Wallenius Wilhelmsen ASA

OSE:WAWI

Earnings Call Transcript 2022-Q3

[Lasse Kristoffersen, executive]

Yes. So good morning, and welcome to the Q3 Presentation of Wallenius Wilhelmsen. I'm sorry, I put on the Johnny Cash voice this morning, but it hopefully would hold. I also welcome to you on stream. Together with me today, we'll have Torbjorn presenting the numbers and we will have a Q&A together at the end, as we always do. So we follow the same sequence. We will have a presentation and then we will have questions both from the room and from the stream.

So let me then briefly start with the highlights of this quarter. And I'm very happy to say that this is the best quarter on record for Wallenius Wilhelmsen. Both in terms of revenues and EBITDA, we have a very strong performance. Torbjorn will tell you in detail what it is. And I'm very happy to see that we are improving in all our segments. We can say that we are totally sold out in shipping. This brings us to a very solid financial position, and we today have a net debt-to-EBITDA of 2.3x.

On the organizational side, I'm very happy to share that Wenche Agerup will start as the Chief People Officer on November 21, and we actually have Wenche in the room. So Wenche, if you could show. Then also, we just announced that Xavier Leroi, who have been in the company for a while, yesterday took over as the COO of shipping. And shipping is, of course, a very important business area for us and he will be based out of Seoul as of January 1 next year.

We also announced that we now have no remaining provisions for the antitrust case as we have concluded the last settlement with -- the last known settlement with customers. And with this, we can finally put the antitrust case behind us as an organization. We are still fighting -- sorry for my voice, we're still fighting class action claims in Canada and the U.K., but we consider this to have no merit and we have made no provisions for them.

And I think it's fair to say that this has been a very challenging case for this organization. It was against the law. It was unacceptable and it was also a breach of our own rules and procedures. The provisions and settlements have been reported according to the case development. And in total, this case have costed us close to $900 million.

And I'm very pleased to see that we have moved on with all customers. We have made new contracts with all customers and I consider us today to have very strong relationships with all our customers in our business. And just to be very clear, compliance is my responsibility. It's ultimately the CEO's responsibility to ensure that we are in compliance in this company. And measures have been taken since 2012 to build compliance both in terms of compliance framework in this organization and compliance culture. And I can assure you that I will do all I can to make sure that this will never happen again in Wallenius Wilhelmsen.

So then we're moving into the presentation. And the agenda is as it always is. We're starting with a little update on the market. Then I will talk you through shipping and logistics, share a few perspectives on sustainability before Torbjorn talks about the numbers and we will have a quick prospect in the end and then a Q&A.

So starting with the markets. We see growth in all our segments. And the light vehicle sales are growing. Here, you have the numbers quarter-on-quarter. So in total, the light vehicle sales in the world grew 10% from Q2 to Q3 and the seagoing volumes grew about 6%. And we are expecting this year that the total sales in the world would be around 80 million cars. The stronger growth we see in China.

And -- but in general, we are now seeing that the supply chain issues on particular semiconductors is easing, meaning that the volumes are picking up. And next year, we expect that the world sales will grow somewhat and best estimate we have today is 83 million cars. There is, of course, a macroeconomic environment that will affect also the light vehicle sales. And the forecast for next year has been somewhat adjusted down recently due to some demand distraction.

So the general economic situation will also hit the car sales of the world. But we have then to remember that we are now already at a very low level. If you look on the graph to the right, before COVID, we saw there was sold around 95 million cars in the world. We are now at 80 million, and there is a significant pent-up demand for cars in the world. So also car sale will be affected by the macroeconomic environment, but we believe less than most other segments.

Around 30% of our transport is on high & heavy and breakbulk and in high & heavy, which are big machineries, I'll come back to it, we are mainly in 3 segments. We are serving the Construction segment, the Mining segment and Agriculture. And in all of these, we have seen significant growth. These numbers, mind you, are year-on-year because of seasonality in this, it makes more sense to compare with same quarter last year. And the sales volumes are up quite significantly. And this will be an all-time high in world sales of high & heavy equipment and we expect that to develop next year.

Although the sales numbers up here will develop into the next year, we think there will be a moderate volume growth into next year as this is more representing increases in prices. And why are we expecting a moderate or a more flattish market on high & heavy next year? Well, obviously, the construction industry around the world has slowed down. There is a pent-up demand for machineries, but still, there is slowing down in construction. Commodity prices have been falling recently. And obviously, that will affect the CapEx interest at miners.

And on Agricultural side, we see some of the same effects, but the demand seems to be more robust in that area. So in general, on high & heavy, we have seen all-time high volumes in Q3 and we expect them to stay at or very close to all-time high value numbers also in the short to medium term.

On the fleet, the fleet is basically sold out. If you ask our analysts, Eirik sitting back here, he would say that we are at 100% capacity, around 85% to 90% utilization. We are now at 96% utilization, meaning that we're totally sold out and that has also resulted in congestion. I will come back to that.

There has been quite some ordering activity. Today, there is 94 vessels on order. This represents some -- around 16% of the fleet. And these vessels are, to a large extent, to be delivered in '24,'25 and onwards. I think there's only 11 vessels due for delivery in '23. So the new vessels coming into the market, we will see the effect in '24 and onwards. So that was a few words about the market.

Let's then move into our performance, starting with shipping. And we had a very strong quarter in shipping. Starting with volumes, on the green bars as you can see, that has grown quarter-on-quarter with around 3%, meaning that we are able to fill up the vessels and trade them a bit more efficient than in the last quarter. And one of the reasons why the rates are up quarter-on-quarter is that we have been able to trade more out of Asia into Europe and into North America and that is our best paying trade.

So you can see that the volumes are growing in these 2 trades, while they are somewhat down in other trades. This will vary a bit between quarters. But in general, this is a profile that we like to see. And the rates are up with close to $1.5 per CBM despite the fact that we are carrying a little bit less of the well-paying high & heavy and breakbulk cargoes. So this has been a very strong performance on shipping in terms of both volumes and rates. And we now start to see the effect of the new rates coming into our book of business.

And as we have said before, we are now systematically working on getting all rates back to sustainable levels with our customers. Our fleet is more or less stable. We are down to 126 vessels. The owned fleet is up by 1. We declared a purchase option in the quarter. Then we have added 3 vessels on the long-term fleet. Those were deals done in a very different market than today, but they were added to the fleet in the third quarter.

And on the short-term fleet that has been reduced. And we are very careful in this market to put on expensive and long commitments when it comes to tonnage. Our biggest concern and problem now is the port congestion and that's the green numbers. These are the number of waiting days we had in our fleet in Q3. And this represents about 10%, 11% of our capacity. So the most important job we do now and we have set down a taskforce working with that and we already see some results is to make sure that we are able to reduce congestion or waiting time imports so that we can free up the vessel capacity that we already have.

We have earlier announced that we would -- we plan to come back on fleet strategy this year. We have now decided to take a little step back and a little pause, both due to the current new building prices, the uncertainty of technology, but also now with this economic environment. We have said that we would likely come back on a fleet strategy next year. Having said that, we are still working on our next generation of vessels, we are still very committed on delivering on our journey to 0 emissions. But most likely, we will come back in full on the fleet strategy next year.

And then by the -- at the end on the shipping, I would like to share a little anecdote. We have our first female captain in our fleet this quarter, Captain Lee, she's Korean. And I think she is the third Korean to be a captain on a vessel. And she has done all her education and done her development with us. And we truly consider and I believe that diversity is a competitive advantage and we will continue to drive diversity in Wallenius Wilhelmsen.

Then moving on to logistics. And I think this is our little well-kept secret. I think all of you know that we are heavy in shipping, but actually, the majority of our people work in logistics. So what is logistics? This picture gives you a pretty good idea. This is our Zeebrugge terminal. And here, you can see all of Wallenius Wilhelmsen at play.

You have the vessels coming in, just next to the vessel, you can see what we call breakbulk. In this case, I think there are small boats and yachts that we carry. Next to that, you see high & heavy equipment. These are excavators and they are agricultural machines. And all the way at the far, you can see cars.

You can also see some buildings here and one all the way at the back, that's a fumigation center, meaning that when we are sending cars and equipment to Australia in this season, we need to make sure they don't have any bugs and not electronic bugs, but physical bugs. And basically, what we do is that we heat up the cars or the equipment so that the bugs do not survive.

There's also another element here and that's the gray building at the front. That is a processing center. And I want to take you into that processing center now because I was there just a few weeks ago. And this is a processing center for Doosan. Doosan is a big producer of equipment from Korea. In this case, we are working on their excavators.

So simply told, you can see in the middle picture, these excavators, they come just with a basic package. So when somebody at the construction side would like to have longer arms or bigger grabs or more lights or a nicer camera, we do that. And on this very picture, I'm actually mounting a new light on this excavator, but we are putting on both the boom and the arm and the grab and all of these things so that they are tailored into the European market.

So we are actually adding a certain percentage of value to the product that we have taken from Korea into Zeebrugge. We put on the equipment and we make sure we bring it out to the construction site where it sits. That's logistics in a nutshell.

And I'm very happy to see that logistics also are improving this quarter. In general, revenues are up 11% quarter-on-quarter and that is driven by 2 main factors. One is that the volumes are coming back, as we said, that the semiconductor challenges are reducing and they are able to produce more cars. But there's also another effect and that is that when they have limited capacity on cars, they are trying to sell models with as much accessorized as possible, meaning that there is a high level of accessorization on the cars and we do that.

So when we're sitting at the end of the factory line of Nissan in North America, the car comes out as a standard car and everything below, let's say, line 3 on your accessorized list, we do, we put it on. So that's one of the reasons why the revenues are also increasing quarter-on-quarter.

On the terminal side, it's rather stable, but there is a little improvement in Australia because we see Chinese volumes coming back after the COVID shutdown earlier in the year in China. And then on inland revenues, that is at the back of somewhat increasing car production in the U.S.

So as I said, all in all, in logistics, we are improving in all parts of our business. And we still think there is significant upside. So if you look on the world, the sales and production of cars in North America and in Europe, last quarter, we were 20%, 25% below where we were prior to COVID. So in a normalized market, we believe that we will get back to much higher activity in this business.

Now the main concern is not really demand from our customers, but labor. And in particular, in the U.S., labor is a challenge. And just as an anecdote, in the U.S. today there are 2 open positions for every one job seeker. So it's a very tight market and that's really the core of our activity there now is to get access to enough labor so we can serve our customers.

Then quickly on sustainability. Safety is our priority #1 and we will never be happy on safety. We are doing okay on shipping. We are well within the targets we have on lost time incident frequencies. And I'm very happy to say that in the last quarter, we had no medium or serious incidents in our fleet.

But due to the fact that we are onboarding a lot of new people into logistics, we have seen a small increase in the lost time incident frequency. These are mostly related to smaller -- I wouldn't even say incidents, but back pains and other things that makes people go home early or come in late. So there are minor things, but still, we are working systematically to improve. And we have a lot of measures in place to drive the safety performance also in logistics.

When it comes to CO2, we had a slight increase in the absolute emissions in the last quarter. That's driven by, little bit by speed, but also by congestion or our vessels are sitting there without moving and that means that we are producing more CO2 to the atmosphere. The good news is though that we are moving more cargo. So the cargo -- the carbon intensity, in other words, how much emissions do we have per unit we transport is going down. And that's really for us the key measure.

And on the carbon footprint, we see that all the parts of our sustainability framework, both people, planet and prosperity comes together. And I want to close with one example that we announced earlier this year. We believe we are the first one in the world to introduce artificial intelligence onboard our vessels. Now we're introducing technology that helps the masters and shore personnel to optimize the speed, the routing and the voyage planning of the vessel. And we think that could be as much as 7% to 10% fuel improvement on this.

On the trials, we have seen 7% delivered. We have done this now on 65 vessels and we will roll it out for the full fleet. And this is a complete new way of thinking of optimizing the vessels. And it sounds easy to put some AI onboard a vessel. But I can assure you, if you've been a captain on a vessel for 20 years and suddenly the machine tells you what to do, there is a change process associated with this. So we're working on that.

With that, I leave it over to you, Torbjorn.

[Torbjørn Wist, executive]

Thank you. Thank you. And I thought the Johnny Cash voice worked quite well. So now I will continue as an aging version of Marcus & Martinus. Anyways, very, very happy to stand here today and present a very, very strong set of results for Wallenius Wilhelmsen. We're very proud of the results delivered this year.

If we start with the financial highlights, as you can see, the total revenues increased to -- so slightly shy of USD 1.4 billion or 14% up quarter-on-quarter. The adjusted EBITDA ended at $434 million, which is up 42% quarter-on-quarter and almost double year-over-year. As a result of the strong performance, net profit ended up at $246 million. And with that, we saw a strong increase in the cash position and hence, a reduction in the net debt.

Given the results, we ended up with a strong set of key financial metrics, including the return on capital employed coming in just under 12%. We had a equity ratio of some 39% and net debt-to-adjusted EBITDA of 2.3x, which is a very nice number considering the fact that when I started in the first quarter I presented here, I think that number was 6.4. So very happy to see that at these levels.

As Lasse pointed out, in this quarter, we produced strong results across all segments. And that is, of course, something we're really, really proud to acknowledge. If we start with the shipping, they recorded a record quarter, up some $99 million, 35% quarter-over-quarter. Fuel surcharges increased by $75 million, whereas the fuel expenses increased by $26 million. And I will come back to that on a later slide.

The net freight increased by $51 million, driven by both volumes as well as an improvement in rates. Same picture. Year-over-year, we were up 94%. And again, this is on a very strong market driving a rebound in the rates. Logistics, which we've known has had some challenging times given the semiconductor issues, saw a positive margin development and was up $12 million or 62% quarter-over-quarter. This was driven by auto and high & heavy volumes.

Fumigation seasonality, as Lasse mentioned, we have the stinkbug season, which means that we're going to see increased revenues from that side as well as we also saw lower fuel costs within the inland transportation business. Year-over-year, again, very positive on strong volumes and revenues in high & heavy, U.S. and Australia and increased volumes in our terminals.

We also saw that government services delivered a strong set of results, almost tripling the EBITDA that we saw in the previous quarter and this is driven by increased U.S. flag military and civilian cargo as the United States and NATO respond to the Russian invasion of the Ukraine.

Looking at the overall revenue bridge. If we start off with the revenues, they increased by $166 million quarter-over-quarter. $51 million came from shipping volumes and higher revenue per CBM on the trade mix. We had $75 million in fuel surcharges due to the significant increase we saw in the fuel prices in the previous period and the fall into this period and I will come back to that on the next slide.

We also saw a net $40 million increase in revenues in both the Logistics and Government Services side and this was partially offset by a negative change in the [ TC out ] revenues. The adjusted EBITDA was significantly up $129 million quarter-over-quarter. In broad numbers, roughly 75% of this increase comes from the shipping side, whereas 25% comes from Logistics and Government Services. $49 million -- there was a $49 million reduction in net fuel cost, given that we had a $75 million increase in surcharges and a $25 million increase in cost.

The cargo voyage costs increased $5 million and this is just linked to the fact that we have higher volumes. We had a stable vessel OpEx quarter-over-quarter. And we did see a reduction in charter expenses because the increase we have seen in charter rates was offset by a reduced short-term charter activity.

Turning to the positive net fuel surcharge effect that we saw in Q3. When we say net fuel surcharge effect and let's just call it NFS, so I don't have to say it so many times, this is essentially the change in fuel surcharge revenues less the change in fuel costs. This effect will be a lag in periods where you see increasing fuel prices because then the -- call it the additional fuel surcharge revenues we receive will come later. And what we saw from the second quarter into the third quarter was that the average VLSFO prices fell by some 16%. So we had a declining fuel price, but we had fuel prices in our contracts that reflected the higher prices in the previous quarter.

So as we have said on many occasions, there will always be a lag effect. And within Wallenius Wilhelmsen, we see that the lag effect is some 3 to 5 months, so that the fuel surcharge follow the fuel cost themselves. Now of course, to sort of quote my old economics professor, ceteris paribus, there are many things that will affect the fuel surcharge revenues. Of course, if you do not transport or have full ships, clearly, that will impact it because if you're running a half-full slip, clearly, you would not get as much fuel surcharge revenues.

It will be impacted by the trade, the customer and the cargo mix. It will be impacted by the fuel inventory because sometimes we sort of fill our -- fill the tank up and have inventory in the vessels that will last for quite a number of days. And then, of course, there's also the contract reference fuel price within the customer contracts themselves.

But over time, we see that the fuel surcharge covers the change in fuel costs on a one-to-one basis. And as you can see from the green chart -- the green bars on the left side of the slide, in this particular quarter, the effect was substantial, given that we've been trending up and suddenly there was a fairly significant decline in the fuel price themselves.

Turning to cash. As mentioned in the introduction, we had strong cash generation within the business. The total cash increased by $242 million to just over $1 billion and this was driven by mainly the strong set of EBITDA, but also proceeds from the recent refinancing. Given the increase in revenues, there has also been an increase in working capital. But please note that the working capital amount of minus $94 million also includes payments of civil claims and customer settlements within the quarter.

We had limited investment cash flow in the quarter and the amount you see there is mainly related to vessel maintenance, smaller investments in terminals, processing centers and some intangible assets. We had a positive net debt change due to the $160 million in net proceeds from refinancing the flagship that we announced the previous quarter, countered by scheduled debt and lease service payments. The undrawn credit facilities increased to $377 million and this includes the increase from the recent refinancing and these are, of course, available for general corporate purposes as well as new build investments.

Turning to the balance sheet. Our balance sheet and liquidity position strengthened in the third quarter. We're well-positioned to deliver on dividend policy as well as reinvest in the business. We also have a buffer against any unforeseen economic events. The total assets increased to $8.4 billion and the equity increased to $3.25 million.

In the fourth quarter, we have some remaining bond maturities of $76 million in total, which are covered with proceeds from the bond issue we did in April. And the next bond maturity will now be in September 2024. Other Q4 payments include the remaining installment of the dividends of $25 million as well as $32 million of remaining antitrust liabilities, which Lasse covered in his introduction. And after this, we expect no further payments related to the antitrust case. So we're very happy to be able to put that one in the back mirror.

When we look at the maturity profile going forward, we have manageable 2023 lease and bank maturities to be refinanced over the next 12 months and we are in good dialogue with our financing partners on this.

So with that, it concludes my financial presentation and I'm now very happy to hand it back to Lasse.

[Lasse Kristoffersen, executive]

Thank you. All right. So then let me round it off before the Q&A with a short view on how we see the future. The short story is that we believe '23 will be a favorable market condition for us. We expect that light vehicle sales will increase somewhat, even though we see a macroeconomic development which is less positive around us, there is a big pent-up demand and we're already coming from very low levels.

And even if we will see a less favorable development in light vehicle sales, there is very, very tight capacity in the shipping part of our business. So there is still quite some buffer before we will see reduced volumes. What we also expect is that the high & heavy will plateau or maybe weaken somewhat from the high levels we see now, but they will still be on historical high levels.

And then, of course, there are significant risks going forward. And the 2 major ones that we would like to point out today is, of course, the -- if we see an even deeper macroeconomic recession than what we expect today. And also, as I said, on the logistics, the access to labor and the cost of labor is a risk to our company.

But in general, we believe the outlooks are strong for Wallenius Wilhelmsen and we expect to strengthen our financial position in the quarters to come.

So that was the end of the presentation and then we're open for any questions.

[Unknown Executive]

We can do questions in the room to start and then I will do questions via the webcast afterwards. So Anette and Indre will be helping you with speakers.

[Unknown Analyst]

So could you talk a bit about how lagging your [indiscernible] are to the general freight levels in the market? Can we see increase in freight rates going for despite flat development in rates?

[Lasse Kristoffersen, executive]

Yes. We are -- I mean, in general, we are turning roughly 1/3 of our book of business every year. Next year, we are looking at some 30% that we will renew. So on that rate, we're renewing contracts all the time. But we see this year that we have a significant effect of the rate increases already. But roughly 30% will be renewed next year.

[Unknown Analyst]

So you basically have some cushion despite even if the market were to soften a bit into next year?

[Lasse Kristoffersen, executive]

In terms of rates, yes, we are now back at more sustainable rates in our book of business. And then, of course, the other factor, which is as important, are the volumes. But we expect the rates to stay at this level and maybe increase. And the volumes, we believe will be as strong in the next quarters as this one.

[Unknown Analyst]

Maybe a bit technical on the fuel surcharge. But you seemed to indicate and report that the fuel charges will be going down in subsequent quarters. But if there's a lag of 3 to 5 months shouldn't -- in the Q4, the fuel surcharge should go up, shouldn't it?

[Lasse Kristoffersen, executive]

I don't think we should speculate on what happens in Q4. But as Torbjorn said, over time this will equal out. And the reason why we brought it in today is that there is a particular high effect in Q3. But maybe we'll add to it.

[Torbjørn Wist, executive]

No, I think that's a fair summary. And again, it will vary because again, there are many other factors that will impact the fuel surcharges, as pointed out on the particular slide. So I'm not going to speculate on fuel prices, if I was, I'd probably be a very rich man if I knew how they would develop. But in general, we do see a 3- to 5-month lag on fuel surcharges versus fuel costs. And I think we'll just leave it at that.

[Lasse Kristoffersen, executive]

Nothing in the audience. Do you have anything from the cast?

[Unknown Analyst]

It is pretty quiet here so far, but I've received 2 questions. The first one coming from Frederik Ness in SEB. And he's asking -- and I guess this goes to you, Lasse. You're saying about 10% of your fleet is tied up in congestion today. What do you consider normal congestion? And when do you expect the current level to normalize?

[Lasse Kristoffersen, executive]

Well, a normal level will be what we saw prior to COVID and that would be somewhat 90% less than what we have today. So we have a significant -- but we will always have some congestion. This is mostly related to Europe. The 3 main ports are Bremerhaven, Zeebrugge and Southampton. And we have a dedicated effort to reduce it. We already see some results in Zeebrugge and we have new arrangements in Bremerhaven that will improve the situation. So our target is to drive this significantly down over the next few quarters.

[Unknown Analyst]

Very good. And the second question is from Petter Haugen in ABG. And he is asking how should we think about dividends for 2022? So I don't know who of you would like to address that one.

[Lasse Kristoffersen, executive]

I can start, and then you can find the money afterwards.

[Torbjørn Wist, executive]

Okay.

[Lasse Kristoffersen, executive]

That's -- we have a dividend policy of 30% to 50% of net profit. We will deliver on that, but the actual dividend will be decided on the general assembly next year.

[Unknown Analyst]

Very good. A couple more questions are coming in. One very technical one on CII coming from Pal Dahl. How many vessels will be rated D or E? What is your toolbox to keep the vessels at sea or better levels? And what are the associated costs of these tools?

[Lasse Kristoffersen, executive]

That was quite a comprehensive question. I'll try to answer some of it. So basically, for those who don't know, CII are new regulations coming into the industry that puts requirements to the emission efficiency of the vessels. Associated with that, you have a scale A to E and you should stay at C or better. And if you are falling below C, you have 1 year to get back up to C from a D or an E. We see that we will have some vessels coming down at D next year. That's what we expect. We will work hard to get them back up to C.

But on some of these, there is a limit to how much more we can do on the technical side. And then the last point of measure would be to use 0 emission of carbon neutral fuels being biofuels. And we are looking into all of these. So we're both working with operational measures, you saw the AI. We are investing into technology on the vessels to improve the energy efficiency. And eventually, we are also looking into using biofuels.

[Unknown Executive]

We have one more question in the room. If we can [indiscernible].

[Unknown Analyst]

You said previously that you would come with an update on fleet renewal…

[Lasse Kristoffersen, executive]

Yes.

[Unknown Analyst]

In the course of the year. Are you still expecting or intending to come with such an update?

[Lasse Kristoffersen, executive]

As I said in the presentation, we are putting a little pause on that process now. There is -- we are still working on the next generation of vessels. We are in active dialogues with both yards and others. But we expect that the fleet strategy will be a 2023 announcement, not this year.

[Unknown Executive]

And we have received a question from Frode Morkedal. Can you provide an update on congestion? And I guess we did in the slide relating to fleet congestion and waiting times as well as whether you think there is a potential to increase the global fleet's efficiency next year?

[Lasse Kristoffersen, executive]

Yes. Well, as I said in congestion, we are working hard at it. We are seeing 10%, 11% of our fleet congested. I don't have the numbers for the others, but I would assume they are seeing similar numbers. And I also assume that they are, as we're working systematically to drive it down. So yes, I would expect congestion to be less next year, but that's really hard to predict, of course.

[Unknown Executive]

And a couple of questions from [ Ole Storberg ]. Is your contract renewals next year evenly spread out through the year?

[Lasse Kristoffersen, executive]

He caught me naked. I don't know. I'm sure it is. It's more or less, yes, but I don't know the exact numbers, to be honest.

[Unknown Executive]

And the second question, how important is the China EV business to Wallenius Wilhelmsen?

[Lasse Kristoffersen, executive]

Today, it's an increasing importance, but still in absolute numbers, not very big yet. We have a very big business out of Korea with Hyundai and Kia. We're also serving Japan and increasingly now out of China on electric vehicles on the shipping side.

On the, let's say, business development side and on the logistics side, it's a very important area for us. And in all our businesses from our terminals to processing centers and our vessels, we are now putting ourselves in a position so that we can be a preferred choice when it comes to EVs. So for instance, now in Belgium, you saw this terminal up here. On the other side, we are now building our cell terminal, which will be more or less a dedicated terminal for EVs with services including charging that will be offered to some few customers that we are in dialogue with. When it comes to the Chinese volumes, they are growing extremely fast. But in terms of the total market, they are still not very significant.

[Torbjørn Wist, executive]

Maybe it's worth adding that the Chinese EVs -- I don't know if there's volume here, but the Chinese EVs also offers us the opportunity to sell a wider suite of services. So not just, let's say, a shipping leg, but also, you call it the end-to-end service because you have new entrants, which do not have an established supply chain themselves. And here we can offer the whole suite of services as we did with NIO as an example.

[Lasse Kristoffersen, executive]

Yes, absolutely. And that's the good news. These new players, they trust on us as their logistics partner. We basically run the show from A to Z.

[Unknown Executive]

And we have one more question from the web, final one so far. That's from Petter Haugen as well. He is asking, could you elaborate on the new building strategy in light of alternatives such as charter in ships for 3 to 5 years?

[Lasse Kristoffersen, executive]

Yes. So as I said in the presentation, we are careful in adding tonnage in this market at the price levels we see. And that does not mean that it's out of the question to renew some ships, but we are very careful. And that's out of 2 reasons. One is that it's a very expensive charter market, but also because we have a very clear dedication of driving this industry towards 0. And the vessels we can get on TC are traditional technology. And that's why we work extensively also with our next generation of vessels, and we will not order vessels that cannot take us to 0.

[Unknown Executive]

And that seems to be it from the online audiences. Are there any further questions in the room?

[Lasse Kristoffersen, executive]

Doesn't look like it. Seems that we're done. Okay. So then let me close with saying thank you for joining us and we are very happy and proud to be able to deliver strong results. We are very happy that we can put the antitrust case behind us and things look good for Wallenius Wilhelmsen. Thank you.