Earnings call: MPC Container Ships reports robust Q2 2024 results

MPC Container Ships ASA (ticker: MPCC) announced strong second-quarter financial and operational performance in its latest earnings call. The company reported the addition of 17 vessels to its fleet, resulting in $300 million in contracted revenue. With a focus on disciplined capital allocation, the company declared a $0.10 quarterly dividend, marking its 11th consecutive payout.

Despite the challenges posed by the Red Sea crisis, which has led to increased freight rates and container trades, MPC Container Ships remains in a strong market position with a significant charter contract backlog and high earnings visibility into 2025.

Key Takeaways

• MPC Container Ships added 17 new vessels, with two-year average charter durations.
• The company declared a $0.10 quarterly dividend, continuing its streak of consecutive dividends.
• Generated approximately $20 million in cash during the quarter.
• The Red Sea crisis has impacted the industry, causing increased freight rates and container trades.
• Strong market position with 98% charter coverage for 2024 and 76% for 2025.
• HARPEX index has risen 145% since January, indicating strong charter rates.
• Company raised revenue guidance to $510-520 million and EBITDA to $335-350 million.

Company Outlook

• MPC Container Ships has raised its revenue and EBITDA guidance for the year.
• The company has a clear capital allocation strategy, focusing on shareholder returns and fleet optimization.
• The Gemini alliance is expected to create new demand for feeder vessels.
• MPC Container Ships aims to maintain a low-leverage strategy and a strong dividend policy.

Bearish Highlights

• The market outlook remains uncertain due to supply-side dynamics.
• A slowdown in momentum has been observed recently, though charter rates are still historically high.
• S&P activity has been slow, indicating a potential cooling in the market.

Bullish Highlights

• Charter rates and asset values have increased throughout the year.
• The demand shock and increased port handling volumes have driven up rates.
• Minimal spot ships are available, and charter periods are longer.

Misses

• There have been small downward corrections in smaller feeder sizes.
• The idle fleet globally is at a historically low level, which could lead to supply constraints.

Q&A Highlights

• Share buybacks are part of the capital allocation strategy but are only one component.
• The company emphasizes returning capital to investors through dividends and event-driven distributions.
• MPC Container Ships is open to alternative fuels and has ordered methanol vessels as part of its fleet optimization efforts.

In summary, MPC Container Ships has shown resilience and strategic foresight in navigating the volatile container shipping market. The company’s proactive fleet growth and optimization measures, coupled with a disciplined approach to capital allocation, have positioned it well for continued success in the coming years. With a solid backlog and positive market indicators, MPC Container Ships looks set to sail through the uncertainties of the global shipping industry.

Full transcript – None (MPZZF) Q2 2024:

Constantin Baack: Good morning, and good afternoon, everyone. This is Constantin Baack, CEO of MPC Container Ships, and I’m joined by our CFO and Co-CEO, Moritz Fuhrmann. I would like to welcome you to our Q2 2024 Earnings Call. Thank you for joining us to discuss MPC Container Ships Second Quarter Earnings. This morning, we have issued a stock market announcement covering MPCC’s second quarter results for the period ending June 30, 2024. The release, as well as the accompanying presentation for this conference call are available on the Investor and Media section of our website. Please be advised that the material provided and our discussion today contain certain forward-looking statements and indicative figures. Actual results may differ materially from those stated or implied by forward-looking statements due to the risks and uncertainties associated with our business. And on that note, I would like to hand over to Moritz, who will run you through the first part of our presentation.

Moritz Fuhrmann: Thank you very much, Constantin. Good morning, and good afternoon, everyone. And also from my side, welcome to MPCC’s earnings call for the second quarter of 2024. As usual, we have structured the presentation into three sections focusing on the Q2 highlights, market insights, and the company outlook. Jumping right into it and going to Slide 3, we continue to post strong results both financially and operationally. Top-line revenue and EBITDA came in at $131 million and $78 million respectively, while markets continued to perform very well. Since the last reporting, we have taken advantage of the prevailing positive market momentum and fixed 17 vessels in total, with roughly two years average charter duration, adding roughly $300 million of contracted revenue to the backlog of the company. This also includes a number of forward fixtures for vessels coming open late Q4 and early Q1 ’25. And in total, we have added a staggering 330 months of employment to the fleet, significantly increasing the coverage and the earnings visibility for ’25 and ’26. While being busy on the chartering side, we have continued with our fleet optimization, i.e., selling older and less strategic vessels while adding larger and slightly younger tonnage, including attractive charter backlog to the company. The container markets continue to show strength supported by the ongoing disruptions in the Red Sea, as well as early restocking cycle. Both rates and charter durations are substantially up from beginning of the year. However, the long-term outlook remains somewhat uncertain given the supply-side dynamics. However, with that limited open positions in ’24, but also ’25, MPCC is in a very comfortable position. The good financial result translates into a quarterly dividend of $0.10, which has been declared by the Board and this marks our 11th consecutive dividend, bringing the total number to US$890 million over a span of less than three years. Turning to the next slide and looking at some KPIs for the second quarter, financially we see that our figures show a slight decreasing trend as a result of the legacy backlog being run off as we speak. However, EBITDA and profit margins are in line with last quarter’s and based on the latest fixtures, we have actually added to the revenue and EBITDA backlog of the company. From a balance sheet perspective, with the delivery of our first newbuilds 5,500 TEU, the total assets increased $2 billion. Despite drawing down on newbuild financing, our net debt remains negative or in other words, cash positive. And at the same time, the leverage ratio only slightly increased to roughly 17% and remains at very conservative levels. The fleet utilization continues to be strong with roughly 80 – sorry, roughly 98% for the quarter. As we have a large number of dry dockings coming up in Q3 and Q4, we expect the utilization to be slightly lower as compared to Q1 and Q2. And at the same time, the OpEx with $7,500 per day for Q2 ’24 was slightly inflated by one-off items and is expected to normalize throughout the remainder of ’24. Looking at the cash development on Slide 5, we generated around US$20 million cash overall on quarter-to-quarter. The strong operational cash flow of $81 million, together with the drawdown of the post-delivery financing for our first 5,500 TEU vessel, did more than offset the 41 million net investments into our fleet through retrofits and CapEx, as well as the roughly $60 million dividend that was declared for the first quarter of ’24, but only paid out in the second quarter. All in all, MPC remains very disciplined from a capital allocation perspective. Turning to the next slide, this is not only an illustration of our dividend journey, but also shows MPCC’s transformation into a value company. Again, this marks our 11th consecutive dividend, bringing the total number of distributions to $893 million. Year-to-date, the implied dividend yield is already at 28.5%, assuming investors would have bought the stock in January ’24. However, most importantly, we will continue to walk the talk and will stick to our distribution policy, distributing 75% of adjusted net profit and continue returning capital to shareholders. The next slide, Slide number 7, highlights our chartering efforts so far this year. The trend is clearly visible and we have been very active over the last couple of weeks to fix vessels at very strong rates and durations. In Q4 and Q3 to-date, we have concluded 25 fixtures, whereby relative to the first quarter, rates have increased from around $14,500 per day to $20,000-plus per day on average and charter durations are now in the range of 21 months to 22 months on average, up from 12 months earlier this year. That means that since the last reporting, we have added roughly US$300 million to the revenue backlog and around $200 million to the projected EBITDA backlog while adding 430 months in total charter duration. For the time being, we continue to see similar rates and charter durations as we have seen over the last couple of weeks, simply underlining the continued strong chartering market. Turning to Slide 8, and looking at the S&P activity year to date since the last reporting, we continued with our portfolio optimization by offloading two older vessels at very strong pricing, reflecting the strengths in the container markets. The two vessel sales generated US$32.5 million in sales proceeds, bringing total year-to-date figure to roughly $70 million. We expect to hand over the latest two sales in – to its respective buyers in the last quarter of ’24. On the acquisition side, we have taken advantage of certain opportunities during the summer where we identified a disconnect between asset values and charter rates and durations. This simply allowed us to acquire two 3500 TEU vessels for roughly US$50 million while fixing them for three years at around $25,000 per day to a very strong counterpart, essentially de-risking the acquisition through the projected EBITDA. The transaction clearly underpins MPCC’s ability to identify and execute these attractive and accretive opportunities in the market and going forward, obviously, we will continue to act opportunistically when windows of opportunities open up. Overall, the portfolio optimization efforts pay off very well as we added younger and larger vessels to the fleet. And most importantly, despite selling five vessels and acquiring only three, we have increased the available trading days by roughly 10% on a relative basis. And on that positive note, I’m handing back to Constantin who will give some insights on the market and will speak about company outlook.

Constantin Baack: Thanks, Moritz. Following the Q2 review, I would now like to run you through the market section of the presentation, so please turn to Slide 10, I would like to start with the freight market. The Red Sea crisis has basically created a new world for container shipping industry. Why this is the case can be best explained by looking at the Red Sea crisis and the implications on freight rates and container trades. The ongoing Red Sea rerouting combined with strong TEU volume growth on some trades and port congestions in Q2 2024 have led to a significant increase in freight rates over recent months. See also the graph on the left and right hand side showing container trade volumes which is on the right-hand side the red line and freight rates based on the CCFI index which is the blue line on the right. Freight rates are at the highest level on record outside the COVID pandemic period. Additionally, there has – there was basically a two-fold demand effect unfolding during Q2 2024. Firstly, what I would call a TEU mile effect, that is a significant 12% rise in TEU mile demand due to the rerouting around the Cape of Good Hope. Secondly, a TEU volume effect and that is an increase in container trade in terms of TEU volumes. Global volumes stood at 15.7 million TEU in June, a 6.3% increase year-on-year based on CTS (NYSE:) data, especially U.S. imports saw aggressive shipper strategies and front loading of cargoes ahead of the usual peak season. One reason for this is that shippers want to avoid increasing tariffs being imposed on Chinese goods. Another reason is to avoid congestions or bottlenecks later on, a lesson which shippers learned during the pandemic. This has boosted demand on a long distance and high-volume trade. The chart on the left shows the sharp fall and great surge of Gulf of Aden container ship arrivals and Cape of Good Hope containership arrivals. The Gulf of Aden container ship arrivals in July were down almost 90% compared to 2023 levels and the Cape of Good Hope arrivals correspond accordingly. Clarksons estimates that the impact of Red Sea disruptions is adding 3% to global shipping demand with significant impacts on container shipping plus 12% and the car carrier industry of 7%. The supply chain disruptions are not only in the Red Sea region, but they are also spreading out as a result of this. Carrier reliability data for July shows a further decline to a level of around 52% globally in terms of on-time performance, which is only marginal better than the situation when we moved into 2024 on the back of significant Red Sea implications. At a service level, there were particularly large declines in performance when it comes to South America, Europe, Asia and North America trades. One can summarize the status, spot freight rates momentum has cooled off over recent weeks with rates on some trade softening. Nonetheless, freight rates are still at their highest level outside the COVID area, and therefore it remains to be seen on the back of strong guidance revisions by the liner customers what the future will bring in terms of the freight market. Let’s move on from the freight market to charter rates and asset values on Slide 11, the development of freight markets, in particular the TEU mile demand effect that I’ve mentioned earlier, as well as the TEU volume effect, have also had a continued positive impact on charter rates and asset values during the second quarter of 2024. On this slide, you can see the developments of charter rates as per the HARPEX index, which is the blue line, as well as the Clarksons secondhand price index, which is the red line. Basically, since the start of the year, both have increased more or less steadily until today. The initial expectations for TCE rates were that they would not have much room to run even higher after their initial upswing in Q1 2024 as the impact of the distance demand shock triggered by the Red Sea chaos would gradually be absorbed. However, that is not the case and on the top of the distance shock, demand shock was superimposed. Port handling volumes, as explained earlier has gone up significantly and in the top 30 ports globally that increased by 7% during the first half of 2024. This is a significant increase compared to previous years. Consequently, charter rates continue to rise. The HARPEX is up 145% since January and we have recently seen a slowdown in momentum, also due to somewhat lower activity. But charter rates in general remain at supreme levels in a historical context. Over recent weeks, we have observed small downward corrections in the smaller feeder sizes below 1,700 TEU, and asset prices at the same time rose as well. They rose by nearly 29% since January but moved sideways since June this year. Overall S&P activity has not increased by number of sales but in July was a bit slow as the data currently suggests only 15 transactions in that period, but it’s possible that this number may be revised at a later point in time. Charter activity has slowed as well due to the usual summer lull, but the charter market remains at very steady levels and the most recent fixtures we have seen even here in August or end of August, are at very solid levels and solid periods. Let’s have a look at the additional market parameters on Slide 12. The chart on the left shows the forward availability of vessels and the chart on the right shows the development of charter durations. As a starter, the idle fleet globally is virtually empty, only at 0.8%. The share of commercially idle units of the total container ship fleet remains at a historically low level. Now, starting on the left with forward availability and open positions, you can see these bar charts developing over time, illustrating availabilities of ships in the next one month to two months in light blue, three months to four months in red and five months to six months in dark blue have come down significantly since early this year. The number of open positions in the charter market presently is very low, especially for vessels above 3,000 TEU there’s low almost no supply until the end of the year and even throughout 2025, that picture is not dissimilar. Spot ships are negligible, especially in the larger vessel segments including Panamax and post-Panamax vessels, and here the spot market is virtually sold out, but also in the feeder segment, spot ships have become a scarcity. As a result of the high fixture activity in combination with longer charter periods, as you can see on the right-hand side, the vessel availability has decreased significantly at present and going forward. Now a few more words on the right-hand side’s chart. You can see the development of charter periods. Periods have become longer and longer as they have essentially developed hand in hand with the increase in charter rates as explained on the previous slide. Charter periods have been on the rise in sectors facing the most limited supply, particularly in larger vessel categories and for modern eco vessels. The graph shows the feeder size segment between 1 TEU and 5,000 TEU and particular where the average periods was nearly 18 months in July 2024, significantly up compared to the beginning of this year. In terms of forward fixture activity, another aspect we have seen quite some forward fixing as Moritz has also alluded to earlier with around 20% of all fixtures having been fixed on a forward basis in Q2 2024, meaning with delivery windows being more than 30 days out. If we conclude on the charter market in terms of the outlook, whether a downward correction is on the cards remains to be seen. We presently see fixtures at solid periods and stable levels even in today’s market environment, providing some comfort for the month ahead. Moving to the – from the S&P and charter markets to some parameters regarding supply growth development, in particular the deliveries of new ships to the market, as well as the development of the order book. On the next slide, Slide 13, the left chart on Slide 13 illustrates the delivery since the commencement of what we – what can be seen as, let’s say, the most recent shipbuilding cycle, i.e. deliveries since 2023 until year-to-date 2024, as well as the composition of the order book. Both deliveries, which is the left stack and the order book, which is the right stack for the left graph are divided by different ship sizes. What is worth noting in that respect is that, first of all, during July, we saw the highest monthly ordering activity since March 2021 with 1.1 million TEU being ordered in that month alone. But the current shipbuilding cycle is overly focused on the largest vessels in terms of capacity, as can be seen on the graph. And since July, out of the 1.1 million TEU, only two vessels had the capacity of less than 8,000 TEU. So yes, a lot of ordering activity recently, but nothing of that basically below 8,000 TEU. The chart on the right shows the container ship newbuilding price index as a line and the deliveries in blue and the order book to be delivered in red in terms of bar charts, and this shows the following picture. Basically, the shipyards are fully booked throughout ’25 and ’26, certainly for larger vessels. When looking at the price index, it needs to be understood that yes, the prices have gone up, the individual prices in a way. However, it is important to also note that this is mainly driven by larger vessels with way higher specification and equipment than in previous years, meaning that this index also includes dual fuel setups, significant dual fuel setups for larger vessels as the main price driver. Shipyard capacity, looking at the shipyard capacity, as I said, the yards are fully booked even though once closed shipyards are being reopened today. It will be very difficult to order ships of above 8,000 TEU anytime earlier than 2027, if not 2028, as the more likely earliest date for a new order, meaning a lot of yards are booked. Now looking at Slide 14, where we drill into a bit more detail in terms of the fleet age profile. So whilst the contract activity has certainly picked up strongly for the larger segments, the order book needs to be seen in context of the actual fleet in the water and in terms of size and age structure. And that can be seen in the chart on this slide showing the age structure for the fleet currently on the water by size and segment. Hence, as well as the corresponding order book lines on the right-hand side, you can see that the sizes that MPCC focuses on are highlighted with a grey box. A few comments on this. Firstly, the fleet continues to develop an age problem. It is getting older and older and the emission reduction demands from environmental stakeholders are getting tougher and tougher. On the recycling side, according to Clarksons, only 42 vessels, container vessels have been recycled year-to-date in 2024, or roughly 60,000 TEU only at a demolition age on average of 29 years. Why are the old ships not being recycled at this point? The market is simply too good at the moment. At current charter rate levels, we estimate that the 2025 and likely even the 30-year class will be paid within short when chartering out vessels. So that’s another aspect why we haven’t seen any developments. And lastly, and I think very importantly, investments in small units is certainly falling behind in the current shipbuilding boom. Investors may shy away from ordering units at a high price because the economies of scale for the larger units are simply easier to run the math. What is very importantly is to note is that developing the right design for smaller units is comparably more challenging as you’re not just design optimizing for one very trade, and like the ultra-large vessels East-West trades for example. But the smaller units are the flexible part of the service offering and also the relative cost, if you look at dual fuel setups or the like is more expensive in relative terms. So I’ve made that point in previous earnings calls. I firmly believe that new vessels in the smaller sizes are needed in order to cope with the needs for the ship going forward in particular, looking at the age profile and we do expect new orders in our segment to come. Now, I would like to continue with the outlook section. Please move to the next slide where we start off with the charter backlog, an illustration that we have used in previous quarters. So please move to Slide 16. On the left, you can find some more details on our backlog and forward coverage as explained in more detail by Moritz. We have executed on our chartering strategy during the past months, locking in solid period charters at very good rates. Hence, on the back of this, we have added a substantial volume to our backlog. As per end of Q2 2024, we have a revenue contract backlog of in total US$1.1 billion, which has increased compared to the previous quarter where we were looking at US$0.9 billion. Also, the projected EBITDA backlog has increased to roughly US$0.7 billion. In terms of coverage for the remainder of the year 2024, meaning the last half of this year, we now have 98% of coverage of all operating days and for ’25, we look at 76% which is up from 47% compared to the last quarter and 42% for 2026. As you can see on the right-hand side, in terms of charter volume and counterparties, 90% of our charter contracts are with the top ten liner companies, all backed by long-term cargo commitments, which also speaks for itself when looking at the robustness of our backlog. Now let’s continue and look at the upcoming charter positions for the rest of this year and next year on Slide 17, where we have shown on the left-hand side the number of fixed and upcoming vessels for ’24 and ’25. The columns show the quarterly development for ’24 as well as more on the right side the full-year figures. So for 2024, we have already fixed 33 of the charter positions with five more positions open until the end of the year. For 2025, we have 22 charter positions of which we have already forward fixed 6 vessels as also explained by Moritz earlier, with 16 open positions remaining for the year 2025. We are presently in active discussions with some of our charter clients on certain extensions and fixtures for 2024 positions. With the days covered for ’24 and ’25 as a starting point and that’s now on the right-hand side of this chart, we have run a sensitivity for revenues and net profit basically for two scenarios or two rate assumptions. Firstly, current market rates according to Clarksons. And secondly, the 10-year historical average rates from Clarksons. The outcome can be seen in the graph on the right. And applying our dividend policy and current market cap, we would still be looking at a very solid double-digit dividend yield for the future. And on the back of this and taking basically a step back, I would like to reflect a bit on the next slide, Slide 18 on MPCC’s development over the past years and how we expect to continue to build the company going forward. During the initial phase of the company, we are focused on ramping up the fleet in a market environment which basically can be characterized as a period during which we had a very firm view that investing and deploying capital is the most beneficial and most value-enhancing activity for MPCC and our shareholders. This growth phase during which we built up the fleet saw us invest and that’s at the bottom here. $870 million in 82 vessels with only very limited divestment activity, selling only six vessels in that period. Since Q3 2021 basically, we have transitioned into what we describe is the – and have described in previous presentation a strategic execution phase during which we optimize the fleet and also our portfolio. And in this period which we will look into in a bit more detail, we have seen us actively selling and buying ships, managing the portfolio. We have sold 31 ships for around $560 million, whilst we have acquired 14 vessels for $475 million. The divestments saw us offload mainly older, less efficient tonnage, whilst the acquisitions were mainly modern efficient vessels, including ECO Vessels, as well as Dual Fuel newbuilds with strong cash flows attached. The way we see the world in this phase is volatile. And in a volatile and not easy-to-predict market environment, we firmly believe what matters a lot is not only to have a solid understanding of the underlying market drivers, but also to ensure the company is positioned in a way that is extremely resilient to cope with almost any market environment and developments benefiting from rising markets and being perfectly positioned to also make use of attractive opportunities once the markets go down. Hence, we have operated on a strategy balancing the key aspects of our business and we will certainly continue that path in order to generate long-term value for the company and our shareholders. On the right-hand side of this slide, you see how we intend to balance our strategy. Firstly, capital allocation. We will continue our path of disciplined and rational capital allocation. This includes a strong commitment to shareholder returns, including a clear distribution policy and reliable distribution policy. And we will also further explore the disposal of further non-core vessels, whilst at the same time selectively exploring acquisitions. In terms of the balance sheet management, we will continue to ensure we operate on a highly flexible balance sheet. What does that mean? It means we want to maintain a significant number of debt-free vessels in our fleet. We will explore attractively priced green financings for newbuilding, where we will also seek to optimize leverage as the vessels have long-term employment. At the same time, we will reduce the leverage on our existing fleet and maintain at all times a very solid cash reserve and investment capacity in order to be able to act when market opportunities arise. And as far as the portfolio and operations are concerned, we will continue to place a strong emphasis on our fleet on the water and our newbuilding program in terms of operational excellence, cost control, and maintaining a high utilization and a rational and clear chartering strategy. And we will continue with our fleet renewal and optimization efforts going forward. Now, looking at the next slide and how we have actually executed during this strategic execution phase since Q3 2021, let me provide some facts and figures that help you understand how we think in this phase, how we will think going forward. In Q3 2021, we have looked at and that’s the left part of this chart in gray. We have looked at a revenue backlog of $1.1 billion. We had not commenced our dividends. As you can see, we had only three debt-free vessels and a leverage ratio of 35%, whilst at the same time our fleet consists of 100% vessels with conventional propulsion or conventional vessels. Today and that’s the Q2 2024 column basically. We again look at a revenue backlog that at equal levels of $1.1 billion that we have been able to build up over the past quarters. And that is part of the outcome of our very stringent chartering strategy. And at the same time, we have followed, as I’ve explained earlier, a clear capital allocation strategy and have executed on that. That addresses the key areas of our business. Firstly, on distributions, we have returned significant capital to our shareholders, dividending out almost $900 million in distributions. And it is worth noting that at the same time, the stock price has also gone up, i.e., despite distributing significant dividends, we have also been rewarding shareholders basically on both channels through stock performance and return through dividends. Furthermore, we have strengthened our balance sheet by reducing our leverage and freeing up collateral. That’s the next two line items. Basically, we are now looking at more than 60% of our portfolio being debt-free vessels, or 35 vessels in total. And hence, we have also reduced the leverage, as well as enabled us to be even more flexible in terms of our balance sheet capacity. And finally, but certainly not least, and I – as I illustrated and also explained on the previous slide, we have also optimized and renewed our fleet and we have been disciplined. But we are also making use of opportunities in the market to create further value. Going forward, what can be expected, can be expected that we will continue to follow our path of transparent and clear principles, be a reliable partner to all our stakeholders, to our charter customers, to our lending partners, to our shareholders and to our employees, and we will continue our path in a less predictable future, but with a very solid setup and balance sheet. Now let me wrap up the presentation with the last slide. In terms of outlook and summary, we are very happy with the performance of this quarter. Both from an operational and financial standpoint, we have been able to continue on our low-leverage strategy, we have executed a number of fleet renewal measures and will continue that path enhancing value. Whilst at the same time, stay committed to our strong dividend policy. In a market that created a lot of opportunities on the chartering side, we’ve been active at a high level and we have increased charter durations and significantly built out our backlog, and have now a very clear visibility on earnings for the next quarters and years to come. And on the back of this, we have also raised our guidance for this year to – on the revenue side to $510 million to $520 million and an EBITDA of $335 million to $350 million for the rest of the year. We are very well positioned for the future and we are excited to continue to develop MPCC further. And on that note, I would like to open the round for questions.

A – Moritz Fuhrmann: Okay, thank you again, Constantin. The first question has come in. It’s a question on capital allocation. You had ship sales of roughly $70 million this year. It looks like the market was expecting an event-driven dividend. Do you have any plan for such in the second quarter of ’24? That is correct. However, firstly, of these $70 million only, it’s in regards to five vessels, of which only three have been recorded now, meaning, handed over to the buyer. You saw that we also acquired a few vessels over the summer. So we have been reallocating capital from smaller, older spot ships into a slightly younger, larger ships that come with an attractive backlog. There’s two remaining vessels that we reported sold in this quarterly report. However, those ships are only being handed over to the respective buyers somewhere in the fourth quarter of ’24. And once those sales are being recorded, then obviously we will have, as always, a discussion and debate with the Board whether to also declare event-driven distributions.

Constantin Baack: There is another question here regarding, so it says, what is the long-term strategy for the share price fluctuations, more sustainable developments? We actually believe we are well on track as far as the development of the company and the share price is concerned, and we will continue that path. We will continue our strategy in terms of a clear capital allocation and walking the talk. And that relates to both building the company operationally and also in terms of the asset portfolio, whilst maintaining a very clear distribution policy. I mean, there are always days like today or the past few days, Monday, Tuesday, this week the share went up 10% and now it’s obviously down quite a bit today and we are basically back at the level of last Thursday. But in my view, one has to look at the share over – also over longer periods. And I mean, year-to-date, the share is up 60% with a dividend yield of close to 30%. So year-to-date, I think the share has performed very, very well and that’s the same applies to our dividends. And if you look over the last two year periods, I mean, the share is probably up 10% to 15% and we have in parallel declared $900 million in dividends. So again, we believe we are well on track. There are always times where the share is a bit more volatile as the market is volatile, certainly in terms of the global container market. But we believe we are well on track and that will ensure a very positive development and sustainable development, both of our share, as well as of our dividend.

Moritz Fuhrmann: Next question is relating to our presentation. The earnings call presentation looking at Page 16, contracted forward TCE rates are decreasing from now until ’26. Is it expected that revenues and earnings will continue to follow last quarter’s trend of sustained decrease? Obviously, those numbers are still driven by the legacy contracts that we have fixed in ’21, ’22 and maybe also early ’23 at unprecedented rates and durations. So you will naturally see a decline as the market now is at different levels. However, as you have also seen in the presentation, the market has year-to-date come up quite significantly and we have been very active to take advantage of this window that we see in the chartering market now. So I think it’s fair to say that we have been stabilizing not only the backlog, but also charter rates and durations. Can we guarantee that the trend is being reversed or stopped? Obviously not, because it’s a function of the market, but what we can say is that we have with the fixing activity over the last couple of weeks, we have added significantly backlog and visibility into ’25, into ’26 at levels that are very, very healthy from a company perspective.

Constantin Baack: Then there are a few questions around the topic of share buyback, and the question is what is our position with regards to share buyback? I think it is obviously something that is always part of our capital allocation considerations. We have, as explained during the presentation, a few very firm building blocks when it comes to our capital allocation strategy, and that is returning capital to investors, certainly by way of a reliable dividend scheme that is implemented and complemented by the ability to possibly also pay event driven distributions as we have done in the past, and also share buybacks as we have also done in the past. I think we will always balance between those three modes of returning capital investors whereby the dividend is the steady and very reliable part of it and we will definitely focus on that. And next to that, obviously, we have as part of our capital allocation strategy also the moderate leverage that we want to maintain to low leverage and of course, pursuing opportunities, as we have also pointed out in the presentation. So, answer to share back is yes, it’s part of the consideration, but it is only one component and we believe the way we are allocating our capital today is the right way forward and we will continue on that path. Then there is another question around the Gemini alliance, and that is regarding the start of the Gemini alliance in February. Do we think the alliance has the necessary fleet – feeder fleet to service its hub-spoke strategy? I think that is a very relevant subject. I think we are really looking forward to the implementation of the alliance. We truly believe that, indeed, as per the question, it will raise kind of the hub-spoke system for Maersk and Hapag in that very alliance. And we actually believe that this will create new demand for intra-regional trades and feeding into those hubs. So it’s basically a way to address the market by two very large partners of ours, and we actually believe that will fuel demand for feeder services once this alliance is up and running. And therefore, we believe for the utilization of smaller ships, this will be net positive in any event. And we actually believe that. And we touched on that during the presentation. Looking at the order book and the age of the certainly of the smaller vessels trading presently, that might be another accelerator for the need for smaller vessels. So the answer is, we believe once this is established and the hub-spoke strategy is kind of implemented, that there will be more need for feeder vessels, which is certainly net positive for us.

Moritz Fuhrmann: So there’s one more question coming in. As we’re into the second half of ’24, and evidently you have a good visibility into ’25, could you share your concluding thoughts on what we can expect from MPC Container Ships for the rest of the year and into ’25? So, as you can see in the presentation, coverage-wise, ’24 is almost done. From a chartering perspective, there’s a handful of vessels in our fleet still open for the remainder of the year. We also mentioned during the presentation that the market is holding up nicely as we speak in terms of rates and durations. And I think it’s fair to say, or we can, you know, frankly speaking, we do have ongoing discussions with charterers, so we expect to continue the chartering activity that we have done over the summer in terms of rates and duration. So hopefully we will also be able to achieve the durations that we’ve seen stretching into ’25, into ’26. And also for ’25, we have significantly increased the coverage and open positions in ’25, or roughly two dozen ships. So that has also changed drastically and has improved the visibility substantial, obviously for the company, but also from an investor perspective.

Constantin Baack: Then there’s a question regarding fleet optimization. When looking into fleet optimization, will you stick to methanol as a preferred fuel for the future, or how will the risk on choice of fuels, future fuels will be addressed? First of all, yes, we have a few methanol vessels on order. However, it is worth to highlight that obviously, the bunker is the responsibility of our chartering partners and not ours. So I think in terms of cost structure and optimizing it, we have always developed the designs and also the way forward on newbuildings together with partners. And the orders came with long-term charters attached. Hence through the secured EBITDA, derisking our investment in its entirety. So that is one very important aspect. Having said that, when looking at future fuels, there is obviously – it’s still a big question. It’s still the question out there when looking at new propulsion technology, we will certainly not put all eggs in one basket. At this stage, we come more from a rational kind of investment standpoint that we look at what is available, how can we serve our customers best, and how can we manage our risk and upside in that respect. And that has led to us ordering methanol vessels. Having said that, we are constantly also looking into alternatives. And a very important element of our fleet optimization, not to forget, is an investment in the existing vessels. So our retrofit program, which again, we do hand in glove with our chartering partners. So as far as we are concerned, we will continue to be agnostic. When it comes to future fuels, we will continue to invest into our existing vessels and we will also commence our journey on our dual-fuel methanol vessels once they are – the first vessels will be delivered later this year. So there are – at this stage, no further questions. We’ll wait for one or two more minutes in case more questions will come in. Bear with us for a bit. So it doesn’t seem that there are more questions coming in. Again, thanks for everyone’s interest and attention. We are very satisfied with this quarter. We are excited, looking forward with a very solid backlog into the remainder of 2024, but also into 2025 and 2026. And on that note, I’m happy to conclude the call. And again, thanks for your interest. All the best and take care. Bye-bye.

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