Eimskipafélag Íslands hf. - Financial Statement Release

Revenue growth 29.7% in first quarter 2017

EBITDA EUR 9.3 million, good organic growth and strong performance of new
acquisitions but negative effect of fishermen strike 


  -- Revenue EUR 146.9 million, up by EUR 33.7 million or 29.7% from Q1 2016
     -- Volume in liner up 3.0%; liner revenue up EUR 8.9 million or 10.7%
     -- Volume in forwarding up 28.9%; forwarding revenue up EUR 24.8 million or
        82.6%, majority coming from new acquisitions
  -- EBITDA EUR 9.3 million, down by EUR 0.3 million or 3.3% from Q1 2016
     -- Adjusted EBITDA EUR 11.6 million, up 20.5%, taking into account the
        strike in Iceland (EUR 1.5 million) and other non-recurring items (EUR
        0.8 million)
  -- Net earnings EUR 0.2 million compared to net earnings of EUR 1.8 million in
     Q1 2016
  -- Equity ratio 56.6% and net debt EUR 50.4 million at the end of March
  -- EBITDA forecast for the year 2017 unchanged, in the range of EUR 57 to 63
     million

Gylfi Sigfússon, President and CEO

“Eimskip’s revenue in the first quarter 2017 grew by 29.7% compared to the same
period last year and amounted to EUR 146.9 million. Of the growth, 18.2% came
from new acquisitions and 11.5% from organic growth, despite the fishermen
strike in Iceland affecting export volumes from Iceland. Organic growth came
from increased transportation volumes and rising international freight rates. 

The fishermen strike, lasting from 15 December 2016 through 19 February 2017,
adversely affected the exported volume of fish and other supplementary
services. EBITDA was EUR 9.3 compared to EUR 9.6 million in the first quarter
last year. The strike negatively affected the quarter’s EBITDA by EUR 1.5
million. A fine imposed by the Financial Supervisory Authority in Iceland in
the amount of EUR 0.4 million (which Eimskip strongly disagrees with and will
refer to the Icelandic courts) was expensed in the quarter and cost related to
acquisition projects amounted to EUR 0.4 million. Taking into account these
non-recurring items, adjusted EBITDA for the quarter was EUR 11.6 million, up
20.5% from the previous year. The new group companies Mareco and Extraco are
performing well, in line with our expectations, and contributed EUR 1.5 million
in EBITDA for the quarter. Taking the strike and other non-recurring items into
account the organic business grew by 3.8% in EBITDA, despite higher costs
related to increased capacity in our sailing system and lower volumes in
Norway. 

Expenses grew by 32.8% compared to the first quarter 2016. The increase was
mainly due to the addition of new companies to the group, salary cost, higher
freight rates from the deep sea lines, higher fuel cost, expansion of capacity
in the sailing system and the above mentioned non-recurring items. Net earnings
for the quarter amounted to EUR 0.2 million compared to EUR 1.8 million last
year, mainly due to EUR 1.0 million increased depreciation, reflecting
increased investments. 

The North Atlantic liner services revenue was EUR 92.1 million in the first
quarter, up by EUR 8.9 million or 10.7%.  The liner volume grew by 3.0%
compared to the same period last year. Liner EBITDA for the quarter decreased
by EUR 2.5 million, largely affected by the fishermen strike and other
non-recurring items as explained above, amounting to a total of EUR 2.3
million. Forwarding services were performing well with volume growth of 28.9%
and revenue amounted to EUR 54.8 million, up by EUR 24.8 million or 82.6%.
Acquisitions accounted for 69.4% of the revenue growth and 13.2% came from
other forwarding operations. EBITDA from forwarding increased by 113.1% of
which 79.6% came from acquisitions and 33.5% from organic growth. 

Eimskip and Royal Arctic Line in Greenland signed a cooperation agreement in
January, subject to notification to and confirmation from the relevant
authorities if applicable. At the same time, Eimskip signed a contract with a
shipyard in China on building two 2,150 TEU ice class Polar Code container
vessels, built in line with new environmental standards. Expected delivery is
in 2019. The contract price of each vessel is approximately USD 32 million,
where 40% are paid during the building period and 60% upon delivery. In April,
Eimskip secured 80% financing of the contract price upon delivery of the
vessels with the German bank KfW IPEX-Bank GmbH, in EUR with a 15 year term and
a very favorable interest margin. Royal Arctic Line also signed a contract to
build one similar vessel with the same shipyard. 

Eimskip acquired 80% of the forwarding company Mareco in Belgium in January.
The company is headquartered in Antwerp, has an office in Sao Paulo, Brazil and
specializes in reefer logistics services, especially to West, Central and South
Africa. Main commodities are seafood, chicken, pork and beef. Mareco transports
about 32,000 TEU per year and its annual revenue is estimated about EUR 60
million. 

Early in April, Eimskip announced the acquisition of a 51% share in CSI Group
LLC, headquartered in Boston, USA for EUR 1.0 million. This strengthens
Eimskip’s position in container management and costs, as CSI specializes in
trading of containers. CSI’s annual revenue is about EUR 5.0 million, with
approximately 10% EBITDA margin. 

On 3 April 2017, the Norwegian Competition Authority rejected Eimskip’s
acquisition of the Norwegian shipping and logistics company Nor Lines AS.
Eimskip will continue to focus on strengthening its operations in Norway. 

Eimskip continues to work on organic growth and strategic accretive
acquisitions to increase shareholder value. The company continues to evaluate
additional acquisition opportunities and vessel investments on an ongoing
basis. 

The first quarter was in line with our expectations, as outlined in February
with the publishing of the 2016 financial results, including the expected
impact of the fishermen strike in Iceland. The first quarter of the year is
normally the slowest quarter in our operation. The EBITDA forecast for the year
2017 is unchanged from what was presented in February, or EBITDA in the range
of EUR 57 to 63 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 Q1 2017.pdf

Eimskip - First Quarter 2017 Financial Results.pdf