Eimskips’ performance was in line with expectations for the first six months of 2019. However, revenues and EBITDA in Q2 were slightly below expectations, primarily as a result of lower container liner volume to and from Iceland and the Faroe’s.
Following a good first quarter in Container liner services, operating results in second quarter were affected by lower level of volume in import to Iceland due to cool down in the Icelandic economy. In addition, after strong export volumes in the first five months of the year, volume declined materially in June and July but has started to pick up again in mid-August. The decline in export volume is mainly explained by the effect of no capelin season as seafood companies turned increasingly to other species until quota limits were reached earlier than last year. Furthermore, mackerel volumes from Greenland, discharged in Iceland for export were substantially lower than Q2 last year. Domestic services in Iceland such as trucking and warehousing were negatively affected by the lower volume in Q2.
The company currently has the container sailing system under review to adjust for the lower volume levels with the aim of lowering fixed operating costs, secure high customer service level and to pave the way for the Royal Arctic Line cooperation. The goal is to present adjusted sailing system later this year, the work is well under way and the company is confident that they will continue to operate the best sailing system to and from Iceland and the Faroe’s. The expectation is that the new vessels are to be delivered in Q4, slightly later than previously expected and the co-operation with Royal Arctic Line to commence in Q1 2020.
For the last months the company has worked on various projects with the aim of streamlining the operation, improving profitability and increasing productivity. Integration of TVG-Zimsen was completed in Q2 and we are starting to see the benefits in Q3. CEO Vilhelm MÁR ÞORSTEINSSON is pleased to see that the cost cutting measures in the head office divisions executed in Q1 started to materialize in Q2.
A decision has been made to evaluate a potential divestment of Seatours (Sæferðir), Eimskip’s subsidiary in sea related tourism. The company expects to have a decision on this matter in the next few months.
The Board of Directors has approved to work towards consolidating Eimskip’s headquarters in the office facility in the warehouse Vöruhótel and to implement activity-based work environment. In relation to this project the company expects to reduce office space in the Sundahöfn terminal area by approx. 50% resulting in positive financial benefits.
For more information:
Edda Rut Björnsdóttir
Tel: +354 825 3399