Annual Financial Report

Wisdom Marine Lines Co. Limited

17 March 2026

 

1. Letter to Shareholders

Dear Shareholders,

Business Environment

Following a slowdown in activity during the second half of 2024, the dry bulk shipping market continued to retreat through the first quarter of 2025, hitting a nearly two-year low by late January. Despite a post-Lunar New Year recovery, the market softened once more throughout April and May. The stagnation of global dry bulk shipping rates can likely be attributed to uncertainties in U.S. economic and trade policies and the resulting disruption to global supply chain investment. However, as the market gradually adjusted its expectations, the global economic and trade outlook has become clearer. Trade in raw materials and grains began to pick up from July, which also led to a relatively stable performance during the traditional summer off-season in 2025. Moreover, due to a rush to transport goods at the end of the year, the index reached a new two-year high.

Due to considerations regarding trade imbalances and a growing emphasis on security concerns by advanced economies like the U.S., the focus of international politics and economics has shifted toward the revision of trade-related policies and regulations. Furthermore, U.S. concerns over Chinese re-export trade via third countries have made tariffs increasingly unpredictable. Consequently, related industrial investments have faced greater uncertainty, leading to a temporary reduction in investment activity. However, as the market gradually found ways to adapt, the overall economic landscape began to recover. While U.S. import demand remains stable, trade flows have undergone some adjustments. Additionally, the vessel surcharges once mutually imposed by the U.S. and China were discontinued due to their excessive impact.

Despite concerns over a weakening Chinese economy, its steel exports still grew by 19% in 2025, reaching 92 million tons. Although domestic demand has softened, overall steel production capacity remains supported. China's steady exports have also driven demand for dry bulk shipping; specifically, the rise in the Capesize Index is highly correlated with China's industrial activity. In 2025, China's imports of iron ore and bauxite increased, while imports of grain and coal saw a decline. However, China's related commitments to purchase soybeans from the U.S. have yet to be fulfilled, and there may still be business opportunities in the future.

Developments in Iran have once again heightened uncertainties surrounding maritime security in the Middle East. Combined with the expansion of shipping routes and shifts in regional trade patterns, the shipping market has faced increasing uncertainty since early 2026. In addition, peace between Russia and Ukraine has yet to materialize, and the resumption of transportation activities and reconstruction demand following a ceasefire remain unclear. Regional security conditions therefore continue to affect trade routes and shipping demand.

Regarding changes in environmental regulations, the EU's carbon tax and FuelEU have been launched and are now being stably implemented. Their impact on the shipping market has been gradually absorbed, as most shipowners and charterers have established stable cost-sharing models. The UN International Maritime Organization (IMO) carbon fee mechanism, originally scheduled for a vote in 2025, has been postponed, meaning it does not yet have an immediate impact on the market. Nonetheless, the advantage of energy-saving ships will continue to expand. There is still no consensus on alternative fuels.

2025 Business Results

In 2025, we added 1 newbuild ship, sold 10 ships, and added 1 ship under management. The number of ships in our fleet saw a net decrease of 8 and counted a total of 126 at the end of the year. The new ship is of the handysize type. The ships sold included 1 capesize, 1 supramax, 3 handysize, and 5 small handysize.

Due to a sluggish market in the first half of 2025, which gradually recovered in the second half, our annual revenue was US$542 million, a decrease of 14.6% compared to 2024.Operating profit was US$129.5 million, and the operating profit margin declined to 23.9%.

A total of US$44 million were recognized in non-operating profit and loss for the sale of 10 ships in the year. We continued to reduce our debt, with the debt ratio decreasing from 42.6% to 40.7%. In addition, we converted some of our loans into Swiss francs, which also reduced interest expenses from US$61.5 million in 2024 to US$42.6 million. The recognized exchange rate profit and loss was US$8.1 million due to the appreciation of the Swiss franc. The net profit after tax was US$126.3 million for the year, and the EPS were NT$5.27.

2026 Business Plan and Future Strategy

We expect to receive 8 newbuild ships in 2026. They are handysize bulk carriers and eco-ships that comply with the Tier III NOx emission standards. The ships were built by Japanese shipbuilding companies Namura, Tsuneishi, Imabari, and Onomichi, respectively, and are expected to be delivered separately within the year.

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.

Although the freight market fluctuated in 2025, newbuilding prices have not softened due to overall inflationary trends and full order books at Japanese dockyards. On the contrary, shipbuilding costs are likely to rise as new environmental regulations gradually take effect. As the backlog of orders from the post-pandemic period is being cleared, we will keep a close eye on the newbuilding market and continue to order energy-saving ships with the latest specifications. Given the impact of U.S.-China relations on the global shipbuilding industry, we will maintain our focus on reputable Japanese dockyards as our primary partners for new orders.

Despite persistent rumors of interest rate cuts in the U.S., current US dollar interest rates remain relatively high. In addition to maintaining the US dollar as the primary borrowing currency, we will also appropriately adjust the proportion of Japanese yen and Swiss francs in some ship loans. Although the Swiss franc appreciated significantly in 2025, there is a notable interest rate differential between it and the U.S. dollar. Furthermore, since most of our ship loans are long-term, we do not need to realize exchange losses immediately. Consequently, our exchange rate risk remains within a controllable range.

In addition to investing in energy-saving ships and phasing out energy inefficient ones, our medium- to long-term strategy includes a phased rollout of enhanced employee benefit programs to meet the needs of our personnel and boost our recruitment competitiveness. These initiatives include maternity subsidies, flexible working hours, KPI bonuses, and performance-based profit-sharing bonuses. Through these measures, we aim to strengthen our human resource recruitment and development, ultimately enhancing our long-term competitive advantage.

Click on, or paste the following link into your web browser, to view the associated PDF

http://www.rns-pdf.londonstockexchange.com/rns/9368W_1-2026-3-17.pdf

 

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