Highlights of Q1 2019 results
VILHELM MÁR ÞORSTEINSSON, CEO
“Eimskips’ performance exceeded expectations in the first quarter of 2019 and EBITDA for the period was the highest first quarter EBITDA since 2009. Revenue and volume increased in our transportation network between quarters and we were pleased to see a 9% increase in our container liner system. Results improved in the company's operations in Norway, despite less transportation volume which can be attributed to various factors, including lower operating costs as the company reduced the fleet by two vessels. Our Trans-Atlantic services experienced continued growth. The company replaced a vessel with a larger one on the company's North America shipping route, to respond to increased demand. Our international reefer forwarding services also experienced growth after a disappointing result last year. Our domestic operations in Iceland perfomed well and finally we have started to see positive effects of streamlining and integration projects, carried out in the past few months. After a period of external acquisitive growth in resent years the company is now focusing on improving current operation, by integrating work and project processes between units in the company's operations, in order to achieve increased profitability.
The company experienced losses after tax during the period, despite improved operating results largely due to a one-off tax expensed in the amount of EUR 3.4 million as the company lost its appeal to the Internal Revenue Board. The appeal queried the payment of income tax on foreign subsidiaries and the taxation of the parent company in Iceland according to so-called Controlled Foreign Corporation (CFC) regulations. The ruling is a great disappointment to the company and further impacts the competitive position of Icelandic merchant shipping parent companies as it is at odds with the merchant shipping framework in other countries.
We are pleased to have received the formal approval of the Competition Authority in Iceland for our collaboration with Royal Arctic Line, which has been under preparation for several years. The partnership will provide new possibilities for a more efficient sailing system as well as new transport routes and weekly sailings to and from Greenland. This creates opportunities for Eimskips‘ customers interested in increasing their business with Greenland. Two new 2,150 TEU container vessels are being built in China as part of the cooperation and delivery is expected by the end of the year. The new vessels are an important factor in updating the company’s fleet with more environmentally friendly and fuel efficient vessels.
Our management team and employees will continue to focus on improving current operation in order to achieve increased profitability.“