Cmb.Tech N.V. Q1 FY2026 earnings call

Overall Financial Performance

• Net profit for Q1 2026 was $368.8 million, with net finance expenses falling from $113 million last quarter to $81 million this quarter, driven by debt reduction and lower margin terms with banks
• Total liquidity stands above $500 million, and adjusted equity-to-total assets is below 50%, hitting the company's through-the-cycle leverage target
• Capital gains from vessel sales totaled $267 million in Q1 2026, with an additional $127 million expected in Q2 2026
• The board approved a total distribution of 64 cents per share (20 cents interim dividend, 44 cents from share premium), with 70% of the distribution exempt from withholding tax
• 7 new building vessels were delivered in Q1 2026; 2 Capesizes, 8 VLCCs, and 1 additional Suezmax (Sienna) have been sold, with Sienna delivering in Q2
• Remaining total CapEx as of end of April 2026 is $1.2 billion, with only $184 million unfunded (fully covered more than twice by recent vessel sale proceeds); 2026 is the last heavy year for newbuilding deliveries
• Contract backlog increased by $200 million, with $1.9 billion of backlog tied to dual-fuel vessels contracted with creditworthy counterparties

Market Outlooks by Segment

• Dry Bulk: Management is positive. Ton-mile demand growth for key commodities (iron ore, bauxite, coal, grain) is supportive. While order book to fleet has reached 14-15%, the global fleet has an all-time high average age, so expected scrapping will outpace new vessel additions over the next two years. Middle East turmoil-driven gas-to-coal switching has lifted base case ton-mile demand growth to 3.5% for Capesizes and 5% for Panamaxes, with upside to 5.2% and 7.5% respectively in a high coal import scenario. Seasonal volume increases from Q2 to Q4 are expected to further support rates.
• Tankers: Management sees positive short-term dynamics but is cautious long-term. The de facto closure of the Strait of Hormuz has removed 5.3 million barrels per day of short-haul crude export capacity, but longer-haul exports from the US, Brazil, and Guyana have offset this volume loss on a ton-mile basis, leaving the market balanced. Short-term freight rates remain healthy, but the combined VLCC/Suezmax order book is very large, with heavy deliveries concentrated in 2027 and 2028, which is a concern for long-term pricing.
• Containers: Management remains cautious. While Red Sea and Strait of Hormuz disruptions have given short-term rate support, large order book volumes and expected ton-mile demand contraction will likely push rates lower long-term. All company vessels are fixed long-term, so there is no material spot exposure.
• Chemical Tankers: Management is cautious. Soft demand and new vessel deliveries have pushed spot rates lower year-over-year, though rates remain healthy and most company vessels are fixed on time charters, limiting downside.
• Offshore Energy: Management is positive. After two slow years, offshore wind installation activity is expected to increase in 2026 and 2027, particularly in the North Sea, and demand for offshore oil and gas supply vessels remains strong.

1. Dry Bulk: This is the company's largest segment. It holds 36 Newcastle Maxes (with 10 more to deliver this year), 37 Capesizes, and 30 Kamsar Max Panamaxes, with 80% of total 2026 shipping days exposed to the spot market. In Q1 2026, the segment achieved average daily rates of $28,000 for Newcastle Maxes, $26,000 for Capesizes, and $14,500 for Kamsar Max Panamaxes. 80% of Q2 Newcastle Max days, 75% of Q2 Capesize days, and 75% of Q2 Kamsar Max days are already fixed at average rates of $44,000, $37,000, and ~$20,000 respectively. It contributes ~80% of the company's spot exposure, which makes up the majority of current earnings potential. 2. Tankers: After selling 8 older VLCCs, the company holds 6 VLCCs and 18 Suez Maxes. Q1 2026 average spot rates were $180,000 for VLCCs and $91,000 for Suez Maxes. 80% of Q2 VLCC days and most Q2 Suez Max days are already booked at $180,000 and $122,000 respectively. The segment produced $360 million in total capital gains from vessel sales, with $267 million recognized in Q1 2026 and $30 million more expected in Q2. 3. Containers (Delfis): All vessels are fixed on long-term time charters, so the company has no spot market exposure. One additional new building will deliver in October 2026 on a pre-fixed 15-year contract. It makes up less than 10% of total revenue contribution. 4. Chemical Tankers (BoChem): Most vessels are fixed on time charters, limiting spot market exposure. The spot market saw a softening to $21,500 per day from ~$25,000 per day in the prior year, but rates remain healthy. Contribution is less than 10% of total revenue. 5. Offshore Energy (Windcat): The segment has 3 delivered CSOV offshore supply vessels, with 4 more on order. Q1 2026 average daily rates for CSOVs were $65,000, and Q2 2026 is fully fixed at $62,000 per day. CTV vessels have reached over 90% utilization entering the peak spring/summer season, with average daily rates of $3,400. Contribution is low single-digit percentage of total revenue.

• Management's base case 2026 operational free cash flow (excluding vessel sales and remaining CapEx) is over $1 billion, based on current market rates which are 20% above management's initial assumptions.
• 2026 is the final heavy year for newbuilding CapEx, with the majority of remaining $1.2 billion CapEx ($740 million) to be paid over the remaining three quarters of 2026; after 2026, free cash flow will be available for uses beyond net CapEx.
• Base case ton-mile demand growth for 2026 is 3.5% for Capesizes and 5% for Panamaxes, with upside to 5.2% and 7.5% respectively if higher-than-expected gas-to-coal switching materializes.
• A final investment decision on the Namibia green ammonia terminal project is expected to be finalized by the next quarterly earnings call, with no current update on timeline or CAPEX beyond that.

• The de facto closure of the Strait of Hormuz has trapped 115 VLCCs and 24 Suezmaxes (40% of which are dark fleet vessels) in the Persian Gulf, including an undisclosed number of CMB Tech vessels, creating operational and safety uncertainty for crew.
• The large combined VLCC/Suezmax order book (close to 30% of current fleet) has heavy deliveries scheduled for 2027 and 2028, which will likely pressure long-term tanker freight rates if scrapping of older vessels does not absorb the new capacity.
• The container segment has a very large global order book and expected ton-mile demand contraction, which will likely push freight rates lower long-term, even with short-term disruptions providing temporary support.
• If the dry bulk cycle turns, the higher average break-even level of recently purchased/new built vessels across all segments could lead to widespread forced sales at lower prices, pressuring asset values industry-wide.
• Uncertainty around bauxite export caps from Guinea creates downside risk to dry bulk ton-mile demand that is not yet reflected in base forecasts.
• Integration of recent acquisitions is progressing, but has been more challenging than initially expected, creating some uncertainty around SG&A cost targets.

Q: Now that the company has hit its 50% net loan-to-value target, fully funded the newbuild program, and has ample liquidity, what is the forward capital allocation strategy, particularly for dividends? Is the 20 cent interim dividend a maintainable base level? / A: The company will continue to analyze allocation options each quarter, including debt repayment, potential M&A, and shareholder distribution. With leverage targets met and CapEx winding down, shareholder distribution will be a continued core focus. The 64 cent total distribution (20 cent dividend + 44 cent share premium distribution) uses a tax-optimized structure that benefits retail and foreign shareholders, and the board maintains a discretionary policy of distributing 50-60% of net profits to shareholders. No attractive large new investment opportunities exist in core dry bulk and tanker markets today, supporting continued focus on shareholder returns.

Q: Given the current rise in dry bulk asset values after the well-timed Golden Ocean acquisition, what is the current unrealized gain on the investment, and do you see further acquisition value at today's asset prices? / A: The company noted that paper returns on the acquisition look strong today, with the market recovering faster than expected, and deferred any exact gain calculation, just stating that the spot-focused strategy is well positioned to capture near-term benefits. Management commented that all vessel assets (new and secondhand) are currently pricey, and there are no obvious attractive opportunities at today's valuations. The company may sell additional older vintage vessels if prices remain attractive, and prioritizes riding the current dry bulk cycle to maximize returns before making major new investments.

Q: After the Strait of Hormuz closure, is the crude tanker market still balanced on a ton-mile basis, what is the current impact? / A: The market remains broadly balanced on a ton-mile basis. The 5.3 million barrels per day of lost short-haul Middle Eastern crude volumes is offset by longer-haul exports from the US, Brazil, and Guyana, which generate 2-2.5x more ton-mile per barrel than traditional Middle East to China routes. This balance is dependent on maintaining current high export volumes from these non-Middle Eastern producers. Rates remain very healthy at ~$100,000 per day for key routes despite recent gradual declines from peaks.

Q: What is the status of the options for five additional large CSOV offshore vessels ordered in Q3, when do the options lapse, and what type of employment would be used for new builds? / A: The first option lapses at the end of summer 2026, with subsequent options spaced a few months apart. Demand for CSOVs remains strong, and the option strike prices are attractive, but management will wait as long as possible before deciding to lift any options. If lifted, new CSOVs would most likely be operated spot-first rather than ordered with a pre-negotiated long-term charter, since long-term charters currently offer very low returns; the company will mix spot and long-term employment only if long-term rates are attractive enough.