Gylfi Sigfússon, President and CEO
“Macro-economic conditions in Iceland remained challenging during the second quarter. Statistics Iceland reports that for the first six months of 2013 import and export volumes to and from Iceland declined by 4.8% and 0.5% respectively. Eimskip’s transported volume in the North Atlantic liner services increased by 2.0% from 2012 with increases in transport volume in the Faroe Islands, Norway and between Europe and North America, offset by a decline in Iceland import volume consistent with the Icelandic economy. Transported volume in the company’s reefer forwarding services rose by 5.4% from the same period last year.
Eimskip’s revenues came to EUR 108.1 million and EBITDA amounted to EUR 9.8 million for the second quarter of 2013. The results were adversely affected by the continued weakness of imports to Iceland and start-up costs associated with adding a vessel to service our new sailing schedule.
In March, Eimskip continued investing to position the company for future organic growth by introducing major changes to the company’s sailing schedule. The changes create new opportunities for Eimskip’s customers and new sources of revenue for the company. The new sailing schedule added weekly Icelandic coastal services, new port calls in the Faroe Islands, Scotland, Poland and the USA, and increased system capacity by 7.7%. The new coastal services in Iceland have allowed us to streamline our domestic transportation system by reducing the number of trucks in operation. Improved services to the Faroe Islands, by calling three ports, has resulted in an increase in transported volume. Eimskip now operates the most extensive containerized transportation system in its home market in the North Atlantic. The company continues to focus on marketing and selling its new sailing schedule.
Eimskip has increased its fixed cost by adding one vessel related to the changes in its sailing schedule. We see the consequences in the second quarter since it takes time to build volume and revenue to cover the additional costs. The changes of the sailing schedule have reduced the EBITDA by approximately EUR 0.8 million in the second quarter compared to last year.
The EBITDA comparison was also adversely impacted by a reduction in transported volume to Iceland. It is important for both the Icelandic economy and Eimskip that investment activities in Iceland start growing, that financial difficulties of Icelandic homes and companies will be solved and that an acceptable solution regarding the capital controls and currency restrictions in Iceland will be reached.
Although the Icelandic economy remains weak, the company has seen import volumes return to prior year level for the first six weeks of the third quarter. Based on our estimated market outlook for the remaining of the year we estimate the EBITDA of the company to be in the range of EUR 36 to 40 million.
Eimskip will continue to focus on strengthening and expanding its operations in the North Atlantic regarding projects related to serving the fishing and fish farming industry, heavy industry, oil and mining, as well as terminal services and infrastructure projects. The company is also evaluating potential opportunities in connection with future sailings in the North Atlantic.”
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