Good morning and welcome to our quarterly presentation. It's great to see so many people here today. A warm welcome to all of you and a warm welcome to all of you watching us online. Anders, what can we expect today?
I think we're going to hear how we have manoeuvred in a volatile world, and we'll get an update on the results for the quarter.
Very soon. As usual, we'll start with our CEO, Lasse Kristoffersen, who will take us through the market and also how we have delivered this quarter. He will be followed by Bjørnar Bukholm, our CFO, who will take the financial highlights. Lasse will then be back and, as usual, again take the market outlook. Anders, you will take the Q&A session. What do we need to know about that?
For the online audience, please post questions in the Q&A box. Be aware, it takes a while for the questions to arrive actually in the digital world. Post them as early as you can in order to make sure that we can answer them. There will also be a possibility to answer questions here in the audience, and we'll send around a microphone.
Perfect. I think we're set then, are we? With that, Lasse, the stage is yours.
Good morning and welcome. I must admit, when I got up this morning and thought about this presentation, I was a little bit surprised by the fact of how fast we forget. Second quarter was maybe the most uncertain, volatile, and in many ways an outlier in global economics, in global trade. It was a constant change in what the reality was and how volumes moved. Looking back on how we have performed as a company, I must say I'm really, really proud of the team and the numbers we can present today. We'll give you some more details of why we've been able to do so. Starting with the highlights, more importantly, we are delivering another strong quarter, one of the strongest quarters we have ever delivered. In Wallenius Wilhelmsen, we have an EBITDA of $472 million, which is up 2% since the last quarter.
We see that the demand is still firm. We had strong demand during the second quarter that continues into the third quarter. We are paying a dividend of $1.10. This is in line with our policy where we pay up to 50% of our net result. We're also paying out the full proceeds from the sale of Mirat. For those who don't remember, Mirat is a terminal in Australia that we have built up over the last few years. That transaction shows the underlying values we believe sit in our logistics portfolio. We also took note, of course, of the announced trade deals. We are very firm in saying that these are not signed yet. There are still some uncertainties on where they will end. The fact that there seems to hover in around 15% is a very strong signal to our customers and at least reduces uncertainty.
Looking forward, we expect EBITDA in 2025 to be in line with 2024, and we expect 2025 to be another very strong quarter. In this report we're also updating that we are changing some of our financial metrics. Bjørnar will cover this in detail, both what we do and why we do it. One noticeable one is that we have now set a very clear and updated target in terms of return on capital employed to 12%. This is due to the performance we have seen over the last few years and also the target performance that we have. Let me dive into some more details, starting with the market. What is really driving this around us and where do we see both headwinds and tailwinds?
In general, you could say that the demand for cars in the world, the production of cars in the world is muted, and most likely we will see a less number of cars produced or equipment produced in the world in 2025 than in 2024. Still, there is growth in the deep sea, meaning that those who are further from the market are still relatively the winners in production. We see this in particular out of Asia. This is a story that is just continuing, mainly driven by China. The growth is for sure coming out of China both on autos, but also on high and heavy. That is supported by a quite firm, at least flat and somewhat up, also from other exporters in Asia.
Both Korean and Japanese OEMs are performing relatively well in the year and in the quarter, while the Western OEMs, in particular, the Europeans, have seen their competitiveness falling over quite a while. For the European OEMs, there's kind of a double whammy in the quarter. They have for a couple of years seen that their market shares in China are dropping. Remember, one out of three cars in the world are sold in China. Roughly, you can say 1 out of 3 is only in China, 1 out of 3 is sold in Europe and U.S. together, and 1 out of 3 in the rest of the world. That's the market. Losing significant market shares in China is critical for European OEMs. Adding to that, the increased uncertainty in the quarter from the tariffs into us really created a hammock for European OEMs.
Some of them even paused exports, some of them delayed exports. That meant that the volumes out of Europe are both on a structural down, lack of competitiveness, but also on a cyclical down or volatility down in the quarter due to tariff uncertainty. We have seen though that the activity out of Europe is now maybe trending a little bit up into the second half. We see that on the volumes in our terminals, we see that on the bookings forward out of Europe. We might have the bottom behind us. Still, there is a fundamental difference in the competitiveness of Asian versus European and also U.S. car manufacturers. This creates an imbalance in the trade. Although in the previous one you saw there was a marginal increase in deep sea, the increase comes out of Asia.
That means that we need more capacity to solve that because we don't have the volume going back. All the growth in volume adds extra demand in the market. When I talked about tariffs, this is a quite, let's say, messy graph. The main point here is to show on the right side of the two graphs that it seems now that we are zooming in somehow on 50%- 70% depending on stacking or not on cars. What has hit the actual bill yet is only 9% because of delays in imports, time to market, and so on. We have not yet seen the effect of the high tariffs of 25%. This is now being worked into the market. Nobody knows the effect when we sometime probably end up around 15% if that's put also into Inc.
We are quite careful in forecasting the effect of the tariffs because they have not really affected yet. In general, you could expect U.S. production to go up based on following these policies. We have not really seen that we are seasonally up, but we are down year over year. This is relevant of course for our logistics business in the U.S. where we are sitting at the back of many factories. Of course, as in any market, some producers are doing better than others. In general, the production in the U.S. is relatively speaking a bit muted and we have not seen a surge in those production volumes yet. I think it's noticeable though that you can see that the production is very steeply down on what we call heavy and medium trucks. Those are for commercial use.
There is certainly a decreasing sentiment when it comes to more the business-driven demand for cars, while on the private market they're still strong, but it's.
Down.
The fleet is growing. It has been a theme in our industry for a while that quite significant amounts of vessels have been ordered, which is true. What we saw so far this year is that close to 40 vessels have been delivered. Despite that, we experience a very balanced market and we expect more or less the same amount of vessels to deliver in the second half of this year. We are adding some more vessels going forward. We have not yet seen a shift in the market balance due to new vessels being delivered. When we take all this, the market around us, how does that affect and how are we positioned as Wallenius Wilhelmsen?
We are a leading player out of Asia and we believe we are very well positioned for the growth that comes out of Asia and we are for sure winning our share of that business. We have been able to manage the volatility in the U.S. We said in the first quarter that we saw a drop in revenues, but we were not able to adjust costs accordingly. Now we are seeing that those costs are coming down in line with activity levels and we're also able to shift capacity from the Atlantic into ex Asia when we see volumes as low. The fact that we are global and truly global enables us to adapt to where the demand is. We still experience a balanced market.
There is no doubt that the peak for rates are behind us, but we still experience strong rates when we do short term business in the market, jumping into the segments. Shipping ended at $411 million, which is one of the strongest quarters we have had on record. Logistics seems to be very much down, which they are. The main factor in terms of the reduction on EBITDA comes from the sale of Mirat. Mirat was a strong generator for us. The underlying business in logistics is actually slightly up quarter on quarter. Bjørnar will come back to this. On Government Services, there is quite some periodical effects, so don't look too much on the slower second quarter versus the first. Year to date is ahead of year to date last year and we see strong demand for Government Services out of the U.S.
Looking into the details on shipping, volumes were up in the quarter and that was partly also supported by stronger high and heavy volumes. I will come back to that. We see that this is again driven by ex Asia volumes and strong growth in ex Asia volumes. On rates. No, sorry. Back to more details on that. You can see that we have quite a steep incline in the volumes out of Asia, and largely speaking this is driven by two factors: the growth of China, but for sure also our increased market share of Korean exports. As you might remember, we increased from 40% to 50% in the contract with Hyundai and Kia.
At the same time, we see that the volumes out of Europe are dropping, and this is partly due to lower exports and partly also due to a business that we have decided not to renew due to the terms in the business. Largely, this is driven by market demand. I mentioned that we saw a quite steep rebound in the high and heavy numbers in the quarter. We do not see this as a start of a rebound in high and heavy. This is more periodization effects of some cargo being front loaded, but also the fact that we have customers that are winning market shares, and our biggest customer in high and heavy are doing extremely well, and we see that their export numbers are strong, and we are carrying more or less all of those volumes.
This is more an underlying trend with some customers, but also a periodization effect. We do see, though, that our customers still repeat that they have strong confidence that things will improve into 2026 for high and heavy, and then in particular in public infrastructure, defense spending, energy, and mining. On rates, we have more or less a flat development. If you look on the repricing quarter on quarter, it's flat. Repricing year over year shows that the contracts rolled in this year is slightly higher than those last year. There is a small negative effect from customer mix, meaning that we relatively speaking had more volumes from lower paying customer contracts in this quarter. That typically equals out over a couple of quarters. The trade mix shows that the rates are up.
It is important to understand that this is because we are doing relatively more out of Asia, better paid, relatively less out of Europe, less paid. Normally, we do this on a round voyage. It is certainly not positive for us to have less out of Europe, but it certainly shows that we have higher net rates because we have more of the volume with a higher paying cargo. In general, we would say that the net effect quarter over quarter is more or less flat, but certainly a positive development due to some repriced contracts since last year. If you go to logistics on volumes, I mentioned it earlier and also in the last quarter we saw the volumes dropping in Q1. We were trying to adjust costs accordingly. We were not able to. We have been able to do that largely in this quarter.
You can see that despite more or less flat volumes, for instance, on autos we have been able to increase our margins by taking out cost still in high and heavy. We see this on the ground in the U.S. and other places where we have what we call EPCs, basically production facilities completing high and heavy equipment, that the new equipment is moving slow, storage is still high and the flow is still quite slow. When it comes to high and heavy, our customers and the dealers also see still no rebound in volumes and that means that we also have a quite low volume on our processing on the terminals. We saw a drop partly due to myriad effects, but also for sure that we had slower volumes out of Europe and then into the particularly east coast of the U.S.
We have added some more information on contract and book of business in this presentation and we will do that on a regular basis also going forward for 2025. If you can see on the left hand side for shipping, we are more or less sold out. Roughly speaking, we're 90% covered for next year when it comes to capacity and volume. This is completely normal. We are not stressed by not having 100% now. There's constant renewals and that's showed all the way to the right. We are announcing all contracts above $100 million but we do a lot of contracts below $100 million. Just in this quarter we added some $300 million worth of contracts for shipping, non-announced, similar for logistics, $200 million. In this quarter, just by renewing business, winning smaller business, adding business here and there, we have added $500 million book of business.
This is normal business, this is normal procedure and that's why you will not see them in big announcements. We are quite firm that we will be able to fill that gap also at least most of that gap into 2026. The duration of our contracts are for shipping, if you have it based on net freight, it's 3.6 years while it's 7.8 years for logistics. We have a strong book of business. We're sold out this year. We have a strong book of business for next year and it's growing and we are constantly adding to that book of business. A couple of developments in the quarter that's worthwhile noticing. We sold an old vessel and we also exercised some purchase options and these are very attractive transactions. The purchase options are well below the market.
It's end of time charter deals and we were able to sell an old vessel that didn't fit in our trading pattern anymore. Two current market in reds which are in our view quite sound. We also announced a quite exciting project in a way Wallenius Wilhelmsen is coming home to Norway. We are setting up a facility together with Bekkelaget in Drammen. This will be a state-of-the-art, we think actually state-of-the-art in the world, but certainly in Norway, in terms of processing of cars coming into the Norwegian market. If everything goes as planned, we will start building early next year and be in full operation in 2027. We'll be in Drammen Port and this facility can process up to 35,000- 40,000 cars a year and will be most likely the best and the most modern entrance into the Norwegian market.
We are quite excited to do this together with Bekkelaget. On sustainability, in the last quarter we saw some of our safety statistics jumping. I told then, and I repeat now, that this is based on very few incidents and hence we have big periodization effects. What we saw in this quarter was that it fell down significantly on shipping and we are happy with the average performance we have on safety. We are now continuing our positive trend of reducing our incidents. We are working very actively with both safety management, but certainly also on safety culture. This seems to be paying off. On emissions, we are still doing quite well in reducing emissions in terms of actual emissions from our vessels and the distance they sail.
However, we do see that our EEOI, meaning that the emissions per car, to put it simply, is increasing and this is due to the increased trade imbalance. When we have one car from Asia going to Europe and we have no car taking back, that single car needs to have the full emissions for the round voyage. If we have one car going west, one going east, each get 50%, meaning that structural imbalance increases the emissions per car. However, the emissions from the vessels are continuing to go down. The emissions on vessels, if you divide it by the ton miles they do, are continuing to go down. This is what we can control. We work really hard in continuing that trend. We also updated the market that we have for in our Shaper class newbuilding project.
We have taken half of the vessels and made them ready for ammonia, meaning that we are putting in tanks that can do both LNG and ammonia. We're also through that being able to source LNG and BioLNG, and through now having seven of the vessels capable of doing methanol and seven of the vessels ready to do ammonia and LNG. We're now able to tap into all different fuels of the future, and we think this is absolutely critical. We believe that we need to be able to tap into all kind of biofuels. In the short to medium term that means biodiesel, BioLNG, biomethanol, and in the medium to long term into all E fuels, and that means ammonia, methanol, and possibly others that we don't know of yet, and now we are well positioned to do so.
With that, I leave it to Bjørnar to take you through the numbers.
Thank you Lasse and good morning everybody. Also thank you Lasse for no jokes today because I was clearly not prepared for that this morning, although I was thinking about it before we started. What can Lasse figure out today? Thank you Lasse, jokes aside, I will cover the financial update as last time starting with Financial Targets. As Lasse mentioned earlier in this presentation, we have updated the financial targets now to better reflect where Wallenius Wilhelmsen stands today in terms of financial performance and also the financial solidity of the company and where we see that performance should lie going forward longer term. On a high level, the changes in financial targets reflect that we have increased ambitions for returns, reduced leverage, and improved management of liquidity.
If we look into the details of the changes, starting with return on capital employed, we have increased this from 8% to 12% where roughly the first half of the change is explained by the change in accounting treatment for the UCOR put call option that towards end of last year the put option, the price for the put option was classified as a liability on our balance sheet, hence reducing capital employed. The second part of the change is reflecting our ambitions for financial performance over the cycle and improved balance sheet management. Moving over to the equity ratio, we have kept it unchanged at 35%.
Leverage ratio we have reduced from less than 3.5x to less than 3x with a clear ambition for the company to have a moderate dependent level and solid liquidity reserves as this will allow us and give us the flexibility to invest and return capital also in softer markets. Finally, we have introduced a new target for minimum liquidity of $1 billion consisting of operational cash and RCF capacity to allow for quick decisions on investment needs, financing needs, etc. It's important to highlight that we don't consider the financial target as restrictions. This is rather aspirational of where we want to be, guiding principles. Moving over to the highlights for the quarter and as already mentioned by Lasse, it's a new very, very solid quarter for Wallenius Wilhelmsen and we are proud of the strong results. Diving into the details starting with revenues.
Revenues ended up $1.35 billion, up a couple of percent compared to last quarter due to stronger revenues for the shipping segment. Comparing to last year, largely stable revenues, shipping is up while the logistics segment is somewhat down. Moving over to adjusted EBITDA, $472 million, up 2% quarter on quarter due to strong performance for shipping, slightly down for logistics and for government. Compared to last year, there is a drop of $25 million that is explained by the logistics segment. I'll be coming back to that. Very strong net profit, $403 million, of which $135 million relates to Mirat, the sale of Mirat, and a sales gain from that transaction. Adjusting for the sales gain, we have a net profit of $268 million, at 8% quarter on quarter, with improvement driven by the stronger EBITDA and somewhat lower tax expense in the quarter.
Net debt, $1.75 billion, that is up $90 million in the quarter. That is explained by the strong dividend of $524 million that was paid in April, partially offset by strong operating cash flow and also proceeds from the Mirat transaction that was received in May. Moving over to the right-hand side, financial targets, proud to present yet another quarter with return on capital employed on around 20%. Equity ratio up to 41%, up 6% on the back of the strong net profit. Leverage ratio remains below 1x and liquidity reserve stands up nearly $2 billion at the end of the quarter. Moving into the specifics on the segments, starting with Shipping Services, revenues of $1,033,000,000, up 7% quarter on quarter due to strong volumes, partially offset by somewhat weaker net freight rates, solidly shown by last year.
Volumes up 8%, driven by increased volumes out of Asia, partially offset by lower volumes out of Europe. Net freight rate down 2%, that is due to customer mix. It's a neutral effect from repricing and the trade mix. If you look at EBITDA, $411 million, 6% up quarter on quarter due to increased revenues driven by the volumes, partially offset by somewhat higher cost, mainly to carry additional volumes. Looking at cargo expenses, in other words, an OpEx, which is typical, the variable cost increased by $25 million, that is due to more volumes. Then we also had vessel OpEx and charter expenses up by a total of $4 million. That is due to two additional owned vessels during the quarter due to utilizing the purchase option mentioned by Lasse. There was also somewhat more chartering activity in the quarter. SG&A is up by $10 million.
We had some additional project cost expenses in the quarter and then we also had the effect of salary adjustments in the second quarter. All in all, another very strong quarter for the shipping segment. Moving over to logistics, revenues came in at $273 million. That is down 3% compared to the last quarter. That is fully explained by the sale of Mirat. Adjusted EBITDA $32 million. It's down 12% quarter on quarter. Also here, this is explained by Mirat. If you adjust for Mirat, we actually had an improvement on EBITDA of $3 million quarter on quarter with improved performance for the auto segment or the auto business area and the high and heavy business area on stable revenues.
We were able to take out quite significant cost in the quarter that improved the margins for that business, and this is a continued focus area for the logistics area going forward. Terminals came in flat, improved performance in the U.S. and in South Korea, while the European terminals were somewhat softer, which is linked to the export volumes. That is already mentioned by Lasse. When we look at the development for EBITDA compared to the same period last year, we see a big drop. That drop is explained by Mirat, and it's explained by weak results for the auto business area, and it's explained by weaker results for the European terminals. Moving over to Government Services, that delivered another very strong quarter, although somewhat down compared to the same period last year. Note that this is seasonal, and year to date, we're actually performing better than last year.
Revenues, as you can see, largely stable both quarter on quarter and year on year. EBITDA $41 million. That is down roughly 15% compared to the same period last year and also quarter on quarter. The difference lies in the type of volumes that we lifted, so the cargo mix is impacting this, and we also have two extra vessels part of the fleet in this quarter which were previously on commercial charter with other parties in the group, which is increasing the cost. Underlying results for Government Services remain very, very solid. Moving over to liquidity, liquidity rate remains strong, stands at close to $1.4 billion at the end of the quarter. Yes, it's down close to 20% quarter on quarter, but that is due to material debt repayments and the dividend that I already mentioned.
Investing cash flows of $164 million positive due to the proceeds from Mirat, partially offset by CapEx of $64 million, of which $40 million is related to the newbuilding program. Financing cash flow negative $923 million. Regular repayment of vessel loans, and we also had a voluntary repayment of an RCF of $205 million to improve our liquidity and cash management. We have the dividend quickly on the balance sheet and over solidity already mentioned this, so I'll be brief. Equity ratio 41%, materially up due to strong net profit for the quarter. Net interest-bearing debt $1.7 billion, slightly up compared to last quarter due to the dividend. Leverage ratio remains below 1x. Liquidity reserves close to $1.9 billion, $1.4 billion almost in cash. We have RCFs undrawn of around $500 million. A few changes on the RCF side took place in the quarter.
We terminated that facility in WW Ocean of $150 million. This was a short-term facility with limited value for us. We repaid $25 million for the facility we have in WW Solutions. Moving over to dividends. Yesterday, August 11, our board approved a total dividend of $465 million, equivalent to $1.10 per share for the first half of 2025. The dividend is based on 50% of the underlying profit for the first half of the year. By underlying profit, I mean the net profit minus the sales gain from the Mirat transaction. We had an added element linked to the full cash proceeds of $210 million from the sale of Mirat.
All in all, this represents around 75% of the net profit for the period compared to a dividend policy that indicates 30% to 50% of net profit but with an opportunity to extraordinary dividends if there is something special, which Mirat clearly is. With strong dividend, we see that that's a testament to the very strong performance of the company and also the very solid financial position of the company. Finally, a couple of words on the newbuilding program from a financial perspective. In the second quarter, we secured post-delivery financing of $300 million for four Shaper class vessels at very attractive terms. The loan is split in two parts: a $150 million term loan, which is green, actually the first one in our company that is green, and a $150 million sustainability-linked revolving credit facility.
What the revolving credit facility actually does is that it gives us increased flexibility on drawings on the debt, which helps us to optimize our liquidity management going forward. Senior for the loan is five years from the delivery of the last vessel. With this financing in place, we have attractive financing in place for 10 out of 14 Shaper class vessels, and they will manage financing for the remaining vessels in due course. Over to CapEx, at the end of the second quarter, remaining CapEx for this program is roughly $1.5 billion, and we have paid $43 million so far. Lasse commented on the change in fuel for seven of the vessels. That came with an additional CapEx of $80 million. Especially the LNG tanks are very, very expensive. It positions us much better for the future in terms of flexibility for fuel sources.
With that, I will hand it back to Lasse for the prospects.
Thank you. Let me just get to it. We are experiencing strong demand and utilization, in particular in shipping, and we see this continuing into Q3. There is still a strong demand and a good balance in the markets, and we expect 2025 to be in line with 2024. This is, as I said, driven by the growing exports out of China into basically all markets of the world, but the U.S. We expect that to continue. We're also seeing some signals that European volumes might come up somewhat in the second half of this year. We do not expect yet a rebound in high and heavy despite the strong volumes we have. Coming into 2026, signals from our customers are strong. We are maintaining a strong outlook for the year, and we believe 2025 will be another very strong year for Wallenius Wilhelmsen.
I ask Anders and Bjørnar back to the stage.
All right, just as a reminder, if you have questions via the web, please post them in the Q&A session section of the web c ost. First, first Lasse. You know the market is good. How long can we expect it to last?
The current market momentum is certainly continuing into Q3, and with the current volatility and when we speak to our customers, even they don't know what's happening in Q4. We still think that this year will be a strong year. It's too early to call 2026, but the momentum that we are experiencing is currently continuing into certainly the third quarter.
Thank you. Bjørnar, you're paying out $1.10 in dividend. Just a reflection of how is that split up and why that amount.
Yes, thank you and thanks to the audience for letting me repeat a good message. The way we are thinking about this is that we have the net profit and then you consider what is the underlying net profit of the business and that what the business delivers, minus the sales gain for Mirat. We took 50% of that amount, which is in the upper end of our dividend policy, and then we added an element to that, which is the full cash proceeds of $210 million from the sale of Mirat that took place in the quarter, and that adds up to $465 million.
Yes, thank you. We'll start off with questions from the audience, if there are any. Anyone? There seems to be no questions from the audience. We'll start with the questions from the web. There is a question around our newbuilding program. If demand dips, what is our plans in terms of recycling all the tonnage when new vessels are delivered?
Of course, normally we plan for running a vessel in 30 years. Now the demand has been so strong that we have decided to take a couple of vessels through that 30-year renewal in terms of class and run them older than that. In general, I would say that we will probably see that vessels turning 30 are more candidates for scrapping going forward when it comes to a newbuilding program. This is to replace our core fleet where that makes us. It kind of is our secret sauce. Large vessels that can have huge flexibility on high and heavy, breakbulk, and cars. These will create competitive advantage for us when they are delivered. We are very happy to get them in, but we have a huge need for capacity also in 2029 and 2030 and beyond. This is a start of a renewal program.
It's not growth, it's renewal of our fleets. Of course, when we renew our fleets, we will phase out old vessels as new vessels are being delivered.
There is another question relating to logistics in terms of demand per region, how has that evolved? They're asking for thermal, Soto, and high and heavy.
Okay, that was many dimensions. Let me start then east and going west. Demand out of China in terminals, in logistics, strong volumes are going up on both auto and high and heavy. We talk a lot about the auto growth out of China. The similar numbers are for high and heavy and we do some logistics activity there. We are well positioned in Australia. We see growth in Australia and we are now actually also entering. We've done a lot more on the high and heavy in Australia and we're now coming into the auto segment as well and growing with, for instance, Chinese players coming into the market in Europe. I would say it's a somewhat softer sentiment both on high and heavy and cars in the quarter and right now. This is more due to uncertainty, but also some structural decline.
We see a bit less numbers, although the momentum has picked up a little bit into Q3 in the U.S. and North America. It's extremely hard to say one answer. Some producers are doing extremely well, others are losing market shares. For instance, in this quarter, I think if I remember right, GM gained 10% market share while some of the others lost 10%- 15% in volumes. It's very big difference in the U.S., but in general I would say that the activity on the East Coast terminals are a bit softer. West Coast terminals are an activity is very full. Canada is going extremely well and I would say Mexico is going surprisingly well and delivering good volumes and numbers despite the uncertainty on tariffs.
Thank you. That was an elaborate answer. On the fleet, there is a question around, you know, do we have plans to sell any additional older vessels, and how is the chartering market? Are we looking at adding tonnage?
We are constantly looking at our fleets, and if we see that there is value in selling vessels, we will sell vessels. We have a book of long-term charters that are producing good purchase opportunities for us. In terms of options, we are utilizing those. We did in this quarter, we'll do going forward. We saw in this quarter we had an opportunity to get what we consider a good price for a very old vessel that was non-core. If we see those opportunities again, we will take them. In general, we do not do long-term charters now. We do not do long-term TCs. We have the capacity we need, although we see that there are fluctuations in the need for vessels. We do some short-term charters. That's just sound for this industry. We saw for a while that market didn't function. Now it's functioning again.
We could typically take in a vessel for one voyage ex Asia or for five weeks or something like that, but no long-term chartering activity at the moment.
Okay, then one for you, Bjørnar. On the increased return on capital employed, how much can be assigned to the put option, and how much is reflecting the current market?
Thank you. As we split as mentioned, we basically split this in two parts. The increase from 8% to 10% is based on the change in accounting treatment for the put option. The second half is due to overambitions for financial performance over the cycle and also improved balance sheet management. So 50/50 split.
Okay, on port fees, do we have any additional information?
Unfortunately not. What has happened is that there was another round of comments being collected from the industry. We added comments to the U.S. T R, which is the body that runs this process. Nothing has come out of that yet. We have no idea how we will conclude. Certainly, our aim is to make sure that we get port dues in the U.S. that are at least in line with other segments. If you remember, car carriers were singled out as a segment where there were also proposed dues on non-Chinese built vessels, which is not in line with the intention of this regulation. We have added our comments, but we don't know the outcome yet.
Okay, a question on rates in the quarter. We saw the trade mix or the customer mix actually having a negative impact on rates quarter over quarter. How is that expected to go forward?
In general, there are always periodization effects you could have. If we, for instance, have quite some contract volumes in a quarter from one specific customer, that affects our customer mix over a year. This equals out. The customer effect from customer mix shouldn't really add much during the year. What will add to this year is that we are phasing in, and we're now phased in full in new contracts, for instance with Hyundai Kia, at new rate levels. We see the structural imbalancing continuing, meaning that you could be a little bit fooled by seeing that some net rates are increasing because you have less return cargo. That reduces the averaging out of lower rates coming from Europe. When we look at our book of business, we have a very solid rate in all our contracts right now.
There are still historically strong rates when we do short term business out of Asia, although we are certainly not at the peak levels we saw a year or two back.
All right, there is a question on fuel. We opted to switch to LNG, ammonia for some of our vessels. What was the driving force behind that decision? Could we explain a little bit about how we feel about that and prices, et cetera.
The main rationale for doing that was to get access to all types of fuels. If you look at the current, at the design we had, we did not have access to bio LNG and we did not have access to ammonia. We believe that for the next five to ten years we will source significant amount of biofuels. Biofuel, meaning sustainable biofuel that is not competing with food or anything else, but actually bio waste that you use for fuel. This will be a commodity that is in high demand and we need to be able to source all types of biofuels. We do biodiesel today. We are already looking at biomethanol and now we can look at bio LNG and more importantly we believe in the future where we'll have E based fuels, methanol or maybe eventually ammonia.
We want to be positioned to be able to capture also ammonia as a fuel on the Shaper class. This is about preparing for optionality in the future and both for biofuels and let's call it sustainable fuels.
Okay, thank you. There is a question on fleet growth. You touched upon it in your presentation. You know fleet growth is substantial. How do you look at the demand side of things? You touched upon it, can you elaborate a little bit more?
As the balance is still strong, obviously demand has been able to fill the vessels that have been entered this year. Close to 40 vessels so far. We see still a strong demand out of Asia. We do not speculate on how this was balanced out, but for now we're still in a good. There is no doubt that there is a big order book coming online and that for sure that will increase the supply side most likely faster than the demand side. Remember, what drives our earnings is not short term supply demand. We have long term contracts with industrial customers as long as they ship volumes. We have an agreement on doing it on fixed rates. The most important thing for us is not really the short term growth in fleets, it's the actual ability for exporters to export cars. That still looks firm.
Thank you. Once again for you. There are a few, but not too many. It goes on the outlook. Is that including the gains from Mirat and vessel sales, et cetera, or is it?
When we talk about the outlook, we are focusing on EBITDA and not net profit, and certainly not extraordinary events like the sale of Mirat.
I think that was clarifying. On to something that we haven't talked about in a while: wind-powered vessels.
Wind-powered vessels.
Is that going to be a reality or is that still a fiction?
It is a reality. There are vessels out there that are using wind as a power source. If you ask my personal opinion, for sure, wind is a massive energy source we will need to capture. However, it's not, you see, and they're still in an early phase. For Wallenius Wilhelmsen, we are still working on our Sail wind project, which is an EU-funded project with a lot of partners to see how much wind can we actually capture on a vessel. Very specifically, short term, we are working on installing one big sail on one of our vessels. The pilot installation is soon up in Sweden and we will put it on one of our vessels this year or probably the next. We are already working on harvesting wind and we will continue to do that.
I'm sure that our fleet and the world fleet will find new ways, new technologies, and better ways to capture wind. It's going to be a major supplement for energy in the future. Most likely, for most trades, for most vessels, and for most ship types, it will not be the primary energy source, but it will be a very, very strong supplement.
Thank you. We're starting to get towards the end here, but a final question is Chinese OEMs are building vessels. Is that a threat or an opportunity?
In my view, it's an opportunity because we see that this is subscale. They don't have the organization, they don't have the size to operate what they need. I think these were decisions made in a time where capacity was really, really short. We expect that you will see a consolidation of the players out of China as we have done in other markets. Of course, we want to be part of being a strong player out of China, but we are not scared of our customers becoming our competitors. Of course, we see new competitors coming out of China being operators like Cosco, but we are ready to compete with them.
All right, if there are questions that haven't been answered, we'll try to answer them via emails and other means. A few words, Lasse, before we end the presentation.
Yeah, as I started, I would nearly say I'm surprised of how well we've been able to do in a market that has been extremely volatile. Although we see now a good momentum, the momentum is continuing into Q3. 2025 will be another strong year. We are adding contracts to our book of business. Unannounced contract worth $500 million just in the quarter. We in Wallenius Wilhelmsen believe that we are well prepared for a future even though uncertainty is much higher than we saw a year ago.
Thank you.
Thank you.