Earnings Call: Q1 2021

May 19, 2021

Ladies and gentlemen, thank you for standing by. I am Emma, your Chorus Call operator. Welcome and thank you for joining the Zim Q1 2021 Financial Results Call. I would now like to to turn the conference over to Alana Huitzman, Head of Investor Relations. Please go ahead. Thank you, Emma, and welcome to Zim's 1st 2021 financial results conference call. Joining me on the call today are Eli Glickman, Zim's President and CEO and Xavier Despluis, CIM's CFO. Before we begin, I would like to remind you that during the course of this call, We will make forward looking statements regarding expectations, predictions, projections or future events or results. The company's current expectations and that actual events or results may differ, including materially. You are kindly referred to consider the risk factors and cautionary language described in the documents the company filed with the Securities and Exchange Commission, including our 2020 annual report filed on Form 20 F on March 22, 2021. We undertake no obligation to update these forward looking statements. At this time, I would like to turn our call over to the ladies' names. Eli? Thank you, Ilana, and welcome to today's call. It is truly a momentous time in ZIM 75 year history. I'm excited to share with you our impressive year to date accomplishment as well as the important step we've taken to unlock significant shareholder value. Following our successful IPO conference, which we outlined on Slide number 4. First, our differentiated approach and the proactive strategy we implemented to capitalize on the highly attractive market have once again conference. For the 2nd consecutive quarter, We generated all time record EBITDA and net profit, with net profit We are pleased to report that our consistent earning growth position Zim as one of the leading carriers In terms of profitability, we also deliver our highest operating cash conference. EBITDA results were well above the implied guidance range that we provided conference call. Importantly, we continue to deliver industry leading margins conference. And once again outperformed the liner industry average. Our adjusted EBITDA margin conference was our highest ever 47%, again 47%. And adjust conference. EBIT margin was also our highest ever 39%, again 39%. We remain committed to our goal of consistently performing as one of the top 3 carriers In terms of EBIT margin, we also significantly strengthened our balance sheet conference. Based on our strong Q1 performance, the robust market environment We are raising our 2021 guidance. Specifically, we now expect This is Art from our March 21 exceptional of EBITDA in the range of 1.4 to $1,600,000,000 and EBIT in the range of $850,000,000 to $1,050,000,000 Our record results in the Q1 enable us to achieve another important milestone $340,000,000 principal amount outstanding on our Series 1 and 2 notes We are proud to achieve this important accomplishment sooner than expected an earlier than the stated maturity by 2 all years, further strengthened our balance sheet and enhancing ZYN's position to take advantage of favorable fundamentals for the benefit of shareholders. Conference call today as well as our success capitalizing on the attractive market, we are pleased To announce that our Board of Directors approved the distribution of a special dividend of approximately $240,000,000 or $2 per share in 2021. Importantly, this special dividend come on top of our previously communicated 20 21 annual dividend guidance, whereby we are expecting to be distributing Our Q1 financial results reflect our consistent earning growth and as I already mentioned conference call. As you can see on Slide number 5, Our leverage continued to trend downward. Zim's net leverage improved from 5 point Excuse me, from 5.3 to 0.5 over the previous 9 quarters, position us in the top tier of the industry. Sustainable growth remains a top priority for Zim conference. And we remain focused on being one of the top 3 players in terms of EBIT margin among the global carriers. Moving to the next slide, Slide number 6. We made significant progress year to date advancing major initiatives conference. We should not have been a shipment related to our 4 strategic pillars, operational and commercial agility, First, for Zim, our exceptional operational agility allow us to successfully compete with global shipping giant as we implement our differentiated asset light and global niche model. The benefits of this approach conference. We have demonstrated as we have adapted our vessel deployment to address dramatic change in the demand since early 2020 conference. In response to the COVID and the subsequent recovery in demand, prior to COVID, Our fleet includes 68 vessels, which will count down to 59 in May of 2020. As global trade resume and caught up to pre pandemic levels, we identified new opportunities and expanded our capacity growing our fleet to 98 vessels as mid March. Today, our fleet includes over 110 vessels as we continue to quickly align Our capacity in the past few months to meet continued growth in demand despite the very tight chartering market. Related to our success increasing our capacity, We do own our commercial agility to identify market opportunities and develop new growth engines. Importantly, We expand in our strategic Pacific and inter Asia trades, opening new services to address profitable underserved routes. In 2020, we identified the opportunity for premium high speed services to meet growing e commerce trends and provide viable shipping alternative to airfreight. In the Q1 of 2021, we launched additional lines to meet growing acceptance of this offering. This e commerce services, including 3 from Asia to the U. S. West Coast, conference. Our instrumental in driving our record Q1 results and positive forward outlook. Through our partnership with the 2M alliance Maersk and MSC will further translate our transpacific presence, a key trade for us, Launching an 8 joint Asia U. S. East Coastline service to commence this month. In addition, We have worked with our partners to upgrade our Asia to the U. S. Gulf Coast Light service by upsizing vessel capacity. Another of Zim's primary strength is our operational excellence. A key component of this conference. Consistent with this critical objective, we move quickly as promised in our IPO roadshow In 2 weeks after pricing, we announced the conclusion of a strategic long term charter agreement with Cispar. In February, we announced for 10 green 15,000 TEU LNG dual fuel vessels. We are proud that this transaction will position Zim as a leader in terms of carbon intensity among global liners. Other key features of our operational excellence include our continued emphasis on effectively managing costs and our equipment needs. Given our significant growth combined with the current congested market and limited availability of containers, We have made substantial investments in new equipment already starting in 2020 to best position ZYN for the future. Since January 1, we've entered into agreement For the purchase of containers, mostly new built units, for a total of approximately $588,000,000 and we'll grow our container fleet from approximately 640,000 TEU as of the end of March 2020 to exceed Finally, we have continued to invest in disruptive technology, further establishing Zim as a leading digital shipping company. In March, we announced our participation in Series B financing round of WaveBL, We view our early investment in WaveBL in 2017 as a major win as our objective since inception was for subborder industry adoption. We are delighted to see the growing acceptance of Wave Technology, including by other global carriers. Most recently, we established Zimark, a tech company that we expect will conference. We are excited about Zimark's potential to impact shipping and broader logistics sectors consistent with landmark innovation that will transform other industry. We are proud Of the progress we have made, we innovate in ZYN as a resilient and robust digital shipping company that utilize sophisticated digital strategies to power new services and build opportunities for our customers. I will now turn the call over to Xavier, our CFO, for his comment on our financial results and market development. Please. Thank you. Thank you, Eli, and again, welcome, everyone, to our quarterly update. I will now briefly discuss Our KPIs, specific Q1 figures and our strong cash position. Additionally, I would like to first reiterate Eli's comments on our On Slide 7, I would like to highlight several KPIs that are reflective of our outstanding financial performance, including strong cash generation and the continued deleveraging of our balance sheet. We continue to benefit from our asset light model as well as our prioritization of a better paying cargo mix and initiatives to capitalize on the e commerce boom, This was critical to drive our record results as the average freight rate per TEU rose by 76% In Q1 2021 to $19.25 per TEU compared of $15.18 in Q4 2020. Regarding our balance sheet, we significantly increased our cash position, which I will discuss shortly. Our shareholder equity today is of $1,100,000,000 Total outstanding debt in the Q1 increased by $302,000,000 resulting from a net increase of EUR 389,000,000 related to lease liabilities, almost entirely reflecting us conference. Successfully fixing additional long term charters in the quarter in a very tight market. That is partially offset by a net decrease We also continued to improve our leverage ratio, which decreased to 0.5. Our free cash flow totaled $643,000,000 compared to $390,000,000 in Q4 2020. That represents a 64% conference. Moving on to Slide 8. Our ability to take advantage of changing market conditions Looking at our top line, total revenues in the Q1 were $1,700,000,000 compared to Even more importantly, we grew profitably, successfully promoting better paying cargo as we continuously seek to prioritize profitability conference over mere additional volume and market share. Net profit was a record $590,000,000 in the first quarter compared to a $12,000,000 loss in Q1 2020. Adjusted EBITDA in the first quarter also significantly increased to $821,000,000 compared to $97,000,000 in Q1 2020. Adjusted EBIT increased to $688,000,000 in the first quarter compared to $27,000,000 in the comparable quarter in 2020. As Eli already mentioned, these results were an all time high and well above commentary. Q1 2021 EBITDA and EBIT margins stood at 47% and 39%, respectively. Our Q1 2021 results also include increased tax expenses totaling $54,000,000 Out of this amount, €34,000,000 relate to deferred tax expenses, I. E. Noncash, mostly related to carry forward losses previously recognized as assets. Furthermore, in light of our current and expected performance for the full year, We reassessed our entire carry forward tax losses, and we now expect to utilize all of them in 2021. To launch new expedited services as a response to identify growth in demand and our enhanced position in the Pacific trade. It is especially noticeable given the seasonality traditionally associated with Q1 volume due to the You can see that our carried volume year over year increased by 28% from 638,000 TEUs in the Q1 of last year conference to 818,000 TEUs in the current quarter. Though it should be noted that Q1 2020 volumes were already negatively impacted by the then emerging pandemic. This was driven primarily by growth in the intra Asia and Pacific trades. Compared to the Q4 of 2020, our volume increased by 2%, with our expanded presence in Intra Asia contributing most significantly to the increase. For the full year, we now anticipate carried volume growth of conference. 30% as compared to 2020, whereas the industry is expected to grow by 4% to 5%. Consequently, given our growth expectations and in light of the current congested market and limited availability of containers, We contracted for $588,000,000 of equipment to be delivered during the year. Containers in the amount of $104,000,000 were already delivered in the Q1. Based on our robust cash flow, we made the prudent capital allocation decision to purchase this equipment Cash generation, we started 2021 with a consolidated cash position of $570,000,000 During the quarter, our adjusted EBITDA stood at $821,000,000 Taking into account the decrease of $50,000,000 of working capital and other, dollars 134,000,000 of investing cash flow, dollars 224,000,000 of debt service, We finished the quarter with $983,000,000 of cash, excluding IPO proceeds. And including IPO proceeds, we ended the quarter conference with $1,200,000,000 Now I will review the strong market fundamentals that we continue to see in the Leidos sector and and our positive view going forward. Moving to Slide 11. On this slide, we show that market supply demand fundamentals Combined with strong demand, these dynamics have elevated both charter hire and freight rates. Specifically, while new buildings on older, including those recently placed by carriers, have risen to 17 Due to the lead time for vessels newbuilding, we have quite a firm outlook on the supply forecast moving forward. Though the order book grew from its lowest level of 8% back in October 2020, We do continue to view supply demand fundamentals as favorable, particularly given demand growth expectations. Based on an upwardly revised forecast in April, the IMF now projects that the global economy will grow by 6% conference call. The low order book combined with robust demand has resulted in higher freight rates, which in turn have also allowed for increased charter hire rates as shipping companies are seeking to secure timing. Moving on to Slide 12. Supportive of sustained market strength, demand is expected to surpass Supply growth during 2021 according to Boolery. Their port handling forecast suggests conference. This translates into a positive supplydemand picture as seen in the chart on the right side of Slide 12. We expect its supply demand index to strengthen to 104.8 in 2021 This reflects GDP forecasts that are more optimistic than 3 months ago, with the exception that consumer demand sorry, with the expectation that consumer demand for durable goods will remain strong. There is also the possibility of further demebers as widespread vaccine rollouts continue globally. Conference. And in this upside scenario, Bory anticipates a possible stronger boost to the consumer and company's confidence And its world port handling forecast for 2021 would then rise to a 10% growth. Turning to the next slide. Freight rates are well above the past decade average with little indication of a reversal in the near term. Rising charter hire trends are correlated with demand as is also reflected in high spot rates. Our long term contract negotiations highlight elevated demand for capacity and the particular strength we saw in rates more recently. Even as we expanded our presence in the Transpacific with the launch of new lines, we had to limit volume commitments due to the higher demand despite our higher volume offering. The long term contracts, which took effect starting May 1, reflect an average rate increase of slightly above 50% when compared to 2020. With equipment shortages and port congestion assistance, we see freight rates remaining elevated through 2021. While On the next slide, Slide 14, we address inventory and bunker prices. In terms of the impact on container demand, we continue to expect import growth for the entirety of 2021 to remain elevated compared to 2020 simply to rebuild inventories. A typical development in sales in the United States could Turning to the right side of the slide. The price of oil increased with expectations of a fuel demand recovery in the U. S. And Europe as lockdowns ease and economic activity picks back up. And we assumed slightly higher bunker prices when providing our current guidance as compared to our assumptions earlier this year. Turning to Our full year outlook on Slide 15, as previously mentioned, based on our strong results, positive market view and the execution of long term contracts with customers under improved terms comparing to 2020, we now expect to deliver Adjusted EBITDA within a range of between $2,500,000,000 to $2,800,000,000 and adjusted EBIT within a range from $1,850,000,000 to $2,150,000,000 The underlying assumptions driving this improved outlook include We have expected higher average freight rates and charter costs as well as slightly higher volume and bunker rates as compared to our expectations and assumptions that prevailed when we provided our initial guidance in March. We already updated that our Board approved $2 per share special dividend, and we are also reconfirming our intention to distribute between 30% to 50% conference call. 2020 1 net profits to shareholders in 2022, subject to Board approval. And now I will hand it over back to Eli for concluding remarks. Thank you, Xavier. Turning to Slide 17, we continue our path forward enjoying significant momentum. I am extremely proud of our As we continue to steam ahead, we'll further position ZYN as an innovative digital leader Conference of Seabourn Transportation and Logistics Services. We will advance our differentiated model and draw on our strong foundation to successfully operate in the 21st century. We will also maintain a relentless focus on fueling ZYN's growth, maximizing profitability into the future and creating long term value. We will now open the call Conference. The first question is from the line of Randy Giveans with And then also with the rising rates that we've been seeing, any reason why 2Q results would not exceed the results we've seen here in 1Q? And if improved, what are those additional plans for that free cash, more special dividends or more aggressive debt repayments? Thank you. Thank you, Randy. I will maybe start tackling your first question. The Your special dividend, you may remember that during the IPO, we communicated on our initial dividend policy, which was from 0% to 50%. And we also did mention that we were limited by the indenture, by the documentation of the notes in our ability conference. We distribute dividends or distribute results or profits that we dated 2021. With the very strong Q1 that we are delivering now and the further testing of the cash sweep close As part of the indenture, we've announced the full repayment of Transcendo far earlier than what we initially anticipated. And that's basically freed us completely from any restrictions with respect to dividend payment. So also combined with not only a strong Q1, but a revised guidance in terms of outlook for 2021, We've increased significantly by 70% to 80% compared to last time we addressed you. Conference. We feel comfortable that there is no reason for us not to start distributing in 2021 as opposed to waiting, as we initially said, in 2020. So today, the $2 per share, We believe we present a good remuneration to our shareholders that Lou, addressing your second question when it comes to the improved guidance, We are very pleased with the market conditions. We are very pleased with us being able to increase our guidance for the full year of 2021. Nevertheless, from a dividend policy perspective, we are not changing. As of today, there are dividend policy, which is still I want to reemphasize that we intend to pay between 30% to 50% Q1 profits into 2022 and that should come in early conference. Got it. Okay. And then you mentioned the improved pricing on your contracts. I think you said around 50% improvement. Can you provide an update on how much of your business is on those 1 year or so contracts following the contracting period in April May. Trying to get a sense for percentage of volumes, maybe duration, if they are all for 12 months or maybe some longer. Okay. It has improved based on your increased and relatively tight EBITDA guidance range. Yes, the percentage conference. Long term contract very much apply first on the transpacific trades, not so much on the other trades. Transpacific trades accounts for 45% pretty much of our overall global dividend contribution. Conference. So now we so when we are focusing on the Trans Pacific, we continued this year just very much like last year. We like the idea to have 50% of our volume on the long term contract and to still benefit from the spot for the reminder of the 50%. But that Has not changed in terms of volume allocation year over year. So overall, if you apply 50% to 45% of our overall volume from a full company perspective. We are still within 20% to 25% of our volumes that conference. When it comes to the rates, indeed, we have and we are very pleased with the outcome The negotiation we've had with our customers. We did mention the 50% increase versus last year. If you allow me, I'm not going to say more about this, providing an information in terms of incremental amount is something that we're happy to do, Not so much to provide the detailed indication as to how much is the average revenue per TEU On our contract volume. Okay. And then on the when you use the term long term, Are those entirely 12 months? Or do you have some 18, 24 months? It is mainly 12 months, it is true that we had customers that were willing to discuss potentially agree with us conference. And quite pleased to limit your commitment to 12 months as we are still optimistic for the year. Perfect. And then I'll just sneak in one more here quickly. Slide 5, pretty incredible chart here showing your net cash conference. Based on our cash flow projections, we could see you being net debt 0, right, by some point in 2021. Is that a target? Do you have any kind of goal, leverage ratios or net cash, net debt amounts by year end? You're right. We are continuing the downward trend in this respect. Do we have an objective To be at net debt 0, the answer is no. And the for us, we wanted to have and to deleverage our balance sheet, and we more than We achieved our initial expectations and targets. So there is no such thing as an objective to come down to 0 So we are happy where we are. This is more a consequence of the very favorable market conditions that lead to this outcome as opposed to a conscious strategy to keep on pushing it down. The Pillar 2, to be honest with you, I think conference. We are more than happy. Sure. Well, hey, thanks so much for that and glad to know you all Staying safe over there. I know I've been praying for Israel, peace in the region. So you all take care. Thank you very much. The next question comes from the line of Omar Nochto with Clarkson Securities. Please go ahead. Hi there. Good afternoon, Ellie and Xavier. Yes. Second thing, Randy's thoughts, obviously, on the crisis there, but also wanted to wish you congratulations on another very, very strong quarter. And Sounds like we're going to be repeating the same message here in 3 months' time. Wanted to ask about the guidance. And obviously, conference. The $2,500,000,000 to $2,800,000,000 is a huge jump from where you were just a couple of months ago. And obviously, since then, We've seen a surge in freight rates. And I guess my question is, do you think that your EBITDA guidance for the year, just knowing what you know now, is still Somewhat conservative considering you did $800,000,000 of EBITDA already in the Q1, which I guess indicates that you may potentially reach your conference. Any thoughts on that? First of all, I would very much hope so. This conference. This comes on the back of a few favorable elements. First of all, We have and we enjoy a significant increase in volume. When we compare ourselves to the rest of our peers, when we compare ourselves quarter over quarter, We are carrying more than and we expect to carry more than 30% incremental volume on the back of all the new lines that we've opened and we continue to open. So that's, I think, one very strong driver behind The improved guidance. Obviously, the second one is the freight rates. And if you look and if we look at the SCFI, It is going up. When we initially thought that it would start to gradually decline, We are seeing the opposite trend, especially relevant on the trade lanes where we do operate. So this is another conference. Very strong driver that explains why we significantly upgraded our guidance. And then Lastly, there is and we just talked about it, the finalization of the long term contracts. So we know that for Q3, Q4, We'll benefit even if we were to anticipate or to be conservative and look at the spot market Going a little bit or softening a little bit, the long term contract is going up and will be on the year quarter over quarter in Q3 and in Q4. So we when we come to you, we truly think that The guidance that we are communicating now is well within reach of the company. So we are saying it loud and clear that we Whether there is room for upside, we never know and time will tell in terms of forecasting horizon. We have clear visibility into Q2, obviously, a good visibility of Q3. Q4 is a little bit more blurry, but again, conference. We see very strong and resilient market conditions. Thanks, Avery. That's really good color. And I guess maybe just Wanted to double check on some of the figures you were talking to Randy about when it came to the spot versus contract. Just so I have it right, about half of the Trans Pacific business is on contract and then outside of Trans Pacific, it's primarily spot based. Yes. And so yes. And then so if we look at it from just ZIM overall, if the Trans Pacific is about 40% of the overall business, then Effectively 80% of your business over the next 12 months is still open to the prevailing spot market. That's pretty correct. With the carryout done on the Asia Med, which represents 20% of our volumes, you have Another 20% to 30% of we don't say long term contract, but it's not really spot, it's quarterly pricing. Conference. Got it. Okay. And then just one final one for me. You mentioned the 588,000,000 You also recently contracted those 10 dual fuel new buildings. What are your thoughts on do you feel comfortable with the existing fleet capacity? Conference. Do you see a need to go into the newbuilding market for more ships or are you happy with how things are at this point? Well, from a container from an equipment perspective, it was very important to us to continue Bring in new containers as we are growing quite significantly quarter over quarter. So we took conference. The initiative to order equipment quite a while ago, and we started that into the Q3 of last year already, And we are continuing aggressively to bring in additional equipment. When it comes to vessels, we are We're happy to continue to charter in capacity as opposed to go and buy and order vessels and ships. We did as you know, we did secure the long term charter for the large capacity vessels that we expect to take delivery from conference call. In 2023 to replace the 10,000 TEU vessels that we are currently deploying on our Asia U. S. East Coast. So we are very pleased to have concluded that partnering agreement with Seaspan in February. And then now we will continue to bring in vessels as we need in order to cater for the new lines that we are opening and ought to renew existing charter that come to a renewal date, but we are not challenging our strategy, which is to continue to rely on the charter market. And then what may change and what is changing is the allocation of short term charter versus longer term charter due to the current market conditions obviously. Conference. The next question comes from the line of Alexia Dougani with Barclays. Please go ahead. Yes, good afternoon. Thanks Thank you for taking my questions and well done on navigating so successfully such a volatile environment. I just have Three questions, please. Just firstly, just building on a bit of the previous questions. In terms of kind of size of the business now. I mean, clearly, you've talked about 112 vessels. Do you think we will end the year at a higher number? And What do you feel is the right number to kind of run the business with the current contracted volumes and the way the market is growing. And then secondly, just to kind of tie up On the CapEx for the full year, am I correct in thinking that CapEx now will be EUR 488,000,000 for the full year instead of 300 previously. And then just thirdly, when you think about following kind of this period of conference. I mean, do you feel you can sustain this level of margins going forward because you've built your market share. Just a bit of color to that that will be great. And then just finally on the order book. Obviously, it's still quite low, but it's been moving quite a bit recently. At what point do you start worrying about supply demand balance further out? Conference. Thank you, Alex. I will try to take one after the other. So starting with your first question with respect to the number conference. We don't have a number of vessels in mind that we think is appropriate for us. Quite the contrary, we see vessels as a means to an end. We look at the trade lanes where we think we can provide a competitive proposition and grow profitably. That's the driver. And we've been engaging very heavily and since already 3 quarters now On the e commerce trade starting between Asia to the U. S, doubling and tripling the trade lanes and also complementing the similar continue to grow our fleet. We are also expanding, as we mentioned, with our partners, with the 2M on our historical The trades, Asia to the U. S, to name 1. So that's the driver for us is not a number of vessels. It's really for as long conference. As we can go and stay in trades that are profitable, we will go in those trades and we will stay in those trades. If not, we will potentially exit. So I guess, I hope that answers your first question. We are the 112 vessels today. We might as well finish the year at 130 or at 100. This will be driven by our analysis of conference. We are increasing our full year cash CapEx in a way by using the excess cash that we are generating today in paying and investing in new containers as opposed to contracting leases with blocks providers. So you should consider price CapEx of roughly $500,000,000 or $150,000,000 even for the full year of 2021, largely allocated to containers. Then your third question with respect to the volatility in our markets and what could be normalized earnings. What do we think can be the earnings power of ZIM? I think what is very important to us, we don't know what the new normal will be. We don't know whether it's going to be drastically different from what It was before. We have views and expectations. 1, we think that the market has gained maturity. That is clear to us in terms of capacity management, and that will also resonate for your 4th question. So the market He is more disciplined in this respect. So we as an industry have demonstrated that we could navigate Certain changes in demand and in market conditions, that's one. 2nd, when it comes to the conference. Expectations are quite favorable for the liner operator like us. So globally, we think that, that will eventually happen. We do agree that Today's circumstances are exceptional on the back of already a very good Conference. 2020, we think that 2021 will obviously be extremely good. We think that 2022, the staff continue to be well aligned. What will be the new normal for the industry remains to be seen. What is important for us is that In terms of positioning ZIM, vis a vis our peers, our larger competitors, we continue to deliver compare your EBIT margin. And we do that quarter after quarter. We think that the transformation, The new positioning of ZIM within our landscape is delivering results. The agility that we demonstrate is paying off. Lastly, your question with regards to the order book, yes, it's only up, but it's only up from a very low number. When we were talking and looking at what the situation was in October last year, not so long ago, it was 8%. It was too low. Let's be clear. It was too low to guarantee the replacement CapEx. It was too low conference. As well to cater for the increased demand that is expected for the years to come. So now we are at 17%. If I was to commit and say, well, where do we think is the threshold above which Potentially, there will be a risk of overcapacity. I think below 20%, we are safe. Conference. Again, to capture for replacement capacity and to capture for the expected growth in our market, so 20% I think it's a reasonable number. Thanks, Javier. And actually, if you don't mind, I'll ask a follow-up on just the future Technologies. I mean, there is a little bit of a debate at the moment whether LNG is the right fuel Transition fuel to kind of get the industry decarbonized. I mean clearly yourselves have voted with your towards kind of LNG. I guess, what is your view? I mean, do you feel that it's good enough and therefore That's where you've decided to well, to target your future requirements. Just any color on what kind of the industry is discussing at the moment would be helpful. Sure. No, we don't think That LNG is going to be the long lasting technology that will allow for the industry to fully carbonate. LNG solves and addresses a few emission issues, but doesn't address CO2 emission. It is more But it is not the long term solution, but it is the best solution that is available today In terms of scalability, in terms of access, when we had to make the decision To enter into this long term agreement with Seaspan, for us, it was a no brainer. We didn't want to buy because we don't think That AT is going to be the LNG technology might eventually or will most likely be replaced conference. With an alternative technology, be it ammonia, be it hydrogen, that will solve the CO2 emission question. So So we don't want to buy and we don't want to take any residual value risk on the vessels. Nevertheless, we're willing conference. It's clearly LNG. There is no better viable technology today than this. So that's our stance. We are not a vessel owner, And we are happy to remain like this, predominantly. And again, when we just Negotiated with Syspan, we wanted Syspan to make the most environmentally friendly choice when it came to serving ZIM conference. And in turn, allowing us to serve our customers in the most efficient manner from a carbon intensity perspective. Conference. This concludes Q and A for today. I hand back to Eli Glickman, CEO for closing comments. Thank you, operator. I would like To thank everyone again for joining us today's call and for your interest in Zim. We look forward to sharing an update on your progress We see you in the future. Thank you very much. Goodbye. Conference. Ladies and gentlemen, the conference has now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.