GYLFI SIGFÚSSON, PRESIDENT AND CEO
“After a challenging first quarter of the year 2018, the second quarter EBITDA results are more in line with our expectations. The company invested in a new weekly sailing system by adding two vessels to its sailing routes and is therefore going through a transformation period. It takes time and effort to build up volume on the weekly services but we are optimistic about our plans and the outlook for volume bookings are very positive for Iceland import and export, Trans-Atlantic trade and Short-Sea. In the second quarter, volume of cargo for the PCC factory in Húsavík, Iceland started to materialize which strengthens the volume on the Gray route serving the Iceland coastal route. In August, Eimskip secured more volume from UK, through new customers that will contribute volume growth on the Gray route. Trans-Atlantic volume on the Green route between North America and northern Europe and Scandinavia is continuing to build up, with around 44% growth in volume in the second quarter.
Volume in the second quarter of 2018 in Eimskip’s liner segment is in line with our expectations or up 2.9% in comparison with the second quarter 2017, driven by 6.3% growth in container liner volume in relation to Trans-Atlantic trade, Iceland and the Faroe Islands, despite much less car imports to Iceland. Revenues in the liner segment amounted to EUR 115.9 million, a decrease of 1.4% from same period last year, mainly explained by currency exchange rates, a drop in revenues in Norway and lower revenues from car imports to Iceland. EBITDA for the liner services was EUR 10.2 million compared to EUR 11.8 million in the second quarter of 2017.
Volume growth in the second quarter of 2018 in Eimskip’s forwarding segment was 10.9%, mainly driven by 36.6% growth in dry forwarding with revenues amounting to EUR 56.8 million, a growth of 6.6% from last year. EBITDA for the forwarding services was EUR 4.7 million compared to EUR 4.9 million in the second quarter of 2017.
Net finance expense in the second quarter amounted to EUR 0.9 million compared to EUR 2.8 million for the same period last year. The fluctuations in international freight rates, currency and bunker prices are always challenging.
The net earnings for the second quarter 2018 are similar to last years’ second quarter and amounted to EUR 4.6 million compared to EUR 4.9 million for the same period last year.
In August, Eimskip started new port calls in Poland and Lithuania during the mackerel season, responding to market needs. The new building program of the two specialized 2,150 TEUs container vessels is on track for delivery in the middle of the year 2019. The intended co-operation with Royal Arctic Line is being evaluated by the Icelandic Competition Authority. Eimskip acquired a 51% stake in an operating company, Tromsoterminalen AS, in Norway that has plans to develop both a terminal and a larger coldstore operation in Tromso. Tromsoterminalen is currently operating a 7,000 ton coldstore serving the seafood industry. In the first half of the year, Eimskip opened offices in Copenhagen and Las Palmas expanding its service network.
Volume and revenues from new customers in the liner system are expected to increase the profitability of the company for the remainder of the year. In addition, the company expects to realize gains from a number of short-term initiatives to improve the operation and its profitability, e.g. off-hire of one vessel in Norway, lowering of operational container cost, reduction in salary cost, fine-tuning of the sailing system, increased synergies between offices and other measures. The EBITDA guidance for the year 2018 is unchanged and according to current assumptions the results will be in the lower to mid-range of EUR 57 to 63 million.”