Cmb.Tech NV Q1 FY2025 Earnings Call

Good afternoon, everyone, and welcome to the Cmb.Tech Earnings Call for the First Quarter of 2025. My name is Alexander Saverys. I'm the CEO of Cmb.Tech, and I'm joined here today by my colleagues, Ludovic, Joris and Enya. We want to focus on our first quarter numbers, the financials and the highlights. We also want to say a few words about the Cmb.Tech and Golden Ocean proposed merger. We will say a few words about the decisions that we're taking at the IMO meeting a couple of weeks ago and then zoom in on our different marine divisions and give you an update on where the market is. To end, as usual, with the conclusion and time for questions and answers. I would like now to hand it over to our CFO, Ludovic.

Thanks, Alex, and good afternoon, everybody. If we look at the Q1 figures of 2025, we end the quarter with a profit of roughly $40 million. Excluding capital gains, we would have resulted in a net income of minus $6 million. These figures, for the first time, we consolidated Golden Ocean from a balance sheet perspective at the end of March. But from a P&L perspective, we consolidated as of the 12th of March. So, the figures include 19 days of Golden Ocean P&L. Mind you, there are different depreciation models. So, it is sometimes not very easy to look through the figures. We have a liquidity end of March within Cmb.Tech of $245 million. Contract backlog has been highlighted in the previous business update, but we are reaching close to $3 billion. We're very proud to say that we've added roughly $1 billion in the first quarter. The CapEx still remains at $2.2 billion, and our equity on total assets within Cmb.Tech ended the quarter with 31.9%. Zooming in on the highlights. We've mentioned the profits. The most important transaction, obviously, was Cmb.Tech buying the Hemen’s stake in Golden Ocean, followed by an increase on open market transactions which resulted in a term sheet signed for a merger transaction between Cmb.Tech and Golden Ocean. On the business side, we've added two important long-term contracts, one with Fortescue for an ammonia-powered Newcastlemax and then a big landmark agreement we signed with MOL, a Japanese company for three Newcastlemaxes, ammonia-powered and six chemical tankers that are ammonia-ready and ammonia-powered. We continued our strategy of diversification and decarbonization by taking delivery of five newbuilding vessels. We had four dry bulk vessels and one CTV. At the same time, we decided not to declare a dividend for Q1 2025. On the right side, you can see that in the divestment program, we've sold three VLCCs, which will generate close to $100 million profit from capital gains in the next two quarters, and we have finalized the delivery of the Cap Lara and the Alsace and Windcat 6, which brought a capital gain of $46 million in the first quarter. The fleet on the water today stands at 113 vessels, with another 46 newbuilds coming. You can see that by the end of the year, we'll be at 131 ships and then growing until the end of '26 to roughly 150 vessels. Zooming in on the P&L breakevens, the achieved earnings and rates in the first quarter and the anticipated earnings quarter-to-date in Q2. We can see the tankers, we have a good first quarter with an average of $40,000 per day. The second quarter to-date is roughly $43,000 per day. On the bulkers, we had a somewhat weaker first quarter, resulting in our Newcastlemaxes earning $18,000 per day. In Q2, we are up at $24,000. The container and chemical tankers are mostly long-term contracts, which are fixed at good rates, and we do see an uptick in the earnings on our CTVs in the offshore market. This is an overview of the contract backlog that is well known to you with the notable additions of the chemical tankers on the four industry-ready ships and the two and three fitted, but also very happy to show the 12-year contract we had on the Newcastlemax bulk vessels upon delivery. I'll hand over now to Alex to discuss further the proposed merger between Cmb.Tech and Golden Ocean.

Thank you, Ludovic. I will zoom in on what we have already discussed on our Capital Markets Day, which is indeed the proposed merger between Cmb.Tech and Golden Ocean to create a leading diversified maritime group. On this slide, you can see in one slide what the transaction entails. If the merger is approved, our fleet would grow to 250 vessels, about 200 on the water plus 50 newbuildings. The contract backlog, as already mentioned, would be $3 billion. Roughly 1/3 of the fleet will be powered by ammonia or hydrogen, and we would have an average age across our fleet of six years, so a very young fleet. Looking at some financial metrics of the proposed merger. The total fair market value of the fleet would be $11.1 billion. We estimate an NAV per share of close to $15 per share if the merger is completed. Our CapEx commitments would not change too much because Golden Ocean does not really have an order book. So that still stands at $2.2 billion. And then we would have a listing of Cmb.Tech in New York, NYC, in Brussels, Euronext, and we would apply for a listing on Oslo Børs to have Cmb.Tech listed in Norway as well. You can see at the bottom of the slide, the fleet overview with the notable change if the merger goes through of adding 91 vessels to our Dry Bulk division, which in one go will then become the biggest division in our group. If you look at some of the open days and fixed days statistics, there's a lot of information on this slide, but I wanted to highlight the total number of days for 2025. That is assuming Golden Ocean and Cmb.Tech together for the whole year would be 55,000 days. If the merger goes through, in 2026, we would have 62,400 days combined, of which 18 will be covered by time charter contracts. We have added a slide following some questions from analysts on what a pro forma free cash flow could look like for both companies over the year 2025. At the bottom of the slide, you can see some of the sensitivities we have applied mainly on the open days in the Tanker division, Euronav combined with Golden Ocean. You can see that we have a kind of a mid-case forecasted case set for VLCCs and Suezmaxes around $50,000 a day for Newcastlemaxes and Capes at $26,500 and for Kamsarmaxes and Panamaxes at close to $14,000. We've then deducted 20% to have a low case, added 20% to have a high case. What is under conclusion is that you can see that for the year in the low case, we will have a free cash flow generation, excluding any additional sale of vessels of $250 million, a high case at $750 million and our base case at $500 million this year. You can also see on this slide that this is, of course, very heavily skewed towards our VLCC and Suezmax segments and our Capesize segment. I would like now to hand it over to Joris Daman, our Head of Investor Relations, to talk about the impact of the MEPC '83, the meeting at the IMO that was discussing greenhouse gas emissions. Joris, over to you.

Thank you, Alex. At Cmb.Tech, decarbonization is a key part of our strategy. This can come from clients setting their own targets or from existing regulations, such as Maritime regulations that started in January this year and the EU ETS which began last year. Recently, MEPC '83 was voted on and will be voted again in October. MEPC '83 focuses on fuel intensity, assessing how much fuel ships use. To improve fuel efficiency, ships need to blend in biofuels or use alternative low carbon sources instead of relying solely on slow speeds. The regulation has a tiered implementation system, where meeting certain fuel intensity reduction targets can keep companies compliant and avoid penalties. For instance, if a ship reduces fuel intensity by 17% by 2028, it remains compliant without penalties. However, if a ship reduces fuel intensity by only 4%, a penalty of $100 per ton of CO2 equivalent applies. If companies do not meet the 4% reduction, the penalty increases to $300 per ton. It's important to note that burning one ton of fuel emits three tons of CO2. The penalties are substantial and will increase over time between 2028 and 2050. We've also analyzed the cost implications of fuel compliance over time. The fuel price comparison shows that by 2032, the cost for low sulfur fuel oil blended with biodiesel or with green ammonia will be comparable when accounting for penalties. By 2038, dual-fuel ammonia ships will have lower operating costs compared to LNG carriers. Our analysis relied on various forecasts regarding fuel availability and pricing, using data from the Maersk McKinney Miller Institute. If ammonia becomes more accessible and cheaper, these tipping points could shift. This analysis highlights daily fuel costs and the long-term benefits of ordering a dual-fuel ammonia-powered ship today. For example, a ship delivered in 2028 can operate until 2048, and considering all associated costs under MEPC '83, it could be financially advantageous by approximately $17 million when compared to options like biodiesel or LNG with biomethane. This makes a strong case for investing in dual-fuel ammonia-powered vessels right now.

Thank you, Joris. It's very clear. I would like to provide a market update across all our Marine divisions, starting with a general overview of supply and demand for each division. In the tanker segment, the growth in ton-mile demand for crude oil is forecasted to be relatively flat this year and next. However, the order book remains at historically low levels, and the fleet's age is increasing. Overall, despite the flat demand, we believe the supply aspect looks favorable, and we are optimistic about the crude oil markets. Currently, we have 22 vessels on the spot market and eight ships on time charter, along with two new vessels that are also chartered. In the dry bulk sector, this year appears to be somewhat subdued, particularly in the first half where demand has been underwhelming. However, we expect ton-mile demand for Capesize vessels to rise. Similar to tanker vessels, the order book for dry bulk is at historical lows around 7-8%, especially for Capesize ships, with the average age of our fleet also increasing. In conclusion, we remain positive about dry bulk, with 14 vessels currently operational, excluding the Golden Ocean fleet, which may be added pending approval of the merger later in Q3. In the container sector, significant developments have occurred over the past few months. The two major issues have been the tariffs imposed by the Trump administration and a potential peace deal in Yemen that could halt attacks on merchant ships in the Red Sea. Currently, 8% of TEU miles were affected by tariffs, which have now been suspended, leaving us uncertain about future developments. Due to the situation in the Red Sea, if container vessels are able to operate there again, TEU miles could decline, which would not be favorable for trade, compounded by a relatively high order book of about 30% in the short term. As it stands, we have zero ships available in the spot market, with all our vessels chartered, four currently on the water, and one anticipated next year. In chemical tanker trades, we are adopting a more cautious stance as we see MR product tankers entering the market. The order book is reasonable, but demand could be better, and the influx of product tankers is exerting downward pressure on rates. Despite this, our spot market vessels are still earning close to $20,000 a day, which is positive. Additionally, we have four ships on charter, with ten more contracted under long-term agreements. Regarding offshore wind, we observe robust growth in the European market with new projects expanding at 15% this year and expected to rise by 22% next year. The CTV and CSOV fleets are also growing. We believe there is greater demand for our ships than supply in this sector, so we remain optimistic about our CTVs and CSOVs. Focusing on Euronav and the tanker markets, our earnings on the spot market for VLCCs and Suezmaxes in Q1 were $35,000 and $41,000, respectively, which are healthy rates. For Q2, we have already secured rates of $40,000 for VLCCs and $42,000 for Suezmaxes, with about two-thirds of the days already locked in. Additionally, we've sold three VLCCs with a projected capital gain of $100 million and recently delivered vessels that generated over $45 million in profit. While crude oil demand indicators are mostly positive, it's slightly lower than our hopes. However, we believe the long-term outlook for tankers remains favorable due to aging fleets and a low order book, even though global GDP has been slightly downgraded; we still anticipate positive growth in oil demand. We expect a disconnect between oil production and consumption, which usually benefits tanker demand. On the topic of Iran, any changes in sanctions could be beneficial. Increased sanctions could lead to more oil being transported via conventional tankers, while easing sanctions might push the dark fleet out of the market. Similarly, the OPEC narrative has shifted; after many discussions on unwinding voluntary cuts, we have seen some progress, with expectations of gradual increases in output. Despite a significant drop in oil prices, we are seeing some positive movements. In dry bulk, we have 14 ships in operation with Newcastlemaxes and newbuilds, and another 14 vessels are scheduled for delivery in the future. The first quarter has been traditionally slow, with earnings of $18,400 on our Newcastlemax fleet, but we have seen a rise in bookings for Q2 with about 75% of our days fixed at $24,000 a day, outperforming the Baltic 5TC by 40%. In our Dry Bulk division, we signed two significant deals: one with MOL for three ammonia-powered Newcastlemaxes and another deal with Fortescue. While some indicators show challenges, we believe the overall balance remains positive. The Atlantic iron ore trade from Brazil is trending positively, and as we enter the seasonally stronger second half of the year, we anticipate continued growth, especially for Capes and Newcastlemaxes. Regarding the Australian iron ore trade, weather-related issues have affected its volume, but we expect improvement as conditions stabilize. Overall, while the dry bulk market has been slow, we see growth pockets, particularly for iron ore, coal demand in India and China, and a healthy grain trade. Incorporating the Golden Ocean fleet will further enhance our positions in these markets. In closing, our long-term view for Capes and Newcastlemaxes is optimistic despite recent sluggishness. We foresee a stronger second half of this year and into 2026 and possibly 2027, leading to better fleet utilization and rates. On the container side, we acknowledge the trends related to the Red Sea and tariffs, and although we are exploring reinvestment opportunities, we are exercising caution due to high ship supply and demand fluctuations. In chemical tankers, despite slight declines in spot rates compared to last year, our overall performance remains solid, as most ships are secured under long-term charters. Lastly, in the CSOV sector, we're witnessing demand growth in both offshore wind and oil and gas projects, particularly in Europe, with significant projects underway. We also anticipate increasing demand for CSOVs in Asia. That concludes our market update. We have provided an extensive overview of our order book containing 43 vessels, including timelines and delivery details. Thank you for your attention, and I'll now pass it over to Enya for the Q&A session, concluding with a note on our significant developments, especially our collaboration with Golden Ocean—an important highlight for the quarter—and our continued positive outlook in the tanker and dry bulk segments, as evidenced by our investments. Enya, the floor is yours.

Yes, we will now start the Q&A. I will now go over to the questions. Frode, you may now unmute and ask your question, please.

Thanks for the informative slides on MEPC '83. I propose we refer to it as IMO 2028, which is simpler to remember and pronounce. It also relates to IMO 2020, which many are familiar with, as that was when the industry transitioned from high sulfur fuel oil to VLSFO. Now, in 2028, the plan is to move away from VLSFO. The solution is dual-fuel ships, and that's where your expertise comes in. You made a strong case that this is very profitable. Could you discuss your ammonia solution? I understand you have some ships ready and others in production with engines as well, right? Please elaborate on that.

Okay. Frode, like Joris has highlighted, we are very positive about the decision that was taken at the IMO. Some people think it was not ambitious enough. We would say that the glass is half full. It's a very strong step towards pushing people to having dual fuel engines and to start analyzing what is the best fuel of choice. Because over the last couple of years, there's been a lot of debate about LNG, about methanol, about ammonia, about hydrogen. If we put all the data next to one another. And of course, with the caveat that this still needs to be ratified in the month of October. But if it goes through in October, or as the story is very clear. If you want to order a ship today, ammonia is the way to go. If you want to operate a ship today, which is already on the water, ammonia will be the way to go, latest by 2032 if your alternative is diesel and 2038, if your alternative is LNG. With one very big important remark, we are using ammonia prices from the Maersk Center for decarbonization. Ammonia prices there sit at an equivalent of above $2,000 of diesel equivalent. We are seeing prices now being quoted to us for green ammonia that are much closer to $1,000 per ton, meaning that it would advance these deadlines to much earlier, maybe 2029, 2030 and then on the LNG competition 2032, 2033. All in all, we are very, very positive about the developments at the IMO, and we call it MEPC '83, but indeed, we should call it IMO 2028. Now what does this mean for our company? One, what you are seeing already, people are contacting us for the vessels that are fully ready with ammonia engines, and we are engaging with our customers now more and more. And as you can see, we already signed some contracts. Going forward, for the fleet, which is ready to be retrofitted, we anticipate as well to have some very interesting discussions with customers on existing ships to put them through a dry dock and potentially retrofit them. Because now they suddenly have the visibility of where the deadlines are and how they could lower their fuel bill and operate in compliance with IMO 2028. Whether that retrofit then happens in two or three years from now or already now, that is, of course, something we will discuss with our customers. Conclusion for us is the business case we have built up over the last couple of years is strengthened, thanks to the IMO.

Yes, indeed, very interesting. Another question I had is you had the slide on the pro forma free cash flow. That's very interesting. Just a clarification. Is this including debt repayments?

Yes. That's including debt repayments, excluding capital commitments to the yards. It has been a topic that analysts and investors have asked us, okay? So, we have a big order book. You should always put in mind roughly $900 million to $1 billion every 12 months need to be paid at the yard, roughly $250 million per year has to be funded to fulfill that CapEx commitment. That is out of equity. Equity, we say operational cash flow, which we've tried to highlight here, or sale of vessels. What we have tried to put on the slide is that even in a somewhat more bearish scenario compared to our average forecast of minus 20% under the base case, we still generate $250 million of excess cash flow, which would already match with the unfunded CapEx that we have on a yearly basis. Now this is even excluding the excess cash we have on the sale of ships. You've seen the three ships we've sold. It's $100 million on the P&L. It's actually even more on cash that would come in on those ships. So that is the second buffer. Good market spot rates go even below our worst-case scenario. Obviously, we still have the excess cash from the sale of vessels to fund that CapEx.

Great. That's very useful. So, I guess, in 2026, you will have more vessel days on the Capes, right? So that should actually be even better, I guess, assuming similar cash breakeven rates for next year, right?

Yes, that's correct. In one of the slides, you can see that in 2026, we expect around 62,000 ship days, with 12% coming from long-term contracts. This means more than 80% will be on the spot market, and half of that will be bulk carriers. You can quickly estimate the cash generation perspective if we achieve an average of $26,000. Any amount above that will contribute directly to excess cash flow.

The next one is Kristof. You can now unmute and ask your question, please.

Maybe first also on alternative marine fuels and ammonia. So, you have a partnership with WinGD for the engines. Just to remind me, is that an exclusivity partnership? And in terms of timing of the technology to the market, how does it compare to competitors? And on the long-term charters with MOL, do you already have some kind of visibility for what trade lanes they would be used, green corridors or whether it will be point-to-point or not? This is the first bulk of my questions. And then on the shipyards, regarding the port cost for China-linked vessels, do you see or do you expect significant changes in delivery schedules because of potential consequences? And regarding slots in shipyards, do you see or expect issues with capacity being reserved for defense orders?

Okay. Thanks, Kristof. So just on your questions on ammonia and WinGD, we have a partnership with WinGD. The WinGD can perfectly sell ammonia engines to other people. Obviously, they are delivering the first engines to us, and this is why we engage on that partnership. So, there is no exclusivity there. Actually, we can also work with other suppliers like MAN on ammonia engines, and we always choose the best supplier for the best engine. In terms of when the vessels will be ready, the first engine will be ready after the summer. As you know, we will take delivery of the first fully fitted ammonia vessel in January of next year. So that is when the very first ammonia Newcastlemax in the world will be delivered. And then we will take delivery of another seven in '26, one container vessel, and then on we go '27 and beyond. On MOL, the trade lane that MOL will put the vessels on has not been defined yet. But typically, it will be either Australia or Brazil, the two main trade lanes, but they might send them to Africa as well or to Europe; we don't know yet. So, no decision has been taken yet on where that vessel will be deployed. Some of the other questions? On the shipyards, you mentioned the impact of USTR. I think, in general, Kristof, the impact of USTR is still too early to say. We only know what has been publicly stated. But we also know that these things still have to be clarified. A lot of the shipping lawyers still don't even fully know what the impact will be on leasing, eventual ownership. So, we still need some clarification there. What we do feel is that obviously there is somewhat of a reluctance from shipowners to go to the shipyards in China because of the potential impact of USTR. So that is definitely something that we're seeing right now. There, we have to say that it will probably be more on certain specific ship types, for instance, container vessels. There will be more harder hit than other ship types because there are quite a few junctions. Because as we access, it's still a little bit too early to assess the impact for preliminary assessment for our group is that it will be a very limited impact. On your question on defense, capacity being reserved so that yards are not marketing the birds that they have. I would say we are not seeing that. We are not seeing that shipyards, commercial shipyards are still promoting their slots to different shipowners.

Okay. And can you comment on recent press rumors on Cmb.Tech, potentially ordering one new VLCC and two Suezmaxes and two options for two Suezmaxes?

I can be very clear and short about that. We have not ordered these vessels, and rumors fly because, obviously, people know that we are constantly looking at opportunities, but we have not ordered anything yet.

Eden Niels, you can go ahead and ask your question.

Hello, my name is Sumit Kumar. I'm a private investor with a strong interest in shipping and hydrogen. I have two questions. First, could you provide a brief update on the progress of your large-scale hydrogen and ammonia project in Namibia, particularly regarding the ammonia terminal and the PV2Fuel industrial production timeline? Second, given the recent major investments in fleet expansion and Golden Ocean, do these investments in shipping pose any risk to the funding or focus for your hydrogen and ammonia infrastructure projects?

Thank you very much. We have not provided a clear update on what is happening in Namibia because there hasn’t been much news to share. Currently, we have a hydrogen production station that is nearing completion, and we hope to start producing our first hydrogen molecules very soon. This will be followed by a potential small-scale ammonia production plant. As for the ammonia terminal project, we are deeply engaged in the detailed engineering for the ammonia tank terminal in Walvis Bay and expect to provide further updates in the coming months. The project is still very much in motion, but there is significant engineering work underway, so we don’t have any commercial updates at this time; it’s still a bit early for that. Regarding the PV2Fuel project in Namibia, we are also focused on the tank terminal, continuing with engineering and securing land plots, and moving forward as planned. When we have something to announce, we will certainly share it with you. To reiterate, our philosophy in Namibia is to initiate clear projects that demonstrate feasibility, provide supplies to local users, and increase scale gradually as we move forward. We expect this theme to become more prominent in future earnings calls once we have more substantial updates to share, but it remains a central focus for us.

Maybe just to add there because quite some investors and analysts have asked what this translates toward CapEx. I think in the next earnings call, which will be at the end of August, we will have a dedicated slide also, not just on the philosophy of why we're doing it, but also on the committed CapEx so that people can have a clear view on that.

And then as to your point on, if we have invested in Golden Ocean, does that mean that we have less money available for Namibia, I would say to the contrary. I believe that if the merger with Golden Ocean goes through, we will have a much bigger balance sheet, much more liquid share, much more access to different pockets of capital and financing. But I think that the Golden Ocean transaction will assist us in accelerating our projects in Namibia rather than putting us on a back step. So, we do believe that the Golden Ocean transaction, on the contrary, will help us to continue our investments in the production of molecules. I hope that answers your question.

The next person is Kilian. Kilian, you may now unmute and ask your question, please.

This is C.Y. Kilian. I'm going to ask some tough questions. I've been listening closely to your recent actions, and there are a few concerning points I want to address. One area I’m not confident about is your dry bulk sector. What are your plans to enhance revenue in that division aside from the proposed merger? Are you acquiring new sea routes or taking steps to increase your presence in the spot market? I would also like to know what initiatives are being implemented to improve your dry bulk business at this time.

So, thanks a lot for your question. Look, the revenue in dry bulk is not something you can control when you're active on the spot market because the market is the market. It's a very transparent market. It's a commoditized business. What we can do, of course, is build the best ships, the most efficient ships. And based on the freight that we get on the market, have a better bottom line than older vessels. And I think we have proven that with our Newcastlemaxes. Let's look at our numbers on Q1. You say that it's very unsettling. I understand that you are disappointed in how the market was in Q1. But if you just compare with very similar vessels, we outperformed by 40%. So, in a way, what are we doing to optimize our revenues? We are building very modern vessels, which in a given freight environment will always outperform other ship types. The fact that we've added or are trying to add more exposure to the dry bulk market is that we really believe that even though for one or two quarters, the market might be a bit lower, the medium to long-term outlook is very promising. And in order to have a very promising result as well, we need to get access to the ships, and that is why we invested in Golden Ocean. Are we adding sea routes as you say? We are per definition active on all the major routes with our fleet, and we will be even more active when the Golden Ocean transaction goes through. Its scale of Golden Ocean will always be something that can also improve our revenues because we have more flexibility to position our vessels in the right basin and to catch the markets as and when they occur. Does that answer your question?

Thank you, Mr. Saverys. If at all possible, I have a question for Mr. Ludovic. So, taking into consideration your report for Q1, the EPS obviously came $0.07 below the consensus estimates. That's one thing, that's understandable because of the market conditions. Now looking at your peers in the industry, almost every single one of them didn't withhold paying dividends, but I see that nothing has been declared. And as an investor, I think it's one of the most important things for me to know that where are we going with that? Is that something your Supervisory Board has discussed? Or is that something to look forward to maybe in Q2? I'd like to know that as an investor?

Absolutely, that's a question we often receive and it's frequently debated during our meetings with the Board and Management. Currently, we have a fully discretionary dividend policy, which differs from the previous management at Euronav that had a fixed percentage based on net profits. We believe the dividend should reflect our balance sheet and investment opportunities as our Company grows. We prefer not to have set dividend policies tied to net profits. At the end of each quarter, we evaluate with the Board whether to distribute dividends or reinvest in new projects, acquisitions, or companies. In our Capital Markets Day presentation, which is available online, we emphasized that within the listed companies we control, we've historically paid substantial dividends. Therefore, while we appreciate dividends, the timing of when to pay them is crucial. Over the past 25 years, we've distributed about 55% of net profits from companies controlled by our family, Cmb.Tech, highlighting our commitment to paying dividends. Last year, we issued significant dividends through Cmb.Tech. However, given our ongoing merger and large capital expenditure program, the Board decided not to declare dividends for this quarter. This is something we reassess every quarter.

The next person who wants to ask a question is Kimmo. You can now unmute and ask your question.

I wanted to ask about your fleet positioning pro forma for the merger. Dry bulk will represent most of the open days. And looking at the medium term, are you comfortable with that position? And secondly, is there any appetite to continue consolidating the overall shipping industry?

Thank you. So yes, we are very comfortable having spot exposure on dry bulk. It's also one of the reasons we did the Golden Ocean transaction for the reasons we just explained to you. We think that the supply/demand dynamics are very positive. So going into the second half of this year, we're very happy to have the spot exposure. Adding to that, as we've stated before, as and when we see that we can take some coverage, long-term contracts on our existing fleet at good rates, it's definitely something we will investigate. Our strategy is being spot-oriented in combination with time charter cover and having a good balance between the two. So, I think...

And I think, just to add to that, if I may, since we are diversified, we operate diversified assets. Some asset classes will be in a strong market, and some will be in a somewhat lower market. I think what we try to do is use our contracts backlog, the $3 billion that we mentioned to eventually allow for a bigger spot exposure in markets that seem quite promising. But where, as of today, maybe the earnings that we've seen in Q1 for dry bulk are not fantastic in terms of P&L or cash flow generation. The second part that we actually use by being a diversified shipping company and manage the risk of having a big spot exposure is having the access to a large fleet and being able to sell some assets. As you've seen, every quarter, we sell a handful of assets, mostly the older assets, not just to fund some of the newbuilding program, but also to increase our liquidity position should the market right now in some promising markets like dry bulk not be where we want them to be that at least we have always a strong balance sheet to go through that cycle and then catch the right opportunity when the market picks up.

Yes, makes sense. And Q1 is obviously the seasonally weaker quarter for dry, so no surprise there. You've provided a lot of commentary on how ammonia will become competitive in the medium term with the Capesize for example. However, I was wondering how are you thinking about the fuel of choice for middle-sized assets, such as, say, Kamsarmaxes or CSOVs, both due to the lower nominal cost and lower fuel consumption?

We would say that we also believe, for instance, for Kamsarmaxes that ammonia will be the fuel of choice. It's just managing to find the engine that can be implemented and managing to find the right trading for Kamsarmaxes where ammonia could be found. On the CSOVs, we know today that we are doing today hydrogen engines on board because of the shorter distances because hydrogen in certain areas will probably be preferred instead of ammonia. But we think that eventually, you could even have CSOVs on ammonia as well. It will always be a mix of cost of, of course, safety concerns and availability of the fuel. We have stated many times before. And again, I know we have peers that have different views. We don't believe in methanol. We don't believe in LNG in the long term as a solution to decarbonize shipping. We think the two molecules of choice will be ammonia and hydrogen throughout the different segments. The smaller the ship is, the more you could go to hydrogen, the bigger it is, the more you will have to go to ammonia.

I see that Kilian is still raising his hand. So, I'm not sure if you still had a question, Kilian?

I have one last comment and a question. I noticed your fleet, specifically the Euronav fleet for crude oil. What is the long-term vision until the end of 2026? From the management perspective, are you adding more newer ships or acquiring new ones? Additionally, what do you forecast for daily tonnage rates for the rest of 2025? How do you factor in the possibility of a downward trend in the future? Mr. Saverys, what is your outlook?

We think the future is pointing upwards, but for 2025 and 2026, we are assuming rates anywhere between $40,000 and $60,000 a day on our VLCCs and on Suezmaxes. You also see that we are getting new building deliveries next year coming into our fleet. To your point of whether we will acquire new tonnage, we can do two things, either we can buy secondhand or we can order newbuildings. Right now, we are very happy with the fleet composition we have. We might sell some older vessels and we will look opportunistically, if the prices are okay, whether to order more vessels or possibly buy more secondhand. But we actually think that the rates for the next 18 months could actually more go up than go down.

We don't have any live questions anymore, but we did receive a few written ones. So, I will just ask them. The first one, you have a large amount of treasury shares. Could those be used for further acquisitions or reissued?

We're starting with one by one.

Enya, yes. So, it's a good question. So, the Company has acquired quite a few own shares in the last 18 months. Right now, we keep them. I think it's always good to have treasury shares that we bought at a very low price to be able to issue them on transactions. And this could be linked with the Golden Ocean transaction, it could be other transactions. But for the moment, we will not cancel those shares.

And the second one, what will be the availability of ammonia and hydrogen? Is hydrogen coming after special with ammonia or never?

It’s difficult to say. A lot of projects have been stopped on the hydrogen ammonia production. A lot of new projects are coming on stream. I think it will be an end-to-end story. We see ammonia projects coming on stream in the world. We see hydrogen projects coming on stream. It will depend on the region and the time. It is slow, but we think that in the next five years, supply will accelerate.

And I think there to add, there's a lot of wait-and-see attitude sometimes from product developers to take FID because they want to see the demand for those end products. And where we believe that shipping could add a lot of visibility on demand that could accelerate decisions for this project to come online. So, it's a little bit of a chicken and egg problem that we have. But as Alex said, we strongly believe that this will be accelerated in the next five years.

And the third question, you must have a lot of pushbacks on your relatively small float. Will the acquisition of Golden Ocean alleviate, for example, more float available for institutions?

Yes. Short answer is yes. If the merger goes through, our free float will go to 38%.

So that's an increase from 8% today to a combined company, much bigger, stronger, larger market cap of 38%.

And then one last one, what's the LNG propane ethane area be of interest to you in the future?

LNG is not really of interest right now, but other segments could always be of interest. But right now, our focus is on completing the merger with Golden Ocean.

And I think there to add, we've shown a slide into the Capital Markets Day presentation. The investment parameters that we always take is supply also in demand and specific target assets. And the order book-to-fleet ratio right now on LNG seems pretty high on some of the other sectors as well. But as Alex mentioned, this could change and once that order book is being absorbed, but as the prices are the right moment, then obviously, we will look at any segment that is out there.

Okay. And I think that concludes the questions.

Very good. So, I would like to thank everyone for participating in this call. As we have said before, if you have any further questions, you can always reach out to us. And my colleague, Joris Daman, his email address is in the presentation, is there to assist you. Thank you very much, and see you next time.

Bye-bye.