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

We are live. Thank you for participating in this video conference regarding the results for the first half of 2026. We shall start with a brief review of the results, both financial and operational. And afterwards, as you know, we will take your questions, which we'll await for. For the presentation, Tudor, please start.

Thank you. We also have the presentation on the screen. The overall view for the first half of 2026. We have come back to profitability on a recalibrated operational basis compared with the same period in 2025, we have volumes decreasing and revenues increasing, which means a recovering market. The aggregated volume decreased by 3.2%, but the revenues increased by 0.5%. From the aggregated volume, the industrial, mineral and chemicals increased by 2.1%, chemicals by 14.1%. The agricultural products decreased by 17%. We have the increase in revenues by RON 1.6 million. We have a solid profitability. We have operational leverage and expenses, which were recalibrated. EBITDA was plus RON 16 million. The operating result plus RON 22 million. And the net profit increased by RON 19 million. The premises, the hypothesis for the second half of 2026 are the following. The Danube on the navigation is temporarily stopped. This is why we, as a group, we relocated the slate downstream from Cernavoda to Izmail, [indiscernible], and we are shipping towards Constanta because this navigation -- this conditions, the upstream ports have been closed due to this reason about these conditions on the navigation. We have inventory in Constanta Port, but we have a vision about Q4 in 2026 with an improvement of the Danube navigation conditions. And of course, the transport to recover to the ports upstream of Cernavoda. In July, the hypothesis is that we have goods going from exports from Ukraine. For the last quarter of 2026, we look at the disposal of inventory, a gradual one of the chemical and mineral inventory. And we're considering the same attractive pricing conditions for the grains international market. And of course, fuel and energy prices at current levels. We note recovery of the energy coal flow as compared with the winter of 2025, 2026. So we keep our estimates of the budget for revenues and expenses as a group, plus 14.6% in revenues, 69% EBITDA when compared to 2025. And that I say individually, an increase by 10% of revenues and 68% of EBITDA in 2026 as compared to 2025. The first half of this year, we had solid increases in profitability, EBITDA plus RON 16 million. And the operating result and the net profit became [ re-became ] positive, plus RON 22 million of the operational result and plus RON 90 million of the net profit. So we have an increase in revenues and in the profitability. Of course, for -- by optimizing the expenses. TTS has a similar result, plus RON 16 million -- RON 1.6 million. The operational result, plus RON 1.7 million, and the net profit plus RON 0.1 million, although we had revenues decreasing by RON 1.6 million. So we hold the estimates in the budget for 2026. Revenues, RON 746 million and an EBITDA of RON 158 million. And from as a group and individually, we have RON 452 million and EBITDA of RON 48.6 million. For a more detailed presentation of the financial results. I will ask my colleague to present the situation. Thank you.

Thank you, Tudor. With regards with the revenues, the good results origin for the second quarter. At a group level, the revenues are increasing of plus RON 5 million, plus RON 4 million as compared to the second quarter of 2025. The main source, of course, the increase of the chemical good. As a group, at the 30th of June, we are RON 1.6 million above the 2025 and plus RON 26 million when compared to the same period of 2025. At an individual level, we see a more visible increase, plus RON 19 million when compared to the first quarter of this year, plus RON 12 million when compared to the second quarter of 2025. In the last 12 months, we have, as individual, for the TTS, we have a slight decrease of the revenues, minus RON 1.5 million, but we are above the levels of the same period of last year. The aggregated volume, although decreased mildly, shows that the recovery of the profitability was due to the operations of the company. Looking at the profitability and margins, the second quarter, we look at the leverage effect of the profitability. When compared to the first quarter, RON 6.2 million in EBITDA and RON 7.3 million in operational results. When compared to 2025, the 12-month indicators, plus RON 16 million in EBITDA, plus RON 22 million of the operational result and plus RON 90 million in the net profit. The second quarter of 2026 is by far the best quarter in the past 24 months due to the agricultural year. It's the first quarter with the profit from this operational interval. We have an increase of RON 4.6 million and RON 6.4 million when compared to the second quarter of 2025. Looking at the margins, we have an increase, both at group level. Starting with the second quarter of 2025, we only had a correction in the fourth quarter of 2025. And then we can see, of course, a recovery. In the last 12 months, the EBITDA margin increased significantly. TTS as an individual entity, it showed resilience from a trade component, and it was the most stable component of the group compared to the second quarter of 2025, plus RON 1.3 million in EBITDA and plus RON 1.3 million of the operating results, we can see an increase from 2025 by RON 1.5 million in EBITDA and RON 0.1 million in net profit. The second quarter evolution shows the normalization to a more diversified portfolio of goods transported. And an increase of profitability of the assets of the company of the group. From a liquidity perspective, the cash, we have an increase quarter-on-quarter. The best value in the second quarter of 2026, RON 45.8 million as a cash position in the operating segment and at group level, it was -- there's an arrow here, it's RON 94 million, it's an increase. If we compare end of March, end of June, the decrease in cash at the end of the period is not a worsening of the operating conditions, it's about the payment of dividends, which occurred during that period. This is what we had about the financial situations. Thank you, Tudor.

So in the first half of the year, the aggregated volume showed a slight decrease as compared to H1 2025, minus 3.2%. But we see an increase of 1.3% on transport segment, and this partially compensated the minus 6.5% difference registered on operations. Chemical goods had the best performance level, 1.35 million tons aggregated volume ,more precisely 14.1% increase compared to H1 2025 and a more accentuated growth on operation, 18.3%. Mineral goods showed a slight decrease, 2.46 million tons. This is a slight decrease of 100,000 tons or minus 3.8%, more accentuated on the port operational side, minus 0.2 million tons or minus 12.9%. Agricultural goods had the lowest performance. So 1.11 million tons. This is a decrease of 230,000 tons or 17.1% decrease as compared to H1 2025. If you want a more detailed the presentation of the goods, I'm going to allow my colleagues to take on the presentation.

Thank you. Let's start with chemical products, chemical goods. We have a significant growth in Q2. This is generated by the opening of a new production capacity in the lower Danube area. We benefit also from this new production capacity because we offer what we know best, service package that includes operation and transport, and this is reflected in the volumes from Q2. Also in what concerns volumes in the past 12 months, we see a growing trend, and this is not a circumstantial result. It's a structural result because we have a new production capacity added to the market overall. In what concerns industrial goods -- mineral goods, sorry. Moving on to mineral goods. Here, we actually are seeing a stabilization of the market. Yes, we can see a slight decrease, but this decrease is seasonal in nature, and it relates to restocking, we are dealing with old inventory, new inventory and combining the 2. And the development, in terms of the development throughout the last 12 months, we are seeing a stabilization trend in what concerns the market, both in terms of port operation and transport. We see a larger difference in what concerns operated quantity because in H1 2025, we had a lot of circumstantial events. And we had a huge quantity of goods accumulated from 2024 and the beginning of 2025. And what concerns agricultural goods, indeed. Here, we have a weaker overall result or very weak. But this has to be put into context. The context is as follows. So on one hand, we had temporary stops and what concerns are grains hub in Constanta related to the new capacity that I mentioned beforehand. And this has affected the quantity that we operated as reflected in the figures you have before you. We also have to take into the account the seasonal aspect. Q2 is the weakest when it comes to agricultural goods because it comes immediately before the new grain season. And we also take into account the context on the grains market overall. The price of goods also determines demand on the market. And obviously, the quantity that we have available for transport. If we analyze, the evolution in the past 12 months, there is a decrease, but the decrease is not as accentuated. It's not as large, and we have signals that in the following period, the situation that we had last year or 3 years ago will not repeat itself. Remember when the market was affected or partially affected due to grain prices that decreased quite significantly. Moving forward, this was the presentation for the first half of the year 2026 and the premises for the second half of the year. If you have questions, please ask them.

Ms. Irina Railean would like to intervene to speak.

Can you hear me?

Yes.

My questions are rather related to Q3 and the situation that has been created in what concerns the flow of the Danube. And what expectations should we have in terms of profitability for TTS in Q3? What impact, negative impact could we see due to the situation? Are we seeing a postponement of volumes that were affected by this low flow? Or maybe if you can give us more details and context, how do you see the situation? How did the market react? How did competition react in this situation? And the second question relates to volumes or additional goods. Maybe -- I'm sure you know the situation, but we have additional goods that came due to conflict and aggravation of conflicts between Ukraine and Russia throughout the entire basin of the Black Sea. So maybe you have an update in this regard? If it's a situation that TTS can draw some benefits from and how much, if any? So how do you see the situation?

Thank you for your questions. I'm going to try to answer as best as I can. So in what concerns the flow rate of the Danube, and how it affects our activity. Yes. Obviously, our activity is influenced. It's not necessarily a surprise that Danube started to decrease, and it had its moments from the beginning of the year, but this has accentuated at the beginning of summer. How it affects us, it affects us in terms of volumes, namely goods volumes are decreasing in what concerns goods coming from -- via Constanta Port towards other destinations. For certain grounds, we have alternative transport means. We use railway transportation for a portion, then we use barges again, and we continue to the destination for other destination, some destinations are more affected than others. So we accumulate a lot of goods in Constanta and we have a bigger inventory, which will be, of course, subsequently delivered as the Danube recovers its flow rate. This situation created by the lowering of Danube level happens periodically each year. It is a natural effect of the summer time. We have experience in this regard, and we focus when we see that the level starts to decrease below a certain level, we refocus our energy on other areas where we can perform better. And that's why we succeeded in transferring part -- in the lower part of the Danube and continued routes that are still viable towards Galati, the Republic of Moldova and Ukrainian ports. And what concerns the new flows generated by the regional conflict, we have restarted the transportation of grains on the traditional route. We are, of course, we are benefiting from our experience. So infrastructurally, we are on point with everything. But the situation is overall difficult. Of course, it's not stable at all. We depend on the development of the conflict of the region. So if they will restart export via Ukrainian maritime seaports, what is happening with river ports in Ukraine due to drone attacks. We are obviously monitoring the situation closely. And we are trying to continue with the business as usual, and we plan on continuing what we do best to transport and operate goods.

I would like to also add something in terms of profitability. The fact that we have maintained as targets for 2026 the values that we estimated at the beginning of the year, taking into account the premises that we mentioned, the flows, the Ukrainian flows that started to reappear, taking into account a staggered disposal of inventory as of Q4, and what concerns Constanta and, of course, all of these things affected by uncertainty. You are all accustomed to this situation, and what concerns the war in Ukraine. But still, we maintained our profitability targets and our revenue targets from the beginning of the year, which entails substantial growth as compared to 2025. So that's where our vision lies in what concerns what the second half of the year will look like for 2026.