Release Date: May 22, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MPC Container Ships ASA (MPZZF, Financial) reported a strong quarterly result with an adjusted EBITDA of USD66 million for Q1 2025.
- The company has a substantial revenue backlog of USD1.1 billion, with high employment coverage for 2025 and 2026.
- MPC Container Ships ASA (MPZZF) declared its 14th consecutive dividend, amounting to $0.08 per share, contributing to over USD1 billion in dividends paid over the last three years.
- The company successfully executed fleet optimization by selling seven older vessels and taking delivery of two methanol dual-fuel new buildings.
- MPC Container Ships ASA (MPZZF) entered the Japanese lending market and raised USD75 million through a sustainability-linked bond, enhancing financial flexibility.
Negative Points
- The company faces macroeconomic and geopolitical uncertainties, which could impact future performance.
- Despite strong market conditions, there is a need for fleet renewal due to an aging fleet, with many vessels over 20 years old.
- The decision to adjust the dividend payout ratio from 75% to 30%-50% may not be well-received by shareholders expecting higher returns.
- There is a significant discrepancy in the order book for vessels below 8,000 TEU, indicating potential challenges in fleet renewal.
- The company acknowledges the ongoing volatility in the shipping market, driven by geopolitical tensions and regulatory shifts, which could affect strategic planning.
Q & A Highlights
Q: What is the plan for the 33 conventional ships built between 2005 and 2010? Do they all need retrofitting, or is there an option of selling more of them?
A: Moritz Fuhrmann, CFO: We have retrofitted around 24 ships with major retrofits and 8 to 10 with smaller retrofits. We consider retrofitting to improve commercial viability and may sell ships with weaker designs that don't have a viable retrofit path.
Q: Is the new dividend policy of reducing the payout ratio a permanent or temporary decision?
A: Constantin Baack, CEO: The decision is carefully considered, reflecting the cyclical nature of shipping. We are shifting focus to fleet renewal and strategic growth, adjusting the payout ratio to 30%-50% to ensure flexibility for future opportunities.
Q: Could you provide more color on the increase in other income and the decrease in depreciation?
A: Moritz Fuhrmann, CFO: The increase in other income is due to insurance payments for main engine damages. The decrease in depreciation is linked to vessels acquired with below-market time charters, which will normalize in the coming quarters.
Q: Do you see greater value in expanding the fleet through newbuild orders or acquiring younger secondhand vessels?
A: Constantin Baack, CEO: We aim for flexibility to act in the current market, buying assets with long-term charters to mitigate high entry prices. The dividend policy is sustainable, and we will consider both newbuilds and secondhand vessels.
Q: Are you only optimizing or renewing your ship portfolio, or are you also planning on growing the fleet?
A: Constantin Baack, CEO: We have sold more ships than acquired recently but increased trading days with younger ships. We aim to maintain a minimum scale for strategic dialogue with customers and are open to growth that generates shareholder value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
