Eimskipafélag Íslands hf. - Financial Statement Release

Eimskip announces Q1 2014 financial results

First quarter 2014 results are in line with the company's expectations


  -- Operating revenue EUR 104.2 million, down by EUR 1.1 million from Q1 2013
  -- Operating profit, EBITDA, EUR 6.0 million, down by EUR 1.2 million from Q1
     2013, as a result of the new sailing schedule and adverse weather
     conditions in January and February
  -- Transported volume in North Atlantic liner services up by 11.1% from Q1
     2013
  -- Transported volume in reefer forwarding services up by 13.4% from Q1 2013
  -- Equity ratio was 64.2% at the end of March
  -- Forecasted EBITDA for the year 2014 unchanged, in the range of EUR 37 to 41
     million

Gylfi Sigfússon, President and CEO

”Results of the first quarter are in line with our expectations and it is
positive to see that volume in the company's transportation system is growing.
Transported volume in the North Atlantic liner services grew by 11.1% from the
first quarter last year, with increases in all market areas except exports from
Iceland due to a disappointing capelin season. Imported volume to Iceland has
increased and we are seeing positive trend in categories such as vehicles and
construction supplies which have been stagnant during recent years. Volume in
the company's reefer forwarding services increased by 13.4% compared to the
same period 2013, mainly due to increased transport from Europe to Asia, but
revenues were down due to decreased prices in certain markets. The company's
operating revenue amounted to EUR 104.2 million and decreased by 1.1% from the
same quarter last year, reflecting the lower revenue from freight forwarding.
The revenues were also affected by reduced services due to a strike action
taken by a part of the crew of Herjólfur, the company's ferry operation in
Iceland. Finally, the company sold less equipment in the first quarter this
year compared to last year and the prior year included the divestiture of
specialized container equipment no longer needed. 

The first quarter's EBITDA amounted to EUR 6.0 million compared to EUR 7.2
million in the same period 2013. Eimskip's first quarter is seasonally the
quarter of the year which contributes the lowest operational profit. Also,
several important items affected the results in the first quarter of 2014
compared to previous year. 

Adverse weather conditions in January and February negatively affected our
sailing schedule which increased use of fuel and cost of overtime. In late
March 2013, Eimskip increased its capacity by adding a vessel to the sailing
schedule, resulting in increased cost of the sailing system which was not
reflected in the full quarter of the prior year. It is good to see that the
increased capacity supports the volume increase in the first quarter this year.
Lastly, lower exports of capelin combined with increased imports caused an
imbalance and resulted in higher cost related to repositioning of empty
containers. 

As the company experienced with the ferry operation, some uncertainty exists in
the labor market in Iceland. Certain important collective agreements are still
to be finalized, such as with the Seamen's Union of Iceland. 

It is expected that the first of the two container vessels, which are currently
being built for Eimskip in China, will be delivered this June. The first vessel
will be given the name Lagarfoss and will be serving on the Yellow Line. The
new vessel will replace one of the company's current vessels. A new amendment
agreement for the ultimate delivery date of the second vessel has not been
finalized and we now expect that the delivery will not occur until 2015. The
delay of delivery will neither affect the sailing schedule nor services to
Eimskip's customers. 

Eimskip continues to evaluate its external growth opportunities to strengthen
its current position in markets outside Iceland and in line with the company's
vision of being a leading transportation company in the North Atlantic. The
company continues working on preparing dual listing of its shares in relation
to these potential investments. 

It is constructive to see that imported volume to Iceland is growing since it
gives hope of improving economic conditions in Iceland. We expect to see
exports grow in the coming months with the upcoming mackerel catch around
Greenland, Iceland, the Faroe Islands and Norway. 

We keep our EBITDA forecast for the year 2014 unchanged in the range of EUR 37
to 41 million. Transported volume in the North Atlantic in April and the first
two weeks of May seems to be consistent with the volume growth in the first
quarter.” 

  Further information

  -- Gylfi Sigfússon, President and CEO, tel.: +354 525 7202 
  -- Hilmar Pétur Valgardsson, CFO,  tel.: +354 525 7202 
  -- Erna Eiríksdóttir, Senior Manager of Investor Relations, tel.: +354 825
     7220,  email: investors@eimskip.is

Attachments:

Eimskip - Financial Statements Q1 2014.pdf

Eimskip - First Quarter 2014 Financial Results.pdf