CMBT

Business Context and Reporting Period

This Form 6-K filing by CMB.TECH NV (formerly Euronav NV) reports unaudited financial results for the second quarter ended June 30, 2024, and the first half of 2024. The company is executing a strategic transformation from a traditional oil tanker operator to a diversified maritime group focused on decarbonization, dry bulk, container shipping, chemical tankers, and offshore wind. The name change to CMB.TECH was approved on July 2, 2024, with the ticker symbol changing from EURN to CMBT on July 15, 2024.

Key Financial Metrics

Dividends: The company paid $4.57 per share in Q2 2024 and declared an interim dividend of $1.15 per share in July 2024. Share buybacks totaled 8.02 million shares in H1 2024.

Material Changes vs. Prior Period

• Profit Surge: Net profit increased 14% in Q2 2024 compared to Q2 2023, driven primarily by significant gains on the disposal of tangible assets ($95.0M in Q2 2024 vs. $0 in Q2 2023). YTD 2024 profit more than doubled compared to YTD 2023.
• Revenue Decline: Operating revenue decreased 28% in Q2 2024 compared to Q2 2023, reflecting the strategic sale of older tanker vessels and a shift in fleet composition.
• Asset Sales: The company successfully sold three VLCCs (Nectar, Newton, Noble) and the container vessel CMA CGM Baikal in Q2 2024, booking approximately $94.6M in capital gains. The sale of the ship management subsidiary (ESMH) to Anglo Eastern generated a $20M gain.
• Fleet Expansion: Seven newbuilding vessels were delivered in Q2 2024, including hydrogen-ready CTVs and Newcastlemax dry bulk carriers, increasing assets under construction to $678.5M.

Guidance, Outlook, and Risks

Management Commentary: CEO Alexander Saverys emphasized that the transformation to CMB.TECH is "in full swing," highlighting the completion of older tanker sales, the addition of accretive time charters, and the delivery of future-proof newbuildings. The company aims to decarbonize the fleet through hydrogen and ammonia technologies.

Market Outlook:

• Tankers: Markets remain robust due to low fleet growth and geopolitical disruptions (Red Sea re-routing), though VLCC rates eased slightly in line with seasonality.
• Dry Bulk: Strong performance driven by iron ore and bauxite trade; Capesize earnings are up 181% year-over-year.
• Containers: Freight rates have surged to near-COVID levels due to Red Sea disruptions and port congestion, though a large order book poses a long-term supply risk.
• Offshore Wind: Demand remains high with record utilization rates for Crew Transfer Vessels (CTVs).

Risks and Contingencies:

• Geopolitics: Potential easing of sanctions on Russian oil or resolution of Red Sea tensions could negatively impact tonne-mile demand.
• China Economy: Weak consumer spending and high unemployment in China pose risks to global oil and bulk commodity demand.
• Supply Side: A large order book in the container sector could lead to a capacity glut if re-routing unwinds.

Investor Verification Checklist

• Asset Disposal Gains: Verify the sustainability of profits given that Q2 net income was heavily influenced by one-time gains on vessel sales ($95M) rather than core operating revenue.
• Capital Expenditure: Confirm funding sources for the remaining $2.69B in outstanding capital expenditure for 50 vessels under construction.
• Debt Levels: Review the increase in total borrowings (from ~$0.63B non-current in Dec 2023 to ~$1.89B in June 2024) to ensure debt service coverage remains healthy.
• Charter Backlog: Validate the $2.06B contract backlog and the specific terms of the new long-term charters adding $161M.
• Dividend Policy: Assess the sustainability of the high dividend payout ($5.72/share in H1 2024) relative to free cash flow after accounting for significant capex and debt repayments.