Welcome, and thank you for joining the GTT Q3 2023 Activity Update Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. 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, CEO. Please go ahead, sir.
Thank you very much. Well, good morning, everybody. Thank you very much for being with us today. I have the pleasure to present to you our activity for the first nine months of 2023. So first of all, key figures. In for the core business, we've obtained this year 53 orders, 10 additional ones in the Q3. LNG as a fuel, we obtained 15 new orders, mainly only in the Q3. Our revenues on these first six months are amounting to EUR 200 million, which represents an increase of 35% compared to last year.
On Q3, our revenues have amounted to EUR 122 million, which represents an increase of 57% compared to Q3 of 2022. Well, some other important factor, we can say that the turnover of Hyosung, for example, still small, but has increased by 124% compared to the turnover of last year, which is marking a clear acceleration of our activity in that field. Well, as a result of all that, and as a result of an enhanced visibility for the year end, the ranges for 2023 consolidated revenue and EBITDA are narrowed to the upper half of the guidance we gave in July.
So let's look at our order book now. We have 287 LNG Carriers, the same number as the one we had in July. And altogether, the four large structures, it represents 202 contracts, so 202 units, so more than more than 200 and the largest figure we ever had. On LNG as a fuel, we have 84 tanks to build, and there as well, it's the largest figure we ever had. All that is fueled by some factors of the energy carrier demand. The increase of the energy demand as there is a coal- to- gas switch in order to replace coal by a far less polluting source of energy.
Also the fact that gas is quite, it's fitting quite well with renewables. When, as renewables are intermittent, you may rely on gas for ensuring the provision of electricity to our customers. There is also a pipe- to- LNG switch. LNG is far more flexible, and there is a security of supply coming from relying from ships rather than pipes. It allows suppliers and customers not to be prisoners of the other. We can see that also there is a strong demand for LNG Carriers as such as a result of longer routes, for example, from U.S. to Asia, but also from U.S. to Asia, not going through the Panama Canal, which is very congested, and also ships having to take a longer route.
We can see also a strong replacement market with a switch from old to new vessels. So on this page, we can see that there are numerous U.S. projects which have been decided. We can see the decided projects or the sanctioned projects, those for which major investment decisions have been already put in place. So we arrive to a figure of 56 million tonnes per annum, which renders, as of today's date, 2023 as one of the most important years in terms of decisions or sanctions taken on projects. So if we look at the requirements for under construction plants, we can see that there are still numerous LNG carriers to be ordered.
According to our analysis, market is still requiring at least 85 LNG carriers for contracted supply of LNG liquefaction plant under construction. So between 85 and 115 orders. So it's something which is very significant. Three drivers accelerate the replacement of the existing fleet. The aging, the age of the fleet, we can see on the graph on the left-hand part of the slide, that many ships have been built in the past century, on the early years of the century. And some of them need to be replaced, basically, because their population, as we can see on the second chart, is generating a lot of CO2, and is more and more threatened by regulations.
And also because they have a very high boil-off, and switching to a new technology allow to reduce consumption, allow to be in accordance with regulations, and allow to save energy cargo for being sold, as it is quite valuable commodity. So LNG as a fuel, we see that in the Q3 of this year, there were significant orders passed, and we still believe that it's the only solution already available to reduce emission. It's existing, it's available in large quantity. It's working well, it's proven. And we keep on working on that sector, believing that it's the solution for significantly reducing the emissions from the shipping industry.
We can see that there is a more favorable momentum, and that it's also showed by the conviction that the prices are going to remain very attractive. Some Chinese shipper, for the very first time, have chosen LNG as a fuel for fueling its container ships. We obtained some authorizations in principle and a joint development program for adapting LNG tank solutions to mainly tankers. And we did that with the American Classification Society and with DHT with a well-known shipper. On our digital solutions, we obtained in the Q3 very significant commercial successes.
Smart shipping, we obtained a contract with GasLog, which is going to equip 35 of its LNG carriers with our smart shipping solution, mainly aiming at managing the boilers and providing also several other applications. On weather routing, we obtained a contract for the entire fleet of clean products tankers and liners. So there we can see the size its entire fleets which are switching to Ascenz Marorka for adapting the solutions we developed over the past year. On fleet performance, we obtained a contract from CMA CGM for equipping 49 LNG-powered container ships. So there is clearly an acceleration in the adoption of our solution.
On Elogen, we obtained in the Q3 two contracts in Korea for electrolyzers for 2.5-megawatt PEM electrolyzers. So that is confirming the fact that we... Elogen is considered as a large electrolyzer provider by more and more buyers, and that also is very encouraging. And we invested in a company, bound4blue, a company which is building wind sails, very innovative wind sails. And we, they are very, very excited by the perspective of this business, which is very much in line with our strategy, developing technology for a sustainable world. There, I will pass on the floor or the mic to Thierry, the Group CFO, who is with us.
Thank you. Thank you, Philippe. Good morning, everybody. Now, I suggest you look at the Q3 performance in terms of revenue. The revenue for the Q3 amounted to EUR 122 million, and we present for the first nine months of 2023 a cumulative revenue of EUR 300 million. As you can see, this means a strong increase of +35% compared to the same period last year, mainly driven by new builds, +36% at EUR 273 million, due to the increase in the number of energy carriers under construction. Driven by Elogen as well, we more than double our revenue compared to last year at EUR 6.7 million.
This reflects the execution of the orders that were booked in 2021 and in 2022, and is in line with our anticipation, sorry. Regarding services overall, we also recorded an increase in the revenue of around 11% compared to last year, with many new contracts signed as mentioned by Philippe earlier. I remind you, there are two types of services. The first one is assistance services to vessels in operations with a very distinctive and high add value activity provided by GTT teams. And the second one is digital solutions, fast-growing and competitive market. In summary, very solid revenue in the Q3 and over the first nine months of 2023. Philippe?
So, our guidance for revenue, we expect to consolidate the revenue in a range of EUR 385 million-EUR 430 million. For EBITDA, we expect an EBITDA for the year 2023, between EUR 190 million and EUR 235 million. For dividend, we expect to have a payout ratio of at least 80% of our consolidated net income. Taking into account the absence of significant delays in ship construction schedules during the first nine months of 2023, we are now targeting the upper half of the outlook range in terms of both revenues and EBITDA. So now, Thierry and I are going to be very pleased to answer your questions.
This is the Chorus Call 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 Jean-Luc Romain of CIC Market Solutions. Please go ahead.
Good morning, and congratulations on upgrading your guidance. My questions are about the orders. We have seen Qatargas sanctioning, like, I think 17 orders for Hyundai Heavy Industries. Are those contracts to be announced as one deal by Hyundai, or are these redistributed to diverse shipowners? That's the first question. The second question relates to services and to your contract you announced yesterday night. Does this kind of contract put you in a position to kind of influence or have an impact for the shipowner to go from classic propulsion to maybe LNG propulsion, as GSL, if I'm correct, doesn't have any LNG-powered vessels?
Okay. Well, on Hyundai, well, on the announcement that we could read on the press, it concerns Hyundai. And we probably would suggest that it's better to refer to Hyundai on their intention, whether they should, what they would like to do with that. But as far as we are concerned, we cannot comment on news which for the time being is concerning only Elogen. On the contract for digital activity, we develop our digital activities as something which is split from our energy activities. Of course, we do that with the same DNA as the one for GTT.
It's a quest for excellence, a look for high technology, and but we develop these solutions for themselves. It's a competitive landscape, and we are not trying to pollute this marketing with the marketing in favor of energy. Except that we want to give the impression that technology is very important. The service to customers is also very important. Another question?
The next question is from Richard Dawson of Berenberg. Please go ahead.
Hi, good morning. Thank you for taking my questions. The first one's on the more stringent environmental regulations. Just given that a number of these regulations are starting to come into force now, and particularly with a number of them on the horizon, when do you think we'll start to see LNG Carrier orders for that replacement cycle? When will that replacement cycle really start to kick off? And then secondly, on LNG as a fuel, so good to see some orders coming through this quarter. Do you think what's the momentum like going into Q4 and into 2024? Is a lot of this being driven by just lower LNG spot prices, so customers are making the decision to order new vessels?
Or is it sort of changing demand for customers, that they're starting to see LNG as sort of the only viable solution? I, I know it's something you've touched on a lot, but, but we still continue to see some methanol orders. So just wanted to get your thoughts on that, would be great. Thank you.
Well, on the, on, your first question about the more stringent regulations and the replacement cycle, I would say that you have replacement orders when you don't have orders for new build, so for new facilities. So, for the time being, you have a lot of orders for new facilities, so you don't have a lot of space available slots for replacement market. The number of slots are increasing and yeah, are keeping on looking at how they could increase this number of slots. But still, with all the orders to set aside, all the ships to build for the new projects, there is not a lot of space for replacement.
So it could come when the market is a bit cooler than what it is now. A bit less active than what it is now. On LFS, yes, we do think that LNG is a great solution because it allows to very significantly reduce the emissions. It's ready for the future. It means once you have Bio- LNG or e-LNG, you can drop in the fuels into the membrane tanks without any modifications. And it's available. LNG is available. Bunkering ships for LNG are existing. So if you want to reduce sharply your emissions, you better choose LNG proven, existing, available, affordable.
That's very helpful.
Thank you. Sorry, could I just have a follow-up just on that, that first point about the shipyard capacity? Just, just any color on how that, that is progressing? Are we starting to see more slots actually being coming through now, or is it more sort of a couple of years' time? Thank you.
They are working on adding some slots now. It's not sure they are going to find a solution because it's not only a slot in their order book that they have to free up, but it's also a supply chain which can provide the required equipment for building an LNG carrier. And the supply chain capacity has been a bit stretched with the very strong demand we are experiencing for a couple of years. So, there are also these issues to be sorted out, and all that is not obvious.
That's great. Thank you very much.
As a reminder-
Next question, please.
As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Daniel Thompson of BNP. Please go ahead.
Hi, good morning. Just two questions on Elogen, please. So firstly, look, we've seen order intake, backlog increasing, in, in the division, and we've now seen quite a marked increase in, in revenues in the Q3 in Elogen. So I was wondering, what is your expectation on the level of absolute losses, which we should expect, as revenues ramp up towards, you know, towards 2025? Should we still be... Are your margins expected to stay the same, or should we, you know, should we be looking at the absolute level of losses, that we had in 2022, or sort of EUR 15 million, or, or as revenues scale up, are we expecting a sort of widening of those losses in the absolute sense?
And then secondly, I was wondering if you could communicate on your longer-term margin ambitions that you think could be achievable in the electrolyzer business, let's say, 2030 and beyond. What sort of margin level you think you could achieve there? Thank you.
Okay. So on the absolute losses for the year or for 2024 or 2025, we have not guided on these elements. We've given you a figure for the negative EBITDA we made in the first six months of this year. It's, in a certain way, it guided you on the fact that the losses we are making are under control, are contained, and we are not fighting for significant market share. We are fighting for significant orders.
Orders which are meaningful, which are saying that Elogen is on its way to obtain very significant contracts with well-known names for larger electrolyzers, and that is appreciated and that is appreciated by large customers. So that's the strategy we've announced some years ago. We are sticking to that, and I think the more we think about it, the more we think that it's a well-thought strategy. We, as far as balanced activity are concerned, we said that in the second part of the decade, we should arrive to a positive EBITDA. And up to now, we did not guide on what will be the level of margin by 2030.
It's still a new market, and things may change significantly up to that time. So we are still cautious people even though we think that we are on the right track.
Okay, thank you. The final question is from Renaud Saleur of Anaconda Invest. Please go ahead.
Good morning. I've got two small questions, please. Can you update us on the situation in Korea on the lawsuit and the different appeals? And secondly, we see developing and shipping dual fuels or new fuels like ammonia, eventually, hydrogen. You've made a couple of announcements about membranes for these markets. Can you tell us what you expect, what's the potential size of this market, and if and when it becomes a contributor to sales?
Okay. Well, on Korea KFTC, we've exhausted all the possible recourse. And at the beginning of this year, we obtained a negative decision from the Korean Supreme Court, which said that the case is very obvious and they don't, they are not going to lose their time in examining the case. But the case is obvious, but in the exact other direction. So if a shipyard would like to split the existing contract it has with us, it can request that from GTT, and instead of having one contract, then we should be obliged to accommodate two contracts.
One dealing with the access to our technology, our patents, and the other one dealing with the engineering we are providing with our technology, and where they could select what they would like to us. The fact of the matter is that this decision has been rendered in March, and we are at the end of October, and no current shipyards have requested to split the contract into 2. So, we are in this situation, and let's see what are going to be the future developments. On your second question, dealing with the fuels, low carbon fuels, the fuel of the future.
Well, ammonia is a strong request from shipowners because ammonia basically will not generate CO2 in its condition, so could be compliant with the most stringent regulations. Still, ammonia is a very toxic fuel, and if you don't have regulations on CO2 for this fuel, you are going to have to comply with very strict safety rules. And all that is not yet in place. It's a very complicated problem. For example, when you burn ammonia, you're generating a gas which is 200 times more powerful in terms of gashouse effect than CO2. So how do you avoid this gas? That yet is not clear. Still, we are looking at all these difficulties.
We know all these difficulties. It does not prevent us from having a technology which is for energy, but which is ammonia compatible. So we are ready for the future. The more we work on these various fuels, the more we are convinced that the right solution for the time being, and for at least a decade, is LNG. It's available, it's cleaner, it's affordable, you have bunkering ships existing, you have a tank technology existing, thanks to us. So, we believe that energy- as- a- fuel is going to be considered very seriously in the next years.
There is a follow-up question from Daniel Thompson of BNP. Please go ahead.
Hi, thank you. Just one more from me, please. As I'm sure you're aware, there was an article in the newspaper around the French oil services company last week, relating to a project in Russia. Just in light of that, I wondered if you could sort of remind us of your activities on the vessels going to Russia. I think there were six vessels under construction in Korea, which were still due to be delivered at some stage. So I wonder if you could just sort of confirm you know, the situation regarding any sanctions and your compliance with those sanctions in respect of your activities in Russia. Thanks.
So, we comply with the sanctions. We've always complied with the sanctions. And at the beginning of this year, we announced that all our contracts were suspended or terminated as a result of these sanctions. We are just continuing some activity on two ships built in Russia, on the first and second ship built in Russia, in order to ensure a safe construction for these two ships. So it was limited, a very limited engineering activity. All the rest were suspended. For ships built in Korea, our contract is not with Russia, it's with a Korean party, and so it's not subject to sanctions. There are no European sanctions preventing us from honoring, fulfilling a contract with a Korean party.
So there may be decisions from Korea, but that is another story. It's generally, in fact, these ships may be operated by international owners, so the implementation of these sanctions may be difficult. So that is the situation for the time being. We've been very clear on the fact that we were suspending or terminating our contracts with the Russian counterparts. And we were fulfilling, we are complying with the sanctions. And when there is no sanction, we cannot stop, we cannot stop to the fulfillment of the contract.
Okay. That's clear. Thank you.
Mister, there is one, follow-up question, sorry, from Renaud Saleur of Anaconda Invest. Please go ahead.
Yes, thank you. It's about electrolyzers. Today, about 80% of the electrolyzer markets in China, and there are powerful Chinese manufacturers, which so far didn't export anything to the rest of the world. When we see what happened to solar panels, is there a risk that, three or four years down the road, the electrolyzer market is completely dominated by China, and therefore, you, you, I mean, any companies like ITM, yourself, and Yale would, would not have any market share at all?
Well, I could say that GTT is a counter example of how a European company can resist to international competition. But, as far as comparison between solar panels and electrolyzers are concerned, I would say that policymakers have drawn lessons from the painful experience on solar panels. And they've made sure that there is an ecosystem of companies existing in Europe for being a potential competition to existing solutions. The second point is that electrolyzers in China are alkaline electrolyzers, and we selected PEM electrolyzers because they are fitting very well with intermittent renewable energy. Can...
They can be started easily, they can be stopped easily, while alkaline electrolyzers are taking a lot of time to do so. And the third point is that, electrolyzer, PEM electrolyzers, the technology, we, we have, are more efficient than alkaline electrolyzers. And for producing green, hydrogen, the, efficiency of the electrolyzer is key. It means that you are using less electricity, something expensive, as we know, in order to produce, hydrogen. And, we consider that it's going to be a key factor in the selection of the technology. All that, all these considerations, we had them in mind a long time ago when, we discovered, the, the sector. That's why we, we had in mind of, acquiring, a PEM, technology, company.
And since I would say that we are even more confident on this choice, and it's why... Well, obviously, nobody can be complacent about Chinese competition, but we think that we are in a different line, in a different corridor, with PEM technology. And from the successes we have, from the recognition we have from some customers, we have the feeling that we are still in the right line.
Thank you.
Mr. Berterottiere , there are no more questions registered at this time. Back to you for any closing remarks you may have.
Well, I would like to thank you very much for your attendance this morning, very early morning. I'm personally in Korea, so I thank you for having accommodated this early call for an update on our activity at the end of October. Thank you. Bye-bye.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.