Eimskipafelag Islands Hf. · OMXICE:EIM
Eimskipafelag Islands Hf — Q3 2019 Earnings Presentation
30 slides from Eimskipafelag Islands Hf's earnings presentation, 2019
Slide 1: Presentation of Q3 and 9M 2019 Results
PRESENTATION OF Q3 AND 9M 2019 RESULTS Vilhelm Már Þorsteinsson, CEO
Slide 2: Key Highlights for Q3
KEY HIGHLIGHTS FOR Q3 NEW CONTAINER SAILING SYSTEM INTRODUCED, READY FOR ROYAL ARCTIC LINE COOPERATION CONTINUED GROWTH IN TRANS-ATLANTIC SERVICES COOL DOWN OF ICELANDIC ECONOMY AFFECTING IMPORT PERFORMANCE OF INTERNATIONAL OPERATION ON TRACK STREAMLINING AND INTEGRATION PROJECTS RESULTING IN LOWER
Slide 3: Eventful Q3
EVENTFUL Q3 “Paperless” project dramatically New simpler and more reliable container sailing Automating terminal reducing waste in printing and system implemented – lowering fixed cost communications in Rotterdam paper handling Electronic invoices for our Successful shift to a modern Lagarfoss equip
Slide 4: Operating Activities
aN \ ; : ‘ rg ar. a 4 — \ ¥ mi OPERAT ACTIVITI A
Slide 5: Volume Development in Liner Services
VOLUME DEVELOPMENT IN LINER SERVICES Container liner volume for 9M up 0.6% but Reefer liner services down 12.2% Q3 ▪ Overall volume decrease of 5.1% ▪ Container liner down 5.2% and Reefer liner down 3.8% ▪ Slow summer in export from Iceland and Faroe Islands and did not pick up until late August ▪ C
Slide 6: Geographical Split of Liner Volume
GEOGRAPHICAL SPLIT OF LINER VOLUME Growth in Trans-Atlantic between years VOLUME SPLIT 6
Slide 7: Volume Development in Forwarding Services
VOLUME DEVELOPMENT IN FORWARDING SERVICES Reefer forwarding volume for 9M down 3.7% and dry forwarding volume down 18.2% Q3 ▪ Decline of 10.3% in forwarding volume mainly due to discontinued service in China and trade tensions ▪ Decline of 4.0% in reefer forwarding ▪ Dry forwarding down 23.5% 9M ▪ G
Slide 8: Main Outbound Flow of Forwarding Volume 9M 2019
MAIN OUTBOUND FLOW OF FORWARDING VOLUME 9M 2019 Europe → Europe → 2% Intra Asia 16% N-America Europe 17% Asia → Europe 25% Asia → N-America 6% N-America → Europe → Europe 4% Africa and 11% Europe → Middle East S-America 0.2% Asia → S-America 1% Intra Asia 11% S-America → Europe 1% Asia → Africa and
Slide 9: Vessel Newbuilding and Royal Arctic Line Cooperation
VESSEL NEWBUILDING AND ROYAL ARCTIC LINE COOPERATION Damaged shaft generator of Bruarfoss causing further delay NEW BUILDING PROJECT ▪ Just before sea-trial of Bruarfoss in September the Shaft Generator was damaged during testing causing further delay in delivery ▪ The root cause has been analyzed b
Slide 10: New Container Sailing System Introduced in October
NEW CONTAINER SAILING SYSTEM INTRODUCED IN OCTOBER Simplified sailing routes and larger vessels increase service and reliability and lower fixed operating cost ▪ Number of container vessels reduced by one – currently 10 container vessels in operation ▪ Capacity maintained at similar level with large
Slide 11: Financial Results
FINANCIAL RESULTS FINANCIAL 11 RESULTS
Slide 12: Income Statement Q3
INCOME STATEMENT Q3 EBITDA results in line with expectations | Net earnings increases between years IFRS 16 Q3 2019 ▪ A decrease of 5.3% in revenues, mainly Q3 2019 Q3 2018 Change % due to lower liner volume in Iceland EUR thousand Impact Adjust. ▪ Lower international freight rates in Revenue 172,52
Slide 13: Income Statement 9M
INCOME STATEMENT 9M Operational improvements in first 9M | One-off tax expense affecting bottom line IFRS 16 9M 2019 ▪ Marginal decrease in revenues between EUR thousand 9M 2019 Impact Adjust. 9M 2018 Change % periods but more decrease in expenses ▪ Salary expenses down by EUR 3.4 Revenue 504,045 50
Slide 14: Results by Business Segments for Q3 and 9M
RESULTS BY BUSINESS SEGMENTS FOR Q3 AND 9M Improvements for 9M but Liner Services affected by declining volume IFRS 16 Q3 2019 EUR thousand Q3 2019 Q3 2018 Change % Impact Adjust. Liner Services: Revenue 110,185 110,185 116,505 (6,320) (5.4%) Expenses 93,639 3,790 97,429 98,991 (1,562) (1.6%) EBITDA
Slide 15: Geographical Split of Revenue
GEOGRAPHICAL SPLIT OF REVENUE Increased share of Europe | Iceland affected by lower import volume REVENUE SPLIT 15
Slide 16: EBITDA Bridge Q3
EBITDA BRIDGE Q3 EBITDA in level with previous year EUR million 25 ▪ EBITDA mostly affected by decreased volume in container liner 20 5,1 ▪ Improvements in the reefer liner operation following streamlining (2,2) 0,8 (0,3) 0,7 measures 1,0 15 ▪ Lower operating cost of head office 22,7 divisions posit
Slide 17: EBITDA Bridge 9M
EBITDA BRIDGE 9M Operational improvements and streamlining more than offset negative development in Container liner system ▪ Container liner volumes negatively affecting results ▪ New sailing system will reduce fixed expenses as a counter measure ▪ Norway improving as a result of capacity reduction
Slide 18: Balance Sheet
BALANCE SHEET Balance sheet affected by new accounting standard IFRS 16 ▪ Approximately EUR 32 million increase in EUR thousand 30.9.2019 31.12.2018 Change % assets and liabilities due to IFRS 16 effects Non-current assets 372,137 335,172 36,965 11.0% Fixed assets 321,145 313,765 7,380 2.4% ▪ Equity
Slide 19: Development in CAPEX
DEVELOPMENT IN CAPEX Substantial amount of investments planned in 2019 delayed to 2020 ▪ Maintenance CAPEX in 2019 at a different level than previous years ▪ 9M 2019 EUR 12.6 million compared to EUR 23.5 million same period 2018 ▪ Maintenance CAPEX items mostly relate to EUR 36m renewal of container
Slide 20: Target CAPEX Plan 2020-2022
TARGET CAPEX PLAN 2020-2022 Substantial amount of investments planned in 2019 delayed to 2020 EUR million ▪ Maintenance and investment CAPEX in the range of EUR 22-27 million ▪ Excluding delayed investments from 2019 ▪ Maintenance CAPEX in the range of EUR 19 to 21 million ▪ Expected dockings in 202
Slide 21: Cash Flow in Q3 and 9M
CASH FLOW IN Q3 AND 9M Substantial increase in cashflow before debt service continues ▪ Management has increased focus on Million EUR Q3 2019 Q3 2018 9M 2019 9M 2018 cash generation which has been improving year on year EBITDA 22.7 17.6 56.7 39.8 ▪ Working capital changes due to seasonal effect Work
Slide 22: Target Long Term Capital Structure
TARGET LONG TERM CAPITAL STRUCTURE Objective to maintain an equity ratio near 40% and modest leverage ratio CURRENT RATIOS - 9M 2019 TARGET CAPITAL STRUCTURE Total Equity: EUR 237m Equity ratio: ~ 40% Equity ratio: 45% Net debt (NIBD*): EUR 183m NIBD/EBITDA: ~ 2-3x EBITDA NIBD/EBITDA (LTM**): 2,6x ▪
Slide 23: Summary and Guidance
SUMMARY AND GUIDANCE 1 COOLDOWN OF THE ICELANDIC ECONOMY AFFECTING IMPORT VOLUME 2 TARGET LONG-TERM CAPITAL STRUCTURE AND A THREE-YEAR TARGET CAPEX PLAN INTRODUCED 3 NEW SAILING SYSTEM IN PLACE WITH EXPECTED EUR 7-9 MILLION COST BENEFIT, INCLUDING RAL 4 CONTINUED FOCUS ON OPERATIONAL EFFICIENCY TO I
Slide 24: Thank You
THANK YOU 24
Slide 25: Appendix I
APPENDIX I 25
Slide 26: This is Eimskip
THIS IS EIMSKIP Eimskip is a leading transportation company in the North Atlantic with connections to international markets and is specialized in worldwide freight forwarding services, with the vision of providing excellence in transportation solutions and services ABOUT KEY FIGURES 9M 2019 GEOGRAPH
Slide 27: Eimskip is Well Prepared for IMO 2020
EIMSKIP IS WELL PREPARED FOR IMO 2020 Blue area has been 0,1% SOx from 1.1.2015 White area is 3,5% SOx until 1.1.2020 and 0,5% there after Eimskip will fully comply with the new regulations. Most of our vessels will use low sulphur fuels and we will also use scrubber technology. Recalculated low sul
Slide 28: Fuel Price Development
FUEL PRICE DEVELOPMENT Average spread between gas oil and heavy oil has been on average USD 200 for last 12 months ▪ Around 53% of total current fuel consumption of the vessel fleet is gas oil and 47% heavy fuel USD / MT ▪ From 1.1.2020 it is estimated that share of gas oil will increase to 85% give
Slide 29: China Forwarders Freight Index
CHINA FORWARDERS FREIGHT INDEX Average prices decreased by 5% between Q3 2018 and Q3 2019 -5% 11
Slide 30: Disclaimer
DISCLAIMER Information contained in this presentation is based on sources that Eimskipafélag Íslands hf. (“Eimskip“ or the ”Company“) considers reliable at each time. Its accuracy or completeness can however not be guaranteed. Copyright of information contained in this presentation is owned by Eimsk
Eimskipafélag Íslands hf. — Q3 2019 Earnings Presentation on 6ix