Earnings call transcript: Norden’s Q1 2025 profit surges, guidance upgraded

Norden, a prominent player in the shipping industry with annual revenue of $4.04 billion, reported a robust financial performance for Q1 2025, with a net profit of $33 million and an upgraded full-year guidance. The company’s stock surged by 5.37% following the announcement, reflecting investor confidence in its strategic initiatives and future prospects. With a market capitalization of $835.87 million and trading at an attractive P/E ratio of 5.43, the company has caught the attention of value investors. InvestingPro analysis reveals 10 additional key insights about Norden’s financial position and growth prospects.

Key Takeaways

• Norden’s Q1 2025 net profit reached $33 million, with a Return on Invested Capital (ROIC) of 11%.
• The company upgraded its full-year guidance to $50-130 million, up from the previous range of $20-100 million.
• Focus on biofuels and sustainability initiatives, including investment in MashMex.
• Stock price rose by 5.37% post-announcement, indicating positive market sentiment.
• Share buyback program of $7 million announced until August.

Company Performance

Norden’s performance in Q1 2025 marks a significant improvement over the previous year, driven by strategic investments and a focus on sustainable solutions. The company’s stock currently trades at $28.53, having bounced from its 52-week low of $21.62 while remaining well below its high of $52.54. The company’s flexibility in operations and moderate debt levels position it well against industry challenges, such as geopolitical uncertainties and potential U.S. tariffs. Despite weak spot markets in the tanker and dry cargo segments, Norden’s high near-term coverage and adaptable business model have contributed to its strong performance. According to InvestingPro’s Fair Value analysis, the stock appears undervalued at current levels.

Financial Highlights

• Revenue: Not specified
• Earnings per share (EPS): Not specified
• Net Profit: $33 million
• ROIC: 11%
• Dividend Distribution: DKK 17 million (DKK 2 per share)
• Share Buyback Program: $7 million until August

Outlook & Guidance

Norden has revised its full-year guidance upward to a range of $50-130 million, reflecting its confidence in continued margin improvements and strategic focus areas. The company is poised for growth in project cargo and anticipates challenges from potential global economic slowdowns. Nevertheless, its emphasis on sustainability and biofuels, along with high coverage in dry cargo and tankers, positions it to capitalize on future opportunities. InvestingPro’s comprehensive financial health assessment gives Norden a "GOOD" overall score of 2.64, suggesting strong operational fundamentals. For detailed insights and access to the full Pro Research Report covering Norden’s business model, competitive position, and growth prospects, consider an InvestingPro subscription.

Executive Commentary

• "We believe that over time, we will generate best in class returns on invested capital." - Martin Bersdell, CFO
• "We are well positioned for weaker markets in the short term while maintaining deferred exposure in markets that we believe will be attractive long term." - Martin Bersdell, CFO
• "The share price looks to be discounting a 25% decline in both asset prices and freight rates in both dry and tankers." - Martin Bersdell, CFO

Risks and Challenges

• Geopolitical tensions and potential U.S. tariffs could impact global trade dynamics.
• Sanctions on Russian oil may affect shipping routes and costs.
• Dollar weakness might impact the company’s net asset value (NAV).
• Weak spot markets in tanker and dry cargo segments present ongoing challenges.
• Potential global economic slowdown could affect demand for shipping services.

Q&A

During the earnings call, analysts focused on Norden’s sustainability strategy, particularly its investment in biofuels and the potential impact of USTR port fees on operations. The company’s approach to project cargo was highlighted as a growth area, while concerns were raised about the impact of geopolitical tensions on the shipping market.

Full transcript - Dampskibsselskabet Norden AS (DNORD) Q1 2025:

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: We are ready to start today’s event here. My name is Rasmus Kurbo, and on behalf of Hansgrohe and Andersson Capital, I have the pleasure of welcoming CFO Martin Bersdell from who will take us through the q one twenty twenty five report that was published this morning. So first of all, a warm welcome to you, Martin. And before I hand over also a warm welcome to all of those of you who signed up for today’s presentation, as usually, you can ask questions in the chat, so you’re welcome to do that.

You can do it either in English, You can do it in Danish if if you prefer that and do the translation then. Should you want to see the presentation again, we’ll record it and publish it on different platforms afterwards. But with that, I’ll leave the floor to you, Martin.

Martin Bersdell, CFO, Norden: Thank you very much. And to all of you listening in, welcome to this presentation of our q one results for 2025. Let’s jump right in. As some of you may have seen from our recently published report, we generated group net profit of $33,000,000 in the quarter corresponding to a return on invested capital of 11%. That earnings was actually, to a large extent, driven by good coverage in what we actually consider quite challenging spot markets.

You will have seen that late last week, we upgraded our full year guidance estimate from an original interval from 20 to 100,000,000. Now we expect 50 to 130,000,000 US dollars, mainly on the back of vessel sales and good operational performance. And we do see improved operational performance compared to last year, especially driven by margin recovery in the dry operator segment as part of the FST business unit. The updated net asset value for Norton is DKK372 per share by the end of Q1. And we have actually spent a considerable amount of time and effort in realizing part of this NAV during the last four months.

The board has again decided to return capital to shareholders. So we are complying with our own internal dividend policy of distributing at least 50% of net profit. So now we distribute DKK17 million in a combination of dividend of DKK2 per share, about $10,000,000 and another share buyback program running until August of $7,000,000 Now before diving into the different business units here, let me just point out that we have actually added information in this q one report compared to previously. We have had the request from several analysts and investors that they would like to understand better what are going on in the FST business. So now we have actually provided additional segment information.

So you can actually see margins and earnings for the dry operator, tanker operator, projects and parceling and logistics segments. So I hope that will add to the transparency and understanding of that part of the business. And in FST, we generated an EBITDA of $3,300,000 in Q1, a considerable improvement from a rather weak Q1 twenty twenty four. And that was, as I said before, driven by trial operator and margin improvement in and in projects and parceling, again, steady profit and actually good growth in their activity levels, whereas the tanker operator had lower earnings as a result of a lower market, which was as expected. Also in logistics, we actually see good operational improvements.

And you will see from the graph at the top of the right hand side, the overall FST margin developing quite positively in the last twelve months. Asset management continues to do very well with an increase in underlying contribution margin. When you look at the EBITDA, it actually decreased compared to the same period of last year, but that was mainly actually because last year was affected by a considerable amount of gains from sale of vessels. So when you take that out, it’s actually still also a solid underlying performance. At the end of Q1, we still had 81 purchase options, and just over half of those can be declared within the next two years at strike prices that are 15% below current broker values.

And even though we, as we have announced again and again, we are declaring purchase options and selling vessels, we actually also built the portfolio in the deferred end by entering into new lease agreements with purchase options. So we still have the same number of purchase options as we did by year end 2024. Overall, we think that we are quite well positioned in what we deem to be quite weak markets so far this year. So spot rates are down actually in both tanker and dry segments. But overall, it was a quarter marked by mainly political developments and uncertainty.

First of all, there was the it says USTR. It means the US trade representative proposal to actually put on substantial port fees calling US ports, targeting Chinese and built in Chinese operated vessels. There was a hearing period and a new proposal that has been issued has significantly watered down the original proposal. And actually, as it stands right now, we think that the port fee regulation, if it is implemented as it looks right now, would be something that our flexible business model can handle with with limited costs. Then overall, the I think the entire world was affected by the talk of US tariffs.

Not that our trade lanes are actually impacted a lot because we don’t actually trade a lot into The US, but but the uncertainty created by tariffs and the potential effect on The U the global growth, we think is negative in the short term for actually both dry cargo markets and tanker markets. But we are well equipped to capture opportunities in weak markets. We have a strong balance sheet with low bank debt, and we have positioned ourselves with fairly high cover in the near term but fairly large exposure to a potential structural strong market in in the coming years. And you will see from the graph at the bottom right and also in the last bullet that we actually currently, for the short term, have more open tanker days than dry cargo days for 2025. And dry cargo days is actually mainly a short in expectation of continued weak spot markets.

This brings me to a short review of our business model. Some of you may have seen this slide before. We believe that there’s a lot of power in the way that our business model is structured because we are so flexible that we can handle many different things in in the markets that we operate in. So depending on our market view, we can have high exposure or low exposure. It can be dry cargo or tanker.

It can be short term or long term, and it can be asset heavy or not. And by working with all these different ways of positioning our portfolio, we believe that over time, we will generate best in class returns on invested capital. That is also indicated by the graph at the bottom where we are best in class on ROIC, but certainly also quite high on volatility in ROIC. So it doesn’t come without a certain element of risk, of course. Now as I said previously, we did upgrade our full year guidance at the end of last week.

So now we expect 50,000,000 to $130,000,000 A substantial part of this upgrade was newly agreed vessel transactions, but actually also underlying good operations. This expectation is based on continued improvement in the margins in FST compared to 2024 and based on asset management having quite a high coverage in both dry cargo and tankers at profitable levels for the remainder of the year. That brings me to the key summary, what we think is a solid first quarter with net earnings of $33,000,000 and ROIC of 11%. As I said, we are well positioned for weaker markets in the short term while maintaining deferred exposure in markets that we believe will be attractive long term. A business model that can cope with a lot of the stress that is seen in the underlying fundamentals and with good upside from a big portfolio of purchase options, which we believe will deliver best in class returns to shareholders over time and also indicated by the fact that the current share price indicates large upside to the updated NAV as of the end of q one.

So that was actually my presentation. I think we will open up for questions now.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Perfect. Thank you very much, Martin. And, yes, let’s let’s jump into some of the questions that came through. There was one sort of an that’s more on an overall basis. What is your view on future fuels?

Do we have a sustainable strategy? I guess it’s it’s on the yeah. What would be sort of the standard on on engines going forward and the future and the fuels that will be used for these vessels?

Martin Bersdell, CFO, Norden: Yeah. So the way we think about sustainability and and green fuels need to be adapted to the way our business model works. So we work with even though we operate 400 ships, we only own a very small part of them. There’s a limit to what we can actually do in terms of engines and mechanics and and stuff like that. So fuel types is quite important to us.

And we believe that the the biofuel is an option that has been a little bit underappreciated in recent years. We think that it’s a good way to actually reduce emissions, and it’s a solution that can be scaled quite quickly, and it can be used in all the existing ships that are currently underwater. You saw last year that or the year before, I think it was, we invested in a biofuel company called MashMex, and this was with the exact intention of actually being able to do voyages with biofuel in the future. And the IMO just came out with a new regulation, which is sort of only halfway ratified, which actually does mean that, yeah, biofuel can be a very attractive element in emissions reductions going forward. So I think that this is our key focus in terms of securing biofuels for future voyages.

: Very good. Thank you. And then there

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: was also a question on the USTR port fees. You came across it, Martin, during your presentation as it been as it has been watered down. So it seems like the the effects will be be limited with what we’re looking into. If the initial proposal were to go through, would that have some kind of impact for you?

Martin Bersdell, CFO, Norden: Yes. So the original proposal, which also added big penalties for vessels calling US ports in case the operator had a certain share of Chinese vessels in its fleet or a certain share of newbuildings from China in its newbuilding program. Stuff like that can be very, very tricky to sort of avoid, And that would mean that even though we came with a non Chinese built ship into US ports, that could be quite expensive. But the way that it is phrased now, they focus on either Chinese operators or Chinese built vessels. We are not a Chinese operator, so we can focus on the Chinese built vessels.

And I think that can be avoided. There are not so many import port calls into The US. So I think an operator like us can find non Chinese built ships to actually make those port calls. So I think that is once again actually a strength of of the business model that we can accommodate this at what I think will be limited cost.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Very good. And then there’s also a question related to to to a segment called project cargo or brake bulk. It might not be as as well known as as as the other segments you’re operating in. But there’s You have gradually increased your exposure to project cargo.

Currently, the contribution in earnings is small compared to your dry and and and product tanker. The project cargo market is much more opaque for outsiders looking in. Can you give us a bit of insight on how big the market is and, hence, the potential for Nuance? Is it possible in the future we see Project Cargo as a major earning contributor to Nuance, or will it always be a small add on? That

Martin Bersdell, CFO, Norden: is a good question. I don’t actually think that we have good market data about how big the market is. But just for for the viewers here, the the project cargoes are typically, let’s say, it could be big machines or it could be steel coils or stuff that are processed goods but don’t really fit well into a container. So and and then there’s the parceling bit, which is really where you use the different cargo holds on the ship to transport various types of commodities as opposed to our normal dry operator business where it’s typically one commodity in the entire ship. So we are definitely very pleased with our performance in projects and and parceling.

We think they make a good margin and a fairly steady margin and and all has, as I said, also been able to grow the business. So it’s something that we would like to actually focus on and grow because it gives us, I think, we can call it high quality earnings that are quite stable. So, that is definitely a key focus area of ours, going forward.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Good. And also then a number of questions sort of related to the sort of, should we call, the turmoil that we have seen sort of in the beginning of the year. We’ve seen a weakening dollar. The question goes on how would that affect you, and how are you prepared to this in case the dollar should weaken further from here?

Martin Bersdell, CFO, Norden: Yeah. So I think you can split our dollar exposure or the shareholders’ dollar in two. So one part is that we have our headquarters in Denmark with the DKK costs, and we have a fairly big office in in Cyprus with euro costs. So I think there is an element that a weaker dollar will make these headquarter costs more expensive and, of course, will then be negative for our margins if we don’t if we don’t do anything about it. So this is this is one part.

It is one part where we do hedge our exposure out in time so that it won’t hit us immediately, and it’s something that we can hopefully plan around going forward. But the other thing is that the the Norton stock is listed in DKK in Copenhagen. So, of course, the NAV is basically a US dollar calculation. And The US Dollar declines, then the NAV will also decline. So I think anyone can actually go in now to our NAV table in the report and make their own calculation if with a new dollar p k k rate.

And I think, actually, based on the the NAV that we showed today, if you use the dollar Danish kroner equivalent of 6.5, the $3.72 would be 20 kroner per share less. So it’s not immediately, I think, a key concern, but it’s certainly something that we need to be aware of if the dollar sort of loses its reserve currency status.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Very good. And also on the oil price, I guess there’s also a direct in direct impact on a lower oil price from the fuel you’re using for your own vessels. But I guess there’s also an indirect impact or an indication that a lower oil price is usually a reflection of an expected lower economic activity going forward. Could you also elaborate a bit on that?

Martin Bersdell, CFO, Norden: Yeah. So if we start with the the cost picture, we fuel, of course, is the biggest variable cost that we have, but it is, to a large extent, what we call a pass through. So sort of the the minute that oil price changes, the minute our freight rates will also change that we negotiate with clients. So in that sense, I think the exposure is fairly limited. But a lower oil price, as you say, can be an indication of lower growth.

It can also have the effect that the ships are incentivized to go a little bit faster, which actually adds some shallow supply into the fleet. So for dry cargo, I would say that if it’s a big decline in the oil price, it can be a small negative due to the supply effect. On the tanker side, a lower oil price can also lead to more either inventory building or more consumption, which tends to be actually good for tankers. So there are many, I would say, varied effects on our business, and it all depends on the reasoning behind a falling oil price, I would say.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Good. And then then a couple of questions also on geopolitics. There’s one. Have you started again operating on the on the Black Sea? Yeah.

That’s one question. Yeah.

Martin Bersdell, CFO, Norden: Yeah. Yeah. So we are, you can say, very, very rarely trading on the Black Sea. We are open to doing it, but it we don’t trade Russia and Ukraine at the moment, but there are other ports in the Black Sea that we can trade. And often, it can be on TC vessels where we do not necessarily control completely what where the ship is is headed, but it’s a very, very small item for us currently.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: And and then in relation to this, there’s also one on if if if a peace agreements of some kind should come through, how will that sort of affect your market? Another one here is also please provide an update on your view on the dynamics in the tanker tanker market via the potential changes in the sanctional trades.

Martin Bersdell, CFO, Norden: Yeah. So I think there are at least two factors related to geopolitics that have been very important in supporting the tanker market in recent years. One is the sanctions on Russian oil, which means that the Russian oil is transported longer because a lot less of it is taken directly into Europe, but it’s instead transported out into, for instance, India and East Asia. So that adds demand for for vessels. And and a similar effect can be seen in the in the Suez Canal and the Red Sea where, of course, the hostilities down there against certain types and certain flags of of vessels also mean that the vessels, to a larger extent, go South Of Africa instead of through the Suez Canal.

So both of these have a tendency to be supportive for rates. And, of course, then the opposite is if they were to all fall away in case of a peace agreement, that would not that would be negative for for tankers. Sorry. Yeah. So that would be negative for tankers.

I will say, though, that just because there is a peace agreement or a ceasefire in Ukraine, it’s not necessarily the case that all sanctions are removed. So the picture is a little bit noisy there, but but the overall conclusion is that removal of sanctions and removal of impediments to trade will be negative for tanker rates.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Good. And then there was also a number of questions on the tariffs, but I think you also came across it on your slides. And I think as as with with the wording you had there that you expected limited, at least direct trade impacts from The US tariffs. Of course, it can have some other indirect effects, but I guess the direct effects as you see it currently is limited.

Martin Bersdell, CFO, Norden: Yeah. The direct effects are limited, but we do think the tariffs have added to uncertainty, and we do think that will lead to, all things being equal, less strong global growth in the coming quarters.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Yeah. And then there’s a question related to your purchase options. It says here with 44 purchase options currently in the money, are you expecting more vessel sales in 2025? Or if so, are any of the in the money purchase options included in current guidance?

Martin Bersdell, CFO, Norden: So we do still have the strategy that we are what we call risk off. So we do still think that the vessel prices are factoring in a market that is stronger than what we think is realistic. So that is a convoluted way of saying that, yes, we will still pursue vessel sales. Our guidance includes vessel sales that we know of, that we have already signed and agreed, but guidance does not include future vessel sales that we hope will materialize going forward.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Good. And then there’s a question if if if there’s sort of any impact or if you could give any reflections on the SMB tech and Golden Ocean merger that that we’re seeing sort of is there any sort of market effect from these mergers? And and will this yeah. Will there be a need for you to to to react on on on these kind of mergers and also do some consolidation in the industry?

Martin Bersdell, CFO, Norden: I’m I’m not going to say that I know a lot about the specifics of of that merger. So I I can’t really comment on whether that would have any impact. I don’t think I don’t think that will actually have any impact on the market. That has from time to time been transactions. It happens.

But I don’t think it materially changes sort of the competitive dynamics of the industry.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Very good. We’re through most of the questions, Martin. There there’s one final here. That is sort of the mismatch that’s currently between you now. That is at $3.72 and the and the market that sets the price of your shares at a hundred and 86.

I don’t know. Could you give us sort of any reflections? I I know, yeah, it’s it’s always a bit tough to comment on that.

Martin Bersdell, CFO, Norden: But it’s certainly a a key point. I think it’s fair to say that it seems that stock markets are more negative on the near term outlook than shipping markets. So the NAV that we report is actually based on asking brokers what could we sell these ships for in the current environment. And the ship vessel prices both in dry and tankers are actually still quite high. So you will see actually that in our Q1 report now, we have added some sensitivity analysis on the NAV, which indicates that a plusminus 10% change in both market prices for ships and market prices for freight going forward.

So if that those two both change 10% up or down, it will lead to a 70 krona per share change in the NAV. And that means that, say, we trade at around a 80. That means that we can have two and a half of those scenarios, and that is what is priced in already in the share price. So it’s a simple way of saying that the share price looks to be discounting a 25% decline in both asset prices and freight rates in both dry and tankers. So, of course, we think that is very pessimistic, but we do agree in on some of the direction, and that, of course, is part of the reason why we are selling ships.

So converting vessels that trade at a 50% discount into cash that I think should not at least be trading at a 50% discount should be good for shareholders in the near term.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Very good. We will conclude by that, Martin. Thank you very much for for the rundown here of the quarterly reports.

Martin Bersdell, CFO, Norden: Thank you, and thank you for your interest in Norden.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: The same from here. Thank you for listening in and for some very good questions. We will end it here. Thank you very much, and have a nice day. Good morning, and welcome, everyone.

We are ready to start today’s event here. My name is Rasmus, and on behalf of Hans Christian Andersen Capital, I have the pleasure of welcoming CFO Martin Bersdell from who will take us through the q one twenty twenty five report that was published this morning. So first of all, a warm welcome to you, Martin. And before I hand over, also a warm welcome to all of those of you who signed up for today’s presentation. As usual, you can ask questions in the chat, so you’re welcome to do that.

You can do it either in English, and you can do it in Danish if if you prefer that. I’ll do the translation then. And should you want to see the presentation again, we’ll record it and publish it on different platforms afterwards. But with that, I’ll leave the floor to you, Martin.

Martin Bersdell, CFO, Norden: Thank you very much. And to all of you listening in, welcome to this presentation of our q one results for 2025. Let’s jump right in. As some of you may have seen from our recently published report, we generated group net profit of $33,000,000 in the quarter corresponding to a return on invested capital of 11%. That earnings was actually, to a large extent, driven by good coverage in what we actually consider quite challenging spot markets.

You will have seen that late last week, we upgraded our full year guidance estimate from an original interval from 20,000,000 to 100,000,000. Now we expect 50,000,000 to 130,000,000 US dollars, mainly on the back of vessel sales and good operational performance. And we do see improved operational performance compared to last year, especially driven by margin recovery in the dry operator segment as part of the FST business unit. The updated net asset value for Norton is $3.72 per share by the end of Q1. And we have actually spent a considerable amount of time and effort in realizing part of this NAV during the last four months.

The board has again decided to return capital to shareholders. So we are complying with our own internal dividend policy of distributing at least 50% of net profit. So now we distribute DKK 17,000,000 in a combination of dividend of DKK 2 per share, up $10,000,000 and another share buyback program running until August of $7,000,000. Now before diving into the different business units here, let me just point out that we have actually added information in this q one report compared to previously. We have had the request from several analysts and investors that they like to understand better what are going on in the FST business.

So now we have actually provided additional segment information. So you can actually see margins and and earnings for the dry operator, tanker operator, projects and parceling, and logistics segments. So I hope that will add to the transparency and understanding of that part of the business. And in FST, we generated an EBITDA of $3,300,000 in Q1, a considerable improvement from a rather weak q one twenty twenty four. And that was, as I said before, driven by dry operator and margin improvement in and in projects and parceling, Again, steady profit and actually good growth in their activity levels, whereas the tanker operator had lower earnings as a result of a lower market, which was as expected.

Also in logistics, we actually see good operational improvements. And you will see from the graph at the top of the right hand side, the overall FST margin developing quite positively in the last twelve months. Asset management continues to do very well with an increase in underlying contribution margin. When you look at the EBITDA, it actually decreased compared to the same period of last year, but that was mainly actually because last year was affected by a considerable amount of gains from sale of vessels. So when you take that out, it’s actually still also a solid underlying performance.

At the end of Q1, we still had 81 purchase options, and just over half of those can be declared within the next two years at strike prices that are 15% below current broker values. And even though we as we have announced again and again, we are declaring purchase options and selling vessels, we actually also built the portfolio in the deferred end by entering into new lease agreements with purchase options. So still have the same number of purchase options as we did by year end 2024. Overall, we think that we are quite well positioned in what we deem to be quite weak markets so far this year. So spot rates are down actually in both tanker and dry segments.

But overall, it was a quarter marked by mainly political developments and uncertainty. First of all, there was the it says USTR. It means The US Trade Representative proposal to actually put on substantial port fees calling US ports, targeting Chinese and built in Chinese operated vessels. There was a hearing period and a new proposal that has been issued has significantly watered down the original proposal. And actually, as it stands right now, we think that the port fee regulation, if it is implemented as it looks right now, would be something that our flexible business model can handle with with limited costs.

Then overall, the I think the entire world was affected by the talk of US tariffs. Not that our trade lanes are actually impacted a lot because we don’t actually trade a lot into The US, but but the uncertainty created by tariffs and the potential effect on The U the global growth, we think is negative in the short term for actually both dry cargo markets and tanker markets. But we are well equipped to capture opportunities in weak markets. We have a strong balance sheet with low bank debt, and we have positioned ourselves with fairly high cover in the near term but fairly large exposure to a potential structural strong market in the coming years. And you will see from the graph at the bottom right and also in the last bullet that we actually currently, for the short term, have more open tanker days than dry cargo days for 2025.

And dry cargo days is actually mainly a short in expectation of continued weak spot markets. This brings me to a short review of our business model. Some of you may have seen this slide before. We believe that there’s a lot of power in the way that our business model is structured because we are so flexible that we can handle many different things in in the markets that we operate in. So depending on our market view, we can have high exposure or low exposure.

It can be dry cargo or tanker. It can be short term or long term, and it can be asset heavy or not. And by working with all these different ways of positioning our portfolio, we believe that over time, we will generate best in class returns on invested capital. That is also indicated by the graph at the at the bottom where we are best in class on ROIC, but certainly also quite high on volatility in ROIC. So it doesn’t come without a certain element of risk, of course.

Now as I said previously, we did upgrade our full year guidance at the end of last week. Now we expect 50,000,000 to $130,000,000 A substantial part of this upgrade was newly agreed vessel transactions, but actually also underlying good operations. This expectation is based on continued improvement in margins in FST compared to 2024 and based on asset management having quite a high coverage in both dry cargo and tankers at profitable levels for the remainder of the year. That brings me to the key summary. What we think is a solid first quarter with net earnings of $33,000,000 and ROIC of 11%.

As I said, we are well positioned for weaker markets in the short term while maintaining deferred exposure in markets that we believe will be attractive long term. A business model that can cope a lot of the stress that is seen in the underlying fundamentals and with good upside from a big portfolio of purchase options, which we believe will deliver best in class returns to shareholders over time and also indicated by the fact that the current share price indicates large upside to the updated NAV as of the end of q one. So that was actually my presentation. I think we’ll open up for questions now.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Perfect. Thank you very much, Martin. And, yes, let’s let’s jump into some of the questions that came through. There was one sort of an that’s more on an an overall basis. What is your view on future fuels?

Do we have a sustainable strategy? I guess it’s it’s on the yeah. What would be sort of the standard on on engines going forward and the future and the fuels that will be used for these vessels?

Martin Bersdell, CFO, Norden: Yeah. So the way we think about sustainability and and green fuels need to be adapted to the way our business model works. So we work with even though we operate 400 ships, we only own a very small part of them. So there’s a limit to what we can actually do in terms of engines and mechanics and and stuff like that. So fuel types is quite important to us.

And we believe that the the biofuel is an option that has been a little bit underappreciated in recent years. We think that it’s a good way to actually reduce emissions, and it’s a solution that can be scaled quite quickly, and it can be used in all the existing ships that are currently underwater. You saw last year that or the year before, I think it was, we invested in a biofuel company called MashMex, and this was with the exact intention of actually being able to do voyages with biofuel in the future. And the IMO just came out with a new regulation, is sort of only halfway ratified, which actually does mean that, yeah, biofuel can be a very attractive element in emissions reductions going forward. So I think that this is our key focus in terms of securing biofuels for future voyages.

: Very good. Thank you. And then there

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: was also a question on the USTR port fees. You came across it, Martin, during your presentation as it been it has been watered down. So it seems like the the effects will be be limited with what we’re looking into. If the initial proposal were to go through, would that have some kind of impact for you?

Martin Bersdell, CFO, Norden: Yes. So the original proposal, which also added big penalties for vessels calling US ports in case the operator had a certain share of Chinese vessels in its fleet or a certain share of newbuildings from China in its newbuilding program, Stuff like that can be very, very tricky to sort of avoid, and that would mean that even though we came with a non Chinese built ship into US ports, that could be quite expensive. But the way that it is phrased now, they focus on either Chinese operators or Chinese built vessels. We are not a Chinese operator, so we can focus on the Chinese built vessels. And I think that can be avoided.

There are not so many import port calls into The US. So I think an operator like us can find non Chinese built ships to actually make those port calls. So I think that is once again actually a strength of of the business model that we can accommodate this at what I think will be limited cost.

: Very good. And then

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: there’s also a question related to to to a segment called project cargo or break bulk. It might not be as as well known as as as the other segments you’re operating in. But there’s a the question, you have gradually increased your exposure to project cargo. Currently, the contribution in earnings is small compared to your dry and and and product tanker. The project cargo market is much more opaque for outsiders looking in.

Can you give us a bit of insight on how big the market is and, hence, the potential for Norn? Is it possible in the future we see project cargo as a major earning contributor to Norn, or will it always be a small add on?

: That

Martin Bersdell, CFO, Norden: is a good question. I don’t actually think that we have good market data about how big the market is. But just for for the viewers here, the the the project cargos are typically let’s say, it could be big machines or it could be steel coils or stuff that are processed goods but don’t really fit well into a container. So and and then there’s the parceling bit, which is really where you use the different cargo holds on the ship to transport various types of commodities as opposed to our normal dry operator business where it’s typically one commodity in the entire ship. So we are definitely very pleased with our performance in projects and and parceling.

We think they make a good margin and a fairly steady margin and and or has, as I said, also been able to grow the business. So it’s something that we would like to actually focus on and grow because it gives us, I think, we can call it high quality earnings that are quite stable. So that is definitely a key focus area of ours going forward.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Good. And also then a number of questions sort of related to the sort of should we call the turmoil that we have seen sort of in the beginning of the year. We’ve seen a weakening dollar. The question goes on how would that affect you and how are you prepared to this in case the dollar should weaken further from here?

Martin Bersdell, CFO, Norden: Yeah. So I think you can split our dollar exposure or the shareholders’ dollar exposure in two. So one part is that we have our headquarters in Denmark with the DKK costs, and we have a fairly big office in in Cyprus with euro costs. So I think there is an element that a weaker dollar will make these headquarter costs more expensive and, of course, will then be negative for our margins if we don’t if we don’t do anything about it. So this is this is one part.

It is one part where we do hedge our exposure out in time so that it won’t hit us immediately, and it’s something that we can hopefully plan around going forward. But the other thing is that the the Northern stock is listed in DKK in Copenhagen. So, of course, the NAV is basically a US dollar calculation. If the US dollar declines, then the NAV will also decline. So I think anyone can actually go in now to our NAV table in the report and make their own calculation if with a new dollar p k k rate.

And I think, actually, based on the the NAV that we showed today, if you use the dollar Danish kroner equivalent of 6.5, the $3.72 will be 20 krona per share less. So it’s not immediately, I think, a key concern, but it’s certainly something that we need to be aware of if the dollar sort of loses its reserve currency status.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Very good. And also on the oil price, I guess there’s also a direct in direct impact on a lower oil price from the fuel you’re using for your own vessels. But I guess there’s also an indirect impact or an indication that a lower oil price is usually a reflection of an expected lower economic activity going forward. Could you also elaborate a bit on that?

Martin Bersdell, CFO, Norden: Yeah. So if we start with the the cost picture, we fuel, of course, is the biggest variable cost that we have, but it is, to a large extent, what we call a pass through. So sort of the the minute that oil price changes, the minute our freight rates will also change that we negotiate with clients. So in that sense, I think the exposure is fairly limited. But a lower oil price, as you say, can be an indication of lower growth.

It can also have the effect that the ships are incentivized to go a little bit faster, which actually adds some shallow supply into the fleet. So for dry cargo, I would say that if it’s a big decline in the oil price, it can be a small negative due to the supply effect. On the tanker side, a lower oil price can also lead to more either inventory building or more consumption, which tends to be actually good for tankers. So there are many, I would say, varied effects on our business, and it all depends on the reasoning behind a falling oil price, I would say.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Good. And then then a couple of questions also on geopolitics. There’s one. Have you started again operating on the on the Black Sea? Yeah.

That’s one question. Yeah.

Martin Bersdell, CFO, Norden: Yeah. Yeah. So we are, you can say, very, very rarely trading on the Black Sea. We are open to doing it, but it we don’t trade Russia and Ukraine at the moment. But there are other ports in the Black Sea that we can trade.

And often, it can be on TC vessels where we do not necessarily control completely what where the ship is is headed, but it’s a very, very small item for us currently.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: And and then in relation to this, there’s also one on if if if peace agreements of some kind should come through, how will that sort of affect your market? And another one here is also please provide an update on your view on the dynamics in the tanker tanker market via the potential changes in the sanctional trades?

Martin Bersdell, CFO, Norden: Yeah. So I think there are at least two factors related to geopolitics that have been very important in supporting the tanker market in recent years. One is the sanctions on Russian oil, which means that the Russian oil is transported longer because a lot less of it is taken directly into Europe, but is instead transported out into, for instance, India and East Asia. So that adds demand for for vessels. And then a similar effect can be seen in the in the Suez Canal and the Red Sea where, of course, the hostility is down there against certain types and certain flags of of vessels also mean that the vessels, to a larger extent, go South Of Africa instead of through the Suez Canal.

So both of these have a tendency to be supportive for rates. And, of course, then the opposite is if they were to all fall away in case of a peace agreement, that would not that would be negative for for tankers. Sorry. Yeah. So that would be negative for tankers.

I will say, though, that just because there is a peace agreement or a ceasefire in Ukraine, it’s not necessarily the case that all sanctions are removed. So the picture is a little bit noisy there, but but the overall conclusion is that removal of sanctions and removal of impediments to trade will be negative for tanker rates.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Good. And then there was also a number of questions on the tariffs, but I think you also came across it on your slides. And I think as as with with the wording you had there that you expected limited, at least direct trade impacts from The US tariffs. Of course, it can have some other indirect effects, but I guess the direct effects as you see it currently is limited.

Martin Bersdell, CFO, Norden: Yeah. The direct effects are limited, but we do think the tariffs have added to uncertainty. And we do think that will lead to, all things being equal, less strong global growth in the coming quarters. Yeah.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: And then there’s a question related to your purchase options. It says here with 44 purchase options currently in the money, are you expecting more vessel sales in 2025? Or if so, are any of the in the money purchase options included in current guidance?

Martin Bersdell, CFO, Norden: So we do still have the strategy that we are what we call risk off. So we do still think that vessel prices are factoring in a market that is stronger than what we think is realistic. So that is a convoluted way of saying that, yes, we will still pursue vessel sales. Our guidance includes vessel sales that we know of, that we have already signed and agreed, but guidance does not include future vessel sales that we hope will materialize going forward.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Good. And then there’s a question if if if there’s sort of any impact or if you could give any reflections on the SMB tech and Golden Ocean merger that that we’re seeing sort of is there any sort of market effect from these mergers? And and will this yeah. Will there be a need for you to to to react on on on these kind of mergers and also do some consolidation in the industry?

Martin Bersdell, CFO, Norden: I’m I’m not going to say that I know a lot about the specifics of of that merger. So I I can’t really comment on whether that will have any impact. I don’t think I don’t think that will actually have any impact on the market. That that has from time to time been transactions. It happens.

But I don’t think it materially changes sort of the competitive dynamics of the industry.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Very good. We’re through most of the questions, Martin. There there’s one final here. That is sort of the mismatch that’s currently between you now. That is at $3.72 and the and the market that sets the price of your shares at a hundred and 86.

I don’t know. Could you give us sort of any reflections? I I know, yeah, it’s it’s always a bit tough to comment on that.

Martin Bersdell, CFO, Norden: But it’s certainly a a key point. I think it’s fair to say that it seems that stock markets are more negative on the near term outlook than shipping markets. So the interview that we report is actually based on asking brokers what could we sell these ships for in the current environment. And the ship vessel prices both in in dry and tankers are actually still quite high. So you will see actually that in our q one report now, we have added some sensitivity analysis on the NAV, which indicates that a plus minus 10% change in both market prices for ships and market prices for freight going forward.

So if that those two both change 10% up or down, it will lead to a 70 krona per share change in the NAV. And that means that, say, we trade at around a hundred and 80. That means that we can have two and a half of those scenarios, and that is what is priced in already in the share price. So it’s a simple way of saying that the share price looks to be discounting a 25% decline in both asset prices and freight rates in both dry and tankers. So, of course, we think that is very pessimistic, but we do agree in on some of the direction, and that, of course, is part of the reason why we are selling ships.

So converting vessels that trade at a 50% discount into cash that I think should not at least be trading at a 50% discount should be good for shareholders in the near term.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: Very good. We will conclude by that, Martin. Thank you very much for for the rundown here of the quarterly reports.

Martin Bersdell, CFO, Norden: Thank you, and thank you for your interest in Norden.

Rasmus Kurbo, Moderator, Hans Christian Andersen Capital: The same from here. Thank you for listening in and, for some very good questions. We will end it here. Thank you very much, and have a nice day.

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