REG - Wisdom Marine - Annual Financial Report

Wisdom Marine Lines CoAnnouncement

19/03/2025 08:00

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RNS Number : 2831B  Wisdom Marine Lines Co. Limited  19 March 2025

1. Letter to Shareholders

 

Dear Shareholders,

 

Business Environment

 

The dry bulk shipping market can be said to have generally moved at a steady
pace in 2024. It delivered consistent results during the Lunar New Year and
the off-season in summer, but showed no significant rebound after the
off-season. In the meantime, economic concerns about the global economy
triggered by the US election and China's economic slowdown weighed on the
shipping market to a certain degree. Therefore, shipping activities fell in
the fourth quarter of 2024, and the index stagnated.

 

US President Trump wasted no time in making changes to US tariff policy after
he took office. Given that the United States is the world's largest market,
changes to US tariffs will inevitably have a major impact on the global
economy. Currently it is hard to predict President Trump's policy goals, so it
remains difficult to formulate any response quickly, which puts the market in
a cautious stance. However, grains, coal, and other goods that are closely
related to dry bulk shipping are essential consumables, and so any decrease in
shipped volume is unlikely to persist over the long term. We remain confident
about the fundamental soundness of the demand in the dry bulk shipping market.

 

China's economy did not make a clear recovery in 2024, and the fiscal and debt
problems that gradually emerged with slowing growth are making the market
cautious. Nevertheless, China's total imports of iron ore, coal, and grains
rose by 6.4% in 2024, providing important support for the demand for dry bulk
shipping.

 

Although the Israel-Palestine conflict has eased, the Red Sea routes continue
to carry a higher risk. The Russia-Ukraine war has not ended either. The risk
of war has not led to significant changes in global shipping routes so far.
Yet hope remains to restore the Red Sea routes in 2025. If a ceasefire can be
reached between Russia and Ukraine, there will be also be a good chance of
restoring the demand for raw materials and grain shipping.

 

Regarding environmental requirements, President Trump holds a right-wing
attitude towards climate initiatives, but the European Union continues to push
for related regulations. It will not only lower the carbon tax exemption from
60% to 30%, but also introduce the transition of fuels under the FuelEU
Maritime Regulation. However, as the EU is not the largest market for dry bulk
shipping, these regulations have a limited impact on the overall market
capacity despite having prompted some shipping companies to explore
environmental innovation. On the other hand, energy-efficient ships with a
good energy efficiency record may create benefits in terms of compliance cost
and corporate image.

 

2024 Business Results

 

 

In 2024, we added 4 newbuild ships, sold 4 ships, and added 1 ship under
management. The number of ships in our fleet saw a net increase of 1 and
counted a total of 134 at the end of the year. The 4 newbuild ships included 1
kamsarmax, 2 supramax, and 1 handysize. The ships sold included 1 capesize, 1
supramax, 1 handysize, and 1 small handysize.

 

In 2024, aided by the overall recovery in the market, the annual revenue was
US$634.4 million, up by 16.3% compared to 2023; the operating profit was
US$211.3 million and the operating profit margin rose back up to 33.3%. Aside
from the first quarter, performance in the fourth quarter also did not meet
expectations.

 

A total of US$31.3 million were recognized in non-operating profit and loss
for the sale of 4 ships in the year. We continued to reduce our debt in 2024.
The debt ratio fell from 48.8% to 42.6%, which reduced interest expenses from
US$68.8 million in 2023 to US$61.5 million. The recognized exchange rate
profit and loss was US$6.2 million due to continuing depreciation of the
Japanese yen. The total net profit before tax was US$188.5 million, and the
EPS was NT$8.08.

 

 

2025 Business Plan

 

We expect to receive another 2 newbuild ships in 2025. Both are handysize bulk
carriers made by the Japanese builder Namura. Both are eco-ships that comply
with the Tier III NOx emission standards. Both are expected to be delivered in
the fourth quarter.

 

A relatively large percentage of our current charters are index-linked hires.
The plan is that our ships' better energy saving performance will lead to
higher charter premiums than the market average and we will not have to
negotiate for fixed hires at a discount in uncertain political or economic
times. Nevertheless, we will also utilize the index futures market and lock in
charterers for certain ships during specific periods.

 

Despite fluctuations in the freight market at present, the prices of new ships
have not changed much due to overall inflation and abundant orders at Japanese
shipyards, which means there is relatively limited capacity for fulfilling
more ship orders. We do not currently have any plans for large capital
expenditures. The fleet policy for 2025 will continue to prioritize the
elimination of less energy-efficient vessels.

 

The Japanese yen has been falling in recent years, which may suggest more room
for appreciation, while the US dollar interest rate stays high. To diversity
interest rate and exchange rate risks, we are making plans to increase Swiss
franc-denominated loans in response to market conditions. However, we remain
conservative when planning for capital expenditures. We will also consider
continuing the repayment of loans when the operating cash flows become
stronger.

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