Good morning, this is the conference call operator. Welcome, and thank you for joining the GTT Q3 2025 Activity Update c onference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Anyone who wishes to ask a question may press star and one on their touchtone telephone. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Philippe Berterottière, Chairman of the Board and CEO of GTT. Please go ahead, sir.
Good morning, everybody. I'm very pleased to present to you the Q3 2025 Activity Update. I am with Thierry Hochoa, the CFO of the GTT Group, and with the entire Investment Relations Team. Your 2025 first nine months have been quite impressive. First of all, the fundamentals are excellent, with 84 million tonnes per annum already decided. The revenues are approaching EUR 600 million on the first nine months, which represents an increase of 29% compared to last year. We obtained fairly diverse orders with energy carriers, heating carriers, Danelec, and energy as a fuel. All that led us to upgrade our 2025 outlook when we include Danelec. On key highlights, we introduced new technologies for energy as a fuel that we named QubiQ. We obtained approval in principle from Bureau Veritas.
We completed the acquisition of Danelec, and we obtained a quite large contract from the Chinese shipyard, Hudong-Zhonghua, for 24 energy carriers. We continue our innovation efforts with a new partnership with Bloom Energy and Ponant Exploration Group on a new system for zero-emission ships. We obtained a contract for an electrolyzer in Slovakia for one megawatt. If we look at our order book, we've received 19 orders in the first nine months, not taking into account the order we received in October. So, 267 energy carriers, which are guaranteeing our activity in the next years, 22 heating carriers, three Danelec, and three FSRU.
If we look at the market, we can see that the activity in terms of SPA, sales and purchase agreement for energy, for the contracts passed to liquefaction facilities, have been very important in the second and third quarter of 2025, and that is very much supporting the decisions for future FIDs. In fact, in terms of FIDs, we can see that this year has been phenomenal. It's an all-time record, with 84 million tonnes decided as of today. It's historic, and that means that the outlook for LNGC demand for the next year is very strong. The supportive trends for energy and for energy carrier orders are very strong, but the geopolitical context remains quite complex.
I would say we could talk about that at large, but I would say that the instability of regulations between the two sides of the Pacific Ocean are creating a kind of concern, still perplexing the decisions of shipowners. I do hope that the recent discussions are going to be able to clarify that. In any case, the energy carrier order inflow is expected to increase, backed by strong long-term fundamentals on which we talked just a moment ago. As far as energy as a fuel is concerned, we can see that the adoption of this fuel of the future is continuing to grow very significantly.
It's very good news, very good news for the planet, very good news for GTT, as this energy at a certain point of time is going to be transported by energy carriers, and also very good news for energy as an actor in energy as a fuel. We can see our market share. We are trying to enlarge this market share in introducing new solutions, and we've introduced QubiQ, which is a new tank design, which aims at enlarging the increasing the cargo space, the space left for the cargo, facilitating the installation, so reducing the cost of building the tank, reducing the boil-off, and so improving the total cost of return of our solution for the owners. In our digital activity, we are scaling up our efforts in the EUR 1.25 billion market with the acquisition of Danelec that we've completed in the end of July.
We are in a fast-growing market, and we do expect to be able to benefit from this growth. We are in this market. Our mission is to benefit from recurring revenues, which will balance our other activities, and to develop revenue synergies that we are targeting between EUR 25-30 million by 2030. Key achievements. I would say that during these first nine months, we've released a new generation of VDR. That shows you that the innovation activity, constant innovation activity of Danelec is very much in phase with what we do at GTT, and it's why the integration is going to be very easy as we are on the same wavelength. We've obtained new contracts with a very significant contract obtained from Hudong-Zhonghua for 24 energy carriers with our slushing system developed for mitigating the slushing risk and optimizing cargo operations.
Now, I hand the mic to Thierry Hochoa, the Group CFO, who is going to present to you the consolidated revenues.
Thank you, Philippe. Good morning, everyone. Now, regarding our revenues for the first nine months of 2025. Revenues at EUR 600 million are up +29%. A strong increase compared to EUR 465 million for the first nine months of 2024. Two main drivers to explain our revenue performance. The first driver is revenue from new builds, standing at EUR 558 million, was up +30%, benefiting from a higher number of LNG and heating carriers under construction. The second driver is linked to the digital activities at EUR 20 million, was up +83%, and including EUR 6.5 million of revenues of Danelec, our recent acquisition. Excluding Danelec, the digital revenue growth was +24% compared to last year.
One comment on revenues from LNG as fuel: they are down by 32% at EUR 16 million and mainly explained by the strong competition. Regarding electrolyzers activities, revenue are down and stand at EUR 3.7 million for the first nine months of 2025 compared to EUR 6.6 million for the first nine months of 2024. This evolution is mainly due to the absence of contracts in 2024 and the continuation of transition and repositioning of Elogen. Finally, revenues from services slightly decreased by 3% at EUR 18 million due to a lower level of pre-engineering studies, which are non-recurring by nature but offset by robust certification activities. All in all, the activity of the first nine months of 2025 remains very solid. I'm now back to Philippe for the outlook.
Yes, thank you, Thierry. On the back of a very strong core business performance and the integration of Danelec over a five-month period, we are upgrading our outlook, assuming no significant delays in ship construction schedules. For revenues, instead of a range between EUR 750 million and EUR 800 million, we have now an estimated range of EUR 790 million-EUR 820 million. For EBITDA, instead of a range between EUR 490 million and EUR 540 million, we have a range now between EUR 530 million-EUR 550 million. Our payout ratio will be at least 80% of our consolidated net income. Now we are going to answer your questions. Please.
Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Richard Dawson of Berenberg. Please go ahead.
Hi, good morning, and thank you for taking my questions. First one is just on the order outlook for new LNG carrier orders, because clearly very supportive trends with new LNG capacity being sanctioned this year, but we're still seeing a bit of hesitation from shipowners really to place those orders for shipyards. Just through your conversations with your customers, when do you expect an acceleration to start to come for those LNG carrier orders? Maybe second question is just on shipyard capacity across Korea and China. Has this slowdown in LNG carrier orders this year put some of that planned expansion on hold? Where are we sort of in total slots for this year? Thank you.
Okay. Thank you all very much for this question. I do agree with you about these hesitations. It's a perfect word for characterizing the current situation. In fact, the owners are weighing whether they should take the decision now. They are very much perplexed due to the instability in regulations. We had taxes on Chinese-built ships in the U.S. We do not have them anymore. We have taxes in China on American ships. They would like a more stable environment before taking decisions. Energy carriers are the most expensive commercial ships, and that's important investment decisions. They are weighing the risks before taking these decisions. I can say that we have a lot of discussions with shipowners. They would like to move. They would like to know whether they can go to China. They would like to know what kind of competition they can benefit from between China and Korea.
Those are considerations that for the time being they are weighing. When is it going to change? I think we may have orders in the last two months of this year. I think that year 2026 will be significant in terms of ordering. It goes back to the second part of your question about slots. I do not think that there are many slots still available for building ships in shipyards for delivery in 2028. Then it is in 2029. I am feeling that these slots are fairly far away for the needs that owners have. There is going to be a kind of acceleration in the market. Your last question is the shipyard capacity. The current flow of orders is not reducing the capacity of the yards as they are building. The capacity out there, as these capacities are very active.
It is important for the shipyards to maintain these capacities. That is why we can see some pricing, some prices which are more aggressive than what they used to be. I think it is a factor which is going to help the acceleration in the order flow I was speaking about.
That's clear. Thank you very much.
The next question is from Jean-Luc Romain of CIC Market Solutions. Please go ahead.
Good morning. I have two questions, please. The first is about LNG as a fuel orders. We have seen several shipowners like CMA CGM and I think Evergreen in Taiwan ordering new fuel vessels recently in Korea and China, not sure. Should this translate into orders for you is your first question? Second question is, as we are seeing a slowdown in orders this year in new LNG carriers, should we expect a slowdown or stabilization of your new build sales in the next couple of years, or should we expect those to decline a little? I'm speaking about the new build sales.
For LNG as a fuel, when we have not announced a contract, I cannot comment on the fact that the contract is going to be for us. It's a market where we have a market share, where we are trying to enlarge our market share, and where we are going to, where we are improving our offering, our solutions in order to do so. It's a market with high competition where we are fighting hard. On the slowdown of orders and the consequences it means for the years to come, I would say that we are giving you figures about our revenues for the next coming years, and I send you to your computations, to your work, for assuming what the turnover is going to be, what the results are going to be for the next years. I cannot further help you.
We are giving you all the information about that. What I can say is that we may, we are not seeing any kind of cancellations in our order book, nor do we see particularly delays in delivery.
Thank you very much.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Henri Patricot of UBS. Please go ahead.
Yes, good morning, everyone. Thank you for the update. Two questions from my side, please. The first one on the market. I was wondering if you can comment on what you see as the potential impact of the delay to the IMO net zero framework, both for the core business in maybe driving a slower replacement of the fleet, and secondly, in terms of the speed of adoption for LNG as fuel. Secondly, on deliveries for this year, I believe you targeted something close to 100 deliveries in the core business. Is that still the case? It implies quite an uptick in the fourth quarter. Thank you.
On the market for IMO, I think I hinted that in our last communication at the end of July for the first six months of the year. I was feeling that it was going too far too quickly. This delay in the implementation of this regulation is not going to change the fundamental trend of the market for shipping, which is that shipping is switching to LNG. LNG is reducing the CO2 emissions, and LNG is cheaper than other fuels. So cleaner and cheaper. It is two significant improvements. In spite of the delay of the IMO regulation implementation, this evolution will continue. It is not going to cause a kind of slowdown.
While in the LNG carrier decisions, as that is very much driven by the need for ships for new plants and also for replacement markets, there is clearly a need for replacing old ships, which are generating twice more CO2 than modern ships. There are large parts of the world, to begin with Europe, which are taxing CO2 emissions, heavily taxing CO2 emissions. All these points are in place and are positive for LNG at large and positive for LNG as a fuel. On your second question, we expect to have still a strong activity in 2025. Compared to 2024, we had 66 orders. Up to now, we had in 2025, 58 orders. We are going to have still a significant 28—sorry, 58 deliveries. Of course, we are going to have still at the end, in the fourth quarter of this year, a very significant number of deliveries.
Thank you.
The next question is from Jamie Franklin of Jefferies. Please go ahead.
Hi there. Thank you for taking my questions. Firstly, just on LNG carriers, at the 1Q 2025 update, you spoke to around 40-65 vessels still required for projects under construction. I just wanted to get a sense of how many of the orders that you've received in the last six months are for those under construction projects, and how many are for the newly FID projects this year, please. Second question, just on Danelec. The integration seems to be going well. Are you still actively pursuing new M&A opportunities now, or are you waiting for the integration of Danelec to complete? If you are considering new opportunities, could we assume similar size to Danelec? Thank you.
Okay. On LNG carriers. I've not noticed when we said 40-65. It is a time ago, but definitely the orders we received this year are for existing projects and are decreasing this number for projects decided before year 2025. We have not received orders for the 84 million tons per annum decided in 2025. These are for deliveries in 2029, 2030, and 2031. It is these long-term perspectives which are going to be supported by these investment decisions. Still, we consider that there are ships which are needed for the projects decided before 2025. On M&A and Danelec, yes, I confirm that the integration with Danelec is going well.
The priority for the time being is to continue very well this integration. It is the best guarantee that we are going to be able to obtain the synergies that we were talking about and also that we are going to be able to benefit from the growth of the sectors where we are operating. We are looking at M&A possibilities, of course. Meanwhile, we are not becoming blind to what we could find on the market. I will say that for the time being, there are no opportunities which are making sense. It is not because there is nothing that we are not looking at that, and it is not because we have a priority succeeding the integration that we are not looking at what could make sense, which is our priority number one. Next question.
The next question is from Kevin Roger of Kepler Cheuvreux. Please go ahead.
Yes, good morning. Sorry for that one, but it's a kind of follow-up because you used to give us the net numbers in terms of how many vessels you were seeing for the project that were sanctioned or under construction. Just if you can follow up as a kind of magnitude, the 84 million tons of project that have been sanctioned year to date in 2025, how many vessels do you consider are needed to transport this LNG worldwide? Just a kind of magnitude with the data that you were provided before. The second one. On Elogen, it seems that the restructuring is almost completed. H1, you booked quite a large provision, almost EUR 50 million. Any sense on if you're going to use all those provisions or if a bit more is needed?
Just a comment maybe on this provision and where you think you're going to end with the restructuring. Thanks.
Okay. On the number of ships, what we can say on the 84 million tons per annum is that 17 are not from Gulf of Mexico or Gulf of America, so to speak, to the rest of the world, where you have a very important shipping intensity, and in particular, as the Panama Canal is quite congested, and where the shipping intensity is something like 2.3. In fact, I consider 67 million tons are from Gulf of Mexico to the rest of the world, and the shipping intensity can be 2.3 or, let's say, two ships per million ton, to be cautious. For the rest, the 17 million ton, you are on Mozambique to the rest of the world, and the shipping intensity is probably 0.9 or one ship per million ton. Altogether, it is a very large number of ships.
Let's say, without being too specific, far more than 100 ships to be ordered and probably something close or close to around 150 ships ordered. As far as Elogen is concerned, I'm going to hand the mic to Thierry.
Yes, thank you, Philippe. Yes, you're right that you mentioned that we booked at the end of H1 2025, EUR 40 million of cost to restructure this affiliate. You have all the costs here. We do not expect additional costs because in this cost, I remind you, we have the final height of the Vendom Giga Factory and the write-off of this asset. You have as well provision for the workforce reduction plan. We do not expect additional costs at the end of this year for Elogen.
Okay. Thanks. Have a good day. Thanks.
The next question is from Jean-François Granjon of ODDO BHF. Please go ahead.
Yes, good morning. Two questions from my side. The first one, could you comment on the LNG as a fuel? You mentioned some more or intensity competition. Could you give us more about that? What do you expect for you in terms of growth and trend for the development of this business? Do you expect some more delay or more time due to the more competition you mentioned? The second question concerns Danelec. You also mentioned some cross-selling and synergy activity that EUR 25 million-EUR 30 million. In which time do you expect that? Could you explain to us more how you expect to reach such level of synergy or new synergy in the coming years? Thank you.
Okay, thank you. On energy as a fuel, we have competition from different containment technologies which are called Type B or Type C, and which are using a thick plate of stainless steel, which has to be welded. In terms of operation, it's something which is a bit complicated, but this technology has the merit to be very easy to install inside the ship. It can be lifted and posed inside the ship, which is very much liked by shipyards whenever they are quite busy. We need an installation in the ship which is taking time and workmanship, even though materials are far less expensive. We are existing in this market, and it's a fast-growing market. We are keeping on improving our solutions to better exist in this market, and you're going to see how we progress in this market in the years to come.
As far as Danelec is concerned, we are planning synergies between EUR 25 million-EUR 30 million by 2030, and it's mainly obtained through cross-selling between the various activities or the various parts of Danelec. We had VPS, we had Essence Maroca, we have Danelec, and these three companies have different portfolios of customers where we are going to try to sell the solutions of the others. That basically were the synergies that we are going to try to obtain.
Okay, thank you.
Mr. Berterottière, this was the last question over the phone.
Okay, thank you. We do have one question coming from online from Jean-Philippe Desmartins at Edmond Dorothier Asset Management. Succession planning of the CEO position at GTT. Do you have an update to give?
The special committee of the board of directors is working on that. Proper information will be given in due time. If there is no other question, I would like to thank you for having attended this conference, and I hope to see you soon. Thank you very much.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.