Eimskip has released the financial results for the third quarter and the first nine months of 2019. According to Vilhelm Mar Thorsteinsson, CEO of Eimskip, the company is satisfied with the overall performance during this period.
"I am pleased to see that EBITDA and net profit of our forwarding operations increased between years although volume declined as a result of discontinued business and trade tension.
International operations are performing in line with expectations. Our operations in Norway continued to improve after various streamlining measures earlier this year and the Trans-Atlantic service has been growing by double digit numbers in 2019 which has positively affected e.g. the North America operation. In Q3 a decision was made to close down our Eimskip office in Belgium and integrate part of the operation into the Eimskip Rotterdam office. This measure will result in a reduction of 11 FTE’s. A one-off redundancy payment will be an expense in Q4 but an annual operational improvement of EUR 0.3-0.4 million is expected as a result of this initiative going forward. Our office in Murmansk was closed in Q3 and responsibility of the area moved to Sortland in Norway. Furthermore, in 2019 we have merged or consolidated few other offices into single locations. This is in line with the current journey to streamline and focus on core operations.
Container liner services continue to be affected by lower import volume levels to Iceland due to the cool down of the Icelandic economy. Export was slow during the summer, both from Iceland and the Faroe Islands but picked up in late August. Overall, the volume to and from Faroe Islands has been on track year to date.
I'm pleased to see Domestic Iceland performing well although affected by lower import levels and challenging environment. Streamlining and integration projects are paying off as can be seen in lower cost e.g. in head office functions and operations in general. Salary expenses are down by EUR 4.7 million year on year whereof EUR 3.4 million are due to streamlining measures. Total number of FTE’s reduced by 55 during the year and are now 1750.
A new container sailing system was introduced in October. With simplified sailing routes and larger vessels, we are able to increase service and reliability in the system as well as lower fixed operating cost. Target net operating cost reduction of the new sailing system, including the cooperation with Royal Arctic Line, is in the range of EUR 7-9 million on an annual basis.
As previously announced the shaft generator of Bruarfoss, one of our new buildings, was unfortunately damaged during testing. As a result, we see a further delay in the cooperation with Royal Arctic Line and currently it is estimated to start in Q2 2020. We expect the delivery of Dettifoss in Q1 and Bruarfoss in Q3 of 2020. We are currently in discussion with the shipyard in China regarding next steps and compensation for the delay in delivery.
Finally, I would like to mention that we are introducing a targeted long-term capital structure and a three-year target CAPEX plan. Our aim is to maintain an equity ratio near 40% and to have modest leverage ratio of 2-3x net interest-bearing debt against EBITDA. Our aim is to increase transparency and predictability and increase service to investors and capital market analysts.”
For the full financial report; please click here.