Call of Havila Kystruten AS. Following the publication of the Q2 financial figures of 2025, we are delighted to welcome the CEO, Bent Martini, and the CFO, Aleksander Røynesdal, who will speak in a moment and guide us through the presentation and the results. After the presentation, we will move on to a Q&A session in which you will be allowed to ask your questions via our audio line or the chat box. We are looking forward to the results. Having said this, Bent, please, the stage is yours.
Thank you very much, [Ingmar]. Welcome to this second quarter presentation from Havila Kystruten . We are quite delighted to show you that we are continuing the positive development into the second quarter and have very positive kind of views also in the forward months to come. Next, please, [Ingmar]. Just some pictures here to show that we have been quite successful in presenting this company and the product to the market, achieving recognitions throughout the world. Our customers are extremely satisfied, and that is, of course, something we are very proud of. Next, please. We will take a general update from the company, and then Aleksander will go more in detail on the financial highlights. Next, please. For the newcomers in this session, we are sailing on the historical route between Bergen and Kirkenes.
We have a concession with the Norwegian Ministry of Transport and Communications operating four out of 11 vessels on this route. We have been operating now for the second year of digital operations, and we are now also waiting for the government to come out with the next tender for the concession for 2030 to 2040. That is quite something we are looking forward to see, and we are very focused on continuing the positive development on this route. Next, please. For the second quarter, we had 100% operational uptime, a very positive uptime throughout the year, and the vessels are technical-wise very fit for these operations. The organization has kind of grown into operating the modern fleet, the crew on board, and the support organization ashore. We are very happy that we are able to deliver 100% operational uptime. Next, please. Some business highlights.
We have been able to grow the revenues 22% year on year, driven by a 20% increase in average cabin revenues and also an increase in occupancy for the second quarter compared to last year. We are growing the EBITDA, the margins, day by day, month by month, and have a very positive development into the second quarter. As you might know, the third quarter is the best quarter in this operation. We are continuing developing the product on onboard sales, activities, etc., and working with optimizing the products, creating more margins. It is stable now, and we are putting more effort into more activities, growing the day-by-day onboard sales. Also, on the cost side, we are quite stable. The cost is more varying with the occupancy, and the cost of goods are kind of the majority cost. LNG is stable.
We are focusing on reducing energy and have been very successful in the second quarter reducing energy, also delivering a 38% reduction in CO2 compared to the 2017 kind of figures, which is the requirement from the Norwegian government is to reduce 25%, and we are exceeding that a lot. That is our focus to really be good in reducing energy and, of course, reducing emissions to air. Also, in continuing the focus on reducing food waste, second quarter, 57 grams per guest, which is extremely good. Our customers are extremely positive and satisfied with the product, and we are in average for the four vessels exceeding 70% on the NPS, Net Promoter Score, and that is extremely good in this segment. Next, please. Also, continuing the focus on selling through our own channels.
I think we have now really found the balance between operators and agents and selling through our own web page, direct sales, reducing our cost of commissions, creating the margins ourselves. That is, of course, something we will continue focusing on. We have implemented now the new CRM system, which is helping us to giving a much better support in the sales process towards the customers. That is something that is day by day improving also the sales. The summer campaigns, which have been launched, where we introduced short voyages, have been a great success in Q2 and also now in Q3. Giving the customers much more flexibility, also attracting kind of a much broader audience, our customers into this segment. Next, please. On the booking side, the DACH, the German market, Austria and Switzerland is a very strong market for us.
We do see that we are attracting and growing in the U.S. market and Australia, New Zealand. We also grow now in the Asian market and having a very, very positive development. When you look at the segments or the different customers that we are focusing on attracting, it's a more younger audience. We have been able to reduce the average kind of age of travelers with the activities we are presenting and also the focus on sustainable operations are attracting maybe different customers than in ordinary in this route if you look at over time. The balance is now very good for us, and the mix of channels of sales is very good. Next, please. 90% of the targeted sales have been sold already. We are having occupancy now in an average of 67% for the year. Very strong third quarter, and we are focusing on the fourth quarter.
We have had a high focus on balancing the northbound and the southbound voyage. Last year, it was a 10% unbalance, and this year, it's a balance which enables us to create much more revenues from each guest, each traveler. The majority of our bookings now are FIT, free independent travelers, which normally contribute with higher margins. Of course, also the risk of cancellations in the group reservations that normally are in this segment. Having FIT bookings, then you reduce those risks. We have also changed kind of the contracts with the agents and tour operators. Now the kind of all the bookings for the year are fixed. There are no risks for cancellation throughout this year. The year is looking quite optimistic for the year and results. Next, please. Aleksander, then?
Thank you, Bent. Now, next slide. Okay, a couple of words on the operational performance. What you can see is the seasonality in our earnings and our EBITDA generation. We are now going into high season. Second quarter is usually our second best quarter in kind of a cyclical perspective. We grew by more than 22% on the operational revenues. The contractual revenues are somewhat lower, and kind of that's based on indexation of the contract, which is based on, you know, the set of cost components. The rise in Q1 2025 is related to an accounting effect from an auction year that we have. Just to explain that difference in Q4 2024 and to now Q2 2025. The rise in margin is driven by price growth, but also by occupancy growth. The second quarter was more than 5 percentage points better than the same period last year.
Total EBITDA for the quarter ended at NOK 79 million, and we have an EBITDA margin of 19%, which is also better than what we had in the second quarter last year. Next slide, please. On the key performance indicators, what you can see on the occupancy throughout the different quarters, 74% up from 69% same period last year. Cabin factor is trending, of course. You know, it's ticking up quarter by quarter, which is very positive. It means that we have more passengers aboard the ship, and we can sell onboard products, excursions, other products, etc., to all of these guests that are traveling with us. The rise in the cabin factor is a positive for the, especially for the onboard sales. Average cabin revenue has grown rapidly from kind of a low base.
We have touched upon kind of the background for that increase earlier in the earlier early schools. I think that the company started off with a low pricing to fill the ships. Combined with a lot of cancellations, that was where we kind of offered our clients to travel at a later point at the same price. That price effect has kind of leveled off during the year. If you look at the price increase in Q1, we have close to 40% price increase. In the second quarter, it's leveling off a little bit with 20% increase in the ACR. We still see that for the year, we are kind of in that range of 20%+ ACR growth compared to last year. That's kind of driving the increase in margins.
On the operating or the onboard sales per passenger night, in Q2, we still haven't seen the full effect for the initiatives that we have implemented this year. It's taken somewhat more time to implement these initiatives. We are seeing now that for the later summer season, onboard sales are picking up per guest. That's a positive sign. I think one of the key focus areas for the company throughout the third and fourth quarter and into 2026 is to drive that product development onboard and increase onboard sales. Next slide, please. A couple of words on the cost. Costs have stabilized. We had kind of the same cost in Q2 2025 compared to Q1 2025 at a much higher occupancy. That's positive. If you look at the composition of the cost, crew, which is variable with occupancy, is a large cost.
Then LNG and the OpEx for the vessel and the hotel is one of the second and third biggest cost elements. Next slide, please. Looking at each cost category, on the left-hand side, you have the most variable cost components, which is the cost of goods sold, directly related to how many passengers we have on board and how much they are spending when they are on board. Payroll crew is also, I mean, we have a minimum manning that we have to adhere to, but the crewing is also related to the occupancy of the ship. I think it's quite good that we have been able to manage the crew cost compared to the increases we saw last year. I think we've had a lot of training of personnel, which have been leveling off somewhat. OpEx vessel is more stable. It's more related to ongoing operation of the ship.
We have a large component in the OpEx vessel, which is related to our powered by the hour agreement with Kongsberg. Port cost is a large component of the OpEx, and that kind of follows cost inflation. For the LNG, the LNG cost is directly linked to the LNG market price. As we announced in August, we renegotiated the LNG purchase contract in August, where we kind of opened up for the ability to acquire one-third of the volume through a second supplier in Denmark. Based on the pricing formula and the forward pricing that is present, we see that this would lead to a 10% savings on the LNG on an annual basis. We expect that to take effect from the fourth quarter this year.
Admin payroll is also a more fixed cost related to cost inflation, but there are some swings from time to time, especially Q4 last year, where we had extra initiatives on the marketing side. On the right-hand side, you can see the kind of breakdown and chart occupancy compared to cost. We are kind of following the line. Q2 2025 was on the line, and it kind of shows the sensitivity on occupancy and operating cost. Next slide, please. On the outlook, we maintain a target EBITDA of NOK 400 million in 2025. We have a large focus on margin improvement for the year. I mean, that's been the main target to improve our margins. We have an occupancy target of 75%. We still have some volume to sell to reach that target. You don't show the occupancy for the year, which is at 67%.
What we see is that the kind of behavior of our customers is changing a bit, especially with the increased offering of shorter voyages. We see that customers book their trips closer to the partner than before. We're still optimistic on getting there on the occupancy for the year. ACR is still maintaining that + 20% increase in ACR, which means that the overall margin will also improve substantially from last year. 2026, still, you know, focus on improving that margin. What we see on the bookings that we have for next year is that we are more than 10% above the same time last year on the average cabin revenue. We are within that 10%- 15% range in pricing. We are working on the occupancy and on the marketing campaigns for next year to reach a higher occupancy than this year.
We have kind of an increased focus on developing additional revenue streams. What we see is that we kind of started to try a little, learn a lot on the additional revenue streams. We have started bundling trips where we offer a flight and a stay combined with the voyage. We see that this was implemented at first last year. What we see now is that the interest for this is taking off. It is really a focus area for 2026 just to build on that packaging. I think that with those initiatives and with that price increase, we are looking for plus NOK 600 million on the EBITDA next year. We will, in the subsequent years, get into that range of NOK 600 million-NOK 800 million in EBITDA. We see that the pricing is a lot higher on the shorter voyages.
Compared to a half trip compared to a round trip, guests pay more per cabin per night, and they spend more while they are on board. We believe in that strategy. It is just taking a little bit more time than just filling the ships with round trips. Next slide. A couple of words on the financing side and the refinancing process. We signed an amendment agreement with the existing lender for our secured bond in July. What we did was extend maturity by six months. Maturity is now in January 2027. We aligned the covenants of the agreement with our operational ramp-up phase, providing headroom in the covenants to our projections. We reduced the interest rate for the first five months, where there is a step up at the end of the year.
To achieve that, we settled the co-premium, the co-protection on the loan, which means that the new principal amount is NOK 326 million. This will be booked in the third quarter financials. We see this as a step in the refinancing process. This is the first step. The next step is to find more firm footing. We have engaged Arctic Securities to drive that process. We are working on a number of alternatives on the financing side. Next slide, please. We get a lot of questions on the book equity and the negative results. What we see is that our book equity is impacted by currency. In the second quarter, we had NOK 150 million negative results from changes in the euro-NOK exchange rate and some unrealized losses. What we see, a large part of the negative equity is related to currency.
If you look at the value-adjusted balance sheet, where you have debt in euro and you take the ships in euro at the quoted brokered value, we had an average value or a cumulative value for ships at NOK 688 million in the second quarter, which means that the value-adjusted book equity is more than NOK 3 billion. We still feel comfortable that there is substantial value in the balance sheet. For us, it's now a matter of improving the operating model and building the operating results to match that value, underlying value. Next slide, please. A couple of words on the share. As I mentioned, we see substantial asset backing from the four ships and the contract with the Norwegian government. We will continue to deliver on sustainability, and we have an ambition to become climate neutral by 2028.
We are now looking into the first phases of blending in biogas to reduce our emissions further and to prove to the government that it's possible to achieve pretty hairy climate goals today without any modifications to our ships. We think that there's kind of good potential for us to grow on the coastal route with the four ships we have, which can comply with the stricter environment regulations that can be implemented in the future. One of the signals we get is that the coastal route is a very important part of Norway's environmental efforts. It is one of the top 10 areas where the government can really cut emissions that will impact the CO2 balance of the country. A word on the share split and then the reverse share split that was announced at the AGM.
We have been working through the summer on practicalities, and we had some obstacles with the Norwegian holiday. What we see is that because of the technicalities, we will need to do an AGM to ratify all the details of the reverse split. We will get back to that. Hopefully, we can execute it in September. That would mean that 50 shares today would become one share after the split. Next slide, please. I think the key performance indicators we've been through are more for reading. The presentation has been published on the stock exchange, and I think it's more for analysts and shareholders to have a track record of our KPIs. Just for everyone's recollection, the KPIs are sourced from the company's booking system. There are discrepancies between the figures, the KPIs, and the accounting figures because of some periodization and some currency effects.
It shows a good picture of the operational performance of the company. I think that concludes it, [Ingmar] . We are open for questions.
Yes, thank you very much for the presentation. We now move on to the Q&A session. For a dynamic conversation, we kindly ask you to ask your question in person via the audio line. To do so, click on the Raise Your Hand button. If you have dialed in by phone, please use the key combination *9 followed by *6. If you have not the opportunity to speak freely, you can use our chat box. We have already received a question. [Mr. Kuse], you should be able to speak now.
Yes, good morning. Thanks, gentlemen. Thanks for taking my question. I have a few, actually. I would start with the relation of occupancy and pricing. I would gather that overall, compared to maybe what you projected last year, occupancy is the KPI which is maybe still lagging a bit behind your initial thoughts. What are your thoughts on the pricing effects on demand and if you maybe overstep at the one or the other end? What are your thoughts there? That would be really interesting.
You can fill in, Bent, if you have others. I think a lot of the price increase is coming off a very low base. If we compare ourselves with our competitor, we are not expensive at all. Some of it is coming from these canceled trips that were e-booked at very low prices.
I think we see with the 10% increase that we have for next year that we're reaching a level now where we see additional price increases over and above that. It can be achieved by a mix, by improving the mix of voyages, as I mentioned in the presentation. We have a lot higher average cabin revenue for shorter trips and for half trips than round trips. I think the way we will seek to grow pricing further and to grow the yield on the existing cabins is to develop shorter trips and package that in a way that we can extract more value from the cabins. We are touching on an absolute pricing level. I think we are touch and go where we can put it.
Okay. Yeah, I saw that in the report, you mentioned that the shorter trip revenue was up 40%. I think that's very encouraging. Could you maybe quantify what more or a substantially higher price for the shorter trips means? Is that like 10% or 15% or 20% sort of on a like-for-like basis or more?
I don't have the number in my head now, Tim, but it's around 20% for half trip compared to round trip.
Okay.
At least.
Thanks.
At least.
Yeah.
I mean, it's a difference between northbound and southbound. The north half trip northbound is by far the best pricing.
Okay. Yeah. Understood. Bent, maybe you could comment on sort of the relation. You mentioned that you have three individual travelers. That's the sort of strongest growing group. On the other hand, the share of agencies was higher in Q2. Is that like the normal seasonality, or does that not relate to each other? That means that three individual travelers could also have booked via agency.
Totally.
Okay. Yeah.
The travel agents also provide a conversion. They are selling FITs also. The balance, as we see under development, we see is very positive. The good thing is that the travel agents and tour operators are kind of those that are filling up the books quite ahead. For 2026, we already have about 30% of all capacity is booked. Of course, having good partners in agents and tour operators is kind of very positive for the company.
Excellent. Aleksander, maybe two quick questions on the cost. Banker costs were lower than Q1. Was that the normal seasonality or also some, yeah, other effect? You mentioned that the new contract will kick in in Q4. That's nothing we can see here. Maybe personnel cost also was lower than in Q1. Maybe you could just comment, is this a level we can expect going forward, or did you move some costs from sort of the personnel cost to variable costs, maybe, which were then in cost of materials to maybe external sellers? That would be interesting. Thanks.
Yeah. On the LNG cost, the spot LNG price was higher in the first quarter than the second quarter. It's more of a market pricing. We see that the market price or the TTF pricing for core LNG has come down quite a bit. The last time I checked, it's around 32, which is a lot lower than what it was in the first quarter. We can kind of expect that in the third as well. As you say, from the fourth quarter, the new arrangement kicks in. We do expect that saving is from the fourth quarter onwards. On the personnel, I presume you mean, you know, crewing.
I think part of the crewing costs in the first quarter is also related to end of the year, where some of the very highly booked trips in late December are kind of flowing into the first quarter because some of the trips start at the end of the year and then they end in the beginning of the first year. We do see that we have better control on the crewing costs and on the manning compared to occupancy. We are working hard to optimize the manning in accordance with the occupancy.
Okay, perfect. Maybe last question. On the cash flow, which was positive in Q2, two questions there. Can you remind me on the cash flow profile over the year? Secondly, I remember that at least last year, you still had some issues with credit card issuers that prepayments didn't really flow through to you due to you being a startup in there due to the young company age. Can you comment on that and how that's developed? That would be great. Thanks.
Yeah. In terms of prepayments, the level is usually at its highest at the mid-year, like beginning in July, and then it's at a low point at the end of the year. In the first half of the year, we managed to release probably half of the withheld prepayments. The payment provider originally took back almost everything, and then they reduced it to 60%. We have worked with the payment provider as our results have improved. Part of the improvement in working capital in the first half is also related to the release of these prepayments. There's still some prepayments being held back, approximately EUR 3 million, and we are working to get that released also now in the second half. That's kind of a positive on the working capital.
Okay. Thank you .
It means that our working capital is moving into kind of negative territory, which is in our case good because we do sell far ahead. We would like all that prepayment to be paid to us and not held by the report data.
Excellent. Thank you.
Thank you very much. We move on to a question from the chat box. First of all, the participant thanks you for the great presentation and is curious about how you can say anything about the performance compared to competitors. For example, how you can communicate the obvious advantages, Kystruten versus Hurtigruten, with existing and potential customers.
That was a tricky question. I think what we see is that both Hurtigruten and us have a very positive development on the occupancy and the number of guests choosing to travel the coastal route. In general, that's very positive that both companies actually are having success. Of course, we are trying to kind of do something different than our competitor, and they are trying to do something different than us. For us, we are very focused on kind of giving the customers the flexibility to choose like shorter voyages. We had a lot of focus on creating those opportunities. Now we see that it's giving us a very good development now in bookings. Those traveling on shorter voyages are also willing to pay a bit more. That's also helping us.
The flexibility of kind of doing this is also based on that we have four sister vessels that are similar. The pricing model we have and the bookings, following up the bookings, etc., enable us to manage kind of the whole year and the continuing kind of filling up the vessels, even though we are having shorter voyages. I think that's a big difference between the companies today.
Thank you very much. There is a question from the same participant if it would be possible to talk and clarify a bit more on the currency challenges, which had a big effect on Q1 and Q1 results, or how to cope with such going forward.
Yeah. I think the challenge is that we have accounts in NOK, which is kind of related to our Norwegian setup and the fact that we do operate on the coastal route. Then we have assets which are priced, you know, balance sheet-wise, are priced in euro, but in our books, they are booked in NOK. You know, since the assets or the ships, they are built kind of in a European context, they are priced in a kind of second-hand market, priced in euro. We have probably in last year, we have close to EUR 400 million in equivalent revenues, which is covering kind of the interest expense. For us to borrow in euro, it's the natural thing because you have a hedge on the debt service, and then you have balance sheet protection because the second-hand value is in euro.
At the same time, you know, we are operating in Norway. We have revenues in from the Norwegian government in NOK and from a number of guests in NOK, which are matching with the Norwegian cost. I think it's noise. Over time, it should level out, but it's noise, and it makes it difficult to read the bottom line. We have discussed a number of times, you know, to do as our competitor have accounts in euro. That is certainly something we are looking at to avoid having these large unrealized currency swings from month to month or from quarter to quarter.
Thank you. We get back to [Mr. Kuse], who has another question. You are able to speak now.
Yes, thanks. Sorry for bothering you even more. I do have two questions, or maybe three actually, on the reporting. Is this something you're looking into for 2026, Aleksander, the euro switch, or is there any sort of regulatory topic, or is it just more an internal readiness that's the factor for that?
It's kind of an internal readiness. It's regulatory as well. We need to apply for it. It's been on the discussion for some time. It's something we are evaluating. I don't have a timeline for it at this point in time.
Okay. Maybe also on the refinancing, just a quick question there. Is it, maybe we could just, I don't know, this is a moving target in the process, but sort of your tendencies, is it still mainly your thoughts on refinancing, or how are the chances, or your thoughts on maybe a seven-lease-back kind of option or a mixture? That would be interesting. The final question, you mentioned that you will be blending in biogas to further improve your CO2 profile. Is that on your account, or is this together with sort of a subsidy from or, yeah, payments from the governments on that?
Yeah, I can address your first question of the refinancing, and I'll leave the biogas to them. We are, I mean, with the amendment, we are positioned to do a refinancing now. If the conditions are right, our advisor is working on a number of alternatives. They are pursuing private placement or...
We just lost the connection to Bent and Aleksander, and I'll wait a few seconds until they reconnect. I'll just stay online. Hopefully, they will be back with us in a few seconds. There seems to be a problem with Bent and Aleksander reconnecting. I'll wait a few more seconds. I can tell in the meantime there have been no further questions. Unless Bent and Aleksander get back to us, I would rather say that we come to the end of today's earnings call. Thank you, everyone, for joining and your shown interest in Havila Kystruten AS. Should further questions arise at a later time, there is the reconnecting to Bent and Aleksander. We move back to those. If you unmute yourself, we can get back to you. Maybe I just try to give you the opportunities to speak. Yes, that should work now.
Yes, now we can hear you and get back to you. Welcome back.
Sorry, the phone, the power went out here. Okay, Tim, are you still there?
Yes, thanks. I think you mentioned that you are working on all kinds of scenarios with Arctic .
Yeah, we are working on private placement, like private debt solutions. We have set up a syndicate for public bond. The public bond market is probably as good as it has been in a long time. I think the window for the public bond market is certainly attractive for us. For us, it's a balance of market conditions compared to our operating results and our ability to get acceptance for kind of the ramp-up phase of the company. We are also looking into leasing solutions, leasing in a European context and also leasing from other places. We are pursuing kind of a number of options. We may do this in a two-step approach, or if the terms are right, we can do it more long-term. It's kind of dependent on the market conditions, what's available, and also the progress of our ramp-up.
We are positioned to do it now with the amendment. We have more time, and we are less stressed on time and in covenants than what we were.
Okay. Is that the principle of the big loan you're looking to refinance or also part of the shareholder loan?
It's primarily the secured bond. Depending on the transaction, we may also kind of address the shareholder loan as well.
Okay, that's good. Okay. On the biogas?
As a company, we do have ambitions to start blending in biogas over the next year. The ambition is to be 100% climate neutral at the end of 2028. We have a dialogue with the potential delivery of biogas along the Norwegian coast, and that is looking quite positive. We are, of course, in dialogue with the Norwegian government for doing this. They also are very focused on reducing their total CO2 emissions. We, as a company, could actually enable them to at least deliver on the targets in this concession. If you look at the 11 vessels today, we are the only one delivering on the 25% reduction, and we can actually reduce the CO2 emission and help the government to deliver on their targets. That is the kind of discussions we have, and it's a very positive discussion with the Norwegian government.
Okay, understood. You would be compensating for your competitor on the route in a way if you over-deliver on your, yeah. Okay, understood. Thanks a lot, guys, and all the best for the upcoming projects. Thanks.
Thank you.
Thank you for your question. As I said to the participants and now to you, as you are back, in the meantime, we have received no further questions. Therefore, we come to the end of today's earnings call. Thank you very much for joining and showing your interest in Havila . Should further questions arise at a later time, please feel free to contact investor relations. Thank you, Bent and Aleksander, for your presentation and the time you took to answer the question. I wish you all a lovely weekend. With this, I hand over to Bent and Aleksander for some final remarks.
Thanks a lot, [Ingmar]. Thanks a lot, everyone, for participating and listening in. Looking very much forward to presenting the results in the third quarter for you guys. Thank you.
Thank you.