Bonheur reported its first-quarter 2025 earnings with a notable improvement in its operating results, reaching 132 million. Despite a challenging market environment, the company maintains a robust cash position close to 5.2 billion, with net cash slightly over 1.6 billion. According to InvestingPro data, the company boasts impressive gross profit margins of 93% and maintains a healthy financial position, earning a "GREAT" overall financial health score. The company’s stock, however, saw a decline of 2.83% in pre-market trading, reflecting investor concerns over market conditions and geopolitical risks affecting the cruise segment.
Key Takeaways
- Bonheur’s Q1 operating results improved significantly, reaching 132 million.
- The company’s 12-month rolling EBITDA doubled pre-COVID levels, ranging between 3.5-4 billion.
- Cash reserves are strong at nearly 5.2 billion, with external debt at 3.5 billion.
- Renewable energy projects are on track, with significant investments in wind and solar technologies.
- The stock fell 2.83% in pre-market trading amid market volatility.
Company Performance
Bonheur demonstrated resilience in Q1 2025, with an operating result of 132 million, an improvement from the previous quarter. With a market capitalization of $982 million and a strong free cash flow yield of 20%, the company continues to focus on renewable energy, with significant progress in wind and solar projects. InvestingPro analysis reveals 11 additional key insights about Bonheur’s performance and potential, available to subscribers. Despite geopolitical challenges affecting its cruise segment, Bonheur remains well-positioned in growth industries.
Financial Highlights
- Operating Result: 132 million, improved from the previous quarter.
- 12-month rolling EBITDA: 3.5-4 billion, doubling pre-COVID levels.
- Cash Position: Close to 5.2 billion.
- External Debt: Approximately 3.5 billion.
- Net Cash: Slightly over 1.6 billion.
Market Reaction
Bonheur’s stock experienced a 2.83% decline in pre-market trading, closing at 240. Trading at an attractive P/E ratio of 9.17 and currently appearing undervalued according to InvestingPro Fair Value analysis, investors appear cautious due to geopolitical risks in the cruise segment and potential short-term weakening in power prices. The company has maintained dividend payments for 20 consecutive years, with a current dividend yield of 2.73%. The stock remains within its 52-week range of 205.5 to 287.5.
Outlook & Guidance
Bonheur plans to continue its focus on renewable energy and wind service segments. The company is exploring ancillary services in energy markets and potential repowering of existing wind farms. For detailed analysis of Bonheur’s growth prospects and comprehensive financial metrics, investors can access the full Pro Research Report, available exclusively on InvestingPro. Future guidance includes EPS forecasts for upcoming quarters, highlighting a strategic focus on sustainable growth.
Executive Commentary
- "We have a long-term strategy to remain a leading player within this segment," said Okema Nuren, CEO of Fred Olsen Winter.
- "We are positioned in growth industries, which are very capital intensive," noted Riccardo Labo, CFO of Bonheur.
Risks and Challenges
- Geopolitical risks impacting the cruise segment.
- Potential short-term weakening in power prices.
- Challenges in Northern Sweden with transmission capacity.
- Volatility in demand within the offshore wind market.
- Supply chain constraints affecting project timelines.
Q&A
During the earnings call, analysts inquired about the Codling offshore wind project challenges and potential locational marginal pricing in the UK electricity market. Executives addressed technical issues in wind farm operations and discussed potential vessel investments in the wind service segment.
Full transcript - Bonheur (BONHR) Q1 2025:
Annette Olsen, CEO, Bonnour: Good morning, everybody, and welcome to the first quarter presentation for Bonnour. My name is Annette Olsen. I am CEO of Bonnour and Fred Olsen and Company. And with me today, I have Riccardo Labo, our CFO, and he will do the first part of the presentation as usual, and then the CEOs for the different segments will come and present. And we will take the questions and answers at the end.
So Rickard, over to you.
Riccardo Labo, CFO, Bonnour: Yes. Thank you, Annette. And also a hearty welcome from me to this first quarter presentation. We have a mixed quarter. On one hand, we have an improvement in our operating result with 132,000,000, which, of course, is positive.
On the other hand, we have had some wind farms that have not operated as capacity due to technical issues. And we have had a canceled cruise for Balmoral due to the geopolitical situation in the Red Sea. And obviously, without these issues, the operating results could have been better. So again, it’s a mixed report this time. I will quickly go through the main events in each segment as they will be thoroughly covered by my good colleagues.
Starting with renewable energy, where we have a small year on year improvement on the EBITDA. But we have to remember that first quarter twenty four was a very low wind speed quarter. On the very positive side, we have seen higher power prices in The UK, more than compensating the very low power prices in Northern Sweden, where there are severe issues with the trapped power in Northern Sweden due to lack of transmission capacity from north to south, which Sophie will come back to. Like I said, generation is low this quarter. It’s 21% lower than the P50 estimate, which is the kind of midpoint estimate for wind given historical wind resources in the various countries.
The observed viewer of this presentation will note that we now report this including compensated curtailment to have a more clean number compared to the technical issues where we also then include on generation what we actually get compensated for. This is a trend we see that the governments will compensate for curtailment due to the big impact of renewables in the grid. So we think this is a better way to present the figures going forward. But then the 21% deviation is then really related to low wind in the quarter, in particular in Scotland and Norway, but also due to technical issues that we also come back to. Very good.
MidHill, that was out for half of last year, commenced operation back in January 25. And also very good in the quarter that the two big projects that FURAZ have undertaken, Crystal Rig four and Windy Sander three, which are CapEx programs of close to NOK 3,000,000,000 are progressing on time and budget. Moving on to wind service. Despite only 57% utilization for bolt turn and blue turn, we have a strong improvement on EBITDA from 174,000,000 to $280,000,000. And also the two yard stays for bolt turn and blue turn went well, which Hakul Magni will also come more back into in his presentation.
Also in the segment, we agreed in the quarter in March to sell our 50% stake United Wind Logistics to our partner, and that was closed April 30. Moving on to Cruise. And we don’t have a separate slide on Cruise in this deck because the main things on Cruise are actually covered in these bullet points here. Its results clearly lower than where it should have been and also lower than we expected. The main reason for the lower result is that we had to cancel one cruise for Balmoral, a long cruise to Asia that was going through the Red Sea area.
And due to the geopolitical we deemed it unsafe to conduct that cruise. That is the main reason why the occupancy is only 63%, as Bolete and Borealis have operated as expected in the quarter. So it’s really one main event in this quarter, and that is the impact of this canceled cruise for Balmoral that we were not able to replace with high paying guests replacement cruises. Booking numbers are up 11% compared to last year, and that also includes the weak first quarter. These are the full year for ’25 and ’26, and we also started to selling some world cruises into ’27.
So that’s 11% up. We have utilized the market turmoil in the last months to hedge 75% of the estimated bunker consumption, and we have hedged that in pound sterling. On the other investment, we see an improvement of 35,000,000. The main driver for that is NHST, which continued to perform much better than in the past and had an EBITDA of positive 38,000,000 in the quarter compared to a negative 3,000,000 first quarter last year. There are also some interesting trends around Fred Olsen eighteen forty eight that Per will cover more in his presentation.
But we see now on floating that the technology we have developed, Brunel, finally, we see that the market start to appreciate the big benefits of that technology. And we see that also on the floating solar side that is really picking up in Southeast Asia. Yeah. Despite having a few issues in this quarter, like I said, it’s a quarter with improvement compared to first quarter last year with 132,000,000, and it really supports this long term trend that we present now in each quarter where we are where we came out of COVID and the recovery in energy prices, but also the strong performance in the wind service segment, where we’ve been able to lift our twelve months running EBITDA between 3,000,000,000 and 4,000,000,000. And we see this quarter actually add to that trend with a small tick up in this quarter due to that you’re replacing fourth quarter last year with an improved 132,000,000.
So it’s supportive of this trend we have seen. And the twelve months rolling EBITDA now stands between 3,500,000,000.0 and 4,000,000,000, as you see here, which is more than a doubling of the level pre COVID. On the numbers, we have covered several of these, but it’s maybe important to note a few things on the revenues and the margins. And on the revenue side, we are more or less in line with the revenue last quarter with a drop of 77,000,000. And it’s really in the wind service where the revenue drop is the biggest of 109,000,000.
While on the other hand, the EBITDA in the wind service improved by 106,000,000. That is related to the Shimitsu contract that has a much lower margin than they have on the vessels that we own, Blue Turn and Brave Turn and Bolturn. So it’s a purely a mix effect that score. The lower revenue on cruise is really only related to the issues on Balmoral. And the variances on the EBITDA, we already covered.
Then on the consolidated figures, we’ve been through the revenues and EBITDA improvement of 132,000,000. Depreciation is higher. That is related to that we’re now starting to depreciate both cranes or upgrades on the turn vessels. So for weeks, the higher depreciation. Net finance this quarter is on a very normal level when it comes to net interest, but we have some unrealized currency effects related to internal loans.
They will fluctuate up and down each quarter. On the first quarter last year, we have some very positive unrealized effects. I wouldn’t pay too much attention to those unrealized effects, but rather the slide will show later on the cash and debt in the group on external level. Tax cost is lower that we are not in Taiwan this quarter where we paid tax on the operation. Final slide from my end is the group capitalization per first quarter twenty five.
As you remember from the fourth quarter presentation, we presented then the capital allocation framework, which is closely linked to our financial policy. I’ll not repeat the financial policy and the capital allocation framework in this presentation, but rather spend time on the figures. On the figures, there are no material changes from last quarter, but it just confirms the policy. If we look at the 100% owned entities on the top, we have at the end of first quarter a cash position of close to 5,200,000,000.0 and an external debt of close to 3,500,000,000.0, so a net cash of slightly more than 1,600,000,000.0. And as you see, the subsidiaries control 100% of Bonnour are all net cash positive, and cash and external debt in Bonnour is matching around 3,000,000,000.
Where we have significant debt is in renewable energy, and that is related to the two joint ventures in Scotland, where we have optimized the capital structure according to the financial policy and the capital allocation framework by taking in very competitive short term, long term project debt, and also competitive priced equity by partners. So there we have a net debt position of four point close to 4,400,000.0 on the two joint ventures. And on the wind service, where we don’t control 100%, which is UWL, Global Wind Service and BlueTurn, cash and debt is fairly matching. We have presented in this report a note eight where you can see the effect of UWL going out of the balance sheet. So here, it’s included and it’s also included in the numbers in this quarter.
It will be go out in the second quarter. And from the note date, you can see what will go out on the asset and the liability sides from UWL going forward. My final remark on this slide is very important to link this to the policy and that we walk as we talk when it comes to the numbers related to the policy. So by that, back to you, Annette.
Annette Olsen, CEO, Bonnour: Very good. First company to present is Fred Olsen Renewables with CEO, Sofia Olsen, Jepson. Thank you.
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: The highlights for this quarter for Fred Olsen Renewables is that production is unfortunately below estimates due to low winds and technical issues. We’ve also seen the construction of our two ongoing wind farm projects is progressing well and that the prior power prices have reached a two year high, but might be weakening in the short term. You’ve seen this slide before, it shows all of our projects and the pipeline, no highlights there this quarter. However, I could mention that the development pipeline is progressing well. Over to the market.
On the right hand side is an overview of the power prices in the markets that we are in. We have seen that the average prices reached a two year high in February. And as mentioned, there is a possibility for a weakening in the short term. I think in general, we see that when exiting a winter season, there is a lower demand and the demand that this or the residual demand would then increasingly be covered by cheaper renewables. So the prices will then more or to a greater extent be affected by resources like mostly solar and hydro going forward.
We do also see that there is a potential impact on prices by the tariffs introduced. Also industrial activity, especially in Germany, which is a motor in Europe and by potential increased geopolitical uncertainty. Over to production and to give you some more details there. The generation was below estimates, mostly due to low winds in Scotland and Norway, curtailment and downtime. We have seen significantly reduced turbine availability on our wind farm, Crystal Rig 1 close to Edinburgh.
I think we are together with our service provider working very hard to restore production levels and to establish a reliable timeline for full recovery. The Midhill Wind Farm, which I talked a bit about last quarter, was back in operation on the January 25 after an external transformer failure, and we have seen negative prices in Sweden in periods. Hence, Verboliden and Hoegh Galleden have been stopped. Just to give you an update on the construction projects that we are progressing, Windy Standard 3 is progressing well. We’re building out 88 megawatts of wind power here, and the tree felling is progressing together with a an establishment of a construction compound.
Moving over then to Crystal Rig 4, which is a bit more progressed in the construction. Here the all the anchor cages are installed. This is the base for the foundation, the gravity based foundation, and we have done most of the concrete pouring of the foundation. We’ve added a picture of a toad in this slide, because I’m quite amazed traveling to all of our wind farms of the continuous environmental measures that we are doing both on construction projects, but also in on the operational wind farms. And in this example, we there is a toll migration ongoing, so we close the road to make sure that they can pass safely.
To sum up, production is below estimates. The power prices have reached a two year high, and we see that the construction of Crystal Rig four and Windy Standard three is progressing well.
Annette Olsen, CEO, Bonnour: Thank you, Sophie. Next Lars Bendy presenting Fred Olsen Seawind.
Lars Bendy, CEO, Fred Olsen Seawind: Thank you, Annette. Yes. And worth highlighting for the Wolfin Seawind in this quarter is that we for Armour War project have now more clarity on the grid situation, which I’ll come a bit back to later. Also worth highlighting is that we see continued support both in UK and Ireland for offshore wind. Especially in Ireland, we’ve seen a new government come into place in Q1, which I’ll also touch a bit on later in my presentation.
If we start in Scotland and Mewarra, as I’ve alluded to before, we have submitted our consent application last year in Q4. We’re naturally following this very close. We have an expectation of an onshore consent award this year and offshore next year. A project like Mibor in The UK needs two conditions to be fulfilled in order to bid into a CFD auction. One of them is to have a final consent, and the other is to have a grid connection.
Therefore, also positively, we’ve seen this quarter that our grid position is now clear with a regular connection to shore. On the back of that, we are fully engaged in The UK connections reform in order to get prioritization for our project. Positively, the UK government is now working with really getting grid to the projects as they progress. And with a project like Mjobor, that is one of the front runners, we are naturally positioning ourselves to be in that queue. Overall, we’ve seen that progression of grid, progression of the CFD regime in The UK is progressing well.
It gives us faith in the market, it gives us faith in Mewborr being a good project to develop for floating offshore wind. And we remain focused to be one of the first movers in floating offshore wind with our project in Scotland. If we then move to Ireland, we have also on Cotlin submitted a consent application last year. We are following that close, and are naturally in close dialogue with both stakeholders and authorities on that. As I mentioned in the beginning, in Q1, a new government took office.
We see a government which continued its support and ambitions within offshore wind. Naturally, for us, that is key and very important that we have a continuation of the policy from before, but also a very predictable and stable policy within offshore wind. So we are naturally happy to see that. We also had a step forward for our project on a more detailed project level, since we now have a foreshore license in place. A foreshore license is basically a permit to do site investigation.
And in order to progress the design of the project, we need to do further site investigation as a natural part of the development schedule of Kotlin project. This naturally ties very well into the other work that’s ongoing in the project where we are preparing for procurement, we’re preparing for getting the scope and design in place on the back of the final consent determination on the project. So overall, in both Scotland and Ireland, we’ve seen good steps forward on our projects. And we see also environments with continued support for offshore wind. So with that, back to you, Annette.
Annette Olsen, CEO, Bonnour: Thank you. Feral Wedholt will now present REDOCENT eighteen forty eight.
Feral Wedholt, REDOCENT 1848: Yes, thank you. So we will do an update on floating wind, both on the market, seen from the bottom up from the technology developer, and then we’ll look a bit on this floating solar market and status on our project, Aviso. So, yeah, so next one, please, Ejorn. So on the market for floating wind, we see that there is currently a dynamic in that market, and that dynamic is really driven by some of the projects coming to a stage of maturity where key decisions really have to be taken. And we see that The UK projects are leading the way and that is key decisions on technology, that is key decisions on supply chain and on contract structures.
So we see a couple of effects of this, which is relevant for us. One is that we see that more parties are looking at the turbine floater as one unit. And that has been our view for a while. And we also see that the larger EPI wraps are being pushed and that favors the larger EPI companies that we need to relate to. So in this stage, conceptual solutions really have to be brought forward to documented facts.
And for our solution, Brunel, we see that as a benefit. Brunel has a basic design certificate at mature design level, really meaning that Brunel’s performance is documented and verified by a third party as a fact. We also see that implementing a 15 megawatt turbine is a big turbine to implement on a floater. And from our perspective, started with a 15 megawatt turbine from the start is a benefit. And that also gives Brunello good scaling capabilities.
So when you come to these floaters, there’s been quite a lot of them introduced over the last years. So that’s been a market with a lot of competition. So the question is, is there any consolidation? From our side, yes, there is, but not necessarily name, but certainly in function. So from our side, we have looked at the semi subversible concept from the start, and we believe in that.
So that’s a prerequisite for this slide. We see I’ve highlighted two features here, which I think is important. One is that we see more and more designs being balanced. So that means that the buoyancy point and the gravity point needs to be aligned for better motions. For a fixed board, single tower design, then most of these designs are moving their tower into into the center.
And you see that on most of these concepts now that they have a tower centered design. Another one is also related to these huge turbines that you need stiffer towers. That means also heavier towers. And we see the concept of so called stiff stiff towers being implemented more and more. So from our side, Brunel, Brunel has been balanced from day one and having dual towers being a single point more dual tower design that allows us to use the more traditional soft stiff, so called soft stiff towers that’s used in both fixed wind as well.
So that concludes the perspectives on floating wind. Then we move over to floating solar. And looking at the market there, then we see that this market is growing. When it comes to utility scale, large developments, then Asia is really leading the way. It’s been Philippines, it’s been Indonesia, and it’s been India initially.
But we also see now further countries like Thailand and Vietnam announcing projects for large scale floating solar. We see growing attention for smaller and medium sized developments in replacing generators on our communities. And Europe is also moving forward, but it’s more slowly. In North Eastern Europe, North And Western Europe, we see that grid connection is key for the business case. So that favors local offtake and it favors hybrid setups.
In the South And South Eastern Europe, with a better capacity factor. We have a better, more flexibility in the business case. So that is a positive. And then we see a large potential in hybridization with hydro dams and then particularly in areas where you have dry and wet seasons. So finally, moving on to the next slide, then a couple of points as a status update on our project BRISO.
We have this quarter completed quite a comprehensive tank test at Sinterfortune 29, which has confirmed expected motions, integrity and mooring loads. And then we see that we get good cost reductions on working the supply chain and through configuration management of our system. So that was it. Thank you.
Annette Olsen, CEO, Bonnour: Thank you. Okema Nuren, CEO of Fred Olsen Winter. Please.
Okema Nuren, CEO, Fred Olsen Winter: Thank you, and good morning to everyone. First quarter, I think, was a step back to a more normal quarter. We had vessel coming out of plant yard stays, so activity increased. On the market, we continue to see the same trends that we are focused on for the last year. There is limited vessel capacity available medium terms, but we see a volatility in demand side, primarily driven by the challenging we see in the offshore wind value chain.
So that is creating a somewhat more volatile market. If you then go over to the activity in the quarter, so we had bolt on that completed yard stay in the first half of the quarter. It was strengthening the half of the vessel to make a more generic sea fastening for the fifteen, sixteen megawatt generation turbines. Then it went straight on to on contract with Saipem preparing to be part of a monopod drilling campaign on the Kurzai project. Brave turn that commenced finally the energy project early January.
I’m very proud to say that this is this is a tricky site during the middle of the winter, and we completed ahead of P50 the program. Just a little testimony about the competence in the organization and the vessel post upgrade. That vessel will now most likely go into yard late this quarter to do the same upgrade as we did on Oton. BlueTurn remained on the Vestas O and M campaign until the February and before it went into yard. It has been it has been working more or less back to back for the years, so it really needs some maintenance.
That yard stay ended early May and the vessel is now mobilizing to do a O and M campaign for Siemens in May. That is a replacement for a cancel turbine contract because the project, which was supposed to install turbine for, has been delayed by two years. Bluen started on the Hai Long project, installing the first turbines late this quarter. If we then go over to the financials, as I said, we are taking a step towards more normalized activity. Two vessels coming out of yard.
So we had 57 contract utilization. That means that we were able and we sold 57% of the days in the quarter. And that was basically all the days that we had available apart for transit and yard. When we was in operation, we had 98% commercial utilization. Again, strong proof of a strong operational quarter, yet another strong operational quarter.
On the financials, we had revenues slightly north of 46,000,000 and an EBITDA of close to 25,000,000 for the quarter. Then we go over to the market and the backlog. I think if you look at new contract award in general year to date, it has been somewhat below normal pace. If you look at new. Turbine installation contracts, We have seen several contracts award in general, but most of them are linked to delayed project or major O and M campaigns on the back of quality issues with the with the turbine.
For Wick secured one contract this quarter and that was more a standard O and M contract for Blue Turn four hundred days in 2025 and 2026. On the market side, again, back to what I said initially, there is limited list availability the next years, but there is some volatility in demand. There is. And the market will then be very affected by, again, the timing of this volatility in demand in the medium term. If there is a match between a vessel and demand, you will see some fluctuations in the dayrates.
Longer term, I think we have pointed out, we see that the last years the offshore Belgium has an issue. We have seen costs increasing. There has been capacity and there has been quality issues that is, of course, impacting the business case to the developers, which again shift demand out to the right when they are working to try to get the business case This has been the case for two years and has always been part of this business. But what we have seen maybe is that that trend has accelerated somewhat the last month.
On the positive side, I think we continue to see high tender activity, especially if we’re looking longer out in time. So I think that was the prepared remarks from my I’m happy to answer your question afterwards.
Annette Olsen, CEO, Bonnour: Thank you. So we are now moving into the session of questions and answers. So please, do you have some questions?
Speaker 6: Thank We will now go to the first question. And your first question today comes from the line of Daniel Haugland from ABG Sundal Collier. Please go ahead.
Speaker 7: Hi, everyone. Thanks for taking my question. I actually have a couple of questions, but I think I’m going to limit it to two at first and then I’ll get back in line. So my first question is, we’ve all kind of seen Erste’s decision to halt the Horn C4 project this week. They are citing increased costs and supply chain risks on execution of that project.
Now that can obviously be project specific, but I was wondering if you can comment on if anything has changed with respect to cobbling or whether you’re kind of seeing any of similar effects in the supply chain and cost picture. That is my first question. Thank you.
Annette Olsen, CEO, Bonnour: Yeah, I think Lars can answer this.
Lars Bendy, CEO, Fred Olsen Seawind: Yes. Thank you for the question. I think firstly, it’s important to appreciate also what you said yourself that are very different. In nature, they have different seabed conditions, they have different distances to shore, different wind profiles, different designs, all of that results in different EVEX, CAPEX and profiles. And projects are also under different regulatory regimes and different CFD regimes, which result in different revenue profiles.
So to really have a meaningful opinion on Erste’s situation is very difficult. And it’s also very difficult to compare the situation is in with Kotlin. What I can emphasize is that we remain confident in our Kotlin project. Kotlin is a fundamentally strong project. We have been very clear on a flexible development strategy for Kotlin, where we will be able to progress that project faster, if we feel that is the best opportunity or alternatively delay it.
That allows us to limit pre FID commitments to a minimum. It also allows us to keep a very cost disciplined project profile. On one side that protects the project. Secondly, it also allows us to capture new value by introducing potential new technology down the line to increase the value of the project. And we remain confident in that strategy.
So I think I hope that answers your question.
Speaker 7: Yeah, thank you for that. And obviously, wasn’t alluding that these projects are similar in that sense. I think on the CFD, the prices look a bit same, but other factors are obviously different. My second question is that in your accounts, you write that FOS has issued loans reflected under other financial fixed assets to the Codling JV. So two questions there.
Can you say approximately how much Bonnour has lent to the Codling JV? And second, what is the carrying value of the equity stake of the Codling JV on your accounts now? Thank you.
Annette Olsen, CEO, Bonnour: Is that a question for you, Riccard or Lars?
Riccardo Labo, CFO, Bonnour: It’s maybe a question for me, but we need to take some time to get to the exact figures. So we’re not prepared to do that on this call. But but, yeah, we’ll have to come back to that.
Speaker 6: Yeah. Okay.
Speaker 7: Okay. I understand. Would be just at least be interesting to know approximately kind of the amounts at a later stage when you have those numbers just kind of yes. Okay. Thank you.
I’ll get back in line.
Speaker 6: Thank you. Your next question comes from the line of Helena Brondeau from DNB. Please go ahead.
Speaker 8: Yes. Hello. Thank you so much for taking my questions. I would just start by adding to Daniel’s previous question when you brought up Juan Civre and Aristad’s comments about like a more expensive value chain, higher risks, etcetera. And I fully understand that, that does not necessarily apply to Codling II.
But I was just wondering in terms of what do you see in the supply chain industry these days? Where do you sort of see the largest bottlenecks, if any?
Annette Olsen, CEO, Bonnour: I think there is a lot of things that is happening in the value chain, Larsson.
Lars Bendy, CEO, Fred Olsen Seawind: Yes. Yeah, I can maybe thank you for the question. Can maybe try to add on to my question from before and say, well, I think got a safety, I think roughly eight months ago, and now they then said they cannot progress the project. That is unfortunate for the industry, of course, overall, that we have these project delays or cancellations as Hakan Mauna also alluded to. When we look at the supply chain now, it’s correct.
We see supply chain being tight in some places, and we see it being less tight in other places. It is very dynamic and it is volatile as Hakan Maun also said. On the positive side for a project like Kotlin, we’ve also seen, for example, a slowdown in the American market. That’s potentially not positive for the industry as such, but for a project that is looking for capacity. That will have an impact, of course, on that assessment.
So I think it’s very difficult to comment specifically on where is the supply chain tight. We monitor it very closely on Kotlin. We see in the period we are looking at that there is supply available for a project like Kotlin. We have a large scale project, which is interesting for the supply chain. And I will say that over the last year to year and a half, it’s probably our estimation that the tight supply chain has become a bit less tight than it was actually earlier.
To put a comment to that.
Annette Olsen, CEO, Bonnour: And maybe also to add that when you have a tight supply chain, there are also developments going in the positive direction on the technology side.
Lars Bendy, CEO, Fred Olsen Seawind: Exactly. We see new capacity coming into the market, and we see new technology coming into the market. And back to the point I said before, what is very important from a development perspective is that we are flexible on how the proof date. What we want to avoid is being tied into a schedule where we have to make or forced to make short term commitments, because then you can end up in a situation where you are positioned poorly towards the supply chain. And that’s been our strategy, which I’ve repeated a couple of times and which we’ve had focus for now actually for a while in for ULTON and SEWEN, and that will continue given the market volatility as it is now.
Speaker 7: Okay,
Speaker 8: thank you. Thank you so much. I have one more question on the onshore side. I have noticed that the topic of tonal pricing has come more up in The UK these days. And I was wondering if you could shed some light on how you assess this potential change in policy and and how you sort of assess the risk for your Scottish wind farms given given their location inside The UK?
Annette Olsen, CEO, Bonnour: Sophie, this is a big debate. I don’t know if you can give a quick question to this. Yes.
Speaker 8: Thank you. Definitely.
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: The discussion of Sonal play pricing and locational marginal pricing is part of the review of electricity market arrangements that’s going on currently in The UK. That is a big debate or sort of topic and reform. And I think we see we are following that debate closely, of course, and and influencing in whatever way we can. We are taking part of industry bodies and different groups and also talking to senior politicians directly. We have been very clear with the government and others in our views that introducing solar pricing is negative in The UK in terms of what they want to achieve in the Clean Power Act 02/1930.
It will increase uncertainty and it will also lead to less build out of renewable energy. So that is sort of the very helicopter view. I think it’s too early to comment specifically on how it will impact our specific wind farms, but we are, yeah, quite firm in our view that we are recommending the the officials not to to implement this reform.
Annette Olsen, CEO, Bonnour: Thank you.
Speaker 8: I understand it’s early days, but have you gotten any signals about any like potential grandfathering of existing projects? Because at least my view is that it’s sort of crazy to change the framework conditions after investments have been made.
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: I think it remains too early to comment or no actually about that. We have received signals that they are looking to close or decide on this onward pricing before the AR seven round, which is the allocation round seven, which is the upcoming contracts for difference auction in The UK. So that is at least a positive thing that will give certainty to the participants of that auction.
Speaker 8: Yes, thank you.
Speaker 6: Thank you. Your next question comes from the line of Sindra Serbai, Arctic Asset Management. Please go ahead.
Speaker 9: Yes. Hello. Good morning. Just two topics from or two questions from my side. First, forecast for offshore wind installations have continued to decrease nearly quarter by quarter for the last two years.
Most recently, Urstel becomes more than two gigawatts project. To put it bluntly, can you promise that you will not contract any vessels now? Have you shelved any plans of possibly doing that?
Annette Olsen, CEO, Bonnour: Welcome, Magnus. This is a perfect question for you.
Okema Nuren, CEO, Fred Olsen Winter: Good morning, Sintra. I assume that you’re talking about a new build turbine installation vessel. Is that correct?
Speaker 7: Yes. Yes, of course. Yeah.
Okema Nuren, CEO, Fred Olsen Winter: I think as part of the Bonneur group and the Bonneur policy, we never give forward guidance on what we are doing. But I think, as we have said that we are closely following the situation, we have a long term strategy to remain a leading player within this segment. We have a strong operational platform, we have a strong financial platform, are debt free, and we can take opportunity when they arise. So I don’t it’s the same answer. We are closely reviewing the situation.
Speaker 9: Okay, thanks. Secondly, on renewables. Once again, there is, let’s say, some technical issues. I’m aware that the transformer issue was not your fault, so to speak. But four or five of the plants are no more than 20 years old should be should we be worried that, let’s say, the technical conditions are starting to put, let’s say, pressure on reliability?
And would you expect repowering or doing something to mitigate that?
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: Thank you. It is correct that our wind farms is getting older. And I think that is actually quite an exciting phase for us because it means that we are moving in to the full life cycle of projects where we are now looking at repowering to newer the potential of newer, larger turbines replacing the existing ones, which is quite an exciting prospect. So we are maturing these prospects of repowering and will, of course, comment on any projects as they are in that stage. I think with regards to our standards of operations, we have high standards of operations.
I do. It’s like the machine rooms in the vessels actually where you want everything to be spic and sound and very clean. And I’ve actually been climbing quite a few turbines myself lately and see that even though we have older turbines, they should still look ship’s shape and be operating well. So that is the sort of standard that we are striving for and that remains a key priority for us and focus area at the moment.
Speaker 9: Okay. Thanks. Finally, one question more for renewables. The situation in Northern Middle Northern Sweden with persistently low power prices, would you say that your, let’s say, medium term price expectations are lower now than a couple of or when those plants were already decided to build?
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: Thank you again. I think in general, we see Northern Sweden as a very attractive market for onshore wind in terms of the wind resource, lack of people living there and the stable regulatory regime, which is quite positive to onshore wind. So I think the low prices and extreme capture discounts that we see now is due to the trapped power and these sort of lack of grid transmission between the Northern and southern zones. We know that the TSO, the Svenske Grafnet has quite a lot of focus on this and are looking to build out transmission lines between the zones. And we do our belief is that if they’re able to sort this out in the longer term, Sweden, Northern Sweden will be a very attractive market going forward.
Speaker 9: Yes. And do you have any penalties when you can turn off the turbines rather than taking the cost of negative power prices, right?
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: That is correct. And that is what we have done this quarter. I think it’s also worth mentioning that we are looking into entering into ancillary services where you are then getting paid, for example, to when you are curtailing that you might start some production in order to balance the grid. And those in balancing mechanism markets are proving quite attractive in Northern Sweden or Sweden at the moment. So that could potentially be a new revenue stream in the future.
Speaker 9: Okay. Would that be kind of a short term arrangement? Or is it like longer term contract where you reserve capacity for the grid operator?
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: You reserve capacity longer term, but you have to do some work in the beginning in order to enter that market. And once you are in, you can sort of help balance the grid on a general basis.
Speaker 9: Think probably. And that would be a fixed tariff plus money for the power delivered?
Annette Olsen, CEO, Bonnour: I think probably this is a bit detailed right now, But certainly we can come back. Yeah.
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: Are we can definitely go more into detail about that.
Speaker 7: Okay. Okay. Excellent. Thank you.
Speaker 6: Thank you. Your next question comes from the line of Anders Rosenlund from SEB. Please go ahead.
Riccardo Labo, CFO, Bonnour0: Thank you. I have a couple of questions. My first question is on the United Wind Logistics, which you sold and where the sale was closed and you provide some details in the Note eight of the report. But could you tell us how much revenues UWL generated in 2024? And how much of that is in your 2024 revenue reports or revenue line?
Riccardo Labo, CFO, Bonnour: Morning, Anush. Sorry, we cannot disclose that. We have a long term partnership with our partner, and we don’t disclose the details on revenues and so on. But what we are trying to provide you with is the balance sheet effects of Note eight, and that is as far as we can go. Sorry about that.
Riccardo Labo, CFO, Bonnour0: Okay. My next question is on the renewables segment. Were there any high price levers in Q1?
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: No. And they were only very negligible. I can’t pronounce that word. So no.
Riccardo Labo, CFO, Bonnour0: Okay. Well, thank you. I’m not sure how to pronounce Levis either, so that’s that’s fine. On the Blue Tern, has the crane on Blue Tern been upgraded? Is it is or is am I mistaken assuming that that is the last vessel to potentially be upgraded and broadened?
Okema Nuren, CEO, Fred Olsen Winter: Oh, I think you are correct. The crane has not been upgraded to do the 15 megawatt generation. There is a plan and a possibility to do it. But I think for us, it’s more an option if we select to do it. Again, that’s more strategy and capital allocation and the market, of course.
Riccardo Labo, CFO, Bonnour0: And given the order backlog for ’25 and ’26, there you’re not assuming that that will take place during ’25 and ’26? Or
Okema Nuren, CEO, Fred Olsen Winter: I think I can just if you look at the lead time to get a new crane, that is quite long.
Riccardo Labo, CFO, Bonnour0: Okay. Thank you.
Speaker 6: Thank you. Your next question is a follow-up question from the line of Daniel Haugland, ABG Sundal Collier. Please go ahead.
Speaker 7: Hi, again. So Richard, I have one question for you. Now that you sold the UWL and the cash position will kind of be even better than it already is, Do you and I think I asked a similar question on Q4, but do you have any updated comments on what kind of opportunities you see for capital allocation going forward?
Riccardo Labo, CFO, Bonnour: Yes, thank you for that question, Daniel. Yes. There will be well, we closed the transaction in in April. And obviously, then we have received the funds for our shares. I would say in the longer term perspective, if we go back in history, we have now been operating for close to a hundred and eighty years.
We have to be and also according to our financial policy and capital allocation policy, we have to be resilient both to cater for downturns, but also be able to grab the opportunities that may arise going forward. So in that respect, close to 600,000,000 up and down on the cash, which is approximately the cash proceeds from UWL of shares and shareholder loans doesn’t make that much of a difference into that. We have to remember that we are positioned in growth industries, which are very capital intensive. And just an example now, the two projects that renewable energy have undertaken, Chris Rig four and Windy Standard three, those are gross CapEx of 3,000,000,000. An installation vessel that we have discussed is a CapEx of 4,000,000,000 to 5,000,000,000.
So in this respect, I don’t think the 600 on UWL really moved the needle in any direction when you look at this bolt up against our policy or long term positioning, and also the CapEx ticket item of the industries we’re in.
Speaker 7: Okay. Thank you.
Speaker 6: Thank you. Your next question comes from the line of Helena Vondbro from DNB. Please go ahead.
Speaker 8: Yes. Thank you for taking our second round of questions. I have one more question related to the wind farms in Scotland. I see you have three concentrated wind farms. And during the previous AR6, you bid in two projects into that one and got a quite good price, I would say.
So my question is, do you plan to what are your plans in terms of AR7? Are you planning to bid in these projects? And are they ready to bid with the concerns in place?
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: Thank you. I think I will comment on whether we bid and possibly have one if and when that is done. But what I can say is that what we do see with these new or upcoming allocation rounds in The UK is that in order for the UK government to reach their goals for 02/1930, the upcoming allocation rounds will have to be quite attractive. And I think The UK is a main market now in Europe focusing on renewables, and that is very attractive. Attractive.
Speaker 8: Thank you. And I also just wondered if how you sort of look at the possibility of bidding in potential repowering projects into these rounds. Is that a possibility for you?
Sofia Olsen Jepson, CEO, Fred Olsen Renewables: Yes. Repowering projects can also be built into bid into the CFD rounds as they are basically new projects just on being built on sites where there have been wind farms before.
Speaker 8: Okay, thank you.
Speaker 6: Thank you. There are currently no further questions. I will hand the call back to the room for closing remarks.
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