Eimskipafélag Íslands hf.
Financial Statement Release
Eimskip announces Q1 2014 financial results
First quarter 2014 results are in line with the company's expectations
Operating revenue EUR 104.2 million, down by EUR 1.1 million from Q1 2013
Operating profit, EBITDA, EUR 6.0 million, down by EUR 1.2 million from Q1 2013, as a result of the new sailing schedule and adverse weather conditions in January and February
Transported volume in North Atlantic liner services up by 11.1% from Q1 2013
Transported volume in reefer forwarding services up by 13.4% from Q1 2013
Equity ratio was 64.2% at the end of March
Forecasted EBITDA for the year 2014 unchanged, in the range of EUR 37 to 41 million
Gylfi Sigfússon, President and CEO
”Results of the first quarter are in line with our expectations and it is positive to see that volume in the company’s transportation system is growing. Transported volume in the North Atlantic liner services grew by 11.1% from the first quarter last year, with increases in all market areas except exports from Iceland due to a disappointing capelin season. Imported volume to Iceland has increased and we are seeing positive trend in categories such as vehicles and construction supplies which have been stagnant during recent years. Volume in the company’s reefer forwarding services increased by 13.4% compared to the same period 2013, mainly due to increased transport from Europe to Asia, but revenues were down due to decreased prices in certain markets. The company’s operating revenue amounted to EUR 104.2 million and decreased by 1.1% from the same quarter last year, reflecting the lower revenue from freight forwarding. The revenues were also affected by reduced services due to a strike action taken by a part of the crew of Herjólfur, the company’s ferry operation in Iceland. Finally, the company sold less equipment in the first quarter this year compared to last year and the prior year included the divestiture of specialized container equipment no longer needed.
The first quarter’s EBITDA amounted to EUR 6.0 million compared to EUR 7.2 million in the same period 2013. Eimskip’s first quarter is seasonally the quarter of the year which contributes the lowest operational profit. Also, several important items affected the results in the first quarter of 2014 compared to previous year.
Adverse weather conditions in January and February negatively affected our sailing schedule which increased use of fuel and cost of overtime. In late March 2013, Eimskip increased its capacity by adding a vessel to the sailing schedule, resulting in increased cost of the sailing system which was not reflected in the full quarter of the prior year. It is good to see that the increased capacity supports the volume increase in the first quarter this year. Lastly, lower exports of capelin combined with increased imports caused an imbalance and resulted in higher cost related to repositioning of empty containers.
As the company experienced with the ferry operation, some uncertainty exists in the labor market in Iceland. Certain important collective agreements are still to be finalized, such as with the Seamen’s Union of Iceland.
It is expected that the first of the two container vessels, which are currently being built for Eimskip in China, will be delivered this June. The first vessel will be given the name Lagarfoss and will be serving on the Yellow Line. The new vessel will replace one of the company’s current vessels. A new amendment agreement for the ultimate delivery date of the second vessel has not been finalized and we now expect that the delivery will not occur until 2015. The delay of delivery will neither affect the sailing schedule nor services to Eimskip’s customers.
Eimskip continues to evaluate its external growth opportunities to strengthen its current position in markets outside Iceland and in line with the company’s vision of being a leading transportation company in the North Atlantic. The company continues working on preparing dual listing of its shares in relation to these potential investments.
It is constructive to see that imported volume to Iceland is growing since it gives hope of improving economic conditions in Iceland. We expect to see exports grow in the coming months with the upcoming mackerel catch around Greenland, Iceland, the Faroe Islands and Norway.
We keep our EBITDA forecast for the year 2014 unchanged in the range of EUR 37 to 41 million. Transported volume in the North Atlantic in April and the first two weeks of May seems to be consistent with the volume growth in the first quarter.”
Gylfi Sigfússon, President and CEO, tel.: +354 525 7202
Hilmar Pétur Valgardsson, CFO, tel.: +354 525 7202
Erna Eiríksdóttir, Senior Manager of Investor Relations, tel.: +354 825 7220, email: email@example.com