Half Year 2026 Havila Kystruten AS Earnings Call
Speaker #1: Ladies and gentlemen, welcome to today's earnings call of the Havila Küstruten AS. Following the first half-year results of 2026, I would like to welcome the company's CEO, Bent Martini, and CFO, Alexander Rönestal, who will guide you through the figures in a moment.
Speaker #1: Followed by a Q&A session via audio line and chat. And with that, I hand over to you, Bent.
Speaker #2: Thanks a lot. Good morning, everyone. First of all, I will start to say that this is a sad morning for people in Norway, and I think also people outside Norway, with the recent news of the passing of His Majesty King Harald this morning.
Speaker #2: He will, for sure, be remembered as a great king, and our thoughts this morning go to especially Her Majesty Queen Sonja and, of course, the entire royal family.
Speaker #2: And we are looking forward to having a new king, King Haakon, I guess, this will be official in a few hours. So, back to our first half, second quarter 2026.
Speaker #2: The results is next slide. For those not familiar with the route, we are one of two operators on this route between Bergen and Kirkenas, the unique coastal route.
Speaker #2: It's a concession with the Norwegian government, 34 ports going northwards and 33 ports going southwards. Havila Küstruten, we have 4 out of 11 vessels on the route, and the other operator is Hurtigruten with their 7 vessels.
Speaker #2: Next, please. I'm quite proud that we are continuing delivering on hire services. Our vessels are high-performing vessels, so 100% of the time is fantastic on this very hectic route, and it's a fantastic operation with our crew, familiar with the vessels now, and continuing to deliver high performance.
Speaker #2: So, the results for the second quarter is very strong. Especially May and June, it's very, very strong. And all-time high for at least Havila.
Speaker #2: Küstruten, and both the contract revenue and the operational revenues are up, and the EBITDA reached 1998 million, and Alexander will come back to more details about the results on in the figures.
Speaker #2: Also, confident that we are on the right track when it comes to delivering on increased operational revenues on board the vessels, which is a firm target for the company to increase more.
Speaker #2: In second quarter, compared to last year, an increase of 32% is good. We have a way to go when it comes to kind of the overall target, looking ahead, but it's a very good movement and the performance is increasing day by day.
Speaker #2: So that's very positive sign. And as we have said before, our focus on digital on the digital platforms, selling most of our voyages by our own channels, that's still a focus, and we have now a very, very good balance between kind of the sales through operators and the sales through our own channels.
Speaker #2: Selling on our own channels implies that we will have no commissions paid out, so the revenues are stronger. And the development on selling on the FIT individual travelers is going up, and also securing kind of the onwards revenues very, very good.
Speaker #2: Yeah, so we do see that the focus we have on kind of mixing up the rights customers or the guest segments is going very well.
Speaker #2: We have a strong increase in the especially in the English-speaking markets, North America, UK, Oceania, and those represent more than one-third of our guests in the second quarter.
Speaker #2: So it's a strong kind of movements maybe the world championship in football also helped out, because it's a very, very strong booking now, and all-time high activity on our web pages.
Speaker #2: So Norway is a very, very attractive market these days. And it seems also going forward that the interest of traveling to Norway and especially also on the on this route is very strong.
Speaker #1: Industry in North and Eastern America, UK, and Oceania—those represent more than one-third of our guests in the second quarter. So, it's a strong kind of movement. Maybe the world championship in football also helped out, because there's very, very strong booking now, and all-time high activity on our web pages.
Speaker #2: Yeah, and when you look at the bookings, on the left side the graph you see is showing kind of the development year by year, the green one is 2026, and it shows the strong kind of development since 2025, and the red one is what we can say about 2027, it's very strong, and we are very optimistic for 2027 also.
Speaker #1: So, Norway is a very, very attractive market these days. And it seems, also going forward, that the interest in traveling to Norway—and especially also on this route—is very strong.
Speaker #1: Yeah, and when you look at the bookings, on the left side, the graph you see is showing kind of the development year by year.
Speaker #2: So all in all, it's a very, very positive development when it comes to the occupancy, the bookings, and as I mentioned earlier, the development on board sales building kind of the revenues has it's a very, very positive development.
Speaker #1: The green one is 2026, and it shows the strong kind of development since 2025. And the red one is what we can say about 2027.
Speaker #2: So then Alexander, then you can go more into the details.
Speaker #3: Thank you, Ben. A couple of words on the overall revenue and EBITDA development in the second quarter. So as Ben mentioned, very strong headline growth on revenues driven by contract revenue up more than 20%, operational revenues up 13%, where this is driven by higher volume.
Speaker #1: It's very strong, and we are very optimistic for 2027 as well. So, all in all, it's a very, very positive development when it comes to the occupancy, the bookings, and, as I mentioned earlier, the development in on-board sales.
Speaker #1: Building the revenues is a very, very positive development. So then, Alexander, you can go more into the details.
Speaker #3: We have a 17% increase in passenger nights, we have an increasing ACR, and we have very strong growth in onboard sales. And I think the KPIs probably suggest somewhat even stronger growth on the especially on the ticket revenue side.
Speaker #2: Thank you, Ben. A couple of words on the overall revenue and EBITDA development in the second quarter. So, as Ben mentioned, very strong headline growth on revenues, driven by contract revenue up more than 20%, and operational revenues up 13%, where this is driven by higher volume.
Speaker #3: There is, and we mentioned this in the quarterly report, there is a certain periodization effect compared to the KPIs, where we do expect a positive in Q3, and there's also somewhat currency effect, where a large part of especially May bookings for this year were made at a higher exchange rate than the realized one.
Speaker #2: We have a 17% increase in passenger nights. We have an increasing ACR, and we have very strong growth in onboard sales. And I think the KPIs probably suggest somewhat even stronger growth, especially on the ticket revenue side.
Speaker #3: And then I think it's worthwhile mentioning that currency effects on the operational side translate into savings on the financial side, where we do have debt denominated in euro and USD.
Speaker #2: There is, and we mentioned this in the quarterly report, a certain periodization effect compared to the KPIs, where we do expect a positive in Q3.
Speaker #3: Looking at the EBITDA, 98 million up from 79 million last year, so the positive growth in revenues is partly offset by cost increases, but especially on the bunker side, where we in the second quarter faced higher bunker cost compared to especially first quarter this year.
Speaker #2: And there's also somewhat of a currency effect where a large part of, especially May bookings for this year, were made at a higher exchange rate than the realized one.
Speaker #2: And then I think it's worthwhile mentioning that currency effects on the operational side translate into savings on the financial side, where we do have debt denominated in USD.
Speaker #3: And also compared to the expectations at the end of last year. We are working also on efficiency initiatives, onboarderships, and we do expect that these we do see effect of that now, and we do expect these effects to materialize in the coming quarters.
Speaker #2: Looking at the EBITDA, 98 million, up from 79 million last year. So, the positive growth in revenues is partly offset by cost increases, especially on the bunker side, where we in the second quarter faced higher bunker costs compared to, especially, the first quarter this year.
Speaker #3: On the KPIs, the overall KPIs are all moving in the right direction, occupancy very strong in the second quarter, 83%, it's the highest occupancy we have recorded.
Speaker #2: And also compared to the expectations at the end of last year. We are working also on efficiency initiatives, onboarded ships. And we do expect that these we do see effect of that now, and we do expect these effects to materialize in the coming quarters.
Speaker #3: Q3 is shaping up very well as well, and at we're seeing the same type of occupancy figure for the third quarter of this year.
Speaker #3: Which is a leap from 24 and 25. Cabin factor has risen from 1.7 level up to 1.9, and it's kind of stabilized at that level.
Speaker #2: On the KPIs, the overall KPIs are all moving in the right direction. Occupancy is very strong in the second quarter—83%. It's the highest occupancy we have recorded.
Speaker #3: The ACR, we are working hard on yield management and achieving a price growth of close to 10% this year. At the moment, we have about 8% growth in ACR compared to last year, and what we see is that the pricing curve this year has been very positive, with average price increasing throughout the year as bookings closer to departure is sold at a higher rate than that earlier bookings.
Speaker #2: Q3 is shaping up very well as well, and we're seeing the same type of occupancy figure for the third quarter of this year.
Speaker #2: Which is a leap from 24 and 25. Cabin factor has risen from the 1.7 level up to 1.9, and it's kind of stabilized at that level.
Speaker #2: For ACR, we are working hard on yield management and achieving a price growth of close to 10% this year. At the moment, we have about 8% growth in ACR compared to last year.
Speaker #3: The spend per pax night is also up, and we do see that the initiatives that we have implemented on board is paying off. And as Ben's mentioned, we have with the very high occupancy that we now have, there's a great opportunity now to work on sales on board, as we have all the guests on board.
Speaker #2: And what we see is that the pricing curve this year has been very positive, with the average price increasing throughout the year, as bookings closer to departure are sold at a higher rate than earlier bookings.
Speaker #3: On the cost side, I think I'll jump to the next slide. I think this is more for analytical information. Looking at the cost in the third quarter, now in the second quarter, on the right-hand side you can see the correlation between occupancy and cost.
Speaker #2: The spend per pax night is also up, and we do see that the initiatives that we have implemented on board are paying off. And as Ben mentioned, with the very high occupancy that we now have, there's a great opportunity to work on sales on board.
Speaker #3: The Q2 of '26 is on the line, of cost, and as expected, given that very high occupancy figure that we saw in the second quarter.
Speaker #2: As we have all the guests on board, on the cost side, I think I'll jump to the next slide. I think this is more for analytical information.
Speaker #3: And it should be mentioned that this cost overview is not adjusted for inflation. Looking at the various cost components, cost of goods sold, up 30% compared to Q2 last year, driven by both a higher number of passengers on board, but also higher sales per guest.
Speaker #2: Looking at the cost in the third quarter—now, in the second quarter, on the right-hand side, you can see the correlation between occupancy and cost.
Speaker #3: Payroll crew up 13% from second quarter last year, it's a function of higher occupancy and inflation. The L&D side, we also have an increase compared to last year, where the higher spot price from the geopolitical uncertainty in the Middle East is impacting our fuel cost.
Speaker #2: The Q2 of '26 is on the line. Of course, then as expected, given the very high occupancy figure that we saw in the second quarter.
Speaker #2: And it should be mentioned that this cost overview is not adjusted for inflation. Looking at the various cost components—cost of goods sold is up 30% compared to Q2 last year, driven by both a higher number of passengers on board and higher sales per guest.
Speaker #3: On the admin opex, we are kind of we are maintaining the same level as earlier, and we have I think we organizational-wise, we have scaled up the organization over the past couple of years, and I think we are now at the appropriate level in terms of staffing onshore.
Speaker #2: Payroll crew up 13% from the second quarter last year. It's a function of higher occupancy and also wage inflation. On the L&D side, we also have an increase compared to last year, where the higher spot price from the geopolitical uncertainty in the Middle East is impacting our fuel cost.
Speaker #3: On the outlook, we have a revised our target to approximately 500 million for the full year, the revision is predominantly linked to the geopolitical uncertainty, that we are experiencing at the moment, and especially the higher energy cost as an effect of that.
Speaker #2: On the admin opex, we are kind of we are maintaining the same level as earlier, and we have I think we organizational wise, we have scaled up the organization over the past couple of years, and I think we are now at the appropriate level in terms of staffing on shore.
Speaker #3: We do see expect based on the current forward pricing a much higher fuel cost in Q3 and Q4. With that said, we are on track operationally, the occupancy is trending close to 80% for the year, we are currently above 74%, we are on track on achieving an occupancy in the higher range of our target.
Speaker #2: On the outlook, we have revised our target to approximately 500 million for the full year. The revision is predominantly linked to the geopolitical uncertainty that we are experiencing at the moment, and especially the higher energy cost as an effect of that.
Speaker #3: The ACR is also trending upwards towards 10%, so with those strong underlying booking figures with the positive development, we are maintaining the long-term outlook, for 6 to 800 million in '27 onwards.
Speaker #2: We do expect, based on the current forward pricing, a much higher fuel cost in Q3 and Q4. With that said, we are on track operationally.
Speaker #3: And we do with the indexation that we have in the government contract, where approximately 70% of the fuel cost is compensated in higher revenues on the state's contract, but with a time lag of 1 to 2 years, so we do expect the 2028 compensation to reflect the current decrease in fuel pricing.
Speaker #2: The occupancy is trending close to 80% for the year. We are currently above 74%, so we are on track to achieve occupancy in the higher range of our target.
Speaker #2: The ACR is also trending upwards towards 10%. So, with those strong underlying booking figures and the positive development, we are maintaining the long-term outlook for NOK 600 to 800 million in 2027 onwards.
Speaker #3: So that's the reason why we are maintaining the long-term target we see that this is a short-term issue. On the financing side, we did the full refinancing at the end of last year, reduced effective interest rate from high double digits to just below 10%.
Speaker #2: And we do with the indexation that we have in the government contract, where approximately 70% of the fuel cost is compensated in higher revenues on the state contract, but with a time lag of one to two years.
Speaker #2: So, we do expect the 2028 compensation to reflect the current decrease in fuel pricing. That's the reason why we are maintaining the long-term target.
Speaker #3: It's a very flexible and long-term financing arrangement for us, and it puts us in a position to deliver on the operational results. And it's kind of a it's a platform that can be optimized as we do deliver on our results, with the first call option in 2028.
Speaker #2: We see that this is a short-term issue. On the financing side, we did the full refinancing at the end of last year, reducing the effective interest rate from high double digits to just below 10%.
Speaker #3: On the balance sheet side, the vessels that we have, we do collect the broker valuations every quarter, the this is a broker's assessment on the value based on new building cost, willing seller, willing buyer, mechanisms, vessels value that 663 million euro, at the end of second quarter, that compares to book value of close to 4 billion NOK, so there's a substantial premium on the market value of the vessels.
Speaker #2: It's a very flexible and long-term financing arrangement for us, and it puts us in a position to deliver on the operational results. And it's kind of—it's a platform that can be optimized as we do deliver on our results, with the first call option in 2028.
Speaker #2: On the balance sheet side, the vessels that we have, we do collect the broker valuations every quarter. This is a broker's assessment on the value based on newbuilding cost and willing seller, willing buyer mechanisms.
Speaker #3: And that really reflects the movement in new building costs, since the ships were ordered back in 2019. So if you went out and ordered similar type of ships today, you would easily pay 180 million per ship.
Speaker #3: And based on that, that broker value, the value adjusted equity, so that's 2.2 billion, in the second quarter. Supporting the underlying value of our share.
Speaker #2: Vessels are valued at €663 million. At the end of the second quarter, that compares to a book value of close to NOK 4 billion. So, there's a substantial premium on the market value of the vessels.
Speaker #2: And that really reflects the movement in new building costs since the ships were ordered back in 2019. So, if you went out and ordered similar types of ships today, you would easily pay $180 million per ship.
Speaker #3: So to sum it up, we have a record high booking situation for 2026. 2027 is firming up really well, and as we have commented on in our trading update, we see that, you know, we differentiate between group bookings and individual bookings, and we see individual bookings developing very positively, so we do see that the book for next year is firmer, higher quality, than a year ago.
Speaker #2: And based on that broker value, the value-adjusted equity is 2.2 billion in the second quarter, supporting the underlying value of our share.
Speaker #3: And this high occupancy creates a platform for growth in onboard spend, so the job is now really to develop the product onboard, and take advantage of that opportunity that lies in onboard sales.
Speaker #2: So, to sum it up, we have a record-high booking situation for 2026. 2027 is firming up really well. And, as we have commented on in our trading update, we differentiate between group bookings and individual bookings, and we see individual bookings developing very positively.
Speaker #3: We do actively work on additional revenue streams, so we do we have started packaging to some extent, so we do offer shorter trips, combined with flight and hotel, we are testing that out, we are offering hop-on, hop-off, and with these shorter trips, with these specialized packages, we are attracting kind of a much younger clientele than what has historically traveled on the route.
Speaker #2: So, we do see that the book for next year is firmer and higher quality than a year ago. And this high occupancy creates a platform for growth in onboard spend.
Speaker #2: So the job is now really to develop the product onboard and take advantage of that opportunity that lies in onboard sales. We do actively work on additional revenue streams.
Speaker #3: The refinancing puts us in a good position, so it gives us the time to deliver operationally, and then we have a call option from '28, and work on that will start next year.
Speaker #2: So, we have started packaging to some extent. We do offer shorter trips combined with flight and hotel. We are testing that out.
Speaker #3: And then finally, we are we do expect that the next tender for the next concession period will be announced sometime later this year, or early next year, and we are in a very well position to participate in that tender and achieve a renewal of the contract.
Speaker #2: We are offering hop-on, hop-off. And with these shorter trips, with these specialized packages, we are different than what has historically traveled on the route. The refinancing puts us in a good position.
Speaker #2: So it gives us the time to deliver operationally, and then we have a call option from '28. Work on that will start next year.
Speaker #3: So I think with that, Ingmar, the presentation from the company is complete, and then we are open for questions from the audience.
Speaker #2: And then finally, we do expect that the next tender for the next concession period will be announced sometime later this year or early next year.
Speaker #1: Okay, thank you very much. So we move on to the Q&A session. If you would like to ask a question, please raise your hand, and I can allow to unmute yourself, and we already have raised hand.
Speaker #2: And we are in a very good position to participate in that tender and achieve a renewal of the contract. So, I think with that, Ingmar, the presentation from the company is complete.
Speaker #1: Tim Kruse, you should be able to unmute yourself, switch on the microphone, and ask a question. Mr. Kruse, please go ahead.
Speaker #2: Yes, good morning. Thanks, Ben. Thanks, Alexander, for the presentation. On the guidance for this year, so it would imply that you do roughly 350 plus EBITDA if we reach the 500 in the second half, can you walk us through, like, where that would come from?
Speaker #2: And then, we are open for questions from the audience.
Speaker #1: Okay, thank you very much. So, we will move on to the Q&A session. If you would like to ask a question, please raise your hand and I can allow you to unmute yourself. We already have a raised hand.
Speaker #2: I mean, it must then only come from the booking revenue line, as cost base will increase in the second half, so obviously Q3 is your best quarter, but also Q4 must be then substantially better than last year, and even the year before.
Speaker #1: Tim Kruse, you should be able to unmute yourself, switch on the microphone, and ask a question. Mr. Kruse, please go ahead.
Speaker #3: Yes. Good morning. Thanks, Ben. Thanks, Alexander, for the presentation. On the guidance for this year, it would imply that you do roughly 350-plus EBITDA if we reach 500 in the second half.
Speaker #2: That would be helpful if you could, yeah, give a bit more color on that, and then secondly, I'm also looking at sort of your midterm targets.
Speaker #2: There again, that would imply for the 800 million another 300 million plus in revenue, sort of from this current year level, which you are saying you're heading to 80%, maybe 80% occupancy?
Speaker #3: Can you walk us through where that would come from? I mean, it must then only come from the booking revenue increasing in the second half.
Speaker #3: So, obviously, Q3 is your best quarter. But also, Q4 must then be substantially better than last year and even the year before. It would be helpful if you could, yeah, give a bit more color on that.
Speaker #2: So what occupancy level, and what other sort of onboard sales activities, pricing, etc., would you need to reach that, and yeah, what sort of timeframe would you yeah, would you think that that could be possible?
Speaker #3: And then secondly, I'm also looking at sort of your midterm targets. There again, that would imply for the 800 million another 300 million plus in revenue, sort of from this current year level, which you are saying you're heading to 80%, maybe 80% occupancy?
Speaker #2: Thank you.
Speaker #3: Yeah, so on the I think on the target for this year, Tim, majority of our EBITDA is created in the third quarter obviously, and if you look at the history of the last Q3s, that has been the case.
Speaker #3: So, what occupancy level and what other sorts of onboard sales activities, pricing, etc., would you need to reach that? And, yeah, what sort of timeframe would you—yeah, would you think that that could be possible?
Speaker #3: We do see a positive periodization effect in Q3 on the revenue side compared to Q2, as well as a lesser currency effect, compared to the headline KPIs.
Speaker #3: So the bulk of the EBITDA is created in Q3, and then we do see Q4 firming up quite well. We have I think bent the booking intake at the moment, for the year, is very strong.
Speaker #3: Thank you.
Speaker #2: Yeah, so on the target for this year, Tim, the majority of our EBITDA is created in the third quarter. And obviously, if you look at the history of the last Q3s, that has been the case.
Speaker #3: So I think we are very optimistic on top line, and then we are concerned about the cost side, which has led to a revision of the estimates.
Speaker #2: We do see a positive periodization effect in Q3 on the revenue side compared to Q2, as well as a lesser currency effect compared to the headline KPIs.
Speaker #3: I guess on the onboard sales, Tim, it's kind of we have the guests on board, we are now working on developing the product portfolio for the guests on board, as well as kind of it's really a people's thing, so it's the sales training, it's management training, and we are we're also implementing sales targets and incentives for the staffing on board to achieve these goals.
Speaker #2: So, the bulk of the EBITDA is created in Q3, and then we do see Q4 firming up quite well. We have a big event—the booking intake, at the moment for the year, is very strong.
Speaker #2: So, I think we are very optimistic on the top line, and then we are concerned about the cost side, which has led to a revision of the estimates.
Speaker #2: I guess on the onboard sales, Tim, it's kind of—we have the guests on board. We are now working on developing the product portfolio for the guests on board.
Speaker #3: I'm not bent if you have any things to add.
Speaker #2: No.
Speaker #3: And Tim, on the long-term on the longer-term side, on occupancy, we see 27th firming up really well, this year we're going to be close to 80% at the end of the year, in occupancy.
Speaker #2: As well as kind of, it's really a people thing. So, it's the sales training, it's management training, and we are also implementing sales targets and incentives for the staff on board to achieve these goals.
Speaker #3: We see 27 being even stronger, so we're quite confident on the occupancy level. We have raised prices, substantially, to reflect both the increase in cost levels, but also the strengthening of the Norwegian kroner towards other currencies.
Speaker #2: I don't know, Ben, if you have anything to add.
Speaker #1: No.
Speaker #2: And Tim, on the longer-term side, on occupancy, we see '27 firming up really well. This year, we're going to be close to 80% at the end of the year.
Speaker #3: So we're quite optimistic about the operational side next year. And then if you take into account that the state contract will increase based on indexation, that leads us to maintaining that target line.
Speaker #2: In occupancy, we see '27 being even stronger. So we're quite confident on the occupancy level. We have raised prices substantially to reflect both the increase in cost levels, but also the strengthening of the Norwegian krone towards other currencies.
Speaker #2: Okay, thank you. That's helpful. Ben, can you maybe comment sort of on the competitive environment? I mean, if you only have one competitor, but sort of yeah, what the trends are there, in terms of also the tender, what you're hearing, and it would also be interesting to hear about the sort of the economical ecological profile in terms of what could be expected for the new the new concession round, because my understanding was sort of the ambitions for the ecological treatment of the current tender period was somewhat yeah, more ambitious, and then didn't turn out to be that yeah, that stringent or that comprehensive as you were prepared for with also your ships, yeah.
Speaker #2: So we're quite optimistic about the operational side next year. And then, if you take into account that the state contract will increase based on indexation, that leads us to maintaining that target line.
Speaker #3: Okay, thank you. That's helpful. Ben, can you maybe comment, sort of, on the competitive environment? I mean, if you only have one competitor, but, sort of, yeah, what the trends are, the tenor, what you're hearing.
Speaker #3: And it would also be interesting to hear about sort of the economic and ecological profile in terms of what could be expected for the new concession round.
Speaker #3: If you look at the if you look at the concession, itself, then there were kind of requirement was to reduce the CO2 emissions by 25% compared to 27th figures in this route, so how do you like we have managed to reduce the CO2 by plus 35%, close to, yeah.
Speaker #3: Because my understanding was sort of the ambitions for the ecological treatment of the current tender period was somewhat, yeah, more ambitious, and then didn't turn out to be that, yeah, that stringent or that comprehensive as you were prepared for with also your ships.
Speaker #3: 38, 40%, that's kind of. Yeah, the capacity or the potential now, so we have delivered on the requirements in this route, and in this contract we have today.
Speaker #3: Yeah.
Speaker #2: If you look at the if you look at the concession, itself, then there were kind of requirement was to reduce the CO2 emissions by 25% compared to 27th figures in this route.
Speaker #3: So I think we have overperformed, that's one thing, the sad thing of the contract is that it was intended to give some environmental bonus, if you actually reduce the CO2 more than those 25%, and that is something because we have been in discussions with the government, and still are, on that part, that's that is kind of the disappointment from our perspective, on the contract, when it comes to the World Heritage George, that's another issue, and that's not part of the concession, itself, but as more demonstrate that those not willing to reduce or willing to invest in environmental kind of measures, they actually won that battle, so that was a kind of a big disappointment for us, but we do see that actually keeping up, being in the forefront, actually increase the focus on the company, the people traveling with us is very focused on the environmental side, and they we have a younger kind of guest mix, us closer to 50 years in average, and the other one, other on yeah, other operators maybe more closer to 70 in average age, so the people traveling with us is very focused on the environmental side of the business, and willing to pay.
Speaker #2: So Havila, you just said we have managed to reduce the CO2 by plus 35%—close to, yeah, 38–40%. That's kind of the capacity or the potential now.
Speaker #2: So, we have delivered on the requirements in this route and in this contract that we have today. So I think we have overperformed. That's one thing.
Speaker #2: The sad thing about the contract is that it was intended to give some environmental bonus if you actually reduce the CO2 more than those 25%.
Speaker #2: And that is something, because we have been in discussions with the government and still are on that part. But that is kind of the disappointment from our perspective on the contract.
Speaker #2: When it comes to the World Heritage fjords, that's another issue. And that's not part of the concession itself, but just to more demonstrate that those not willing to reduce or willing to invest in environmental kind of measures, they actually won that battle.
Speaker #2: So, that was kind of a big disappointment for us. But we do see that actually keeping up—being at the forefront—actually increases the focus on the company.
Speaker #3: So that kind of is something we look as our strengths going forward, and of course present vessels are we are today able to reduce and deliver by the 2050 requirements, if you look at the various agreements, etc., then 2015 requirements we can do today, and that puts us in a strong position for the next tender, because of course still, even though the situation or the political issues in the US and others kind of have delayed the process in IMO, etc., still the focus on environmental measures are there, and we will continue our kind of focus on reducing the CO2 by blending in biogas going forward, and the instrument, I think, will be that Norwegian government will implement the fuel EU Maritime the recently said that that will be implemented by January 2028, and then of course we have a very, very strong incentive to continue reducing CO2.
Speaker #2: The people traveling with us are very focused on the environmental side. And we have a younger kind of guest mix. Us, closer to 50 years in average, and the other one—yeah, other operators—maybe more closer to 70 in average age.
Speaker #2: So the people traveling with us are very focused on the environmental side of the business. I'm willing to pay, so that is something we see as one of our strengths going forward.
Speaker #2: And, of course, present vessels, as we are today, are able to reduce and deliver on the 2050 requirements. If you look at the Paris Agreement, etc., then 2050 requirements, we can do today.
Speaker #2: And that puts us in a strong position for the next tender because, of course, still, even though the situation or the political issues in the US and others have kind of delayed the process in IMO, etc., still the focus on environmental measures is there.
Speaker #3: In that market, it will be very positive for the company. To do that, so when it comes to the next tender, we believe that the Norwegian government cannot just say that it will keep the present requirements, they need to strengthen the focus on environmental side, so and we are not afraid for that, it will we will be able to deliver on day one.
Speaker #2: And we will continue our kind of focus on reducing the CO2 by blending in biogas going forward. And the instrument, I think, will be that the Norwegian government will implement the Fuel EU Maritime. They recently said that would be implemented by January 2028.
Speaker #2: And then, of course, we have a very, very strong incentive to continue reducing CO₂. In that market, it will be very positive for the company.
Speaker #3: Did I answer your question, Tim?
Speaker #2: Yeah, thanks. Okay, yeah, I hope that that turns out that way, and then yeah, congratulations on the operational performance, I also hope the cost side is a bit in your favor in the second half of the year.
Speaker #2: To do that. So, when it comes to the next tender, we believe that the Norwegian government cannot just say that they will keep the present requirements.
Speaker #2: Thank you.
Speaker #3: Yep.
Speaker #1: Yes, thank you very much for the questions, and I'll wait if some other participants raise their hand, having a question. That is not the case, by now.
Speaker #2: They need to strengthen the focus on the environmental side. So, and we are not afraid of that. We will be able to deliver on day one.
Speaker #1: So with no further questions arising, we come to the end of today's earnings call. Thank you very much for your interest in Havila Kystlunden, thank you very much, Bent, thank you, Alexander, for the presentation, and your time, and should further questions arise at a later time, please feel free to contact investor relations.
Speaker #2: Did I answer your question, Tim?
Speaker #3: Yeah, thanks. Okay, yeah, I hope that turns out that way. And then, yeah, congratulations on the operational performance. I also hope the cost side is a bit in your favor in the second half of the year.
Speaker #3: Thank you.
Speaker #2: Yep.
Speaker #1: Yes, thank you very much for the questions. I'll wait to see if any other participants raise their hand with a question. It appears that is not the case.
Speaker #1: I wish you all a good day from my side, and handing over to you, Bent, once again, for some closing remarks.
Speaker #3: Thanks. Thanks, Ingmar, and thanks for facilitating this presentation, and thanks to everyone hearing us out. Thank you.
Speaker #1: By now, so with no further questions arising, we come to the end of today's earnings call. Thank you very much for your interest in Havila Kystruten Q4.
Speaker #1: Thank you very much, Ben. Thank you, Alexander, for the presentation and your time. Should further questions arise at a later time, please feel free to contact Investor Relations.
Speaker #1: I wish you all a good day from my side, and I am handing over to you, Ben, once again for some closing remarks.
Speaker #2: Thanks. Thanks so much. And thanks for participating in this presentation. And thanks to everyone hearing us out. Thank you.
