Wallenius Wilhelmsen ASA (WILWY) Earnings Call Transcript & Summary

Good morning, and a special welcome to everyone here in the audience. Also a warm welcome to everyone watching us online from all over the world. I'm here with Anders-Redigh Karlsen, who is our Head of Investors. So Anders, I will start with you. What can we expect today?

I guess another good quarter is basically what we're delivering. So it's a bit boring, but -- it's good.

It's good. And we will do the usual drill. We'll very soon start with our CEO, Lasse Kristoffersen. He will do the business update. He will be followed by our CFO, Bjørnar Bukholm, who will do the financial update, and then Lasse will conclude that part. And then, Anders, you will run the Q&A session.

Yes. So if you have any questions in the audience, we will open up for that. But also on the webcast, please post your questions in the Q&A session of that, and we'll address those questions as they come. And do remember, it takes a little bit of time before they arrive. So put them in ahead of time rather than later. So...

Good. Then we're ready.

Then we're ready.

And then, Lasse, the stage is yours.

Thank you. Good morning, and thank you for tuning in and listening to us. I will jump straight to the headlines and then take you through some more details afterwards. So all in all, as I said this morning, we are delivering another strong quarter and adjusted EBITDA of $471 million, that is adjusted for a sale of a vessel. We still see that there is strong demand for our services and, in particular, the growth out of Asia continues, and I'll come back to that to some detail. We're also growing our network in logistics. We are partnering with more customers in logistics, and we're proud to announce that we opened 3 new facilities in Australia in the quarter. I'll come back to that, too. We sell the vessel with a gain of $16 million. And then, of course, as most have heard, in the quarter, there were announced port fees in the U.S. They were increased for what we thought was $14 to $46 per net ton, and that has an impact on our operation, on our customers and possibly on our financials, and I'll come back to that. But if you look at the underlying business, that is still strong. We're expecting another strong quarter in Q4, in line with Q3 before we take into account any effect of the U.S. port fees. So all in all, Wallenius Wilhelmsen is performing well. We're delivering well on most parameters, and we also expect to do so in '25 and into '26. So let me then give you some updates on the market. I'll talk you through some highlights from the business and the quarter, and also touch upon sustainability as we always do in the quarterly presentation. Three themes for the market review this time. I will share with you a little bit more about the growth and where does it come from and what can we expect going forward possibly. I will touch on both the tariffs and the U.S. port fees and also the utilization and the balance in the market. So let me start with the overall demand. Deep sea volumes are increasing and are expected to increase in pure volume this year with 3%. And these are in most trades, but there's no doubt that the general trend is that the growth comes out of Asia, that continues, while the volumes going back to Asia, principally out of Europe and the U.S. are reducing. So this is what we have alluded to earlier that we are seeing an increasing imbalance in our business, meaning that we are fully loaded vessels and we have full utilization, and we allocate all our capacity that we can out of Asia, but we're not able to fill up the vessels going back as much as we have done in the past. And the story out of Asia, the growth story out of Asia is China. And as you can see, China have seen a massive growth in exports of cars over the last few years. And since 2021, they have had a CAGR, an annual growth of 33% every year, and they're approaching close to 6 million cars, maybe 5.7 million cars exported this year. If you look on the forecast for '26 and '27, and we use S&P as our main source for that, they believe that the export will fall into '26 and into '27. We are challenging that assumption, and I'll share with you a little bit why. And on the right side of this slide, you can see that there are quite some achievements made by Chinese car manufacturers. And I think we need to start rethinking why do the Chinese car manufacturers succeed. Historically, China was a cost arbitrage. Western OEMs moved production to China to reduce cost. Then there were Chinese OEMs coming online with a cost advantage. Now the reason why Chinese are winning market shares is because they innovate themselves. And if you look on the left side of this graph, this is a third-party assessment of technology leaders in the industry. And as you can see, we've taken out the names for sensitivity. But as you can see, out of the top 5, 4 are Chinese. That means leading in technology, and that's EV technology and drivetrain technology, but not least, digital computing and the cloud technology. So the Chinese producers have gone from being cost leaders to now being technology leaders. They are also many of them fully integrated end-to-end and have full control of their supply chain, and they have their own developed computing capabilities. So we believe that the Chinese competitive advantage in the car market is still there. We expect that to grow. And our base case is not that China will -- exports out of China will reduce over the coming years. And then last comment on China. We cannot think of China as one thing. In China, you have -- I mean, you could very simply talk about China in 2 ways. One, you have established OEMs already at scale, not being technology leaders. They are at the bottom of this slide. And then you have new players not at scale yet, but are technology leaders. They are typically at the high end of this. So some of these players need to get to scale to survive, but they are growing fast. And that's why we are focusing in a lot on being a partner to these Chinese companies. And this is where Wallenius Wilhelmsen comes at its best. If you're a new started OEM, you are starting your exports, you need presence abroad. You need terminals, you need shipping, you need processing, you need distribution, and we're a one-stop shop, and we are quite unique in offering that to the Chinese market. The other key story, of course, in the quarter are the tariffs. One are the tariffs on the cars. And just to put this into perspective, the tariffs on cars have an effect of maybe $4,000 to $6,000 per car imported into the U.S., while the port fees have a cost of maybe $200, $300 per car. So these are very different nature. The problem is that the last comes on top of the first. And of course, this comes also on top of OEMs that are struggling with their performance, with their market shares and also with their financial performance. Generally speaking, although it's not fully implemented and carved in stone, it seems like we have come to a conclusion. U.K. is concluded. EU seems to be concluded as well. They need to approve it first, but that is expected to happen. And both Japan and now Korea has confirmed 15% tariffs. And then there is still uncertainty where we will end on Canada and Mexico. But what you will see later on is that, that export still is strong. On the other hand, on the USTR, that was announced on -- I think it was October 10, and then it was implemented on 14th. And remember, 13th was a day off in the U.S. So basically, the day before implementation, this was announced. And we might have been the first company in the world paying a port fee. We did that on the 14th of October. There are some exceptions to this, U.S.-owned U.S. flag vessels, we have some of them. And also, we can mitigate through different measures. One is that there is maximum 5 -- I mean, you can only get 5 port fees a year on the vessel, meaning that if you are circulating vessels more than 5x into the U.S., you can get an exemption for the last entries. Then last week, there was an announcement that this -- the whole scheme will be postponed 1 year. We have not seen anything confirmed. We have not seen any details. And I can assure you we have made quite a few calls to figure out. So this is not confirmed and concluded yet, but that can happen anytime soon. But until that, we are assuming that these port fees are here to stay, and I'll share with you later on a little bit of the effects of that. Generally, in the U.S., there has been a strong sentiment on car sales. So the import tariffs has not changed the appetite for new cars in the U.S. The recent growth is probably driven a lot by the end of EV incentives, but still, there are quite a good level of sales in the U.S. And we also see now that the production in the U.S. is starting to pick up. We're not on historic peaks. We're still below historic highs over the last few years, but we are seeing that domestic production is growing somewhat. While on the import side, we see different markets performing differently. In general, you can say that the Mexican and Canadian volumes and the Asian volumes out of Korea and Japan are more or less flat. They have decided to keep on pushing for market share and delivering volumes to the U.S. and have not really taken any stance or stop when it comes to the tariffs. The opposite is the case for the European OEMs. As you can see, throughout the year, they have been declining in volumes into the U.S. And this is a trend now that maybe recent months have started to stabilize, but still they are significantly down from what we saw last year. So the loser so far in market share has been European OEMs in the U.S. market. Last item I want to touch on in the market is the fleet utilization and also the newbuilding deliveries. As most will know, there is quite an extensive order book in the RoRo segment. That is starting to deliver. This year is the, call it, the strongest year, the highest year in terms of deliveries. We also have another year next year where there will be more volume coming in. But the update so far is that we are still seeing high utilization, and we have not yet seen a direct negative effect of the new vessels coming in. And to the right, you can see Clarksons assessment of fleet utilization. And in '25, they're still expecting 96% utilization. And then when you see the 100%, of course, that's a theoretical max, but the reality was that for the last few years, the demand has been higher than supply, and that has caused a lot of cars to go into containers. We see that is coming back now. So in reality, we have had a utilization well above 100%. Even though we have a lot of vessels coming in, according to Clarksons, they expect utilization close to 90% over the next couple of years. Historically, that is a good utilization of the fleet. So if you look on the market assessment, there is not going to be a massive reduction in fleet utilization. And through that, you can expect the market to hold up somewhat. There's no doubt that we are beyond the peak. If you look at the more spot numbers on freight coming out of Asia, they probably peaked a year ago, but they are still historically strong. So as you can imagine, there's quite a few things happening around us, and we have here just shown you what it's like to be global infrastructure. Wallenius Wilhelmsen, we are global infrastructure. Whatever happens in the world hits us. And the good news is whatever happens in the world, we're able to manage. And I will not take you through all this, but as you can see, there have been massive disruptions in ports, in trades, in tariffs, now in produce, but we are able to manage through and as you can see, an amazingly strong and stable financial performance throughout these things. And this is due to a couple of things. One, we have a fantastic book of business. I would claim, and that's my claim, that we have the strongest book of business with the best customers in the industry. I think we have the best team being able to adapt to whatever happens. And I can assure you with something happens like USTR, Wallenius Wilhelmsen is at its best. And then last but not least, we have a global presence across the full supply chain. So we're an integrated part of our customers' logistics, and they need us to deliver. So that leads me into the performance for the quarter, and Bjørnar will give you more of the numbers. I'll give you more on the business side. Very briefly, you can see we have a relatively stable performance throughout the years. Strong performance in both Shipping and Logistics, and Government. And all of them are -- well, both Logistics and Government are slightly up, while Shipping is marginally down. I'll come back to some of these factors that has caused this. We are continuing to add to our book of business with the contract negotiations ongoing and what we expect to renew this year, we expect 2026 to be another sold-out year. We have added around $300 million of contracts in the quarter. And we have now a total book of business on Shipping on $7.8 billion and a duration of 3.4 years. And on logistics, it's around $3 billion. So when I talk about our book of business, this is our book of business. This is what we're going to live off in '26 and into '27. Very little of what we do will be short-term spot market cargoes. But of course, we do that as well. On Shipping, we saw a slight decline quarter-over-quarter. That was due to somewhat lower volumes. And there were a few reasons for that. One is that our biggest customer in Korea, HMG, they had a strike for a few little periods, so they had somewhat lower volumes. And also the fact that we have less volumes going east from Europe and North America, meaning that the total volumes are decreasing, although we're completely busy and have full vessels going west. And on volumes, we also see that we have probably passed the bottom on the High & Heavy. And for those who don't know High & Heavy, that is excavators and harvesting machines addressing mining, construction and agricultural industries. We see that agriculture is still weak, mining, still strong demand, and we are now seeing signs of somewhat recovering in the construction sector. So we are not expecting the High & Heavy volumes to go up fast or steep, but we do think that the bottom is behind us. So what countered the lower volumes in the quarter was somewhat higher rates. Quarter-on-quarter, the rates are more or less stable, and you should expect, there's not big things happening. But if you look year-over-year, you can see that we have been able to reprice our book of business, adding close to $2 per net ton in terms of higher rates. And also, we see that we have more trades out of Asia, which pays better than the return cargo from Europe and North America. We have also done some transactions in the quarter, and I wanted to bring this in to show you the value of the book we have on vessels. We have sold vessels with good book value margins. But also we have a significant portfolio of up to 11 vessels on time charters where we have purchase options or purchase obligations, all of them largely in the money. So there is quite a lot of value hidden in our time charter book that we showed some of that value in this quarter, where we declared a purchase option for a 15-year-old vessel below $15 million. And at the same time, we sold 2 vessels, 30 years-ish for a total number of $40 million. So basically, we're buying half the age for less money. And we have plenty of more of these opportunities going forward. Quickly on the U.S. port fees. We are maybe the biggest player on the U.S. market. We're certainly one of the biggest, but we believe maybe the biggest player in the U.S. market, significantly bigger than other players out of the same region, let's say, Norway. So we have shared now the numbers and what is our exposure. And our exposure this year is expected to be up around $100 million. These numbers are not accurate. As I said, this just came to the market. We don't know yet how many calls we will have and when they will hit the U.S. and so on. But in the range of $100 million, that's our exposure. Next year, the total exposure, in other words, in theory, what we can be exposed to paying in fees is somewhere between $350 million and $400 million. So you can imagine these are substantial numbers for us. And then the big but is, of course, we are working actively on reducing this bill. We know we will do that. We know that we will not be in $350 million to $400 million in actual cost next year, but we don't know how much we can mitigate. And on top of that, we are working together with our customers for them to recover these costs for us. And our target is to recover all of these costs, minimize the cost as much as we can and then recover what's left with our customers. It's hard for us to say how much we will succeed and where we'll end. But so far, we see strong understanding from our customers that this is something that we simply cannot carry and a cost that we have not brought to our customers. On the Logistics side, we see somewhat increasing performance. I'll start at the bottom because that's the main reason. We have strong performance in our terminals. In general, we see good volumes and good activity, except for 2 things. That's the auto side in the U.S., which has been a little bit softer and also in the High & Heavy, in particular, in the U.S., where we see that the market currently is soft. But generally speaking, we see strong volumes, high activity in the logistics sectors and also increasing margins both on the auto side and on the terminal side. While on High & Heavy, the margins are falling, and that's basically because we have much more storage than we have actual processing, completing of equipment where -- and that's really where we make our money and that's where we should make our money. I told you that we are growing our business. We have previously shared that next year, we will start up in Gothenburg with the terminal. We have shared that we are likely investing together with Bertel O. Steen in a new facility in Drammen. This quarter, we opened 3 new facilities in Australia. We are, generally speaking, one of the leaders, maybe the leader in the Australian market, both on shipping and logistics. We have grown tremendously over the last few years, and that will continue. And in the quarter, we made a major breakthrough with a very fast-growing Asian car producers. And then you can imagine where they come from, but I can't tell you. And we are now doing their shipping. We are doing their processing, meaning finalization of cars in Australia, distributing to dealers. We're basically their supply chain out of their call it, manufacturing country into the Australian market. And this will add somewhere in $25 million to $30 million worth of revenue that contract alone per year, and we see further growth opportunities with new players coming in. And to us, this is a very good example on how we are uniquely positioned with growing OEMs that need help to establish an overseas presence and also to get to overseas markets with shipping. Quickly on Government service. This is how our business volume and our commercial volumes comes in. So the majority of what we do are U.S. flag required business, meaning government moving cargo, requiring a U.S. flag to move it. Then we have income from the stipends, the stipends, meaning that we have support from U.S. authorities to run on the U.S. flag. And then there's an element also on top, which is the commercial cargo, meaning the cargo that the government business gets from the rest of the Wallenius Wilhelmsen system, normal cargo. And as you can see, we had a good development in terms of volumes and revenues into this quarter, although somewhat down from same quarter last year due to a technicality with U.S. activating one of their reserve fleet, which we believe will come back to rest soon. So in general, we would say that the Government segment is performing well, and we see high demand of U.S. flag cargo. So before I pass to Bjørnar, let me touch on sustainability and every conversation in Wallenius Wilhelmsen starts with safety. And we have on top of our strategy to be a leader in safety, security and compliance, and I think we are increasingly getting there. We are never happy with our safety scores. We believe that we can avoid any accident happen, but we do see that what we do, how we work and how we invest in culture on safety helps, and we are improving our performance, and we are well below our targets for the year. On emissions. We are also doing well on the stuff we can control, meaning the emissions per, call it, nautical mile we're traveling. Although due to the increasing imbalance, we have less cargo on our own voyage, meaning that we have higher emissions per cargo units. That's the EOI on the right-hand side. The absolute emissions are going up, but that's simply because we have more activity. If you look at the emission per vessel per nautical mile travel, it's down 0.1%, and we'll be consistently reducing our carbon footprint and increasing our energy efficiency for quite some quarters and years in a row. With that, Bjørnar, the numbers.

Thank you, Lasse, and good morning, everyone. It's great to stand here today for the third quarter and really, really seeing the consistency in our performance despite the market turmoil and the numbers we are showing and really, really impressed by the organization and everything that we're actually able to deliver in such challenging times. So with that, let's look at the numbers. Revenues came in at around $1.3 billion. It's down 1% quarter-on-quarter, largely driven by the Shipping segment, and we had lower fuel cost surcharges and also slightly lower volumes on seasonality. If you compare to the same quarter last year, also volumes down -- sorry, revenues down 1%. This is driven by the sale of the MIRRAT terminal that we sold in April this year. EBITDA came in at $488 million, 3% up quarter-on-quarter, but that also included an exceptional item with the sale of 1 vessel, and we had a gain of $16 million and that vessel was delivered to her new owners in the third quarter. When we adjust for that vessel sale, we had an EBITDA -- adjusted EBITDA of $471 million. That's on par with the previous quarter, slightly weaker contribution from the Shipping segment and then somewhat better contribution from Logistics and the Government services. When we compare to last year, there is a drop of around $30 million. $20 million is explained by underlying slightly weaker contribution for the 3 main segments and then $10 million is explained by the MIRRAT terminal that we had last year, but we didn't have it this quarter. Moving over to net profit, $280 million. Adjusting for the sales gain, it's $263 million, which compares to $268 million in the previous quarter when you adjust for the $135 million sales gain from the sale of the MIRRAT terminal. It's slightly down quarter-on-quarter. This is explained by taxes. We had higher tax expense in this quarter as we upstreamed cash or took dividend from our operations in EUKOR in Southern Korea, and then we need to pay withholding tax. That was $6 million. That explains the difference. So very, very stable quarter-on-quarter and also comparing to last year, $259 million. So very, very stable performance in a challenging market environment. Moving over to net debt. Our net debt position increased by $150 million in the quarter. This is explained by the dividend of $465 million in the quarter, partially offset by the very strong operating cash flow we had in the quarter and had for many quarters in a row. Moving over to the financial targets on the right-hand side. Again, very pleased to see that we delivered a return on capital employed in the area of 19% to 20%, nearly 2x what we have over the cycle long-term target of 12%. Stable equity ratio at 40%. Leverage ratio remains at around 1x. And then our liquidity reserves at the end of the quarter was $1.7 billion. And note that this also includes undrawn credit facilities that we have with our core banks. Then some details on the Shipping side. Revenues came in just north of $1 billion. It's down 2% quarter-on-quarter, largely explained by lower fuel surcharges due to falling bunker prices. Then as Lasse commented on seasonally somewhat weaker volumes, factory shutdowns in EUKOR, a strike with our key customer out of Korea, but this was partially offset by net freight rates being up 1% compared to the previous quarter. But please note that this was due to trade and customer mix. The underlying prices to our customers is relatively stable, so no repricing effect in the quarter. If you compare to the same quarter last year, it's basically flat, very, very stable. Volumes slightly down, rates are up. Moving over to adjusted EBITDA, $407 million. It's down 1% quarter-on-quarter. A couple of reasons for that. One is slightly lower volumes. The second effect is a retroactive charge of $12 million related to increased stevedoring cost in the U.S. following substantial rate increases in certain imports, double-digit rate increases in percentage terms. So this is actually dating back for the last previous 11 months. So it's a one-off hit in this month. Recurring cost going forward on a comparable basis around $1 million extra per month, certainly not $12 million extra per month. Then we also had a negative effect as the fuel surcharges went down $21 million, but our fuel cost only went up $15 million. Over time, we are fully covered more or less through our bunker adjustment factors. But from quarter-to-quarter, there may be swings as the bunker prices are moving up and down. Compared to the same quarter last year, we see also that our EBITDA is slightly down. This is related to volumes, partly offset by net freight and then we had this, let's say, extraordinary items in the quarter on the cost side. I know some of the analysts has picked up on the vessel cost actually was down in the quarter. This is also largely explained by a one-off event that we got a recovery of $3 million on damage repairs in the quarter. It's relatively -- underlying it's relatively stable on the vessel OpEx. But all in all, a good quarter on the shipping side. Moving over to Logistics. Revenues flat quarter-on-quarter. If you adjust for the sale of MIRRAT, we actually see that revenues are up in the quarter. And if you compare with the same period last year, yes, it's down 7%. But if you adjust for the sale of MIRRAT, it's largely stable also compared to last year. EBITDA came in at $34 million. It's up 6% quarter-on-quarter due to the strong performance for the terminals. If you adjust for the sale of MIRRAT, we actually see that result is up 10%. If you look at the various segments in our business, we continue to see that the auto business is performing below our targets. That is driven by the U.S., while we see that our operation in Canada and Mexico and Rest of the World is doing well. Similarly, on the High & Heavy side, we have a big footprint in the U.S. The High & Heavy market in the U.S. has been sluggish. We are seeing some signs of recovery, as Lasse mentioned, but for now, this is impacting our results in the U.S. For other parts of the world, we see that the performance is relatively good. Terminals, that was the shining star in this quarter. Even without MIRRAT in the quarter, we actually had $3 million better performance from the terminals in this quarter. Part of that is related to underlying strong performance across all of our terminals and then part of it related to specific events. We had some price increases in Southampton with effect dating also back in time. And we had a government grant for our terminal in PIRT in South Korea. So helped to boost already strong results on the terminal side. Moving over to Government Services, where we continue to see that the activity level is good. The results are solid. Revenues were up 6% quarter-on-quarter. That was driven by seasonality. Q3 is typically a stronger quarter seasonally for the government U.S. cargo that we carry. When we compare to last year, our revenues were actually down $5 million. As Lasse pointed out, this was due to a specific event with some of the cargo that we typically carry was carried by a government-owned vessel. We expect that to be a one-off event. We typically don't see this type of reactivation of older vessels. This also impacted our EBITDA in the quarter when you compare to last year as we were missing some revenues that we expected to carry and we had the capacity to carry those volumes. But still, we see that EBITDA of $44 million, it's up 7% compared to the last quarter, and that is due to the seasonally stronger volumes despite losing out of some volumes that we hoped to carry. But all in all, Government Services continues to perform very, very well. Moving over to the cash and liquidity position. It remains very, very solid. At the end of the quarter, we had a cash balance of close to $1.1 billion. It's down 21% quarter-on-quarter due to the dividend payment of $465 million during the quarter, and then we have also done some voluntarily repayment of our debt during the quarter. Operating cash flow, $482 million, with a stellar cash conversion rate of more than 100%. Some of you may ask, how is that possible with more than 100%. That's a technicality into how we calculate it. We calculate that adjusted EBITDA versus the operating cash flow and not EBITDA versus operating cash flow. So that's purely a technicality, but it's very, very strong. Investing cash flow, negative $23 million. So we have CapEx on our newbuilding program, and we have certain other CapEx, but then we had the sale of one vessel that partially offset this CapEx. And on the financing side, it's been a very eventful quarter, negative $740 million. Of course, a large part of that is explained by the dividend. Then we also had regular payments, our bank loans, our vessel leases and terminal leases. But in addition to that, we did $100 million or $98 million repayment on a credit facility. After that, we have no drawn credit facilities in the group, and we bought back $26 million in the bond maturing in March 2026. Reason for doing this is that we want to improve our cash management and liquidity management and not having drawn debt when we have excess cash in the group, although some of the cash is not placed where we want it due to the relatively complex structure we have with EUKOR, government services, logistics and the traditional WW Ocean shipping side. Finally, our balance sheet. As you know, we continue to have a very, very strong financial position, strong equity ratio of 40%. Moderate debt level continues, will continue. Leverage ratio remains around 1, and then we have liquidity reserves of $1.7 billion. It's down $200 million quarter-on-quarter. This is explained by cash down $300 million, mainly due to the dividend. But then the credit facility part is up by around $100 million as we repaid the only drawn facility we had during the quarter. With that, I will leave it over to you, Lasse, for the outlook.

Thank you, Bjørnar. And I will make that short, and we have touched it already. Generally speaking, we see that demand is still strong, both demand for shipping and for logistics in general, there are some weaker signs of auto and High & Heavy in the U.S. But in general, we expect these activity levels to continue into Q4 and that we will have an underlying performance in Q4 in line with Q3. And that is before any effects of the USTR, and we have shown you a little bit of what that possibly could be, but we are optimistic that we will be able to mitigate and recover most, if not all parts of those fees. And then we expect anytime soon any confirmation on whether they are still applying or not. Maybe already today, we will have news in that regard. We expect 2026 also to be another year with high utilization, thanks to a very strong book of business, long-term partnership with our customers. And then again, the uncertainty for 2026 is largely linked to the USTR port fees, the size if they apply, and also our recovery. So with that, I'll stop the presentation and, Anders, invite for questions.

Just again, if you have questions, please feel free to post them in the chat on the webcast. We will start with the few ones. Lasse, you delivered a very strong Q3. Focus is now on the challenges for Q4. What's your thoughts around that?

Well, I think what we can control in our company are working well. And we believe that Q4 will be largely in line with Q3 and also that we will have another strong year in 2026. And then factors on USTR, we cannot control. But I would say this organization has been exceptional in the past on making sure that we have minimal impact of these events. We showed that on historic line. And we also believe that the impacts of the USTR will be manageable. So generally, our outlook for Q4 is in line with what we've seen so far this year, and we expect another strong performance into 2026.

Okay. One for you, Bjørnar. You're now a few quarters or 3 quarters into being a CFO. You came from the company previously, but what is your key takeaways from the current period?

Yes, I think that's a very good question. And I'll probably say it's a combination of 2 factors, if that's allowed. So I didn't expect and you didn't tell me, Lasse, that the world was going to be this volatile with tariffs, U.S. port fees, some customers struggling, some customers doing really well, a lot of capacity coming into the market. So I didn't really expect that. So thanks for that, Lasse. But what I neither didn't expect that in this very, very special market conditions, the ability for Wallenius Wilhelmsen to deliver such consistently fantastic results with Q1, Q2, Q3 actually being exactly at the same level, plus/minus $5 million. And then you are saying, Lasse, that Q4 should be, give or take, in the same area before any potential impact...

You're telling me, Bjørnar.

We agree that Q4 will also be a good quarter before any potential impact of the USTR port fees. So that surprises me that so much volatility in the world, but Wallenius Wilhelmsen keeps on delivering.

Okay. We can start off with some of the questions from the audience. [ Jorgen Liam ] has some questions here. Firstly, he asked about our ability to mitigate and how can we mitigate the effects of the USTR port fees?

Yes. So the mitigation -- by mitigation, then he means how much can we reduce the fee before we claim it from our customers. And there are a couple of things we can do. As I mentioned earlier on, we can put specific vessels into strength, so we can have more than 5 entries during the year, then you are exempt. We also are in a unique position with having U.S. flagged business that we can -- that we're already using in our operations. And then also, we could do other measures. So we make sure that every time we go to the U.S., we can have full vessels. And as you know, this is a cost per net tonne of the vessel, meaning that whether it comes in empty or full, doesn't matter. So if we can bring more cargo into the U.S. and not least more cargo out of the U.S., that would also affect it. So that's the 3 main areas. And then I think we have a list of 15 measures that we are looking at implementing and starting to implement to mitigate these costs.

He's also got a follow-up in terms of what can you share about our conversations with customers in terms of recovery?

We are fortunate. We have customers who consider us being their partners, and we consider them being our partners. And when things like this come up, we have to sit down and we have a good conversation. Those conversations are constructive. They are positive. Our customers largely understand that this is a cost we cannot carry. And then we're currently in the discussions on where do we land it, how do we do it? How much is it really. But I would say, generally speaking, we have constructive, positive dialogue with all our customers.

Finally, he's questioning our math skills. Our math skills.

Math skills, okay.

Yes, because...

That's probably your department, yes?

If we add up $100 million in Q4 in port fee estimates, we say $350 million to $400 million for the year. How do we make that?

I was hoping for that question because it's an elegant one. And was it Jorgen?

Yes, it was Jorgen.

I mean you could have figured this out, Jorgen, but I'll tell you. So the thing is that the port fees start to apply from 14th. So any vessel arriving from October 14 and later will pay a port fee. Quite a few voyages started before October 14. So for every voyage coming in before -- starting before October 14, when they get to the U.S., we pay a port fee. And then for every voyage that starts after October 4 (sic) [ 14, ] we need to take into account when you calculate the result of the voyage, the expected future port fee. So you get the full port fees for the period from 14th of October until the end of the year, prorated for all the days we have. And then also, we have the addition of the voyages starting before October 14. So this represents more than a quarter or a short of a quarter of costs. I hope that was a good answer, but I was happy to...

Yes, I think that was a good answer. We shed some light on purchase options. What are our thoughts around those and what do we do about?

Well, of course, we're not sharing our commercial decisions upfront. We have some purchase obligations, meaning that we will buy the vessels, and we are happy to do so because they are very attractively priced. When it comes to purchase options, that's something we love. We love optionality. In a market with uncertainty, we can choose what we will do or not. The good news is that we have options, which is far below the current market. And for some of these vessels, these are vessels in our core trades with core capabilities, unique capabilities. So we expect to have several of these coming in and that we will actually declare the options when they come due. But that depends, of course, on the market and the need at that time.

Okay. There was a follow-up on that as well in terms of our fleet, but it was related to newbuilds. Do we plan to order any newbuilds?

We have no plans to order any new newbuilds as of now. But of course, as a long-term player, vessels being 30 years -- trading for 30 years, and we are positioning ourselves for future competitive advantage. We always look at how can we develop our fleet. But for now, we're more than happy with the shape of program that will deliver 14 vessels. We will have the biggest, we think, the greenest and the most cost-efficient vessels in the industry. Half of them being 9,300 and the other half close to 12,000 CEU. And this will really put us in a strong competitive position in '26, '27 and '28.

Thank you. Next one is for you, Bjørnar. The question is, what do we plan to do with all our cash? And is the USTR port fees impacting our dividend?