GYLFI SIGFÚSSON, PRESIDENT AND CEO
“The first quarter of the year 2018 was challenging with EBITDA of EUR 7.3 million and negative net results of EUR 1.6 million. The company is going through a transformation period and investment for the future in the new weekly sailing system. It will take time to build up volume on the weekly services but we are optimistic about our plans and the outlook for volume bookings are positive. Eimskip’s revenue in the first quarter 2018 amounted to 155.5 million compared to EUR 143.5 million for the same period last year, up by EUR 12.0 million or 8.4%. The growth is mainly explained by increase in transported volume in both liner and forwarding.
Total expenses amounted to EUR 148.3 million compared to EUR 134.2 million in the first quarter 2017, up by EUR 14.1 million. The main reason why total expenses are increasing more than revenues is due to expansion of capacity in the sailing system, as the company added two vessels to its fleet compared to the same period last year. Cost related to the increased capacity of the weekly sailing system is up by EUR 2.5 million. The increase in cost is also affected by increased fuel cost, salaries and cost related to return of leased containers. In the second quarter, it is expected that the volume in relation to the contract with CMA CGM on the Green route between Halifax and Portland, Maine, will start materializing. Also in the second quarter, it is expected that the volume of silicon material for the new factory PCC in Húsavík Iceland will start materializing.
Volume growth in Eimskip’s liner segment was 4.0% and 10.0% in the forwarding segment, compared with an estimated global demand growth of 3-4%. The import volume to Iceland was lower than expected, mainly because of drop in imports of cars. Export from Iceland has been growing because of increased volume of fresh and frozen fish despite a slow capelin season. The Trans-Atlantic business has steadily increased in volume, however the capacity growth in the sailing system and the cost related to the increased capacity still needs to be met with higher volume. Eimskip continues to work on fine-tuning the sailing system and to cut operating cost.
Imports to the Faroe Islands grew in the quarter but export was under expectations and Norway was in line with last year with some growth in volume on the north bound direction.
The volume in the forwarding segment grew by 10%, explained by growth in the dry segment but the reefer segment was down, mainly due to trade tension in the Africa region.
The 16% weakening of the USD against the EUR in comparison with the first quarter last year negatively affected the operating results due to a long USD position for the operation.
The first quarter is generally the slowest quarter of the year in Eimskip’s operation, as it is generally for the global shipping industry. For the last five years, the first quarter in Eimskip’s operation has on average generated 16.5% of the total EBITDA of the year. The company is putting forward a number of short-term initiatives to improve the operation and its profitability. The EBITDA guidance for the year 2018 is EUR 57-63 million.”