Wilh. Wilhelmsen Holding ASA (WWIB.OL) Earnings Call Transcript & Summary

Good morning, Christian, and welcome to everyone listening into this webcast. It's been an exciting quarter. The geopolitical backdrop is pretty challenging to say the least. Everything that's happening on the security front, on tariffs, et cetera. It's a very, very difficult environment to navigate. But I must say the Wilhelmsen Group has fared pretty well during the quarter. Do you agree?

Totally agree, building sort of solid in the balance sheet. Good performance from basically all our sort of different units. So I totally will agree that we have had a good quarter -- second quarter in '25.

I must say it's a little bit say, challenging or interesting to operate with nearly record results with nearly 1 of the most difficult backdrops that we have, but that's the situation we are in. And with that, I think we should move into the second quarter. So as you can see, I will start off with the net profit for the quarter, $250 million for the group, which is extremely strong. We had, I would say, satisfactory EBITDA from the operating entities of New Energy and Maritime Services. We'll come back to that a little bit later in the presentation. We've had very strong contribution from associates in Wallenius Wilhelmsen and Hyundai Glovis, amounting to $197 million for the quarter. We've also gotten an approval from the AGM to cancel some shares and also the mandate to acquire additional shares, which we also did during the second quarter, close to 335,000 shares. We also increased the ownership in Edda. I'll come back to that a little bit later, but we are now close to 38%. And we paid the first dividend of NOK 12, and the Board has the authority from the General Assembly to distribute up to additional NOK 8. So all in all, just to make a quick summary, I think the second quarter has been strong for us as a group.

Totally agree.

Then looking at Maritime Services. It's pretty flat, flat quarter-on-quarter, down year-on-year. This is very much due to revenue recognition in -- related to ship management and the acquisition of Zeaborn. I think we would have liked to see a little bit, say, upward pressure on both top line and also on margins and EBITDA, landing for this quarter at 13%. But overall, the operating sales side operations of the business is running pretty well. Then looking or moving ahead to New Energy. I would say it's a surprisingly strong quarter for New Energy, very strong operations and activity level for NorSea Group and across all the bases along the Norwegian coast, landing then at revenues of $100 million for the quarter and a strong also EBITDA contribution from New Energy and then again linked to NorSea Group. There's a small goodwill impairment during the quarter and some pretty good contribution from associates within New Energy. Just looking at that from a breakup point of view, it's roughly $2 million from NorSea, $3 million from Reach and the remaining from Edda. And again, as I mentioned initially, increased the shareholding in Edda Wind, and the company was then delisted in this third quarter at the beginning of August. And I think that process has been, say, according to expectations. Just stopping briefly at Edda, a market leader in its segment, supplying vessels to the offshore wind mill service industry, 8 vessels on water, 4 under construction. I would say, a pretty sound order backlog, but of course, still open capacity. We invested initially in 2020. So 5 years ago in this company, and it's been somewhat of a journey with different partners and also being listed on the stock in exchange now delisted, $156 million altogether from a book value perspective. But we have strong belief in this segment. And I think it's a pretty nice picture on screen here, showing a little bit of what these ships are all about. It can accommodate quite a large number of technicians. It has workspace, a good, strong crane. And of course, the heave compensated gangway which is important for this industry. So it will be interesting to see how we can develop this company going forward. Holding and investments. As I mentioned, very, very strong contribution from Wallenius Wilhelmsen and Hyundai Glovis, $197 million in total for the quarter, $157 million from Wallenius Wilhelmsen, of course, including the sales gain from the sale of this terminal, MIRRAT in Australia, but still underlying performance and profitability is strong. Hyundai Glovis at $40 million, which is, I would assume, record results for Hyundai Glovis in a quarter, which, of course, is very positive from our point of view. We have $6 million in gain from, say, financial assets. We have $18 million in other financials, which is including the investment management that we do have, which contributed with $6 million. And then we had pretty strong cash inflows during the quarter with close to $200 million from Wallenius Wilhelmsen. And as we started off with, we have a market backdrop which is challenging. The performance for the group is strong. The cash flow from the group is strong. And as you will come back to, we are using, say, this momentum to strengthen our balance sheet, strengthen liquidity. We are a long-term industrial player and we intend to continue to be a long-term industrial player, and we believe it's the right time for us now to build that strength so that we can, say, grasp the potential opportunities and whether the storms that may come ahead of us. And I think that's a little bit also what's summed up in the outlook from the Board, so I will not labor further on that. I'll pass it on to you, Christian, so take it from me.

Thank you very much, Thomas. I think basically, I've covered the total picture very well. Top line in total for the second quarter somewhat sort of 5% quarter-on-quarter and 6% quarter-on-quarter, 5% year-over-year. EBITDA at $48 million. Share of profit from associates with the very good sort of results from Wallenius Wilhelmsen and Glovis. Wallenius Wilhelmsen accounting for $157 million. But you haven't covered is the -- of the financial income, which is sort of at $23 million. And looking a bit back because it's sort of April, May and June, where we had the dollar-NOK challenges or the changes, this is the value of the hedges that we do have on the dollar-NOK exposure. So you will see that the $23 million positive there on the beginning. And you will also see it when you go further down on the comprehensive income where you see a total comprehensive income of $377 million, which is basically then converting Norwegian or other currency assets into U.S. dollars. So there is quite some impact of the U.S. dollar fluctuations in the second quarter. If we can expect that to go on, we will see. But there is a financial hedge in place and rolling as we have discussed in many years, and it's a sort of normal procedure to cover the U.S. dollar, specifically in our accounts and balance sheets.

But it is probably fair to say, Christian, that we had anticipated the dollar to depreciate even further. So it's stabilized a little bit at a relatively strong level.

And into the third quarter, which basically stabilized as we have seen it. Kicking off the year with -- on the cash flow, kicking off the year with $155 million on the beginning, $42 million coming in from Maritime Services. And you could have had some discussions after first quarter, what sort of happens and what happens is that we also build on the working capital when it comes to the Maritime Services. So you could add -- we have sort of invested or invested in working capital of USD 21 million in Maritime Services, building up storage towards the tariff situation, so that we are able to support our customers and deliver for a longer period, not knowing exactly what the structure will look like. So building up capacity will tie up also cash, but good cash flow from Maritime Services, good cash flow from NorSea, and obviously, also very good cash flow from the dividends you just described from Wallenius Wilhelmsen at high levels of close to USD 200 million and close to $30 million coming from Hyundai Glovis. On the investment activity side, you have said that we did on the New Energy investment in -- further investment in Edda wind, so taking Edda Wind in private, close to USD 20 million, $13 million into Reach Subsea converting warrants and also then just short of USD 90 million is cash invested in very highly liquid, but low-risk cash funds in the market with the cash coming in. And you would expect that also to happen in the future as we see Wallenius Wilhelmsen have posed or they have decided a dividend coming in just short of USD 180 million in this quarter as we are into -- as they decided a couple of days ago. Dividend and pay and buyback at $80-some million, where dividend is at USD 49 million and buyback is at the remaining. So we've done 2 buybacks, 1 a bit larger in the first quarter, 1 a bit smaller as described by Thomas in the second quarter. And buyback is a part of our financial policy as obviously also then policy on where to be when it comes to the dividend side. Not so much to describe on the back end, ending at $200-some million end of the first half year. And I might add that the $87 million being invested in the investment activity is at least for me, it's the same as cash, so we could put that on top, but technically, it's in that role when it comes to the cash flow structure. Balance sheet, obviously, also then as a response or an answer to the very good performing business units are increasing. So equity is increasing. The total asset is increasing and balance sheet is strong. So our equity is increasing in percentages or 1 percentage, but also, of course, also in absolute numbers. And the sort of really strong good eye, we'll see that we have changed the word in the top line from a long-term financial structure to a sound structure. The word is basically based on the fact that there are some -- the debt structures are -- have a tenor until 2027. And then long term might be sort of a bit sort of a wrong word. As you will see also from the graph more or less all that in WMS or Maritime Services has been repaid, and that's 1 of the measures when we are receiving cash that we are paying down debt. There are still substantial debt in the NorSea and in New Energy, but we will continue to take down debt as a part of also the cash management structure going forward. But we will, at the same time, in white banks and other institutions to discuss the future of the structures and then the financing structures of the group.

But I think it's also prudent to comment that the communication we have with the banks is very sound, strong with, say, they are positively inclined to support this group, which is very, very pleased.

Definitely, definitely. Thomas said, the first dividend of NOK 12 is paid out in the second quarter, and we did a buyback of 334,000 shares. And with that, we are in line with the financial policy and even more in line with the policies with the range. If the Board decides to pay all the NOK 8, but that's discretion at the Board coming up in the third quarter. So good when it comes to buyback. And as you can see on the right graph, basically at par with 2024. We are also in the process of -- takes couple of months or so, in the process of canceling around 2.2 million shares basically close to 5% of the outstanding shares, hoping that will sort of mature or end up in a couple of weeks or so. So at that point, we will give a note to the stock exchange, what's -- when that's being done. So that's in the process and all the decisions have been made, so we are just waiting for the final decision on that. So that's basically on the balance sheet and on the cash flow side. Back to you, Thomas or back to you, Age, there on the question side.

Thank you, Christian. I think we like to finish off with this picture, trying to give a little bit of a snapshot of what we're doing and our vision that we labor on every time of shaping the maritime industry. And although as we mentioned many times, a difficult backdrop, very difficult to navigate to really understand how this is impacting the maritime industry going forward. But saying that, there are always opportunities. We are seeing organic opportunities within our profile or portfolio. And of course, there will be other opportunities that we are evaluating on an ongoing basis. So I hope we will continue to fare well in the next quarters as well. And if there are exciting news, we will make sure to share them with the market. Age, do we have any questions?