Earnings call transcript: Bonheur’s Q4 2024 sees stock dip amid challenges

Bonheur’s recent earnings call revealed a mixed financial landscape, with the company’s stock price falling by 5.41% on the day of the announcement. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations, despite trading near its 52-week low. The company maintains impressive gross profit margins of 82.21% and trades at an attractive P/E ratio of 8.37x, suggesting potential value opportunity for investors. Although exact figures for earnings per share (EPS) and revenue were not disclosed, the company faces a complex environment with both setbacks and growth opportunities.

Key Takeaways

• Proposed dividend increase of 12.5% to 6.75 per share.
• Wind Service segment revenue increased by SEK 1.3 billion.
• Renewable Energy segment revenue decreased by SEK 335 million.
• Cruise line occupancy dropped to 65% from 71%.

Company Performance

Bonheur’s performance in Q4 2024 highlighted a robust Wind Service segment, which saw a revenue increase of SEK 1.3 billion. The Renewable Energy segment faced a decline of SEK 335 million, and cruise line occupancy fell to 65%. Despite these challenges, the company maintained a strong net cash position of SEK 1.8 billion. InvestingPro data reveals strong overall revenue growth of 15.45% and a "GREAT" financial health score of 3.35, with 11 more exclusive ProTips available to subscribers.

Financial Highlights

• Proposed dividend: 6.75 per share, a 12.5% increase.
• Net cash position: SEK 1.8 billion.
• Wind Service revenue: up SEK 1.3 billion.
• Renewable Energy revenue: down SEK 335 million.

Market Reaction

Bonheur’s stock price fell by 5.41% following the earnings call, closing at 240.5. This decline positions the stock closer to its 52-week low, indicating investor apprehension possibly due to operational challenges and market volatility.

Outlook & Guidance

Looking forward, Bonheur is focused on long-term value creation, with continued investments in renewable energy projects. The company prioritizes risk-adjusted returns and attractive investment opportunities, aiming to strengthen its market position in wind services and expand its renewable energy portfolio. With a market capitalization of $866.21 million and a sustainable dividend yield of 2.49%, InvestingPro subscribers can access detailed analysis and comprehensive Pro Research Reports to make informed investment decisions in this evolving sector.

Executive Commentary

CFO Richard Ollavor emphasized disciplined capital allocation, stating, "We try to be very disciplined on having different cost of capital for the various business units." CEO Annette Olsen remarked, "Times are turbulent, but there are also plenty of opportunities," highlighting the company’s balanced view of challenges and prospects.

Risks and Challenges

• Technical issues at wind farms could impact operational efficiency.
• Declining cruise line occupancy may affect revenue.
• Volatility in renewable energy markets and geopolitical impacts could pose risks.
• Limited availability of offshore wind installation vessels may hinder project timelines.

Q&A

During the earnings call, analysts inquired about capital allocation strategies and operational challenges at wind farms. Discussions also centered on investor interest in future projects and clarifications on insurance claims related to financial performance.

Full transcript - Bonheur (BONHR) Q4 2024:

Annette Olsen, CEO, Bonhoeffer: Good morning, everybody, and welcome to the fourth quarter presentation for Bonhoeffer. My name is Annette Olsen, and I am the CEO of Bohner and Fred Olson and Company. Today, as usual, our CFO, Richard Ollavor, will start the presentation with an overview and then the individual CEOs of our subsidiaries will then present. We’ll have the Q and A session at the end. So, Hartree, welcome.

Richard?

Richard Ollavor, CFO, Bonhoeffer: Thank you. And also good morning from me and welcome to this webcast. I should maybe start saying that this has been a special quarter. We have had several of our key assets out of revenue generating activities. I think most notably, BraveTurn and Bolton.

BraveTurn being at the yard and Bolton in transit back from Taiwan. But also their assets have been out operations. Despite this, we land the fourth quarter solidly, but also the full year very solidly. And on the back of this solid performance and a strong position, the board yesterday arrived at the proposal of a dividend of 6.75 per share, which is a dividend growth of 12.5% and represents several year with the consistent dividend growth of double digit showing the strength of the group. I will not go into detail of each segments because that is covered by the various CEOs, but just some of the highlights, starting with renewable energy.

I think the main event in the quarter was the F of the Windy Standard three wind farm, which Sofia will cover in more detail. When it comes to operations, we have had downtime, significant downtime, on Mid Hill and Rig one. Mid Hill have been down the full quarter due to a transformer failure outside our control and also significant downtime on Crystal Rig 1. That will be covered more in detail. On wind service, I think I already mentioned BraveTurn and BoltTurn that will be covered more in detail, or Hokkumangne, what those vessels have done this quarter.

But despite this, it’s been a good quarter in wind service where Blueturn has operated well and the Global Wind Service and UWM also have operated quite well this quarter. When it comes to cruise, we have had also there Balmoral in drydock this quarter, a big undertaking of our oldest vessel. And fourth quarter is normally a weak quarter. Despite this underlying corrected for last year that we had the gain of Sailobremaar and the drydocking of Balmoral in this quarter. Cruise Line is improving year on year also in fourth quarter.

And underlying for ’24, Cruise Line has an improvement of approximately $100,000,000 in operating performance. So Cruise Line is on the right track. When it comes to other investments, also an improvement there this quarter and also a strong improvement year over year, and this is driven by better performance in the media business of NHST. And also finally, we have brought the SaaS company, Manustesk, finally into black figures. Already mentioned the dividend of $6.75 per share.

And after that dividend, the equity in the parent company stands strong of 8,100,000,000.0 kroner, which is an equity share of 66.4 percent. Taking a little bit on the long term view, as we know, are at the end of twenty twenty four, how did the year panned out and how this is in a longer term perspective. We show these graphs first time in the third quarter presentation. And our intent is to repeat them because we think it’s good to consistently look at how we are doing to develop the group of companies over the long term. And the trends we have seen the last years is also the same in this quarter that our biggest revenue area now is the wind service segment with wind carrier ULL and Global Wind Service driving the revenue.

Redorsen Renewable, even it’s a lower generating revenue generating unit is still our biggest EBITDA contributor. But this last twelve months, wind service is catching up and on EBITDA is now on par with the renewals. And finally, cruise lines emerging back from COVID with the two new vessels and now at the higher EBITDA level than pre COVID. And that is the same for all the three assets we see in this graph. Pre COVID, it was mainly EBITDA coming from renewable energy.

Renewable energy significantly higher than pre COVID. And then wind service going from a very low EBITDA pre COVID to a strong EBITDA post COVID and also then Cruise Lines coming back up. So we have three all the three segments are now delivering solid EBITDA and also knock on wood, the media business is finally also delivering a positive EBITDA. Then over to the consolidated summary. Fourth quarter, lower revenues than fourth quarter last year.

That is basically due to BraveTurn being at the yard and BoldTurn being in transit, and utilization of Vowelvik has been less than 33% in the quarter. And that also translates into the EBITDA, which is SEK300 million lower this quarter than fourth quarter last year, related the same to the wind service, the two main vessels being out of the market and then also 100,000,000 related to cruise. And we’ve looked 85,000,000 on the sale of as a gain of sale of Bramale in fourth quarter ’twenty three, which of course is not repeated in fourth quarter ’twenty four. And then you have the drydocking, so small underlying improvement in cruise. Depreciation at same level as last year.

The net finance came out quite positive this quarter and especially compared to fourth quarter last year. These are really unrealized profit and loss on financial instruments, basically interest rate swaps and exchange rates. So they developed in the wrong direction in the fourth quarter ’twenty three and developed in a very positive direction in fourth quarter ’twenty four. So the positive deviation year over year on net finance is approximately the same as the negative on EBITDA. So earnings before tax is at the same level.

Slightly lower tax cost and then the net result is on the same level as the fourth quarter last year. Then EBITDA and revenue per segment. Starting on the top with renewables on par prices, and Sophie will cover this more in detail, but prices are down in especially Sweden, a significant drop in Sweden, but holding up and actually increasing in The UK, which is the most important market. Also to note that we have booked insurance related to Mid Hill, so the downtime on Mid Hill has a very limited effect financially in the fourth quarter. Wind service, very again, very strong in fourth quarter last year, but also strong on the revenue side in fourth quarter this year.

Der Hakon Magne will cover this more in detail, but we have the termination fee with Astell that is covering the quarters where we would have had the contract. Then on the cruise segment, slightly down on revenues due to the drydocking and then other slightly up. On EBITDA, renewable energy, almost on par despite the operating issues and also to be noted there that we booked 65,000,000 on positive reversal of EGL in fourth quarter twenty three. So adjusted for that, the results are more or less on par. Wind service, we don’t need to comment anymore.

Hakon Bank will come back to how we booked the termination fee. And then cruise lines already covered and then the improvement on the other segment driving from NHST. Yeah. Then taking also a step back on looking at the preliminary figures for 2024, this will be then final in our annual report. Again, if somebody had told us that they had the ’23 with the declining energy prices, we would actually come out on the same EBITDA in ’twenty four as we did in ’twenty three.

I will have a little hard time believing that, but that’s where we ended up. Renewables is down year over year with the on the revenue and the EBITDA, down three thirty five on the revenue and approximately the same on EBITDA mainly due to lower power prices. While wind service is up 1,300,000,000.0 on revenues and up $225,000,000 on 2024 and a record year again for the wind service segment. Cruise Lines, stronger bookings, revenues up three thirty five and EBITDA up 19. But if you then correct for the 85,000,000 sale of Bremore in 2023, EBITDA is up more than $100,000,000 And then the other segment, $87,000,000 more revenue and $74,000,000 less loss.

Also here, we have all the overhead costs of Bonaire and so on. So a better performance in the media segment, meaning that they we also then come out very close on the EBITDA. And then we have slightly higher depreciation, so the EBIT is down 118,000,000 and then we have some on the net finance process and minuses. So actually the net result for ’24 is slightly higher than ’23. Then on finally on the balance sheet and the capital allocation.

Taking the numbers first, we end the year quite good on the cash and the debt. We have delevered the group of companies quite significantly this year. So for the entities, we control 100%. We end the year with a cash position close to 5,400,000,000.0 and external debt of 3,600,000,000.0. So net cash debt of what we control

Speaker 2: 100% is positive 1,800,000,000. Then where

Richard Ollavor, CFO, Bonhoeffer: we have the significant debt, billion. Then where we have the significant debt in the joint ventures in The U. K, I think things are more or less stable with smaller cash position and external debt being amortized as we go and a net cash debt of minus 4.8%. Then on the wind service, where we have a blue turn, global wind service and U double deleverage in this year and now a net cash debt only of $2.95. So then over to the financial policy.

And I think I’ll just repeat the financial policy here because I think this is very important for the next slide. We have three pillars on the financial policy that’s been in place now for several years. First and foremost, the financial and liquidity position of the company shall be strong. And the company, there we meet Bonhoeir Assa, where you find the line where we have 3,600,000,000.0 in cash and 3,000,000,000 in external debt and a net cash debt position of more than 400,000,000. So we can really check the box that the company is in a strong financial and liquidity position at the year end.

Subsidiaries must optimize their non recourse financing. None of the debt you see in the external debt in this column has any recourse to Von Er or any cross recourse within the group. So we fulfill this policy. Then we are fully aware that with these strong limitations that we will never expose the model company and that the subsidiary must find their own debt without guarantees from the MOLU company, there is a strong obligation on us to find innovative financing sources for the subsidiaries. And I think at the end of twenty four, I think we are in a good position there with several good joint ventures, industrial joint ventures.

We have the fund in Witsen, where we know we’ll have two new wind farms being dropped into the fund. And of course, we are also evaluating, and we have been in the past, public markets and and M and A. So this financial policy stands strong. Then we have thought a lot before this quarter how we should think about our dividend policy. We have had a dividend policy for many years.

We had a discussion with our board how we can modernize our dividend policy more into a capital allocation framework.

Lars Bendel, CEO, Fred Olsen Seaweed: So what I’m

Richard Ollavor, CFO, Bonhoeffer: going to present to you is the summary of this work and the framework we have now decided on. So first and foremost, the goal of this is that the combination of the financial policy that I took you through and the capital allocation framework is to make clear the company’s priorities and make clear our ambition to create long term shareholder value. So the share financial policy is the foundation on this, and we will never compromise on the financial policy. And I don’t have to repeat the bullet points in the financial policy. Those are the same as I had on the last page.

But on top of the financial policy, we have the capital allocation framework and where the dividends must see in the context of the capital allocation framework. So again, the company’s financial policy is the foundation. But on top of that, our key aim is to generate competitive long term shareholder value through a combination of share appreciation and distributions to shareholders. And we have looked over the long term. We have looked at the S and P in The US.

We have looked at the Oslo Stock Exchange and see over time that the very best companies, they have a solid combination of share appreciation and distributions to the shareholders. Some companies reinvest everything in the business if they can generate good returns, and other companies that don’t see the prospects of good returns, they distribute everything to the shareholders. I think we are long term here, and we see that a combination of share appreciation and distribution to the shareholders is the aim we want to achieve. But then it comes the key point on the capital allocation and the transparency the company wants to give with this policy is that when we are considering the balance between share appreciation and distribution to shareholders, we have done the clear goal to allocate capital only to areas where the long term value creation on a risk basis is considered attractive. That meaning, if we cannot find value creation above what the market demands on us, we should rather pay the money out to the shareholders.

But this also considering opportunities outside the current ownership holdings, which has been a key factor of a group of companies over many, many years that we have managed to innovate and transit the group from one area to others, like, for example, entering into renewable energy many years ago. So on the back of that, when the board is considering dividend proposals, the company board of directors then have to take into account the company’s other capital allocation opportunities and measure that they can give a long term value creation over about the cost of capital on a risk adjusted basis, but always based on the financial policy. And I think on the back of this financial policy and the capital allocation framework, the board had a discussion yesterday and then arrived at the dividend for 2,000 the proposed dividend for 2024 of $6.75 per share, which is a dividend growth of 12.5% and is now in line with several years of double digit dividend growth. So I think that’s ending my presentation, Olathe.

Annette Olsen, CEO, Bonhoeffer: Good. We will then move to the CEO presentations. And Sofia Polsenjepsen is next with Fred Olsen Renewables.

Sofia Polsenjepsen, CEO, Fred Olsen Renewables: Thank you. So the highlights this quarter for Fred Olsen Renewables were, first and foremost, the investment decision that was made into Windy Standard three. We also happily saw Mid Hill wind farm back in production after we’ve had this external transformer failure. And then we have had low availability in the quarter due to then Mid Hill that was operational only in January and Kistorygon and Hogalind other wind farms. We are as a company focusing on having a full cycle business model as you see on this slide.

And all our operational wind farms that are listed on the right. Getting them to spin well. And then we now as you see have two wind farms under construction which I will talk a bit more about later. We’re very much focusing on developing our portfolio of development projects, which is now of four gigawatts and maturing that in a solid way to be able to move into the consented phase and then construction and to be viable and commercial projects. To go a bit back and look at the market, we have seen that there has been a low production of wind and hydro during the quarter which has been balanced out then with increased production from gas and coal fired generation in Europe.

We do see that storage levels are low and that is being compensated by the mild climate at the moment, hence keeping prices moderate. We also do see a tight LNG market in Europe especially. And why are we concerned about the gas market and prices? I think you see that on the graph to the bottom left and how closely linked the European gas and power prices are. With regards to the prices, we do also see that they are sensitive and to weather changes and temperature going forward.

Also the geopolitical landscape, which is now currently very much moving at the moment. So moving then on to production, we have seen that the generation was lower than the P50 estimate in the quarter due to the downtime at the Mid Hill Wind Farm. Also due to the downtime at Crystal Rig one wind farm. This is a wind farm with older turbines, which have been challenging technically for a while and especially this quarter, where we are very much focusing to rectify this and get them all back and running again. Then we’ve had challenging challenges on the Hager Linden wind farm in Sweden, where we have seen unexpected failure of main components and parts, which we are working closely with the turbine manufacturer to rectify.

Although the the replacements of parts are pending due to lags in the supply chain. This has been then combined also with a high volume of curtailment in the quarter, which is influencing the production. Regarding Mid Hill, this was as mentioned not generating due to a transformer failure at the external SSE (LON:SSE) substation. And we have booked the insurance claim of £11,400,000 in this quarter. Because we do have a business interruption insurance on all of our wind farms.

Then the most exciting news this quarter is the investment decision that has been made on the Windy Standard three wind farm. As you see from the dots on the map, it is a wind farm located in Dumfries in Galloway in Southern Scotland. And it’s adjacent to what we call it Windy Standard Cluster, where we have two operational wind farms already. So the construction is commencing now in March 25 and we expect completion by Q4 twenty six. The capacity factor or expected yield will be 32%.

And as you might remember we won a contract for difference which is a support scheme in The UK. We won that in summer last year. So the wind farm will be generating power under this contracts for difference for fifteen years. It’s also worth mentioning that the 20 turbine wind farm that this will be will then also provide access to surplus grid capacity, which will create a quantifiable benefit for the Windy Standard one repowering project when that comes along in not too long, which will then avoid significant costs and delays for that project. Additionally, this wind farm and the investment in it falls within the scope of the wind fund want or Withstand Fund.

And we will in Freight also Renewables commence then the pre agreed drop down procedure with Wind Fund one for them to enter into their 49% partnership of the projects. The investment, total investment of Windy Standard Tree is £133,000,000 and it is an 88 megawatts wind farm. The other wind farm that we have under construction is Crystal Rig 4 in the Crystal Rig Cluster, another cluster of wind farms that we have. The main message this quarter is that the construction is progressing well. We are amidst installing all of the anchor cages and also most of the tree felling has been done enough so that we have the area cleared for installing all the turbines in their locations.

So we are very excited about the progress of this 11 turbine wind farm sites. To sum up, this quarter we’ve had low availability in the quarter due to Mid Hill, Crystal Rig one and Hergarden as mentioned. We have seen a steep drop in power prices in Scandinavia offset slightly by an increase in The UK. We’ve made a final investment decision on Windy Standard three and also the construction of Crystal Rig 4 is progressing well. Thank you.

Annette Olsen, CEO, Bonhoeffer: Next (LON:NXT) is Lars Bendel and he will present Fred Olsen Seaweed.

Lars Bendel, CEO, Fred Olsen Seaweed: Yes. Thank you, Andre. I will give you a introduction to Q4 for Fred Olsen Seaweed and I’ll start with some good news from Q4. We achieved an important milestone with our Scottish project Mirbor in Q4, where we submitted both the onshore and offshore consent application. This is a significant milestone for us.

It’s a lot of work. It’s a lot of vessel deployment on-site, a lot of data gathering in order to get to that milestone. So very well done by the team and an important milestone where we actually now are the first of Scotland projects to submit the consent application both onshore and offshore. So good news. If we then move in to this slide, which you’ve seen before, which is an overview of our core markets and core projects, I will come back to both Kotlin and more in more detail, but I wanted to attach a few comments to Norway on this particular slide.

In Q4, we made the decision together with Hafslen not to bid and pursue Occhino. We will, however, continue to monitor the Norwegian market. We will together with Hafslan jointly look at potential future opportunities in Norway, but for now, we will not pursue Uciano. Moving on to Scotland and Miovor. As I said, we submitted the consent application in Q4.

And to give you a bit of background into the process we are now looking into in Scotland, This means we will during 2025 have close dialogue with the planning body in The UK around our application. We’ll have to give more detailed information and it’s a process that can take everything from maybe six to twelve to eighteen months depending on the interaction. It’s new ground, it’s floating projects, so it’s not the same as earlier with bottom fixed, so that also needs to be taken into consideration when assessing a consent application in The UK. Following consent award, the project will in principle be in position to bid into a future CFD auction. At the same time, we will progress and secure clarity on grid.

And when we have both a final consent in hand and clarity on grid, we will be able to assess and bid into a CFD auction. So a lot of good work in ’24, but also a lot of work still ahead of the war in ’25 and the coming years. But at least securing the first milestone with consent has been important to progress and really maintain a good competitive position for our Scotland project. If we then move to Ireland, also ’24 was a very much a focused consent year around Kotlin. We submitted the consent application in September and that has been ongoing also in Q4 in relation to observations and will continue into 2025 as well.

In Q4, we also saw in general election in Ireland for the parliament. Generally Ireland has been a country where there has been support across the last political parties for offshore wind. Now a new government is in place and it’s our assessment that the stable support for offshore wind will continue also going forward. In 2025, Kotlin will have focus around the consent, as I mentioned before, but also very much preparing the project for procurement processes on the back of consent determination. So there is a lot of work now preparing that because on the back of consent determination, we are in principle through the milestones we need to be and would be ready to later take FID on the project, but still a lot of work to be done.

So I think overall and in general, a busy ’24 and also a busy ’25 when you look ahead, but also very interesting year for Fred Olsen Seawend. So with that, I’ll leave the word back to you.

Annette Olsen, CEO, Bonhoeffer: Thank you, Lars. And Per Alvid Holt from Fred Olsen eighteen forty eight is going to talk about the developments in technology. So okay.

Per Alvid Holt, Representative, Fred Olsen 1848: Thank you, Anatol. So if we can go directly to the states and update slide, then we will zoom out a bit going into this. If you go to the next one, please, and even the next after that. Then we’ll zoom out a bit looking at floating solar, but starting with solar in general. And then we’ll end up giving a status on our development on our floating solar technology, Presol.

So if we go to the next slide, these are some graphs. The one we’ll start with the one to the left, which is from the the report Renewables 2024 from the International Energy Agency. And for solar, it shows both historic data up until 2024 and then a projection until 02/1930. And it shows some significant milestones when it comes to generation of electricity, so the actual product. In 2026, the IAEA expects that there will be more renewable electricity produced from solar panels and from wind turbines.

And in 2029, they expect that it will be more electricity renewable electricity produced from solar panels than from hydroelectric plants. And that growth is also supported on the graph to the right, which shows the added capacity in the last four years. And it also shows the domination of China, not only in the supply chain but also in the installation. So that is a significant growth. And if we go to the next slide then, I also added this one.

This shows the growth of added capacity. And it shows that the added capacity for until 02/1930, ’80 percent of the added capacity is expected to be PV. And I added it because I think it’s interesting that 40% of that added capacity is what they call distributed. So that’s not utility. That is typical residential, commercial and industrial acreage that is utilized.

So this is the backdrop for us focusing on solar. And this is a lot of solar panels. And we know that solar panels are area intensive. They do need a lot of area. And in that context, then floating solar is interesting for us.

So as an example, on the next slide, I brought a picture from The Netherlands showing the Marketer Meer behind the dykes in The Netherlands. I’m not saying by implying by this slide that there will be a utility scale development in Markitmer. There’s certainly at least some environmental regulations in the way of that right now. But it shows what kind of acreage AC surface can or a water surface can provide compared to an onshore development. So if you look to the right in the picture, you will see five red squares and that are five onshore commercial developments of solar neatly fitted into the agricultural and industrial landscape in The Netherlands, totaling at about 137 megawatt peaks.

So of course, compared to that, the water surface on the right provides a huge available area. If you have a very huge available area of water, then the wind can make waves. And in this case, if you have a system then that can handle those waves at the and be cost efficient, then that certainly gives you some potential. So on that note, the markets that we are looking at for our system, Rizal, if you go to the next slide, are basically four, when it comes to the business case for solar applications, then it’s two main drivers. It’s the proximity to the Equator and the number of clear days the number of days with clear skies in a year that improves your business case.

So in the right markets, we are, for our system, approaching utility scale competing with other energy sources. Another market is the displacement of hydrocarbons in island communities, which is a better business case usually. And the hybrid solutions with hydro is also a good opportunity in areas where you have dry seasons especially. And then finally, you have these special applications, and that’s typically consumers which are without grid or have an insufficient grid where floating solar can provide a cost efficient addition to their energy need. So finally, short status on the project itself.

We, last year, completed a basic design phase, which has been important and we’re now entering a period where we are doing a validation and verification based much on our pilot that we have in the South Of Norway in Riese. And then we are, of course, hunting some and taking part in some specific processes for a commercially sized pilot for our system. So that’s it.

Speaker 2: Thank you.

Annette Olsen, CEO, Bonhoeffer: Thank you. Joakom Magnore, CEO of Fred Olsen Wind

Joakom Magnore, CEO, Fred Olsen Wind: Thank you, Annette. I think as also as Richard said, it has been a very special quarter for Vuhigg.

Richard Ollavor, CFO, Bonhoeffer: For the last quarters, I

Joakom Magnore, CEO, Fred Olsen Wind: was down here talking about high uptime and stable operation on vessels. Last quarter, we meant that we will have some more planned yard stay, pent up yard activity going forward, and that will happen in this quarter. So I think if we start within the next slide, if you go on back no. If you go back to the summary slide. Thank you.

As I said, this quarter was stained by high yard activity and also transit, leading that we only had one operational vessel. Vessel. This is as planned. On the more positive note, we had a strong order intake this quarter. Also doing a full year good order intake for the company.

On the market, I think I just reiterate the comment that I’ve had in the last quarter. We see there’s limited vessel availability the next years. We see, however, that the general issues that the offshore wind industry and value chain are facing, it impacts the timing of the demand, which again creates a more dynamic and volatile phenomenon. Now if you go to the next slide, just briefly talking on the activity in the quarter. I think as mentioned last quarter, we decided to to take bolt turn back from the Taiwanese market where she had been for four years due to a dip in activity in that market for the next years as we saw better opportunities in Europe.

That transit takes around seventy days, and it arrived late in the quarter in Europe where it went straight into a planned yard stay to to strengthen the aft to make a more generic c fastening of the 15 megawatt setup to Siemens (ETR:SIEGn) and Vestas. The vessel is now out of yard and is starting on project mobilization and will then commence its new contract later late in this ongoing quarter. Breiturn, I have to say finally, was delivered. Unfortunately, it was somewhat delayed from the major upgrade program. It then transited from Spain to Denmark to commence the mobilization for the NNG project.

It commenced the project late and early January. On the good side, yes, the project was delayed, but I think the vessel is working very well. So that that is good. Bluetern, it continued on a a Vesta’s campaign for the whole quarter. I think as we also mentioned last quarter, that will now go into yard in February or more or less these days to then have some long awaited maintenance after more almost three years of Bluhin completed the Yunlin project demobilization this quarter and it is preparing for the Hai Long startup late this quarter.

Going into the financials, of course with only one vessel in operation, the utilization only came in at 33% this quarter due to the aforementioned reasons. As I said, BraveTurn left Spain in November, but due to mobilization phase and accounting rules, we did not book any revenues on that vessel in the quarter. So, it’s a quite modest EBITDA of 11,000,000 this quarter. And in on top of that, I think it’s that EBITDA is impacted by how we book the termination fee of the previously announced termination

Speaker 2: of

Joakom Magnore, CEO, Fred Olsen Wind: a major contract that was supposed to be done this this year. So without that termination fee, I think the EBITDA would have been closer to zero. And just to reiterate how we actually booking this termination fee, the complication is to see is that when we have an obligation to share parts of the revenue with the original charter of the vessel as long as the original contract was supposed to have been going on. We will still book % of the revenue, but we have made that provision of the termination fee. So we have not booked the full termination fee.

So when the vessel is not working, we will then book the previously provision to compensate for the for the that we haven’t booked the termination. So I think we come back to it on the backlog, but I think the remaining provision left in the backlog is around at the same level that we booked this quarter. For the full year, the EBITDA came in at 116,000,000. That is a new record. And you also see the graph again 2021 was a bad year for the industry, but we have now had four good years with improvement in underlying earnings.

And also just a little bit remind that the 2024 results was done with one investment yard for the whole period. Going over to my last slide and and the backlog, as I said earlier, it was a good order intake this quarter that lifted the backlog to 448,000,000 for our three owned vessels up from 288,000,000 last quarter. The main driver behind this, was that the previously announced reservation agreement for one vessel was turned into a firm that will take the vessel from 2025 and potentially early into 2027. On the market, I can just reiterate what I said. I think there is very limited vessel capacity available the next years.

But again, the uncertainty in the market from the value chain issues and the ongoing offshore, offshore in issues gives some more uncertainty on the actual timing, both from delayed project and also projects slipping to the right on the time scale. On the, on the positive side, I think that tender activity remains at record high levels, both in terms of volumes but also in terms of lead times. In other words, the different developers are increasingly looking to secure capacity longer time ahead than what they did before. So I think that concludes my remark, this time. And I leave it back to Annette.

Good.

Annette Olsen, CEO, Bonhoeffer: And, Richard will now talk about Fred Olsen Cruise Lines.

Richard Ollavor, CFO, Bonhoeffer: Yes. Thank you, Annette. So that will end the end the company presentations. So, Cruise Lines, fourth quarter, it is a little bit of a repetition here, but we ended the quarter with the occupancy of 65% versus 71%. That is, of course, impacted by the Balmoral 17 Day dry dock, but also a couple of cruises that didn’t have the vaulted occupancy.

So strategically to drive the occupancy also going forward is very important for shoulder seasons quarter one and quarter four. The yield was up this quarter. I think that is more an effect of the mix of cruises, more shorter cruises with higher yield and the longer cruises with lower yields. Strong bookings, I think, on the same level as we have the last quarter that what we have taken in, in ’twenty four for going forward is 16% higher than it was in ’twenty three. So yes, I don’t think there’s too much more to say about the cruise lines, Amit.

Annette Olsen, CEO, Bonhoeffer: The good thing is that the management in cruise lines is very energized. So hopefully, we are going to see improvements when it comes to also the operation. So with that, we will open up for the Q and A Thank

Moderator: you. And your first question comes from the line of Daniel Howland from ABG Sundal Collier. Please go ahead.

Daniel Howland, Analyst, ABG Sundal Collier: Yes, good morning, everyone. So I have a couple of questions as I think I will just take them by the different business units. So if I can start on Renewable Energy with the problems on Midhill and Crystal Rig. Now you say that Midhill is back, but is there any time line on Crystal Rig one and when the problems there might be fixed? That is the first question.

And then I have a second question also on Renewable Energy. On the $161,000,000 revenue provision you did on the insurance claim from Ed Hill, was this fully taken in Q4? And I guess there is no cost related to this. So I just want to confirm, is it a positive $161,000,000 effect both on revenue and EBITDA?

Annette Olsen, CEO, Bonhoeffer: Sophie?

Sofia Polsenjepsen, CEO, Fred Olsen Renewables: Thank you. I guess with respect to your first questions on operations, we are of course striving for operational excellence on all of our wind farms. And I can say with regards to Crystal Rig one that that is the highest focused area for us at the moment to get all of these turbines spinning again as soon as possible. With regards to your second question on the insurance claim, 11.4 was booked this quarter. That is for the Q4.

I think we expect to book a slightly higher sum also for not not a higher sum, but a slight a slight number also for the few days that the wind farm was out in January. So there will also be some Okay.

Daniel Howland, Analyst, ABG Sundal Collier: Okay. Thank you. But you say eleven point four, is that in pounds

Annette Olsen, CEO, Bonhoeffer: or? Yes.

Daniel Howland, Analyst, ABG Sundal Collier: Yes. And that was positive both on the revenue and EBITDA level?

Sofia Polsenjepsen, CEO, Fred Olsen Renewables: Should be.

Daniel Howland, Analyst, ABG Sundal Collier: Okay. Thank you. And then I had two more questions. One is on wind service. So I just wanted to check double check on the update on the vessels.

I see you say that bolt turn is expected to commence a new contract in late Q1. So you basically say that vessel has a low utilization in Q1 as well? Just want to double check that. And then I have last question on Cruise. So given that you have a lower utilization year over year, but I also think you said that booking numbers are quite decent.

I just wanted to clarify, when you say the utilization number for cruise, is that adjusted for the drydocking? So is that only calculated on the available days? Or is it based on the full number of days in the quarter? That is my two last questions. Thank you.

Joakom Magnore, CEO, Fred Olsen Wind: I think I can start with the Ity one. Yes, Boltund will go straight out of yard as we speak and onto the contract late this quarter. Yeah. So limited earnings because the because of the arts.

Richard Ollavor, CFO, Bonhoeffer: And the other one also the other one down there is also quite easy. Yes. It’s the full number of days. So 65 is is what we have achieved on utilization based on the full number of days not adjusted for the drydock.

Daniel Howland, Analyst, ABG Sundal Collier: Okay. Thank you. That’s very helpful. I’ll get back in line. Thank you.

Moderator: Thank you. We will now go to the next question. And your next question comes from the line of Helena Brondboe from DNB. Please go ahead.

Helena Brondboe, Analyst, DNB: Hello. Thank you for my question. I’m sorry for the background noise there. But we just speak to the wind farms that have had downtime in the quarter. You also mentioned Hoeghaliden in your presentation.

So I was firstly just wondering if what has happened what happened there and is that wind farm back to production

Speaker 2: again?

Sofia Polsenjepsen, CEO, Fred Olsen Renewables: Thank you. As I commented on Hogaliden in Northern Sweden, we’ve had some unexpected faults on key components where we’re working very close with the turbine manufacturer to rectify this. There are some delays in the supply chain, which is affecting that.

Helena Brondboe, Analyst, DNB: Okay. So you don’t know when it will be up and running again. Is that what you are saying?

Sofia Polsenjepsen, CEO, Fred Olsen Renewables: It’s not that the whole wind farm is not spinning. We are definitely producing quite a lot from Hergeline. I think what you were referring to of not up running, we had the exceptional grid outage of Mid Hill during the quarter. That’s the only time that we’ve seen that the whole wind farm has been out of service. So with regards to our other wind farms, we are not seeing anything like that by far in terms of in terms of outages.

And that was also on Mid Hill and external outage. So when I’m when I’m referring to the other wind farms and some operational hiccups, that is mainly single turbines that are experiencing some some hiccups and where where some parts are needed to be changed. And then you have to wait for the supply chain to come with the chains and you have to sorry, with the parts and you have to hire a crane, etcetera. And so that is the normal procedure that we are working on all our operational wind farms.

Helena Brondboe, Analyst, DNB: Okay. Thank you. And I was also wondering on the Codling Wind Farm and the constant application. What do you sort of see as the most likely timeline on this wind farm now?

Lars Bendel, CEO, Fred Olsen Seaweed: Yes. I think I on our last quarterly presentation tried to indicate a bit of the timeline, which I can try to repeat. First of all, Ireland is a new country or new it’s not a new country but it’s new when it comes to offshore wind and the planning body will deal with the first consent application for offshore wind. So that is to be taken into consideration. And we don’t have any fixed timelines for when we will get the consent determinations.

And that’s currently an unknown we have to deal with. On the top of that, in Ireland there is a judicial review regime where a party can challenge the planning body on the consent determination. We will not be party to that, but it will be something we need to cater for time wise if it So we have those two uncertainties, the timeline around the consent determination and the potential judicial review. The way we’ve addressed that as as a project is that we have instead of having one timeline, we have strategic options that cater for different outcomes. And that’s how we plan the project.

We will not enter into early commitments but instead having optionality on the outcome. Back to your question, I cannot give you a precise answer to the timeline now other than saying that we will cater for an early determination in our planning and we will also cater for a later determination.

Helena Brondboe, Analyst, DNB: Okay. Thank you.

Moderator: Thank you. Your next question comes from the line of Daniel Hoeland from ABG Sundal Collier. Please go ahead.

Daniel Howland, Analyst, ABG Sundal Collier: Thank you. So I just got back in line. It seems like there was not a lot of other questions. So I wanted to turn a little bit to the capital allocation framework because I think this is quite interesting. And I obviously appreciate that you maybe don’t want to guide too much on things there.

But I just noted that the Wind Service division has a very strong cash position now. So I guess there are probably discussions in the management and board around what to do with it. So my question is, given that you’re saying that you still see a strong market for wind turbine insulation vessels, are you planning to buy any new vessels here?

Richard Ollavor, CFO, Bonhoeffer: Yes. I think, Daniel, thank you for the question. I think we have for several time now, we said that we aim for having new builds when the market dynamics are right. So that stays firm. But also back to the financial policy, it’s also a fact that we also like you probably have noted, that we are upstreaming cash, excess cash to the model company to fulfill the financial policy of that the model company should stay liquid and strong.

So in the fourth quarter, we have upstreamed quite a bit of cash bolt from Cruise Lines, paying back their debt that Bonhoehr supported Cruise Lines with during COVID. And we also paid back a share of the loan that Bonhoehr gave to for Vik during the tough years back in 2018 and 2019.

Daniel Howland, Analyst, ABG Sundal Collier: Okay. Thank you. I have one follow-up there. So given this capital allocation framework, how do you think about kind of weighing, let’s say, buying a new wind turbine insulation vessel against, for example, taking an FID on the Codling project, which at least on WIKA installation would require quite a significant amount of CapEx CapEx contribution from you guys?

Annette Olsen, CEO, Bonhoeffer: Good question. Yes.

Speaker 2: Do you

Richard Ollavor, CFO, Bonhoeffer: want me to start, Vanessa?

Per Alvid Holt, Representative, Fred Olsen 1848: Yes, please.

Richard Ollavor, CFO, Bonhoeffer: I think this is very good question, Daniel. This is exactly the heart of it that we have to look we have very strong platforms to invest from. We have a very strong platform in offshore, both wind and solar and also offshore solar. We have a strong platform in offshore wind with two excellent projects in Kolding and Moonmore. And we have a fantastic position on the wind services side predominantly with Fulvic and Global Wind Service.

And also the cruise platform is proving well. So all these platforms are giving us great investment opportunities going forward. And like you say, there are large capital opportunities. So first, we have to also leverage other external capital sources to optimize the funding and also the cost of capital. But after that, when you consider then how much equity Vonir should contribute, what the point of this capital allocation framework is is that we see that if this investment cannot generate competitive returns, then we’re actually better off giving it back to shareholders.

And then after you made those tests, then you have to prioritize, like we say, what are the most attractive opportunities on a long term risk adjusted basis. And I would like to stress long term. We think long term. So we cannot look at these returns on the very short term, but look what they will bring us over the long term, but also the point, I think you are also pointing to on a risk adjusted basis. So we try to be very disciplined on having different cost of capital for the various business units where, of course, the equity coming from a boner down to the business unit will cost differently from a high risk project to a lower risk project.

But I don’t think we can go into details and actually say how we evaluate each segment. But we try to do this quite systematically. So the subsidiaries, they have to fight for the bond equity and come up with projects that have better returns than we otherwise could give back to our shareholders. And they also have to compete individually to have the best returns in the group to fight for a scary source that’s capital. So just a quick question back to you, Danik.

Was that helpful?

Daniel Howland, Analyst, ABG Sundal Collier: Yes. I think this is super interesting and kind of hitting into the core of at least my impression of what investors care about in your company. Maybe one last follow-up on this and then I’ll give jump back into the queue. But do you have any stated, should I call it, required return levels or IRR levels, etcetera, in kind of the whether you will distribute capital to shareholders versus keeping it for projects?

Richard Ollavor, CFO, Bonhoeffer: Of course, this is something we have internally, but we will not share it externally.

Daniel Howland, Analyst, ABG Sundal Collier: Okay. Thank you. I’ll get back in queue.

Annette Olsen, CEO, Bonhoeffer: Yes. And maybe we should add that obviously, times are turbulent, as you all know. It’s lots of challenges in all the different segments we are operating in, but there are also plenty of opportunities. So I think every day we are waking up in the morning, looking at the news, trying to understand the picture in front of us.

Moderator: Thank you. Your next question comes from the line of Anders Groeselund from SEB. Please go ahead.

Speaker 2: Thank you. Were there any high price levers in the cost figure in Renewable Energy segment in Q4?

Sofia Polsenjepsen, CEO, Fred Olsen Renewables: I think in terms of EGL, you as previously mentioned by Richard, there was a positive one off effect in the previous quarter, a NOK70 million positive effect that was not in this quarter. So I would consider that

Daniel Howland, Analyst, ABG Sundal Collier: if I were you.

Speaker 2: Okay. But what was the full year high price levies in the Renewable Energy segment? Because that’s netted out throughout the year, isn’t it? So there’s provisions and counter effects.

Richard Ollavor, CFO, Bonhoeffer: I think on the short the main effect is what Sophie is pointing to that when you compare quarter over quarter, we have approximately a short of SEK70 million in fourth quarter twenty twenty three and we had nothing in fourth quarter twenty twenty four.

Speaker 2: Okay, excellent. Thank you.

Annette Olsen, CEO, Bonhoeffer: Thank you. There are no further questions. I will now hand the call back to the speakers. Thank you very much

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