Earnings Call: Q1 2026

May 27, 2026

Summary

Q1 results were weak as lower freight rates, weather disruptions and Middle East conflict drove higher costs. Management expects recovery as volumes and rate indicators improve and fuel surcharges and contract repricing take effect in Q2–Q3.

Yeah. Bueno, vamos a partir. Okay. Let's get started. [Foreign language] Good afternoon, everyone. Welcome to our second call of the year. First, regarding the results of the first Q of 2026. My name is Mariela, the person in charge with the relationship with investors of corporate affairs. Joining me, Roberto Larraín, CEO of Compañía Sud Americana de Vapores. For those who need the translation towards English, you can find it on the closed caption icon, and you can change the language there. For the people that need translation, you can switch to the other language in the world icon below. With that, we would like to welcome everyone. We're going to do a short presentation of the results and also regarding the situation of Compañía Sud Americana de Vapores, giving Hapag's results, and at the end, we're going to have a section for Q&A. Hopefully, you can write the questions in the chat box, and we can address them in order. Just give me one second to share the presentation with everyone. Eso, Roberto, te dejo la palabra. Roberto, now the floor is yours. Gracias, Mariela. ¿Se ve en modo presentación? Can you see it in presentation mode? Eso es lo que también las personas tienen en modo presentación, creo. Perdónenme un segundo. We do apologize. Just give us one second. We are going to try to put it in full screen. Aquí se sigue viendo así. No se ve perfecto el tema. Si contactas en Messenger. Seguramente no. Excuse me. Eso perfecto. En este caso. No, eso no se ve. ¡Ey! Ahora sí. Yes. Eso es. Okay, empezamos. Now we can start. Within the first Q of 2026, there were several disruptions in the market that affected the entire industry and around the world. With all the situations and without any context, it is important to review this in further detail regarding the Q. The beginning of the year was not really good. The Hapag-Lloyd drop, which importantly share that, and it is explained by all the disruptions that we discussed, the Middle East and also climate conditions that were very difficult in some ports. That meant logistical issues and costs that we had to face. The other thing is the operations with Maersk and Gemini. This has been developing well, and it allows that the scheduling is still high, except for the problem in March that the indicators went down, but Hapag-Lloyd with Maersk is really leading the front. The other important thing is the ports business. There was an increase of cargo. A new port was opened, and we're trying to find synergies with this new society that Hapag manages in port. Regarding ZIM, in the purchase of this company, we keep making progress with the shareholders, and we are still working for the authorizations, competencies, and with the government that are the ones that are missing in order to finish this project. Last, which is also very important, are the perspectives or forecasts that Hapag-Lloyd provided at the beginning of the year with these results regarding. It didn't go up or down, but it was kept because of this geopolitical issue that we're facing. Next slide. If you see the results as the Group Hapag-Lloyd, the liner business in the ports terminal, we can see that we had a drop in sales. This is explained basically by the drop of tariff, which was 9%, and those volumes were almost null, but this is explained by the drop in tariff. We need to consider that this drop was on an industry level, not just Hapag. This explains it, that January and February, the narrow started opening in the Suez Canal. This made the tariffs drop in 2 months. In March, we started seeing other problems, and that's when the logistics started changing and started facing all these problems. The drop in tariff is aligned to Hapag-Lloyd and what we see in general from the market. When it comes to volume, we can see that it's lower than the competition, because last year, Hapag was alone, and now it is being compensated one year with another. Now, in terms of EBITDA and EBIT, this was negative because of the increase in costs that we witnessed. The EBITDA is positive. It's almost half of Q1 last year. We showed Q4, we checked Q4 also because there's a trend in the previous quarter. In the last line, the next quarter is very negative versus the 469 increase there. Now, in this slide, we can share the reliability of the itineraries. To the right, you can see a thick orange line that is Hapag-Lloyd, that up to the beginning of the year was almost 90%, and now we see that it dropped to 80%. It's still more important than the rest of the market, which are the two lines at the bottom. They are the ones that have the worst reliability and the ones that have the best reliability. They are moving around between 50% and 80%, 60% and 70%. So it is maintained despite the disruptions, and that is a good indicator. Now, regarding what happened in terms of weather that affected, it was in Europe. There was a drop in exports that had an impact in volume. This very severe weather condition that disrupted North America and Europe, that disrupted the vessel schedules and terminal operations that meant that the ports were inaccessible. Therefore, we had to hire storage outfers, take them by land, hire other means of transportation to keep the schedules, and this means overcost. Now, regarding the Middle East, given that it started in March, Hapag-Lloyd and all vessel companies suspended transit on the Suez Canal that was resuming, and the same thing happened with Hormuz. Because of the reasons that we all know, we have to stop operating there. In the case of Hapag-Lloyd, specifically, six vessels were retained in the channel, in the canal, in the Strait of Hormuz. They were able to leave because of our American associates. The five that were rented, one ended up a charter contract. So it was delivered in the port of the area, and the role was affected by a missile. They weren't attacking the ship. It was just intercepted, and there was a little fire, and that is being repaired in the area. So there are three vessels that are in operation that are still retained there, and this is affecting Hapag-Lloyd. Now, regarding ports. Between March and April, the vessels to that area was suspended because they were not ready to receive all the cargo in the Salalah Port, and people from India started grabbing that cargo. That was fixed, and we can see it in the map. The ports that are being used right now in the Red Sea, in Saudi Arabia, and through trucks, it's just 1,000 kilometers to reach the other coast. That's how we are supplying the rest of the countries. The Emirates are using pilot vessels and within the canal, within the strait. They are also working for other countries. So logistics and the resiliency is becoming more normal. Ports are getting more saturated and ports in India also, but they are operating. It, of course, costs more because there are some contracts and some trucks. At least in that area, we have the containers, and we are analyzing other alternatives. We have to say now that by the end of February, we have the signing of the agreement in purchasing this company. The timing was not great because at the end of February and then March, we started this conflict in that area. ZIM is an Israeli company and that's the one that's in the specific process. Regardless of this, the shareholders approved this. The transaction was yielding a 90% majority, and what is left is the approval by ministries of the State of Israel and then, of course, the different countries that operate the antitrust issue. Timings there are different, and we need clear solutions and clear answers from the state. That's it. When we zoom in the results of Hapag-Lloyd by business line, we can see that the shipping business, which is the most important one, you see they have lower results than the first quarter 2025. What Roberto was saying is very important because we separate what happened in the quarter, because one thing is January, February, affected by storms, bad weather in a market in the north of Europe and in the East Coast of the U.S. These are markets where Hapag has overrepresentation in the market, and this is why when you see the results of other liners, there were other three liners that had negative results, and there were others that had better results. The implication of why Hapag's results were worse was because weather during those months. Ultimately, this should be reverted, and the market was a quarter that, in terms of scale, see growth results in terms of volume. The market in the first quarter grew around 4%, and therefore, the forecast for the midterm, when you see volumes of April and May, are positive. The bad weather situation was reverted, so these are particular things that are part of the problems that this logistics chain needs to adapt to. This is what happened in January and February. During March, and by the end of February, we saw the beginning of the conflict in the Middle East. So in March, global volumes, the entire industry, all the competitors, tended towards zero. On the other hand, with an important increase of cost, the cost of fuel duplicates, and this is something that's not seen in this result because we're going to see the breakdown of expenses for fuel, because we had fuel storages were marked, that's why we don't see it here, but it is shown in the cash flow. The cash flow in terms of fuel for Hapag-Lloyd, it's 100,000 tons of fuel a week. The tonnage of fuel that they consume is $400 in high prices. It's additional costs that during that quarter still haven't been captured in terms of those results, but they haven't been captured in the other costs for clients. That is something that we're going to see during the second and third quarter. When you see tariffs, there is this sort of normalization in the lower range, 9%, almost 10%, regarding the drop rates regarding the first quarter of the previous year. This has to do with the market condition. Despite the fact that the market is still growing, the entering offer of the last period has been larger. This means the balance that has more offer than demand, so the trend of tariffs has been lower. Now, regarding the Q4, we see an increase, given that all these over costs are start transferring, especially regarding fuel, we should expect that this is also going to increase in the next quarter. We have to see what happens on the level of margins. When you really see what we were explaining about volume, an almost flat volume, the main drops are in the growth from Europe and Europe to America, the business in the Atlantic, that was very affected, and Hapag-Lloyd has more share than the rest of the market. The cost line is relevant during this period. The cost basically went up $100 per TEU, and that's basically what you make in a year, the total margin. When you look at the lines cost by cost unit, see an increase in fuel. In fact, fuel drops from $200 TEU to less, and this is going to start rising in the next period. However, the cost increase that we saw in Q1, that has to do with what Roberto was saying, more storage, more fees, more trucks because of the congestion and bad weather. All of this will go down, but it's going to be compensated with fuel. We don't expect that on a global level, if you see the cost by TEU, can be lower. This is also going to depend on volume. As long as we see strong volume as we are seeing now, that is going to help indicate that there's capacity that we're not using, that allows us, with the fleet that we have, we can fill more of the ships and the vessels, and then the vessel employ some depreciation will go down. Now, when you look at the terminals business, in terms of entering, this is going to increase. We need to consider that one, the transfer volume of cargo increased 11%. It was very positive, but this also means not just for the terminals and comparing that with the first Q and the first quarter, but also from February, we started consolidating the entire operation related to containers, logistical and terminals of one of the branches, which is the terminals branches and the managed containers in India. This is also going to increase in the consolidation of the results we have. The volume was also good in Latin America. When we compare quarter with quarter, November, March last year, it purchased a participation in a terminal in France. Therefore, that period, it's a high share of the contribution of that quarter versus last year, that only reached one month. Now, when you see how the perspective is for the rest of the year, 2027, 2026, in terms of supply and demand, we still hope that the demand will grow at 2% or 2%-3% in Q4. This might go, especially in the last quarter, but that's not what we see in April and May. In fact, when you see the capacity has been going up. It's for a variety of reasons, of transfer, but secondly, it has to do with the big seasons, they happen on routes through Africa, through the Suez Canal, that still with our costs, last periods have tended to less distances. But when we look at the year, a good demand, 3%, is a good indicator. With our supply, that is going to grow around 4%. Half of that has already entered this month. It is a good balance for this year. Here also, we should consider when you add a 7% of supply that has entered this year, we are in a year of balance, but that we've been accumulating a supply entering of 5%. The expectation for 2026 was not really positive because of this effect of a lot of supply. The spot, as I said before, has grown. The CCFI is also a price indicator that includes spot and contracts. They are also rising. That's the message. During the following years, we can start recovering the high of the increase of cost in fuel and the extra charges, and also set aside all those surcharges related to conflict areas, also related to specific contingencies. The results, they might not be really positive this first quarter, they will be compensated in the next quarters. Given all the uncertainty that we have regarding Red Sea, because when we are seeing all the agreement of peace, we have to see how much it is going to hold on, which sea transits are going to normalize. There's still a lot of uncertainty. Too many uncertainties to estimate the possible logistics, the logistics that we saw there by finished goods, by back then, this regarding what was informed a couple of months ago. Now, if we consolidate results on the CSAV level, we can see the results of Q1 was negative, and the last line was 89.9, 82.9. This is explained by the Hapag-Lloyd results. Now, if you see it by line, of course, investment, Hapag-Lloyd results was less. This was the important impact because of what has happened. The financial result was better this year because we had more cash flow available because of the cooperation that we had last year. In the exchange difference, for example, the dollar versus the euro, given that we had a lot of cash flow in euros, we have some utility regarding last year. The dollar now is negative and taxes go along the same line. Now you can see the graph, that we are around 150 million, which is explained by Hapag-Lloyd's results. The next slide. Slide, please. Here, you see the closing of March, and that's collectible. The grades that we had were 55 million, and this moved, and of course, we had taxes to recover. You can see the situation here in this slide. This is happening now. We are going through it right now. We have to collect 112 million in Germany, in the regular tax operation that happens every year that we know. During April, all these taxes are recovered, and when we get it being integrated. In March, we see them gone, but we can see new ones because of the dividends that we divided. We see two more, which are the dividends that we brought in. One was the recovery of 112 million, and the other one was Hapag-Lloyd's dividend. You can see how Hapag-Lloyd has double retention. They have 41.7 million euros in Germany, which can be compared to the 112. If you see it in May, we're going to see it should be a detention, so 65.6 million euros, and the credits were around 55, and they're going to go down to 35, 36 million. We would also like to share the latest initiatives that we've been doing in Port City, which is part of the sustainability pillars that we have within the company. This is a multi-sport school we are going to open in the next 2 weeks. It is a public school. The thing about this school in San Antonio is that we have a technical specialty of port operations. It is a school that is pre-connected, and half of the students either are doing logistics studies or port operations. That means that tomorrow, they are probably going to be part of our workforce or they're going to work for our industry. Therefore, we are pleased and excited to share that with everyone. Well, this is Cobai's space. The infrastructure was very damaged. It rained. Now they are going to be able to do their outdoor activities throughout the year. Also related to another school, another public school, and this is the specialty of climate and refrigeration. We created an entire room. We still need more stuff to add there, but it's the building of a room that was abandoned, where these students now, probably, maybe tomorrow, can get to the logistics storages, and they can do preparing, especially in reefer containers or not reefer containers, but this is a space where they can train, and they can be very qualified to be part of our own workforce. We also had beautiful activities. Our summer camp is the third year in a row that we've had 100 kids have fun with us during the summer, and their parents kept working. The community in San Antonio appreciates this so much that everyone participates for the Summer Institute summer camp. We are hitting our slots, and we're trying to see how to create more for next year because it is initiated. We are also doing something in San Francisco in the school for talent development of university, where they prepare students of last 2 years of high school. One, to do the university selection test. Secondly, it helps them with the aim to university. Some of them participated this year, now they are participating again. We can see some young children are initiating this step. We've seen a lot of great results. When you see, these are, of course, different students of the schools. But when you see the results in comparison to their peers, it's a really important difference in the standardized selection test. We'd like to invite everyone to our website. We have a form to attend the maritime lectures that we're doing. We had the first one in April. It was really fun. You can see the curator of the International Maritime Museum, and he did an entire lecture about maritime culture in Chile. Also, he shared the narrative around the objects that we have in the company that has a lot of history. You are all invited to sign up. We're going to keep doing more sessions. It's also part of the education program of the Chile Development School, located in the San Antonio terminal. Kids here have the opportunity of visiting our facilities, which is also part of our chain. With that, I wanted to wrap it up. Again, the most important thing is to understand that the results are not positive and satisfactory. However, projections for the next quarters should improve. We should start to cover our costs. Gemini, on the other hand, is still operating quite well. Trust in this schedule is coming back to levels that exceed 80%, which is also very positive. On the CSAV side, the recovery by the partners was slow, which is good. We briefly covered that and we distributed to the shareholders. Now we future recovery growth, future recoveries of $6 million plus from taxes because of foreign credit. Still, we need to have clarity about the fact that if ZIM goes public, this could be a benefit or a problem for the shareholders, and this increase in cash flow should increase. For the cash flow to keep an appropriate percentage of profit for the next years, so that we can keep distributing, so that we can keep approving the dividends by the board, and we can still receive the growth here and for profit in the future. Now we can move towards the Q&A section. I'll stop my presentation. Let's move to the Q&A section. We have some questions in the chat box. Can everyone see it? One question, what is the probability of approving the ZIM golden share by the State of Israel, and when should that happen? Well, the timing, as we said at first, is not great, because it was just before the war. There are some things that we need to understand about this. Today, ZIM is a company involved in the American stock, and the important partners are very left to companies. We might say that this is a liner that has its headquarters. It's not Israel, but their owners are Israeli, and they are in another stock market. In terms of a war conflict, they can take care of some of the vessels. Given how the business is articulated, a fund from Israel, which is sea, would operate with the bank, with the vessels, trust vessels, and that should be the strategic route. They would be covered in the operation that they see as risky, but would cover those companies for that division and rest assured, without that, it could have a growth with ZIM, which is in the rest of the world. We think it's very well structured, and we shouldn't see any problems in its approval. It's addressed by the board conflict that we got in the deadlines. It's around 1 year what they have in plans for. By the end of the year, we might see something. The minister that is in charge of this is leaving, so that might accelerate the decision or might leave it to someone else. The time we will have a great analysis is at the end of the year. This should be done, and hopefully, this can work out because this is a physical structure. There is a question regarding cost. Hapag had announced by the middle of last year an ambitious plan of cost reduction of removing $1 billion of the cost accounts of the company. According to this plan that was announced last, this period has been a bit highlighted, and that is related to the usage and volume. Basically, a year ago, we started making internal cooperation, and this cooperation implies to have exceeded a certain capacity within the alliance. If you define the size of your alliance, if you want to grow, it's very difficult. Given that Hapag intends to keep positioning itself as a growing company, during last year, we had a higher capacity than what volumes grew. So throughout the year, as we are seeing, Hapag really grew. It grew 8% last year versus the world that grew 4%. So we are earning a good share, and that was not shown in the first quarter. As volumes are still sailing and are still growing, an important part of the structuring of the efficiency in terms of cost is related to this increase you use. But at the same time, in the industry, there are so many costs that are moving because of unpredictable events that it's difficult to see a decrease for TEU this year. But the important thing is that regardless of the gross cost increases, it's compensated by the revenue, the margin in change and increase. So it is difficult to say a drop in cost. The relevant thing is that through contracts, we recover. We can re-update the fuel indicators. That is something that is done every once in a while and immediate, therefore, we're probably covering that in the next quarters. There's another question about the cost of oil. It's a member here in this business. We could talk for hours about it. Both tariffs are reflected. It increased. They increased at the beginning of March and April because of the conflict between China and the United States. In the 3-day cadence, an appeal was made on the 15th date, but it was not accepted till the end of April. Being B, the spot was applied, and the increase of the tariff should be reflected in that. Now, contract, that would depend on the contract. The contract, if they have the clauses regarding oil prices, and they are readjusted quarterly. Given that this happened during March, it is reviewed in Q2, and it started to be seen in Q3. There are clients that understand the problem. They can anticipate for Q2, but during Q3, I think that's where we're going to see the adjustments in tariffs with clients that didn't have a contract. Then we are also going to do the market tariff. Just to give you some notions about the TEU tariff cost. By 2025, the total cost of fuel was around $2.8 trillion. But now, if the entire year had this level of price, it will grow 50%. If you look at it by TEU or production level in the first quarter, it's not reflected. It's not reflecting the increase in fuel prices. It's around $200 by TEU. So if this increases, it would be $100 more just on fuel alone. That's give or take the notion of the sensitivity of this fuel increase. $100 might be the entire profit of a year or even more. This is why it's so important to start resuming the contracts and start recovering that that we only saw in cash flows of March. We are going to see it in the second Q, and we are going to see that reflected, and we are going to be compensating that with releases. Regarding the volume perspective, we need to have clarity, because in part, the industry didn't grow. That was because of the Middle East. We do see the volumes are growing back. When you see the complete volume of Hapag-Lloyd's 2025 related to the Middle East, it's around 67% of its total volume. In reality, there are things that are actually in India, there are things that are related to the area, but not specifically to this gulf. So in reality, 67%, the real affected percentage is just 3%. That is the dimension of the dropping of volumes if this was maintained. We need to remember that bookings were canceled since the conflict began. We closed one part of March, April, and in May, we have already resumed bookings, and the map that Roberto was showing is very interesting on how the industry is adapting very impressively and very quickly. Today, we have ports that used to transfer 100 trucks a day. Now they are booking 7,000 trucks. All the cargo could get into the gulf, and this drop in volume from a couple of months ago, they recover it now, but now with a higher cost. The important thing to see, if the conflict continues, more than a decrease in volume because of the affected area, which I think might be more limited, we need to start to think about how booking systems really affect the world GDP. The first half of this semi, the IMF is anticipating less growth with higher than normal affected volumes, because fuel, because all assets are going to increase, and we are going to see an effect of inflation, and this might have an effect in global volume more than specific cargo. That's it. Some final comment. It was not a good Q1, but with more caps than we see from the future, and we also said this when we did the analysis of the year. We are seeing the conditions are getting off course because of the conflict. It's important, and hopefully, this will be resolved, but the market is moving towards improvement. So we are just waiting for that to improve in what's left of the year. Thank you for participating. If you have any questions or comments, we are fully available for you. Let's see, have a great afternoon, everyone.