Good morning all. Good afternoon all. Welcome to the Nakilat second quarter 2026 results call. My name is Adam, and I will be your operator today. If you would like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by one on your telephone keypad. I will now hand the floor to Zeina Fares from EFG Hermes to begin, so please go ahead when you are ready.
Thank you for the introduction. Good afternoon, ladies and gentlemen. This is Zeina Fares from EFG Hermes Research speaking, and I would like to welcome you all to Nakilat first half of 2026 results conference call. With us on the line today we have Mr. Hani Abuaker, the CFO, Mr. Fotios Zeritis, Head of Investor Relations and ESG Reporting, and Mr. Kamaran Jomah, Financial Planning and Reporting Manager. Without further delay, I would like to congratulate management on an amazing set of results this quarter. I will hand over the call to Fotios. Please, the floor is yours.
Thank you, Zeina. Good afternoon, everyone, and thank you for joining Nakilat second quarter earnings call. For your convenience, a transcript of this call and the accompanying presentation are available in the investor relations section of our website. Please note that this call is being recorded and the media are not permitted to attend. Before we begin, I would like to remind you that some of our remarks today may contain forward-looking statements. These statements are subject to uncertainties that cause actual results to differ materially. For further details, please refer to slide two on investor relation presentation. In addition, certain remarks may include non-IFRS financial measures. A reconciliation of these measures is provided in the notes on the presentation.
Before we proceed, I would like to note that Nakilat will not be commenting on geopolitical matters or developments, and our focus today will remain on the company's performance and overview. I will start with a brief overview of the LNG shipping market. Kamaran Jomah, Nakilat Financial Planning and Reporting Manager, will then walk you through the company's financial results, followed by our CFO, Hani Abuaker, who will provide you an update on the company's outlook. Then we will be happy to address your question. Let's begin with LNG shipping market. The LNG shipping sector remained constructive during the first half of 2026, with both spot and term charter rates continuing to reflect long-term market fundamentals. While market conditions have evolved compared to the last year, demand for modern and efficient vessels remains supported by ongoing growth in the global LNG trade and the balanced supply environment.
The global LNG expansion is expected to underpin long-term demand for LNG shipping. At the same time, continuing investment in both liquefaction and regasification infrastructures reinforces the positive outlook for the industry and supports established operators with a strong track record in delivering safe, reliable and efficient transportation solutions. Moving to slide 10, according to Clarksons, average one-year time charter rates during the first half of 2026 remain at healthy levels across the main vessels categories. The modern two-stroke vessels one-year average time charter rate around $66,000 per day, and DFDE vessels approximately $44,000 per day. One-year charter rates also continue to provide a reference point to the market. On slide 10, Clarksons reports that the global LNG fleet reached 826 vessels by the second quarter of 2026, with additional 292 vessels on the order book through 2031.
This reflects the industry's preparation for future trade growth and next wave of LNG supply projects. Overall, LNG continues to play an important role in the global energy mix, supported by long-term demand growth, ongoing infrastructure development and fleet modernization. While near-term market conditions may continue to fluctuate as new vessels enter the market, a broader geopolitical economic uncertainties persist, the industry long-term fundamentals remain encouraging. With that, I would like now to hand it over to Mr. Kamaran Jomah, Nakilat Financial Planning and Reporting Manager. Kamaran, the floor is yours. Please proceed.
Thank you, Fotios. Looking at the first half of 2026, Nakilat continued to deliver sustainable results underpinned by a long-term charter profile, stable core operations and a disciplined financial management. I will now walk you through Nakilat's financial and operational performance for the six-month period ended June 30th, 2026. Please refer to slides 12 and 13, which summarize the first half results. Starting with profitability, Nakilat reported net profit of QAR 857 million , compared with QAR 860 million in the first half of 2025, broadly in line with the prior period. Earnings per share stood at QAR 0.15 compared with QAR 0.16 a year earlier. Annualized return on equity was 12.6%, and the group maintained a solid liquidity position with a current ratio of 1.39.
On income, total income for the first half reached QAR 2.39 billion , compared with QAR 2.27 billion in the first half of 2025, an increase of approximately 5.5% year-on-year. Revenue from operations amounted to QAR 2.32 billion , compared with QAR 2.2 billion in the first half of 2025. The increase was supported by higher revenue from wholly owned LNG vessels, reflecting our fleet utilization, the continued stability of our long-term charter arrangements, and higher dry docking related amortization revenue following the dry dockings which completed during 2025. The LPG segment recorded higher revenue year-on-year, primarily reflecting the full six-month contribution of the two LPG vessels acquired at the end of March 2025. This was partially offset by lower average daily charter rates during the period.
In the shipyard segment, performance in the first half of 2026 was affected by the ongoing geopolitical situation, which reduced activity levels across the shipyard operations and other marine services. As a reminder, Qatar Shipyard Technology Solutions has been fully consolidated since July 2025. The current period therefore reflects its full results, while the prior period included only our share of results under the equity accounting method. Within the LNG joint venture portfolio, contributions were lower than the first half of 2025, primarily due to accounting treatment and finance lease revenue. This was partly offset by lower depreciation and reduced finance costs across the portfolio, together with a gain of the disposal of two older steam vessels within one of our joint ventures, as we continue to renew our portfolio with more efficient tonnage across the group. Moving on to expenses.
Operating expenses for the first half of the year increased to approximately QAR 530 million , compared with QAR 414 million a year earlier. The movement was mainly driven by the full consolidation of Qatar Shipyard Technology Solutions and the LPG vessels following their respective transfers, which introduced additional operating costs which were not present for the full year in the prior comparison. General and administrative expenses increased to QAR 72 million , compared with QAR 37 million a year earlier. This was mainly attributable to the full consolidation of Qatar Shipyard Technology Solutions, which introduced additional overhead costs which were not present in the prior year. This was partly offset by the continued benefit of cost improvement initiatives across the group.
Depreciation and amortization amounted to QAR 460 million , compared with QAR 434 million in the first half of 2025, an increase of approximately 6% year-on-year. This mainly reflects the completion of the vessel dry dock cycle during the second half of 2025, which resulted in higher depreciation in the current period, as well as the recognition of the LPG vessels and Qatar Shipyard Technology Solutions following their full consolidation. Interest dividend and other income were marginally higher year-on-year. Higher income was earned due to the increase in cash balance available for deposits, which was largely offset by the elimination of interest income from the joint ventures following their consolidation of Qatar Shipyard Technology Solutions, together with lower variable interest rates on short-term deposits during the period.
Bringing these revenues and cost movements together, EBITDA for the first half was approximately QAR 1.79 billion , around 1.4% lower year-on-year. The decline was mainly reflected due to the lower shipyard activity due to the current geopolitical environment, as lower contributions from the LNG joint venture portfolio mentioned earlier, and including the accounting treatment of the finance lease revenue. These impacts were partly offset by higher revenue from wholly owned LNG vessels and lower vessel operating expenses within the existing fleet. Finance costs decreased year-on-year, primarily due to lower average variable interest rates, savings from improved loan margins under Nakilat's ongoing refinancing strategy, and scheduled loan repayments in line with the group's debt amortization profile. These benefits were partly offset by lower capitalized interest and the inclusion of finance costs associated with Qatar Shipyard Technology Solutions following its consolidation.
Turning to slide 14, which provides an overview of the balance sheet. Property, plant, and equipment decreased during the first half of the year, mainly reflecting continued investment under Nakilat's new build program. This is partly offset by the depreciation recognized across the fleet and operating assets during the period. Total cash and bank balances included deposits which increased compared to the year-end of 2025. This was driven mainly by the net increase in borrowings raised from the finance and new build program, together with cash generated from operations. These inflows were partly offset by installment payments made in line with the new build construction schedule and the payment of the 2025 final dividend. Overall, the cash position demonstrated Nakilat's ability to fund ongoing investment commitments while maintaining solid liquidity.
Borrowing increased by approximately QAR 1.8 billion to QAR 21.7 billion compared with the year-end 2025, primarily due to drawdowns relating to the financing of the new build program. This was partly offset by scheduled loan repayments consistent with the group's debt amortization profile. The movement in borrowing reflects Nakilat's disciplined execution of its long-term investment strategy. As noted earlier, Nakilat continues to secure funding well in advance of the upcoming shipyard payment obligations for the new build program. Financing arrangements are in place to fully cover all scheduled shipyard payments for 2026, and the group continues to make additional arrangements to support future requirements. This approach provides strong funding visibility, enhances liquidity planning, and supports orderly execution of the new build program. The board of directors has not declared an interim dividend in respect to the first half of 2026.
The dividend for the full fiscal year 2026 will be considered by the board at the year-end. To summarize, Nakilat closed its first half of 2026 with net profitability broadly in line with prior year and higher revenue from wholly-owned LNG vessels. This reflects the strength of the group's core operations and stability of its long-term charter profile, despite a more challenging environment for the shipyard activities. Looking ahead, Nakilat enters the second half of 2026 with a resilient earning, which positions the group to benefit from the phased delivery of the new vessels and to continue executing its long-term growth strategy. For the shipyard and marine segment, activity remains affected by the current geopolitical situation, and we continue to monitor developments closely while expecting a gradual recovery once conditions normalize. I thank you for your attention.
I will now hand it over to Nakilat's Chief Financial Officer, Hani Abuaker, who will discuss the group's business outlook and strategic priorities. Over to you, Hani.
Thank you, Fotios and Kamaran. Before I turn to the outlook, I would like to take a moment to recognize our seafarer and crew members. Throughout what has been a challenging period, they have shown remarkable resilience, and their perseverance and unwavering commitment to operational excellence and safety have been an example to all of us. On behalf of the board, the management, we extend to them our sincere gratitude and appreciation. As we have announced, one of our vessels was struck by a projectile while transiting the Strait of Hormuz. I would like to reiterate that all our crew members are safe and unharmed, that the incident resulted in no injuries, and that there was no environmental impact. Our team are working diligently to accelerate the necessary repairs and to return the vessel to full operational service in the very near future.
I would like to emphasize that the group maintains comprehensive war risk insurance, which was in place at the time of the incident and which we continue to hold to mitigate the financial impact of events of this nature. Now turning to the outlook in the first half of 2026, we maintain sustainable financial performance despite the ongoing geopolitical challenges. This reflects the resilience of the operating models and our ability to respond quickly to the changing conditions. We have taken immediate and effective measures to rationalize expenses and optimize operations across our business segments, helping to mitigate the impact on overall performance and protect our cash flow. In the shipyard segment, performance was impacted by the current geopolitical environment, which led to lower activity levels across shipyard operations and related marine services. As a result, the contribution from this segment was lower year-on-year.
Looking ahead, as condition becomes hopefully stabilized and normalized, we anticipate a recovery to our shipyard activity levels starting modestly and hopefully progressively building towards a normal operational capacity. Overall, our priority remains clear: continuous disciplined cost management, resilient cash flow generation, and maintain sustainable financial position as we navigate the current challenging environment. With that, I will now hand the call back to the operator to open the floor for questions, so please do so.
Thank you. As a reminder, if you would like to ask a question on today's call, please press star followed by one on your telephone keypad now. When preparing to ask your question, please ensure you are unmuted locally. That's star followed by one to ask a question today. Our first question comes from Nafez Al Abbas from Ajeej Capital. Nafez, your line is open. Please go ahead.
Thank you, gentlemen, and congrats on the results, and God bless you for everything that you're doing. In terms of the new builds program, do you guys have any plans to, let's say, dispose of some of the old vessels to maybe use that to reduce leverage later on once the new build program is, let's say, a few years into it? If you have any comments on that, thank you.
Thanks, Nafez. As what Kamaran has said, if there's any of our vessels that is quite old and they are not on a charter contract, they still have a lot of sometimes to expire. If they are not chartered right now, we will always look for an opportunity to really recycle these vessels by disposing them or selling them and let the new tonnage to come in. That is what Kamaran alluded to when we talked about our joint venture, where we had a couple of steam vessels that we looked into dispose them or sell them when they came out of the charter.
Great. Thank you.
The next question comes from Izzul Molob from QIC. Izzul, your line is open. Please go ahead.
Hi. Good afternoon. I have five questions, so should I go one by one?
Okay.
Hello? Yeah. Okay. Sure. First question is on your cost of goods sold, which I saw that is down around 6% Q-on-Q, despite revenue being flat. Can I know what's the reason for this?
Hi. Are you referring to the OpEx and G&A?
Yes. Correct.
Yeah. So-
No, no. Not OpEx. The direct cost.
Which direct cost?
Cost of revenue. Yeah, the cost of revenue.
I am not sure which line item you are referring to.
Okay, cool.
But we have the total income, and we have expenses.
So basically, what I am saying is your gross profit-
If you are referring to Sorry.
Your gross profit actually higher, so your gross profit higher Q-on-Q, but your revenue is quite flat. What is the reason for this?
Yeah. There are two elements. From the revenue section, as we mentioned, we have the inclusion of Qatar Shipyard and the LPG vessels, which were not there in the comparative period. In terms of the expenses, as mentioned and as highlighted in the IR slides that we have published, it is due to cost optimization across the group.
Okay. Second, can you explain a little bit, because I saw that there was an increase in cost from the consolidation of Qatar Shipyard, but the revenue contributions, it is not as good. Can I know what is the reason for this?
Yeah. As I mentioned during my part of the call, we had a reduction in the shipyard activity, and this was as a result of the geopolitical situation.
Mm-hmm. Do you expect this to basically, how to say, to improve upon this ease of this geopolitical situation, this current situation?
Yeah. Once the situation eases, we expect a ramp-up back to normal operating activities.
Okay. In terms of for your share of profits from JV, it is down year-on-year, Q-on-Q. What is the reason for this?
Yeah. Again, there is a couple of elements on this point which I highlighted, and I am happy to go through them again. Again, we had the exclusion of Qatar Shipyard, which in the prior year was included as share of profits from joint ventures.
Okay.
As well as the LPG vessels, which were also included as part of the share of results from joint ventures. Both of those two elements now are fully consolidated in our financial statements and are reflected accordingly across the P&L. As well as the LNG joint venture performance, we had a reduction due to the finance lease accounting treatment. Together, that has resulted in the reduction.
Okay. On the ship that has been attacked, will insurance compensate for that, and how much is the quantum? That is first. How does the payment like for this vessel? Will you still get revenue and payment, or how does it work?
As per our war risk insurance, we get compensated for the damages and the repair. The magnitude of the repair is still being assessed by our team. I am sure they will conclude over the next one or two weeks how much is the cost. The most important is that it is being covered by the war risk insurance. Our vessel is still on hire, or they will be compensated as part of the war risk insurance for the off hire that potentially has resulted from this impact.
Okay. Can you also give some colors on the additional fleet timeline on your slide seven? Because total you have 40 fleets. In terms of the deliverables, how many fleets of completion? This kind of colors. Yeah.
It is- I think- Yeah, go ahead, Kamaran.
Sorry. I was going to say, if you can just refer to that slide, we've given- I think a pretty good outlook in terms of the delivery of the 40 vessels. I think you mentioned 46, but it's 40 vessels that are being delivered. You can see from there, we've given by quarter and then long-term, we've given an annual outlook of the deliveries.
Okay. Sorry, which slide is this?
It is on slide 16.
16. Let me see. It's 16.
Okay.
No, 16 is dividends. It's-
15
15. Go to page 15.
15.
Page 15.
Okay. All right. Okay. Thank you. Thank you very much.
The next question comes from Ahmed El Sharkawy from SICO. Ahmed, please go ahead. Your line is open.
Hello. Am I audible?
Yes.
Hi, Nakilat management. Congrats on the great set of results. I have two questions from my end. The first question is, since you have mentioned cost reduction, can we expect more synergies to be recognized from the consolidation of Qatar Shipyard and more cost efficiencies in the next coming quarters? Or is this a good indicator for the rest of the year? My second question is about the tax expense. We have noticed an increase in tax expense in the second quarter. What is the reason?
All right. Yeah. Let me just answer the tax question. This increase in tax is relating to two elements. One is relating to the domestic tax portion, and the other is relating to the global minimum tax, which is minimal for us as our core operations is international shipping. But as mentioned, we have the consolidation of the Qatar Shipyard as well as the slight increase in our core business profits, which has resulted in an impact in the tax estimate for the year.
Yeah. In relation to the operating cost and G&A, there are two factors here. There is one we have to take into consideration is that the reduced activities, which has resulted into a lower OpEx for the first half. In regards to synergies, if you looked over the years, we always as a company, as we scale up in the number of vessels and by the number of years we operate, we usually find a way to optimize costs and use a lot of automation and try to find a way that we can really consolidate our procurement to really reduce our cost per unit for service and for spare parts. This has been evident for the past many years. You should always expect sort of improvements that comes from trying to really capitalize on the synergy part as part of the group.
You also have to take into consideration that Qatar Shipyard Technology Solutions did not have as much activities for the last six months. Also you have to take into consideration that also our vessels has not been operating as compared to a previous normal year. We should really expect, going forward, the OpEx to normalize, but there is always going to be a chance for us to really optimize our cost through synergy or through finding a better and smarter way to reduce our cost. Thanks.
Yeah. Maybe one more question about the tax expense. What would you guide for an effective tax rate given the consolidation of Qatar Shipyard Technology Solutions and the two portions of tax, domestic and global? For the future, what kind of effective tax rate could we assume?
Yeah, I think a good guide, Ahmed, would be to use the existing effective tax rate. If you were to take the P&L now and calculate-
Okay.
-the existing effective rate.
Perfect. Thank you and all the best.
Thank you.
As a reminder, that is star followed by one. The next question comes from Lee Beswick from QNB. Lee, please go ahead. Your line is open.
Hi, can you hear me?
Yes.
Can I just ask about the new ships? Have you begun or have you negotiated the pricing with QatarEnergy yet on the ships that are going to be delivered in the next 12 months?
These prices has already been set on the date we got awarded the contract. That was already-
Oh, okay. That's already been agreed.
Yes.
Is that the case for all of the new ships then?
Lee, if you are looking for some guidance on that, again, if you refer to, as Fotios said, just slide 15, where we have Nakilat's new builds, you will have a guidance there on the ship commitments.
I am not looking for guidance on the CapEx. I am looking for an indication of the day rate that you are going to receive, if and when the ships actually get deployed.
The day rate has already been agreed from the moment we get awarded the contract. As we have said before, we always target something between 11% and 13% to 14% levered IRR. This is what exactly where the day rate has been set.
Right. Okay. Is there a force majeure clause in those contracts?
The force majeure? Yes. In the contract there is a force majeure. That is something that they really need to really if they got called, there is a lot of long-term mechanism that they have to work on it.
Right. Okay. Fair enough. Thank you.
No further questions at this time, but as a final reminder, that is star followed by one to ask a question today. We have no further questions, so I will hand it back to the management team for any closing comments.
Thank you very much all of you for joining us today, and we appreciate your time and continued interest and confidence in our company, Nakilat. We remain committed to maintaining open and transparent communication. Our IR team is available for any further questions that you guys might want to ask, and we usually do in a very short period of time to provide you with that information. With that, thank you very much and looking forward to see you in the near future.
This concludes today's call. Thank you very much for your attendance. You may now disconnect your line.