Good morning from sunny Oslo, and welcome to Höegh Autoliners first-quarter presentation. My name is Marlen Thu, Head of Investor Relations.

With me today, we have our CEO, Andreas Enger, and our CFO, Espen Stubberud, who will walk you through the first-quarter business and financial performance. As usual, we have the Q&A session at the end of the presentation.

For the audience, if you have any questions, please send your question to our Investor Relations mailbox at [email protected]. With that, I leave it to you, Andreas.

Thank you, Marlen. We are starting this presentation with a beautiful picture of Höegh Rainbow, which we took delivery of in the beginning of January.

It had its first quarter in operation. It's the eighth in the series of our 12-ship newbuild program of vessels that are doing a great job in a tight market.

Let's start with some of the very recent highlights. We've had an exciting week at Höegh Autoliners with the successful exit out of the Persian Gulf of Alliance Fairfax, which I think we commented here earlier has been trapped inside the Persian Gulf.

That happened with fantastic help and support from the US Navy who mobilized substantial resources to ensure a safe transit for that vessel. We now have no vessels operating in the Persian Gulf, and no remaining vessels that are bound for that area.

There is sort of a continuous disruption, but contained operationally with repositioning and adaptation, which is I think one of the things we are quite good at in terms of fast response. The Persian Gulf service is suspended due to the conflict.

We don't at this point see any near-term transit of vessels into the area, but we maintain regional coverage via a Suez Red Sea service that then returns back through Suez as we're not going through either the southern Red Sea due to the Houthis. Capacity market is tightened following these delays and rerouting, and there's also substantial onshore logistics constraints.

There is clearly a turbulent market in many ways. Also in terms of fuel and bunkering.

I think one of the biggest effects of the Hormuz crisis is imbalances in the global energy market, sharp increase in fuel prices, and also tighter availability. It has led to reduced network speed to save fuels, but also very sort of proactive bunkering operation to make sure that we have sufficient fuel on our vessels at all time, which we're also successful in doing.

The fuel price increases comes with a delay. We are expecting recovery through fuel surcharges, but those comes with a significant time lag that is impacting short-term guidance as we will see.

Actually there is not been much impact on fuel pricing and fuel price increases on this quarter because most of our fuel is used in the quarter is basically bunkered and expensed at an earlier price. Given the kind of large fluctuations we see right now, we've chosen to show these pictures with the upper part here showing the bunker cost and BAF balance over the last 5 years.

That shows that there are periods, and we saw the last period following the Russian invasion in Ukraine with substantial hike in energy cost and substantial effects also on our costs and on BAF. We see that through this period and through all other periods, the BAF mechanisms has worked.

We have over that period had a fuel cost recovery of approximately 95%. The bottom part of the chart here basically shows how the Hormuz conflict have created a new very very substantial spike that will have big effects on our fuel costs into the second quarter and will also have then big corrective effects later in the year on the BAF revisions that will come for the third and the fourth quarter.

Then again, the highlight for the quarter, EBITDA of $145 million, flat quarter-on-quarter, reflecting obviously some added operational cost due to the turbulence in the Strait of Hormuz, but underlying and driven by continued strong cargo availability and continued attractive pricing and market conditions. $103 million US dollars profit after tax, gross rates of 92.6, which is up 1%.

Back to normal dividend payments, paying out $94 million of dividends for the quarter. We have taken delivery, as I just said initially, of one vessel, adding or making the count of newbuilds now in commercial operations to eight.

We have an equity ratio of 53%, slightly down due to the debt increase on the new delivery. Moving on to market and commercial.

We are facing a quite exceptionally growth in Chinese light-vehicle exports. Far East exports in total rose 28% year-on-year, China at 57%.

If you look at EV and hybrid exports into Q1, you're seeing numbers up sort of or close to 90% year-on-year. What we see is that the energy uncertainty and the higher oil and gas prices seems to be driving also the sales and the conversion to EVs and hybrids, clearly benefiting Chinese producers having, I think, in many ways, very strong products and price points in that market.

The global light-vehicle sales fell 5% year-on-year. Full-year outlook is somewhat downgraded, but again, the Chinese success in the market is substantially elevating demand for shipping services.

Reflect a little bit also in all the turbulence and with the growth of China, what our trade structure looks like. I think we are pleased to see and it's important to notice also in these times of disruption that we have a well-diversified operation.

We've had fantastic growth in China, almost doubled the share, but it's still from 10 to 19%. It's still sort of a balanced card on this.

You can see on the other one is that we have very strong presence in the Middle East as a discharge region. 17% of our cargo discharge, which obviously causes some disruption that we are addressing by first, reallocation of capacity, but also from a dedicated service now from the US into the Red Sea.

We do not go through the southern Red Sea because of the Houthi threat, but we can go in through Suez and serve the Red Sea coast of Saudi Arabia, which we are doing to compensate for not being able to enter through the Strait of Hormuz. High and heavy is in many ways the same story, not exactly with the same magnitude, but the shipments of construction equipment from Asia did grow 31% year-on-year in Q1.

It's driven by continued growth out of China, but still with other markets being fairly stable. There is an expectation of continued high and heavy sales growth in 2026 into 2027, but there are some uncertainties of the US equipment demand in 2026 due to various tariffs and sort of some noise in that area.

The same story, that you have a market growth primarily out of Asia and primarily driven by the success of Chinese exporters. We have a strong contract backlog.

We are in many ways relative to our 80% contract coverage overbooked for 2026. We have large part still of 2027 covered.

We have added contracts adding for about $160 million during the quarter. When it comes to the remaining renewals towards 2027, 80% of that is to long-time relationship customers where we have 10-plus years of relationships.

Rate agreements are typically non-committed contracts with a fixed pricing towards freight forwarders and used-vehicle shippers. The spot volume, it's only now 6% of the volume.

In that volume, there is an 80% high and heavy share. The spot market is in reality, in the current market, almost entirely for type project cargo, high and heavy equipment.

There is very little automotive components in that part of the cargo mix. That leaves us to first capacity, sustainability, and later into finance.

Then I'll leave it to Espen.

Thank you, Andreas. Turning to capacity, and capacity market continues to be tight, and tighter than we had anticipated a year or two ago.

During 2024 and 2025 and so far this year, 141 car carriers have been delivered. These have been absorbed, and the market remains tight.

In fact, pricing have been increasing so far this year. We continue to use the short-term capacity market.

We had four ships on charter in the first quarter. That was down one vessel quarter-on-quarter.

If you would want to charter a ship over the next few months, that's it's pricey, but it's also very few ships available, only two, three ships available up to the summer. Turning to sustainability, we are very pleased to have been able to drive down carbon intensity over the past few years, obviously on the back of now having eight Aurora-class vessels in operations sin- since January, but also having invested heavily in existing existing fleet, and also dive- divested five vessels, which were weak fuel performers.

Quarter-on-quarter, we're up marginally. That's related to heavy weather delays and idling early in the year, and also some idling related to the Middle East conflict.

Turning to the financial update, the year started very very strongly. Our commercial team complained about lack of capacity already early in January.

That's not not normal. I think it's the first time we we heard about.

Normally, the first few weeks in January is a slow period following a downscaling and closure of plants around New Year's. This year have been very strong from the very beginning.

We have about the same number of operating days in the first quarter as we had in the fourth quarter. Do still had anticipated somewhat higher volume in the fourth quarter first quarter, on the back of very strong demand and extremely high utilization.

However, volume came down a little following the Middle East conflict where we canceled three voyages to the region in March. Net rate moving flat quarter-on-quarter.

Top line moving very flat. Costs also moving flat.

We come in with the EBITDA, as Andreas said, of $145 million, moving flat quarter-on-quarter. Also also, as mentioned by Andreas, we didn't have any fuel impact from the increasing pricing in the first quarter.

In fact, fuel costs came down $2 quarter-on-quarter following a 5% lower fuel prices. We had some extra costs related to discharge of unplanned cargo.

That was cargo already en route to the Middle East that was discharged. We had car- charter costs increased to $2 million quarter-on-quarter on the back of the increased pricing just that we just talked about.

Net profit before tax, seemingly, we are dropping 35% year-over-year. Just as a reminder, we sold one vessel in the first quarter of 2025.

Adjusting for this, net profit before tax year-over-year is down 11%. Our balance sheet remains strong, some modest changes to net debt-to-EBITDA and equity ratio following the delivery of the eighth Aurora vessel.

We are ending the first quarter with close to $500 million in cash and liquidity reserves. Cash somewhat higher than we've seen in the previous quarters, but flat quarter-on-quarter following the change in dividend calculation method that we announced in the second half last year.

It's another strong quarter with tra- cash generation. We had $144 million from operating activities.

We had net capex of $16 million. That's mostly dry docks and investments in the existing fleet.

We had normal payments for to bank and lease, and we paid out $99 million in dividends in the quarter. Again, we are paying out cash in excess of $200 million, paying out $94 million in May, which marks the 16th consecutive quarterly dividends, and we paid $1.7 billion now over the last 4 years.

Then we're coming to outlook.

Yes. I think it's fair to say that there is a level of turbulence, uncertainty in the world on many dimensions, including tariffs, fees, and conflicts that is creating uncertainty.

In that environment, we see demand for ocean transportation remaining firm, supported by steady demand from Asia and China. In particular, we see quite substantial demand for additional capacity, and it's definitely not in the current market any downward pressure on rates.

When it comes to the next quarter, I think the Q2 will be very much colored by the spike in fuel prices, which will impact fully and still with no BAF effects before into the third quarter. That effect is expected to be around $20 million, and the impact of Middle East service is expected to around $10 million.

While this is obviously an unfortunate effect and we would love to get back to the Persian Gulf as quickly as possible, we're also quite satisfied that we have a area where we have 17% of our cargo discharge, very important and attractive market for us, and we're able to manage that disruption with clearly some, but not an enormous impact to the system, which I think is because we have a fantastic team and capability to deal with disruptions and reallocate capacity and work the system in a way that minimizes that effect. As we said back to, that we have a well-diversified geographical structure that allows us to manage also quite substantial crisis.

The Q2 EBITDA adjusted for the above effects is expected to be slightly at the same level or slightly below the first quarter. That is the outlook.

That is substantial, but temporary fuel effects. I don't think we're going to guide on how temporary or how long-lasting the disruptions in the Strait of Hormuz is, but it's quite clear that in the current environment, we are extremely pleased that we have got one vessel out with US Navy support, which is now fully back in commercial service, adding to our available capacity.

We see no scenario where we'll send new vessels in there in the very near future. We are obviously still hoping for a resolution that will allow us to resume traffic into the area.

That's the end of our presentation. Thank you very much for listening, and I think we're now going on to Q&A.

Marlen?

Thank you, Andreas and Espen. Yes, we have received a few questions from our online audience.

The first questions is regarding market and the rate. First question is, RoRo as part of shipping business is cyclical.

Can we say anything about where we are in the cycle? Can we comment anything about how's the net rate is looking towards the second half of the year?

I think starting with that we have a practice of guiding for the following quarter. We are not going to divert from that, and it's definitely not the time where that I think would be appropriate.

That's not so much because of the market. It is because of all the sort of conflicts and tariffs and things and other things that are impacting this industry in different ways.

When it comes to the cycle, we are in a period in this industry that is very very strongly influenced by a remarkable growth of Chinese exports across our cargo categories. It obviously most prominent in automotive.

It's very prominent in EVs, hybrids that seems to be gaining traction with also with the energy uncertainty. Also supported by equipment high and heavy.

We are in the part of a cycle where there is a export growth that is clearly absorbing, or to some extent with disruptions more than absorbing, the newbuild deliveries. I think the driver of the market now is more on the position on Chinese export growth.

From where we see, demand seems to be there. The products are there, the price points are there.

We're quite impressed with how also the Chinese car exporters have lost or are unable to deliver to one of their important growth markets in the Middle East, and we basically, from what we can see, they're still able to redirect production to other areas, maintaining or even accelerating the export growth. That position is very robust.

That also creates a tight market. It puts upward pressure on chartered capacity.

It clearly supports the current rate levels very well. How and when that will change in a longer term, I don't think we want to speculate.

Thank you very much for the detailed answer, Andreas. Yes, we also a few questions, but this is the same topics, and we will try to consolidate the questions.

The next set of question is about the capacity market. We mentioned a bit earlier that we are looking at a roughly one vessel delivery per week for this year, and where the market is still tight.

Can we say anything about it, but we're still having a new buildings coming in the next years? Can we say anything about the risk of overcapacity in the market?

Is anything we can comment on? What is the current supply-demand balance process assessment?

I think that, I don't know if you have anything to add, Espen, but I think that answer will be quite repetitive of the one I just gave in the sense that as long as Chinese exports grow at the pace it does, the market will remain tight. It is very dependent on that threat.

We

can say that the order book has been big, and I think it's been a concern for many. At the peak, the order book-to-fleet ratio was 42%.

Now it's down to 20%. That capacity has been absorbed.

I think we also see now actually that a couple of new orders have been placed for '29 and '30, also reflecting this very very strong market, and capacity pricing actually going up. Can

maybe add to that if there's one thing is happening, that for every year this capacity has been well-absorbed by growth, the legacy fleet has become one year older. It was old to start with.

I think we're also seeing that the longer this journey works and the longer the capacity is actually absorbed, the closer we are to capacity attrition through scrapping for vessels that reach their end of life. I think every year of maintained tight capacity is further improving the cycle by actually adding a year to the legacy and bringing the more vessels closer to natural scrapping.

I think it's a very positive dynamic. While I think it's also difficult to make clear guidance on exactly how it's going to play out because it's many moving parts and it's the sum of all those variables.

Yes. The next question is about fuel price and how we hedge the fuel cost exposure.

We mentioned earlier about the cost pressure from the higher fuel price starting from Q2. We also talk extensively about the BAF mechanism.

Because a question from the audience just now, maybe we can just remind the audience a little bit about how we handle higher bunker cost in this segment with our BAF mechanism, Espen?

I think the BAF that we are referring to, it's a contractual fuel surcharge, and it's very established in our industry. We had it for a very long period of time.

It's a contractual fuel surcharge that is updated quarterly based on actual fuel pricing. It comes with a lag, as we said, a quarterly lag.

Actually for us, it takes 5 to 6 months before it's fully reflected in the P&L because of the periodization of the voyages. It's a very very strong recovery, as Andreas already talked to, this quarter is a one-off.

We will get this increased fuel prices back in BAF surcharges in the following quarters. We have a 95% recovery over time.

This is very well-established, and it's been basically very strong recovery for a very long period of time.

Thank you, Espen. Yes, the next question from analyst Jørgen Lian, DNB Carnegie.

We guide about the impact of fuel and service in the Middle East, and for the latter the volume impacts around $10 million expected in Q2. Is it a run-rate quarterly impact, or is just specific for the quarter?

We are talking about the next quarter, and I think, as Andreas said, Middle East is a very important discharge region for us. It's a backhaul, the rates to the Middle East is lower than on the fronthaul.

We are very happy that we can continue to serve the region via the Red Sea with a dedicated service from the US. We are serving our clients.

We already had two ships into the Red Sea that has discharged in three ports in the Red Sea. We're also serving clients from Europe to the Middle East with what we call space charters.

We put that cargo on peers' capacity. We are serving this region through the Red Sea, and we'll continue to do so.

For the second quarter, the impact is around $10 million.

Thank you, Espen. Yes, I'm just trying to wait a few seconds for the new questions to come in.

Yes, the next question from analyst Eirik Haavaldsen, Pareto. Have we seen or do we expect to see any effect of the disruptions from the Middle East conflict on contract renewals?

No, I don't think so, or in the sense that what we're seeing is the contract renewals, and I commented on that we are engaged in is going as planned and continued as planned. Demand for additional volume from customers in Asia is strong.

I think the environment, given the tightness and given the export growth particularly out of Asia, there is strong dynamic around contracts and contract renewals there. I don't think it has any particular impact on the Middle East either, I think.

Obviously, we have customers there. They are eager to get back, and both finding alternative routes like the Red Sea and, clearly, preferably coming back into an ordinary service to the Persian Gulf, which, again, is an important market for us and is an important market for many of our customers.

Thank you, Andreas. We talk a little bit about our contract backlog for the coming years.

It's a questions from two audience for the webcast. Can we say anything about the rate level in the recent contract renewal for this year and next year?

We are for new contract rate level, I think, but that's obviously individual and it's, yeah. Do you want to add?

No, I think no, not really. I think it's a very strong market, and it's the back of China.

Again, 57% growth quarter-on-court- year-over-year in the first quarter is just unprecedented. I think that's that's such a strong growth that that we actually see capacity pricing going up, and that's, just reflective on the where the market is.

Thank you. The next questions about the topic that we talked a lot about in the Q3 last year.

Do we have any current space scale regarding US port fees? Do we have any updates about that?

No, I don't think we have any updates on that. It has been suspended.

There are debates around it. We are actively engaged in the process.

We've met with USTR. We have had key meetings, and it's an ongoing process.

I think I also said back in Q3 and elsewhere on similar kind of questions, we are not going to guide on future policy decisions from the US administration. This is a future policy decision from the US administration.

Thank you so much, Andreas. I think that's the last question we receive for now.

Thank you so much for your attention and for your engagement. Of course, if you have more questions, feel free to send an email to our Investor Relations mailbox.

We thank you for your attention, and we look forward to seeing you next time.