Q2 2026 Hapag-Lloyd AG Earnings Call

August 13, 2026

Operator: Ladies and gentlemen, welcome to the Hapag-Lloyd Analysts and Investors H1 2026 Results Conference Call and live webcast. I am Sergen, the Chorus Call operator. Hapag-Lloyd is presented by CEO Rolf Habben Jansen and CFO Mark Frese. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Rolf Habben Jansen. Please go ahead, sir.

Speaker #1: I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session.

Speaker #1: You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast.

Speaker #1: At this time, it's my pleasure to hand over to Rolf Habben Jansen. Please go ahead, sir.

Speaker #2: Thank you very much. And from our side, a warm welcome, and thank you for making the time to join us here today. As always, we'll give you a quick introduction from our end, between myself and Mark, and then we'll be happy to take any questions that you may have.

Rolf Habben Jansen: Thank you very much, and from our side, a warm welcome and thank you for making the time to join us here today. As always, we will give you a quick introduction from our end between myself and Mark, and then we will be happy to take any questions that you may have. I think if we look at the H1, I think we reported an unsatisfactory start to the year. I think our Q1 was really not good. Q2, definitely better. I think good performance on volume quarter-on-quarter, up quite a bit. Year-on-year, also quite decent. Unit cost also improved. Rates came up a bit, but admittedly only late into the quarter, so the majority of that we will actually only see as from Q3. Of course, there was serious disruption in the Middle East, which caused quite a lot of cost.

Speaker #2: I think, if we look at the first half, we reported an unsatisfactory start to the year. I think our first quarter was really not good.

Speaker #2: Second quarter, definitely better. I think good performance on volume. Quarter on quarter, up quite a bit. Year on year, also quite decent. Unit cost also improved.

Speaker #2: Rates came up a bit, but admittedly, only late into the quarter, so the majority of that we will actually only see as from Q3.

Speaker #2: Of course, there were serious disruptions in the Middle East, which caused quite a lot of cost. Cash effect of that, around 600 million dollars.

Rolf Habben Jansen: Cash effect of that, around $600 million. What we see in the P&L is about two-thirds of that. Good throughput growth in our terminal business. A number of new investments announced. We continued working on the ZIM transaction, where the shareholders have approved that transaction, and now we are working through the regulatory approvals, and we still expect to wrap that up towards the end of the year. We raised our outlook in July on the back of higher demand, but also higher spot rates. But of course, there is a certain amount of uncertainty, even if I think it is fair to say that the outlook right now is significantly better than what it was when we spoke the last time in May, and you see that also reflected in our numbers. In terms of market fundamentals, good growth in the market.

Speaker #2: What we see in the P&L is about two-thirds of that. Good throughput growth in our terminal business. A number of new investments announced. We continued working on the zinc transaction, where the shareholders have approved that transaction, and now we are working through the regulatory approvals, and we still expect to wrap that up towards the end of the year.

Speaker #2: We raised our outlook in July. On the back of higher demand, but also higher spot rates, but of course, there is a certain amount of uncertainty, even if I think it's fair to say that the outlook right now is significantly better than what it was when we spoke the last time in May, and you see that also reflected in our numbers.

Speaker #2: In terms of market fundamentals, good growth in the market. On the right-hand side, we also tried to make the point here that the growth on the dominant legs over the last couple of years has been a lot stronger than many people anticipated, and which is also, I think, why you see that supply and demand are at the moment actually fairly balanced or even tight.

Rolf Habben Jansen: On the right-hand side, we also try to make the point here that the growth on the dominant legs over the last couple of years has been a lot stronger than many people anticipated, which is also, I think, why you see that supply and demand are, at the moment, actually fairly balanced or even tight. If you look at the last couple of years, since 2023, I think we have seen roughly 25% growth on the dominant legs, which is something that we had not seen for a very long period of time. That, of course, means we need a lot more ships. In addition to that, congestion is up, and because of the growth and because of the tightness that there is in many ports like Shanghai and others, we do not expect that to go away anytime soon. And of course, that also requires additional ships.

Speaker #2: If you look at the last couple of years, since 2023, I think we've seen roughly 25% growth on the dominant legs, which is something that we had not seen for a very long period of time.

Speaker #2: That, of course, means we need a lot more ships. In addition to that, congestion is up, and because of the growth and because of the tightness that there is in many ports like Shanghai and others, we don't expect that to go away anytime soon, and of course, also that requires additional ships.

Speaker #2: We see on the back of that that the indices have gone up. They also remain quite strong as we move into Q3. As such, I think we have a fairly optimistic view right now for the second half of the year.

Rolf Habben Jansen: We see on the back of that the initiatives have gone up. They remain also quite strong as we move into Q3. As such, I think we have a fairly optimistic view right now for the H2 of the year. If we move on, a few words on the Middle East. We have been able to get the vessels that we wanted to get out of the Strait of Hormuz out of the strait, so we are happy with that because that is all about safety for our crews and our ships. We have offered people alternative routings through Land Bridges, for example. That is working well, even if, of course, it is more expensive and the capacity is less than what we used to have. On Gemini, that runs as before.

Speaker #2: If we move on, a few words on the Middle East. We have been able to get the vessels that we wanted to get out of the Strait of Hormuz, out of the Strait, so we're happy with that because that's all about safety for our crews and our ships.

Speaker #2: We've offered people alternative routings through land bridges, for example, that is working well, even if, of course, it's more expensive and the capacity is less than what we used to have, and on Gemini, that runs as before well.

Rolf Habben Jansen: Well, we saw a dip in schedule reliability, but still remained well above everybody else when we had the bad weather in Europe in Q1. But right now we are, as we expected, I think announced in May, again, safely back above the 90% threshold. So that is definitely good. On the terminal front, quite a few achievements in H1 as that business is becoming a more and more important pillar of our overall business. We got to 51% on J M Baxi in India, which means that we consolidate that as of the end of Q1. We started operations in Damietta, which is very helpful given all the volume that is now coming through the East Med. It is later than planned, but the start has been good. We signed the contract for Aracruz, or Imetame, where we expect to start operating in 2028.

Speaker #2: We saw a dip in schedule reliability but still remained well above everybody else. When we had the bad weather in Europe in the first quarter, but right now, we are as we expected—and I think announced in May—again safely back above the 90% threshold.

Speaker #2: So that's definitely good. On the terminal front, quite a few achievements. In the first half, as that business is becoming more and more important pillar of our overall business, we got to 51% on GM Bakshi in India, which means that we consolidated as of the end of the first quarter.

Speaker #2: We started operations in Damietta, which is very helpful given all the volume that is now coming through the East Med. It's later than planned, but the start has been good.

Speaker #2: We signed the contract for Agra Cruise or Emaitama, where we expect to start operations in 2028, and recently we announced signing of a term sheet with Eurogate, to acquire 20% of CTH in Hamburg and to up our share in Tanger from 10 to 20%.

Rolf Habben Jansen: Recently we announced a signing of a term sheet with Eurogate to acquire 20% of CPH in Hamburg and to up our share in Tangier from 10% to 20%. On the ZIM transaction, known to everybody, I think the deal summary is on the left-hand side. Nothing new to that. Since we spoke, a lot of work has gone into getting all the necessary approvals. You can read quite a lot about that in the press. We, however, just continue to work diligently with all the regulators in the various countries, and based on what we see today, we are still confident that we will close the deal towards the end of this year. With that, let me hand it over to Mark, who will take us in a bit more detail through the numbers.

Speaker #2: On the zinc transaction, known to everybody, I think the deal summary is on the left-hand side. Nothing new to that. Since we spoke, a lot of work has gone into getting all the necessary approvals.

Speaker #2: Quite a lot of that you can read, quite a lot about that in the press. We, however, just continue to work diligently with all the regulators in the various countries, and based on what we see today, we're still confident that we will close the deal towards the end of this year.

Speaker #2: And with that, let me hand it over to Mark, who will take us in a bit more detail through the numbers.

Speaker #3: Thank you, Rolf. And good afternoon. Thank you for joining us today for our results call. Following an unsatisfactory start of the year, as we talked about it, our operational and financial performance improved clearly in the second quarter.

Mark Frese: Thank you, Rolf, and good afternoon. Thank you for joining us today for our results call. Following an unsatisfactory start of the year, as we talked about it, our operational and financial performance improved clearly in Q2. As you can see here, this recovery was supported by higher freight rates and stronger transport volumes in our liner shipping business, and that is particularly due to the robust export out of Asia and the improved demand from the United States. At the same time, our Terminals & Infrastructure business maintained its growth path, with throughput increasing to 3.6 million TEU in Q2. However, the conflict in the Middle East caused severe operational disruptions and substantial additional costs.

Speaker #3: As you can see here, this recovery was supported by higher freight rates, and stronger transport volumes in our liner shipping business. And that is particularly due to the robust export out of Asia and the improved demand from the United States.

Speaker #3: At the same time, our terminals and infrastructure business maintained its growth path, with throughput increasing to 3.6 billion a million TU in the second quarter.

Speaker #3: However, the conflict in the Middle East caused severe operational disruptions and substantial additional costs. And despite these significant headwinds, we generated a group EBITDA of above 0.8 billion US dollars, and delivered another strong free cash flow of 0.6 billion US dollars in the second quarter.

Mark Frese: Despite these significant headwinds, we generated a group EBITDA of above $0.8 billion and delivered another strong free cash flow of $0.6 billion in Q2. Overall, the clear improvement in Q2 demonstrates the resilience of our business and provides a solid basis for the remainder of the year. Rolf already mentioned it, that we are more and more getting positive for H2. With that, let me walk you through now through the individual components a little bit in more detail. Starting with our P&L. Group revenue increased by 19% compared to Q1, reaching $5.8 billion in Q2. This improvement was primarily driven by better market conditions in the liner business as such. Group EBITDA increased by 68% quarter on quarter to $829 million, while the EBITDA margin recovered from 10% in Q1 to 14.2% in Q2.

Speaker #3: Overall, the clear improvement in Q2 demonstrates the resilience of our business, and provides a solid basis for the remainder of the year. And Rolf already mentioned it, that we are more and more getting positive for the second half.

Speaker #3: With that, let me walk you through now through the individual components a little bit in more detail. And starting with our P&L, group revenue increased by 19% compared to the first quarter, reaching 5.8 billion US dollars in Q2.

Speaker #3: This improvement was primarily driven by better market conditions in the liner business asset, group EBITDA increased by 68% quarter on quarter to 829 million US dollars, while the EBITDA margin recovered from 10% in Q1 to 14.2% in Q2.

Speaker #3: And this improvement was even more pronounced at the EBIT level, following a loss of 157 million in the not positive quarter one of this year.

Mark Frese: This improvement was even more pronounced at the EBIT level. Following a loss of $157 million in the not positive Q1 of this year, we generated a positive group EBIT of $176 million in Q2. Group profit also returned to a positive territory and amounted to $83 million. Turning to the performance of the Liner segment, revenue increased to $5.7 billion compared to $4.8 billion in Q1. The development was supported by higher transport volumes and the significant recovery in freight rates. Liner EBITDA reached $773 million in Q2. Following an EBIT loss of $174 million for the Liner business in Q1, the segment returned to profitability and generated an EBITDA of $153 million in Q2. The recovery was achieved despite significant cost headwinds. On rates and volumes, our average freight rate increased by 11% quarter on quarter to $1,475 per TEU.

Speaker #3: We generated a positive group EBIT of 176 million US in Q2. And group profit also returned to a positive territory, an amounted to 83 million US dollars.

Speaker #3: Turning to the performance of the liner segment, revenue increased to 5.7 billion US dollars, compared to 4.8 US dollar billion US dollars in the first quarter.

Speaker #3: And the development was supported by higher transport volumes and the significant recovery in freight rates. Liner EBITDA reached 773 million US in Q2. Following an EBIT loss of 174 million for the liner business in Q1, the second the segment returned to profitability and generated an EBIT of 153 million US dollars in the second quarter, the recovery was achieved despite significant cost headwinds.

Speaker #3: On rates and volumes, our average freight rate increased by 11% quarter on quarter to 1,475 US dollars per TU, and compared to the prior year quarter, the average freight rate was around 9% higher, the improvement was supported by stronger exports out of Asia and the recovery in demand from the United States asset.

Mark Frese: Compared to the prior year quarter, the average freight rate was around 9% higher. The improvement was supported by stronger exports out of Asia and a recovery in demand from the United States as that. Transport volumes increased by almost 9% compared to Q1, reached close to 3.5 million TEUs. To the prior year comparison, volumes were 3.5% higher. The strongest sequential volume improvement was recorded on the Europe to America trade, and that was the trade which was particularly affected by the severe weather conditions and softer demand in Q1. For H1 2026, transport volumes increased by 1.5% to 6.7 million TEUs, while the average freight rate remained stable year on year at $1,406 per TEU, despite the significant fluctuations during that period. Jumping now to the unit cost side. Let's have a look on the cost development.

Speaker #3: Transport volumes increased by almost 9% compared to the first quarter, reaching close to 3.5 million TEUs. Compared to the prior year, volumes were 3.5% higher.

Speaker #3: The strongest sequential volume improvement was recorded on the Europe to America trade, and that was the trade which was particularly affected by the severe weather conditions and softer demand in the first quarter.

Speaker #3: For the first half of '26, transport volumes increased by 1.5% to 6.7 million TUs, while the average freight rate remained stable year on year at 1,406 US dollars per TU, despite the significant fluctuations during that period.

Speaker #3: Jumping now to the unit cost sides, so let's have a look on the cost development. Unit cost increased to 1,443 US dollars per TU in that second quarter, representing an increase of 2% compared to Q1, and 7% compared to prior year quarter.

Mark Frese: Unit cost increased to $1,443 per TEU in that Q2, representing an increase of 2% compared to Q1 and 7% compared to prior year quarter. This increase was driven by the conflict in Middle East, which resulted in roundabout $600 million of additional cash cost of this amount. Rolf indicated that already $400 million was recognized as expenses in the Q2, while the remainder is related to build-up of bunker inventories. Bunker and emissions cost increased significantly due to the sharp rise in bunker prices. Our average bunker consumption price increased from $485 per metric ton, which was in Q1, to $700 per metric ton in Q2. Handling and haulage costs were affected by higher storage expenses and increased hinterland transportation costs related to alternative routing solutions in the Middle East, the Land Bridge, and fuel surcharges.

Speaker #3: This increase was driven by the conflict in Middle East, which resulted in roundabout 600 million US dollars of additional cash costs of this amount, and Rolf, indicated that already 400 million US dollars was recognized as expenses in the second quarter, while the remainder is related to buildup of bunker inventories.

Speaker #3: Bunker and emissions cost increased significantly due to the sharp rise in bunker prices, our average bunker consumption price increased from 485 US dollars per metric ton to which was in Q1 to 700 US dollars per metric ton in Q2.

Speaker #3: Handling and haulage costs were affected by higher storage expenses and increased hinterland transportation costs related to alternative routing solutions in the Middle East, the land bridge, and fuel surcharges.

Speaker #3: We are also incurred higher insurance and time charter costs varying much related to that crisis there. In response to the sharp increase in energy costs, we implemented an emergency surcharge or implemented emergency surcharges together with our regular fuel recovery mechanism.

Mark Frese: We also incurred higher insurance and time charter costs, very much related to that crisis there. In response to the sharp increase in energy costs, we implemented an emergency surcharge. Our implemented emergency surcharges together with our regular fuel recovery mechanism, these measures have mitigated the additional cost burden. Importantly, when adjusting for higher bunker prices and the direct effect of the Middle East disruptions, our underlying unit costs improved both sequentially and year-on-year, and this reflects the impact of our ongoing cost-saving measures. To the T&I performance, a couple of words turning to our segment here. The business continued its positive momentum in the Q2, and it further reinforced the strategic importance to our group. Throughput increased to 3.6 million TEU in Q2. For the H1, throughput reached 7 million TEUs.

Speaker #3: These measures have mitigated the additional cost burden. Importantly, when adjusting for higher bunker prices and the direct effects of the Middle East disruptions, our underlying unit cost improved both sequentially and year on year, and this reflects the impact of our ongoing cost saving measures.

Speaker #3: So to the P&I performance, a couple of words. Turning to our segment here, the business continued its positive momentum in the second quarter. And it further reinforced the strategic importance to our group.

Speaker #3: Throughput increased to 3.6 million TEU in Q2. And for the first half, throughput reached 7 million TEU. Revenue surged by almost 50% to $360 million, and EBITDA increased to $102 million in the first half of '26.

Mark Frese: Revenue surged by almost 50% to $360 million, and EBITDA increased to $102 million in the H1 2026. This development was supported by the first-time full consolidation of J M Baxi Ports & Logistics' container terminal business and strong throughput growth in India and Latin America. At the same time, operational challenges at key European hubs continued cost pressure and the ramp-up of new terminals weighed on profitability of this segment. Nevertheless, the segment generated a solid EBIT of $39 million in the H1 2026. Jumping over to our cash flow. Operating cash flow for the H1 2026 amounted to $849 million. The difference compared to the EBITDA mainly reflects a temporary working capital headwind of over $470 million, and that is primarily related to the strong increase in business activities and the bunker inventory build-up during the Q2. Investment spending.

Speaker #3: This development was supported by the first-time full consolidation of JM Vakshi's container terminal business and strong throughput growth in India and Latin America. At the same time, operational challenges at TU European hubs continued, cost pressure, and the ramp-up of new terminals weighed on profitability of this segment.

Speaker #3: Nevertheless, the segment generated a solid EBIT of 39 million US dollars in the first half of '26. Jumping over to our cash flow operating cash flow for the first half of '26 amounted to 849 million US dollars.

Speaker #3: The difference compared to the EBITDA mainly reflects a temporary working capital headwind of over 470 million US dollars, and that is primarily related to the strong increased in business activities and the bunker inventory buildup during the second quarter.

Speaker #3: Investment spending so CAPEX was modest, and stood at close to 300 million US dollars, and that was mainly related to new build installments, fleet retrofits, including our ongoing conversation of the five vessels to methanol, dual fuel propulsion, and our terminal activities.

Mark Frese: CapEx was modest, and stood at close to $300 million. That was mainly related to new build installments, fleet retrofits, including our ongoing conversion of the five vessels to methanol, dual fuel propulsion, and our terminal activities. Interest received, divestments, and other activities generated proceeds of $431 million. As a result, investing cash flow was positive at $135 million. Overall, we generated a strong free cash flow of roundabout $1 billion in the H1 of the year. Looking at the financing cash flow, it amounted to $1.9 billion. This includes the dividend payment of around $600 million, as well as debt repayments and some other financing effects. At the end of June, our cash position amounted to $3.2 billion. A couple of words to conclude, and a brief overview on our balance sheet figures.

Speaker #3: Interest received divestments and other activities generated proceeds of 431 million US dollars, as a result, investing cash flow was positive at 135 million US.

Speaker #3: Overall, we generated a strong free cash flow of roundabout 1 billion US dollars in the first half of the year. Looking at the financial cash flow, it amounted to 1.9 million billion US dollars, this included the dividend payments of roundabout 600 million US dollars, as well as debt repayments and some other financing effects.

Speaker #3: At the end of June, our cash position amounted to 3.2 billion US dollars. So a couple of words to conclude and a brief overview on our balance sheet figures.

Speaker #3: We continue to have a robust balance sheet that's clear by and shown by high liquidity and low leverage. Equity amounted to 20.7 billion US dollars, at the end of June.

Mark Frese: We continue to have a robust balance sheet that is clear by, and shown by high liquidity and low leverage. Equity amounted to $20.7 billion at the end of June. That is around about an equity ratio of 61%. Net debt increased from $1.2 billion at year-end 2025 to close to $2 billion. This development mainly reflects the dividend payment in Q2 and the temporary negative working capital effect asset. Our liquidity reserve amounted to $5.9 billion, including $3.2 billion in cash assets, $2 billion in fixed income investments, and around about $0.7 billion in our undrawn revolving credit facility. This robust financial position provides us with substantial flexibility to fund all strategic priorities and to navigate the continued volatility in the market which we are facing, and which we are facing. Having said that, I hand it back to Rolf for the market update and the outlook.

Speaker #3: That's a roundabout an equity ratio of 61%. Net debt increased to from 1.2 US dollars billion US dollars at the end 25 to close to 2 billion US dollars.

Speaker #3: This development mainly reflects the dividend payment in Q2 and the temporary negative working capital effect asset. Our liquidity reserve amounted to 5.9 billion US dollars, including 3.2 US dollars in cash assets, 2 billion US dollars in fixed income investments, and roundabout 0.7 billion US dollars in our undrawn revolving credit facilities.

Speaker #3: And very clearly, this robust financial position provides us with substantial flexibility to fund all strategic priorities and to navigate the continued volatility in the markets which we are facing.

Speaker #3: And which we are all facing. And having said that, I hand it back to Rolf for the market update and the outlook. Thank you.

Mark Frese: Thank you.

Speaker #1: Yeah, maybe switching to market first. I think we have a constructive or positive market outlook for the remainder of '26. I think we continue to see robust demand growth.

Rolf Habben Jansen: Well, maybe switching to market first. I think we have a constructive or positive market outlook for the remainder of 2026. I think we continue to see robust demand growth. I think when demand started picking up in the course of Q2, lots of people thought that that might be short-lived, but even up to today, I think we still see very robust volume. So very decent peak season. Also, if you look at something like on the right-hand side, the inventory to sales ratio in the US, you can see that that is definitely not on the high side. I believe we commented on that already in November, that we said at some point in time in the course of 2026, this is very likely going to come. I think that is a little bit what we see right now.

Speaker #1: I think when demand started picking up in the course of the second quarter, lots of people thought that might be short-lived. But even up to today, I think we still see very robust volume.

Speaker #1: So very decent peak season, and also if you look at something like on the right-hand side, the inventory to sales ratio in the US, you can see that that's definitely not on the high side.

Speaker #1: And I believe we commented on that already in November, that we said at some point in time, in the course of '26, this is very likely going to come.

Speaker #1: I think that's a little bit what we see right now. So all in all, positive outlook and on the back of that, that's also why we adjusted our earnings outlook.

Rolf Habben Jansen: All in all, positive outlook and on the back of that is also why we adjusted our earnings outlook in the month of July. I would say that we are still very comfortable with that. So not that much to add to that. That brings us to the wrap up and priorities for this year before we get to your questions. Challenging start to the year. Volumes and financial performance definitely better in Q2. A good performance, in Gemini, very resilient, still delivering industry leading schedule reliability consistently. Middle East continues to be difficult, but we have adjusted our operations to deal with that. As such, yes, that causes a significant additional cost. But so far, we have been able to cope with that. The terminal business doing well, continues to grow, and becomes increasingly strategically relevant.

Speaker #1: In the month of July, and I would say that we're still very comfortable with that, not that much to add to that. That brings us to the wrap-up and priorities for this year.

Speaker #1: Before we get to your questions, challenges started at the year. Volumes and financial performance were definitely better in Q2. A good performance in Gemini. Very resilient, still delivering industry-leading schedule reliability consistently.

Speaker #1: Middle East continues to be difficult, but we have adjusted our operations to deal with that, and as such, yes, that causes a significant additional cost, but so far we have been able to cope with that.

Speaker #1: The terminal business doing well. Continues to grow and becomes increasingly strategically relevant, and our priorities for the remainder of the year continuing to focus on improving our cost position.

Rolf Habben Jansen: Our priorities for the remainder of the year are continuing to focus on improving our cost position, of course, assuring that we get all the regulatory approvals for ZIM, and of course, trying to do whatever we can to maximize yield. That wraps it up from our end. With that, we happily hand it back over to the operator for Q&A.

Speaker #1: Of course, assuring that we get all the regulatory approvals for ZIM, and of course, trying to do whatever we can to maximize yield. And that wraps it up from our end.

Speaker #1: And with that, we'd happily hand it back over to Hugh to the operator for Q&A.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Anyone with a question may press star and one at this time. The first question comes from Cristian Nedelcu from UBS. Please go ahead.

Speaker #2: Ladies and gentlemen, we'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone.

Speaker #2: You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2.

Speaker #2: Anyone who has a question may press star and one at this time. And the first question comes from Christian Nedelko from UBS. Please go ahead.

Speaker #4: Hi. Thank you very much for taking my questions. The first one, could I please ask you on the port congestion theme? You mentioned a strong three years in head hold.

Cristian Nedelcu: Hi. Thank you very much for taking my questions. The first one, could I please ask you on the port congestion theme? You mentioned a strong three years in head haul volume growth. Looking forward, what are the arguments in favor of head haul demand continuing to outgrow terminal capacity growth for the next two to three years? Any arguments in particular there? My second one, if I could please ask you on the Bab el-Mandeb. I think there is more and more of your peers that are going through there or planning to go. Could you help us visualize a bit to what extent delaying the return to Bab el-Mandeb could bring a temporary competitive disadvantage versus other carriers? What is your latest view there? The last one, if you allow me.

Speaker #4: The volume growth. Looking forward, what are the arguments in favor of head hold demand continuing to outgrow terminal capacity growth for the next two to three years?

Speaker #4: Any arguments in particular there? My second one, if I could please ask you, on the Bubble Man depth: I think there are more and more of your peers that are going through there, or planning to go.

Speaker #4: Could you help us visualize a bit to what extent delaying the return to bubble man depth could bring a temporary competitive disadvantage versus other carriers?

Speaker #4: And what's your latest view there? And the last one, if you allow me, we understand you're still the ZIM negotiations are still ongoing, but just in a hypothetical scenario that the deal would not go through, could I ask you what is the plan B in terms of capacity going forward?

Cristian Nedelcu: We understand the ZIM negotiations are still ongoing, but just in a hypothetical scenario that the deal would not go through, could I ask you, what is the plan B in terms of capacity going forward? I think your order book is a relatively low percentage of your active fleet today. Are you ready to accept shrinking market share, or should we consider a meaningful step up in CapEx and leases over the next few years in a hypothetical scenario that the ZIM deal does not go through? Thank you.

Speaker #4: I think your order book is relatively low percentage of your active fleet today. So are you ready to accept shrinking market share or should we consider a meaningful step up in capex and leases over the next few years in a hypothetical scenario that the ZIM deal does not go through?

Speaker #4: Thank you.

Rolf Habben Jansen: Let me try and take them one by one. I think first of all, port congestion. We see the port congestion because the growth or demand growth has been stronger than capacity growth over the last two, three years. It is not something about what we see going forward, but it is in essence what has already happened over the last few years, and now some of the infrastructure needs to be expanded to cope with the volumes that we already have today. That is why we see that congestion. I think that that is still going to last for a while, because building that type of infrastructure is not that easy. In fairness to the terminal operators, I think everybody has been surprised with the growth on the dominant legs over the last two or three years.

Speaker #1: Let me try and take them one by one. I think, first of all, port congestion—we see the port congestion because the growth, or demand growth, has been stronger than capacity growth over the last two or three years.

Speaker #1: So it's not something about what we see going forward, but it's in essence what has already happened over the last few years. And now some of the infrastructure needs to be expanded to cope with the volumes that we already have today.

Speaker #1: That's why we see that congestion. I think that that's still going to last for a while because building that type of infrastructure is not that easy.

Speaker #1: And in fairness to the terminal operators, I think everybody has been surprised with the growth on the dominant legs over the last two or three years.

Speaker #1: So it's not criticism to anyone, but I think the reality is that it will take some time before the infrastructure is just on bubble man depth.

Rolf Habben Jansen: It is no criticism to anyone, but I think the reality is that it will take some time before the infrastructure is adjusted. On Bab el-Mandeb, I think our view is probably not so different from others. The situation today is definitely different and better than it was a year or a year and a half ago. That means that, we would also expect to see a gradual return to Bab el-Mandeb. That will still take some time, as we have always said, because we are not going to bring everything back in one go, but we will do that step by step, to avoid also overload on the terminals, especially in Europe. I do not see also why that would potentially be a competitive disadvantage. In terms of ZIM, we are working through that and our plan is to close that until the end of this year.

Speaker #1: Well, I think our view is probably not so different from others. The situation today is definitely different and better than it was a year or a year and a half ago.

Speaker #1: So that means that we would also expect to see a gradual return to bubble man depth. That will still take some time, as we have always said, because we're not going to bring everything back in one go, but we will do that step by step to avoid also overload on the terminals, especially in Europe.

Speaker #1: So I don't see also why that would potentially be a competitive disadvantage. In terms of ZIM, we're working through that, and our plan is to close that until the end of this year.

Speaker #1: And that's currently the plan. And we are also actually pretty positive that in the end, we will be able to get that done. So that's our planning assumption.

Rolf Habben Jansen: That is currently the plan, and we are also actually pretty positive that in the end we will be able to get that done. So that is our planning assumption.

Speaker #4: Thank you.

Cristian Nedelcu: Thank you.

Speaker #2: The next question comes from Lars Heindorf from Nordea. Please go ahead.

Operator: The next question comes from Lars Heindorff from Nordea. Please go ahead.

Speaker #4: Thank you for taking my questions this afternoon. The first one is about rate development. There’s a lot of volatility, as you mentioned also in your opening remarks. Can you indicate, perhaps, what kind of share of your BCO or contract volumes are subject to what I would call normal BUFF regulation here, which typically does not step in until the third quarter, or into the delay?

Lars Heindorff: This afternoon. Thank you for taking my questions. The first one is on the rate development. A lot of volatility, as you mentioned also in your opening remarks. Can you indicate perhaps what kind of share of your BCO or contract volumes that are subject to, I would call normal BAF regulation here, which typically not steps in until Q3, owing to the delay and to what extent, how much of those volumes have actually been subject to the EBS surcharge? Just to get a sense for the delta in terms of the rate development from Q2 into Q3.

Speaker #4: And to what extent, I mean, how much of those volumes are actually been subject to the EPS surcharge? Just to get a sense for you, the delta in terms of the rate development from Q2 into Q3.

Speaker #1: I mean, on all our long-term contracts with very few exceptions, are subject to normal MFR or buff, as you call it. So that's what you will see in the vast majority of cases.

Rolf Habben Jansen: All our long-term contracts with very few exceptions are subject to normal MFR or BAF as you called it. So that's what you will see in the vast majority of cases. Some cases we have customer formulas, but all of those contracts have a bunker clause, and that means that in most cases, we will see those adjustments as from 1 July.

Speaker #1: In some cases, we have customer formulas, but all of those contracts have a bunker clause, and that means that in most cases, we will see those adjustments as from the 1st of July.

Speaker #4: Okay. And then on the return to Suez. What kind of cost savings will that provide? Clearly, of course, there was a bunker. I know that.

Lars Heindorff: Okay. Then on the return to Suez, what kind of cost savings will that provide? Clearly, of course, there are some bunkers, I know that. On the other hand, you have to pay the fee to get through Suez, and I do not know if you can relate that to what kind of price impact you think that will have if it is only Gemini, at least for starting, and then CMA CGM is also there right now, but the rest seems to be hesitating a bit, turning at least full on back to Suez. Thank you.

Speaker #4: On the other hand, you have to pay the fee to get through Suez. And I don't know if you can relate that to what kind of price impact you think that will have if it's only Gemini, at least for starting, and then CMA CGM is also there.

Speaker #4: Right now, but the rest seems to be hesitating a bit, turning at least full-on back to Suez. Thank you.

Speaker #1: I think no, the pure cost savings on the trip are not so significant because, as you rightfully point out, you save on bunker, but you have to pay the Suez fee.

Rolf Habben Jansen: I think the pure cost savings on the trip are not so significant because as you rightfully point out, you save bunker, but you have to pay the Suez fee. I still expect that the overall return to Suez will be gradual, probably from now until the end of the year. That is in a way also good, because if the market continues to grow, then we will actually need a bit of additional capacity to move all of that cargo, as today the situation is really tight. Yes, we are going to get a fair number of new ships into the industry in 2027. But right now, there are no indications that the growth in 2027 will be much lower than what we see right now. As such, a fair number of those ships is actually also needed to carry the cargo.

Speaker #1: I still expect that the overall return to Suez will be gradual. Probably from now until the end of the year. And that's in a way also good because if the market continues to grow, then we will actually need a bit of additional capacity to move all of that cargo as today the situation is really tight.

Speaker #1: And yes, we're going to get a fair number of new ships into the industry in 2027. But right now, there are no indications that the growth in 2027 will be much lower than what we see right now.

Speaker #1: And as such, a fair number of those ships is actually also needed to carry the cargo. And that's, of course, where at some stage returning to Suez will also help to turn the ships a bit quicker.

Rolf Habben Jansen: That is of course, where at some stage, returning to Suez will also help to turn the ships a bit quicker. So we can improve asset turns a bit.

Speaker #1: So we can improve asset turns a bit.

Speaker #4: Okay, and then the last one, just on the markets in general. Clearly, solid demand, particularly in head-haul, as you've been pointing out. I mean, what kind of growth pace do you expect the market to be at, sort of presently?

Lars Heindorff: Okay. Then the last one, just on the market in general. Clearly, solid demand, particularly head haul, as you have been pointing out. What kind of growth pace do you expect the market to be at sort of presently? Are you there?

Speaker #4: Are you there?

Rolf Habben Jansen: Sorry. I think when we look at the dominant leg growth, we are looking at about 7% or so over the H1 of this year. Last year was about 6%. I do not see a lot of indications that that is going to be much different if we try to look at the next 12 to 18 months and to have visibility much beyond that is always very difficult.

Speaker #1: You're at sorry. I think when we look at the dominant leg growth, we're looking at about 7% or so the first half of this year.

Speaker #1: Last year was about 6. I don't see a lot of indications that that's going to be much different if we try to look at the next 12 to 18 months and to have visibility much beyond that is always very difficult.

Speaker #4: Okay. Thank you.

Operator: Thank you. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question comes from Cristian Nedelcu from UBS. Please go ahead.

Speaker #2: As a reminder, if you wish to register for questions, please press star and one on your telephone. The next question comes from Christian Nedelko from UBS.

Speaker #2: Please go ahead.

Cristian Nedelcu: Thank you very much for allowing to add a couple. Could you tell us some bookings on Asia, Europe, what you are seeing recently? There are some reports of some sequential weakening in bookings. I do not know if you are seeing that at all. Secondly, I believe the Port of Hamburg, I think they flagged some operational issues, I think some points related to rail, some bottlenecks related to rail transportation. Just conceptually, when we think about your volume growth into Q3 and Q4, does that really move the needle for you? Does it represent a bit of a constraint in terms of volume growth in your ocean business or not really? Any color you could offer us there? Thank you.

Speaker #4: Thank you very much for allowing me to add a couple. Just one—could you tell us, on bookings in Asia and Europe, what you're seeing recently?

Speaker #4: I think there was some reports of some sequential weakening in bookings. I don't know if you're seeing that at all. And secondly, I believe the port of Hamburg, I think they've flagged some operational issues, and I think some points related to rail some bottlenecks related to rail transportation.

Speaker #4: And just conceptually, when we think about your volume growth into Q3 and Q4, does that really move the needle for you? Does it represent a bit of a constraint in terms of volume growth in your ocean business or not really?

Speaker #4: Any color you could offer us there? Thank you.

Rolf Habben Jansen: I think, generally, we see the market growing. From that perspective, there is certainly enough demand out there. I do not see a real slowdown of bookings. Sometimes you have a little bit of fluctuation from one week to another. For example, if we have Ferragosto in Italy, you will typically not see a lot of bookings there. Underlying demand, as far as I can see, is still very strong. When we look at the inland, that is definitely an issue. We have the low water. We have some other operational issues that you were also referring to. That means that in most cases, things need to then move by truck because there is no other alternative where capacity is somewhat scarce. That does put some limitation on especially some of the export volume.

Speaker #1: I think generally we see the market growing, so from that perspective there is certainly enough demand out there. I don't see a real slowdown of bookings.

Speaker #1: Sometimes you have a little bit of fluctuation from one week to another. And for example, if we have Ferro Agosta in Italy, you will typically not see a lot of bookings there.

Speaker #1: Underlying demand, as far as I can see, is still very strong. When we look at the inland, that is definitely an issue. We have the low water.

Speaker #1: We have some other operational issues that you were also referring to. That means that in most cases, things need to then move by truck because there is no other alternative where capacity is somewhat scarce.

Speaker #1: So that does put some limitation on, especially some of the export volume. But it is not something that will have a material impact on our overall volumes when looking at Q3 and Q4.

Rolf Habben Jansen: It is not something that will have a material impact on our overall volumes when looking at Q3 and Q4.

Speaker #4: Understood. Thank you very much. And can I please follow up just in terms of unit cost? I think the excluding the Middle East, the performance was good in Q2.

Cristian Nedelcu: Understood. Thank you very much. Can I please follow up? Just in terms of unit cost, I think excluding the Middle East, the performance was good in Q2. I do not know if in terms of looking forward Q3, Q4, any moving parts you can tell us and how you would expect the unit cost to develop. Thank you.

Speaker #4: I don't know if in terms of looking forward, Q3, Q4, any moving parts you can tell us and how you'd expect the unit cost to develop.

Speaker #4: Thank you.

Rolf Habben Jansen: I agree with you. I think our unit cost development was good into Q2, and we just need to make sure that we stay on that track. Biggest uncertainty there, of course, remains energy-related cost, as that is a big factor. I would say most of the other factors we have under control.

Speaker #1: I think I agree with you. I think our cost unit cost development was good into Q2, and we just need to make sure that we stay on that track because uncertainty there, of course, remains energy-related cost.

Speaker #1: As that is a big factor. I would say most of the other factors we have under control.

Speaker #4: Thank you very much.

Cristian Nedelcu: Thank you very much.

Operator: There are no more questions at this time. I would now like to turn the conference back over to Rolf Habben Jansen for any closing remarks.

Speaker #2: There are no more questions at this time. I would now like to turn the conference back over to Rolf. Haben Jansen for any closing remarks?

Speaker #1: Yeah, not much from my side. Just to say thank you. Yeah, for joining. Hope that was informative for you and hope to see or speak to you again.

Rolf Habben Jansen: Yeah, not much from my side. Just to say thank you for joining. Hope that was informative for you, and hope to see or speak to you again soon. Thank you. Bye-bye.

Speaker #1: Soon. Thank you. Bye-bye.

Operator: Ladies and gentlemen, the conference is now over and you may now disconnect your lines. Goodbye.

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Q2 2026 Hapag-Lloyd AG Earnings Call

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