Hello and welcome to Milaha. Please note that this call is being recorded. You will have the opportunity to ask questions to our speakers later on during the question and answer session. If you would like to ask a question by that time, simply press star followed by the number one on your telephone keypad. I'd like to hand the call over to our moderator, Bobby. Please go ahead.
Okay, thank you. Hi. Hello everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services.
I wanted to welcome everyone to Qatar.
Navigation Milaha Second Quarter and First Half 2025 Results Conference Call. On this call we have Akram Iswaisi, who is the EVP of Finance and Investments, and we have Sami Shtayyeh, who is the VP of Financial Planning and Analysis. We will conduct this conference with first management reviewing the company's results, followed by a Q and A session. I would now like to turn the call over to Akram. Akram, please go ahead.
Thank you so much, Bobby. Thank you everyone for joining. Milaha's first half of 2025 Earnings Call and your interest in the company. Similar to prior calls, I will start by going over our consolidated financial results, then move on to our various individual business segments and finally turn it over to Sami to go over the outlook for the rest of the year. As usual, we will end the call with Q and A. The key highlights of our financial results: Milaha's operating revenues came in at QAR 1.59 billion for the six months ended June 30th , QAR 1.6 billion rounded for June 30, 2025, compared with QAR 1.4 billion for the same period in 2024, for an increase of 11%.
Operating profit came in at QAR 354 million for the six months ended June 30th, 2025, compared with QAR 316 million for the same period last year, for an increase of 12%. Net profit for the six months ended June 30, 2025 was QAR 672 million, compared with QAR 628 million for the same period last year, or an increase of 7%. Lastly, our earnings per share was QAR 0.59 for the six months ended June 30, 2025, compared with QAR 0.55 for the same period last year. Now moving on to the segments.
Maritime & Logistics: Operating revenues for Maritime & Logistics increased by QAR 60 million, going from QAR 394 million in 2024 to QAR 454 million in 2025, led by our container shipping unit, which was mainly the result of high freight rates or increased freight rates from the China service that began in earnest in the second half of 2024.
Operating expenses increased by QAR 37 million, broken out as follows: QAR 24 million of the increase being variable in nature and tied to the revenue growth, QAR 22 million of the increase coming from right of use accounting for two chartered-in container vessels that joined our fleet in Q4 2024, QAR 8 million increase in salaries and wages due to increased crewing costs in our offshore segment, and lastly, we had an increase of QAR 17 million in fleet and technical costs transferred to our offshore segment due to additional expenses related to new vessel additions. Non-operating income increased by QAR 30 million, with better performance from QTerminals, our QTerminals joint arrangement, more than offsetting lower gains on the sale of assets that were recorded in 2024. That brings us to an overall bottom line increase of QAR 54 million versus last year.
In Offshore, our operating revenue grew by QAR 159 million or 22% versus last year. Increased project work and the addition of three new vessels from the second half of 2024 up to the first half of 2025 drove the growth. Overall expenses increased by QAR 132 million, with QAR 85 million of operating supplies and expenses being directly variable in nature and tied to the revenue growth. There is also a QAR 14 million increase in salaries and wages, in addition to an QAR 11 million increase in depreciation and a QAR 17 million increase in vessel technical expenses, both related to fleet additions. At the non-operating level, there was an QAR 11 million increase in tax expense tied to essentially the recently enacted global minimum tax, which was implemented in Qatar this year. The net income result was year-over-year growth of QAR 60 million or 14% in Gas & Petrochem.
Operating revenue increased by QAR 37 million, going from QAR 122 million in 2024 to QAR 159 million in 2025 for an increase of 30%. QAR 32 million of that increase is related to us taking full ownership of two VLGCs that were previously part of the Gulf LPG joint venture that we had with Nakilat. For your information, we had a 50% stake in that JV, with Nakilat having the other 50%. The JV consisted of four VLGC vessels, and financial results of that JV were recorded below the line as part of the share of results of joint arrangements. Now that we've taken full ownership of the two vessels, we started recording the results line by line, essentially above the line in operating revenues and expenses.
Operating expenses increased by QAR 26 million, with QAR 11 million of that increase coming from higher depreciation expense related to the change in useful life of our wholly owned LNG vessels that occurred in Q4 2024, and most of the remaining balance related to the OpEx from the two VLGCs we just spoke about. Non-operating profit decreased by QAR 3 million, with better results from associates being offset by QAR 14 million in higher tax. Net profit for the segment came in at QAR 367 million versus QAR 359 million in 2024 for an increase of 2%. Now moving on to Trading and Capital, starting with Trading, the Trading segment reported a slight decrease in revenue, going from QAR 102 million in 2024 to QAR 97 million in 2025. Cost of goods sold similarly decreased, with the end result being a flat bottom line with last year and then
Moving on to Capital, revenue slid by 17% or QAR 41 million versus the first half of 2024, with a QAR 60 million drop coming from lower Qatar Quarries sales and a QAR 26 million drop coming from our investment units. QAR 34 million of the investment drop had to do with lower dividend income from our local company equities as explained in Q1 2024. In Q1, as explained in Q1 of 2025, 2024 was the first year some companies started issuing semiannual dividend distributions. This happened later in 2024. In effect, last year there was a full year dividend paid out in the first half of the year, but in the first half of 2025 there's only the semiannual dividend payout. The lower dividends were partially offset by higher returns from the rest of our investment portfolio.
On the cost side, total expenses came down by QAR 19 million, with QAR 7 million related to the successful recovery of outstanding receivables that were previously provisioned for, and the balance mainly related to Qatar Quarries' cost of goods sold. There was an QAR 11 million decrease in non-operating income, and all in all, Capital recorded a net profit decrease of QAR 34 million compared to 2024. That wraps up the segment s, and I will now turn it over to Sami to discuss the outlook for the rest of the year. Thank you.
Thank you, Akram. Starting with Maritime & Logistics, on the container shipping side, there remains industry-wide uncertainty over container shipping rates given the political and economic trade and tariff issues.
In logistics, the environment remains very competitive and challenging, but we're optimistic that new product and service offerings such as pharma warehousing and turnaround efforts will improve results. In Offshore, on the support vessels and services side, we expect to see continued growth, particularly longer term with all the expansion work in Qatar's oil and gas industry. For the harbor and industrial logistics operations, we expect stable revenue given the long-term nature of most contracts. In Gas & Petrochem, overall we expect limited volatility due to the long-term nature of contracts we have in most business units. On the VLGC side, rates remain currently healthy and longer term look stable. In Trading, we'll be focused on optimizing the segment and continuing our focus on profitable growth and margin improvement. Lastly, in Capital, we will continue to focus on yield. With that, now the operator will open up for questions.
At this time I would like to remind everyone that in order to ask a question we press star then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Okay, your first question comes from the line of Rob Skepper with Ashmore. Please go ahead.
Hi Akram. Hi Sami. Thanks for the, thanks for the call today. Much appreciated. I guess kind of going through in presentation order. I guess starting with Maritime & Logistics. Another good quarter there driven by container shipping. I note the comments you just made in the outlook about uncertainty on rates given the kind of various disruption going on in terms of what you're seeing currently in the third quarter. When you look at your routes and look at your rates, is there any negative trends starting to emerge at this time?
Thank you very much for the question. Honestly, we are cautiously optimistic. I think the Red Sea situation will persist, and that will also continue to put pressure on supply chains. I think that will continue overall. Where you've seen our announcements, we continue to grow into new markets and continue to expand our network. To be frank with you, we're quite optimistic. We're cautiously optimistic. Continuous shipping is a spot business, and there's a lot of volatility. As it stands right now, we're quite optimistic for the rest of the year. It's a flat business, and there are so many variables that impact specifically that business because it's not long-term contracted business.
Yeah, sure. Okay, got it. Great. Just jumping to offshore and marine, obviously that first quarter we started to see the impact of a couple of new OSVs. Now we look at kind of second quarter, good momentum there, vessel chartering sequentially higher, also kind of project income and the services revenue also increasing. As we look into the second half in terms of fleet addition driving vessel chartering revenues and looking at that kind of services revenue, is there still continued sequential growth expected throughout the year or is this kind of second quarter the new run rate we should be expecting?
We have a pipeline of projects that we have bid on and there's a pipeline of projects that we will continue to bid on. As of right now, we've announced the three vessels that we've acquired last year, and you're going to see the impact of those vessels for the full year. There will be potentially additional vessels that we may acquire over the next couple of years, but impact again, depending on when those vessels are acquired and when they're deployed. We're also constrained by the availability of vessels in the market. Our options are either build or go acquire secondhand. We are quite optimistic on this segment and I think we'll continue to see positive growth momentum, specifically in the segment, because the demand is there. It's not a function of whether the demand is there or not.
It's a function of how quickly we can acquire or provide vessels to deploy them.
Yeah, got it. Okay, great. I just wanted to ask around the Gulf LPG JV with Nakilat, forgot to ask them yesterday. In terms of that, in terms of you kind of unwinding that JV and taking kind of half the vessels each, when did that transaction close? Like, when did that, just the second quarter.
At the end of Q1, we took over the vessels. They took up the vessels in Q2, so essentially we took over the vessels and now we'll operate those vessels 100%. Effectively, we are looking to exit a specific segment and continue to focus on areas where we can build scale as part of our strategy as an organization. You'll see more and more potential exits of certain subscale businesses where we are not a leader and where we want to focus on areas where we can become a leader and be able to build scale. Exiting the Gulf LPG JV is an example of that. Over time, there are certain segments that we would be looking to exit.
For the Gulf LPG, that was sort of the starting point with us, to take over the vessel, just see what we're going to do with them, if there's an ability to grow the business or essentially go ahead and sell the vessels in the market and continue to focus on the businesses where we can build scale.
Okay, got it. In terms of the earnings power, the second quarter kind of represents the new structure because, as you say, it happened towards the end of the first quarter.
If you look at what has happened, before we were recording, you know, because it was a JV, we were recording 50% of the net profit below the line. Essentially, there's not going to be really a material impact unless, again, the only variable there is the rates in the market. We're booking net income before, but below the line we're still booking the net income. The only difference is we're booking the revenue and the expense and the net income. Where this changes is essentially how we deploy the vessels to generate additional profits. It depends on market rates today.
Okay.
That's the only variable there that will help us create additional value.
Yeah, if you did, I mean if you generated capital from, for example, if you sold those two vessels in terms of the proceeds of an exit like that, would you just put that into the book in the capital segment? Would you like special divvy it out? Would it go?
In our core business? As I mentioned, our focus right now from a strategy perspective is to focus on the segments where we continue to build scale offshore. There's tremendous growth potential there.
Yeah.
That segment will continue to grow. If you look at Maritime & Logistics, there are certain segments within maritime and logistics that, I mean container shipping, we will continue to grow that. It's doing quite well, and it's going to continue to perform according to the plan we put in place. If you look at logistics, it's beginning to turn around. You've seen the announcement in the market that we signed a five-year agreement with Qatar Airways. That business has a new strategy, and there's a very, very strong push to turn that business around and eventually grow that logistics business. If you look at M&L, part of the area that we're focused on, and you've seen again the announcement that we've made on our strategic partnership with Fincantieri, is to continue to provide, to be a service provider, marine service provider to the military sector here in Qatar.
That's a very strong growth area for us. There are specific areas where we think we can build scale and generate attractive returns that will help us in the long run increase shareholder value.
Got it. Great, great. Thanks, guys. Thank you. Thank you.
Are there any other questions?
Sorry for that. Your next question comes from the line (inaudible) of from SICO, please go ahead.
Hello.
Hi, good afternoon. Am I audible?
Yes, you are.
Yeah.
Thank you very much for this opportunity. I have two questions, firstly related to the offshore segment, following up from the previous caller. When it comes to the second quarter numbers in terms of vessel chartering as well as services, the revenues have substantially increased. If I am to back off the first quarter numbers, chartering revenue was QAR 259 million this quarter and services QAR 156 million. I just want to understand whether this represents the current, I mean the run rate going forward or can it increase further when more vessels come into play? That's my first question.
Listen, it's a good baseline for run rate. As I've mentioned on that last question, the previous gentleman, we're on a very strong growth trajectory. The demand is there and for us the only, I mean the demand is there, the growth potential is there. It's just a function of how quickly can we provide vessels and deploy them. It's a good run rate as a baseline. We're quite optimistic based on the demand in Qatar primarily that we could potentially exceed that, exceed that run rate. The only constraint is how quickly we can find vessels, how quickly we can build vessels and deploy them. The demand does exist in Qatar.
Okay, you mentioned that you added three vessels last year, towards the end of the year. Are all these three vessels in operation right now? Were they fully contributing in the second quarter?
Yes, they're contracted. That's why they're contracted to last year. Yeah.
Yes. Okay.
Okay.
My second question
required in the second half of the year. They're not going to be idle the first half of the year. The only time that the vessel will be idle or not working is if it's in maintenance or there's some unexpected maintenance or scheduled maintenance or some sort of an accident. We're required in the second half of the year to be able to deploy them. As I mentioned, we're not short of work, we're just short of vessels. As vessels come in, we do work.
Okay, my second question is on the tax rate now. I guess you had some catch up provisions done in the second quarter. I want to know, if I look at the effective rate, if I work out the effective tax rate, it comes about 5%. Is this the rate that we should take going forward for the.
Full year,
it's not a rate you should take going forward because this is the first year of implementation of global minimum tax, right? Call this an adjustment period. This is our estimate. I mean, we book tax provision based on a complex model. Again, this is the first year in terms of implementation of global minimum tax at Qatar. I would caution you about just using this year as a baseline because it will change next year. I think this is a good proxy for the rest of the year.
Are you getting any kind of exceptions, any segments that you're getting exemptions for this global minimum tax?
There are no exemptions. We have to follow the rule of the law. The tax code is clear. The implementation is happening in Qatar this year, similar to the region where implementation is happening. Exemptions and special programs come up as the level of sophistication evolves. If you go back to the tax code, there are certain exemptions. If you have a tonnage tax regime, then you pay a certain tax rate on the tonnage, not the income. This is sort of how it works. It's difficult for me to sit here and explain it to you on a call. The reality is this is an evolving thing this year.
Right. Okay, that's clear. Thank you very much and wish you all the best.
Your next question comes from the line of Abhinav Sinha with Lesha Bank. Please go ahead.
Hi, one question. On your offshore segment, like related to NFE, what is the kind of traction?
That, like, you are looking at, if any, like at this point
what does that mean? What do you mean by traction?
In terms of the execution and how, would you like to share some guidance for next year?
Unfortunately, we can't share guidance for next year. I mean, right now we're sharing guidance for the rest of the year. The information is out there on NFE and the plans for Qatar. You can look them up. You can see from our results, we are involved in NFE projects. As we've mentioned, if you look at offshore, we've had, for example, about QAR 11 million of income from the new fiber link project. We are doing projects for NFE. There are different types of projects. NFE is a big project that we are benefiting from NFE. If you look at that, as I mentioned, a lot of these vessels we're acquiring, some of them are being deployed in the NFE project. It's difficult for me to give you some sort of guidance.
As I mentioned earlier, the base, what you're seeing right now as a run rate, use that as a baseline. As the year evolves, you'll see us potentially acquiring more vessels and that will change your run rate. I think the demand is there, just a function of how quickly we can acquire vessels and then deploy them.
Understood, thank you.
Thank you.
Your next question comes from the line of Moussa with QIC. Please go ahead.
Hello.
Thank you, gentlemen, for the call. This is Bijoy here. I have a question on the offshore segment. If I look at your margins, your margins have been not improving. It's actually slightly down when compared to last year. What are you, what's your view on the margin side? How do you see these contracts getting priced? Is it the focus on volume or do you. Can we expect margin improvement in the coming quarters?
You're talking about net profit margin because operating profit margins are in line with last year, right?
Yes, almost in line. Yes.
They are in line. I mean, if you look at net profit margin, it decreased primarily because of taxes. As I mentioned earlier, if you look at sort of our growth momentum, a lot of what we've done, two things, what we've done is, one, you know, we're winning new contracts, so we're creating new revenue streams. These new revenue, net cash flow, new revenue streams are at today's market rates, right, but also at today's CapEx rates. Two, we are as contracts come to an end, like legacy contracts, we are renegotiating those contracts at more attractive rates higher than they used to be. These essentially renegotiations will mean that these contracts will have additional net income contribution and therefore will help contribute to the bottom line. I think if you look at even our peers today, our margins are actually healthier than our peers.
We do benchmarking of a lot of different companies in the same space we are in, and our margins are actually very healthy compared to theirs. I think if you look at it, it's very much in line with last year. As I mentioned, for us, it's just a question of how quickly we can get new vessels so we can deploy them on contracts.
Understood. The asset held for sale is part of the strategy wherein you can use that capital to buy other vessels and deploy here.
What do you mean assets held for sale? You're talking about the investment portfolio.
There's one line item under your balance sheet which is assets held for sale.
Which is basically,
I think, assets held for sale. These are assets that we're selling. If we're selling assets, whatever proceeds we will receive from the sale, we will deploy them wherever we have growth opportunities. Again, we're looking at profitable growth. We will deploy them where we generate the highest return. That's it. I can use my balance sheet and I hardly have any debt. I can borrow to fund these assets. I can sell non performing assets. If my strategy changes, then I will exit certain segments, sell the assets, use the cash to fund new opportunities that are profitable. Again, we're chasing profitable growth. I have a lot, I have a toolbox with a lot of options.
Understood. As you mentioned before, you said that there will be new, like when the contracts get expired, we will be renegotiating them on a better, better rate. Do you expect any
market.
That's what you do? Yes.
Do you expect any contracts getting expired in the next few quarters or next year?
We always have contracts expiring, right? Because if you look at our portfolio, it's a portfolio of contracts with different maturities. There are always going to be contracts that will mature, and as they mature, we will negotiate. We have an excellent relationship with our customers. We will negotiate them based on today's rates. That happens every year. Essentially, there's always a contract expired.
Right.
We have in total 60 to 65 vessels in total and we continue to grow that fleet. There's always going to be, you know, you've got about 20 roughly long- term contracts. The rest of them, you know, again we have long- term contracts as well, but there's always a percentage that are short- term in nature. As those contracts mature, we'll, you know, we'll deploy them at market rate.
Understood. Thank you. Thank you so much. That's it from my side.
Next question is from Bibi Aisha with Decimal Point Analytics. Please go ahead.
Hello, am I audible?
Yeah, we can hear you. Go ahead.
Yeah, my question was on tax, but that got already answered. There was a change in the tax page. That has been taken up already.
Okay.
Next question will come from the line of Ahmed Ashaki with SICO. Please go ahead.
Hello. Am I audible?
You're audible. Hi Ahmed, how are you?
I'm good.
How are you?
I have a couple of questions related to the offshore segment. My first question is related to the services. Do the two new lift boats vessels fall under the services and offshore? I see a huge improvement in them. The percentage, in terms of percentage, the growth in services is high. Is the CapEx deployed in offshore related to the services? This is one thing. Do you have a target for the number of offshore fleets in the next couple of years, or are you planning to expand or deploy CapEx based on the projects you win or based on the bids? My third question is related to the offshore contract. Typically, in terms of duration, how long are the duration of these contracts? Let's say the two new vessels that were deployed, which have been recently deployed in 2025, how long were the durations of these contracts?
Okay, to start off, if you look at services, it's chartering services. That's where we charter the vessels. The assets, this new CapEx is mainly in the chartering services. Right. That's where it is in terms of a target for a number of vessels. I think if you recall our previous call, we've mentioned that we're looking at maybe close to QAR 1.3 billion worth of CapEx to be spent on offshore and that could potentially be exceeded depending on the nature of the contracts. Our goal is to build or construct the portfolio of assets with contracts that have mixed duration. We're hoping for longer, the longer the better, and then long, midterm, and short- term. This is how we're running the business today.
We're managing this as a portfolio where we're able to lock in long- term cash flows, but we're also able to get the upside for the changes in the market today. If all of my contracts are locked in long- term contracts, if my vessels are contracted in long- term contracts, I will not be able to get the upside of what's happening in the market. That's how we basically constructed the portfolio and that has served us well. Was there any—did I answer the questions?
Just to follow up on, the CapEx relates to the offshore. QAR 1.3 billion, you mean in 2025 or between 2025 and 2020?
It's going to happen over the next couple of years. I mean, again, this is sort of what we've agreed internally and we said we commit to, and it's going to happen, again, as I mentioned multiple times. It really depends on how quickly we can build vessels or how quickly we can find secondhand vessels.
Right,
okay.
In terms of previously contracted offshore vessels, are they being renegotiated on the current offshore rates?
We have strong relationships with the oil majors in Qatar. As contracts are renewed, we go back and in good faith work with our customers to have a win-win situation. Our approach is not simply to go in there and squeeze the customer as much as possible. It has to be a win-win. This is a long-term relationship where we work with our clients to provide them with solutions and ensure that it's a win-win for both of us. Clearly, from a common sense and a commercial perspective, rates have changed significantly. If you compare it to three, five, six, seven years ago.
Right.
Rates are much, much higher because it's a function of the supply demand imbalance in the market today. Clearly, you know, anyone with commercial sense would expect that there should be an uplift in rates which could help potentially improve the margins.
Okay, that answers my question.
Thank you very much.
All the best.
Again, all of this is subject to negotiation, right? Again, common sense, commercially, this is what one would expect in the current market.
Next question is from Naveed Ahmed with SICO. Please go ahead.
I think I've answered all I can on offshore . I'm not sure that there's anything else to answer on offshore . Go ahead.
Yeah, hi, good afternoon and thank you. My question is not on the offshore, it's on the Maritime & Logistics segment. Just a quick clarification. You're enjoying better rates by opening new routes to China. I just wanted to understand, are the better rates based on some short-term variable which is resulting in you benefiting from the rates, or is it a structural thing which has always been the case in the past?
Honestly, it's just a mix of the two. It's a mix of how we're running the business. Today, there are, I would say, disruptions on the global supply chain, and we are taking advantage of that. Obviously, it's a new service for us that did not exist before. If you compare it to last year, clearly there's additional revenue, additional bottom line. There are some opportunities or dislocations in the market that we were able to capitalize on.
Just a quick follow up. Going forward, is there a possibility that you further increase your presence in China to benefit from this higher rates?
What's that?
I'm asking, going forward, is there a possibility that you increase your contribution from China to benefit further from these higher rates.
That's the goal. This is our first foray. If you look at, we also announced yesterday that we've expanded to North Africa and we have a new service to Libya, which offers great potential and good margins. We are looking at opportunities where we can grow profitably. In the long run, our target is profitable growth. We will have to make some sacrifices in the beginning and make some investments to be able to achieve that long-term vision. That's the ultimate goal.
All right, thank you so much.
Thank you, everyone. That concludes our Q and A session for today. I'd like to turn the call over back to Bobby Sarkar, please. Go ahead.
Okay. Thanks everyone. If that's all the questions we have for today, I want to thank Akram and Sami for taking the time to go over the results and answer questions. Thanks everyone. We'll pick this up next quarter.
Thank you, everyone. Appreciate it.
Thank you, everyone. That concludes today's call. Thank you so much. Thank you all for joining. You may now disconnect. Have a nice day ahead.