Eimskipafélag Íslands hf.
Financial Statement Release
Revenue growth 29.7% in first quarter 2017
EBITDA EUR 9.3 million, good organic growth and strong performance of new acquisitions but negative effect of fishermen strike
Revenue EUR 146.9 million, up by EUR 33.7 million or 29.7% from Q1 2016
Volume in liner up 3.0%; liner revenue up EUR 8.9 million or 10.7%
Volume in forwarding up 28.9%; forwarding revenue up EUR 24.8 million or 82.6%, majority coming from new acquisitions
EBITDA EUR 9.3 million, down by EUR 0.3 million or 3.3% from Q1 2016
Adjusted EBITDA EUR 11.6 million, up 20.5%, taking into account the strike in Iceland (EUR 1.5 million) and other non-recurring items (EUR 0.8 million)
Net earnings EUR 0.2 million compared to net earnings of EUR 1.8 million in Q1 2016
Equity ratio 56.6% and net debt EUR 50.4 million at the end of March
EBITDA forecast for the year 2017 unchanged, in the range of EUR 57 to 63 million
Gylfi Sigfússon, President and CEO
“Eimskip’s revenue in the first quarter 2017 grew by 29.7% compared to the same period last year and amounted to EUR 146.9 million. Of the growth, 18.2% came from new acquisitions and 11.5% from organic growth, despite the fishermen strike in Iceland affecting export volumes from Iceland. Organic growth came from increased transportation volumes and rising international freight rates.
The fishermen strike, lasting from 15 December 2016 through 19 February 2017, adversely affected the exported volume of fish and other supplementary services. EBITDA was EUR 9.3 compared to EUR 9.6 million in the first quarter last year. The strike negatively affected the quarter’s EBITDA by EUR 1.5 million. A fine imposed by the Financial Supervisory Authority in Iceland in the amount of EUR 0.4 million (which Eimskip strongly disagrees with and will refer to the Icelandic courts) was expensed in the quarter and cost related to acquisition projects amounted to EUR 0.4 million. Taking into account these non-recurring items, adjusted EBITDA for the quarter was EUR 11.6 million, up 20.5% from the previous year. The new group companies Mareco and Extraco are performing well, in line with our expectations, and contributed EUR 1.5 million in EBITDA for the quarter. Taking the strike and other non-recurring items into account the organic business grew by 3.8% in EBITDA, despite higher costs related to increased capacity in our sailing system and lower volumes in Norway.
Expenses grew by 32.8% compared to the first quarter 2016. The increase was mainly due to the addition of new companies to the group, salary cost, higher freight rates from the deep sea lines, higher fuel cost, expansion of capacity in the sailing system and the above mentioned non-recurring items. Net earnings for the quarter amounted to EUR 0.2 million compared to EUR 1.8 million last year, mainly due to EUR 1.0 million increased depreciation, reflecting increased investments.
The North Atlantic liner services revenue was EUR 92.1 million in the first quarter, up by EUR 8.9 million or 10.7%. The liner volume grew by 3.0% compared to the same period last year. Liner EBITDA for the quarter decreased by EUR 2.5 million, largely affected by the fishermen strike and other non-recurring items as explained above, amounting to a total of EUR 2.3 million. Forwarding services were performing well with volume growth of 28.9% and revenue amounted to EUR 54.8 million, up by EUR 24.8 million or 82.6%. Acquisitions accounted for 69.4% of the revenue growth and 13.2% came from other forwarding operations. EBITDA from forwarding increased by 113.1% of which 79.6% came from acquisitions and 33.5% from organic growth.
Eimskip and Royal Arctic Line in Greenland signed a cooperation agreement in January, subject to notification to and confirmation from the relevant authorities if applicable. At the same time, Eimskip signed a contract with a shipyard in China on building two 2,150 TEU ice class Polar Code container vessels, built in line with new environmental standards. Expected delivery is in 2019. The contract price of each vessel is approximately USD 32 million, where 40% are paid during the building period and 60% upon delivery. In April, Eimskip secured 80% financing of the contract price upon delivery of the vessels with the German bank KfW IPEX-Bank GmbH, in EUR with a 15 year term and a very favorable interest margin. Royal Arctic Line also signed a contract to build one similar vessel with the same shipyard.
Eimskip acquired 80% of the forwarding company Mareco in Belgium in January. The company is headquartered in Antwerp, has an office in Sao Paulo, Brazil and specializes in reefer logistics services, especially to West, Central and South Africa. Main commodities are seafood, chicken, pork and beef. Mareco transports about 32,000 TEU per year and its annual revenue is estimated about EUR 60 million.
Early in April, Eimskip announced the acquisition of a 51% share in CSI Group LLC, headquartered in Boston, USA for EUR 1.0 million. This strengthens Eimskip’s position in container management and costs, as CSI specializes in trading of containers. CSI’s annual revenue is about EUR 5.0 million, with approximately 10% EBITDA margin.
On 3 April 2017, the Norwegian Competition Authority rejected Eimskip’s acquisition of the Norwegian shipping and logistics company Nor Lines AS. Eimskip will continue to focus on strengthening its operations in Norway.
Eimskip continues to work on organic growth and strategic accretive acquisitions to increase shareholder value. The company continues to evaluate additional acquisition opportunities and vessel investments on an ongoing basis.
The first quarter was in line with our expectations, as outlined in February with the publishing of the 2016 financial results, including the expected impact of the fishermen strike in Iceland. The first quarter of the year is normally the slowest quarter in our operation. The EBITDA forecast for the year 2017 is unchanged from what was presented in February, or EBITDA in the range of EUR 57 to 63 million.”
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