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Eimskip EBITDA up 8.6% in Q3 2017
Gylfi Sigfússon, Eimskip President and CEO:
“The third quarter 2017 is the company’s largest quarter in terms of revenue and EBITDA since 2009. Revenues were EUR 177.0 million, up by EUR 42.9 million or 32.0% from last year, largely explained by new acquisitions, volume growth and increased freight rates.
The EBITDA results are in line with our expectations, in the amount of EUR 19.3 million or up by 8.6% from last year. Net earnings for the quarter amounted to EUR 8.8 million, down by EUR 0.6 million from last year, mainly reflecting adverse currency exchange fluctuations year-on-year of EUR 1.0 million.
Liner services revenue in the third quarter amounted to EUR 112.2 million, up EUR 12.8 million or 12.8% compared to 2016. The volume in the North Atlantic sailing system grew by 3.2%. Imported volume to Iceland continues to grow substantially while the export volume is stable. Exports from the Faroe Islands remain strong but imports have decreased.
At the same time the company faced a decrease in volume on the northbound in Norway while the southbound volume was stable. Liner services EBITDA for the quarter was EUR 13.8 million, down by EUR 0.3 million or 2.1%. The decrease in EBITDA is largely explained by lower activity in Norway and higher IT expenses, with implementation of new systems and additional cost related to changing the service provider for the group’s IT systems.
Forwarding services performed well in the quarter, with 50.8% volume growth. Revenues were EUR 64.8 million, up EUR 30.2 million or 87.1%. Forwarding acquisitions accounted for 67.8% of the segment’s revenue growth and 19.3% came from organic growth. EBITDA from forwarding services was EUR 5.5 million, up EUR 1.8 million or 49.0%. Thereof EUR 1.7 million came from new acquisitions which are performing well.
The company’s revenue for the first nine months amounted to EUR 497.0 million, up EUR 123.6 million or 33.1%. Transported volume in the liner services grew by 3.2% compared to the first nine months last year and the forwarding volumes were up 40.1%. EBITDA for the first nine months was EUR 45.3 million, up EUR 1.7 million or 4.0% from last year’s EBITDA. Taking into account the EUR 2.3 million non-recurring items in the first quarter of the year, adjusted EBITDA was up EUR 4.0 million or 9.2%.
As a part of its organic growth strategy, Eimskip will further strengthen its Trans-Atlantic services by offering new weekly services between Northern Europe and North America. The third vessel has been added to the Green Line as from week 47. Eimskip’s Trans-Atlantic volumes are three times larger than they were in 2009 and in 2017 volumes are up 33%. This volume growth, together with a new short-sea agreement with the international shipping company CMA CGM between Halifax, Nova Scotia and Portland, Maine in the US, creates foundation for the weekly services.
It is a big step for the company to start weekly service and it opens doors to a new customer base that demands weekly service. We have added a harbour crane in Argentina, Newfoundland and Labrador, to allow us to use two gearless vessels on the Green Line that will lower the operating costs of the vessels. At the same time, we are adding one harbour crane to the port of Sundahöfn, Reykjavík to further increase productivity.
Eimskip signed an agreement with GAMMA Capital Management in November to establish the inventory financing company Krít ehf. With the agreement, Eimskip is opening up new opportunities for customers of value added services by connecting logistics services with inventory financing. The company is using its IT systems to connect with the financial services of Krít ehf., creating a fast, efficient and secure financing solution for customers.
"We are pleased to have finalised a favourable agreement with the Nordic Investment Bank (NIB) to purchase three buildings in Eimskip’s terminal in Reykjavík which the company has leased from NIB since 2009. These are the office building for Eimskip’s headquarters, a dry warehouse and a cold storage facility in Sundahöfn. The total size of the assets is 10,440 square meters and the purchase price is EUR 8.3 million. Payment for the assets and transfer of ownership will take place in the middle of 2019. The assets and the financial commitment are included in the balance sheet.
Eimskip continues working on organic growth and strategic accretive acquisitions to increase shareholder value. The recent acquisitions have been performing well, are accretive and adding shareholder value. The company’s strategy to grow by acquiring specialised forwarding companies has been working well.
Integration of these acquisitions is in process, creating a more powerful network and growth opportunities through new commodities, new trade lanes, cross selling and synergies. With the acquisitions, the company has also achieved other goals by increasing the proportion of asset-light EBITDA, generating higher return on capital and geographically diversifying revenues and EBITDA. The company continues to evaluate additional acquisition opportunities and vessel investments on an ongoing basis.
The EBITDA results for the first nine months are in line with our expectations. Volume in the company liner and forwarding system in the first six weeks of the fourth quarter are in line with our expectations. The company expects the Norwegian operation to get back on track after some challenges. Eimskip has been working on a restructuring project related to the operation in Asia.
Included in the forecasted EBITDA for 2017 is an estimated revenue transaction related to the restructuring project that is expected to increase the company’s fourth quarter revenue and EBITDA by EUR 2.5 million. The EBITDA forecast for the year 2017 is EUR 60 to 62 million, taking into account the estimated gain from the restructuring project.”
For more information:
Tel: +354 525 7202
Publication date: 11/24/2017
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