Hello, good evening, ladies and gentlemen, this is Ahmed Hazem speaking from EFG Hermes Research, and we'd like to welcome you all to the first quarter 2025 results conference call for Bahri. With us on the line today is Mr. Ahmed Al-Subaey, CEO of Bahri. We have Mr. Basil Abulhamayel, the CFO of Bahri, and we have Mr. Faris Al-Qahtani, CIO of Bahri. Without further delay, Faris, I'd like to hand over the call to you. Please, go ahead.
Thank you. Thank you, Ahmed. Good day, ladies and gentlemen, I'm Faris Al-Qahtani, the head of investor relations at Bahri, and welcome to Bahri's first quarter 2025 analyst call. Thank you for joining us, and I'd like to extend a special thanks to EFG Hermes for hosting this call. All participants on today's call will be in listen-only mode. Once our call has concluded, the presentation and all relevant materials will be available on the IR page of our website. Please refer to our disclaimer, which applies to all disclosures made in today's presentation. Kindly note that all figures discussed during today's call are in SAR, unless otherwise stated. I am joined today by our CEO, Ahmed Al-Subaey, and our CFO, Basil Abulhamayel, to take us through the company's first quarter 2025 results and performance. These results were disclosed on the 8th of May on Tadawul's website.
We also uploaded there our earnings release, which provides additional insights into our performance. Both documents are also available on our company website. Our full financial statements will be published in the coming few days in both the Tadawul and our company website. At the end of our presentation today, we will open the floor for questions. Before I turn over the floor to our CEO, allow me to give you a brief overview of Bahri. Over the past 27 years, Bahri has grown to become a world leader in maritime transportation and logistics. We are proud to serve over 160 ports worldwide, supported by a dedicated workforce of more than 4,000 people, both onshore and offshore. Our diversified operations are built around four core business units: Bahri Oil, Bahri Chemicals, Bahri Integrated Logistics, and Bahri Dry Bulk, plus a new marine services, which runs our desalination business.
All of these business units are supported by our industry-leading in-house Bahri Ship Management function. Together, these businesses give us one of the largest and most diversified fleets in the world. Speaking of our fleet, at the end of March, we operated 97 owned vessels and 14 long-term chartered vessels: 44 VLCCs, 47 chemical tankers, 13 dry bulk carriers, and seven work boat vessels. This fleet enables us to connect economies across the globe from North America and Europe to Asia, the Middle East, and beyond. Finally, to give you an idea of our financial scale, our revenue in full year 2024 was SAR 9.5 billion, and our net profit was SAR 2.2 billion. Our net operating cash flow was SAR 3.5 billion. And we ended the year with a comfortable net debt to EBITDA of 1.7.
With that, I will pass the floor over to Ahmed, Bahri's CEO, to take you through the key highlights of the first quarter.
Thank you, Faris. Good day, ladies and gentlemen. It is indeed my pleasure and our pleasure to welcome you to our analyst call for the first quarter of 2025. We are truly excited to have this opportunity to engage with you all. Before we dive into last quarter results, I would like to first walk you through Bahri's overarching strategy, the principles that guide us basically. These four pillars are the core of our strategy, each one a key enabler of long-term sustainable growth, resilience, and value creation for Bahri. Our first strategic pillar is sustained fleet expansions and modernization, with a clear emphasis on value-added growth. We see significant untapped demand for our shipping and logistics services, driven by two powerful engines of growth. First, our core customers. Today, we carry only a fraction of these total cargoes.
By deepening these relationships and delivering world-class, reliable, and customer services, we are determined to win a larger share of the total volume. Second, the surge in cargo demand in Saudi Arabia, both current and emerging. As the kingdom undergoes its Vision 2030 transformation with our scale, network, and local expertise, Bahri is actually best positioned to capture this growing demand. The challenge here, and the opportunity, is to convert this large untapped demand into growth. To do so, we need a larger, more modern fleet. Accordingly, we will continue investing in vessel acquisition, not only to expand capacity but also to replace our older vessels with newer vessels that demonstrate improved efficiency and sustained standards, and sustainability standards. As always, we are a prudent buyer and a reluctant seller. The second strategic pillar is diversification.
We are focused on broadening our business platform to reduce inherent cyclicality of ship industry and build a more resilient multi-stream earning profile. At the same time, we are strengthening and diversifying our access to capital, ensuring financial agility to fund growth when the opportunity arises. First, we are allocating capital in a disciplined, balanced manner across our business lines, creating natural hedge against cyclical downturns. Second, our diversification strategy targets adjacent sector and geographies where we can unlock operational synergies through leveraging our global presence and customer base. Third, we are leveraging our strength in providing end-to-end logistics solutions. This gives us scale, it gives us efficiencies, it gives us shared performance platform, and faster ramp-up as we move into new verticals of growth. Our third pillar is driving continuously profitability improvement. We are focused on two powerful levers.
The first is commercial optimization, enhancing how we deploy vessels, manage voyages, and respond to market conditions. The goal here is to consistently outperform the market so that our results reflect operational excellence and not just cyclical tides. The second lever is cost efficiency, to drive operational cost improvement through greater efficiency and adoption of new technologies. Our in-house Bahri Ship Management team is key enabler to this particular lever, applying best practices and innovation technologies across the fleet at scale to ensure compliance, enhanced performance, and effective cost management. Our fourth and final strategic pillar is leveraging partnership to strengthen and expand Bahri's market access. Our goal is to secure long-term access to major demand channels by deepening existing partnership and forging new mutually beneficial relationships in key cargo corridors. We are also aligning our strategic initiative with Vision 2030 through our partnership with Public Investment Fund, the primary driver of Kingdom transformation.
We are positioned to capitalize on emerging logistics and shipping opportunities tied to national development priorities. We are also leveraging our relationship with Aramco and its worldwide network of affiliates and customers to expand beyond the current COAs and unlock new revenue streams across the broader energy value chain. Our new office in Singapore further adds to our ability to forge and solidify relationships in this critical Asian Pacific region. Together, these four pillars form the foundation of Bahri long-term strategy, guiding our investment decisions, sharpening our competitive edge, and positioning us for resilient, sustainable growth while fully supporting the Kingdom's transformation. With that strategic lens, let's dive into our quarter performance. During the first quarter, we delivered robust net profit growth, reflecting the resilience of our diversified business model in a challenging market, very challenging market.
Revenue declined 6% to SAR 2.2 billion, yet our EBITDA increased 14% to SAR 1.2 billion, and net profit rose 18% to SAR 533 million. I truly applaud the team at Bahri for this achievement. They were able to rapidly pivot ahead of the curve and purposely manage our revenue mix to prioritize profitability. These results underscore our ability to deliver in a challenging market and showcase the strength and especially the resilience of our diversified operational model, an advantage that clearly sets Bahri apart. We are the first out of the gate and usually last to go down. Basil Abulhamayel, our CFO and my partner here, will dive deeper into the financials, but for now, let me briefly add some color to the numbers you saw in the previous slides. Our Bahri Oil, Bahri Chemicals, and Bahri Dry Bulk businesses faced challenging markets during the first quarter, putting pressure on freight rates.
We had anticipated Q1 market weakness to a larger extent, and our BUs had prepared and then executed mitigated strategies. Really, it is preparation, preparation. This is the name of the game in the first quarter. That's how the team navigated through rough seas and optimized vessel deployment, revenue mix, and chartering management to maintain profitability. The fleet investments we made in 2024 are already paying off and are providing us with additional levers to drive further optimization. The outcome of these efforts had yielded results across our portfolio. Our revenue declined, but the team was able to expand profit margins and deliver positive EBITDA growth. Of all chemicals, Bahri Chemicals revenue and EBITDA declined, they fell at a slower pace than the overall market, illustrating the unit's relatively outperformance. Bahri Dry Bulk managed to stabilize its margins and grow EBITDA despite experiencing TCE erosion.
Meanwhile, integrated logistics swung back to profitability, boosted by early gains from its 2024 transformation strategy and sustained strength in the bulk. Marine services managed to increase its EBITDA on the back of the first desalination barge entering commercial operations. If you really sit back and look at the performance across Bahri this quarter, there is one primary theme, one word that defines, it is resilience. We are not done yet. We have high expectations and will continue to excel regardless of how the tides turn. We continue sailing forward with our fleet expansion and modernization this quarter. We added five modern vessels in Q1 and three more in our operational fleet in April, taking our own fleet to cross the 100-vessel milestones for the first time in our history.
Today, we have a larger, younger, more cost-effective, and environmentally sustainable fleet that positions us to respond to an ever-dynamic shipping market. Finally, our commitment to safety and sustainability continues to set us apart. For the first quarter of 2025, we reported a lost-time injury frequency rate of 0.31 injuries per million hours. We are also proud to report zero fatalities and zero oil spills during this quarter. I have said this before and I will repeat it, operational excellence and responsible practices are the core principles for Bahri leadership. The management of Bahri, especially myself and Khalid Alhammad, the President of Bahri Ship Management, consider ourselves collectively and individually as ultimate stewards for the safety and security of our seafarers. This is of paramount importance to me and to all of us in Bahri as we continue to drive safety-first culture at our company.
We are deeply proud of the women and men at Bahri. They are the true drivers of our business. They operate our ships. They drive day-to-day decisions. They forge partnerships. They embody the vision of Bahri as a global leader. They are truly key Bahri differentiator and success. Speaking of partnerships and global leadership, we made key moves during the quarter to advance our strategic ambitions. We deepened our longstanding partnership with Petredec, one of the global leaders in LPG shipping and logistics. During the first quarter, we established a dedicated joint commercial team to address Saudi Arabia's growing demand for LPG and ammonia shipping solutions. This initiative builds on nearly two decades of collaboration and reflects Bahri's commitment to expand our capability in critical energy transport markets. In another significant step forward, we created a strategic JV between Bahri Logistics and Tasaru Mobility Investments and the Mosolf Group.
This partnership represents a major step in advancing automotive logistics capabilities in Saudi Arabia, especially as the kingdom automotive sector progresses towards its target of 400,000 vehicles manufactured annually by 2030. The JV will deliver integrated solution services including shipping, electric vehicle handling, custom clearances, inspections, and tailored and tailored to meet the specific needs of automotive industry. We also continue to strengthen Bahri global presence with the opening of our new office in Singapore during this quarter. Singapore is a critical hub for the global shipping and energy markets, and this expansion brings us closer to our customers in Asia Pacific. With that, I will hand it over to Basil, our CFO, to take you through the financial details of our first quarter. Basil, the floor is yours.
Thank you, Ahmed. It's my pleasure to welcome you all to our first quarter 2025 analyst call. I'll now take you through the financials of the quarter. In the first quarter, we recorded revenues of SAR 2.2 billion, a 6% year-on-year decline, mainly from lower revenues from oil and chemicals business. These were partially offset by growth in integrated logistics, dry bulk, and marine services. Bahri managed to offset the revenue decline with profit margin expansion, resulting in EBITDA growth of 14% compared to Q1 last year. EBITDA growth was driven by integrated logistics returning to profitability, cost containment at Bahri Oil, new revenues from marine services, and increased income contribution from associates, particularly our investment in Petredec. Net profit grew at a rate of 18% higher than the 14% EBITDA growth rate.
Overall, these movements reflect benefits from our diversification efforts and fleet investments, with relatively weaker results from oil and chemicals cushioned by better performance from the other business units. Our cash flow results reflect continuing ramp up in vessel investments. Net operating cash flow was SAR 490 million compared to SAR 690 million in the prior year. The decrease was due to higher cash requirements for working capital in Q1 2025. Capital expenditures amounted to SAR 1.7 billion, compared to SAR 754 million in Q1 2024. The bulk of the Q1 2025 CapEx was for full payment of our VLCCs delivered to us during the quarter. Our net debt balance rose to SAR 9 billion from SAR 8 billion at the end of 2024 and SAR 6 billion at Q1 2024. The increase in net debt, in addition to cash from operations, was used mainly to fund CapEx.
Let's now look at our investments and financial position in the next slide. During the first quarter, we added five vessels, four VLCCs and one dry bulk carrier. We also divested an older VLCC as part of our fleet renewal strategy. In April, we deployed three additional VLCCs that were delivered to us in March. This brought us to the 100 owned vessels. Furthermore, we are expecting delivery of three more VLCCs in the upcoming quarters. We are also looking at acquiring a multipurpose vessel for integrated logistics. In total, including the 14 chemical tankers we have under long-term leases, Bahri operated 111 vessels at the end of Q1 2025, up from 109 vessels at the start of the year. Given the increased vessel investments, our net debt to EBITDA ratio stood at 1.85 times at the end of Q1 2025.
This remains a healthy level from a financial risk perspective. Additionally, our liquidity position remains strong, supported by a SAR 3 billion five-year revolving credit facility, which we secured in January to support working capital and capital expenditure requirements. In all, we believe our financial condition remains supportive of our fleet investment strategy of pursuing opportunistic discipline, value-accretive acquisitions, maintaining a balance between fleet investments, profitability and a healthy balance sheet. Let me now go to the performance of each of the business units. To provide you context on how BU performance impacted the group, let me first turn your attention to incremental year-on-year BU contributions to the group. The top waterfall chart shows negative incremental revenue contributions from oil and chemicals, partially offset by positive contributions by the other business units, including dry bulk and integrated logistics. Others in this top chart largely reflect marine service revenue.
We will explain each of these when we get to the BU slides. The bottom chart demonstrates incremental EBITDA contributions, with chemicals providing negative contribution while other businesses, especially Integrated Logistics, recorded positive EBITDA growth. The SAR 151 million incremental EBITDA for others include profit contributions from marine services and affiliates such as Petredec. Let's now take a deeper look at how Bahri Oil performed. During the first quarter, Bahri Oil delivered positive EBITDA performance despite reduced revenue. On average, market rates were weaker year-on-year for the quarter, which contributed to an 11% year-on-year decline in revenue to SAR 1.1 billion. Despite this, EBITDA increased by 1% to SAR 599 million on the back of EBITDA margin improvements to 55% from 48%. This margin expansion was mainly driven by a higher use of own tonnage rather than lower margin chartered vessels.
This shift to own tonnage was enabled by the expansion of its fleet to 44 VLCCs by the end of the first quarter from 39 vessels a year ago. Also helping was an improved cost profile for the VLCC fleet. Over the 12 months from end Q1 2024 to end Q1 2025, Bahri Oil added eight modern scrubber-fitted eco VLCCs and divested three older vessels, resulting in a younger, more efficient operating fleet. Looking beyond Q1 2025, three more VLCCs have joined the operating fleet last April, and another three VLCCs have been secured for purchase, with expected delivery dates in the following quarters. Turning to the chemicals unit, the business unit recorded revenue of SAR 696 million in the first quarter of the year, representing a 13% year-on-year decline. This was primarily driven by lower freight rates amid continued softness in the chemicals and clean petroleum products shipping market.
EBITDA also decreased by 20% to SAR 357 million, reflecting a margin contraction to 51% from 56% and a 14% year-on-year drop in realized TCE rates. Despite these headwinds, our internal analysis indicates that the BU outperformed the broader market, which saw significantly steeper year-on-year declines in spot rates. We attribute this relative outperformance to proactive chartering and commercial optimization measures we put in place ahead of anticipated market weakness, as well as cost efficiencies realized through the BU's fleet expansion and modernization efforts over the past 12 months. Integrated Logistics revenue reached SAR 266 million for the quarter, representing a 38% increase compared to the prior year, propelled by the continued business expansion of Bahri Logistics, its non-shipping segment, and full fleet utilization at its shipping segment, Bahri Line.
Importantly, Bahri Integrated Logistics reported positive EBITDA of SAR 62 million during the quarter, a SAR 78 million improvement over a negative EBITDA of SAR 16 million during the prior year. This earnings turnaround was driven by strong revenue growth coupled with improved cost performance, which in turn was due to full utilization of Bahri Line fleet in the first quarter of this year compared to Q1 2024 when two break bulk carriers were dry docked part of the time and its new multipurpose vessel was deployed only midway throughout the quarter. Improvement in leased warehouse utilization following increased customer uptake and one-off expense in Q1 2024 and reversal of cost accruals in Q1 2025, which boosted incremental EBITDA. Looking ahead, Bahri Line plans to acquire an additional multipurpose vessel this year to further expand into the project cargo market.
Meanwhile, Bahri Logistics is progressing with the completion of Jeddah Islamic Port bonded zone warehouse and a new agency office in Hamburg, primarily to support Bahri Oil operations. Bahri Dry Bulk delivered strong revenue growth in the first quarter of this year, driven by an increase in cargo contracts and a larger fleet, which helped offset the impact of lower shipping rates. Revenue rose by 13% year-on-year to SAR 94 million, while EBITDA increased 7% year-on-year to SAR 29 million, with the BU maintaining a resilient EBITDA margin despite a 20% decline in TCE rates for its own vessels. This margin resilience reflects Dry Bulk's successful pivot towards optimizing charter and profitability. While last year's focus was on expanding cargo volumes and securing long-term contracts, supported by increased use of chartered-in vessels, this year the emphasis has shifted to maximizing returns from operations through more agile, profit-driven chartering strategies.
With that, I will hand back to Ahmed for his closing remarks. Thank you.
Thank you, Basil. Let me close by leaving you with key takeaways about Bahri and our performance in the first quarter. First, our diversified business model is proving its resilience and driving income growth. While global economic uncertainty and the potential tariff-related trade barriers continue to create a dynamic and volatile environment, our diversified engine demonstrated not just strength, but more so resilience. Even as shipping market softens, our core segment continued to deliver solid performance. Further, our adjacent business lines, such as logistics services and desalination, along with strategic investments like Petredec, contributed to earning growth and helped offset volatility across the portfolio. This is how we managed to grow bottom line despite top-line pressure. Second, our region's strength are increasingly setting us apart despite global uncertainty. Trade policy risks, including potential new U.S. tariffs, is a valid concern.
However, the GCC trade corridors remain relatively well-favored, particularly in crude and petroleum product fluid flows. Our geographic location places Bahri at the heart of global trade routes, and this advantage is becoming more strategic as global cargo flow shifts. We are expanding that edge further. Our new Singapore office deepens our engagement with Asia-Pacific markets and places us closer to key customers in the crude product, chemical, and vegetable oil segments. Finally started a radius transform. Through progress toward the Kingdom's Vision 2030, we have seen the launch of giga projects such as the NEOM project, increasing manufacturing across multiple segments, including electrical vehicles and a fast-growing entertainment sector with upcoming global events. All of these are generating new cargo flows that Bahri is uniquely positioned to serve.
Bahri is a logistic backbone that enables these initiatives, moving critical material, equipment, and finished products that turn national ambition into reality. Third, our business model remains opportunistic, agile, and more so, disciplined. As Basil noted, we are fine-tuning our chartering strategy while expanding our own fleet in a measured, value-focused manner across our business lines. With our recent vessel acquisition, we have reached the impressive milestone of 100 owned vessels. Actually, we crossed it. This major milestone reflects Bahri's growth scale and the industry leadership. Backed by a strong balance sheet and a prudent leverage, fleet expansion and modernization remain a key pillar of our long-term strategy to achieve profitable growth. Looking ahead, we see significant untapped potential across all our business units. The runway across every one of our business units is still wide open.
We have only begun to tap opportunities that will fuel Bahri's next wave of growth. With our resilient business, diversified income stream, strategic regional footprint, and disciplined capital development, we are confident that Bahri's strongest performance is still ahead of us. Actually, you ain't seen nothing yet. We are just getting started, and the best is yet to come for our company, Bahri. With that, let's open the floor for your questions.
Thank you so much.
Thank you, Ahmed and Basil, for the presentation. Now we will open the floor for the Q&A. Ahmed, you can lead on that, if you don't mind.
Thank you. Thank you, Faris. Thank you, Mr. Ahmed. Thank you, Mr. Basil. As a reminder for everyone, you can use the raise hand function, and you can unmute your mic, and you can ask your question directly, or you can send your questions in the Q&A box, and we can ask them for you. We'll give it a moment for the presenters to start or the attendees to start asking their questions. Maybe until we get some more questions in the Q&A box or people start raising their hands, I'd like to take this opportunity maybe to ask about the views on the volatility that we're seeing in the shipping market, especially on VLCCs. We're seeing TCE rates go up and go down quite aggressively since the beginning of the year at the very least.
Mr. Ahmed or Mr. Basil, can you please shed some light on what's going on there?
Yeah. Volatility and TCE rate swings is part of our business. This is part of every quarter, not just the first quarter. But our contracts are designed in such a way that enables us to ride this wave. We really, really, truly anticipated this in December and November of last year, and we designed our contracts, and we locked in our tonnage accordingly, which enabled us to really be able to ride the wave, so to speak. I'm glad that it turned out to be the right call. It's actually allowed Bahri Oil to turn in a strong performance in Q1, really better than the market expectations. Not in line with our expectations because we're always aiming for higher. But it looks like we are really set up for a good first half, not just first quarter going forward.
If I may add to what Ahmed just said, this is the name of the game for us. We are not a trader here. We are in for the long haul. We've been through many of these cycles. It's part of our daily business. But also recognizing this, we have put together a financial flexibility and liquidity program to make sure that we're able to weather these volatile times. In fact, we have a position where we can strategically invest in down cycles when things are looking bad and getting ready for the upswing. I think we're well-positioned, given where we are.
Yeah.
Thank you. I think we are trying to get some more people to ask their questions. As a reminder for everyone, you can use the raise hand function, or you can send your questions in the Q&A box. If anyone is facing any technical difficulty, please send us your remarks in the chat box.
We were so good, Ahmed, that no questions are needed, it looks like.
It seems that investors are a bit fatigued. Aramco's call was probably short your call. But Mr. Ahmed, very insightful presentation. So we have a question coming from Sayed Ahmed. Sayed, please unmute locally and ask your question.
Thank you gentlemen for the call. Just a quick question on this announcement earlier today by the Trump administration regarding the tariff deal that was reached in Geneva. Any comment on that? How does that shape your outlook for creating trade-related activity moving forward overall across all your business units?
Well said. Overall, we welcome such news. Anything that is good for trade is good for shipping, especially between two giant economies like the U.S. and China. We are excited as you are. But like Basil just mentioned, these little bumps in the road do not really impact our business immediately. I think we will see this maybe later on, but so far, our business was going well, even with these trade barriers, so to speak. Like I said, we are more of a long-term shipper. We are not a short-term player. These things did not impact us greatly given where we are, given our customers, and these products were flowing out of the Kingdom, whether it is oil, whether it is foreign products, whether it is chemical, whether it is dry bulk and coming back to the Kingdom. I would say, great news.
We are hoping this will have the impact towards the second half of the year where volumes continue to go up. But as far as immediate impact, I think the only thing I would say that immediately got impacted is the Dow Jones and the markets around the world. But as far as shipping is concerned, we are really good.
I think, Basil, you can go ahead.
Yeah, if I can add, I think the market that got hit immediately was sort of the container market going into the U.S. from China. Of course, that took a huge hit, which is a segment that we are not exposed to. We do not do container shipping, but we will have to wait and see how the year plays out. But immediately, there has been minimal to no effect on us.
Thank you, Mr. Ahmed. Thank you, Mr. Basil. We have a question coming from Syed. Syed, please ask your questions.
Thank you. I think you partly answered the question that I had in mind. Overall, I think within the business segment that you operated, you do not see overall this whole tariff saga impacting you too much from what I observed. One is that, if you could elaborate a bit more on that going forward also, obviously, if it reverses, then that is very good. Obviously, majority of the countries, there is still some tariffs. Global slowdown is worth it. How are you seeing it for this year overall trends on the freight rates? The second question that I had in mind was that I think we recently saw some news around IMO being more conservative on the sulfur usage emission.
If you can talk about how you see that have an impact on you in terms of shipping costs increasing or something like that, or some freight changes that may be required.
Syed, your voice is not clear. Can you please repeat the first question?
Okay, sure. I'll repeat. The first question was that, overall, I think you partly answered, but overall, your views on the business segment that you are operating in, because of this tariff thing, I think you mentioned that you were not impacted. Is that the view, that overall, you feel that this slowdown in global economic growth will not affect you too much? One. The second question was on, I think recently we saw news on some IMO restriction on carbon emissions and sulfur related news. Your views on that, will it impact you once that is implemented? And third question was, any update on improving your foreign ownership limit issue? Because I think that is one of the key issues which is limiting your potential in the market.
Improving what, Syed?
Foreign ownership.
Foreign ownership.
Yeah. Three questions from my side. Thank you.
No, I think the first one, as you mentioned, Syed, thank you for the questions to start with. The first one is pretty much answered in the previous question. All our segments, whether it is the food, whether it is the chemical, whether it is oil, it really had very little impact on the volatility of the tariffs. The volumes are pretty much the same volumes as we anticipated. What we did is we pivoted. We gave up some routes or some volumes we could have taken, especially in the chemical front, because they were low profitability, and we decided to really go to the high sector because we are still the dominant shipper in the Red Sea. The Red Sea still makes shippers nervous. Being really good in the Red Sea, we try to dedicate most of our vessels, especially in the chemical market, to that front.
As far as Syed is concerned, I am hearing some noise. Syed, you want to mute maybe?
Yeah.
Yeah. With the sulfur, no, I think directionally we hit it on the nail. I think decarbonization will continue. In our business, we are all looking for that elusive new fuels. At the same time, we are investing heavily in modernizing our fleet, basically, because it is far more eco, far more efficient. To the degree if you bought a VLCC that is 20 years old versus one that is five years old, you are talking about 10, 15% of efficiencies that you get right off the bat when it comes to fuel, plus everything we build these days, we do not build anything that is not dual fuel. We are really setting ourselves up because when you buy these vessels, they are there for 20 years or so, and we want to really be able to have the flexibility to switch from one fuel to another. We are pursuing that.
The last one regarding the foreign eligibility vessel, maybe you can
Yeah. We are-
The foreign participation.
Yeah. This is something we're working on. Like I said, we don't have 100% visibility as of now, but, given that if you look at the Tadawul market, I believe we're the only company that's still not open, and so based on that, we're hoping to get a positive response from the government to open it up. But we don't have final approval. But this is something we're anticipating a response on soon. Within this year, we hope.
I would be more forthcoming. I would say stay tuned. As Basil mentioned, we're the only company that is not open for Tadawul, that is not open for foreign participation. So stay tuned. This is aligned with the kingdom's sort of strategy. It's at the final stages, I think of decision makers. Obviously, this is not something we control here in Bahri, but we've been following up on it, and it looks like some good news might come our way and maybe our next time we talk, we'll get something. But certainly within this year, we'll update you on that front.
Inshallah. Thank you so much.
Yeah. Appreciate it.
Appreciate it.
Hello. Am I audible? Is it my turn now?
You are.
Yes. Please go ahead. Your line's open.
Thank you so much, sir. Thank you for Bahri management. I have a few questions. The first one is regarding the addition of VLCCs. I assume these are used VLCCs. So, if you can shed some light on the average age right now of the fleet. That's the first question. The second question is regarding the chemicals. You did say that even though the EBITDA declined, it did perform better than other peers because of how you were anticipating this decline and you worked, throughout the quarter, the contract. So if you can shed some light of spot versus contract and, how is it going to look for the coming quarter from a strategic point of view, that would be helpful.
Radha, thank you. Always great to have a woman in our business. Radha, thank you for raising these very good points. I would like to say first, your first question was regarding VLCCs, right?
Yeah, the age. Yes.
Right. We could not have had a better deal than the one we have made on a timely basis, and I will tell you why on a number of fronts. First of all, it reduced our overall VLCC fleet from very high teens, 18- 15, despite getting those nine. The timing is actually that the average age of these vessels is about nine years. The reason we wanted to-
Nine years for the new vessels, sir?
For the new vessels, yes.
Perfect.
For the new vessels. The reason we wanted to do so is first, we want to really build at International Maritime Industries. So eventually these vessels when it is time for them to depart from our fleet, International Maritime Industries will be ready to manufacture VLCCs and deliver to us. So from that point of view, we are keeping in mind our ultimate goal here to manufacture at International Maritime Industries. Second, like I just said, we got right off the bat, 15% and some of them 18% benefits on our fuel consumption because they are more eco, all of them are scrubber fitted.
To me, this is something that hit us immediately. Third, we managed, as we mentioned in our last call, to really secure non-Aramco oil contracts for the first time, mainly Rongsheng Petrochemical and China, and continuing to advance talks with, hopefully, that will materialize in the next time we talk with PetroChina, with Unipec, with Hengli Petrochemical. So, those vessels could not be more timely for us to really deploy them. So they were, if anything, plus, plus. That increased volume of tonnage helped us really deliver this good performance that you have seen in the first quarter.
On the chemical, I must salute the team. They have been extremely agile. We really moved from TCE to more owned vessels because we get more profitability from those, and we were able to renegotiate some of these contracts we have on TCE, which the partners were really ready to do so. A lot of it is because of the Red Sea entrance. So that really helped us too, and changing those routes. That what really made chemicals more resilient and deliver a performance that outperformed the market by quite a bit.
Compared to the global peers, you are operating more in Red Sea, which you mentioned generally
Correct
for vessels. It applies to chemicals, I would assume.
Correct, yeah.
This is helping you be better than peers globally.
Yes. Because it's-
And any competition.
There isn't many competition. We are the only game in town.
Yeah.
Can you-
You know, somebody mentioned that peace is not the absence of war. Peace is the absence of the threat of war. So long as the threat is there, people are nervous.
Of course.
They want to take the safety route, which is something we have perfected really with the Red Sea. So we are able to deliver value that others can't.
Mm-hmm. Can you comment on how the chemicals is now performing in terms of spot versus long time charter in terms of operations?
Well, we're doing more spot than normal, but I don't have the numbers handy. We can always get back to you.
Generally, as a strategy.
Yeah. No, the strategy, normally when things are bad, you want to really do things on a short term. It's one thing to be profitable when the going is good, but when you're facing this headwind, we really need to be, and uncertainty and not a great deal of visibility, so we tend to really shorten everything. We shorten those. We don't want to lock in anything for a long time at these rates. So we take routes, spot bases, we do things in more spot than we normally do. But we can get back to you with the numbers if you are interested, Radha.
Yeah, that would be helpful. Thank you so much. Thank you, Ahmed.
Sure. Thank you.
Thank you, Radha. We have a few questions coming in the Q&A box or the chat box. How do you see charter rates, TCE rates going forward in 2025? I believe, management, you already alluded to it, but if you want to add anything on that.
Predicting TCE rates is like predicting oil prices. If I knew it any better, I'd be in Las Vegas making money then. Really, the name of the game here is not to predict these rates because it's completely difficult, and the global events that has happened in our reality really can change those big time. I think the key here is how to stay agile, how to be able to respond ahead of the curve, and how to be ahead of your competitors. I think that's the decision-making where, how can I make these decisions? I'm not a big fan of outlooks anymore because they're not worth The minute an outlook is written, it becomes obsolete. I'm more of scenario planning. What if this happens? What if that happens? That enabled us to really prepare. So when these things happen, we have a plan.
That's how we're tackling those TCE rates going forward. But the outlooks are there. Everybody can look at them, but we take them with a grain of salt. We have been outperforming those TCE rates across our portfolio.
Thank you, sir. We have a couple of questions, and I will combine them because they tackle the same points. Sarah and Alan, they are both asking on the additions of vessels. Sarah was basically asking, you mentioned three more vessels in the coming quarters. Basically, she wants a confirmation if the total fleet is effectively reaching 100. Alan is basically asking what is the targeted number of VLCC vessels that you have by the end of 2025, the remaining projected CapEx for the year, and any indication regarding revenue and margins for desalination projects.
Let me try to answer a part of these questions. Regarding the question from Sarah, 100. The three will be an additional three. It will be 103 post the first quarter. There will be three additional VLCCs. This is catering to the growth that we see coming in from third-party customers. The number is 103, not 100.
Okay.
Yeah. What is the other one?
What is your target number in terms of VLCC by the end of?
Can you go down a little bit?
I'll say the question again. So basically, Alan was asking, what's the targeted number of VLCCs by end of 2025? That was the first part of his question.
The projected CapEx.
Yeah. Like I just said, I think with that, we'll try to answer your writing because we are opportunistic throughout the year. If I see a good sell, I might sell some of my fleet, going forward. If I get a good cargo deal, I might keep them. So really, I'm not married to a certain number of VLCCs by the end of the year. What we want to do is to continue to deploy them in a profitable way, and if the asset prices are attractive, we'll end up selling them to take advantage of that. So, that is really dependent on what opportunities we find until the end of the year.
But I think overall, the full-year CapEx for this year definitely be lower than last year. We were on a much bigger buying spree. Lastly, on the barges. The barge business is a tariff business. If you imagine it's a water purchase agreement, just like a power purchase agreement. So the margins are fixed for a certain IRR. That's the model for the diesel barges. The idea here is to have a fixed stream of revenue coming in, and we look at this part of the portfolio to be sort of a buffer to the volatility that we see in the other sectors of the business.
Right.
This is a business now that, the recent update is, we have all three barges commissioned now. We'll begin already starting to generate some cash flow, but it'll get bigger as the months go by.
Yeah, I think, the second half of the year, you'll have revenues coming from all three barges. So this is take or pay scheme. So Taliah is locked in with us for 20 years. The clock ticks from now, basically. So over the next 20 years with inflationary also rates going forward. So this is part of trying to shave up the cyclicality of the shipping business. We want logistics and desalination give us a steady stream that enables us to at least lower the cyclicality of the shipping business.
Thank you.
Yeah.
With that, I do not believe we have any further questions. Mr. Ahmed, back to you for any closing remarks.
No. Look, I just want to say thank you all for your support. I think Bahri continues to be a truly Cinderella story with the performance that, of course, what Faris mentioned, our record-breaking performance in 2024. We continue to do so in the first quarter. We are going to do our utmost to work harder for our investors and shareholders to make sure that we turn in a good performance in the first half, and we will stay agile and roll with the punches, so to speak, in the second. Thank you. See you in Q2.
Thank you.
Thank you.
Thank you all. Thank you all for attending today's call. All materials will shortly be uploaded to our website. If you have any follow-up questions, please contact us via ir@bahri.sa. With that, I will conclude today's call. Thank you all for your time, and goodbye.