could see a decrease in the fuel cost in the latest 4 to 5 weeks. We could also see that in the gas market. It's very hard to estimate the fuel cost. We have Rotterdam as a benchmark. And we saw also the path resid, EUR 140. We are computing this actually as an average as a weekly average, and that was the maximum last year. And now we could see EUR 108, EUR 110, we can see constant here. We cannot estimate what will go.

We could see the adjustments between the segments increase by 800 basis points from 47% to 55% and the share of the revenues. Do you have a target for third indicator?

Between segments, if we can see that the revenues increase, of course, we could see that also in the intersegment.

We [indiscernible] and here we have acquisition, the software side, the operational architecture. But a lot of our actual activity is performed by the companies within the group. They are independent, yes. But these are the assets of the group. Now from the fleet due to the work our activity with the parties decreased a lot in order to export the grain from Ukraine ports. We have our own terminals, but we also have [indiscernible], which is a partner. We are talking about 1.5 million tonnes per year, but this is not part in the intersegment side. We have Canopus [indiscernible] which is also the part of the group. The large side of the execution is being performed by the companies within the group. I don't know how much exactly. So we're talking above 50%. This is an advantage actually that we do not rely on other parties.

[Mr. Jokoyo]

Looking at the salaries cost, can you state if their influence -- they're influencing the consolidation of the Decirom towards the evolution of the workforce.

The salaries from August and September were consolidated. We have an increase in workforce. We have 1,700 personnel compared to 1,500 last year as a component of expenses we have 82% from what we have budgeted. But also with the revenues, we are at 90% of budgeted. As a component, 80% of the expenses have fixed component, and this rest is variable. We are talking on a consolidated level.

Do we have any forecast?

Yes, we expect the variable component to increase a bit. And of course, we will see an overlap with the expenses related to the personnel.

[indiscernible], please.

You mentioned a share increase. Do you want to perform that in 2023 or in 2024?

In 2023, we cannot do that because there is no more time. So we might see, yes, so in 2024, yes. In 2023, it has been deferred to the first quarter of 2024. We wanted first the reimbursement of shares to be performed. This was the strategy. We talked about the share increase, but we consider that the redemption operation is more important to finish that activity that was approved in the GMS last year, and where you're considering options on stocks. And today, the redemption was approved, which means that in the following months, we will implement this. And we are considering the share increase, but because we had this redemption process and we think the GMS will be notified in the first half of 2024.

In relation to question 1, can you mention something about subcontractors?

They are usually related to revenues, but they are never going to increase -- grow as revenues because certain expenses relate to volumes, certain are fixed expenses. So it's clearly a growth there, an increase, but we cannot see something significant in this regard.

Another question. In light of the fact -- in light of the Decirom and higher productivity, do you expect the weighting of intersegment to increase, to grow?

We don't know. The waiting. It's difficult to say. When we are strictly discussing about Decirom up to the acquisition itself or up to the moment when we knew the acquisition will be carried out, we didn't have any relation with them. So we didn't know a lot of -- so right now, we can't bring your figures in this regard. We have to analyze. As of June, July and especially August, since we started the consolidation or ideas with the Decirom increasing. We're not talking about huge figures here, not huge increases, small. Our intention with this integration of activity is that we mentioned beforehand we will become a client of Decirom where do we want to end up. We don't want Decirom to do everything through us. We are undergoing a renewal process in terms of contracts for next year. But in certain areas, there will be interventions after these operations. Here, we don't have a list mechanism to tell you this is how it's going to be done. Each contract is going to be negotiated, discussed, and it's going to be very individualized. So in terms of values of inter segmentation of TTS and Decirom, there will be an increase, but we don't know exactly up to where.

So subcontractors decreased in the last 2 quarters, yes. it's the reversal of the increase or growth in the intersegment because operations increased with companies from within the group. So operations with third-party collaborators decreased.

Mr. [ Sakani ]

Congratulations for excellent results and thank you for your responses. Related to SOP, do you have performance criteria based on which you are going to grant shares or will you divide them towards all employees?

There is a combination of the 2. As a first package we want the first package to be given to the management in the group. But what we have managed to do up to the listing the success of entering the capital markets. The second plan -- the second pillar of our decision should be compensated with a license indicators from the top management and the management, both in and the subsidiaries and the very small share will be related to normal everyday work activities. So we are considering performance indicators that will be applied and the business plan is to make an estimate for the following 3 years. The second quarter from 2023 as compared to the second quarter in 2020, it was about the subcontractors. And afterwards he thanks us.

We also have the person wishing to ask a question live. [ Ivana Derek ]. We don't hear the question. You could be on mute. I requested the participant to open their microphone. So the person is not responding. If there are questions...

What percentage of Q3 revenues come from the Decirom?

Okay. So that was the question. Not significant. Insignificant. Another question. How do you see the activity of the group in a context lacking war? So a couple of days ago, we had a discussion with the General Director from the metallurgy installation and we talked about this topic and we reached the following conclusion. When the Ukraine war started, nobody knew what the effect would be. The effects were, on one hand, the closing of certain metallurgy installations, the closing of raw material flows from Russia, minerals, coal, fertilizers and so on and other flows that could not reach, for example, Galati or other installations. And of course, there was a lot of an increased hike in terms of prices. But after a period of time, the Ukrainian army intervened, especially in terms of grains, fertilizers, from Ukraine and there was a huge pressure on the market. All prices increased, all costs increased, especially cost in terms of salaries, which were, of course, completed by inflation. So this increase in terms of the Ukraine situation and this overwhelming volume of goods had an influence in Constanta and on Danube. And it was a snowball effect. So we increased volumes on the Danube, which led to increase of cost and in light of the Russian situation also this was a snowball effect. If tomorrow the war ends, believe us, nobody knows what would happen. There are analysts that we follow and some of them are optimists, some of them are pessimists. [indiscernible] between 2 and 5 years to come back to the situation pre-war. But if the war ends, we have no guarantee that metallurgy installations will fully restore their activities and the volumes on the market will recover and the Ukrainian goods will disappear from the market. So we don't know. There are a lot of questions that we are currently analyzing. And we have certain scenarios, potential scenarios drafted in terms of reactions on our side, depending on the trend and direction of these activities, but we can simply adapt to the market. That's all we can do. What we have done up until now is we try to continue our collaboration with clients prior to the war. We didn't give them up. Of course, we don't expect port operation as before the war, but we have high expectations. Maybe 100%, 80% over 50% is great for us in terms of recovery. We don't want to lose clients in terms of the market on more eccentric routes, let's call them further routes. So we are -- we want to protect ourselves. We want to preserve our clients in light of tomorrow with whatever that they may bring. But we believe that we have quite a good response time and reaction time in terms of market developments. We're going to see.

Another question at the presentation of results for the first quarter of 2023, you were surprised by the results, especially for Q1. Right now, based on the data that you have and contracts already signed, do you believe that the rhythm, the pace of the results will be maintained? Or will we come back to a normal seasonality with first quarter weaker than the rest of the year?

I think I answered beforehand. We were optimistic at the time. So there was an endorsement last year. 2023 is going to be near with huge cost increases, especially in terms of salaries, energy and so on. For us, Q1 was a surprise because as you very well stated, traditionally, Q1 wasn't great. We were surprised by that quarter and its development, especially in light of the fact that it came in a moment when team started to go back to a normal course in Q2 and Q3 and Q4 seems to follow this trend, we seem to be on a normal path. If and when we are going to reencounter seasonality, we don't know. Right now, our figures that we have right now look good, and we are ready to adapt to any change that may occur or much on the market such as the start of the war. If something like this, if such dramatic changes occur in the future, we are going to see how we respond on the short term, medium term and long term of course.

I would like to highlight something. We have a context that is influenced by a lot of things we can control. These circumstances we are operating in acquisition of the Decirom and acquisition of the 2 cranes represented a positive factor for the activity carried out by the company because it allowed us in those circumstances, which were complex and filled with difficulties to have an additional capacity that we could make available to our clients in terms of port operation, operation in general. And even if we can't reach a load at the level of nominal capacity for a port crane, the fact that they appear at the right moment was a happy occurrence that completed the efforts for the acquisition of Decirom, and that's how we were able to tackle and respond with resources, this additional demand that appeared on the market. We consolidated the capacity of Decirom. But by means of the existence of these 2 additional cranes, we could operate ships in direct quarter operation. So in the future, I believe that we are going to identify solutions whenever needed. And if we ever encounter ideal work conditions, then the results could go even higher. But our group's -- our group's history is a long one. And we don't -- we've never had a year without complex issues that hinder our activity. Patients are never the same. They always change. But this entire complex is under control. The power of the group in general is generated by this combination of equipment forces that we have and transaction capacity of TTS that creates the architecture of the transport operations. So thank you. This is what I wanted to mention, to add so that we can all better understand how our activity has carried out. No other questions?

One more question.

Another question. Share capital increase, how large will it be? What will you use the money for in light of the fact that you have a net debt in the negative side? And it would be very easy to finance via a bad debt investment.

Okay. So the share capital increase, we envisage will be similar to the one that took place last year, namely the granting of free shares for shareholders in the form of an exceptional dividend express shares. So we are not talking about capitalization. We are talking about the distribution depending on the result, depending on the reported results in the form of free shares for shareholders.

If there are no other questions, thank you for your participation and we are going to see you at the next video conference. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]