CMB.Tech (NYSE:CMBT) held its first-quarter earnings conference call on Tuesday. Below is the complete transcript from the call.
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Summary
CMB.TECH NV reported a strong Q1 2026 with a net profit of $368.8 million, an increase in market cap and reduced leverage.
The company increased its revenue, reduced net finance expenses from $113 million to $81 million, and ended the quarter with liquidity above half a billion dollars.
Strategic initiatives included taking delivery of seven new vessels, selling older ships, and optimizing the fleet, resulting in a capital gain of $267 million in Q1.
CMB.TECH NV increased its contract backlog by $200 million, largely driven by long-term dual-fuel vessel contracts.
Management announced a $0.64 per share dividend distribution, with a large portion exempt from withholding tax, and highlighted positive market outlooks for dry bulk, tankers, and offshore energy.
The company remains cautious about the container and chemical markets due to large order books and softer demand growth.
Future guidance includes expectations of over $1 billion in operational free cash flow for 2026, excluding vessel sales and remaining CapEx.
Operational highlights include high rates and strong bookings for the dry bulk and tanker segments, with significant growth expected in the offshore wind and oil and gas markets.
Full Transcript
Alexander Severis
Good afternoon everyone and welcome to the CMB.TECH NV Q1 2026 earnings call. My name is Alexander Severis and I’m joined by my colleagues Ludovic Severis, Enia Derkindren and Joris Daman. We will present to you the highlights of our first quarter and the title of this call is Firing on all cylinders. We had a very interesting quarter, a very good quarter and we would like to start with some financials and highlights and I will hand it over to Ludovic.
Ludovic Saverys
Thanks Alex. As usual, we will start with a high level overview of our company. We’re active in five different segments from crude tankers, containers, chemicals to offshore energy. We had an interesting quarter as Alex mentioned compared to last quarter, our total fair market value has increased, our market cap has increased, we’ve reduced our leverage, We’ve reduced our CapEx commitments and increased our contracts backlog. Next slide please. If we zoom in on the Q1 financials, we’ve ended the quarter with a net profit of $368.8 million.
Notable in these figures are obviously our increased revenue but we have been able to to while the quarter past delever quite a bit and reduced our margins with the banks and so our interest, our net finance expenses decreased from $113 million from last quarter to 81 this quarter delivering a very nice profit. The liquidity of the company end of Q1 stands a little bit above half a billion dollars and our equity on total assets value adjusted is below 50% which is our true to cycle target.
Further zooming in, we have delevered, we are paying dividends and we’re strengthening the balance sheet while we are optimizing our fleet through well timed S and P. Notable on the contract backlog, we have signed one five year time charter on a Suezmax vessel and extended to nine year time charters by another year. The board of directors has decided they would like to distribute $0.64 per share as distribution. This will be managed by $0.20 interim dividends and $0.44 distribution out of share premium.
That’s quite interesting because there is no withholding tax on on that part. So 70% of our dividends will be exempt from withholding tax. We took delivery of seven new building vessels which Alex will discuss a little later on and we have sold quite a few ships that were announced already on two cape sizes and eight VLCC. One additional vessel, the Suezmax Sienna has been sold and will be delivered in Q2 for the capital gains of the first quarter were $267 million and in Q2 we’re expecting a capital gain of $127 million.
Then we are a diversified platform. However, we have large spot exposure on two of our promising markets which is dry bulk on the one hand and tankers. If you look at full 2026 we have roughly 53,000 shipping days from which 80% is spot and from those spot days we have 36,000 open dry bulk days which is roughly 10,000 on the Kamsarmaxes and 26,000 on Capes and new customize. These are increasing markets and hence we are favorably positioned to enjoy those in the coming quarters.
On this slide we have shown hypothetical free cash flow for our company in 2026. This is including a free cash flow from the first quarter, but putting some rate assumptions on the right bottom side where you could see that actually if we take the market today we are in the plus 20% case compared to our market assumptions and we would have a operational free cash flow of over $1 billion. This is excluding vessel sales, but it is also excluding the remaining capex which we will discuss a little bit.
On the capex. We’ve come a long way. We have a remaining CAPEX end of April of $1.2 billion from which roughly 184 million is unfunded. If you have followed our story you know that with the vessel sales this is more than double covered for the unfunded CapEx. But this slide shows that 2026 will be the last heavy new building delivery a year with the remaining $740 million to be paid to the shipyards in the coming three quarters whereafter obviously our free cash flow could be used on other topics than CapEx contract backlog we’ve increased our contract backlog roughly by $200 million.
As mentioned there is a gradual repayment. The contract backlog reduces by roughly 100 million per quarter. But we’ve added 200 million of fresh charters of these long term contracts. Still 1.9 billion is on dual fuel related vessels and we have quite strong counterparts, most of them investment grades as you can see on the right side. I’ll then hand over the discussion topics to Alex to talk about the markets.
Alexander Severis
Thank you Ludovic. So I’ll start with our normal slide overview slide in all the segments we are as you can see still positive on the dry bulk market, the tanker market and the offshore energy market. We are and have been over the last two quarters cautious on the container and the chemical market. High level dynamics. We see in dry bulk ton mile growth for major commodities that we are transporting in our Capes and Newcastle Maxes like iron ore and bauxite, but also on other commodities in dry we see some growth.
Looking at the supply side, we will see a growth of 1.7% of the fleet in Capes today, a tick under 5% on Panamaxes. But we still believe that in balance and we’ll dig in the following slides more in detail that the supply demand is actually positive for freight and positive for for our market. The same can be said on tankers, of course. Tankers is a more complex story with what is happening right now in the Middle East. In terms of ton mile it’s very difficult to predict.
But as it stands, analysts are expecting a small reduction in ton mile for crude oil this year, some growth next year. What is interesting on the tanker market is that the supply sides, even though in the short term the fleet is not growing that much as from 2027 and particularly in 2028, we will see a big growth in the fleet. So the order book to fleet in VLCC and Suez Maxis is coming closer to 30%. This being said, in the short term the tanker market dynamics are positive.
We’ll definitely zoom in on that a bit later. On the container side, not a lot has changed. I would say that in kind of the more negative story that we have been seeing over the last quarters, the Middle east turmoil has given some support to the market. But with a large order book and an expected contraction in tu mile demand, we are cautious on the container side. As you know, all our ships are fixed so we are not really exposed on the spot market.
On the chemical side it all feels a little bit softer. Chemical market is less volatile. But there we see there are some new vessels being delivered to the fleet. There is a little bit softer growth in demand for chemical tankers. So in on balance we are a bit more cautious. And then last but not least, we remain positive on the offshore energy markets. After two slow years of wind installation, we’re expecting an increase this year and next in for instance the important North Sea market.
But also on oil and gas, we are seeing a lot of demand for offshore energy supply vessels like our ships. And so all in all we’re expecting good markets going forward in that segment. I want to zoom in on the largest segment and the market that is most important to us right now, which is dry bulk. On the left side of the slide you can see our fleet. We have 36 Newcastle Maxs on the water. We’re adding this year another 10, maybe one or two will deliver beginning of next year, but so in the next six months we will have 46 Newcastle Maxs, big armada of Newcastle Maxis on the water.
We have performed very well during the first quarter, which is traditionally a slower quarter. You can see that we reach levels of $28,000 a day. But what is even better is that looking forward for the second quarter, we have fixed most of our days 80% already at $44,000, which is very good for, for that segment. Cape Sizes is a big fleet as well. We have 37 cape sizes on the water. We achieved rates of $26,000 in the first quarter, have already fixed roughly 3/4 of our days at 37,000 for the second quarter with the amount of ships, the amount of days.
This is all very supportive for our results going forward. And then last but not least, our Kamsarmax and Panamax fleet of 30 ships. The first quarter was satisfactory. We reached kind of a break even level of $14,500. But we have seen in recent weeks a market uptick. And we have already been able to fix very good levels close to $20,000 for three quarters of our days in the second quarter. When you look at the main drivers in dry bulk, it’s a mixed picture.
Some very positive signals, some not so positive. But we will dig into some of the elements in the next slide and slides. Let’s first start on the supply of the vessels, which is the new buildings, the order book and then the age of the fleet. When you look at the new buildings, the order book to fleet has increased over the last three to six months. There have been more orders for dry bulk tonnage and specifically on Cape saucers and Panamaxes, you can see that we are now reaching a level of 14 to 15% of the fleet.
If you put that against the age of the vessels and you can see that we’ve reached kind of an all time high average age of the fleet. There is a lot of potential for scrapping, There’s a lot of potential for all these new buildings to replace the aging fleet. And actually, as it stands, there should normally be more ships leaving the fleet then being added to the fleet in the next two years at least, and even going forward in 2029 and 2030. So on the supply side, we are still believing that this is supportive for our market going forward.
If we look at the demand side, we are zooming in on important commodities for the Capes and important commodities for the Panamaxes. On Capes, it’s of course iron ore, bauxite and a little Bit of coal, but you can see that the number are adding up very nicely. Definitely compared to last year. We are in all segments above, coal is a little bit below. But all in all it’s a supportive picture in the first quarter and in the month of April. The similar story can be said on the Panamaxes.
The typical cargoes at Panamaxes transport, coal and grain have been growing and so we are seeing this being translated in of course better freight rates. So I would say that Q1 has surprises to the upside side, has been less slow than usually and has underpinned the freight market. Now if we look at the total year, so what to expect for the next couple of months, the picture remains supported for our capes with the iron ore trade. The bauxite trade is a bit of a question mark.
If we see some export caps out of guinea, then this could be a negative for our market in the numbers. We don’t see it yet, but it is of course something to watch. Interestingly, something that could underpin our market is the coal trade and I’d like to zoom in on that on the next slide. We have added on this slide as well. The rate forecasts for a regular 180k cape size for this year, including the first quarter, we are now at $31,500, which is actually a very good rate and definitely in profit making territory.
Operation Epic Fury and the gas to coal switching We’ve tried to analyze, based on the information that is available, what the impact would be if certain countries that are powering their countries and are making electricity with oil and gas would shift more to coal. And this gas to coal switching is basically sketched out on this slide. Initially on the coal side, all the analysts and including ourselves, were expecting a relatively soft market for seaborne coal definitely going into the second half of the year.
And we were looking at our base case scenario of coal power generation in Europe and in Japan, South Korea and Taiwan to go down. Now obviously the war in Iran and the turmoil in the Middle east, which have led to an increase in gas and oil prices, have changed the situation. And what we are now taking as a base scenario is that over the course of this year, Japan, South Korea and Taiwan will increase their imports of seaborne coal by 27 million tons.
So increase the utilization of their existing coal infrastructure. And on Europe as it stands expecting 12 million tons of coal to be added to the trade and increasing utilization from 40% to 55%. Now there is further upside to that. If Europe would import in a high case another 60 million tons of coal. And we’ve tried to map this out on the right side of the slide where you can see in green the supply of ships and in blue, gray and light blue the different scenarios on the demand you can see on capes, we were looking at 1.7% increase in the fleet and a 3% base case increase in ton mile demand.
We have Revised that to 3.5% ton mile demand. Now if you get this extra kicker on coal to Europe in the high case, this could go all the way up to 5.2% increase in demand. And the same goes for Panamax. And I think that’s very interesting because obviously that’s. Coal is a very important commodity for Panamaxes. We have a pretty high delivery schedule this year of close to 5% increase in the fleet. The base case we were looking at a bit under 4% demand growth for Panamaxes.
In the current new base case we’re looking at 5% growth. But in the high case this could even go to 7.5%. So this epic fury, the war in the Middle east could have a significant positive impact on the dry bulk markets. And we’re seeing some of it already now and then. Basically. To conclude, what we’ve mapped here is the new base case, so not the high case in numbers of volumes from Q1 to Q4. What we wanted to highlight here for those who are not very familiar with the dry bulk market, is that the first quarter is always the lowest quarter in terms of volume.
Usually volumes then ramp up in the second quarter, third quarter and fourth quarter, which again we think bodes very well for our dry bulk market going forward. And of course CNB Tech is very well positioned with our large fleet of cave sizes. Newcastle, Maxis and Panamaxes want to talk about Euronav and the crude oil markets. And probably where most of you have a lot of questions on what our view is on what is happening in the world. Let me first start with a quick overview of what our fleet has done.
After the sales of our VLCCs, we are down to six VLCCs. Four are on the water, two will be delivered during the course of this year. And In January of 2027, we achieved very good rates in the first quarter and even better rates for the bookings that we have done in the second quarter. You can see we’re at $180,000 of rates booked for 80% of our days. Of course we only have six VLCCs left, but nevertheless, this will of course contribute very positively to Our profits going forward, the sale of the eight ships, we have communicated on that already.
We did a very nice capital gain of in total $360 million on the sale of these 6 older VLCCs which have been reflected in our first quarter results and will partly be reflected in the second quarter results. We have 18 Suez Maxis on the water. We recently took delivery of the Cap Grace and Cap Joseph, so we have 18 ships in our fleet. We achieved rates on the spot market of $91,000 in the first quarter, $122,000 for most of our days in the second quarter.
Again, excellent rates in the current circumstances. And we have sold one of our older SUS Maxs, the Sienna, which is a 19 year old Susemax, which will deliver in the second quarter and this will give us a capital gain of $30 million. You can see on the right side all the indicators. Again these need to be taken with a big pinch of salt because the real impact of these numbers is of course influenced a lot on the sea going side with what is happening in the Middle east and what is happening in the Strait of Hormuz.
But first, before we talk about that, I wanted to show you the slide on the order book and the supply of ships and the age of the vessels. The order book has really shot up. We are now looking at a combined 500 VLCCs and Suez MAXs on order, which we believe is a lot of ships. Obviously very much skewed towards the second half of 2027 and 2028. But you can see the numbers there. In 2028 already more than 200 V&Suez maxes are on order. Even though theoretically the age profile of the fleet would be able to absorb these vessels.
That is older vessels should be scrapped and the new buildings could replace them. We are a little bit concerned going forward looking at the order book, but in the short term of course not that many vessels are coming on stream. And this is of course translated in good freight markets. Average age of the fleet, you can see there is getting to historical highs. We’re at 13, 13 and a half years. Again, this is a positive as and when and if we would need to scrap some vessels.
Want to talk about the Strait of Hormuz situation, Operation Epic Fury and the impact on shipping in general and on the oil supply. On the left side you can basically see the number of transits through the Strait of Hormuz on a daily basis. We are talking anywhere between 110, 150 ships a day. We are down now between five and 20 transits a day. In terms of tankers, we see that 115 VLCCs and 24 Suez MAXs are still trapped in the Persian Gulf. Of that fleet, 40% are dark fleet vessels.
So not really vessels that we would compete with, but it’s still a significant amount of ships that are trapped there on the supply side of oil. My colleague Yuris Daman has made a very interesting analysis on the right side of the slide. And because it’s his analysis, I want to hand it over to him so that he can explain to you what he is seeing in the numbers.
Juris Daman
Yes, happy to run through it. So the right hand side graph really starts by showing the baseline. The baseline was 15 million barrels per day of crude oil. This is only crude oil traversing the Strait of Hormuz. So being exported out of the Persian Gulf. Now that’s closed, the strait is de facto closed. So we made the assumption that’s lost. And then we are going to look, okay, what’s the actual impact on crude tanker flows? We have a selective passage of 1.2 million barrels per day.
That’s the actual passage over the last two months divided by 60 days. That’s 1.2 million barrels per day. So it’s actually one Suezmax a day or every second day one VLCC. Then we have some pipeline capacity which came upstream and is Today roughly around 5.5 million barrels per day. It’s Yanbu, Fujairah and then the Kirkuk Seyan pipeline. Then we had a temporary effect of floating storage release, so reversal of floating storage and also some Russian sanctions being lifted and actually being able to be added to the tanker market.
And then the real interesting part comes and that’s on one hand the export growth out of the U.S. which is a combination of additional volumes, but also SPR, Strategic Petroleum Reserve releases roughly 1.4 million barrels per day. And then also other countries stepping up the game, for example Brazil, Guyana, Canada, Angola, and they are additionally bringing 1 million barrels per day capacity to the market. So if you go from the 15, we take all those steps, we end up with a loss of 5.3 million barrels per day capacity lost to be transported on board of crude oils.
Now it’s really important to see here that we are actually increasing longer mile transportation. So we get a ton mile kicker because of the exports out of the US but also Brazil, Guyana are actually further away than a typical Middle Eastern China transportation and it’s two to two and a half times more. So if we take the 2.4 and we multiply that by two, two and a half and we compare it to 5.3. We are actually quite balanced from a ton mile perspective.
And that’s really the reason why the utilization of the tankers are still healthy and that the remains for US Gulf China transportation are actually still quite healthy. If you go one step further, really look, okay, what could be the potential impact on the barrel price there? It’s really important to understand that we started the operation Epic Fury in a global situation where there was a large oversupply, so there was a bigger supply of crude oil to the market than a demand.
So we had actually an oversupply of 2.6 million barrels per day, meaning that in the end today’s market is only under supplied by approximately 2.7 million barrels per day of crude, which will have an impact on demand structure or any other means to have the balance again in the market.
Alexander Severis
Thank you very much, Juris. So after that analysis, what we just wanted to add is basically the consequences of the closure of the Strait of Hormuz is that we see a lot more ballesters going towards the Atlantic to pick up the oil where it is still available. And this obviously also has an impact on rates. You can see the rate from the Middle east to China, which we think is much of a theoretical rate. Not that many ships are being fixed at these kind of levels.
The more interesting one is of course is the TD3C route at the bottom in green where you can see that rates were very high but then gradually started going down as more balusters, more VLCCs were coming towards the US Gulf to pick up the oil there. Now when I say gradually going down, we are still at a level around $100,000 a day, which is very, very healthy for our market. But it shows you the disruption that the closure of the Strait of Hormuz also has on the positioning of the vessels.
I’d like to finish with our three slightly smaller divisions, Delfis, Bochem and Windcut on Delphis, we can be relatively short. You know, all our ships are fixed on long term time charters. We still have one new building coming this year, delivering in October, which has been fixed on a 15 year contract. The bottom line on the container market is that the order book is very high. We still see a huge tu mile disturbance with the de facto closure of the Red Sea.
If no container ships pass by there, it’s basically 12% of a demand kicker. So if that falls away, including the big tsunami of new container vessels, that will come on stream in the next couple of years. The market should continue to go down, but very short term we have seen a little uptick because of the disturbance around the Strait of Hormuz. And so rates both on the spot market and also on time charter rates have gone up a little bit in recent days and weeks.
But we believe fundamentally this should normally go down again as soon as certain things resolve themselves and as the order book starts delivering to the market chemical tankers. I was mentioning a slightly softer market that is reflected in in what we are earning in the spot pool. Now. Most of our vessels are fixed on time charters, so we’re not really affected by that. But it has to be said also chemical tanker markets are much less volatile than other markets.
So when we say softening and you look at the numbers that we are achieving on the spot market of $21,500, that is compared to around 25,000 last year. We still believe these rates are very healthy. Finishing off with wind cut. Exciting times for our division wind cut because we have taken delivery now of our third csov, which is our large offshore energy supply vessels. We still have three that will be delivered, plus one larger csov, an MPASV as we call it.
So still four ships on order. We have seen very healthy rates for our CSOVs. You can see an average of $65,000 a day in the first quarter. Second quarter already fully fixed at $62,000 a day. And we have further vessels delivering and are in talks with customers for both short term and longer term employment. Our CTVs are doing well as well after the traditionally slow winter period. We are now coming into the peak period of spring and summer and you can see that our utilization is above 90% and we are earning good rates of an average of $3,400 a day.
We’re expecting, as I said before, this offshore wind market, offshore oil and gas market to remain supported in the following months. This wraps up the market updates and I will now hand it over to Enya for the Q and A.
Enya Derkindren
Thank you, Alexander. We will now continue with Q and A. If you would like to ask a question, please raise your hand. Make sure to introduce yourself and unmute before asking your question. For telephone participants, if you want to raise your hand, you can type star 5 and star 6 to unmute. If in any case you can’t ask your question live, you can also use the Q and A section or you can send an email to Yori Zaman.
His contact details are also in the presentation. We will now start with the first question coming from Froda Merkel. You can now unmute and ask your question, please.
Froda Merkel
Yes, thank you. This is Froda at Clarksons. My first question is on capital allocation. So you basically reached the 50% net loan to value target you have. So you’ve been deleveraging the balance sheet. You have plenty of liquidity and the new build program looks fully funded. So basically, how should you think about capital allocation from here, specifically on the dividend?
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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