Eimskipafélag Íslands hf. - Financial Statement Release

Eimskip: Strong performance continues in third quarter

Normalized EBITDA growth 23.3%


  -- Revenue EUR 134.1 million, up by EUR 4.3 million or 3.4% from Q3 2015
  -- Revenue up by EUR 6.3 million or 4.9% when excluding the EUR 2.0 million
     gain on disposal of a vessel under construction included in Q3 2015 revenue
  -- EBITDA EUR 17.8 million, up by EUR 1.4 million or 8.6% from Q3 2015
  -- Normalized EBITDA up EUR 3.4 million or 23.3%, excluding the EUR 2.0
     million gain on disposal
  -- Net earnings EUR 9.4 million compared to EUR 8.5 million, up by 10.7% from
     Q3 2015
  -- Equity ratio 63.3% and net debt EUR 34.8 million at the end of September
  -- EBITDA forecast for the year 2016 has been changed to the range of EUR 52
     to 55 million



GYLFI SIGFÚSSON, PRESIDENT AND CEO

“Revenue for the third quarter amounted to EUR 134.1 million, up by 3.4%.
EBITDA for the quarter was EUR 17.8 million, up by 23.3% compared to last
year’s normalized EBITDA of EUR 14.4 million when taking into account a EUR 2.0
million gain on disposal of a vessel under construction that was included in
the third quarter’s 2015 revenue. Transported volume in the North Atlantic
liner services grew by 6.8% compared to the third quarter last year and revenue
was up by EUR 5.7 million or 6.1%. There was good growth in transported volume
related to Iceland, the Faroe Islands and Norway. Volume growth in the
company’s forwarding services was 4.7% in the quarter while the forwarding
revenue was down by EUR 1.4 million or 3.8%, affected by lower international
freight rates and lower volumes from China that are slowly recovering. Net
earnings amounted to EUR 9.4 million, up 10.7%. The company continues to
deliver good results and this is our best third quarter in terms of revenue,
EBITDA, EBIT and net earnings since 2009. 

The company’s revenue for the first nine months amounted to EUR 373.4 million
and was up by 1.2%. Liner revenue increased by EUR 15.2 million or 5.8% and
forwarding revenue was down by EUR 10.8 million or 10.2% for reasons previously
stated. EBITDA for the period amounted to EUR 43.6 million, up EUR 8.1 million
or 22.9% from last year, and as compared to normalized 2015 EBITDA it grew by
30.1%. Net financial expense amounted to EUR 1.0 million compared to nominal
net financial income for the first nine months last year, still resulting in
EUR 20.0 million net earnings, up by 28.8%. Transported volume in the North
Atlantic liner services grew by 8.0% compared to the first nine months last
year and the forwarding volumes grew by 3.0%. 

After 90 years of cooperation with the port of Hamburg in Germany, we announced
in October that the company’s vessels on the Blue Line will stop calling
Hamburg and start calling EUROGATE Container Terminal Bremerhaven as of 6
December. The change creates various opportunities and gives our customers in
Iceland, the Faroe Islands and Norway better connections to other markets and
the transit time shortens. The container port of Bremerhaven is the fourth
largest in Europe and is a major transshipment hub to the rest of the world.
Bremerhaven is also the heart of the German fish industry. 

In October, Eimskip further strengthened its position in worldwide reefer
logistics services by acquiring 90% of the forwarding company Extraco in
Rotterdam. The company’s annual turnover amounts to approximately EUR 19
million. Extraco, which was founded in 1991, will be relocated into Eimskip’s
office in Rotterdam to achieve synergies and to be a part of Eimskip’s reefer
logistics center with other Eimskip’s entities there. 

In the beginning of November, Eimskip signed an agreement to acquire the
Norwegian shipping and logistics company Nor Lines. The estimated annual
turnover of Nor Lines amounts to approximately EUR 110 million and the company
employs about 200 people. The company is currently operating an extensive
logistics network in Norway, on sea and land. Subject to the approval of the
Norwegian Competition Authority, it is anticipated that the transactions will
close during the first quarter 2017. 

In May, Eimskip and Royal Arctic Line, the national carrier of Greenland,
signed a letter of intent to form and evaluate a potential cooperation
regarding building of three container vessels and sharing capacity. With the
potential cooperation, Greenland will be connected with international sailing
systems. The work has been progressing well in recent weeks and months and the
goal is to conclude an agreement for a Joint Venture in December. 

It remains our intention to grow organically and through strategic accretive
acquisitions to increase shareholder value. We continue to evaluate additional
acquisitions and vessel investments on an ongoing basis and are currently
working on a few options. We will not be issuing new equity to conclude
potential investments, but will be issuing additional debt for the investments
and by that changing the leverage of the company to more normal levels, still
maintaining a strong balance sheet. 

The outlook of the operations in the fourth quarter is good, the month of
October is according to our expectations and volume in the company’s systems
for the first two weeks of November is also in line with our expectations.
Uncertainty remains regarding wage agreements with a part of the Icelandic crew
members on Eimskip’s vessels. Based on the above, our EBITDA forecast will be
changed from being in the range of EUR 49 to 53 million to EBITDA in the range
of EUR 52 to 55 million.” 



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 Q3 2016.pdf

Eimskip - Third Quarter 2016 Financial Results.pdf