Wallenius Wilhelmsen Aktie

Good morning. And let me first say, sorry for that horrible music, but that's what we get with AI and all these rights issues. So that's what you get. Anyway -- good morning, and welcome. I'm happy to see so many of our friends and partners and not least also investors here. We discussed way back whether we should have a Capital Markets Day. And we decided we don't think we need that. We give you quite some good updates during the quarters, and there are no significant company news that we need to share right now.

On the other side, we are in a market that is quite exceptional. And I think looking out here, maybe with 1 or 2 exceptions, I won't name them. We have never seen something like this, at least in our industry, where we have massive global forces hitting the markets we serve in terms of auto and partly high & heavy and also hitting us. And I think the imports we're now seeing in -- from China in terms of advanced manufacturing, also in cars, can, to some extent, be compared to those who were in the bulkers and tankers back in the 2000s and seeing the imports from China when it came to more raw materials. So really understanding China is something we're all trying to do, and we have that on the agenda today.

So what we wanted to do today are basically talk about the environment in which we operate, less about ourselves, going to touch it. We have put our best heads to work. So Anders will join you soon to talk through the automotive market and partly the high & heavy market, really looking at what putting China into Asia context in historic context and looking at so what happens then to the rest of the world. We will have Morten joining us talking about the shipping market, which is, at least for us, we've never seen anything like this.

And then I think even the most senior in the room can't remember anything like this in the RoRo market. And then we'll have a couple of external views from good partners, also talking about the automotive industry and China. So hopefully, when you leave today, you have learned something new about the industry in which we operate and less so about Wallenius Wilhelmsen, but a lot about our markets.

So with that, I'll pass it on to Anders that will take us through the first session.

Thank you. First of all, just this presentation is quite comprehensive, and thanks to some smart people, Elissa and Leon that have helped me on preparing this. So that's it. So this is a quick agenda for today. We're going to talk about auto. We're going to talk about high & heavy. As Lasse mentioned, the fleet. We're going to have a presentation from Bank of America and a presentation from DNB Carnegie. And then Lasse is going to round off.

So on the agenda, on the automotive side, we're going to talk about Asia, what's happening in Asia, what's driving the market. We're going to talk about Europe, and we're going to talk about U.S. So before going over to the high & heavy side. So trying to put things in context, we're, as Lasse said, we are experiencing a very, very tight market. And it's not necessarily driven by massive auto sales. It's more about how the sales of those automotives are distributed. So there is more and more being seaborne. And as you look here going way back in time, you can see that with the exception of China, car sales are fairly stable. It's not -- there is the financial crisis, there's COVID and a few other pieces that kind of disrupts it. But overall, car sales is -- we're back to 2015 levels when it comes to car sales.

So it's not the market for buying new cars that is driving what we see today. It's more the development within that market. So on the seaborne side, what we're seeing is a massive redistribution. So there is more and more coming out of Asia, less and less coming back from the West. And the fact that China is coming, but also the fact that Korea and Japan are stable is what kind of shifts. And the dark green bar here is showing what is coming from Asia, and that is growing significantly. And with no return cargoes, that means that for the marginal cargo coming out of Asia, there is no return cargo, meaning you have to do a round voyage. And that is extremely ton-mile intensive.

So what we're seeing now is fleet growth, which has been quite substantial, is still insufficient to cover what is needed, and it adds pressure to rates in a positive sense for us. Looking at where are cars sold and what kind of imports are we looking at? Basically, we can split the market in 2. In Asia, pretty much what is produced in Asia is also consumed in Asia. There's limited imports. Whilst if you look at the U.S., South America, Europe and Africa and the Middle East, a majority or a big portion of the total auto sales are actually imports. Then what has happened there? And really, this is on the production side. And really what's happened is that China has moved from 2%, 3% back in 2000 of the global production to in excess of 30% today. Europe and the U.S. have kind of come from pretty high levels, but have reduced their production or their production has come down, whilst Japan and Korea has been fairly stable. So that is really the key factors that is driving the shift in production from Western producers to Eastern producers.

Then going a little bit into the industrial journey that we're seeing or are seeing and has seen in the auto market, in particular for Asia. If you look at Japan and Korea, they have both been through a journey where you started producing cars in Japan. Gradually, you started to export. It took time before people started to realize that these cars are good. It's not a bad car. You get acceptance in the market, your export starts to increase. And then eventually, you start to actually produce abroad in addition to exporting. So we've seen this happen in Japan. Then we saw it happen in Korea, and that is one of our key customers with Hyundai, Kia. So that's a journey that we have been taking part of. But in both cases, we have seen starting off with local production, going into exports, eventually establishing production abroad.

China has been through much of the same journey, but we'll start off with Korea and Japan. So what has happened for those countries? Basically, what we're seeing is that the bottom bar is local production for local consumption. The next bar, the slightly lighter green is exports. And exports have been fairly stable throughout a number of years. So it's come down a little bit, but not massive. So even if development in terms of total production has come up, exports have remained quite stable. Then we've seen the emergence of production in the U.S. and elsewhere in the world and that's really what's driving it. But overall, production from the Asian players have been fairly stable.

And if you look at how they kind of impact in the global markets, we see that they have a huge share of production in the North America. In South America, they have a substantial production. They do have production in Europe. But again, it's pretty much focused around Asia as well. So -- but what we're trying to say here is that there is no -- having foreign production doesn't exclude exporting. So there is a balance here between those 2. If you look at exports, and this is only the export part and the split between Korea and Japan, we see that there was a huge ramp-up ahead of the financial crisis back in 2008. Then there was a decline, and that was partly caused by a strong Japanese yen, leading to an increased establishment abroad, both from the Japanese players, but eventually also from the Korean players.

But overall, exports are remarkably stable even as we have headed towards more restrictions in exports, et cetera, over the past few years. Near term, if you look at a shorter period, where we've had a lot of headwinds in terms of tariffs and changes to global trade, we see that, again, exports are very stable out of both Japan and Korea. If you look at Hyundai Glovis, which is our -- a key customer of ours, their exports to the U.S. have been very resilient, and they're actually -- despite the tariffs, they have actually increased their exports. And you see the same thing for the Japanese. Their exports have remained stable despite the challenges that you see from the U.S.

Then on to China, which is kind of Japan and Korea on speed. Basically, what we're seeing here is that the fact that there is a time between when exports reach a certain level, we put it at 1 million here. And we've taken a 6-year period. Japan moved from 1 million to 3.7 million. Sales are lower at that point. So the actual feat of doing that is very substantial. Korea moved from 1.2 million to 1.5 million in 6 years. China has moved from 1.5 million to an estimated 10 million this year. During the course of 6 years, China has, in reality, surpassed Japan. It surpassed Korea. It surpassed the total of Japan and Korea. And that is really what is driving the market.

Is this a coincidence? No, it's not. China has been mulling around this for a long time, starting back in 2000 when they were starting to build the technology base. They became a member of the WTO. They gradually started to look into this industry. And in 2015, they elevated it into an industrial policy Made in China 2025, where they had 10 priority industries that -- or priority sectors that they wanted to focus on. One was auto. But they also had adjacent industries like batteries and other factors that kind of goes together with this. And the plan was to drive mass adoption. The good thing for China is that they have the world's -- or one of the world's biggest home markets, so they can test out things there before they go global. And then in '21 to '25, their ambition was to go global. And they have done that.

First, starting with production. From 2000 to 2025, their production has increased by 17x. But if you look at the bottom here, you can see actually they're following what they're saying. So in the beginning, they're building the technology base, but they actually took in foreign production or foreign companies to teach them how to do it. Then they created domestic scale, and you see the ramp-up in local production. Then they launched Made in China '25. They were with the ambition to drive mass adoption. They succeeded. COVID came in the middle here and then convert into global scale. And again, they've done that.

And at the same time, the local market has evolved, but sales increased 14x, production 17x, meaning that there is a gap here, and that's kind of what's been moving towards the export. But having the world's largest auto market at your hands has enabled an ecosystem of 70-plus brands. There are brands in China that we've never heard about. But again, that has created a significant competition. It's driven the move towards innovation and everything else. So that's created a brand of vehicles that is not only cheap, but they've evolved into becoming the technology leaders of the auto industry. We've used this graph or this slide before. But last year, 5 out of 10 in the top 10 of the Gartner Digital Automaker Index were Chinese. This year, 6. So there is one additional. And -- so they are technology leaders.

And basically, we see what they've done is that they've learned through joint ventures, partnerships. They've adapted the technology to consumer demand by testing in their own market. They've accelerated and now grown into a global scale. And basically, what we're seeing now is that they're leading on technology. They're producing high-quality cars at a reasonable price. So -- but price is not a selling point anymore. It's a good selling point, but the technology part is actually more important. So they are really leading the industry in terms of doing what they do. Then what have they created, whether it's the Wuling Bingo or the Haval Jolion or Voyah Dream, they have cars hitting the entire market from the entry level to the super and luxury car. And basically, they've created an infrastructure and a product that is actually very good, and it's covering the entire value chain.

And what has this created? Well, it's created an export Monster. So basically, this year, target is from China to export up to 10 million cars. If you do the recent run rate, that number is going to be higher. And that's also what we're seeing. Ships are full out of Asia. And the big thing is the amount of cars coming out of China. What -- have they reached their ambition level? Well, it doesn't seem so. If you listen to the local producers of car and it's not the 70 producers or 70-plus brands, but there are some key brands that are big on exports. Company like BYD recently stated their ambitions for next year.

First of all, they upped their ambitions for this year to 1.9 million. But for next year, they plan to do 2.5 million. That's 600,000 more cars out of China. That's a lot of cars, and it needs a lot of capacity to move that. And if you do SAIC, they had a target this year for 1 million. That target was exceeded in August. Chery, they have an ambition for 1.5 million overseas sales. One note here is that some of these sales may go to Russia, which is kind of excluded in our ambition, but they don't split it. So -- but overall, going through the leading exporters in China, they all have continued very, very high ambitions in terms of exports.

Then do they export for the sake of exporting because the local market is bad? We'll try to look into this. And basically, we've said that if we looked at the exports out of China from China customs, then we looked at the sales in local, some regions where we have good data, so actual sales or registrations with a time lag of 3 months. And basically, what we see is that there is no signs of big inventories in the target markets. It's basically a good correlation between what is shipped and what is sold at the other end. And with the growth that we see from China, they need to have a lot of cars in their pipeline in order to meet the market demand because they seem to be selling at the other end here.

And this is -- this graph is actually quite amazing because the other graphs we talk about going back to 2000, this one goes back to July '24. So it's about 2 years. In that time, in Australia, the Chinese have moved from an 11% market share to a 34% market share. In the U.K., it's from 5% to 21% -- in Italy, it's moved to 13%. In Germany, it's 6%. But what you see is that basically in markets where there is no local production of cars, when you get -- start to get acceptance for the Chinese cars, their market -- they are winning market share very, very fast. And it's really unprecedented numbers and the speed that it's happening is incredible. And so basically, what we're seeing is that they sell and they gain market share.

Then we talked about how Korea and Japan had established production abroad. Well, China has the same ambitions, but it's still moderate. And this is to scale. The other ones haven't been to scale. So basically, what we see is most of the production in China also into 2030 based on what Mobility Global is saying, is expected to be in China. They have ambitions of reaching 1 million cars production capacity in Europe and 900,000 in South America. But beyond that, it's -- these are the big target areas. We put no ambition in the U.S. That's how it looks now. But over time, who knows what's going to happen. But for now, that's -- this is how it's looking. They are expanding abroad. So they're following a little bit of the same path as what we've seen from Korea and Japan.

And to put things in perspective, we looked at a little bit about Europe here. So how is local production impacting imports? And in Europe, we've seen that there is a certain amount of foreign brands producing in Europe. It was started by the Americans. It was followed up by the Japanese and the Koreans, and now we're seeing Chinese coming. And around 20%-ish of European production is actually foreign brands producing in Europe. If you look at the import side, you see that despite having local production, there is an increasing amount of imports. And of course, the Chinese are making a big chunk in terms of recent growth in Europe. So that is what we're seeing, and they are winning over other brands.

But again, local production doesn't exclude imports. But the Chinese are already preparing. As we said, they're planning for 1 million cars production capacity by 2030. They are looking at the greenfield developments, but they're also buying into existing capacity in various places in Europe where the production is underutilized. But on top of that, they're also building infrastructure. They're building battery factories. And there are plans and ambitions on the battery side. We think that is a relevant thing here. It is actually sufficient to fit out between 3 million and 5 million cars. It could be sold to local European producers, but it could also be used in their own infrastructure.

So the Chinese are really establishing themselves in Europe. But again, it's not something that will stop imports. It may change, but -- then we looked at, okay, what's the danger because people are talking about, well, the Chinese are going to start producing locally, so there's going to be no imports. Right now or in 2025, about 1.9 million Chinese cars were imported to Europe. Then we took -- put 1 million cars there. And that's assuming that the Chinese will produce whatever they can in Europe by 2030. And then we said, well, current market share of Chinese cars in Europe is around 12%. That's the latest, but it's moving up fast. That would mean 1.8 million about imports. And this is based on S&P's or Mobility Global's 2030 estimate sales for Europe. So this is just an illustration.

If you were to get the U.K.'s current market share or approximately current market share of Chinese vehicles in Europe, you'd be at around 2 million cars. If you were to move to Australia, you have more than 4 million cars coming into Europe. So we think there is going to be a balance between local production and imports, but the size of those imports is really determined by the ability to gain market share. Then there is a second part of it, and this is more like a thought than anything else. The Chinese, as we said, they have cars spanning the entire range. But they do have some very reasonable cars that have good technology, the latest part in terms of efficiency, they have good warranties. You can do everything.

So basically, what if a cheap Chinese car replaces a lot of the secondhand market in Europe? Because if you buy a 3-, 5-year-old car, you're bound to get repairs, you bound to lose your guarantee, you bound to get all of these things that is kind of the downside of having a secondhand car except that you get it for a reasonable price. But there might be an upside here that people may start buying cheap new cars rather than a secondhand car. That could create another upside to the market. Again, it's just a thought. We don't know whether it's happening or not, but it's something that might change as well.

So basically, we've seen the Chinese follow a path that they have done in solar panels. They've done it in batteries, they've done it in smartphones and now in automotive. So basically, they support by a large home market, they create demand. They gradually build scale. So they have scale, and that brings them a cost advantage. They compete internally and they learn from -- both from foreigners, but also from the competition itself. And eventually, they scale abroad. And that's really what is happening. So it's no coincidence. They have planned this for a long time. Now we're seeing the effects of it.

Then we talked about what drives things out of Asia. So stable Korea, stable Japan, fast-growing China. What impact does it have, first of all, in Europe. And what we're seeing is that production capacity in Europe is underutilized. And from 2015 to 2025 in a 10-year period, European production has come down by 20%, close to. And if you look at how that production is split up on the right-hand side there, you see that it's a lot of the European brands that have lost market share. So we have Japanese, American and Korean cars coming in and eventually, you also have the Chinese. So it's a market where there are challenges. And it can also be illustrated by how is Europe's position looking in the market.

And basically, what we've seen is that on the left-hand side, you have the exports. They peaked in 2015 or at least on this slide, but they're now down close to 30% in 2025. At the same time, you've seen imports moving up 82%. So the trade balance in Europe has gone from a clear positive to a negative. And -- we also see that the Europeans lose ground not only locally but also internationally. If you look at European produced exports from 2015 to today, it's down 27%. A lot of that is China, where the European OEMs have benefited from being very popular in China, but they're now losing market share to local produced Chinese brands that give you much of the same feeling as what the European cars did before.

On the right-hand side, it's actually worth noting that not only have they reduced exports, but they have lost market share in a growing market. So whilst the global market in terms of sales have moved up 19% since 2020, European sales are down 12%. So that is a big challenge. And we are also seeing that they're losing market share in Europe. So not only abroad, but they lose market share in Europe. Going back, they used to have 73% even higher at times market shares up until COVID. After COVID, you've seen that market share move down to around 68%, even lower now. And if you look at the top yellow bar there, you see that it's China that is really moving in.

So what are the reasons? Well, cost is one. This is from IEA. And it shows an example of the cost benefit of a Chinese electric SUV versus a German SUV of a similar size. What drives it? A lot is the battery package and of course, a lot of direct manufacturing costs, but it's also assembly and energy costs. So the -- what we're seeing is that -- the Chinese have bigger scale, and they have better integration. So that's a disadvantage. The Europeans have a more fragmented ecosystem. The Chinese seems to be more interconnected. In terms of battery technology, typically, the Europeans buy batteries, the Chinese produce them themselves. And you also have something that is maybe even more relevant right now, the energy and input costs, which is coming up sharply in Europe.

There is another thing as well, and that's the time to market or the cost of development. And the Chinese are very, very efficient, and it's probably driven by extreme internal competition. So while it takes 2 to 3 years for the Chinese to get a car to the market, it may take 4 to 5 years or longer for the Europeans or for the Westerns. The Chinese, they are built around IT structure. The Europeans, not so much. Chinese have -- are quicker to introduce changes to the IT infrastructure. And they're more focused around software development, whilst a lot of the Europeans have that externally. And there is a more complex structure in the Europeans than what you see on the Chinese. So there is both a cost advantage in terms of production, but it's also in terms of time to market and R&D costs.

And this is shown by a little bit by the complexity, and this is just an illustration, but it shows one of the big benefits of the Europeans previously was that you could choose whatever you wanted. That creates a complex structure for production. It was very nice. You could have whatever color and interior you wanted and you could swap around and do whatever you wanted. And it makes into a lot of different configurations. And of course, that's -- that's good, but it also creates cost and complexity. If you take a Chinese car, this is just an example. You can choose between a few colors. There are some interior colors. You can have a tow hitch or not. There are some premium package or not premium package, and you can choose between all-wheel drive or just 2-wheel drive. So it makes a much simpler configuration, meaning that it's easier to produce that car and send it out to the market. You don't have a lot of cars that are off spec or not exactly the spec that you want. And it gives them a competitive advantage on top of the price point that we show here.

Then what are the Europeans doing to prevent this thing happening? Because the auto sector is extremely important for Europe. It's 6% to 7% of GDP. It's close to 14 million jobs with -- in the entire ecosystem. And it's one of the big export drivers. It's really taking 2 forms in the EU. So first of all, you have tariffs. They introduce tariffs on EVs, and they're talking about introducing tariffs on hybrids. And then you have industrial policy, which they're looking at now through the so-called Industrial Accelerator Act. And that means that you need more European components, et cetera, in a vehicle before you -- in order to sell it in Europe.

So having a look at this, tariffs -- it can slow a little bit in terms of the Chinese growth, but we don't think it's going to derail it. And the example here is based on when they introduced tariffs on EVs, you saw a small decline in sales. But eventually, now that sale has picked up again and you're above the levels that it used to be before they introduced the tariffs. The tariffs are still there. So that could slow it a bit. At the same time, we saw the Chinese switching to hybrids rather than EVs. So their exports moved up anyway. But this is one way of doing it. And whether it works or not, it's hard to say.

The second part is the so-called Industrial Accelerator Act. And there's a lot of components to it, and it all goes around having more European produced input factors into your car. But the important part here is that the European OEMs, they typically have 50-50 or about 50-50 of their products sold within Europe and outside of Europe. So if you do something in Europe that's supposed to support the European market, it only kind of protects 50% of your market. And with the European OEMs being export focused, having protection at home doesn't really help you abroad because then you're facing the Chinese anyway and all the others. So you need to be competitive.

So having a local protection plan isn't really solving a problem. So the Europeans are very aware of this. And basically, what you see is that they understand they need to compete in the global market. And basically, we are seeing a lot of restructuring and a lot of news from the European OEMs. But it all goes around resizing, you need to look at your workforce and capacity, they close down factories, et cetera. And that's where the Chinese are coming in and buying capacity at those factories. You can simplify structures, you can reduce model complexity and everything else, and you can also reduce our organization. You can regionalize, meaning that you do something to your supply chain and your overall footprint.

A company like Volkswagen is actually talking about producing cars in China and exporting to Europe. And you need to reinvest. You need to reinvest in technology because as we showed from the Gartner Index, a lot of the Western OEMs are lagging in terms of technology. So they need to invest in that and put out the next product out there. So that kind of sums up Europe, they have a challenge, but it's a big challenge because they're losing both locally and globally. And they need to be competitive because their whole business is based on almost half of their sales are done outside of Europe.

Then to the U.S. The U.S. is a different market. In terms of sales, it's a fairly stable market. Typically, sales range between 16 million and 17 million cars. It's focused on light trucks rather than straight autos. So a lot of the sales in the U.S. are the bigger fuel-guzzling cars. This is also reflected in the production mix. But while sales are 16 million to 17 million, production is now around 10 million, 10.1 million, 10.2 million. So there is a big gap here between local production and what is sold. At the same time, we see -- as we saw in Europe, the U.S. is even more a mixed market in terms of production. When you look at international brands, you see that in the '80s, the Japanese came into the market. In '90s, you saw the Europeans establishing locally. In 2000, you saw HMG go in there. And you had some additional Europeans back in late 2010.

So basically, the American market is even more fragmented in terms of brands than what we see in Europe, where the foreign brand part was about 20%. In the U.S., we see it's close to 50%. But there is also one other thing that is very different because here, we don't have any Chinese, and we'll come back to that, but that kind of differentiates this market to a lot of the others. But again, there is a foreign brand mix, but with production, but you still have imports. And if you look at imports into the U.S., around 40 -- in excess of 40% of whatever is consumed in the U.S. is imported.

The dark green at the bottom is typically land-based imports from Mexico and Canada with a complex infrastructure and cars moving back and forth as part of what they're dealing with these days. But then you have a lot of imports from Asia, as we talked about in terms of Korea and Japan. And that has -- the Korean seems to be winning in the U.S. in terms of gaining market share. Japanese fairly stable, maybe a little bit down. Europeans losing out a little bit and then you have some others in there. But typically, a lot of the U.S. consumption is based on imports. And again, it shows that localized production doesn't necessarily mean that you lose out on imports.

Looking at the export side of the U.S., it's quite interesting because it shows that actually most of the American exports are European brands exporting out of the U.S. It's not American brands. It's pretty much a lot of European brands produced in the U.S. exporting to the world markets. So again, quite a different market than anything else. But also here, the auto sector is very important, and that's also reflected in the politics. So whilst it's slightly smaller than what it is in the EU, but typically 5% of GDP, around 5% of employment and quite important in terms of exports.

What are the Americans doing? They are doing things differently than what the Europeans are doing for now. Right now, they have put tariffs in place. So Chinese cars have 100% tariffs. So that kind of excludes China from the U.S. Then, of course, we have Liberation Day and all the tariffs around the auto put in place by Trump. Again, it's focusing on getting people to produce more locally. Then you have the fact that there is a lot of trade between Canada and Mexico in and out of the U.S. There, you have the USMCA, which is being changed or we don't know what it's going to look like. But again, trying to get more local production.

And then they have proposed technology and ownership restrictions, which is fairly strict. So a company like Polestar is excluded from selling in the U.S. from 2027 because of the IT infrastructure. They're also talking about Chinese ownership in terms of who owns. So more than 15% Chinese ownership may actually lead you to be excluded from the American market. Volvo has gotten an exemption, but a company like Mercedes has close to 20% Chinese ownership. So it raises some issues. But again, the U.S. is very protective in terms of what they are doing. And that makes it a quite different market than any of the others. That actually leaves me ahead of time.

So basically, what we're seeing is it's a huge shift. And basically, we're seeing a repeat of the story that Japan and Korea saw in the automotive market. China is now following the same path. But again, having local production or extending your production base to other destinations outside of your local market, it doesn't really need to exclude exports. So we think it's going to be a combination of everything in terms of China. But again, the Europeans and the United States are facing big challenges because of the [ resurgence ] -- because of the growth in China.

And it remains to be seen how this will affect the market, but we think it's going to be interesting to watch this going forward. Then probably bored by now, but on to the High & Heavy. High & Heavy is an important part of our business. Right now, it's around 25% of all our cargo. And the main part is typical construction equipment, it's mining equipment and it's agri equipment. On top of that, we also have something called break bulk, which is trains and windmills and a lot of other stuff. That's more specialized products that may be a more one-off and project cargoes, but it does add up to 3% to 5%, typically 3% to 5% of that 25% to 30% of High & Heavy. But this time, this year, we're looking at the main sectors. So, what's happening and what's the outlook in the various sectors?

And if you look at construction first, first of all, housing is not very good, and it's a high interest rate environment, et cetera, never good for housing. So, on that construction is not necessarily very attractive. But what you see is that the inflow of data centers and investment in data centers is a key driver here. That leads to the need for power grids. It needs to have infrastructure in place in order to build those. And we also see that the increased focus on defense spending is also part of what is driving demand for construction. It does vary from region and sector though.

On the mining side, again, a little bit driven by the energy transition and infrastructure. You need a lot of copper to do this. It's both new mines, but it's also expansion of existing mines. And it's also driven by automation, electrification and the need to replace equipment. On the agri side, we see that margins are very slim with fertilizer and diesel and other input factors becoming more and more expensive. And at the same time, agri products not seeing the same increase in value, that puts pressure on margins, meaning that the farmers doesn't have too much to spend. So, that means less buying on new equipment.

There is some positives. Inventories are normalizing, and there is also a need to replace equipment over time. But overall, we'd say that construction, we may see a gradual improvement. Mining, fairly resilient, whilst agri is probably at the floor or somewhere around it, but we don't see any huge pickup in the short term. Going deeper into construction. Basically, it's split between segments, and we put some traffic lights here in order to illustrate where we think things are. So, on data centers and power grids, et cetera, we think that's full go ahead, gung ho, whatever. Defense spending, more and more focus on increased defense spending, in particular in Europe.

Advanced manufacturing, same thing. We think that's also something that is driving demand for construction, whilst housing is soft, and it's all linked to a high interest rate environment. On the regional side, Europe seems to be doing all right, partly driven by data centers and infrastructure. Japan, Korea, okay. Korea, Oceania and North America are doing good and particularly North America, where they're spending like there's no tomorrow on data centers. China, not that good. So, that they are struggling with local consumption. But if you listen to what the market participants say, they're fairly constructive and see some positive trends.

So, that leads us to flat to slightly up as our base view on construction. On the mining side, as I said, it's driven by, demand is driven by energy transition. Of course, there is a base product like iron ore and coal, et cetera, but it's also the energy transition and all rare metals, all these things. These are not necessarily the big projects as you see on the iron ore side or coal side. But typically, you need to process a lot more product in order to get what you need. So, even a small project for rare earth metals could actually require quite a lot of equipment. Then we come to the security of supply, which is a big issue, having local content.

And then automation and electrification is also something that is driving demand for mining. And talked about it, greenfield brownfield. Copper is a very important factor. That's typically a lot in South America. And we see that the key mining companies, they are increasing their CapEx spend and that could again prove to be increasing demand for equipment. So, on the demand side, yes, new mines, capacity expansion, do you need replacement at existing facilities and you need more automation and electrification. So, again, fairly positive outlook for the mining sector as we see a lot of demand there.

Agri, as you said, inventories are normalizing a little bit, but spending is selective because you have low margins and less money to spend. And of course, that impacts affordability. What you do have is an aging fleet, so that could put replacement further. And there is also a tech element to this, precision agri, et cetera, could also be something that drives demand here. On the regions, Asia Pacific looks okay. Europe, probably stabilizing, but it's a mixed picture. Australia, soft, North America, very weak, and South America is the same. So, big agri markets like North America, Australia and South America are struggling. If you look at what the market players are saying, they're saying small agri versus big agri is leading the way. John Deere is saying that it's bottoming, CNH stabilizing, AGCO is cautious and Kubota resilient. So, it mixes all over the place.

So, then we have a Chinese element also on the High & Heavy side. We have seen the Chinese growing exports of High & Heavy equipment. This is a number of units, and this is only a sample because High & Heavy is a big a huge number of types of equipment. So, this is a selection, but it's from China customers. We're seeing that growth is substantial, and we see that a lot of the Chinese big players are starting to get out there. But so far, the Chinese High & Heavy exports are typically containerized, and it's focused on smaller units. But we think that there is a chance that some of these big players in China may have the same global ambitions as the automotive players have.

So, this leaves a possibility for an increase in terms of exports out of China and maybe some of that will hit RoRo. Then just summing up and see looking at what the industry is saying in terms of CapEx spend and sales. And this shows pretty much the same picture as what we said. On the construction side, we see increased spend or increased sales expectations in consensus estimates. In mining, CapEx is moving up. And in agri, sales are slightly stable, negative in the coming years. So it kind of reflects what we're seeing. And with that, it's actually time for a few questions if you have any.

Just on, I mean, there's been a big shift. I think everybody has been a bit surprised this year about the Chinese kind of boom we've seen, maybe not you, but the rest of us. At the Q2 release, you talked a little bit about how your discussions with your customers also have changed a little in their tone. They're planning further ahead, more eager to secure capacity. Can you maybe share some more color on that or give a little bit of an update on what you've seen recently? Because obviously, this is just, at least from the outside, it looks like it's just gaining kind of traction and pace.

I'll leave Lasse, but I'm as surprised as you are.

I'll come back to this also in, at the closing later today. But generally speaking, I think there are 2 factors happening at the same time. One is that they are growing so fast that they realize that transactional approach doesn't work anymore. When you're moving, when you're growing with half a million, 600,000 cars year-over-year, you realize you need friends. I think that's #1. And the Koreans have realized it and Japanese in the past. The other one is, of course, the nature of the market, and Morten will come back to it, that they are really screaming for capacity. And to be perfectly honest, we have more leverage. So, the, I'll cover it a bit more later on, but just 1 year back, the market dynamics were very different in China.

And from a market perspective, what can the Europeans really do? I mean, to, besides tariffs, which hasn't really worked in the past and isn't really working for the American auto industry, I would say. So, in your opinion, what can they do to mitigate or halt this?

I mean they are trying to do a lot. I mean they do restructuring, they do all these things that they need to do. They're also in a greater extent, actually collaborating or making joint ventures, et cetera, with the Chinese. So, they need to, I guess what they need to do and to a great extent, trying to do is to be competitive in the global market. So, I think the European approach is quite different than the American approach, at least from the U.S. OEMs, which is typically local for local, as we showed on the exports is actually out of the U.S. is actually dominated by European brands, whilst the American OEMs are focusing on the local market. So, the Europeans need to be competitive globally, and they're trying to do that. I'm not sure if you have any.

Yes, I could just build on that. So first of all, in our view, we think the Europeans are doing a better approach than the Americans in the sense that they realize they need to compete. And even if you ask the CEO of Stellantis, I mean, I've not asked him, but he quoted that we need to learn how to compete with the Chinese, we can't keep them out. And Stellantis is probably the brand that is mostly attacked. And in the U.S., they have decided that we want to protect our market. And remember then that the U.S. auto manufacturers, even though produced in the U.S. for the U.S. is stable, the U.S. brands are declining.

So, what is really happening in the U.S. is that they get technology in from Korea, Japan and Europe, they don't really develop it themselves increasingly. So, not competing in a global scale seems not to be a good idea. Europeans are competing. And I've talked to 4 different chief executives of European brands last 2 weeks. And it's becoming clearer and clearer that all of them are planning for an Asia-for-Asia strategy, meaning that you cannot produce or develop in Europe for the Asian market. Even having an engineer sitting in Northern Europe, trying to figure out how things are moving and what are moving in Asia is not possible. So, they're moving more of their, not only the production, which they did in the first round, they moved a lot of production to China were pushed out.

Now they need to move more of the technology development. And then the big third question is how do we partner with the Chinese. There's no doubt that they have to partner with the Chinese, but this is a massive dilemma. All of the 4 I talk to are saying how much and where do we let them in. We need to do it in the technology stack. And there are principally 2 areas they need to look into. One is the energy side, batteries. And the second is compute, IT and AI. Is a massive dilemma, but there's no doubt they need to find a way to partner with some Chinese. The Americans are not, and that's probably why we see that the U.S. brands are less and less competitive.

But you have more leverage? I like that. That's my headline.

Any more questions? J rgen, didn't you fall asleep?

It's interesting and following on to what Eirik said because we've seen this before, so I like really the framing in the beginning where you talked about what happened in the Japanese export market and then on to the Korean one. But my understanding going into what's happening on the Chinese side was that things were relatively balanced in terms of efficiencies, right? So, a question to you who might have some more insight into the long historical picture here. What were you able to do back then that leveled off the imbalances that we had out of Asia at that point in time to make the efficiencies of the trade flows better?

And how does that differ this time? So, how sticky would this imbalance that we're seeing in the trade and therefore, the freight intensity of volumes be going forward? And I guess it partly relates to the competitiveness of the European exports, but nonetheless, if you have anything more to add?

I can start in, Anders. I think both of us are fairly new. I mean we don't have that 30-year experience. We were not here with the Japanese. So, and when the Koreans came in. I don't think we can add too much on what happened back then. But I think we can talk a lot about what we see happening right now. But I think looking at Wallenius Wilhelmsen, we were basically founded at the back of the Japanese exports. Wallenius were the first one bringing cars from Japan to Europe in the '60s. They were basically inventing the whole RoRo trade. So, back then, we didn't have a global trade, and it really were more or less invented by the Japanese coming in. We had a little bit of exports out of here.

And there's this fantastic story with Olof Wallenius. He had a couple of ships, RoRo's, which more or less invented trading with the Germans. They thought they had leverage, and this is back to leverage question, Eirik. And they pushed him a lot on rates. And he jumped on a flight to Japan, met with Toyota and said, "I can bring your cars to Europe. Are you interested?" And they said and they asked, "So when?" And then he looked at his watch and his calendar, said, in 32 days, are you ready? And he basically took his whole fleet out of the Germans into Japan and that today, we are the only large player with Toyota, except for the Japanese.

So, I think it was a very different market dynamic. What's really, what we're seeing now is that this massive growth that, I mean, yes, there was growth out of Korea and Japan, but the speed of it out of China is so fast that there's no way that a 3- to 5-year lead time industry like shipbuilding can pick up to it. So, then the only question is how long will it last? We don't think that the Chinese competitiveness will go down. If anything, it's going up. So, the big factor is how, where will they produce.

So, if you take a proxy of the Koreans, they are now adding a massive factory in the U.S. producing maybe 600,000, 700,000 Hyundai and Kias. That is not even coping for the growth in sales in the U.S. for the last 5 years of these brands. So, what we are seeing is that even though local production is established, the local growth in local production is slower than the growth in market share development. So, everybody we talk to are really concerned about capacity out of Asia. It goes to the Japanese, the Koreans and the Chinese. And the Chinese are now mirroring the approach of the Koreans. And I can assure you that Hyundai Kia, when they have 2 partners, us and Glovis, and we are the global partner.

They do around 2 million cars. We have said 50%, you can do the math. We are really a partner with them. And when they have a need, we bend over backwards and we deliver. The Chinese have seen that. So I would generally say that we have never been in this situation at this speed before in this industry. We have never seen anything like it, but I do think that the Chinese are now trying to learn from the Koreans and Japanese in creating partnerships. I'm not sure if it was an answer, but at least that's the gist of what we see today.

Okay. It sounds very sticky, which I guess is the bold story. But on the, and I don't want to jump to conclusions that might come later on, but learning from the Japanese and the Koreans and, of course, building up a large presence within this industry themselves in connection with their export increases. That was also part of the story back then. Now it seems like the Chinese have been a bit more reluctant to do that. They're more reliant on others' services for the Chinese exports. Is that something that you're seeing as lasting? Or is that something that might change?

Well, these are 3, even though they are, have a lot of in common, they are completely different cultures. The Japanese in general, are, Japan is for Japan. So, when we're saying we are the best non-Japanese in Japan, that means that we can fight for the rest. And the 3 players out of Japan, they get first to the table period. In Korea, they've decided that we have, we want 2 friends, and we have those and we stick to them. And then we are competing between the 2 of us, but they are basically covered. That means that China is free for all, and the Chinese are very happy with that being free for all. We don't see any favors coming into Chinese players out of China.

On the other hand, we see everybody being in the Chinese market. So, we compete with the Koreans, the Japanese, the Europeans, whom not. And the only problem is that there's not enough capacity left because of commitments made to others. So, the, in China, it's free for all and everybody can compete. Then they're building up some fleet themselves. And of course, that's been a question, what happens to that? When we talk to them, that's just a fear of not getting enough capacity. And it's far, far, far away from their need, and they always prefer a contract with an operator instead of doing vessels themselves. But for now, it's, I would say, a desperate move just to get access to some capacity.

And when we talk to one of the bigger players out there, what they tell us is, "This is our emergency button. When we need to run a campaign because we need 7,000 cars to land in Australia due to a campaign, we know we have this vessel, we can get it there, and we can control that commercial side of it." But the main load is still with the big operators. So, in China, the good news with the Chinese is they are really commercial, but increasingly more partnership oriented, but everybody can compete there.

Any more? I think I was actually ahead of time today. If not, there is a short break or a good break actually. So, be back here quarter to two.

[Break]

Yes. I'm stealing the show from Anders now. But we got a question before the break that I don't think we answered sufficiently in terms of the structural implications of the trade imbalance. And then one of the guys I pointed to that has a longer memory than me and slightly higher rate was Ole. And Ole came over and told me, but this was the whole reason why you guys made the merger. So, I thought, Ole, I'll call you out on that. And since you have a memory way back, from your perspective, what happened?

Okay. So, I'm not going to tell you what Wilhelmsen thought they were doing, but I'm going to tell you what the analysts saw Wilhelmsen and Wallenius is doing. And we're back in 1997. And the back story, as you heard earlier, was that Wallenius was the only Western operator who had direct contact with the Japanese manufacturers. Everybody else was a subcontractor to the Japanese shipowners who didn't have enough capacity. And Wilhelmsen historically was incredibly strong in Australia. So, they were both unbalanced. Wallenius unbalanced coming back to Japan and Wilhelmsen unbalanced coming back from Australia because there wasn't enough rolling cargo coming out from Australia.

But if you combine the 2, you could go fully laden into Australia with a high-value cargo, you could get just something to get you up to Japan and then you could take cars out of Japan to the world. And then you had a triangle trade and they were balanced. So, that was how the first balancing was solved. This was how we explained it. I don't know what the hell they thought they were doing, but this is how we explained it.

And then if you add a little bit of High & Heavy into the mix also coming from the Wilhelmsen side also balancing out, I think that's a good recap of what happened. And as a follow-up today, today, the system value is less being able to bring cargo back because that is structurally going down. The system value is to have a product in Asia and specifically now in China, where you can come several times a week and pick up cars and distribute it wherever in the world. And that's why an OEM struggle to do that because you need a lot of vessels and a lot of different cargo sources to be able to fill up the vessels into all the various ports of the world.

And if you are a BYD and you have 7,000 cars on 1 vessel, if you send that to 10 destinations, it's going to be very bad economics. So, this is really the value of an operator system that still is there, less for the front haul, backhaul, but more because of the global distribution needed if you are to be competitive out of China. Next one up is Morten. Please, Morten, so come up. He is our internal ship owner and trying to find capacity that doesn't exist. So, good luck.

Thank you very much. I have the mic. And nice to see you all. I am Morten. I'm the Head of Fleet Ownership. And so today, we'll talk a little bit about our fleet development and a bit about the supply side of our market. So if you have a history back to '97 from these companies, you won't need this slide, but I think I'll bring it up anyway. What is a PCTC or a RoRo vessel or a car carrier? Well, it's a large multistory car park with a big ramp and a propeller at the end. Our vessels usually have 12 to 14 decks like this illustration here shows of our Shaper class. All of them can be filled up with cars, obviously, but we also differ on what we can load apart from cars.

Size-wise, the smallest vessels we have can take around 5,000 cars. The largest vessels we have on order can take up to 11,700 cars. And if you're familiar with this area, the biggest car park in the area is at CC Vest, the shopping mall up the street. How many cars can you park there in total? About 1,100. So, Shaper class is around 11 times in volume for the locals. So, as I said, if we sort our vessels a bit, our fleet can be categorized into 3 buckets largely. We have standard car carriers, PCTCs, as we call it. That's where we have the majority of our fleet.

They are very good and flexible and light vessels can fill them up with cars. They can do a little bit of High & Heavy cargo, but only on a couple of decks and not the heaviest stuff. And in the other end of the spectrum, we have RoRo vessels that are tailored specialized vessels ready to carry very heavy cargo up to 500 tonnes per unit and 7 meters tall. We have 8 of those that are in specialized trades with a specific set of customers. And in the middle, we have, for lack of a better word, hybrids, which are flexible enough to take most of our High & Heavy cargo, but also good with cars. And that is the, let's say, the segment or the type that we are growing at the moment.

Our previous HERO class fit into this category and the 14 Shapers we're about to start on, they are also in this category. You'll also, you can also read this a little bit left to right. We are adding capacity in the large end. And when we are retiring capacity, most of it is in the small end of the spectrum. And that is, of course, because we want to provide to our customers the most competitive freight and the lowest emissions and the size, upsizing the vessel is the most powerful lever we have to reach that. And it's also well suited, of course, with our operational size and cargo base. We are well suited to implement larger vessels, and we have historically broken the mold in PCTC several times, introduced larger vessel types.

If you compare us with the peers, we have the largest fleet in numbers and in capacity. And we also have most of these hybrid type vessels. Others are also growing in that category, but we have the largest volume of that, and we will add all the shapers into that category. And in the heavy RoRo segment, which we spoke about, we are quite alone to have that kind of capacity. And we are, of course, intending to continue serving that segment where we have long-standing customer relationships.

If we lift up a bit and look at the global fleet, here on the left side, you see the capacity that has come in and gone out per year. This is in CEU in numbers. The whole global PCTC fleet is now at around 950 vessels and the order book is at about 180 vessels. And you'll see here that we have been through almost 10 years from 2009 to '19, where there were very little or no meaningful fleet growth in the world in this segment. And then came some years with increasing deliveries. So, the deletions here that are illustrated into the future are based on retiring vessels at 30 years of age, which is kind of the normal retirement age for car carriers.

But at the moment, we are not in normal times. And basically, even if we retire vessels, most of them will probably find another home with the secondhand traders or with regional players. So, all in all, we are in a period with fleet growth. The order book a couple of years ago was up to 42% of the existing fleet and has now with delivery of the very big 2025 vintage come down to around 20% and is again on the rise with new orders coming in. Today, we would say the order book is around 25% of fleet. If we instead of looking at deliveries, look at contracting, we see we have been through 3 years from '22 to '24 with quite intense contracting of car carriers.

And then in '25 last year, we took a breather as an industry and sort of a wait-and-see mode to see how the fleet was absorbed. And we all know and you have probably heard this morning that, that was not a problem. The whole fleet of new building has been absorbed and then some. So, this year, the, let's say, the confidence has returned to the market. And we are again in a period with quite active ordering of newbuildings this year. 73 contracts have been signed as far as we know, so year-to-date. And if you just extrapolate that for the rest of the year, we may end up around 2007 record year.

But we are pushing this quite far into the future now and orders are coming in for '30 and '31. So, the lead time is now 4, 5 years, which at least I think we see signs that it's harder for a tonnage provider to secure charters for that far forward and also harder for the yards to price it. So, I think 5 years is sort of a maximum at the moment of what is commercially viable. You may also notice that all these orders, usually, they basically end up with a handful of shipyards, mainly Chinese. And we wish sometimes that there were more providers of PCTC in the market, and we could find more yards interested. But building PCTCs is a bit special.

It takes much more man hours than other types of ships because, again, of all the decks that needs to be welded and the structure. And also, it takes up a lot of space at the shipyard sites because you have to put all the decks out next to each other before you can put them into the ship. So, it isn't everyone who's interested in this sport. And it ends up with a few specialist shipyards, most of this. So, with that in mind, no wonder that the prices are holding up for newbuildings. The yards are also, there's also a lot of interest ordering container and bulkers and so on. So, yard prices are holding up.

We estimate that 7,000 standard dual fuel LNG vessel costs around $94 million now. And on the charter side, we see strengthening rates again. This 1-year charter rate of $90,000 is probably representative, but a bit theoretical also because the order depth or the liquidity here is basically gone. There isn't vessels available for charter for us for delivery this year or even next year. So, it's, we can see deals for '29 and '30 onwards, but there is very little to add in the short term. So, when our colleagues in the sales department come to us and say, "Why don't you add some more vessels, we would like to ship some more," we had to say, "Sorry, there's, it's not possible."

The whole, it's not just us who are basically filled up with cargo, it's the whole industry. And you saw this morning probably that cargo is flowing out of our segment at the moment and into containers and other types of ships. So challenging to secure more capacity than we have on our books. But returning to the start, it's a good timing for us at least. And so we are happy and our customers are happy that we are about to take delivery of the new Shaper series, 3 vessels this year.

And by the end of '28, we will take all 14 vessels. The first 6 are of 9,300 CEU, as you know, and the last 8 will be the largest car carriers in the world at 11,700 CEU. So, we look forward very much to this and what better time to get large vessels into this market. That's what I have.

Then there's room for questions, I think.

So, it's interesting what you were saying on the man hours for the car carriers. Is that something that's changed? Because I believe the efficiency by these 4 yards that you mentioned that are very focused on this business have improved a lot? Or has it always been around that same number?

I wouldn't be able to give you a very precise answer there. We see automation coming up when we visit the yards, but how much exactly it has changed, I couldn't tell you very precisely. It is a significant amount of hours going in. We estimate twice the amount as compared to welding up a VLCC, which is a much larger structure, of course.

And I think this is, this needs to be seen in a wider context, the fact that all segments are ordering. So, the yards can actually choose. And so I think what you're saying, Morten, is that in that market, they don't choose PCTCs unless they've done it before. They'd rather do a bulker or a tanker or a container vessel. Because for a shipyard, it's a question how, the biggest limitation you have is the dock, how much can we push through the dry dock or the slip. And then the second is basically the welding capacity in the area. And what we see is that you can push less vessels through the same infrastructure with PCTC than, call it, at least the average alternative.

And so that's interesting because then you have a tight connection to the Korean yards as well. So, the prices that you're quoting on the $94 million, that's a Chinese-built ship. What will you need to pay if you wanted to make or produce that same ship in Korea at the moment, do you know?

We have discussions with Korean yards, but I couldn't give you a precise number. It's significantly higher, both in Japan and in Korea.

Good morning, everyone. My name is Francesco Allamandi. I'm a Managing Director in the Bank of America Investment Banking team based in London. My day-to-day job is to serve our clients in the automotive industry in Europe, but also globally as this is a global market effectively. For the next 20 minutes, I'm going to have a short presentation going over some of the opportunities, the challenges that the current OEM, the current landscape, global landscape is presenting to the OEM industry, clearly building on some of the themes that Lasse and Anders have gone through this morning.

I think what's fascinating is, we're going through an unparalleled paradigm shift in the industry, as has been mentioned. I think there are 4 key things to keep in mind here that are shaping some of the dynamics in the industry. #1 is what we call the end of volume growth, but certainly a slower growth in the number of units being produced globally. We've been through a cycle between 2010 and 2017, where the industry sort of benefited from a huge growth driven primarily out of the democratization of Chinese mobility consumption, car consumption.

And that has generated operating leverage in the industry and great profits and then margin improvement. And we went through a period of volatility during COVID that we're all familiar with. Today, we're in an environment where markets are growing, are more mature and growing more slowly. By 2029, it's estimated that the industry will essentially only by then recover the same amount of volumes that we had at the prior peak. So, that's a pie that in terms of units, at least is growing a bit slower than in the past.

Secondly, there's different technology adoption globally across regions. So, in particular, and here, we have the example of battery-driven vehicles. China will lead, is expected to lead. U.S. will rely more in the future on more traditional technologies and then Europe is a little bit in [ limbo ]. What does that mean for the OEMs? It means that you need to fund more technology or parallel technologies for a little bit longer.

The third dynamic is the adoption of these new powertrain technologies has been volatile and uncertain, essentially as testified by the very big write-downs that some of these companies, GM, Stellantis, Ford have announced, for example, this year, we've gone through an investment cycle into EV technology that hasn't really produced the returns that we had promised at the onset. And lastly, we're seeing obviously more geopolitical friction globally, whether it's tariffs, rare earth export control, whether it's software barriers.

What that means is, again, from an OEM standpoint, the need to develop different local ecosystems rather than a single one global to compete at a global scale. So, the danger here or the challenge that's faced is there's an increasing capital demand for OEMs to compete in what is a more, theoretically more fragmented market. On top of it, you have the competitive overlay. The Chinese OEMs have taken a large share of volumes from pre-COVID to today in a market which is basically stable in terms of, from 2019 to today in terms of units being produced and sold. The C-OEMs have taken about 12 million more in volumes, clearly lost by the global competitors.

When you look at the distribution of that share gain, you have 2, 3 larger players, BYD, Chery, Geely, but you have also a universe of midsized competitors with very attractive products and which have entered the international market. This dynamic to me has taken 2 stages, right? Stage 1 was between 2019 and 2025. A lot of the volume gains, the proportion of that has happened domestically, right, 8 million volumes gained domestically out of the 12 million essentially. But now we're into a second stage where over the past 4, 5 quarters and projected at the end of this year, what has been a slowing demand in the internal market in China has incentivized the C-OEMs to essentially replace volumes lost in the local market to volumes gained internationally, pretty much so far at a 1:1 ratio up to now.

And what's driving this? The local domestic market in terms of consumption of vehicles has slowed down over the past, since basically 2025. Multiple factors. A, essentially the subsidy regime was wound down over the past 2 years. There's also a normalization, which comes with that because there was demand essentially pulled forward ahead of the subsidies being phased out and also negative wealth effect as the strength of the Chinese consumer internally is a bit weaker.

How do we see that, how does the industry expect that to evolve going forward? Well, if you look at the medium term, '26, '27, '28, volumes or internal demand for cars is expected to be on a recovery, but relatively stable and certainly lower than the prior peak at the end of 2025. So, that's a dynamic that's expected to remain there for the medium period. And, what's also interesting, on the right-hand side, you see the nature of what the Chinese car market is today. It's very much a start-up market where you have 50-plus of the 70 competitors fighting for business, trying to bring innovation.

And essentially, only few of them really have the scale, ultimately, car business is still an industrial business, still scale is still a critical factor for profitability. Only a few of them have the scale necessary to turn a profit. Yes, we see the top 3, the ones who have essentially 1 million-plus number of units. But for the rest, they're still yet to turn a profit. So, there's essentially an existential need for the local player to also evolve and capture share outside of the local market in order to come out of this start-up phase as a survivor of the industry.

The other side of the equation, it's also the ability to fund this international growth from a capacity perspective. When you look at the firepower or the theoretical maximum firepower of the industry in China, looking at volumes, which could theoretically be double what the internal consumption is today.

So we've seen the exports going up. And again, the big gap between the dotted line and the solid bar, that's capacity available to fund or to provide products for this external growth. Where are the products going today? Today, products are going more towards -- or historically up to today, have been going more towards developing markets, LatAm, Russia, Africa, and the rest of the neighboring countries. North America is a more closed market, as outlined before. Europe is clearly the low-hanging fruit, right, where we expect volumes to continue flowing to increase -- to increase flowing.

I'd like to note that this is not a dynamic that's -- that only applies to Chinese OEMs, right? This is one that applies to all the international global players also operating in China, which are increasingly seeing China is also an export base for the global market for a number of reasons, right, for the -- they have installed capacity. They have a low-cost environment, a low cost and growing in terms of growing supply chain that's local. And also, most importantly, there's an advanced technology. These suppliers are able to provide really advanced tech. As I think it was -- the VW CEO mentioned, China is becoming the fitness center of the auto industry. So for global OEMs, being there, learning lessons there, competing and taking that lessons abroad and capacity abroad is still going to be -- there's still going to be a strong competitive incentive to do that.

Talking about -- remaining on the theme of competition, right? What has happened so far with -- in the first wave of competition in the local market, the competitive forces that have shaped the market have been based on a, ability of local players to really hit the market with new products at a very fast cadence and a very fast development cycle, again, a feature of a start-up market; b, great integration, for example, of your phone in the car, the user experience end of the car and then the integration with the local ecosystem has been an advantage. But largely, I'll say, mainly the catalyst that has empowered local players has been the shift in powertrain, right? So going from an ICE vehicle to a BEV vehicle where you have better battery technology, a structural cost on the battery that's advantageous.

And so the initial catalyst was powertrain, where we see the competitive landscape changing today and the forces that shape the market today, they're going more towards the software. And ultimately, the highest application of software, which is autonomous driving. And so today, in the local market, at the end of '25, 2/3 of vehicles sold featured advanced ADAS function, right, Level 2+ and above, much, much higher level than what we get here in Europe or in the U.S. And we have BYD is one of the examples, but essentially a big suite of sensors and features are offered at base level and with smaller incremental cost at the more premium end of the vehicle. So that's clearly a feature that's defined in the competitive battleground in China today.

Above that, you have a growing and nascent robotaxi industry as well, like the ones you see in the U.S., in China, you also see commercial operation from a number of operators in an industry with a number of players, whether it's the tech providers or the actual ones who are more integrated, which do the tech and also the operations on the street. Is this a competitive advantage that's being developed and can be deployed elsewhere in Europe or used to conquer market share globally? I think in the short term, there's still barriers to that. There's data control, there's authorizations, regulation. But what we see is that maybe not the products in the car, but certainly the technology stacks are making their way into the global markets and into Europe. You see Momenta, WeRide, Pony, all of the local players have partnership in place with mobility operators in the European landscape, and we will see these tech stacks operating in our market.

Moving on to a bit of our local landscape here in Europe. The market has been relatively resilient in terms of units being sold despite the macro headwinds. Today, again, the incumbents still have a 60% market share, but the Chinese OEMs have been taking shares. Today, they have about basically 18%. They had 3% about 1.5 years ago. The case study that's very interesting. I know that here in the local market, Norway is a very specific market where the BEV penetration is really high. But in more traditional markets such as the U.K., you can see the second highest sold vehicle in the country in Q1 of this year was the Chery Jaecoo, midsized SUVs with a Chinese brand. So done without a European brand, like, for example, Geely would have done with Volvo or has been done with MG.

So a non-native brand, -- it's not a BEV. It's a plug-in hybrid. So it's a product that really has been competing in a traditional way in quality. Quality is understood as the ratio between the content versus the price. The PHEV is a particularly interesting story because it has been the loophole in a way, used by the Chinese OEMs to go around to a certain extent, the tariffs that were imposed 2 years ago, at the end of 2024. And today, most Chinese makers have to face some degree of tariffs for electric vehicle only. That's on top of the 10% tariff that's already hit the imports in Europe. That hasn't really slowed down the consumption of Chinese vehicles in Europe. The big question is, will Europe impose new tariffs? Last week, the State of the Union speech points to the problem in a way.

It's to be debated whether this is going to result in tariffs. The timeline for that would definitely be similar to the previous one where from '23 to '24, that's when the tariffs will be implemented. So you're looking at perhaps a 9 to 11 months' timeline. Certainly, this would help local manufacturers in the market. But at the same time, the new entrants are expected to, a, absorb the tariffs in a first part, which they can't do because of a cost advantage that they have in the manufacturing. But b, over time, try to localize more into Europe. And these are really the current plans that that we see from Chinese -- from Asian OEMs. That's localization is the ultimate incentive right, of the tariff regime. Why are they doing this? Obviously, tariff avoidance, but also to away from a brand image standpoint, there's also a political acceptability standpoint.

I think it's important to note that when you sum up all of the capacity that will be built to 2030, right? So in the medium to longer term, you still have a significant gap to what the market share and to the volume implied by the expected market share of the Chinese player that will be in 2030, right? So you're thinking about 2 million-plus volumes coming from China, about 1 million potentially localized, there's still a significant gap that leaves room for significant imports there. Switching gears a little bit to North America. North America today is -- we could see this as a happy place for legacy manufacturer. A, there's very attractive, most profitable profit pools of the market. Think about the large SUVs, the trucks. These are really marketplaces where the locals, the Detroit 3 is -- have making a lot of profit. Margins have really focused their strategy to maximize their opportunity set in there.

It's no wonder that the global OEMs who have been losing volumes in the East are looking to North America as a must-win market for the future to replace sort of profit loss elsewhere. Localization is the price of new entry under this current tariff regime, and we've seen announcements made but pretty much most, if not all of the operators in that market that goes towards bringing more production for production for protection in the continent. There are 2 themes here that I think could shape the dynamic going forward. One is the demand in this market is pretty much K-shaped as much of the demand in the U.S. economy. This is our internal data, but basically, you see that the loan payments for new large vehicles, again, large vehicles are the ones sustaining the profitability of the North American industry today, are heavily skewed towards higher classes. And that reflects really the K-shaped dynamic in the U.S. economy.

Now should there be a stock market hiccup, maybe we could see if something changes there and then potential risk on that side of the market. The second dynamic is one about powertrain. And differently from the rest of the world, the car parc and the car sales are going from ICE, not to BEV, but from ICE to namely moving more to hybridization. This is in the medium term, an opportunity for OEMs or could be an opportunity for OEMs, which have global platforms with hybrid technology, and I'm thinking really about the Japanese, the Korean, to a certain degree, the European player, to try to take market share in some of these profit pools, thinking about the midsized compact-sized SUVs. So that's an opportunity for competitive shakeup in the medium term.

I think the big question is in the long term, right? In a market which is essentially protected where the development or the capital deployment into electrified technologies or pure -- few fully electric technology is not as incentivized by the market. What's going to happen really in the long term where, let's say, barriers could come down and you see really players who have been in this fitness exercise for a couple of decades now entering the market against, let's say, less fit domestic players. I'd like to conclude with a quick thought and going back to the beginning of the presentation, right, also reflecting our role as M&A practitioners. When you think about the start of the presentation, we mentioned the fragmentation potential of the market, increasing capital resources needed to compete. And you can think of deglobalization instinctively as a result of that.

What we're seeing instead is really much more collaboration in the industry. And as players from across the globe, we are trying to get together to solve some of these challenges, right? You see from a transatlantic standpoint, software JVs between examples here, Rivian and VW also with equity links on top. You see sharing of platforms, some of the American guys, namely Ford in Europe using some of the platforms of the European established players, sharing of capacities in factories as well, innovative agreements for the manufacturing and distribution with equity links, for example, Stellantis and their stake in Leapmotor and their JV to produce Leapmotor cars outside of the Chinese market. And also deals where capital has been provided in exchange for licensing tech, the Chinese player like the VW and XPeng case shows. So the concluding remark is that despite the change in paradigm, this industry remains intrinsically global. Global scale still counts and matters. The markets are global, and this will remain like this and so will remain the flow of ideas, technology and ultimately also products. Thank you.

Yes. Hi. Thank you. So let me start with my presentation. So I'm an economist, I'm a macro person. So I'm thinking we're going to look at China from a macro perspective, a bit of a bird's eye view. And this picture that I picked is not by accident. It's from BYD's Shenzhen Gigafactory. It's a bird's eye view of that. I think because I'm a bit jealous of our shipping team in DNB Carnegie, who's going there. It's a factory that is approximately the size of London in scale. So it produces an enormous amount of cars and vehicles for export. So let me begin with what we think is important for the macro perspective on China. And this is really something that I think is defining what's happening within China and outside. Because if you look at what's happened in the past, I would say, 6 years, something very dramatic has changed in what's driving China macro.

So if you go back even further in time and you ask economists sort of what is the big risk? What keeps you up at night? A lot of people will tell you, oh, there's so much debt accumulating in China. They're building all of these houses that no one wants to live in, these ghost towns. When that goes bust, it's going to be a big, big cost. It's going to really hinder growth, not only in China, maybe even in the world. And that's precisely what's happened in the last 6 years. In 2021, the Chinese government themselves decided this is a bubble, the risks are high, and they're just going to poke it and also contain the fallout of it. So if you look at the chart behind me to the left, it shows you what happened with housing investments in the pink line, and that's halved. And this is important. I mean, at its peak, it was like 1/4 of Chinese GDP. So when that halves, that's a big impact.

But if you look at what's been happening in the global economy, in the Chinese economy, a proxy for Chinese GDP electricity demand just kept growing. Actually, it hasn't really slowed down even. That, I think, tells you a lot about what's been happening internally in China. It's managed to basically shift 1 engine of growth, real estate into other engines of growth. Manufacturing is important, of course, but so is cars, so is robotics, so is AI, so is biopharma. Everything else got more resources, more investments. And basically, what we think is that China ran Hunger Games on tech. They were saying, yes, welcome. We have a big start-up community. We're happy to invest. We're happy to let there be some overcapacity, but there's going to be sort of competition that gets the winners up and out.

Now the thing that we need to remember is that this has costs. And I think that's where we think the Chinese economy and the export story is kind of focused too much on. So if you think about what happens in the hunger games if someone wins, but someone is going to go hungry. And what's happened with China is that overall, margins for everyone has really been squeezed. And for households, in particular, when we look at real wage growth, that's basically halved. Prior to 2021 or 2020, prior to the pandemic, it was around 6% of real wage growth every single year. Now we're at 3%. And what does that mean? Well, it means that households have much less income growth. But in addition, the biggest storage of wealth for households, their house has declined materially in value. So low incomes, but also a big cut to their wealth. And what does that do to Chinese households? Well, they save more.

The chart to the right shows you that. And if we think about the auto sector, it's kind of the textbook example of this, a sector where demand, chart to the left is basically flat. I'll come back to the decline this year. And the supply, the manufacturing, is growing into the sky. But I think there's a bit more to this. There's a bit more than just demand is too small, supply is too high, and therefore, much more is being pushed out into the rest of the market. So let me start with the demand story. So I think the previous speaker already mentioned it, there's been a lot of changes to subsidies in China, purchase subsidies. One thing is that China has had this big program where we trade in old vehicles, and the government will pay a lot of the price of the new vehicle. It's set up in a way where especially the cheaper cars is going to get more subsidies.

In addition, if you buy an electric vehicle or a plug-in hybrid, you're going to be exempted from the purchase tax. And what I think is important is that when we look at what's happened to these subsidies in total from 2025 to this year, that decline is about 30% to 40%. And if we calculate it as a share of the value of the vehicle, it's actually quite high. For cars that cost less than RMB 100,000, it's about 13% of the value. So why do I make a point out of this? Well, because when we think about a car here in Norway, that's less than RMB 100,000, like NOK 145,000. We think that's a really cheap car. What is that? But for China, for the average Chinese household, if you look at what that costs in terms of their average wage, they have to save 1.4x their annual wage to buy that car. And some of the most expensive segments, I mean, it's almost like buying a house here in Norway.

So when the subsidies change, in our view, that's really had a big impact on demand this particular year. What does that mean? Well, it also means that in some of the segments where demand has fallen more, we've seen that the cars have gone out. So one of the most popular cars that are being sold in Europe, in the U.K. and Germany, at least, as well as in Brazil is this BYD Seagull. It's this baby car, very small and very cheap. And it actually occupies a market that doesn't really exist. It's not really being served there. We also see that the XPeng, which is around RMB 120,000, that's being dubbed the Tesla killer. It's coming out also in a greater extent. And of course, we have Xiaomi. So this is the car that looks like the Porsche Taycan but drives better than the Porsche Taycan or at least it beat it in the Nürburgring.

That one is actually part of a segment where demand is also declining, and it's also coming to Europe. And we have the Tesla Model Y, which is actually a quite expensive car in China as well as the Maextro, which is a Huawei model. So what we're seeing is demand is declining the most in the cheaper segments, and it's pushing some of these cars out, but it's also quite competitive and also the more expensive segments. The bigger story, I think, is not just that demand is declining in China, but that there's been a massive change in drivetrain technology. And I think it's kind of difficult to wrap your head around it because of the scale of China. So as analysts, we typically think something big doesn't really change that fast. Acceleration is not that quick. But if you look at what's happened in terms of Chinese demand for vehicles, in just 6 to 8 years, it's basically transformed the entirety of the Chinese transport sector more or less.

So the chart to the left shows you domestic demand, the total in gray, but you have the ICE vehicles and the traditional hybrids in blue, battery electric and the plug-in hybrids in various shades of pink. And it's kind of fascinating that in just sort of the course of business cycle, the demand for ICE vehicles went for like 25 million cars per year to, what, below 6 almost. That's a massive swing. If you think about the size of that, that's more than the supply the OEMs that produce in Germany, in Japan and the U.S. put together in 1 business cycle. And these factories are not sort of transforming themselves into new EV factories. Those have grown in addition. So there's been a really big change here in the drivetrain. And we think that, that is one of the reasons why especially ICE vehicles are driving the exports.

And a lot of people will say, wow, well, that's a massive change, 6 years, that's not a lot. But when you think about what's been underneath this, it's been pushed through by policy that started back in 2001. That's when China really started saying, "Oh, maybe we should have some more students in engineering courses, material sciences. We need to look more at batteries." In 2015, China had a major pushout of sort of charging infrastructure. That's also when they started mandating supply chain localization. So if you wanted to produce an electric car, the battery you used had to be made in China. They did a lot to make sure that suppliers were built up in China. And that's why when 2021 hit and the housing market was popped and the Chinese car manufacturers suddenly could see more access to capital as support to build up their factories was kind of ready to build.

And that's also what we think is happening when we look at exports. So the chart to the left shows you exports. And I think really, surprisingly, I mean, if we just look at what's being mentioned in the media, everyone is talking about this massive wave of Chinese EVs that's coming to Europe. But if you look at the actual data, the largest increase in exports from China is just normal ICE vehicles. Of course, battery electric and plug-in hybrids have also grown, but these are kind of 2 very different stories. On the one hand, we have all of the stranded productive capacity in China producing ICE vehicles that can be sent out. And on the other hand, you have very competitive EV vehicles that are also being pulled out. And as the previous speaker noted, actually, the European markets, the Western markets in general is not that big a deal for China.

Going forward, I think it's also worth noting that these are the markets that China are targeting. So if we look at what's driving sort of demand for vehicles in developing markets, the chart to the left kind of shows you that. It's the number of households, millions of households that enter what we call middle class. So this is when you buy your first nice car. And if you look at what's going to happen in the next 10 years on our estimates compared to what's happened in the past 10 years, actually, China is not really that big a driver of the growing middle class. It's really the other emerging markets that are more important in terms of the scale of growth. And if we look at what China is exporting today in the regional split, it's quite fascinating that China's exports to these other emerging markets are really that very important. What are they doing there?

Well, 1 is building brand recognition. You have the sales team in line; you create the logistics that you need. But 2, what we're seeing is also that China is able to adapt the supply with the demand in the various regions. So ICE vehicles go predominantly to Latin America, lots to Africa as well, whereas Chinese EV and plug-in hybrids are increasingly also going to Latin America and especially emerging Asia. So one of you or some of you might ask, well, EVs in developing economies, are they capable of penetrating that fast? I mean is the infrastructure for charging there. I think to me, the big surprise is, yes. In Vietnam, for example, EV penetration is 40% of new car sales. So developing economies, having seen what China has done, are perhaps also able to build the infrastructure needed to go over to plug-in hybrids and EVs. And the war in Iran, all the better reason to do so.

Now what will happen then with these Chinese exports? Are there going to be tariffs that are going to make the Chinese exports less competitive? Well, we think there are definitely some. But fundamentally, I think it's important to highlight what China actually has been doing with tech. So from a macro perspective, we look at ex-factory gate prices. So that's an index of how things -- how expensive things are when they come out of the factory. And if we look at the chart to the left, we see what's happened with ex-factory gate prices for autos for cars in China. And normally, an economist keen on sort of inflation and central bank rates, we would expect prices out of the factory, hopefully, to continue rising about 2% every year. That's the best-case scenario. And if we look at what's happened with the Chinese cars, they've been declining in price every single year in the past 12 years.

And a lot of people will say, well, that's because there's too much competition. They're cutting prices, there are price wars because they just have to subsidize and they have to settle the cars at a loss out there to gain market share. We think that might be part of the story for why prices have intensified in terms of the decline. But when we think about what's driving a big part of the cost in China, the battery cost, it kind of followed the same trajectory. Just in a couple -- sort of since 2021, battery costs have fallen by about 40% in China. That's something quite dramatic. And if we look at how that sort of compares to the battery costs in Europe or North America, I think it's a really big point to say it's dropped there as well in Europe and North America, learning by doing, it spreads everywhere. But the gap between how much a battery pack costs to produce in China versus Europe has actually widened further in the past 3 years.

So it's even cheaper, even more competitive now. And what's driving that? Well, every time you go to a Chinese car manufacturing company, the showroom, the first thing you see, I think many of you guys may have seen it, is the wall of patents, which tells you this is our company's particular patents that we have. And we think that is important. But the International Energy Agency, which provided these numbers, they've also looked at other things that may be important. And their calculations show that China, having worked on sort of controlling the full value chain of battery production, they have access to materials in a cheaper way. There's vertical integration. That accounts for about 1/3 of their cost advantage. That's quite difficult to replicate. Another 1/3 of their cost advantage is just China is better at doing things. There's scale, the wall of patents does matter. And then the last 1/3, they're saying is, well, probably some subsidies here and there and probably also a cheaper renminbi.

So what does this mean? Well, the way I'm thinking of it is if China is hoping to continue building its electric vehicle industry, this is really the foundation of what makes it competitive globally. And perhaps, it will be fine. It'll be happy to act as the Western multinational companies have done before, moving factories to Brazil, moving factories to the Middle East, maybe licensing the platforms that you use to produce as long as one of the key components, batteries are still Chinese. That brings me to Europe because this is probably where the problem of tariffs or the question of tariffs is most pressing. And I think the chart to the left is quite fascinating because that shows you the share of Chinese brands. So that includes brands like Polestar, which we don't really think about as Chinese but are owned by Chinese -- by the Chinese. And their share of the European sort of both U.K. and Norway car markets.

And I sort of plotted a couple of things in there because I thought it was fascinating. So for a very long time, the Chinese brand share of the European market was very little, less than 2%, 3%. But even after the European Union slapped punitive sort of tariffs on the Chinese cars, the share kept growing quite significantly as well. Some would argue that's because China quickly switched over to plug-in hybrids. But it just kept growing until we got to the point where the EU and Volkswagen Anhui decided that you know what, what if we just agree that when China sells to Europe, you set a minimum price. We set some sort of volume that you can export, but at a minimum price so that we can protect our domestic car manufacturers. I thought that was fascinating because for a Chinese producer or in this case, Volkswagen in Anhui, that is basically saying we are guaranteeing you a wonderful profit that you'll never have in China. Best case scenario ever.

So now when we're thinking about, okay, will the EU seek voluntary -- they want voluntary export restrictions. So they want the Chinese to say, you know what, actually we'll cap how much we sell to you guys. The question is, will there be a minimum price maybe also involved? Or will there be other horse trading that happens? And one of the things that I think is worth noting is type of horse trading that happens on precisely batteries that I spent some time on. So when we look at the broader picture, a lot of people will say, well, you know what, batteries are actually a general-purpose tech. So if you think about robotics, if you think about manufacturing, if you think about drones, a lot of sort of key strategic applications, it requires a battery to function. And if we think about where China is on the supply chain of batteries, 83% of all batteries today are produced in China.

But the cell materials, so the components, the anodes and the cathodes, almost 100% of them are produced in China. A lot of the materials are being mined elsewhere, but they're processed in China. So if we're thinking about what the EU might want in their negotiations with China, 1 thing is localization of firms, localization of jobs, but another thing is probably also Chinese IP. So this has gotten a name in Europe called the Reverse Deng Xiaoping because it's kind of like what Deng Xiaoping did back in the day, which is saying, you know what, we'll give you market access, but what we really want from you is tech transfer. So let me end there with a couple of takeaways from my part on the macro side. For me, I think there's a lot of things that point to a structural change here. There's a lot of things that tell us that the Chinese car industry is quite competitive.

And yes, there is very clear demand weakness now in 2026, but that is quite mechanical. The more important thing here is that China has managed to change the transport sector completely. And if we look at what's going to happen for exports, the Chinese government is very clear. They want to focus on emerging markets. The West is nice, but it's the rest that really matter. And trade barriers, yes, we might see more of them, but the competitiveness that underpins Chinese tech, it's very hard to just tariff away. And when we look at what might happen with the EU and China, watch out for some type of compromise involving IP. So with that, I'm a little ahead of time. So maybe we have time for the question. One question. All right. Thank you very much.

So then it's left to me to try to wrap it up, not with a disclaimer, but with this. Before I do so, I'd like to thank the person who's been behind this, certainly, Kelly and Francesco for bringing in new perspectives. Thank you. But also the 3 people over here that you don't see, but basically, those are the brains behind both me and Anders and others. So please, Ryan and the team get up and let's give them a good hand of applause, Ida too. All right. So I will try to -- so these are both Elisa and Ryan are part of Anders' team and Ida is on comms for those of you. Three key themes we've heard today that shapes our market. No doubt, China is the one driving the market today. And we have talked a lot about shipping because we have focused on the exports.

And I just want to add 1 thing. We are more than just shipping, as you know. We also have a significant logistics and supply chain solutions business. The stronghold of that is in the U.S. So for the U.S. for U.S. market, we are very well positioned to serve that too. And certainly, also with our logistics capabilities around the world, we're fully able to help Chinese players grow way beyond the terminal side. So I just wanted to mention that. But today, we're really focused in on the shipping part of our business and those markets. And the key there is that we have constrained capacity. And then the natural consequence is that rates are increasing. So let me give you then a little bit more of the background for that, and I'll end with a repeat of our market view.

What we have seen today is that the Chinese are basically taking over in every market and everywhere. Sitting in Europe, we tend to overfocus on Europe and talk about what happens when we have tariffs. Europe is not key to the Chinese. It's 70% of the current exports and other markets are growing faster. So the Chinese export story is not about Europe, it's about global competitiveness. And I would claim that if you go 10 years back, it was cost advantage. Now it's product innovation and technology advantage. They used to be cheap cars. Now they are better cars. And that's why you have seen that this has grown first in China, built scale and now they're scaling this overseas. And we -- based on the discussions we have with customers, they expect this to continue certainly for the rest of this year and into the next year, into the next years.

This has caused a massive spread between the need for RoRo capacity or PCTC capacity out of China and the supply, meaning that the growth of exports are far surpassing the growth of the fleet that is coming in. We -- if you had asked us 2, 3 years ago, we were a bit uncertain of what happens in '26 when we have this first wave -- '25 and '26, first wave of vessels coming in. The answer was nothing. And the reality is that we're still lagging behind the growth in demand. So what we saw in -- now during 2026 is that more cars are moved into container, and we have a complete new segment of other bulkers and others doing cars. And I can assure you, I've never met a single OEM in the world that prefer anything but PCTC. When you move 10 million cars out of the country, you really focus on flow.

Putting it into a box, out of a box, it creates damages, it's more costly and it's slower. Lifting it onto a bulker, just imagine. So all Chinese customers and OEMs are fighting for PCTC capacity. That's why they have started also now to do some time charters themselves out of desperation, not because it's a good idea. And here, you need to understand the value of an operator. We're an operator. We have around 130 vessels. We have tens of customers. We don't have 1 single vessel more or less ever in our history with 1 customer on board because you are taking big volumes out of China or Korea or Japan or Europe for that matter, and you spread it out to the world. And you need to do that frequently because if you don't come in every second day, the port is filled up. And you can't do that with 20, 30 vessels, but you can do that with 130 vessels.

So what's unique with the big operators like us that these companies can never replace is, 1, the frequency we're there several times a week. Second, we can fill it with other OEMs going to the same port. So you don't need to take 1 vessel to 10 ports, but 1 vessel to 1 port with 10 customers. So that's why we're not afraid of OEMs being our competitors. We don't think they will. But we will have, for sure, Chinese competitors being operators. We already have very good competitors sitting down the street, even in the audience, and we are happy to have competition. But I think it's important to say that we are not concerned about our customers becoming our competitors. And we believe, based on what our customers tell us that these volumes that have moved beyond PCTC, the day there is capacity, they will come back. So not only are we seeing a growth in demand, but also a growth in unmet demand for global shipping of cars and equipment.

And as Anders pointed to, we have not yet seen China moving at scale on high and heavy. This is the one to watch. And when we talk to customers in China, they are now saying that the first stage, they are maybe 10 years after the auto industry. If you talk to big global players, Western players in the high and heavy industry, they are now doing everything they can to settle the market before the Chinese comes. So we don't think that this Chinese story is anywhere near to end. This squeeze in capacity has caused a massive change in the cost of capacity. So when you look on the right-hand side, that's the TC, time charters, what we need to pay if we were to find a vessel. But Morten told you, there are no vessels, we can't find them. But if there were 1, they're expensive. And don't confuse that with our earnings. This is our cost.

Our earnings is on the left-hand side, that's the rates. And when we did contract, the current contracts that were 1-year contracts, most of them in China were 1-year contract a year ago. This is where we did them. We're now renewing these contracts. And as you can see, the spot rates out of China for transport and PCTC, very small market, but it's a very good proxy on what's going on. The sentiment in which we are doing contracts in the fall of -- typically, you do it in the fall and then they start end year in 2026 is materially different than what it was in 2025. And we need to admit that we probably read the market wrong as everybody else because the sentiment last year was not as strong, but the fundamentals were still there, but we just didn't see it sufficiently.

So that leads us to our business. We had some questions this time around last year on what about that 40% open capacity you have in '27. Today, for us, that is a massive opportunity. It's not a question of if we can fill that 40%, it's a question of who do we give it to. And that's what we talked about earlier in terms of leverage. And of course, that's not always easy because there are quite a few customers we need to let down. And we are currently prioritizing real hard and trying to make long-term partnerships with those who we believe are long-term players in this industry. And no doubt, an increasing amount of that are Chinese players. And they have realized they need to do something differently than what they did last year. And so what we have seen so far this year, and I will not speculate what will happen for the end of the year, but so far to date, all players have seen that the rates have gone up, you've seen that, but also duration of contracts has been extended.

And the need for partnerships and deeper relations with somebody like us has really changed in 1 year in China. So I would say I've never seen a change in sentiment among customers in 1 year than what has happened over the last year. Fundamentally different market that we're now renewing in. So when rates are up, durations are out and partnerships are deepening, also we are selling much more of our non-shipping scope to these customers. The only thing to add to that is that the book of business in 2026, as you saw, was sold last year. So whatever happens in this market does not affect 2026. And we have given you a guidance on what we believe for this year, and that's an EBITDA around USD 1.6 billion. At the same time, we will repeat what we said in Q2. We have a very strong outlook. With that, thank you all for coming, and thank you for all those who have been on the stage for excellent presentations.

Good morning, good evening and good afternoon to everyone watching us online, and a very warm welcome to everyone here at the Lysaker office. Very nice to see everyone. What quarterly results. What can we expect on this?

We will hear a little bit about the market strength, which is driven by China. I think that's an important message and a little bit about dividends and our results for the quarter.

So something to look forward to, and we do the usual drill with our CEO, Lasse Kristoffersen, will take the market and the business. Then CFO, Bjornar Bukholm, will take the numbers and then Lasse will take the prospects before you run a Q&A session. So some practical information on that part.

Yes. If you have questions, you can post questions via webcast. Just do it as early as you can or during the presentation, that's fine. Do allow some time between the questions are posted and they're actually arriving on this end. There will also be a possibility to pose questions from the audience.

So be ready. And then I think we can just start. So with that, Lasse, welcome.

Thank you, and good morning, good afternoon. Very happy to invite you to this presentation. We have, in our view, another solid quarter, and we are in a market that is firming up in shipping and where we are really proud that we see results of the hard work we do to improve performance also in other segments, in particular, in logistics. So we are here with what we believe is a strong report and a strong market outlook. But I will talk you through some of the details, starting with the headlines. The continued demand in shipping causes basically the whole world fleet to be sold out, and so it is with us. So we have, at the moment, a fully sold-out fleet out of Asia. I will come back to the cargo balance, but that story continues. And that has caused a significant hike in both freight rates and charter rates in the quarter. I will come back to more details.

The EBITDA, Bjornar will give you more details, but a solid EBITDA at $361 million. It's down quarter-over-quarter, and this is largely due to increased fuel costs that the customers have not compensated us yet. The development in logistics continues. We delivered a very strong quarter in logistics, the best in many, many quarters, thanks to improved underlying performance. The outlook for the year is maintained, although we say it's a very strong outlook in the market. For this year, we maintain our outlook of EBITDA around $1.6 billion. And we today announced a dividend of $0.61 per share. This is 50% of net profit plus $100 million in extraordinary dividends, lifting us up to 82% of net profits in dividend for the quarter and the first half year -- sorry.

So let me then talk you through the key elements of the market. And there are 3 themes I'd like to focus on. We cannot avoid talking about the China story as it continues. We will try to give you some more background on that. Second, there is an increasing gap between what China needs and what China gets from our industry. And that finally has caused the market to move quite significantly, both on freight, charters, and there is still fuel volatility. So let me take them one by one.

China continues to grow. And for those who remember well, when we came towards the end of 2025, we're in '26 now, we said that we expected a much stronger growth out of -- or volumes of exports out of China than consensus was in forecast. Actually, at that time, S&P forecasted lower exports in '26 than '25. And fortunately, according to our plan, we were right and China has, if anything, surprised on the upside. We were expecting them to export some 10 million cars this year if they got the capacity. We still believe that's the best guess.

But right now, in June and increasing in July, they passed 1 million cars in exports per month, meaning that the current run rate indicates more than 12 million cars ex China. Remember, before COVID 2019, this was 1 million or less cars. At the same time, the global car sales has not developed much and actually, it's down quarter-over-quarter, meaning that China is massively eating market share, and I'll come back to that.

Unfortunately, for the Western OEMs, the story continues. The exports are continuing to slide down. And in particular, into Asia and China, the European OEMs are struggling. The American OEMs has for quite a while, lost market share, still falling. But in general, this causes an issue in the industry where we are absolutely sold out of Asia, but we for sure could have had more cargo going back to Asia, from Europe, from the U.S.

There are 2 main reasons why China is now seeing a massive export. The #1 reason is that they have a fantastic product. They have, in terms of technology, functionality and quality, some would even say design, but certainly also price, they are extremely competitive. So that's the reason why the whole world ask for Chinese cars. They are growing all over the world, except for the U.S. because they're not allowed. In the quarter, this was even pushed further by the fact that the car sales in China slowed down. So quarter-over-quarter or if we do the 12-month rolling, in any way, the sales in China are down. And for the OEMs in China to keep up their volumes, they are pushing even harder on exports. But remember, you cannot push harder on exports if you don't have a competitive product, and that's what's the basis. And I said in the last presentation, it used to be a cheap product. Now it is a preferred product. That's very different.

And this is the result where China was a cradle for strong profits, in particular, for some of the European premium OEMs, their market share have more or less cut in half since COVID, while China and Chinese OEMs have taken more or less full control of the domestic market. So today, 70% of the new car sales in China are from Chinese OEMs. This does not mean only Chinese produced because quite a few of the non-Chinese OEMs are also producing in China. So the market share of Chinese produced in China is higher for the Chinese OEMs. And China is the biggest single market in the world. There are close to 30, maybe 27 million, 28 million cars sold annually. Globally, we are close to 90 million.

Comparable in Europe, we sell them around [ 15 ] million cars. In the U.S., we sell around 15 million cars. So the Chinese market is as big as U.S. and Europe more or less together. They're also winning market share outside China, and they have gone up from a very minor market share 5 years ago today, we above 10% globally. And then remember that they are not basically allowed to compete in the U.S. So all of this is outside U.S., meaning that they have a much higher market share in the markets in which they compete.

A question has been asked, so are they just pushing cars out or are they being sold? We have done that analysis, and we have looked at the statistics on the exports. We're looking at the new registration of cars. We are looking in our own facilities. Are we piling up Chinese cars? The answer is no. The Chinese cars are being sold, and there is no sign of increasing inventory of Chinese cars. So this is not just a push to market. It's also cars that are sold in the market. And despite the extreme growth, the sales are pursuing and following.

And that leads us to the issue in China now. And I'm lucky to go to China every now and then, we have a team there. We have a lot of focus on China. We are the biggest player out of China. And every single customer I meet tell us that they would prefer RoRo if they could get access. So sometimes we get the question, is it a threat with container and others? According to our customers, it's not. It's just the fact that they don't get enough capacity. And that's what we have illustrated here. We have plotted the exports out of China on the -- that's the top graph and then the capacity allocated by Ro-Ros measured on AIS data to China. And as you can see, that gap is increasing.

And we now believe that there are somewhere between 2 million and 4 million cars exported out of China on other means than RoR-Ro. Although the vast majority of that our customers would like to use RoRo if they could. And if anything, we think that number is closer to 4 than 2. And this is future demand for RoRo. Although we're sold out now and with no future growth, we are confident that the majority of these volumes will come to RoRo. And that's why we are saying and the market sees that the outlook for demand for RoRo out of China is very, very strong.

So what we fared a couple of years ago was that there was a big order book going back to '24-ish, I think we had 40% of the world sailing fleet on order. And we -- most of us expected '26, '27 to maybe have more cargo -- more vessels than cargo. That has not happened. So despite a massive growth in the fleet, all of it has been consumed. All of it is sold out, and there are hardly any vessel available for charter over the next few years. And that has also caused that the new building activity has come back in our segment. It paused for a while. And by the end of Q1 or in Q1, we had around 14% of the world fleet on order. Through the orders in Q2, we are now past 20%, 21% of the fleet is now on order. And we know based on discussions going on with a lot of players in the industry that the actual number is higher.

So we expect this new building order book to grow even further. But -- and there's a big but, these vessels will arrive in 2030 and onwards. The yard capacity is basically sold out up until 2029. So any new order now comes in 2030 and beyond. And -- the basic assumption is that when we get that far out, unless demand falls off, there is quite a big need for fleet replacement. So if you look at the big numbers and if you scrap vessels that turn 30 years, the world fleet is actually shrinking towards 2030 with a peak somewhere in 2027. So what we thought would be the challenge was the supply side. That has not happened. We don't see that happening anytime soon unless China is politically stopped from market access in other markets than where they are today.

We have seen then just in this quarter, a massive pickup in the market for Ro-Ro and PCTC trade. On the left, you see a spot index made by Hesnes. These are spot cargoes out of China. We don't do that much spot, but this is the best data we have just to illustrate what has happened. And as you can see, the demand out of China and the willingness to pay out of China has grown 80% just within that quarter. And that also have led to a bigger appetite for time charter vessels, and that is in a market where you can hardly find available capacity. So both the freight market and the time charter market has probably gone up 80% during the quarter.

Adding the recent development, I'm sure you could easily claim that both have doubled so far this year compared to the lowest point in Q1. So there is a massive need, a massive interest and a willingness to pay both for freight and for vessels. And then I have to remind all that the left side, freight, that's our income. The right side is our cost. So the fact that time charter vessel goes up is not a good thing for us, but we don't do much short-term chartering on time charters.

Last but not least, the Middle East conflict is still affecting the markets. And of course, this causes high and volatile fuel prices. A quarter ago, we were uncertain whether we would get enough fuel. We are not worried about that right now. There is sufficient, although there is much tighter on the diesel and the refined side than on the fuel oil side. So in sum, we are not concerned to get access to fuel, but the cost is still volatile and relatively high, although down from the peak we saw when the conflict arise. And then this has also transferred into our demand segment, and we have seen a massive move in many markets into EVs. In Europe, in Australia, even in the U.S., we see that the demand for EVs has gone up significantly due to the price of the pump for diesel and gasoline.

So with that, I'll turn over to the business side. I'll do that relatively quick and leave it to Bjornar to give you the details. Highlights, we are coming in just short of $300 million on EBITDA for shipping. In this day and time, not the best quarter we have seen, but again, very much affected of short-term fuel costs that are not compensated yet. Very happy to show the logistics numbers, the best quarter in -- well, don't arrest me, but I think 5 years. And on top of that, we sold last year a very profitable business in Australia. So what we have been investing there are paying up.

In Government Services, we see a slightly pickup quarter-over-quarter, but still a relatively soft quarter for government, and I'll come back to that. On shipping, as the capacity is more or less flat and the market is strong and we're sold out, there's not big movements in the volumes. It's a little bit up quarter-over-quarter, but this is more prioritization than anything else. Underlying, it's more or less flat on volumes, but it's a little bit up, and that means also when the percentage of High & Heavy is up, the absolute numbers on High & Heavy is also up. And this is good for us. As you know, that's a particularly strong segment for us.

Rates are a little bit down. That is partly because -- in quarter-over-quarter because we are now phasing in more of the business than last year. And -- but if you do see year-over-year, the customer and trade mix is up. What does that mean? Well, that means that we are doing more relatively out of China, more relatively out of Asia and less out of the West, and the rates are higher out of Asia than out of Europe. Generally speaking, the rate picture is relatively flat for us quarter-over-quarter. But what we did see during the second quarter was that every new business we signed, we did longer deals at higher rates in Q2 compared to same period last year.

And for us, still -- the Middle East is a big challenge. We still consider the Hormuz Strait to be untradable. And we have not been trading through Bab-el-Mandeb into the Red Sea since, I think, December 2024, yes, at least 2.5 years. So this is a big challenge for us and a big challenge for our customers. They really struggle to get product into the Middle East. And we have and others have now started to trade around Africa into the mid [ Med ] down Suez and into Aqaba. But recently, that has also been challenged as vessels have been attacked outside Saudi Arabia. So we are trying to find solutions for our customers, but they're really struggling. It's hard to get product into the region. And of course, it's not critical for the region to get new cars, but at some point, you need to also replace cars in the region.

I'd say we're very happy to see how the development has been in logistics. And with a little dip in Q4 last year, we have been on a consistent improvement track. And this is due to the improvement plan we presented last year. We have actively renegotiated some of our contracts to reflect the current market and costs. We have aggressively looked for cost in the organization, made it more simple, more efficient. And we are also able to deploy technology in an effective way. So we have set a target of reaching 10% cash EBITDA by the end of '27. And I'm very happy to say that already in the second quarter this year, we are making a good leap towards it, and we are now around 8% cash EBITDA margin in logistics and seems to be continued to improving.

Government segment, as I said, last year, we had a particularly strong start to the year. It seems like years ago, but it was actually just 1 year ago, 1.5 years ago, we changed the President in the U.S. And at the end of his term, Biden had a lot of presidential directed cargoes, meaning that he emptied his pocket, sent stuff to Europe and to Ukraine, and we benefited from that first half last year. It did not happen this year. So there was some less demand. But the other main effect was actually that the Middle East conflict normally would drag capacity.

But this time around, it was not because it was more an airborne conflict than anything else. So the vessels that normally trade for U.S. government into the Middle East are actually now trading in the Atlantic in the second quarter. That is now changing. They are moving to Pacific. So we see in the third quarter that the supply-demand balance in the Atlantic is more normalized. And we can also see that now on the contracts that we are winning. So we believe that the first and second quarter was okay, but it was also reflecting an unusually strong supply of tonnage into the basin.

Book of business, we announced a big contract extension over the summer. We are working on new contracts as we speak. And on shipping, there's no doubt that what we did in the second quarter was higher and longer than what we did last year, and we are now building value into our book of business. Quickly on sustainability. As you know, safety is the first thing we think of in the morning and the last thing we think of when we go to bed at night. And I'm happy to say that our people on board our vessels are safer than ever. We have seen some increase in the numbers in logistics. This is probably also due to more accurate data. But for sure, we are looking into how can we get back on track and the recent trend on the LTIF is positive. No major accidents. That's the most important thing.

And we were very happy that we could get Morning Concert out of the Gulf late June. It has been a tough period for them. Seafarers are used to be at sea for a long time, but nobody likes to be stuck and don't control your own destiny. So luckily, they are out, and we have no vessels in the region. On emissions, we are delivering improved numbers, but there are still the cargo imbalance and the fact that to meet some customer needs, we needed to speed up a little bit. We are trailing slightly behind our targets, but we are still committed to our decarbonization target, net zero 2040 and the pathway to it.

But I wanted to share with you the recent development this year. We have for quite a while, worked together with our partner, Oceanbird on new technology for sails on vessels. This was installed in June, I believe, on board our vessel. As you can see, 40-meter high, 14-meter wide. As we have air bridge and we have bridges that we need to go under, we need to be able to pull it down. So this is quite unique technology. We're testing it now. We're optimistic that it will add value, but we really need to see it full scale. So this is the first in the world, and we're proud to partner with Oceanbird on this.

With that, Bjornar?

Thank you, Lasse, and good morning, everyone. I must say that coming back after summer and being able to present a report like this with solid numbers for Q2, a strong outlook and also a strong dividend, that's a great way to start work after summer. Update on the financial side. So first of all, solid Q2, although certainly below what we delivered last quarter, but it's largely explained by the conflict in the Middle East and increased bunker prices, and it's as expected. So no major surprises on the numbers in this quarter.

So starting on the revenue side, we delivered $1.3 billion in revenues. It's up 4% quarter-on-quarter. The improvement largely driven by shipping due to more volumes on our vessel, largely due to seasonality with more volumes out of the West. But please note, volumes out of the West typically with lower rates, and that's why we see a net rate reduction in the quarter due to trade mix. Then we have slightly lower revenues on logistics side and slightly higher revenues or largely stable revenues on the government side. We compare to last year, revenues are lower and the reason for that is shipping with lower rates, as Lasse has already shown you.

Moving over to adjusted EBITDA, $361 million, that is down 7% quarter-on-quarter with the drop explained by shipping and higher net bunker costs, partially or slightly offset by improved results for logistics and also slightly improved results for the Government segment. This quarter, we had adjustments to EBITDA of $12 million that is related to the investments we are doing in digital transformation and also some severance packages. Both of this related to the cost leadership initiative that we presented in the fourth quarter. Happy to say that for both programs, we are on track.

Net profit ended at $138 million. This is down around $40 million compared to the previous quarter. Majority of the drop is explained by EBITDA, but then we also have slightly higher or $7 million higher depreciation expense in the quarter. And the reason for that is that we took on some long-term charters towards the end of the first quarter, and this now has full effect on our P&L in the second quarter. Looking at the tax expense and the financial expense, largely in line with the previous quarter.

Operating cash flow and the cash flow conversion rather quite weak actually. The conversion rate is just 72%. The reason for that is higher fuel prices and more fuel on our vessels. We see this as a temporary effect and expect that to normalize, assuming also that fuel prices over time are reducing. Net debt, $2 billion, slightly down compared to the previous quarter. You would have normally expected maybe a slightly better development in a quarter where we do not pay dividends. The reason for the relatively modest improvement is that operating cash flow, as I just addressed. We also had sizable CapEx in the quarter. And then also our minority shareholder in EUKOR, they actually got their dividend in April this year, and that was around $35 million.

Moving over to the financial targets. Return on capital employed, 15.6% last 12 months trading. If you look at the quarter isolated, it's more around 13%. All the other financial targets reflecting the balance sheet, as you see, it's at a very healthy level. I'll be coming back to the details when we talk through the balance sheet in a couple of pages.

Moving over to Shipping Services. As you heard from Lasse, adjusted EBITDA, $299 million, down a $30 million compared to the previous quarter. This is explained as follows. Net freight is actually slightly up. That is driven by more volumes, but please note, a lot of these volumes are now coming ex West due to stronger seasonality ex the West, not the volumes out of Asia. And the volumes out of the West has lower net freight rates than the volumes out of the East. Carrying more volumes also carries more costs. We also see that other voyage and cargo expenses are up in the quarter due to more activity level, supporting the additional volumes that carries lower profitability.

Then the main driver is the net bunker cost, up $31 million due to higher fuel and with a lag in recovery under our BAF mechanisms. Vessel OpEx is up $5 million. We had some more maintenance activity in the quarter. We also experienced some inflationary pressure on certain consumables, which is linked also to the conflict in the Middle East. And then there were some timing effects with typically quite low deliverables to our vessels in January every year.

As we talked about last time, net bunker costs were expected to increase significantly in Q2 due to the spike in the prices and the lag in bunker adjustment clauses. Now that we look into the second half of this year and also Q3, we expect this to decline that we, over time, will be recovering the additional costs we had to bear in the first half of this year. And of course, this assumes that we continue to see stabilization or decline in the bunker prices and that it don't jump up again.

Moving over to Logistics, strong quarter, adjusted EBITDA $46 million, up 8% quarter-on-quarter. And as you heard from Lasse, this is the best year in 5 years. So it's the best year since before COVID-19. We have a target of delivering a cash EBITDA for this business of 10% that we shared with you all in Q4. We are now in the area of 7% to 8%. We're really making traction here. But I think we need to be honest with ourselves. It's typically easiest to deliver the first 3% to 4% of the improvement than delivering the last couple of percent. We have taken the quick wins and now the even harder work starts to make that business as profitable as we know it can be.

If you look specifically at the quarter and the improvement compared to last quarter, revenues were actually down $11 million. This is linked to the U.S. auto segment. As I said, it's 2 main factors. One is seasonality. We have some -- quite some Japanese customers in the U.S., and they have the year-end push in March, which is typically the -- lifting the volumes. And then we also had one customer contract. It was quite big from a revenue perspective that was not renewed and that started in April this year.

But then we had other business that were more positive, and we're also starting to see that we're actually quite successful with also increasing some of the rates on the logistics segment to make individual customer contracts more profitable. Operating costs significantly down quarter-on-quarter. And in general, we are seeing a very positive development on what we call the cost to revenue ratio, and this is really much linked to the operational improvement program that we proactively are working with every site to make them more and more profitable.

Moving over to Government Services. It's a better quarter than the last quarter, but it's not a quarter that we are particularly happy with, and it's very much impacted by what you heard from Lasse, which is the conflict in the Middle East, and somewhat more competition short term, especially during the quarter. But still, it was an improvement of $3 million quarter-on-quarter. And if you look underneath the number, I would argue that it's actually an improvement of $6 million. Some of you may recall, last quarter, we got a retroactive MSP payment of close to $3 million linked to Q4 2025. So the underlying improvement is actually $6 million.

The driver for the improvement is more U.S. government revenues than what we had in the Q1. So there is a positive trend. But at the same time, we had quite a big drop in commercial revenues. So this is then the cooperation between Wallenius Wilhelmsen on the shipping side and Wallenius Wilhelmsen on the government side. And this is linked to the fact that we had, I would say, abnormal high dry docking activity during the quarter for government services and vessels were not available to actually carry cargo. And as you all heard from Lasse, there is certainly cargo out there to carry.

Moving over to liquidity and cash flow. So the liquidity position remains very solid. At the end of the quarter, we had $1.2 billion in total liquidity, of which cash around $600 million. This is down $200 million quarter-on-quarter for the following main reasons. Operating cash flow, as already talked about, $260 million, pushed down by inventory buildup on our vessels with more expensive fuel. Temporarily effect, we expect this to turn. Investing cash flow was quite substantial at $98 million, mainly related then to vessel and especially the new building program and also quite a lot of dry docking activity.

The main element that pushed the cash flow down, that was the financing side, close to $450 million in negative cash flow. $364 million is linked to our lease payments and bank debt. Within this number, we actually have $200 million in voluntarily repayment of debt. This also actually links to the material increase in flexibility we have in our debt, we can easily flex up and down to avoid having too much cash on the balance sheet, which is not a good way to run your business. Secondly, we also had regular interest cost payment around $30 million. And then as already mentioned, we paid $30 million, give or take, to the minority shareholder in EUKOR as they are getting their dividend in April, and we are upstreaming cash to ASA from EUKOR.

Moving over to the balance sheet and our continued strong financial position. Starting on the equity side, a big jump on the equity ratio in the quarter, up from 39% to 49%. The main driver for this increase, that is the change in the EUKOR put liability with amount reduced from $850 million to $386 million. So just to remind you all, in April 2026, we reached an agreement with our deal partner, HNG, as a 20% shareholder in EUKOR that the put and the call could not be exercised as long as the ocean carrier contract and an agreement that -- well, EUKOR would carry 50% of the volumes. That contract runs until the end of 2029. And then we have agreed at the earliest date in theory that the option could be exercised is then January 1, 2031, really then reflecting the long-term partnerships we have with Hyundai Kia.

Now, the liability is then calculated at the net present value on the, I would say, estimated or forecasted future exercise price. So there's, of course, quite some uncertainty around this number, but this is our best estimate. For those of you that are interested in understanding more about this, I would urge you to take a look at our quarterly report and the notes where we are addressing this topic.

Net interest-bearing debt, as already mentioned, quite stable at $2 billion. We had a reduction in debt, and we had a reduction in cash as we are continuously trying to make our balance sheet more effective and leverage ratio was stable at 1.2x. Liquidity reserves, as mentioned, is now at $1.2 billion, and it's around a 50-50 split between cash and undrawn credit facilities. And just as a reminder, over the minimum target we are steering that is $1 billion. We are getting significantly closer to that target.

I also wanted to use this opportunity to also take a step back and reflect on what we have actually done together with our partnership banks during the last 18 months to really optimize the capital structure and efficiency of Wallenius Wilhelmsen. I'm pointing out really 3 things when I'm looking back. First of all, we have refinanced $1.2 billion in debt at significantly improved terms. We have extended maturities from '26, '28 into 2030 or maybe even 2031 for some of the capacity. And we have made a lot of this financing significantly more flexible while converting them from a traditional [ ship ] loan to a revolving credit facility that you can decide whether it's drawn one day and not drawn the next day.

At the same time, we have reduced the bank debt and the bond debt from $1.8 billion to $1.1 billion, and we are really focused on repaying or refinancing, of course, the most expensive debt, including the bond debt we repaid in March 2026. This has also enabled us to reduce our cash position from $1.4 billion to $0.6 billion as the debt is now much more flexible with the revolving credit facilities, so we can flex up and down. So we are keeping a strong liquidity buffer without having too much cash on our balance sheet. So I think we have taken a big step, but the work continues to make it even better.

Last but not least for me, very happy to announce a new strong dividend from Wallenius Wilhelmsen to our dear shareholders. Cash dividend of $258 million for the first half year, equivalent to $0.61 per share. So this is then, as you already heard from Lasse, it's 50% of the net profit plus an extraordinary element of $100 million. The dividend is set based on the results, based on the financial position and based on the strong outlook for the company. And also following paying this dividend, Wallenius Wilhelmsen is, as you have seen, in a very strong financial position to address any opportunities that may arise in the market, and we aim to continue to ensure that Wallenius Wilhelmsen stay financially very solid.

With that, I will hand it over to you, Lasse, for the prospects.

Yes. And I can make that rather short. The market has strengthened through the second quarter. We are, of course, benefiting from that on the shipping side. The improvement in logistics, we expect is here to stay and continue. So the prospect for the year and the outlook for the year, $1.6 billion in EBITDA and at the same time, an underlying shipping market that is strengthening. So we today can share that we see a very strong outlook for Wallenius Wilhelmsen.

So with that, we open up for -- now, do you have an update on that?

Yes, a quick update. It's the same date on the 24th of September. We're going to have a market update here at our offices at Lysaker, where we're going to talk a little bit about what we're seeing in the market and the developments that follow. So we will send out an invite to investors, analysts and other interested parties.

And for now, it's to save the date, so more to come. On that, we will start the Q&A.

And we have a lot of interesting questions here. But just starting off with you, Lasse. You said strong outlook. Can you elaborate a little bit more on that?

This is more -- I mean, mostly linked to the market. We see that the demand out of China is continuing, and it's not just a, call it, supply push, it's really a strong demand and a big success of Chinese cars around the world. We don't see any end to that short term. That drives a lot of demand. So even though the fleet is growing fast in shipping, there is more demand. And we see in the contracts that we're doing during the quarter that what we did in the second quarter this year is longer and stronger than what we did last year.

Thank you. Bjornar, you maintained the outlook despite having high fuel costs this quarter. Can you put a bit more color to that?

Yes, absolutely. It's actually a very simple reason to that in the first half of this year, we have had extraordinary high bunker costs. The expectations for the second half is that we, to a large extent, will recoup what we paid extra in this quarter as we will be compensated to a large extent from our customers. In addition to that, I also highlight that there is strength on the shipping side, on the commercial side, and we also expect the government services to have some more wind in the sails in the second half of the year.

All right. Thank you. If you have questions on the webcast, please post them in the chat. But first, we start opening up for questions from the audience. Is there anyone with questions at the premises. There's one back there.

August from Pareto. You Lasse, you talked about how the order book has increased and 21% currently and possibly higher when you are kind of thinking about discussions going on with the industry players. Does those industry players include yourself?

We are constantly looking at the opportunities to grow and renew our fleet. We have not made any new commitments. If so, we would have shared it. But of course, we're continuously looking at extending new building program. We have -- we're very happy with the Shaper Class program that we have put in place, 14 vessels that we think are state-of-the-art and represent strong competitiveness for us, but there will sure be more to come, but we have not made any commitments yet.

All right. Any further questions from the audience? All right. If not, go on to the next one. Sandre at Nordea is asking, could you talk a little bit about the untapped potential in China if we have the capacity? You did touch upon it.

Well, it's -- the way it plays out for us in reality is that we are not concerned about filling the ships this year or next year. It's actually really tough prioritizations. And we have a very deliberate approach to the Chinese markets. We see that the approach from the Chinese players are going from, I would say, more transactional to today, much more strategic, where they see they need friends and they need companies like us. And I've been personally to several meetings where we meet the absolute top management of these OEMs telling us that we need your help on shipping. We need your help, your terminals. We need your processing capabilities in the markets you're in. We need your ability to orchestrate end-to-end services. So for us, this is a massive opportunity to address the growing demand and at the same time, utilize the full capability we have.

And I would say, in general, what we did last year was typically 1-year contracts in China. And just in 1 year, this is now moving to more normal as we do with others, 2-, 3- and even 5-year type contracts. So the nature of the shipping out of China is increasing. Despite that, and we've given the priority in others, the demand is just growing faster than capacity in Ro-Ro. So we have seen now our estimate it's probably around 2 million cars going in containers. If you go to Antwerp or Le Havre, you will see that there are containers coming in with cars even into Europe. And everybody that deals with shipping of cars into Europe know that, that is not effective.

We even now see that -- and it's really hard to know the exact numbers, but significant amount of cars, maybe more than 1 million cars are now going in what we call LoLo, Lift-on/Lift-off, meaning dry bulk vessels and others. They just -- any capacity they can move cars, they use. We believe that this will come back to our segment eventually when there is capacity. So even with no growth out of China, there will be growing demand for RoRo.

Right. And then on to -- it's a question from Sondre at Nordea. He's asking about our order book or our open capacity for next year. We have more than 40%. How is the time charter market affecting our rate negotiations?

Yes. Well, these follow each other, and I showed that earlier. And of course, there -- this is what works in any market that if you get -- if freight rates goes up, the cost of the supply also goes up because people want more vessels. We are not very much exposed to the time charter market short-term. So we are not really tapping into that. We are using some of the medium-term markets a bit forward to build capacity. But in general, we are not very much exposed to the time charter market. So the capacity we have now is the capacity we plan for next year.

Okay. Then one for you, Bjornar. I don't want to leave you alone here. The run rate that we see on logistics now, the big improvement, is that something that we can expect to be the run rate going forward?

Yes. It's hard to be too exact on that question. But I think what we could safely say is that we have certainly lifted logistics to a new level, and we expect to continue to show good numbers for logistics. Exactly what the numbers will be for quarter ahead, we need to wait and see, but we see that the logistics will continue to perform well also in the quarters ahead.

All right. Then on to the Chinese push for cars into Europe. There is a question on there is rumors that European terminals are filling up. and delaying vessels. Is this something that we see and. . .

This has been an up and down situation for years and congestion, meaning that vessels sit and wait outside that happens every now and then. There's not a big massive change in congestion. If anything, it has been a little bit down lately. And as I said, we have no signs of cars piling up in our terminals or in our storage more than before. We have just looked at what we call drayage, that's the waiting time in our terminals. Not big changes, if anything, a little bit down since last year, and there are no signs that the Chinese are sitting longer than others. So as we said, in any way we try to analyze, we cannot see that the move -- the velocity of Chinese cars are lower than any other.

Okay. Then there are some questions about the Red Sea, rumors that Maersk is returning to the Red Sea. Chinese players are doing that route. What are our thoughts around the Red Sea?

Very simple. We don't go until it's safe. We don't consider it safe. And I think the recent activity has shown that it is not safe, and they have been attacking vessels both around Yemen, but also all the way up to the coast of Saudi Arabia. So we will be back the second we consider it safe. It seems to us that the Chinese have a safer transit than others. That's at least what we are told. but we don't consider it safe now. So what we need to do then is to go all the way around Africa down Suez and distribute product. And even that is now more challenging. We just had to change an itinerary going in there because it was not safe to go into even the Northern Saudi Arabian ports. So unfortunately, we don't see any immediate ease of the risk of trading in both the Southern Red Sea and in the Hormuz.

Okay. Then one for you, Bjornar. Working capital has been building. Do you see any unwinding of that into the second quarter? And can you talk a little bit about what's driving the change?

So the reason for the buildup in inventory that is quite simple. It's fuel prices are up, and we have also had significantly more fuel on the vessels to ensure that we don't run out of fuel. As fuel prices are dropping and we see a significantly lower risk of actually running out of fuel because the fuel is available at the pump, we will see a gradual -- we should see a gradual reduction in the inventory and then over time, a normalization. So we would say that over time, this is a temporary effect.

Okay. Then to you, Lasse, on the average rate of the book of business that we kind of we disclosed this quarter, it's down compared to what we saw in Q4. What are our expectations in terms of that going forward?

It's down because -- and you could also see that on the numbers. There was a little bit of a dip in the sentiment last fall when we did some of the renewals. We did them only for 1 year, most of them. And the question was what can we expect? Well, we don't give any forward statements on market. But what I can share is that the contracts that we did in Q2 was at higher rates and longer durations. So as I mentioned, with the Chinese typically going from 1 year towards, say, 3 years and what we have done in the second quarter at stronger rates than what we did in '25.

Then on to our outlook statement. We state that it's a little bit dependent upon the duration of the Middle East conflict. What is our base case in terms of our. . .

I would split that into 2, and then you fill me in, Bjornar. But I think in terms of the revenue utilization on the shipping and in general, the Middle East conflict is not affecting us that much. We're able to find alternative deployment of our vessels, and we still have a logistics operation in Dubai that has very little to do, but still we're there. So the effect on us on the Middle East is really on the bunker side, meaning that we -- if we see another spike in bunker costs, that will affect us. And we have not really seen an effect of the increased energy cost on the general economy yet. So that's also, of course, something that can affect global car sales. So there are several effects that could hit us, but it's not really utilization and demand of shipping.

All right. Then there is a question on dividends from Jorgen at DNB. He's asking is the liquidity level target base for that? Or are there other measures being taken into account in that situation when we do dividends?

Yes. So when we look at dividends and then from a balance sheet perspective, we look at multiple factors. So liquidity being one of them where we have stated that what we consider to be a sound liquidity level that is $1 billion, which is split between cash to run the business and then revolving credit capacity to have extra buffers if something happens. So for also exciting investment opportunities. Then we also certainly look at how much debt should we have in the company looking at and then we're also looking at the equity ratio. It all builds down to that we want to have a strong financial position of the company. So it's really that part, and then looking at the net profit. And if the balance sheet is very, very strong, then we open up for a discussion with the Board and that we should pay a little bit extra, which we have done now many quarters or many half years in a row.

All right. That seems to be running towards the end of the questions, unless we pause a little bit and give it a little time. There is one question about the 24th of September that we mentioned. It's going to be a market update. So it's going to be concentrated on market rather than the company as such.

Yes, in both the global OEM market and then, of course, a deep dive into the shipping market. So you're welcome if you'd like to learn more about that.

All right. Should we -- let's wrap it up. Yes, I think that's it. So any final words to wrap up, Lasse?

Yes. Well, I will just repeat what I said. We are very happy with the quarter. We're happy with the first half year, proud to present a solid dividend. There is a strong outlook. The outlook has improved during the quarter, and we see quite optimistic on 2026 and the underlying market. Thank you.

Good morning, good evening and good afternoon to everyone watching us online, and a very warm welcome and good morning to everyone here in the audience.

Q1 2026, what can we expect today, Anders?

Well, there has been some geopolitical turmoil. So I think we'll hear about the impacts from that.

Good. And as usual, our CEO, Lasse Kristoffersen, will take the market and the business, followed by our CFO, Bjornar Bukholm, who will take the financial review and then Lasse will take the prospects. And as usual, the Q&A.

Q&A. So we'll open for Q&A here in the audience, but we'll also open up for Q&A via our webcast. So please fill in your questions and we'll try to respond to them as best as we can.

And do remember, there might be a little bit of a lag between when you post the questions and when they arrive here, even in a digital age. So please be patient. And we'll try to respond to all of them.

And I think we're ready.

Yes, we're ready.

Good. So Lasse, please take it away.

Thank you, Anders and Anette and good morning. Welcome to people in the audience and online. And I can see we have both friends and family and partners in the room. Thank you and welcome.

When I stood here in front of you and where we were online last time was on February 11th. And when we looked at the future, we thought it was pretty good. And again, we made a mistake of thinking it's linear. And then on February 28, there was an escalation of the situation in the Middle East with an attack on Iran, affecting both business but certainly oil markets.

And what we have seen in this quarter is really -- and when we are now updating our full year expectation is pretty much effects of that event. Because if we go back 1 or 2 years and you would ask anyone, I think, in our industry, probably us included if we saw somewhat weaker Q1 2026, why would that be? All would say because there are too many vessels, the market will be softer and the demand will be softer. That is not the case.

We are very positively surprised by the demand. We are sold out. As you will see, our activity in the logistics area is picking up. So the reason why we are adjusting our forecast somewhat is purely because we see a different cost situation, of which we believe we will recoup most of the cost over time.

So I want to start with saying very clear that we are positively surprised by the strength and the demand in the market. And as you will see later, this is very much driven by the enormous success of Chinese exports.

So let's then jump to the highlights. For Q1, we delivered an EBITDA or adjusted EBITDA more precisely of $389 million. That's down 3% quarter-on-quarter. And given the global events that we believe that is a relatively minor softening quarter-on-quarter. And it is in the shipping area that we have seen higher costs, while we have seen improved performance in logistics.

And I just want to reiterate the demand, the utilization, the tightness in the shipping market is very, very high. We are sold out. And we need to say no to business as we speak. This has put pressure on the charter rates meaning that it's much tougher to get access to more tonnage, more capacity and prices have increased.

We have, for a while, worked with improving the performance of logistics. I'm very proud of what the team has done last year, but also into this year. And the Q1 improvement is partly due to better volumes, but also because we have been better at managing our costs and really implemented measures, so that we have a good and well-adjusted cost base.

The impact directly to us from the Middle East conflict and I'll come back to some more numbers, is rather limited. So the indirect effect is what hits us. And that is through the oil price and through that, the fuel price.

And we have only seen the start of that. So we expect Q2 to be substantially affected by increased fuel costs. Bjornar will come back to explain to you exactly how that works. But in over time, we are recouping our fuel price.

So if the fuel price goes up, our earnings goes up, but with a lag. And what we are saying is that within Q2 and maybe also within 2026, we will not be able to recoup that increased fuel cost fully. But over time, we do recoup it. So this is more of a prioritization.

Due to that, we have adjusted our full year outlook. We now believe that, that will be about $1.6 billion. And I will then add still being a very, very strong result and cash flow for our company, putting us in a very strong position for future growth and development.

So all in all, we believe another solid quarter. And we still believe a very solid year for Wallenius Wilhelmsen.

And I'll tell you a little bit of why. Starting with the Middle East. In everything we do, we start with safety. Also with the Middle East and we're happy to report that we have one vessel, not happy that the vessel is there, but happy to report that the people are safe. Of course, it's not a good situation to be in, but they are safe, they feel safe.

And also, we have an operation with logistics in the Middle East that also they, given the circumstances, feel and are safe. We have normally 2 monthly sailings into the region. And we have a -- in shipping and we have a processing center and a logistics operation in Dubai. All in all, maybe 2% of our revenue in shipping annually is linked to the Middle East. And this is fully replaced by other volumes and revenues from other trades.

So the direct impact from the demand into the Middle East is not really hitting us. So our exposure is more or less $2 million of revenues on our logistics per month. Right now there's hardly any equipment moving or vehicles moving in the area meaning that we are seeing negative numbers on our logistics operation. But our focus now is to make sure that our people are safe.

So then to the market. And I'd like to talk to you about 3 things. One, the Middle East and how does that affect our market. Again, and as always, and I probably will do for many quarters to come, talking about China. And then also on the shipping market and the tightness of tonnage.

Starting with the Middle East. If you look at the left, the total sales -- the global total sales is around 90 million cars. Out of those, roughly 3 million are sold in the Middle East. So 3% of the global sales are in the Middle East. However, if you don't look at Iran, where they are producing cars for themselves, the region is importing their cars.

So even though it's only 3% of the volumes, it's actually 10% of the global demand for shipping. Where of Saudi Arabia is by far the biggest, you have UAE, Kuwait and these are new cars. And then in addition to that, the Middle East is a major hub for used cars, traded used cars coming in from both from Asia and from the West and typically transloaded and sent to more developing markets from the Middle East.

So the Middle East has an impact on the total volumes in the market. So despite the fact that 10-plus percent of the demand in the market has more or less disappeared, it's still super tight.

If you look at the players, we are a relatively small player in the area. We have put up on the left-hand side there our peers on a no-name basis. And as you can see, of the total transit in Hormuz last year for RoRo vessels, we had 4%, so we are not a big player in the region.

Right now there is no trade going into the region. We can neither get our vessels out. There was one vessel reported going out yesterday on a very special circumstances, but we are still in there.

So if you are to feed this market, which happens now, you need to go all the way around Africa through the Mediterranean down Suez and to Jeddah or possibly Akava, adding a lot of demand to shipping. So the main effect for us has been on the fuel.

And as you can see, we had a spike in fuel prices following the incident, not very dissimilar to what happened with the invasion of Russia into Ukraine. The big difference is that the spread between the heavy fuel oils, the VLSFO, very -- the low sulfur fuel oil that we use and the distillates being the marine gas oil and diesel oil has gone out tremendously meaning that Middle East is important for oil and heavy products, but even more important for distillates.

And that's why you see concerns on diesel and petrol for other industries because these are really much more tight than the fuel we use. So when we came into March, we were worried whether we would get access to enough fuel. That risk is now significantly reduced. And right now we believe that there will be enough supply also in Asia of heavy fuel oil although we see some limitations on the distillates in the marine gas oil and marine diesel oil area, but we can manage with that.

So generally speaking, this is a pricing issue, not an availability issue. And as Bjornar will come back to, for us, it's not an absolute earnings problem. It's a prioritization of earnings issue.

Then to China. And we need to brag a little bit. So last time you were here, I think maybe 2 meetings ago, we said that the world or the forecasters get it wrong. The expectation was that China growth would slow down.

We talked to our customers. We looked into what they said and what their plans were. We looked at what they actually gave us our bookings. And for once, we were right.

And that means that the growth is continuing maybe with increased speed. And this year, we would most likely see closer to, I mean, around 8 million cars compared to some 6 million cars in 2025 exported out of the region. And that goes also supported by strong volumes out of the rest of Asia, marginally growing, doesn't look here, but it's marginally growing if you add Korea and Japan together.

So their push out of Asia is enormous. And the trend, unfortunately, out of the West also continues to soften. So the imbalance and I'll come back to that in the market, is still an issue for us.

But the demand is strong. And remember, for every single car or vessel load added out of China, you need a vessel because this is -- there are no volumes that match that on the other side. So there's a full round trip.

So if you have 5,000 cars that need to go to South America, 1 vessel to South America, empty back and it really takes a lot of capacity. And just to qualify these experts, as I said, if you take away the U.S., Chinese cars and Chinese equipment goes to all over the world. They're growing in more or less all markets and in all segments.

So for those who believe that the Chinese story is about electrical vehicles, that's not right. And there, they roughly told, 1/3 of what they sell are normal cars, ICE cars, then they have hybrids and then they have EVs. So they are succeeding in all parts of the auto industry and in all parts of the world. And we believe they will put another record this year.

And underlying this, we also see that slowly but steadily volumes are moving from containers and other segments into RoRo because when the volumes really become big, they need a more efficient and better logistics solutions. And with big volumes, as we have seen in Korea, as we have seen in Japan, nothing beats RoRo.

In Europe, we can see this country by country that the Chinese market shares are growing and they're growing fast. And only from Q1 last year to Q1 '26, we have seen more or less 50% growth in market share. Roughly '25 over '24 was a doubling of market share of the Chinese cars. So we believe that this story has just started. It's certainly not ending anytime soon.

We also have High and Heavy this quarter, around 25% of our volumes and that picture is more mixed. In the construction area, if you look all over the world on the more residential typical housing, it's still soft or flattish. But we see quite strong demand in parts of the world, in particular in the U.S. on infrastructure construction and this is very much related to the new data centers.

And it sounds crazy that one thing can drive the whole market, but it actually does in all parts of it. And we see that what we now see from our customers, both Western and Eastern based, is that they are increasing their bookings for the rest of the year.

Mining has been strong, continue to be strong and investments are keeping up while the situation in the agricultural industry really has become, if possible, worse. They have seen low commodity prices for a while.

And now that is matched with increasing costs on fuel and on fertilizer. So we don't expect the demand for equipment in the agriculture industry to turn anytime soon.

But all in all, we see an uptick in volumes and increased projections from our customers in the High and Heavy area. And as you would remember, these are companies like John Deere and Caterpillar and Komatsu and Volvo and construction equipment, agricultural equipment and mining equipment producers around the world.

Thirdly, what really drives the market now is that there are too few vessels despite the fact that the fleet has grown from 4 million to 5 million units in capacity, meaning 25% growth in 2 years gone. The growth coming into 2026 and the capacity coming into '26, more or less already taken.

So the market is still super tight. And we saw -- we were right 2 years ago that we thought market would soften. But we did not think that we will see the strength we are seeing today.

And since late last year, early this year, we have actually seen an uptick in time charter rates meaning that there are still less vessels than there are demand for vessels in our segment. And that is something we expect to continue throughout this year because there are hardly any vessels available.

And then, of course, there are always opportunities. And we have some very good and deep partners that we are working with long term. And we're able to secure what we need. But for sure, the market is what the market is and that is currently strengthening.

So all in all, when we summarize the market, what we thought maybe 2 years ago about 2026 was that we'll still be good, but probably a bit softer in terms of utilization. And if anything, maybe the trend of falling fuel cost will continue.

That is not the case. Massive demand, very high utilization even into logistics. And what we see now is a surge in fuel cost, which we believe is a temporary effect.

So to the business, Shipping services down 6% quarter-on-quarter, driven by 2 things. The biggest issue and I've always touched it, that's fuel costs. And the second is capacity cost, meaning that we are paying a bit more for capacity than we thought and than we did last year.

Logistics, improving partly due to better volumes, in particular on the auto side in our operations and also because we have reduced our cost base. And I'll come back to that, but this is in historical context, a quite strong quarter for logistics.

Government Services are keeping busy, but with less government cargo than we have had previously. And that means that we have another relatively soft quarter for the government services compared to what we did last year.

Then I need to add that Q1 2025 was an especially strong year due to what they call presidential direct cargoes when one President went out of office and a new one came in.

Total volumes for shipping in the quarter was somewhat down. This is what we call normal seasonality. And I would just like to add, there is no vessel leaving port without a full load more or less, at least from the East.

So this is purely due to prioritization and seasonality of cargoes. Also, of course, the volumes are going down because we have less return cargo. We are growing more out of the East, more capacity added there and less cargo coming back. So the total volume, even though we're sold out, is somewhat down.

And then you will see, as I mentioned, that the share of High and Heavy cargoes are going up, which is good for us. That's a segment that I could -- I believe I could say that we are by far the market leader and it's also a premium paying cargo segment.

And we saw the bottom of this market. In Q1 last year, we have seen a positive trend or stable since, but we're now ticking up. And we believe and based on the input we get, that this is the start of a gradual improvement, not a massive improvement, but a gradual improvement in this segment, which we are well prepared for with the vessels and the operations and the integrated offerings we have to the industry when it comes to High and Heavy.

The net rate was marginally up quarter-on-quarter, but down year-over-year. Don't look too much on these quarter-over-quarter changes. Those are more prioritization. So if I focus on year-over-year, which is more relevant, for sure, the contracts we have for this year is slightly lower priced than average than what they were last year as we had more of peak earnings bringing in.

But then as we are increasing the amount of cargo going out of Asia and less coming back, the average rate is going up. That doesn't mean that it's good for us. We'd rather have high-paying cargo out of Asia and lower pay cargo going back, but that will then increase the average.

So in general, we would say it's rather flat. And I would say that right now, freight market is so tight that the prices are going back up. So we've seen a decline through '25. But right now, we see a pushback in terms of also freight rates, which is natural as we see a strong time charter market that is also pushing up.

As I said, in logistics, if we take out MIRRAT, which is this dotted boxes, this quarter is the best we have had more or less since COVID. Still, we have improvements to come. And we believe we can become even better.

But in historical context, this is a strong quarter. And as I said, it's driven by the auto volumes meaning that we have more volumes coming out of the factories in which we work and our factory line, but also more auto volumes moving through our terminals, which is the lower one.

Still, we are seeing relatively soft activity in High and Heavy meaning that what we do is more or less keeping the equipment for storage rather than processing them, which is high-value work. So we expect that to -- or hope that and believe that will strengthen throughout this year and into next year.

In government, as I said, a soft start to the year, partly because of less cargo coming from U.S. government. We are utilizing then the vessels for commercial cargoes, which have somewhat lower revenues than U.S. government cargoes.

And then there was one effect this quarter that our stipend because we run U.S. flag vessels went up. So that's a one-off effect and Bjornar can cover more details on that later.

Contracts, good quarter again, not a massive quarter in terms of renewals. We signed contracts for around $450 million. We are, as I said, sold out. When you look at this 2027 for shipping and you can see that we're still open 42%. That is only because we have a couple of big renewals coming up this year.

And we are confident that we're able to renew those contracts. We have had them for ages. And they are fundamental contracts to us. And we are fundamental to our customers. So this is just a normal renewal cycle that we see coming up in -- for '27.

Last but not least, we are finally getting some of our new shaper-class vessels coming out in terms of size, economy of scale, fuel decarbonization. We believe this is the best the industry can offer at the moment.

The first shaper vessel will come in around the summer this year. And then we have 7 vessels coming with 9,300 capacity. And then late next year, we will have the first big one, [ 11-7 ] coming out, which will be a new standard for the industry.

And we believe that will set the stage for even better economies of scale. And altogether, we are convinced that the shaper program will improve our competitiveness and also add to our earnings.

Progress is very good. Quality is very good. And if anything, deliveries are ahead of schedule.

Sustainability, we are doing well on safety KPIs, although a little bit of uptick in Q1 for logistics. That is due to weather-related slip, trip and falls in the quarter and also one accident where we were completely innocent. But we were actually hit by another car on the road that took the wrong turn. So all in all, if you look at our safety statistics, we're doing well.

On our emissions, we are somewhat improving, partly due to lower speeds, but also because we are implementing energy efficiency measures and we are improving our green fuel amount. And that's what I wanted to leave you with today.

I've had the luxury of being in Asia a couple of times lately and going back in 2 weeks. Sitting in Europe and maybe even listening to the U.S., you could believe that the decarbonization journey is over. It's not. It's live. When I meet customers in China, in Japan, in Korea, this is still on the agenda.

So don't get mistaken, the climate issue is not solved. People believe companies are investing for the next 5 to 10 years for competitiveness. In China, they are really investing into the green transition and our customers are investing into the green transition.

And the left-hand side shows how much of our cargo are paying up or customer in volume -- customers in measure of volume of cargo are paying up for less emissions. And when we came into 2026, 55% of the cargo volume we carried, customers paid extra for less emissions. Let's say, typically 10% more for 20% less emissions.

When we leave this year, we had an ambition of 75%. And already in March, we got the report yesterday, we were at 70% of our volumes. So we are able to offer our customers what we -- our strategy, meaning that we want to offer low and no carbon solutions and make it available and make it affordable. And our customers are signing up.

And we believe this is a massive competitive advantage going into the next few years and certainly into the '30s when we find effective ways together with customers to decarbonize, create competitive advantage for them and for us.

And with that, I'll hand it over to you, Bjornar.

Thank you, Lasse, and good morning, everyone. As you may recall, I started in position 1 year ago. I have received 0 congratulations, but I'd rather use the opportunity to do some reflection.

Before I started, a lot of players in this industry was really concerned about a couple of factors. Was this mountain of new vessels coming into the market with a big order book, we just had Liberation Day, what would happen to tariffs? Would demand go away? And then some were also concerned about EUKOR and that we had a put option on 20% of the shares in EUKOR.

So where do we stand today? There's not that many today that are concerned about this mountain of an order book. Lasse is actually concerned about capacity cost and that the time charter market is going up because the demand out of Asia is so strong.

Tariffs has been introduced, but they have been introduced at a lower level than what we feared. And as you have already heard from us, the EUKOR put, we have at least sold for the next 5 years. So I would say quite happy with the first year and where Wallenius Wilhelmsen stands today.

So let's look at the quarter from a financial perspective. I would say it's another strong, solid quarter for Wallenius Wilhelmsen. We're delivering well in what is a continued challenging global economic environment, lastly with the Middle East impacting our net bunker costs in the quarter and also in subsequent quarters.

So starting to look at revenues. Revenues for the quarter are down 1% on seasonally softer volumes for the shipping side. That is normal, partially offset by very strong volumes on the logistics side, where especially in the U.S., we are seeing that volumes and activity level is increasing.

Adjusted EBITDA ended at $389 million, as you heard from Lasse, down 3%, mainly related to seasonally softer results on the shipping side, partially offset by improved results on the logistics side.

We also had a couple of adjustments in the quarter versus the adjusted EBITDA and EBITDA around $8 million. That is related to the cost leadership initiatives that we introduced in Q4 with digital transformation and that we're also taking some actions on the cost side.

Looking at net profit. Net profit for the quarter ended at $177 million, largely in line with the previous quarter and as a consequence, also earnings per share, largely in line with the previous quarter at close to $0.40.

Taxes in the quarter, $11 million, $8 million higher than the previous quarter. The reason for that is withholding taxes as we took dividends from Ukraine. We need to pay some withholding tax for getting that funds from South Korea to Norway.

In terms of financial expenses, stable at just south of $30 million. Net debt, $2 billion, up by $330 million. The simple explanation for that is that we paid a dividend of $428 million in the quarter.

Moving over to the financial targets, which remains very solid compared to our threshold. Return on capital employed, which is rolling 12 months stands at 17.3%.

If you look isolated for the quarter, it was a little bit below 15%. Equity ratio close to 40%. It's down 2% quarter-on-quarter due to the dividend payment. Leverage ratio, just north of 1.2x. It's also up because we have increased the net debt and also the rolling 12 months EBITDA is slightly down as Q1 '26 was somewhat weaker than Q1 2025.

Liquidity reserves, we are starting to rightsize the liquidity reserves. Going into this quarter, we had close to $2 billion. We are now at $1.4 billion with the 2 main drivers for the reduction being one, the dividend payment; and secondly, that we have repaid $275 million of debt in the quarter. And that includes an outstanding bond that was maturing in March that we decided not to refinance.

Moving over to the Shipping segment and going a little bit into the details. So if we start with the revenues, revenues are down by $30 million. You can split that in 2. Net freight is down by around $20 million. That is explained by 4% lower volumes, partially offset by increased net freight rates.

And as you have heard from Lasse, the increase in net freight rates, that is largely explained by a change in the trade and the customer mix that the underlying price is slightly down following contract renewals at the end of last year. Then we also have a reduction in our BAF Bunker Adjustment Fuel charges of around $10 million.

Looking at adjusted EBITDA in the quarter ended at $333 million, that is $20 million lower than the previous quarter. Let me take you through the bridge, which you can see. So net freight, minus $21 million volume-related, partially offset by improved rates.

Then we have net bunker cost increase of $12 million. That is one part is due to the lower bus. And then in March, we got not a big hit, but somewhat of a hit of spiking fuel prices in March that partially also impacted the results in March.

Other voyage and cargo expenses that is down $8 million. It's mainly related to lower volumes. So lower volumes mean less cargo expenses. Another factor actually in this number is also what we call space charter costs. We had to rely more on the space charter market in this quarter due to high volumes. We had to rent capacity with other carriers at a high cost.

Let's move over to charter expenses. So charter expenses increased by $8 million in the quarter. And you heard a lot about from Lasse as well. This is also partly a technicality. In Q4 and into early Q1 2026, we redelivered 4 long-term charters where the cost is taken below the EBITDA line, so IFRS 16 lease accounting. So it doesn't impact EBITDA.

That was replaced by short-term -- partially replaced by short-term charters where you take the cost above the line, negatively impacting EBITDA.

So what we used to have is long-term charters below the line, replaced by short-term charters and above the line, impacting EBITDA negatively. And we also then, as mentioned, had to rely somewhat on the space charter market to cover that capacity, both of them negatively impacting EBITDA. This is more a mix effect and a negative effect on the totality.

SG&A is a positive effect of $7 million. The reason for that is that we made a material bonus accrual in Q4 last year. And we also had some year-end adjustment on the SG&A side. So shipping, another solid quarter, although somewhat down quarter-on-quarter for reasons that I have explained.

Let's touch a little bit about net bunker costs and how this affects Wallenius Wilhelmsen. So first of all, we need to say that Wallenius Wilhelmsen is very well covered when it comes to fluctuations in fuel cost over time through what we call bunker adjustment factors in our customer contracts.

However, there is a time lag in these contracts of 1 to 4 months and this varies from customer to customer meaning that when prices go up, we take a hit. And we get normal recovery and prices stabilize and then we take the benefit when prices go down meaning that over time, we would say that we are fully covered.

So let me illustrate this with an example. As you see on the chart here, if you look to 2022, when Russia invaded Ukraine, fuel prices were also spiking, as you can see with the red line. Then we took a hit, meaning increased net bunker cost in Q1 and Q2 2022.

Then our bunker adjustment factors kicked in, in Q3 and Q4 2022 and we got increased recovery. And then we also had an effect in Q1 2023 on the negative side because the bunker adjustment factors were then less beneficial and then things started to normalize. This is the same we expect to see right now.

So Q1, we had a small hit. In Q2, we expect to have a substantial hit. And assuming that things start to normalize or at least stabilize, we expect to then have positive recovery and lower costs going into Q3, Q4 and potentially also going into 2027.

So as Lasse said, this is mainly a periodization and timing effect. But it's expected to hit the results for Q2 and for 2026 as a whole compared to our expectation when we were standing here 11th of February.

Moving over to Logistics. As Lasse has already said, good quarter for Logistics. EBITDA of $42 million, up 50% quarter-on-quarter with revenue growth across several areas of the business.

We also have rate increases in this business. Rates are actually going up in many areas. Significant efficiency gains, both on OpEx side, but also on the SG&A side. And then when we compare to last quarter, we also -- similar to the Shipping segment, we had some material bonus accruals and year-end adjustments for SG&A in Q4.

So these results -- or let me take a step back. So last quarter, we shared with the market that we had ambitions to really turn around the logistics business. And we were shooting for what we call a cash EBITDA of 10%.

The results you are seeing here, that is a cash EBITDA of around 5%. So we are really happy with the results. We are really happy with the development, but our ambitions are higher and that is what the entire team in Logistics is working on as we speak.

Moving over to government, a seasonally soft quarter. It's typically a seasonally soft quarter, except for last year, where we had this extraordinary presidential cargo partially going into Ukraine. If you look quarter-on-quarter, relatively stable, so it's up $1 million. The best way to explain the results in the government segment is actually to look at the different revenue categories.

So what we are seeing is that the U.S. government revenues are going down. It's seasonality. There's also some softness in the market in Q1. That was partly replaced by commercial revenues, but with lower profitability. But then we had a rather significant increase on this MSP, so the Military Security Program stipends.

There are 2 effects there. In February this year, the U.S. authorities announced that the stipend per vessel per year would increase from $5.3 million to $6.5 million, dating back to October 1, 2025. So what you are seeing in Q1 2026 is then the increased stipend for Q1 retroactively also back to Q1 2025.

So you get an extra benefit in Q1 as it was dated back to last year where we were not able to take that increased MSP because it was announced in February. And then on the cost side, it's relatively stable.

Moving over to cash flow and liquidity position. So cash flow and liquidity position remains very strong, currently at $1.4 billion in total with cash of $900 million. Operating cash flow, $322 million. So we have been proud to present a cash conversion of close to 100% on many, many quarters in a row.

This quarter, we're actually only at 83%. The reason for that is also linked to the Middle East, where we have had a need to reduce risk by adding significant amounts of fuels on our vessels to ensure that if things get even worse, we will have the fuel available, so that we can actually serve our customers.

We have more fuel on our vessels at a higher cost and that is impacting our working capital and hence, that's a negative impact on the operating cash flow in the quarter and the cash conversion ratio. That is a temporary effect. And we expect that those normalize in subsequent quarters.

Looking at investing cash flow, $66 million, mainly related to installments on the newbuilding program. And then we also started the construction phase for the Drummond processing center that will open in 2027 together with Bertel O. Steen.

Financing cash flow, negative $439 million. That is mainly driven by the dividend payment of $427 million. Then we also, as already mentioned, had material debt repayments in the quarter, $275 million, with a big chunk of that being voluntarily. And that was partially funded by us temporarily drawing on credit facilities.

Moving on to the balance sheet. Most has already been mentioned, equity ratio of 40%, leverage ratio of 1.2x and then liquidity service at 1.4. So all in all, we maintained a very strong balance sheet. And we have started to rightsize the liquidity position.

Last but not least, let me cover the agreement we have reached with Hyundai/KIA regarding the put call option. So most of us know, Hyundai/KIA, they are our partner in EUKOR and our most important customer on the auto side. So Hyundai/KIA, they own 20% of EUKOR. And Hyundai/KIA, they have a put option on that 20% stake and we have a call option on that 20% stake.

In April 2026, Wallenius Wilhelmsen and Hyundai/KIA, we reached an agreement that the put and call option cannot be used during the current OCC program contract or in new contracts as long as the share we are contracted with the carrier is 50% or higher.

The current contract runs until end of 2029. And the date we have agreed that is the first exercise date is January 1, 2031, so meaning 12 months after the expiry of the current contract. If the new contract is renewed with 50% or more of the volumes, another 5 years will be added to that expiry date.

This has impacts on the accounting treatment of the liabilities. This is currently in Q1 is treated as a current liability. This will now be treated as a long-term liability. And the value of that -- or say the amount for that liability will assess based on the highest of 2 alternatives.

It will either be the net present value of the forecasted taxable result for the years '28, '29 or 2030 or the forecasted net asset values at the end of 2030. It's a somewhat complex to put an exact value on what will that actually be in 5 years.

So for that reason, we don't have an exact figure to share with you today. We will share that figure as part of our Q2 presentation results. It will be in the balance sheet.

What we can say today is that that amount will be significantly reduced compared to what the amount is on our balance sheet today. And it will also impacts the equity ratio positively. But it will actually impact the return on capital employed negatively for accounting reasons. We are coming back to that as part of Q2.

So with that, Lasse, I hand it back to you.

Thank you, Bjornar. Well done, well explained, some complex things to take us through. I will just very quickly say that the prospects for Wallenius Wilhelmsen are really strong.

The demand is strong. We are sold out in shipping. We expect to continue to be sold out in shipping. We expect the fuel cost issues to be neutralized over time. And then what we thought would be maybe the issue going forward was a less tight market. We see a very tight market in shipping.

We do see an improvement in Logistics, both in demand, revenues, rates and in our cost position. And then we had a soft start to the year in government meaning that we believe that this year we'll end around $1.6 billion in adjusted EBITDA.

So with that, I'll hand it over to Anders and Anette. And Bjornar to join me for the Q&A. Thank you.

All right. Q&A. Once again, I remind you that if you have questions, please post them in the webcast. We can start with a few questions. Just Lasse, going back a little bit more than a year, what did you believe at that time? And what has been the biggest surprise compared to where we stand today?

Well, I must admit that as a shipping person for more or less my whole career, we're used to cyclicality. And 2 years ago, we were quite convinced that due to the newbuilding order book and the massive amount of vessels coming that we would see a softening in a year or 2. And I'm quite surprised that, that has not happened.

And I think I've never seen before a segment that's been able to accommodate a 40% more or less growth in capacity without seeing reduced utilization of the fleet. So this cycle and the strength of the market continues longer than we actually expected.

Although we made contracts that we were well covered, the strength of the market in the shipping segment is amazing. And it is due to the unprecedented growth of exports out of China.

Yes. Bjornar, we're 1/3 into the year. We've adjusted our prospects a little bit. How confident are you that we're going to meet our targets?

Do you want that answer in decimals or no, I think I would say 3 things. So first of all, when we share our outlook, it's always based on no material adverse effect.

No, we have been listed. So that's changed the rules of the game. Secondly, I would say that the reason why we are reducing our forecast, that's not due to lower demand or lower utilization.

It's due to higher costs, which we have explained. And thirdly, at all points in time, what we aim to share is our best estimate of what we believe the year will bring in terms of results.

Okay. Are there any questions in the audience? Last one, I think I forgot all about that. So I'll take that first. There seems to be no.

So we'll take our first question from Sondre at Nordea. In terms of contract renewals, you touched a little bit upon it. But we have around 40% coming up for next year. How can you split those? And where do you think that negotiations is going?

I would say that you can split it into 2. We have 2 very big contracts coming up for renewal, one in the High and Heavy segment and one in the auto segment.

The High and Heavy contract is with a long-term strategic customer of ours. They want and we want to conclude that contract and that is progressing well, starting late this year. The other one with the auto customer. We also believe that we have a unique product due to our size and coverage. So we are both -- confident in both of those.

The other part is related to growing volumes out of China and also renewal of contracts out of China. And I'm sure we could have doubled our volumes today out of China based on our fantastic presence and product there, but we don't have the capacity. So I'm not concerned about our ability to fill the book for 2027. It's more a question of who do we prioritize.

Yes. He also has a follow-up question on China really. And how is our customer relationship with our Chinese customers? And how is that differing from what we see towards our legacy customers?

I think what we see in China is natural in the phase that China is in, meaning that they're growing extremely fast. They don't know what the future next quarter and next year brings. So that means they've been rather transactional short term when it comes to shipping while they are much more structural and strategic when it comes to what we call destination logistics.

So as we shared earlier, we have with the Chinese account built up the complete distribution capability in Oceania with picking up the cars in the terminal, processing them, making them ready to deliver to you as a customer, bringing them out to the dealers, doing everything basically. And this is something that's much more strategic for them now.

So our strategy with Chinese customers is really to use our global footprint. The fact that we can serve them and help them scale in destination markets and use that also to have more long-term strategic relationships with them on the shipping side.

Right now I would say that the rule of thumb in China when they source shipping contracts is to typically do 1 year. But again, they are renewing with us and with the partners because they really need support.

Okay. Another question from Sondre was around our fleet strategy. Our average age is increasing. Demand seems to be high. How do we care to approach that?

We've been around for decades. When we think on fleet strategy, we think for decades. That's why we developed the Shaper program because we believe we need to make vessels that are cost-effective and energy effective and able to reach net zero over the next 10, 20 years. We have filled up with quite good contract -- well, fleet renewal now up until 2028.

And we are continuously looking at opportunities beyond that. We will continue to build vessels. We will renew our fleet. We will continue to build vessels that create competitive advantage.

And we will continue to source vessels in the market from close partners and we are doing that as we speak. So we have a very long-term perspective on keeping our capacity and growing with our customers.

Okay. I have one for you, Bjornar. Cost pressure in Q1 from TCN vessels. Can we expect that to continue into Q2 and Q3?

Yes. So what we are seeing is that the demand is so high. So we are in need of somewhat more capacity than what we expected going into this year and the market is very tight.

So the charter prices are high. We also when we space charter with our peers, the prices are going up. So we are expecting that capacity costs going into '26 or the rest of 2026 will be somewhat higher than what we expected just going back 3 months. So that's where we're at.

And let me add to that. We're also expecting that freight rates will pick back up because these 2 factors are, of course, very closely linked. And we talk about the charter expenses. It's both our need that we have more volume than we thought. We need more help to carry it and that the rates are going up somewhat, but not so materially that it's threatening our margins in any significant way.

Okay. On rates, Petter Haugen has a question. Last quarter, we disclosed that our average rate in our book of business on the shipping side was around $55. Where about is that now?

On the...

Average rates in the [indiscernible]?

The time charter equivalent or the daily rates?

No, the --

TC rate.

-- rate per cubic meter was around $55.

Oh, I should have able to take that on top of my mind, but I can't. But we'll look it up and we'll make sure to send it to you, Petter. Right?

Probably quite close.

We can guess, but that's fine. Yes.

There's a question from [indiscernible]. Do you see any positive effects of the recent trade agreements that you have signed with Merck Azure, India and Australia?

Not really. And I would say that both India and Australia are not typically sourcing areas for the U.S. Somewhat, we see an increase in the global production output of High and Heavy equipment in India, but still early days. And the export out of the U.S. in terms of autos are soft and not very relevant.

And the High and Heavy volumes are stable. So I would say we have not seen that and we don't expect to see it that much. But having said that, what we hear from more and more customers, in particular, in the High and Heavy segment is that India is becoming an increasingly important global production hub. So we are certainly keeping a good eye on India in terms of their exports of heavy equipment.

Okay. Another one for you, Bjornar. Cash EBITDA of 10% in Logistics. When do we think we can come there? And do we do that organically or by M&A?

Yes. So we haven't set an exact date, but it's certainly not in '26. So we have -- the way we think about it is that we have now, let's say, 2 years to work hard on improving this. And then we have an ambition that we enter 2028, we should have a materially higher margin in that business. And that is largely fixing what we have today, filling sites, being more cost-efficient, et cetera, et cetera.

It's not about buying our way out of the problem, although we are always open for good investment opportunities on the logistics side.

Okay. Another logistics question. There are many operators that invest in multistory facilities on their terminals. Are we planning to do such things and...

We are doing such things. And you can come to Drummond next year or actually maybe start -- we're already starting. That is a multistory facility fully integrated with a vehicle processing center and the storage with multistory.

And you might ask why is that a relevant question? For sure, ideally, would like to have big open spaces, put the cars where we want them and not drive them up and down in buildings. But the world is such that most of these terminals sit in close to city centers and that's why we need to be more efficient.

So we have this -- we will have this in Drummond. We already have it in Southampton. And we have good experience with operating these kind of facilities.

All right. There seems to be no further questions. We'll pause a little bit just to make sure that there aren't any sitting in the queue. But -- and this is a final warning. If you have more questions, you should post them now. I think there is none.

So if there are additional questions, we'll answer them on e-mail or otherwise. But I guess that ends it for today.

Thank you, and see you again after the second quarter.

Thank you.

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

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

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

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

We know it's going to work.

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

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

Indeed.

Yes. So Lasse, the stage is yours.

Thank you, Anette and Anders, and thank you for joining online and for joining here in this audience. I was asked this morning, so Lasse, when you go on stage for these things, are you nervous? And I said, no, I'm proud. And I'm really proud of being privileged to be the front face today of a team, global team that I think has delivered another fantastic year, another strong quarter and has changed the nature of Wallenius Wilhelmsen. And I'll try to explain why, and then Bj�rnar will help me with that.

So let's get to it. Starting with the highlights. We have delivered another strong year, ending with adjusted EBITDA of above $1.8 billion. The quarter ended at $400 million, another strong quarter, slightly below or below last quarter, but still in the bigger picture, a strong quarter. And thanks to the strong results and also the very strong financial situation and our good book of business, we are in a position where we can pay strong dividends and extraordinary dividends, and we are today announcing a dividend of $1.01 per share for the second half 2025.

We see continued strong demand out of Asia and the story that I've been telling for the last few years continues. In shipping, we are more or less sold out. We are also continuing to extend our contract base, what we call book of business, and Q4 was no exception. We added another $1 billion worth of contracts.

So at the back of all of this, we are still expecting a solid 2026, and we are keeping our outlook for the financial results with an adjusted EBITDA between $1.65 billion and $1.75 billion, which will be another historical strong year for the company.

Before we dive into the quarter and the year, I wanted to take a step back and look at the last couple of years because the company that comes out of, call it, this cycle, meaning into 2026 is a very different company that went into this cycle in 2022. And we have changed in 3 principal areas: In our financial position, in our commercial position and in our operational excellence. And I'll give a little bit of background on each of those.

On the financial, we were a highly leveraged company a few years back. We have repaid half of our debt in the period at the same time as we have returned more than $2 billion to shareholders in dividends. So today, we are a moderately leveraged company, meaning that we are in a position where we can withstand future low cycles if they come. But much more importantly, we can be a stable long-term player in the industry for our customers. We can act countercyclically when we see opportunities, and we can make sure we deliver on financial policy and keep strong and steady dividends back to our shareholders.

We have also transformed commercially and the book of business we have today, when we left 2025 and came into '26, we had a unique book of business, meaning a total set of contracts, both in shipping and logistics far above where we've ever been before. If we focus in on shipping and the book of business, we had a total backlog leaving last year of close to $7.5 billion, lasting for an average 3.3 years with an average rate, so to speak, that means rate per CBM, that's how we measure our income, of $55. If you look historically, the green line here, you can see that, that is way above where we've been historically.

So this means that as long as the world continues, and I will come back to that and the volumes continues, the rates we have secured will take us forward on a level that is strong and sustainable. We are sometimes compared to the time charter market, time charter market being how much do we pay to rent the vessel. That's the red line. As you can see, that's not how we measure our income. That's not what creates our income. That's our cost. That's what we pay for vessels. So what we deliberately avoided over those years, we can see the peak of the red was that we did not put on any massive new tonnage, meaning that we were not sustaining these high levels of payments on time charter, which has been very important for us, challenging in terms of prioritizing, but very important.

So much stronger financially, I would say, solid financially, solid book of business and also worked to improve our operations. And I would say that today, we are a much more integrated and unified company than we were when we came into this cycle. And also, we have entered quite a few new acquisitions, both in the shipping side with Armacup, in logistics with Syngin and ALS. And we are today also operating effectively as one economic entity across EUKOR and Wallenius Wilhelmsen Ocean.

We have started fleet renewal with upscaling our vessels, making them ready for green fuels, and we believe creating competitive advantage for the years and decades to come. We have expanded our network. We have built the biggest terminal in the U.S., I think, in North America in Brunswick and opened that. We opened last week the new terminal in Gothenburg. We have extended our network at the back of Chinese exports into Australia. So we are extending our network to help customers with destination logistics.

We have also taken a leap on decarbonization. And I'm very proud to say that in 2025, 50% of the cargo volume we carried our customers paid up for lower emissions. And I would dare to state that, that's rather unique in our industry.

And then we have started on a very look-through and deep digital transformation, where we are now investing heavily into making sure that we are standardizing and digitizing operations to be more cost efficient, more productive, more scalable, but also, of course, ready to deploy AI into our operations. And Bj�rnar will come a little bit back to that investment later. So in general, I think it's important to say that although maybe Q4 was a little bit on the lower side compared to our expectations, 2025 was a very strong year. The company is in a very good shape. And actually, our expectations for the market into 2026 is strong.

So then what shapes the market. You cannot avoid talking about geopolitics. I'll touch that. Then I'll talk about the driver being the Asian exports and then also on the fleet growth in shipping, which really drives the supply-demand balance. There's no doubt that we are in times of a changing geopolitical situation. Call it geogovernance is changing. And we are seeing now that we're going from a world where we have had, let's say, one global set of trading and where we have had more multilateral agreements into a world which is more bilateral.

And I think this is important for us to say the world trade is not stopping. It's just changing. And the fact that some countries are protecting themselves more with tariffs does not mean that everybody else do. And we have seen new trade agreements opening up with EU and Mercosur, EU and India, new trade deals between Canada and China. So what we see is a new emerging trade system with more bilateralism. Like it or not, but it's a fact and trade continues.

When it comes to the market we are in, moving stuff that can roll being a car or excavator or a truck or harvesting equipment, that market is, all in all, not growing much. So if you look year-over-year, there are not too many more cars sold in the world, but there are more cars transported. So from 2024 to 2025, the total volume of cars moving on vessels, call it deep sea, increased by 5%.

And then if you look at the big data providers in our industry, S&P being one, they estimate maybe only 2% growth into next year. We challenge that. And also, it's important to understand that behind that, there is a big difference in what -- where are we growing and where are we shrinking. So if you take one step back and see, can we trust this number, the answer is no. When we started 2025, the expectation for volume from the year was 15.2 million cars transported, the result was 15.6 million.

At the same time, if you looked at the expectation for '26, the expectation was 15.5 million. Now it's up to 15.9 million. Why? Because the Asian export is constantly surprising on the upside, and I'll come back to China. And unfortunately, for European players, the European volumes or the ex-EU volumes are declining. So there are 2 effects there. One, we're underestimating the Chinese growth. And the second is that although the total transported numbers are down, they are increasing in Asia, decreasing from EU, but they are part of the same voyage. So with lower volumes coming out of EU, it doesn't really drive demand for our vessels. But for every single car China adds to their exports, they need more capacity. And they need that on a full round trip voyage maybe lasting for 2 months.

So that means that underneath these minor expectations on growth, there is actually quite substantial growth in the demand for our shipping services. And we wanted just to illustrate that out of China. The Chinese car exports have grown tremendously, and they continue to do so. And they've grown, let's say, around about 2 million cars from '24 to '25. And I'll repeat that, 2 million cars in growth in exports, basically needing our capacity to do so.

Again, if you look at the forecast for '26 from the official statistics, they expect slower export next year. When we pick up the phone and we call and we check with our customers, and these are public statements, so I can share them with you. If you just take the biggest customer or the biggest players and what they have claimed, this is what we will transport next year and sell next year, you can add 2.3 million cars to that.

That is why we believe that, again, China will surprise on the upside. And the reason why it's still so tight and sold out in shipping is that all the added cars that has come in from China has more or less filled up the new vessels delivered, and I'll come back to that. So our expectation for '26 is that we would more likely have a growth similar to the one from '24 to '25 than a negative development as forecasted. So we believe that there are upside in these numbers, and this is also what we see on the ground.

When we now look at our bookings and what our customers tell us, we have very strong bookings through Q1 and into Q2. So the big worry has been over the last few years, the supply side, too many vessels ordered and meaning too many vessels delivered. And that is true. We have never, I think, in the history of this industry, taken more vessels delivered than in '25. Still, there are hardly any vessel to find if you want to make a charter. And why? Because more or less exactly the need -- increased need out of China has been matching the increased capacity coming out with new vessels.

2026 will be another strong year in terms of deliveries. But if you believe, and this is an if, you believe that the China export story will continue, which I just showed you, that extra volume out of China more or less matches with the extra capacity coming out of the yards. So we don't see any weakening in the demand for our services, and we don't see, at the moment, any weakening in utilization of our vessels.

And actually, what has happened over this year is that the time charter rates after falling for a while, I showed you that earlier on, has now picked up. Why? Because there are hardly any vessels available if you need to charter a vessel. So the shipping market is very tight. The market for our logistics services are very tight in some places, but there's no doubt that we have been affected in the U.S. I'll come back to that. And in the government sector, we have -- saw a little bit of a slowdown due to some factors beyond our control.

So if we then jump into the business, Bj�rnar will come back to the quarterly numbers and give you the details. Here, you can see the year-over-year. If you look at shipping, although maybe a little bit below what we were hoping for Q4, if you look year-over-year, the shipping adjusted EBITDA is basically flat. We are delivering at the same level. The reason why, as I just told you, we're sold out. On logistics, we are down year-over-year, partly as we sold a big terminal in Australia, MIRRAT, I'll come back to that.

While in the Government Service, there's no doubt that Q4 ended below our expectations and also the year did. And this is basically caused by the U.S. government shutdown. They didn't have people in the office to order our services and also a couple of other factors that came into play. It's not a sign that there is a reduced structural need for the capacity we have in our Government Services.

If you look at shipping, volumes are slightly up, and then you would expect to have a stronger quarter. The thing is that this is periodization. So we had much more volume going back from Europe. relative to what was going out of Asia. This is not a general trend. This was a very specific thing for the quarter. So we had higher volumes, but lower rates, thanks to that. And the way it works in the shipping area is that when you take something out of Asia, we call that the front haul, we are paid far more than going back from Europe, which is a backhaul.

So if we have, relatively speaking, in the quarter, more volumes out of Europe, the net rate falls, meaning our earnings falls, but that's just periodization. The general trend is fast-growing volumes out of Asia and decreasing volumes out of Europe. And if you look year-over-year at the bottom right, you can see that thanks to increased prices and thanks to more customers and more cargo into trades with high-paying customers, the rate year-over-year is up. So the small dip in the rate in Q4 is not representative necessarily for the year as such.

In logistics, as I said, we have not delivered the results we were intending in last year. I would say that with one exception, we sold the MIRRAT terminal in Australia. I think that demonstrated the value of logistics, but that also took out quite a bit of our EBITDA. Then we had 2 big concerns during the year. One was the fact that the Europeans slowed down their exports into U.S., thanks to tariffs and uncertainty. We are big on terminals out of Europe. We're even bigger on terminals into the East Coast of the U.S., we were affected.

Second is that the high and heavy, meaning that the construction industry are not buying new excavators or tractors and the agriculture industry not harvesting machines. That sector is slow, and that has also affected into our logistics business. So all in all, we have seen a lower return in logistics. And that's why we have said that we have very much focused now on bringing that business back to a good margin. And we have a clear target within 2 years to bring it back to an operational result of 10% and we are doing quite a few things. We are now looking into reducing costs. So we have reduced costs. We are growing our network, opening new opportunities, growing with customers and also increasing the volumes through the existing facilities that we have.

So we have a clear plan for how to improve logistics, and we are not where we are, where we should be in terms of financial returns for 2025. And in government, as I said, we had a slow period in Q4. We do not think that's representative. And we were just announced by U.S. government that they have approved the budget for increasing the stipend we get for running a U.S. operation, which will have a net effect of more or less of $10 million a year, likely accounting for the full 2026.

Finally, book of business, another strong quarter in terms of adding contracts, close to $900 million in shipping and $150 million-ish in logistics and building on to what we already have. And as you can see, we are totally sold out for 2026 in shipping. For 2027, we have quite a few renewals this year, but these are many of them contracts that we have had for decades, and we expect to renew them, but it's not done yet.

So then before I turn over to Bj�rnar and the numbers, let me touch on sustainability. We are very happy that we are delivering better every year on safety. For us, safety is a fundamental and foundational value that we want to bring people home safe. We had no serious accidents in the whole operation of 12,000 people going to work every day for us in 2025. We're proud of that. And we also see that the statistics for the smaller accidents are coming down. And this is thanks to a very hard work and dedicated effort in the organization and the fact that we have as one of our core values, we care, and we care for each other, and we take care of each other.

On the emissions, unfortunately, we have seen an uptick in the emissions. That's partly due to bad weather in Q4. Normally, we have that, but also the fact that we had to increase the speed a little bit to basically catch up with the enormous demand we have from customers. The big picture is that we are consistently reducing the emissions per what we call transport distance, meaning that for every nautical mile we sail with our vessels, we are reducing the emissions, thanks to dedicated efforts in everything from operational technology to physical installations of the vessels, reducing the energy consumption. So with that, Bj�rnar?

Thank you, Lasse, and good morning, everyone. I actually got the same question as Lasse and my response was, I'm proud, but also a little bit nervous and the reason that you have so much energy when you start, Lasse. So I've been told today that I need to have the same energy. So I will do my best, but no promises. Financial update. So let's start by wrapping up the year. So if you look at 2025 as a whole, it's a new fantastic year for Wallenius Wilhelmsen, although it's slightly softer than the record year 2024. But if you look in the historical context, it's a fantastic year that we are very, very proud of.

Starting with the revenues, $5.2 billion in revenues this year. It's down 1% compared to 2024. This is, I would say, largely explained by the Logistics segment, where we have somewhat softer revenues, down 10%. The majority of that is due to the sale of MIRRAT and also slightly softer revenues for the auto and the high & heavy business in the U.S. And then we had a soft Q4 for ARC for reasons already mentioned by Lasse.

On the positive side, shipping is basically flat compared to 2024, representing the underlying stability we are seen our business right now. EBITDA ended at $1.8 billion. It's around $60 million below last year with the reason for that again being logistics, primarily due to the sale of MIRRAT but then also slightly softer performance for Government Services, while Shipping were spot on last year.

Then we have some adjustments to EBITDA last year, 3 main factors. We sold 2 vessels during the year with a sales gain of $28 million in total, which we consider to be an adjustment to results. It's not part of our underlying business to sell vessels, although I know a lot of bankers would like us to sell vessel and to rent them back expensively afterwards. We are not in that business.

Secondly, we have used our port fees in the fourth quarter of $21 million. I consider that to be an adjustment because it was specific to the fourth quarter, and the port fees are currently on hold. Then lastly, we had around $12 million related to digital transformation and restructuring costs in the fourth quarter. I'll be coming back in a little bit more details around what this is all about. So if you then look at the adjusted EBITDA, we end up at also around $1.8 billion, $90 million below last year.

On the positive side, net profit actually increased in 2025 compared to 2024. And the reason for this is that we had a very positive sales gain when we sold MIRRAT in May, which more than offset the decline in EBITDA. Looking at the financial targets, I will only comment on one of them, return on capital employed ended at 18.4%, so slightly lower than last year, but still at a very, very good level.

Then moving over to the fourth quarter, I would say it's another strong quarter, although it's below what we delivered in the third quarter. So when someone talks about softness, I wouldn't say it's soft when you deliver a return on capital employed of 18.4%. That's a strong quarter.

Starting with revenues, down somewhat more than $50 million compared to the last quarter. This is largely explained by the Shipping segment, but also lower revenues in Government Services and slightly lower revenues on the Logistics side. EBITDA ended at $379 million. That is a significant drop from the previous quarter of around $100 million. The quarter included, as I already alluded to, a couple of adjustments to the result.

So number one, we had USTR port fees, $21 million. Then we also sold a vessel in the fourth quarter. This was an old vessel, more than 30 years or around 30 years old. We had a sales gain here of $12 million. And then we also had $12 million related to digital transformation and restructuring cost that was taken as adjustments to EBITDA.

Let me comment a little bit on the latter, and this is following from what Lasse said a little bit earlier in the presentation. During the second half of this year, we kicked off 2 initiatives, which we have put under what we call a cost leadership umbrella. And this is all about making Wallenius Wilhelmsen even better positioned for the future to deliver a good service to our customer and good returns to our shareholders.

The first one is about digital transformation. Very simply digital transformation that is about upgrading all our existing systems to be future-proof for the future to ensure that we can become even more cost efficient going forward. The second one is about SG&A cost efficiency, where we are taking some measures here and now to reduce the run rate for SG&A by $30 million with effect from later in this year. This is already in process.

So what are we doing on SG&A cost efficiencies? I would say split in 2. One, it has a people impact. We will be fewer people in Wallenius Wilhelmsen in 2026 than we were in 2025. And we're also taking out some external costs around consultants and IT cost. Doing these changes certainly requires some investment. So if we look at digital transformation, we are investing $50 million this year into our new system capabilities. When you look at SG&A cost efficiencies, we will have restructuring costs of around $15 million this year in the beginning of the year, the first half mainly.

We consider these to be adjustments to EBITDA as it is not representing the underlying development of the business, but investments that we are doing in improving the business longer term. It's also key to highlight that for both these areas, the business cases are very, very positive and the payback period on that investment is rather short.

Adjusted EBITDA, taking all this into consideration, then ended at $400 million, also below the previous quarter and last year with around $50 million, with the main driver being the Shipping segment and the Logistics segment.

Moving over to net profit, $175 million, short of what we delivered in Q3 and also the same quarter last year. The driver for this is the lower EBITDA, but it was partially offset by lower financial expenses. And why do we have lower financial expenses? The reason for that is that we have lower debt. So the cost to service our debt has come down quite significantly. The second part is that we had a lower tax expense this quarter with the main reason being that under Government Services, the company ARC, which is a U.S. company, they entered the U.S. tonnage tax regime, which is more favorable from a tax perspective. And then we had a reduction in our tax liabilities and also payable taxes is down around $7 million for ARC.

Looking at our net debt position at the end of the quarter, it was around $1.7 billion. So it was down close to $200 million during the quarter. The driver is continued reduction in our bank debt, close to $200 million, of which $125 million of deduction was actually voluntary repayment of debt. Cash, as you can see, was largely stable quarter-on-quarter.

Looking at the financial targets, ROCE, as already mentioned, 18.4%. That is actually the same as what we delivered on average for the year. So how can we then be as good in the fourth quarter as we were throughout the year when EBITDA was somewhat on the soft side in the quarter? And the reason for that is that the balance sheet management has improved. We are being more effective in terms of the way we manage our balance sheet.

Equity ratio of 42%, up around 2%, 3% quarter-on-quarter due to the positive net profit. Leverage remains at 1x, very stable. And then our liquidity reserves now stands at $2 billion, 2x the minimum target. This was an increase of close to $300 million in the quarter. The driver for this was that we added even more capacity on the credit facility side. This is actually linked to the voluntary repayment of debt as we repaid old vessel debt and we refinanced the vessels into a credit facility of $200 million, where we have the flexibility to draw up and down on that capacity, and of course, with lower margins and also extending the maturity into around 2030, 2031.

Moving over to the segments, starting with Shipping Services. Revenues around $975 million, somewhat down quarter-on-quarter due to net freight being lower for reasons already explained by Lasse, although volumes were stable. Looking at adjusted EBITDA, $354 million, that is down around $50 million quarter-on-quarter. Let me take you through the bridge to see what was driving this. First of all, net freight down $38 million. Around $10 million of that was linked to prior period adjustments or adjustments in voyage estimates. We always do estimates of our voyages and how much they are generating in revenues and costs, and then we did certain adjustments at year-end.

The rest is explained by the trade mix, but also the fact that we did quite a lot of big contract renewals in the fourth quarter, which impacted the underlying rates in the quarter. So this is what we have talked about lower for longer deals. So very strong value creation in the long term, but we are taking then slightly lower rates in the short term.

I would also like to comment on other voyage and cargo expenses, where you see there's a minus $30 million and there is a plus $21 million. The plus $21 million, that's USTR port fees. So the net difference is $9 million. Also in this bucket, we have certain prior period adjustments to the voyage estimate, $5 million, $6 million. So the underlying cost is relatively stable. Also vessel OpEx, that is up $5 million. This relates to the fact that in the third quarter, we had an insurance claim or a refund from an insurance claim of $4 million. So like-for-like, it's also rather stable.

Then SG&A, there is a rather big change in SG&A here in the fourth quarter. This relates to the fact that at year-end, we make accrual for discretionary bonus if there is discretionary bonus. As you have seen, we have had a fantastic year, and then we also share with our employees, not only the shareholders. So that's why SG&A is up in the quarter.

Moving over to Logistics. Revenues largely in line with the previous quarter. It's a drop of $10 million. This is explained by lower revenues for the Inland segment. This is a business with relatively low margin, so that didn't impact EBITDA to a large extent. EBITDA, $28 million, it's down $6 million compared to the previous quarter. At the same time, I would say that the underlying momentum in logistics was rather good. And why am I saying that? The reason is that you see auto is up $2 million, high & heavy is up $1 million, terminals is slightly down. That's the fact.

Inland is stable, while other is significantly up. Other that is SG&A cost. $4 million here is also accrual for a discretionary bonus to our employees we take in the fourth quarter and $3 million is related to changes in SG&A cost allocations between the ASA Holdings segment and the Logistics segment where we go through the allocations throughout the year at year-end. So meaning that the underlying momentum of the business is rather solid, but then we have some extraordinary costs related to SG&A for Logistics segment at the end of the year. In particular, I would say that this is a strong result as one of our key customers had a cybersecurity attack in the fourth quarter that impacted the auto business in the U.S. and also the terminals in both Europe and in the U.S.

Moving over to Government Services. Revenues were down quite significantly in the quarter. This is -- as already explained by Lasse, this is due to the 43-day government shutdown during the quarter. Then as some of you may remember, we said in the third quarter that the U.S. authorities activated a vessel in September that took some of the volumes we would typically have a chance to carry and that also had an effect into this quarter. And then Q4 is normally a seasonally weaker quarter, although we didn't see that last year, but that was due to some extra activity with the change of President in the U.S. Looking at adjusted EBITDA, $22 million. So it's -- the EBITDA is actually cut in 2. The main -- or the only driver for that being the especially low revenues that we experienced in this quarter for reasons already mentioned.

Moving over to cash flow and the liquidity position. So at the end of the quarter, as already mentioned, we had liquidity reserves of $2 billion. That was an increase of $268 million compared to the previous quarter, consisting of close to $1.1 billion in cash and the rest in credit facilities. Looking at some of the items here. So the net investing cash flow, that was $61 million. This is mainly related to CapEx for our new building program, both the vessels and equipment for the vessel, partially offset by the fact that we sold old vessel, meaning 30 years old in the quarter. It was sold in the previous quarter and delivered in this quarter.

Financing cash flow, negative $313 million. This consists of interest payments. The net proceeds and repayments, this is split in, I would say, 3 parts. One is regular payment of bank debt around $60 million, $70 million. Then we had a voluntary repayment of $125 million, and then it's lease payments being the latter part.

I think we will jump over the balance sheet because that's already covered. Then the highlights for the day, dividends. Yesterday, it was approved by the Board that we will pay a cash dividend of $428 million for the second half of this year. The dividend is based on 50% of the net profit for the second half of the year, meaning in the upper end of our dividend policy. And then we have added an additional element, an extraordinary element of $200 million, considering the very strong financial position of the company with liquidity reserves currently around $2 billion and a leverage ratio of just 1.

So if you sum up the dividend for H1 2025 and H2 2025, we actually returned close to $900 million to shareholders this year, representing $2.11 per share, which we are very, very proud of. The dividend will be distributed to shareholders towards end of March.

With that, I will hand it back to you, Lasse.

Thank you, Bj�rnar. You did great. And you kept the energy up, although it's hard to follow some details, but you made it easy. Okay. So I will just finish up with the outlook, and I want you to make sure that when you think of the expectations for Wallenius Wilhelmsen going forward, make sure you have calibrated your view on where we are. We have totally repositioned the company financially. Bj�rnar explained you that. We have cut the debt in half. We have paid a lot of dividends. We have proven that we can pay strong dividends, and we have a strong cash position. We have a strong book of business, taking us years forward, and we are improving the operations in safety, in environment, in digital and in all parts of our organization.

So we are expecting another strong year in 2026. The demand from the market is strong. If you believe that the Chinese export story continues, most likely, that will need all the vessels that will be delivered next year. We are working hard on improving the performance in Logistics, and we expect Government to come back to more normal levels after an extraordinary Q4. So we maintain our expectation for 2026 of an EBITDA of between $1.65 billion and $1.75 billion, which will be another very strong year for Wallenius Wilhelmsen. Thank you.

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

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

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

When we started to avoid the Red Sea, meaning that we had to go all the way through around Africa, getting to Europe, for instance, we said that, that would -- that took 5%, 6% of our capacity out, meaning that we lost 5%, 6% of earning days. When we now study that, we will not get 5% to 6% back due to 2 reasons. One, we -- the world fleet increased the speed a little bit when we started to go around, going back to the Red Sea at some point, probably we'll get back to the same speeds.

But even more importantly, the world trade has changed. So over this period, the growth out of China has been bigger outside Europe than inside Europe, meaning that more of our vessels are going to destinations, which are not necessarily getting the full effect of going through the Red Sea. So we are saying maybe 3%, 4% of capacity will be added when we can have a full availability of the Red Sea.

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

Yes. Thank you, Anders. So we have already financed 11 out of the 14 vessels. So the 3 vessels not financed. There is a natural reason for that. Some of the vessels for last 4 vessels will be delivered in 2028. That's more than 2 years down the road. Securing financing already now is expensive as we need to pay the banks certain what we call commitment fee just to haul that capacity. And we don't want to secure that capacity earlier than what we need as we want to avoid unnecessary fees.

The banking market for us is extremely strong. So there's no worries at all that we will be able to finance these vessels. The banks are calling my colleague, Birgitte every day, and we'll probably also call after this meeting and even here, more banks here than investors, it looks like. We will be financing these vessels late 2026, early 2027, and it's just a natural timing to avoid unnecessary fees.

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

Yes, I'll start and then you can finish. The biggest surprise we had was in the Government Service. And I must say that we are -- I mean, we just need to be honest that we were not good enough in understanding the late effects of the shutdown in the U.S. We should probably have been able to see those signs earlier, but we didn't. So we overestimated what -- the results in government.

And then the other part, as Bj�rnar touched, was really that we're -- at the end of the year, sometimes you get some adjustments. We have more than 500 voyages during the year. When you close the books, you do an extraordinary check of those voyages and that really results in some previous period adjustments, which we might should have seen also, but we didn't, unfortunately.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Yes. Well, we're doing a big overhaul of the backbone of how we operate. And I think it's fair to say that we have been doing well at the back of a data and digital infrastructure built 20 years, 30 years ago, but it's not been fully connected, and there is enormous room to improve that. And also for us to use the -- and benefit from the effect of new technologies, including AI, we need a better and common data platform and how we're making sure that all the data we have is connected. We need to connect our own systems better. We need to digitize more of our processes. We need to standardize more of our processes, and we need to deploy technology to drive efficiency and scalability.

It sounds like nice words, but what does scalability mean? That means that for every new site we add into logistics, we are reducing the cost of operation for the total operation by adding that. Today, because we have less efficient systems, we are adding complexity and we're adding cost. So this is really about simplifying, standardizing, automating our processes and digitizing whatever we can. And we have a major effort on that starting last year going into '26 and '27. And we have called that program Wall Wil '27, and we think we will be in a good position in the year or 2 forward.

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

Thank you for saving me.

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

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

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

Yes.

Anyone? It seems not.

Maybe they chatted.

It could be. I guess that sums it up.

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

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?

So the boring answer is that the USTR port fees will not impact our dividend policy. When we set our financial strategy, I think we had clear -- 3 clear targets. One is we want to deliver stable earnings. Two, we want to have a moderate debt level. And three, we want to deliver consistent returns to our policy in line with the policy.

We are not changing that financial strategy and those policies because of the USTR port fees. The impact may be, if we don't recover all that, it will impact net profit. And if net profit is impacted, of course, dividends will be impacted because our dividend is based on 30% to 50% of net profit. But we are not changing the policy or the financial strategy.

Next one is on markets. First of all, what share of our cargo is linked to the U.S. We haven't disclosed that in a big way. So I think we'll keep that to...

You will stop me from answering. Okay? Yes?

To the fact sheet, but the second part is what are our expectations in terms of growth for the coming years.

Well, we -- as we alluded to earlier on, we believe that the growth out of China is more structural than just short term. So our expectation and what we position ourselves for is to grow with the exports out of China, both, of course, Western OEMs producing in China, but increasingly so Chinese OEMs growing out of China. This goes for autos, but also less noticed for High & Heavy. The growth out of China on High & Heavy is also very strong, both with foreign OEMs and Chinese OEMs. We think that will continue. And that is adding a lot of ton miles, and that's what matters for us.

And you can -- every marginal volume coming out of China requires a new vessel because that vessel does not have return cargo on the marginal counting, meaning that every volume coming out of China will need to be counted on demand on their own voyage basis. The vessel goes maybe all the way to South America and back. So that growth, we will think will continue. We see there's still good demand into the U.S. from Asia. So these key trades are still performing well.

We see growing demand coming out of South America, of the Middle East. So the big one to watch, of course, in our industry now is also the supply side of the equation. So far, we have not seen that, that has deteriorated the market balance, but that is to be considered going into '26. But in general, we have contracts. We see strong volumes, and we expect 2026 also to be a year of high utilization for us.

Okay. Next one goes back to USTR port fees and our calculation about for next year, $350 million to $400 million. What's the number of port calls and what's the average cost per vessel that is behind?

If you take the average typical vessel in the world fleet and not just talking about us, and we are not -- I mean, we're relatively similar. It's just north of $1 million, let's say, $1.1 million every time a vessel comes into U.S. territory, not every time we call a port, it's on time on every string as we call it. So one time when you get in there. So roughly speaking, the average will be north of $1 million. And then maybe we can challenge Jorgen back and then do the math in terms of the exposure and the cost per vessel.

The next one goes on customers and their ability to capture these costs on top of high rates. What are your thoughts around that?

There's no doubt that for quite some of our customers, this is a big challenge. Having said that, and I showed it earlier on, there's a zero indifference in terms of the tariffs impact and the port fees impact, but it comes on top of everything else. And if you look on, in particular, maybe European OEMs where they struggle with market shares in Asia, they are stating themselves that they are running quite some extensive cost-cut programs. Of course, this is a challenge.

Then you have other players maybe out of Asia and other places in the High & Heavy, certainly in the break book, where they don't really see this as a problem where we have already reached agreements. So in general, I would say that our customers, of course, are not welcoming these extra costs, but they are accepting them, generally understanding. And they are at the level that they will be able to accommodate, although there's a commercial agreement to be made with each one of them.

Okay. Then we have some questions about our book of business. Why is it down quarter-over-quarter? And why is there so few contracts being signed during the quarter? I think that's -- it's a relevant question, but it's...

This is -- we have quite some big contracts and some of them come due and some of them do not come due. I mean we had a major renewal with Hyundai-Kia. We have had major renewals with our biggest customers on High & Heavy and auto previously, and those contracts are going for quite a year -- quite some years. And of course, you eat 1/4 of that backlog every quarter. So unless you do all of these big things often, then you will see changes in the book of business. But generally speaking, we are -- wherever we are trying to renew business, we are renewing business. And if anything, we're growing in volumes with our customers.

Then there's a relevant question more on the composition of our fleet. What number of ships do we have that's U.S. flagged?

We have a total of 11 U.S. flag, whereof 10 are qualified under the MSP scheme.

Okay. There are also a number of questions here that are kind of -- we'll respond to those in e-mail later on because they're kind of very detailed. But here's the one. I think it must be an employee that's asking because Wallenius Wilhelmsen has a great reputation of being a great place to work. How will you describe your culture and your employees' dedication to transforming and innovation?

That's a good lead. Well, let me start with what I referred to earlier on. I think this organizations -- I mean, the commitment of our people, the competence of our people, the expertise of our team, I think, is second to none. The global reach is second to none. So when things happen Friday night, this organization mobilized over the weekend. Meet, work out and figure out how do we solve this USTR problem. And Monday afternoon, we had a plan. So I think I've never been in an organization being so agile in managing these -- all these things that get thrown on us.

And as you saw on the time line, we have had quite a few, but our performance is just rock steady. And then, of course, in a very volatile environment where we're really running after one challenge after the other, we're also trying to build a future-fit company. We are investing quite a lot into modernizing our technology. And we have said in our company that digital-in-carbon-out is core to our strategy. We will continue to do that.

So for those who work in Wallenius Wilhelmsen these days, we are trying to do 2 things: keeping up performance by making sure that we are keeping sales up, we have cost control and we are managing the yield of our assets. At the same time as we're running a big transformation program because we need to become much more digital, much more -- even more agile and much more data-driven to be successful in another 5, 10 and 20 years. And we've been around for decades, and we will be around for decades going forward.

There is another one on our fleet, and it's from Petter Haugen on our newbuilding options. Do we still hold any newbuilding options? And if so, when can it be delivered?

I don't think so. I have to look at -- can I get some help in the audience. I don't think we have newbuilding options on our hands, and that probably tells you that if we had, we wouldn't be very active in discussing them. But I must admit, top of my head, I don't think we have more options.

Yes. Then there's one from an investor saying that in our contracts with customers, do we have the ability to pass on these USTR fees? And if so...

It varies, and these are for lawyers to conclude, but we never start with the legal approach with our customers. We've been serving the likes of John Deere and Hyundai Motor Group and Mercedes for decades. We will continue to serve them for decades, and we want to find solutions together. So every dialogue with the customer starts with the relationship and trying to find a commercial solution.

And very rarely, we need to bring in the lawyers to figure out what does the contract say. And generally, I would say that our customers are understanding of this cost. They understand that we cannot carry it. And then there are still discussions on how and when and how much can they carry.

Questions are starting to run out. There is one about what information do we have around the postponement? I guess we said that quite clearly. We don't know.

And we need to act on confirmed granular information. We had not that last week, we had an indication that the intention is to postpone 301, and there's no doubt that, that's the intention. When we call the people -- senior people involved with this, they also tell us that they don't know yet exactly how this will play out. We do know that they are planning to come out with a specific guidance on this and ruling on this anytime soon, could even happen today. So -- but the general read is that the 301 is paused for 1 year until November next year. But until that is confirmed and what that implies, we are acting as if it's still port fees in the U.S.

Yes. Whilst we wait to see whether there are more questions, are there any questions from the audience? It seems to be -- yes, there's one back there.

My name is Lars. I'm a student at BI and just an investor in your company, really exciting to be here. You mentioned the expansion to Australia. I was just wondering what metrics do you use to make sure that it's demand driven and not ahead of the market or too soon?

Thank you for that question. And that's, of course, a balance you need to do every time. In this specific occasion, we had developed a plan on growing the auto side of the business, and we triggered that when we got a contract. So we have a contract now with a fast-growing Asian OEM that are securing us $25 million, $30 million worth of revenue into these processing centers already. We started in Q3 actually. And then we have set them up so we can grow more. We can have more customers coming in.

And we see that our unique integrated offering on bringing freight from Asia to Oceania, managing all transport in Oceania, completing the cars, making them ready and just for them to bring them to their customer is a unique offering. And many of these fast-growing companies ask for that specific integrated service. So I would say we have already a contract in place, but there is room to grow, and we expect that to grow.

Some additional comments or questions have come in. One is on our fuel consumption. Cargo volumes are flat, but fuel consumption is actually down quarter-over-quarter. How can we explain that?

Because we have invested systematically over years in energy efficiency. We do that on technical measures, changing bulbous bows. We're optimizing painting on the hulls. We have operational procedures, and we even use AI, as we have explained earlier on, to optimize speed on the vessels. So I'm extremely impressed with what the marine operations team together with ship managers are able to do.

And we have consistently more or less every quarter, we had a reduction in our energy consumption measured towards the activity level. And then the -- as I said, the emissions per unit transported goes up simply because we have less units going back to Asia, and you need to distribute more or less the same, but slightly less emissions on fewer cargo units.

Okay. Then there's one on logistics in Australia, slightly or a little bit of the same, but is our growth quarter-over-quarter on logistics entirely linked to the Australia operation?

No, it's not. And the Australia operation just started off in Q3, and we will see the full effects from Q4 and into 2026 of the new auto. So in general, we see very good performance in Canada. We see good performance in Mexico. You saw that export still is strong out of Mexico. Europe is a bit more volatile, but also some strong performance there. We have strong performance in Korea, in China. So generally speaking, if you take out the auto volumes in the U.S., also affected actually by the cybersecurity incident with JLR and the soft demand for construction machinery, in general, in the U.S., logistics is performing relatively good.

The remaining questions are mainly things that we can address via e-mail. So it's something we'll do. Summing up, Lasse, what is your thoughts around the quarter?

Taking a big -- slightly bigger perspective. As you saw on this graph, we're global infrastructure. Wallenius Wilhelmsen is hit by everything that goes on in the world. Despite that our performance has been very strong and very stable for many quarters. And this is what we also expect going forward. And then the uncertainty now lies with how can we recover and minimize the cost of USTR if that scheme remains.

But we are still expecting strong demand. We have a strong book of business, and we are writing new business at the moment, which have very strong earning potential in it. So generally speaking, we're in a good shape. We expect the underlying performance to continue as we see it today. But of course, being a global infrastructure, there's always uncertainty.

Thank you.

Thank you.