Eimskip Reports Second Quarter 2024 Financial Results

Eimskip Reports Second Quarter 2024 Financial Results

Highlights of Q2 2024 results

• Acceptable results given softened demand while International Forwarding performed well.
• Revenue remained at same level as last year at EUR 210 million this quarter.
  • Liner revenue decreased by EUR 12.9 million while Forwarding revenue increased by EUR 13.0 million.
  • The decline in Liner revenue is attributed to lower Trans-Atlantic rates, lower import volume and shifts in export cargo mix.
  • The increase in Forwarding revenue was driven by higher global freight rates, particularly in Asia connected trade lanes.
• Expenses amounted to EUR 186 million, an increase of EUR 10.9 million, largely due to third-party logistics services, which increased by EUR 10.8 million.
  • Bunker expenses rose slightly by EUR 0.6 million, and newly imposed ETS expense stood at EUR 0.9 million, hedged through revenue management.
  • Salary expenses increased by 2.9% or EUR 1.1 million, partially offset by a 2% reduction in number of Full-Time Equivalents compared to last year.
• EBITDA amounted to EUR 23.5 million, down from EUR 34.3 million in a strong quarter last year.
  • Liner EBITDA decreased by EUR 10.8 million to EUR 15.1 million, with calculated Liner EBITDA ratio at 10.6% and EBIT ratio at 1.6%.
  • The negative EBITDA effect from the four-week strike in the Faroe Islands is estimated at EUR 1.8 million.
  • Forwarding EBITDA remained stable from last year at EUR 8.4 million, with a calculated Forwarding EBITDA ratio of 10.0%.
• EBIT for the quarter was EUR 8.6 million compared to EUR 19.4 million in Q2 2023.
• Net earnings reached EUR 7.9 million, down from EUR 17.0 million during the same period last year.

Highlights of 6M 2024 Results

• Revenue totaled EUR 405.5 million, with a decline of EUR 18.6 million or 4.4% compared to the same period in 2023.
• Total expenses rose to EUR 367.8 million, an increase of EUR 9.8 million compared to last year.
• EBITDA was EUR 37.7 million compared to EUR 66.2 million in the same period of the previous year, marking a decrease of EUR 28.4 million.
• EBIT recorded at EUR 7.7 million compared to EUR 35.2 million for the same period last year.
• Net earnings were EUR 8.4 million compared to EUR 29.5 million in the same period of 2023.

CEO Statement on Current Trends

“We delivered acceptable results in the second quarter of 2024. The EBITDA in the quarter amounted to EUR 23.5 million, reflecting a decrease attributable to lower results in Container Liner services where a combination of lower rates and volume adversely affected revenue. However, Container liner results improved significantly from the first quarter. We remain focused on cost control, although inflationary pressures have made it challenging to reduce costs meaningfully. While we saw an increase in export volume from Iceland, the category mix led to a slight decrease in unit revenue. Demand for certain imports like cars and building materials declined, which was expected due to prolonged elevated interest rates. A four-week strike in the Faroe Islands impacted operations significantly, particularly affecting import and export volumes, with an estimated EUR 1.8 million negative impact on EBITDA at the Group level.

Market Forecasts and Operational Insights

Global shipping markets have shown volatility, with a surge in freight rates attributed to factors affecting traffic through significant trade routes and recoveries in large economies. While Trans-Atlantic services performed similarly to last year, an increase in volume from the first quarter was noted. Our operations have benefited from strong Norwegian Reefer Liner services, with exports of whitefish and shrimp remaining robust. Despite these challenges, we are optimistic about improving results as a new fishing quota year begins, potentially boosting export volumes.

Investor Meeting Announcement

The Board of Directors of Eimskipafélag Íslands hf. approved the Company's interim financial statements for the second quarter. Investors and market participants are invited to a meeting where the financial results will be presented. A recording and presentation materials will be available on the Company's investor relations website.

Further Information

For more details, please contact Guðbjörg Birna Björnsdóttir, Head of Treasury and Investor Relations, at +354 844 4752 or via email.

Frequently Asked Questions

What were the main highlights of Eimskip's Q2 2024 results?

The report highlighted acceptable results despite softened demand, with a maintained revenue of EUR 210 million and stable Forwarding revenue growth.

How did Eimskip's expenses change in Q2 2024?

Total expenses increased to EUR 186 million, primarily due to higher costs for third-party logistics services and salary expenses.

What impact did the strike in the Faroe Islands have on EBITDA?

The four-week strike in the Faroe Islands negatively impacted EBITDA by an estimated EUR 1.8 million at a Group level.

How did external market conditions affect Eimskip's performance?

Global shipping markets were volatile, which contributed to fluctuating freight rates and impacted revenue from Container Liner services.

What future is expected for Eimskip's operations?

Looking ahead, the start of a new fishing quota year and stable demand for imports are anticipated to improve results, despite some external uncertainties.

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