Wallenius Wilhelmsen ASA (WAWI) Q4 FY2025 Earnings Call Transcript & Summary

Good morning, everyone, and a warm welcome to our quarterly presentation. It's good to see so many here in the audience. And also thanks to all of you watching us online. We are closing the books on 2025, Anders. So what can we expect today?

Today, we can expect to hear a little bit about the journey that the company has been through over the past few years and a bit about where we're standing today. So...

We are ready. And then at the end, we will do a Q&A session.

Yes. As usual, there will be a Q&A. The audience will have the ability to ask questions, but you can also ask questions online. We have a new system today. So we hope it's going to work all right.

We know it's going to work.

We know it's going to work, but post your questions in the Q&A box and allow some time before it arrives on this end.

And then we are ready to kick it off. Are we?

Indeed.

Yes. So Lasse, the stage is yours.

Thank you, Anette and Anders, and thank you for joining online and for joining here in this audience. I was asked this morning, so Lasse, when you go on stage for these things, are you nervous? And I said, no, I'm proud. And I'm really proud of being privileged to be the front face today of a team, global team that I think has delivered another fantastic year, another strong quarter and has changed the nature of Wallenius Wilhelmsen. And I'll try to explain why, and then Bj�rnar will help me with that. So let's get to it. Starting with the highlights. We have delivered another strong year, ending with adjusted EBITDA of above $1.8 billion. The quarter ended at $400 million, another strong quarter, slightly below or below last quarter, but still in the bigger picture, a strong quarter. And thanks to the strong results and also the very strong financial situation and our good book of business, we are in a position where we can pay strong dividends and extraordinary dividends, and we are today announcing a dividend of $1.01 per share for the second half 2025. We see continued strong demand out of Asia and the story that I've been telling for the last few years continues. In shipping, we are more or less sold out. We are also continuing to extend our contract base, what we call book of business, and Q4 was no exception. We added another $1 billion worth of contracts. So at the back of all of this, we are still expecting a solid 2026, and we are keeping our outlook for the financial results with an adjusted EBITDA between $1.65 billion and $1.75 billion, which will be another historical strong year for the company. Before we dive into the quarter and the year, I wanted to take a step back and look at the last couple of years because the company that comes out of, call it, this cycle, meaning into 2026 is a very different company that went into this cycle in 2022. And we have changed in 3 principal areas: In our financial position, in our commercial position and in our operational excellence. And I'll give a little bit of background on each of those. On the financial, we were a highly leveraged company a few years back. We have repaid half of our debt in the period at the same time as we have returned more than $2 billion to shareholders in dividends. So today, we are a moderately leveraged company, meaning that we are in a position where we can withstand future low cycles if they come. But much more importantly, we can be a stable long-term player in the industry for our customers. We can act countercyclically when we see opportunities, and we can make sure we deliver on financial policy and keep strong and steady dividends back to our shareholders. We have also transformed commercially and the book of business we have today, when we left 2025 and came into '26, we had a unique book of business, meaning a total set of contracts, both in shipping and logistics far above where we've ever been before. If we focus in on shipping and the book of business, we had a total backlog leaving last year of close to $7.5 billion, lasting for an average 3.3 years with an average rate, so to speak, that means rate per CBM, that's how we measure our income, of $55. If you look historically, the green line here, you can see that, that is way above where we've been historically. So this means that as long as the world continues, and I will come back to that and the volumes continues, the rates we have secured will take us forward on a level that is strong and sustainable. We are sometimes compared to the time charter market, time charter market being how much do we pay to rent the vessel. That's the red line. As you can see, that's not how we measure our income. That's not what creates our income. That's our cost. That's what we pay for vessels. So what we deliberately avoided over those years, we can see the peak of the red was that we did not put on any massive new tonnage, meaning that we were not sustaining these high levels of payments on time charter, which has been very important for us, challenging in terms of prioritizing, but very important. So much stronger financially, I would say, solid financially, solid book of business and also worked to improve our operations. And I would say that today, we are a much more integrated and unified company than we were when we came into this cycle. And also, we have entered quite a few new acquisitions, both in the shipping side with Armacup, in logistics with Syngin and ALS. And we are today also operating effectively as one economic entity across EUKOR and Wallenius Wilhelmsen Ocean. We have started fleet renewal with upscaling our vessels, making them ready for green fuels, and we believe creating competitive advantage for the years and decades to come. We have expanded our network. We have built the biggest terminal in the U.S., I think, in North America in Brunswick and opened that. We opened last week the new terminal in Gothenburg. We have extended our network at the back of Chinese exports into Australia. So we are extending our network to help customers with destination logistics. We have also taken a leap on decarbonization. And I'm very proud to say that in 2025, 50% of the cargo volume we carried our customers paid up for lower emissions. And I would dare to state that, that's rather unique in our industry. And then we have started on a very look-through and deep digital transformation, where we are now investing heavily into making sure that we are standardizing and digitizing operations to be more cost efficient, more productive, more scalable, but also, of course, ready to deploy AI into our operations. And Bj�rnar will come a little bit back to that investment later. So in general, I think it's important to say that although maybe Q4 was a little bit on the lower side compared to our expectations, 2025 was a very strong year. The company is in a very good shape. And actually, our expectations for the market into 2026 is strong. So then what shapes the market. You cannot avoid talking about geopolitics. I'll touch that. Then I'll talk about the driver being the Asian exports and then also on the fleet growth in shipping, which really drives the supply-demand balance. There's no doubt that we are in times of a changing geopolitical situation. Call it geogovernance is changing. And we are seeing now that we're going from a world where we have had, let's say, one global set of trading and where we have had more multilateral agreements into a world which is more bilateral. And I think this is important for us to say the world trade is not stopping. It's just changing. And the fact that some countries are protecting themselves more with tariffs does not mean that everybody else do. And we have seen new trade agreements opening up with EU and Mercosur, EU and India, new trade deals between Canada and China. So what we see is a new emerging trade system with more bilateralism. Like it or not, but it's a fact and trade continues. When it comes to the market we are in, moving stuff that can roll being a car or excavator or a truck or harvesting equipment, that market is, all in all, not growing much. So if you look year-over-year, there are not too many more cars sold in the world, but there are more cars transported. So from 2024 to 2025, the total volume of cars moving on vessels, call it deep sea, increased by 5%. And then if you look at the big data providers in our industry, S&P being one, they estimate maybe only 2% growth into next year. We challenge that. And also, it's important to understand that behind that, there is a big difference in what -- where are we growing and where are we shrinking. So if you take one step back and see, can we trust this number, the answer is no. When we started 2025, the expectation for volume from the year was 15.2 million cars transported, the result was 15.6 million. At the same time, if you looked at the expectation for '26, the expectation was 15.5 million. Now it's up to 15.9 million. Why? Because the Asian export is constantly surprising on the upside, and I'll come back to China. And unfortunately, for European players, the European volumes or the ex-EU volumes are declining. So there are 2 effects there. One, we're underestimating the Chinese growth. And the second is that although the total transported numbers are down, they are increasing in Asia, decreasing from EU, but they are part of the same voyage. So with lower volumes coming out of EU, it doesn't really drive demand for our vessels. But for every single car China adds to their exports, they need more capacity. And they need that on a full round trip voyage maybe lasting for 2 months. So that means that underneath these minor expectations on growth, there is actually quite substantial growth in the demand for our shipping services. And we wanted just to illustrate that out of China. The Chinese car exports have grown tremendously, and they continue to do so. And they've grown, let's say, around about 2 million cars from '24 to '25. And I'll repeat that, 2 million cars in growth in exports, basically needing our capacity to do so. Again, if you look at the forecast for '26 from the official statistics, they expect slower export next year. When we pick up the phone and we call and we check with our customers, and these are public statements, so I can share them with you. If you just take the biggest customer or the biggest players and what they have claimed, this is what we will transport next year and sell next year, you can add 2.3 million cars to that. That is why we believe that, again, China will surprise on the upside. And the reason why it's still so tight and sold out in shipping is that all the added cars that has come in from China has more or less filled up the new vessels delivered, and I'll come back to that. So our expectation for '26 is that we would more likely have a growth similar to the one from '24 to '25 than a negative development as forecasted. So we believe that there are upside in these numbers, and this is also what we see on the ground. When we now look at our bookings and what our customers tell us, we have very strong bookings through Q1 and into Q2. So the big worry has been over the last few years, the supply side, too many vessels ordered and meaning too many vessels delivered. And that is true. We have never, I think, in the history of this industry, taken more vessels delivered than in '25. Still, there are hardly any vessel to find if you want to make a charter. And why? Because more or less exactly the need -- increased need out of China has been matching the increased capacity coming out with new vessels. 2026 will be another strong year in terms of deliveries. But if you believe, and this is an if, you believe that the China export story will continue, which I just showed you, that extra volume out of China more or less matches with the extra capacity coming out of the yards. So we don't see any weakening in the demand for our services, and we don't see, at the moment, any weakening in utilization of our vessels. And actually, what has happened over this year is that the time charter rates after falling for a while, I showed you that earlier on, has now picked up. Why? Because there are hardly any vessels available if you need to charter a vessel. So the shipping market is very tight. The market for our logistics services are very tight in some places, but there's no doubt that we have been affected in the U.S. I'll come back to that. And in the government sector, we have -- saw a little bit of a slowdown due to some factors beyond our control. So if we then jump into the business, Bj�rnar will come back to the quarterly numbers and give you the details. Here, you can see the year-over-year. If you look at shipping, although maybe a little bit below what we were hoping for Q4, if you look year-over-year, the shipping adjusted EBITDA is basically flat. We are delivering at the same level. The reason why, as I just told you, we're sold out. On logistics, we are down year-over-year, partly as we sold a big terminal in Australia, MIRRAT, I'll come back to that. While in the Government Service, there's no doubt that Q4 ended below our expectations and also the year did. And this is basically caused by the U.S. government shutdown. They didn't have people in the office to order our services and also a couple of other factors that came into play. It's not a sign that there is a reduced structural need for the capacity we have in our Government Services. If you look at shipping, volumes are slightly up, and then you would expect to have a stronger quarter. The thing is that this is periodization. So we had much more volume going back from Europe. relative to what was going out of Asia. This is not a general trend. This was a very specific thing for the quarter. So we had higher volumes, but lower rates, thanks to that. And the way it works in the shipping area is that when you take something out of Asia, we call that the front haul, we are paid far more than going back from Europe, which is a backhaul. So if we have, relatively speaking, in the quarter, more volumes out of Europe, the net rate falls, meaning our earnings falls, but that's just periodization. The general trend is fast-growing volumes out of Asia and decreasing volumes out of Europe. And if you look year-over-year at the bottom right, you can see that thanks to increased prices and thanks to more customers and more cargo into trades with high-paying customers, the rate year-over-year is up. So the small dip in the rate in Q4 is not representative necessarily for the year as such. In logistics, as I said, we have not delivered the results we were intending in last year. I would say that with one exception, we sold the MIRRAT terminal in Australia. I think that demonstrated the value of logistics, but that also took out quite a bit of our EBITDA. Then we had 2 big concerns during the year. One was the fact that the Europeans slowed down their exports into U.S., thanks to tariffs and uncertainty. We are big on terminals out of Europe. We're even bigger on terminals into the East Coast of the U.S., we were affected. Second is that the high and heavy, meaning that the construction industry are not buying new excavators or tractors and the agriculture industry not harvesting machines. That sector is slow, and that has also affected into our logistics business. So all in all, we have seen a lower return in logistics. And that's why we have said that we have very much focused now on bringing that business back to a good margin. And we have a clear target within 2 years to bring it back to an operational result of 10% and we are doing quite a few things. We are now looking into reducing costs. So we have reduced costs. We are growing our network, opening new opportunities, growing with customers and also increasing the volumes through the existing facilities that we have. So we have a clear plan for how to improve logistics, and we are not where we are, where we should be in terms of financial returns for 2025. And in government, as I said, we had a slow period in Q4. We do not think that's representative. And we were just announced by U.S. government that they have approved the budget for increasing the stipend we get for running a U.S. operation, which will have a net effect of more or less of $10 million a year, likely accounting for the full 2026. Finally, book of business, another strong quarter in terms of adding contracts, close to $900 million in shipping and $150 million-ish in logistics and building on to what we already have. And as you can see, we are totally sold out for 2026 in shipping. For 2027, we have quite a few renewals this year, but these are many of them contracts that we have had for decades, and we expect to renew them, but it's not done yet. So then before I turn over to Bj�rnar and the numbers, let me touch on sustainability. We are very happy that we are delivering better every year on safety. For us, safety is a fundamental and foundational value that we want to bring people home safe. We had no serious accidents in the whole operation of 12,000 people going to work every day for us in 2025. We're proud of that. And we also see that the statistics for the smaller accidents are coming down. And this is thanks to a very hard work and dedicated effort in the organization and the fact that we have as one of our core values, we care, and we care for each other, and we take care of each other. On the emissions, unfortunately, we have seen an uptick in the emissions. That's partly due to bad weather in Q4. Normally, we have that, but also the fact that we had to increase the speed a little bit to basically catch up with the enormous demand we have from customers. The big picture is that we are consistently reducing the emissions per what we call transport distance, meaning that for every nautical mile we sail with our vessels, we are reducing the emissions, thanks to dedicated efforts in everything from operational technology to physical installations of the vessels, reducing the energy consumption. So with that, Bj�rnar?

Thank you, Lasse, and good morning, everyone. I actually got the same question as Lasse and my response was, I'm proud, but also a little bit nervous and the reason that you have so much energy when you start, Lasse. So I've been told today that I need to have the same energy. So I will do my best, but no promises. Financial update. So let's start by wrapping up the year. So if you look at 2025 as a whole, it's a new fantastic year for Wallenius Wilhelmsen, although it's slightly softer than the record year 2024. But if you look in the historical context, it's a fantastic year that we are very, very proud of. Starting with the revenues, $5.2 billion in revenues this year. It's down 1% compared to 2024. This is, I would say, largely explained by the Logistics segment, where we have somewhat softer revenues, down 10%. The majority of that is due to the sale of MIRRAT and also slightly softer revenues for the auto and the high & heavy business in the U.S. And then we had a soft Q4 for ARC for reasons already mentioned by Lasse. On the positive side, shipping is basically flat compared to 2024, representing the underlying stability we are seen our business right now. EBITDA ended at $1.8 billion. It's around $60 million below last year with the reason for that again being logistics, primarily due to the sale of MIRRAT but then also slightly softer performance for Government Services, while Shipping were spot on last year. Then we have some adjustments to EBITDA last year, 3 main factors. We sold 2 vessels during the year with a sales gain of $28 million in total, which we consider to be an adjustment to results. It's not part of our underlying business to sell vessels, although I know a lot of bankers would like us to sell vessel and to rent them back expensively afterwards. We are not in that business. Secondly, we have used our port fees in the fourth quarter of $21 million. I consider that to be an adjustment because it was specific to the fourth quarter, and the port fees are currently on hold. Then lastly, we had around $12 million related to digital transformation and restructuring costs in the fourth quarter. I'll be coming back in a little bit more details around what this is all about. So if you then look at the adjusted EBITDA, we end up at also around $1.8 billion, $90 million below last year. On the positive side, net profit actually increased in 2025 compared to 2024. And the reason for this is that we had a very positive sales gain when we sold MIRRAT in May, which more than offset the decline in EBITDA. Looking at the financial targets, I will only comment on one of them, return on capital employed ended at 18.4%, so slightly lower than last year, but still at a very, very good level. Then moving over to the fourth quarter, I would say it's another strong quarter, although it's below what we delivered in the third quarter. So when someone talks about softness, I wouldn't say it's soft when you deliver a return on capital employed of 18.4%. That's a strong quarter. Starting with revenues, down somewhat more than $50 million compared to the last quarter. This is largely explained by the Shipping segment, but also lower revenues in Government Services and slightly lower revenues on the Logistics side. EBITDA ended at $379 million. That is a significant drop from the previous quarter of around $100 million. The quarter included, as I already alluded to, a couple of adjustments to the result. So number one, we had USTR port fees, $21 million. Then we also sold a vessel in the fourth quarter. This was an old vessel, more than 30 years or around 30 years old. We had a sales gain here of $12 million. And then we also had $12 million related to digital transformation and restructuring cost that was taken as adjustments to EBITDA. Let me comment a little bit on the latter, and this is following from what Lasse said a little bit earlier in the presentation. During the second half of this year, we kicked off 2 initiatives, which we have put under what we call a cost leadership umbrella. And this is all about making Wallenius Wilhelmsen even better positioned for the future to deliver a good service to our customer and good returns to our shareholders. The first one is about digital transformation. Very simply digital transformation that is about upgrading all our existing systems to be future-proof for the future to ensure that we can become even more cost efficient going forward. The second one is about SG&A cost efficiency, where we are taking some measures here and now to reduce the run rate for SG&A by $30 million with effect from later in this year. This is already in process. So what are we doing on SG&A cost efficiencies? I would say split in 2. One, it has a people impact. We will be fewer people in Wallenius Wilhelmsen in 2026 than we were in 2025. And we're also taking out some external costs around consultants and IT cost. Doing these changes certainly requires some investment. So if we look at digital transformation, we are investing $50 million this year into our new system capabilities. When you look at SG&A cost efficiencies, we will have restructuring costs of around $15 million this year in the beginning of the year, the first half mainly. We consider these to be adjustments to EBITDA as it is not representing the underlying development of the business, but investments that we are doing in improving the business longer term. It's also key to highlight that for both these areas, the business cases are very, very positive and the payback period on that investment is rather short. Adjusted EBITDA, taking all this into consideration, then ended at $400 million, also below the previous quarter and last year with around $50 million, with the main driver being the Shipping segment and the Logistics segment. Moving over to net profit, $175 million, short of what we delivered in Q3 and also the same quarter last year. The driver for this is the lower EBITDA, but it was partially offset by lower financial expenses. And why do we have lower financial expenses? The reason for that is that we have lower debt. So the cost to service our debt has come down quite significantly. The second part is that we had a lower tax expense this quarter with the main reason being that under Government Services, the company ARC, which is a U.S. company, they entered the U.S. tonnage tax regime, which is more favorable from a tax perspective. And then we had a reduction in our tax liabilities and also payable taxes is down around $7 million for ARC. Looking at our net debt position at the end of the quarter, it was around $1.7 billion. So it was down close to $200 million during the quarter. The driver is continued reduction in our bank debt, close to $200 million, of which $125 million of deduction was actually voluntary repayment of debt. Cash, as you can see, was largely stable quarter-on-quarter. Looking at the financial targets, ROCE, as already mentioned, 18.4%. That is actually the same as what we delivered on average for the year. So how can we then be as good in the fourth quarter as we were throughout the year when EBITDA was somewhat on the soft side in the quarter? And the reason for that is that the balance sheet management has improved. We are being more effective in terms of the way we manage our balance sheet. Equity ratio of 42%, up around 2%, 3% quarter-on-quarter due to the positive net profit. Leverage remains at 1x, very stable. And then our liquidity reserves now stands at $2 billion, 2x the minimum target. This was an increase of close to $300 million in the quarter. The driver for this was that we added even more capacity on the credit facility side. This is actually linked to the voluntary repayment of debt as we repaid old vessel debt and we refinanced the vessels into a credit facility of $200 million, where we have the flexibility to draw up and down on that capacity, and of course, with lower margins and also extending the maturity into around 2030, 2031. Moving over to the segments, starting with Shipping Services. Revenues around $975 million, somewhat down quarter-on-quarter due to net freight being lower for reasons already explained by Lasse, although volumes were stable. Looking at adjusted EBITDA, $354 million, that is down around $50 million quarter-on-quarter. Let me take you through the bridge to see what was driving this. First of all, net freight down $38 million. Around $10 million of that was linked to prior period adjustments or adjustments in voyage estimates. We always do estimates of our voyages and how much they are generating in revenues and costs, and then we did certain adjustments at year-end. The rest is explained by the trade mix, but also the fact that we did quite a lot of big contract renewals in the fourth quarter, which impacted the underlying rates in the quarter. So this is what we have talked about lower for longer deals. So very strong value creation in the long term, but we are taking then slightly lower rates in the short term. I would also like to comment on other voyage and cargo expenses, where you see there's a minus $30 million and there is a plus $21 million. The plus $21 million, that's USTR port fees. So the net difference is $9 million. Also in this bucket, we have certain prior period adjustments to the voyage estimate, $5 million, $6 million. So the underlying cost is relatively stable. Also vessel OpEx, that is up $5 million. This relates to the fact that in the third quarter, we had an insurance claim or a refund from an insurance claim of $4 million. So like-for-like, it's also rather stable. Then SG&A, there is a rather big change in SG&A here in the fourth quarter. This relates to the fact that at year-end, we make accrual for discretionary bonus if there is discretionary bonus. As you have seen, we have had a fantastic year, and then we also share with our employees, not only the shareholders. So that's why SG&A is up in the quarter. Moving over to Logistics. Revenues largely in line with the previous quarter. It's a drop of $10 million. This is explained by lower revenues for the Inland segment. This is a business with relatively low margin, so that didn't impact EBITDA to a large extent. EBITDA, $28 million, it's down $6 million compared to the previous quarter. At the same time, I would say that the underlying momentum in logistics was rather good. And why am I saying that? The reason is that you see auto is up $2 million, high & heavy is up $1 million, terminals is slightly down. That's the fact. Inland is stable, while other is significantly up. Other that is SG&A cost. $4 million here is also accrual for a discretionary bonus to our employees we take in the fourth quarter and $3 million is related to changes in SG&A cost allocations between the ASA Holdings segment and the Logistics segment where we go through the allocations throughout the year at year-end. So meaning that the underlying momentum of the business is rather solid, but then we have some extraordinary costs related to SG&A for Logistics segment at the end of the year. In particular, I would say that this is a strong result as one of our key customers had a cybersecurity attack in the fourth quarter that impacted the auto business in the U.S. and also the terminals in both Europe and in the U.S. Moving over to Government Services. Revenues were down quite significantly in the quarter. This is -- as already explained by Lasse, this is due to the 43-day government shutdown during the quarter. Then as some of you may remember, we said in the third quarter that the U.S. authorities activated a vessel in September that took some of the volumes we would typically have a chance to carry and that also had an effect into this quarter. And then Q4 is normally a seasonally weaker quarter, although we didn't see that last year, but that was due to some extra activity with the change of President in the U.S. Looking at adjusted EBITDA, $22 million. So it's -- the EBITDA is actually cut in 2. The main -- or the only driver for that being the especially low revenues that we experienced in this quarter for reasons already mentioned. Moving over to cash flow and the liquidity position. So at the end of the quarter, as already mentioned, we had liquidity reserves of $2 billion. That was an increase of $268 million compared to the previous quarter, consisting of close to $1.1 billion in cash and the rest in credit facilities. Looking at some of the items here. So the net investing cash flow, that was $61 million. This is mainly related to CapEx for our new building program, both the vessels and equipment for the vessel, partially offset by the fact that we sold old vessel, meaning 30 years old in the quarter. It was sold in the previous quarter and delivered in this quarter. Financing cash flow, negative $313 million. This consists of interest payments. The net proceeds and repayments, this is split in, I would say, 3 parts. One is regular payment of bank debt around $60 million, $70 million. Then we had a voluntary repayment of $125 million, and then it's lease payments being the latter part. I think we will jump over the balance sheet because that's already covered. Then the highlights for the day, dividends. Yesterday, it was approved by the Board that we will pay a cash dividend of $428 million for the second half of this year. The dividend is based on 50% of the net profit for the second half of the year, meaning in the upper end of our dividend policy. And then we have added an additional element, an extraordinary element of $200 million, considering the very strong financial position of the company with liquidity reserves currently around $2 billion and a leverage ratio of just 1. So if you sum up the dividend for H1 2025 and H2 2025, we actually returned close to $900 million to shareholders this year, representing $2.11 per share, which we are very, very proud of. The dividend will be distributed to shareholders towards end of March. With that, I will hand it back to you, Lasse.

Thank you, Bj�rnar. You did great. And you kept the energy up, although it's hard to follow some details, but you made it easy. Okay. So I will just finish up with the outlook, and I want you to make sure that when you think of the expectations for Wallenius Wilhelmsen going forward, make sure you have calibrated your view on where we are. We have totally repositioned the company financially. Bj�rnar explained you that. We have cut the debt in half. We have paid a lot of dividends. We have proven that we can pay strong dividends, and we have a strong cash position. We have a strong book of business, taking us years forward, and we are improving the operations in safety, in environment, in digital and in all parts of our organization. So we are expecting another strong year in 2026. The demand from the market is strong. If you believe that the Chinese export story continues, most likely, that will need all the vessels that will be delivered next year. We are working hard on improving the performance in Logistics, and we expect Government to come back to more normal levels after an extraordinary Q4. So we maintain our expectation for 2026 of an EBITDA of between $1.65 billion and $1.75 billion, which will be another very strong year for Wallenius Wilhelmsen. Thank you.

Okay. So our new system is actually working. We have some questions. But starting off with you, Lasse, a lot of the questions are touching on the Red Sea. What does it take to -- for us to go back?

Yes. So take one step back. So the last couple of years, it's not been safe to go through the Red Sea due to the threat out of Yemen and the Houthis in Yemen. I would say that when you look at the Red Sea, you need to think of that in 2 senses. One is, do they have the capability to still attack? Unfortunately, that's still the case. All the capabilities are there. And then they also need to have an intention to attack us. That is, at the moment, thankfully, not there. But as we all know, the situation in the Middle East is volatile. So we are constantly looking at the safety situation. We do not consider it safe to go back yet, but we are preparing. And we know we will go back one day. But as of now, we are not planning to go back anytime soon.

As a follow-up to that, in terms of capacity, what would a return to the Red Sea mean for us?

When we started to avoid the Red Sea, meaning that we had to go all the way through around Africa, getting to Europe, for instance, we said that, that would -- that took 5%, 6% of our capacity out, meaning that we lost 5%, 6% of earning days. When we now study that, we will not get 5% to 6% back due to 2 reasons. One, we -- the world fleet increased the speed a little bit when we started to go around, going back to the Red Sea at some point, probably we'll get back to the same speeds. But even more importantly, the world trade has changed. So over this period, the growth out of China has been bigger outside Europe than inside Europe, meaning that more of our vessels are going to destinations, which are not necessarily getting the full effect of going through the Red Sea. So we are saying maybe 3%, 4% of capacity will be added when we can have a full availability of the Red Sea.

Thank you. Then for you, Bj�rnar. We're starting to get deliveries of the Shaper classes this year. What do we do in terms of financing?

Yes. Thank you, Anders. So we have already financed 11 out of the 14 vessels. So the 3 vessels not financed. There is a natural reason for that. Some of the vessels for last 4 vessels will be delivered in 2028. That's more than 2 years down the road. Securing financing already now is expensive as we need to pay the banks certain what we call commitment fee just to haul that capacity. And we don't want to secure that capacity earlier than what we need as we want to avoid unnecessary fees. The banking market for us is extremely strong. So there's no worries at all that we will be able to finance these vessels. The banks are calling my colleague, Birgitte every day, and we'll probably also call after this meeting and even here, more banks here than investors, it looks like. We will be financing these vessels late 2026, early 2027, and it's just a natural timing to avoid unnecessary fees.

All right. Then a bit of a tricky question, which kind of goes to both of you. We did provide guidance mid-December. We didn't actually reach that. And a few questions goes on why is that and what are the reasons behind the...

Yes, I'll start and then you can finish. The biggest surprise we had was in the Government Service. And I must say that we are -- I mean, we just need to be honest that we were not good enough in understanding the late effects of the shutdown in the U.S. We should probably have been able to see those signs earlier, but we didn't. So we overestimated what -- the results in government. And then the other part, as Bj�rnar touched, was really that we're -- at the end of the year, sometimes you get some adjustments. We have more than 500 voyages during the year. When you close the books, you do an extraordinary check of those voyages and that really results in some previous period adjustments, which we might should have seen also, but we didn't, unfortunately.

But I think the positive side is that the underlying momentum of the business was in line with our expectations.

That's true, except for Government, but that's not structural. We think it was just a one-off.

A follow-up to that is that do we expect an improvement into Q1 then?

Quarter-on-quarter. Well, we have not given any numbers into Q1 yet because there is no doubt that there is still uncertainty, but we are maintaining our forecast for the full year, and that indicates that also Q1 has to be a strong quarter for us to meet that.

Yes. There is also a question around the range that we provide in the guidance. What constitutes that range or what makes the difference between the low and the high point?

Well, I learned from a very clever person that to look forward, you need to look back. And if you look back 1 year and what happened during 2025, and it's when we started this last year, we haven't even changed President in the U.S. and looking at everything that happened through the year and then thinking that you can find one fixed point 1 year forward on earnings in a global business with global infrastructure. We're connected to every country, every trade, every port more or less in the world, that's impossible. So of course, there are uncertainty in our numbers. But as we have said, we have big confidence in the demand for our services.

Okay. Then there is a little bit about the rate development quarter-over-quarter. I mean, I guess some are asking, can we explain what made the rate go down and what will take -- what it will take?

Two main things. And now we're talking about the rates in shipping, right? And there were 2 main things. One was just periodical trade mix, meaning that quarter-on-quarter, you have -- we had slightly more cargo out of Europe versus out of Asia, and that pays less. And then the average rate goes down. The other one was very deliberate decisions that we, together with our customers, have taken on longer contracts. We have announced those where we have longer contracts at good levels, but somewhat below the peak levels that we had when we entered into the contract. So we have deliberately reduced some of the rates to secure longer business, and part of it is just periodization.

There is also a question around that. What -- in terms of longer for less, if we do that, what kind of reductions are we looking at? And what kind of net present value...

Of course, we will not go into every single contract. We have said that there has to be a net present value for us. It needs to be -- we need to be better off. And then our customers right now are very much keen on getting a, call it, cash help on the short term and are willing to add commitments to the long term. We show today that the average rate in our book of business going forward on shipping is $55 per CBM. That is a strong number and historically way above what we have seen as an average. And that indicates that although we are maybe reducing some rates from the peak, they are still historically strong.

And on that, our book of business shows that there is a decent amount of contracts that are going in for renewal next year. What are our expectations in terms of those renewals and given that fleet balance is...

Listen, let me answer more seriously. One, there's no doubt that peak rates are behind us. But as I showed, the demand for vessels, the tightness in the market is strong. Our customers are still concerned about capacity and they're coming early. We have already started renewal discussions in January and February this year of contracts expiring by the end of the year. So we, of course, expect to renew these contracts, not at rates that maybe were achieved in 2024, but at rates likely above what we have had historically. But this is a speculation. These are discussions going on right now. But for the big chunk of what we have to renew this year, as I said, we have done these customers, these trades, these contracts for decades, and there's a strong mutual dependency between us and our customer.

Then one on the Government side. I can go to you, Bj�rnar. Do you expect to recoup the kind of lost revenue that we saw in Q4?

I think that's a good question, Anders. And to some extent, we should be able to do that. But I think that just the essence of the Government business is that it's somewhat volatile. We don't control exactly where the cargo is going. It could be changes on short term. So it's not -- it's very different than the commercial business with regular moves all the time. This business is -- fluctuates more. What we see and what we hear from our partners is that the activity level will remain strong going into next year. But whether that is Q1, Q2, I think that's too early to be too concrete on.

Then on to something that we kind of shed some light on this quarter, which is the digital transformation. We mentioned about $10 million a quarter, which is a meaningful number. What exactly does that entail in terms of what are we doing?

Yes. Well, we're doing a big overhaul of the backbone of how we operate. And I think it's fair to say that we have been doing well at the back of a data and digital infrastructure built 20 years, 30 years ago, but it's not been fully connected, and there is enormous room to improve that. And also for us to use the -- and benefit from the effect of new technologies, including AI, we need a better and common data platform and how we're making sure that all the data we have is connected. We need to connect our own systems better. We need to digitize more of our processes. We need to standardize more of our processes, and we need to deploy technology to drive efficiency and scalability. It sounds like nice words, but what does scalability mean? That means that for every new site we add into logistics, we are reducing the cost of operation for the total operation by adding that. Today, because we have less efficient systems, we are adding complexity and we're adding cost. So this is really about simplifying, standardizing, automating our processes and digitizing whatever we can. And we have a major effort on that starting last year going into '26 and '27. And we have called that program Wall Wil '27, and we think we will be in a good position in the year or 2 forward.

Then there are a number of questions around how do the book of business distribute, but we haven't shed any light on that, and I guess we are not going to do that either.

Thank you for saving me.

So I just need to have a quick look here so that I think we have addressed most of the questions. Bear with me for a second. It seems like we have addressed most of them. But if you were to sum up Lasse, where do we stand? And how do we look going forward?

I think Wallenius Wilhelmsen is extremely well positioned. We have customers that are depending on the global scale we have, the network on shipping, our ability to help them in destination logistics, Chinese players growing fast, they need all the help they can to scale their destination logistics. We are also investing into new areas of helping them with digital services, and we have a unique position in the government business. So we believe that in all our areas, we'll have strong demand. We need to improve our underlying results in logistics. But in general, 2026 will be another strong year. And let me remind you that we are sold out. And if the Chinese story continues, we believe the whole shipping fleet in RoRo will be sold out in 2026.

And I've got a kind of reminder here. Is there any questions from the audience?

Yes.

Anyone? It seems not.

Maybe they chatted.

It could be. I guess that sums it up.

So thank you all for joining. Thank you for joining online, and see you soon.