Slide 1: Presentation of Q2 and 6M 2019 Results
PRESENTATION OF Q2 AND 6M 2019 RESULTS Vilhelm Már Þorsteinsson, CEO
Slide 2: 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 6M 2019 GEOGRAPH
Slide 3: Key Highlights for Q2
KEY HIGHLIGHTS FOR Q2 STRONG CASHFLOW GENERATION INTERNATIONAL OPERATION ON TRACK DESPITE LOWER VOLUME STREAMLINING INITIATIVES IN NORWAY CONTINUE TO IMPROVE RESULTS LOWER EXPORT VOLUME FROM FAROE ISLANDS LOWER LEVEL OF IMPORT VOLUME TO ICELAND AND EXPORT LOST MOMENTUM DURING SUMMER COST OF HEAD QUA
Slide 4: Operating Activities
a. mi OPERATI ACTIVITIES ;
Slide 5: Volume Development in Liner Services
VOLUME DEVELOPMENT IN LINER SERVICES Container Liner volume for 6M up 1.9% but Reefer Liner services down 16.0% Q2 ▪ Overall volume decrease of 4.8% ▪ Continued growth in Trans Atlantic (TA) ▪ Lower import and export volume to Iceland ▪ Export volume from Faroe Islands suffered from lower catch and
Slide 6: Geographical Split of Liner Volume
GEOGRAPHICAL SPLIT OF LINER VOLUME Increased share of container liner services | Decrease in Norway due to capacity reduction of two vessels VOLUME SPLIT 6
Slide 7: Volume Development in Forwarding Services
VOLUME DEVELOPMENT IN FORWARDING SERVICES Reefer forwarding volume for 6M down 3.5% and dry forwarding volume down 15.1% Q2 ▪ Decline of 14.2% in reefer forwarding ▪ Dry forwarding down 13.5% due to discontinued service in China 6M ▪ Good growth in reefer forwarding in Q2 Q1 however offset by declin
Slide 8: Geographical and Category Split of Forwarding Volume
GEOGRAPHICAL AND CATEGORY SPLIT OF FORWARDING VOLUME Dry cargo contract in China discontinued in Q4 2018 | Increased share of reefer cargo GEOGRAPHICAL SPLIT CATEGORY SPLIT 8
Slide 9: Financial Results
FINANCIAL RESULTS 9
Slide 10: Income Statement Q2
INCOME STATEMENT Q2 Results slightly below expectations mainly due to lower volume in Iceland liner IFRS 16 Q2 2019 EUR thousand Q2 2019 Impact Adjust. Q2 2018 Change % ▪ A decrease of 3.0% in revenues, mainly due to lower liner volume in Iceland and Revenue 167,535 167,535 172,631 (5,096) (3.0%) th
Slide 11: Income Statement 6M
INCOME STATEMENT 6M Operational improvements in first 6M EUR thousand 6M 2019 IFRS 16 6M 2019 6M 2018 Change % ▪ Marginal increase in revenues between Impact Adjust. periods Revenue 331,523 331,523 328,163 3,360 1.0% ▪ Revenue growth of EUR 8.5 million or 5.4% in Q1 compared to a decline of Expenses
Slide 12: Geographical Split of Revenue
GEOGRAPHICAL SPLIT OF REVENUE Increased share of Europe and Trans-Atlantic (TA) | Iceland affected by lower import volume REVENUE SPLIT 15
Slide 13: Split of Total Operating Expenses
SPLIT OF TOTAL OPERATING EXPENSES Almost half of operating expenses is directly volume driven COST SPLIT ▪ Cost development in global transportation markets affects cost of 3rd party logistics services ▪ China forwarders trade index increased by 12% between years EUR 148.5m EUR 149,0m ▪ Other expens
Slide 14: EBITDA Bridge Q2
EBITDA BRIDGE Q2 Decrease in EBITDA somewhat more than expected ▪ EBITDA mostly affected by decreased volume in Iceland Liner which also affected the Domestic operations 14
Slide 15: EBITDA Bridge 6M
EBITDA BRIDGE 6M Improvements in Norway and Iceland more than offset negative development in Container liner system ▪ Following a strong Q1 in Container liner volume, Q2 was affected by lower volume in import to Iceland and export from Faroe Islands ▪ Norway improving as a result of capacity reducti
Slide 16: Container Sailing System Under Review
CONTAINER SAILING SYSTEM UNDER REVIEW Adjusting for lower volume levels but maintaining high customer service levels ▪ Sailing system has been under review with the aim of: ▪ Lowering fixed operating costs ▪ Adjust for current volumes and increase utilization ▪ Continue to secure high customer servi
Slide 17: Balance Sheet
BALANCE SHEET Balance sheet affected by new accounting standard IFRS 16 EUR thousand 30.6.2019 31.12.2018 Change % ▪ Approx. EUR 35 million increase in assets and liabilities due to IFRS 16 Non-current assets 372,409 335,172 37,237 11.1% effects Fixed assets 318,642 313,765 4,877 1.6% Right-of-use a
Slide 18: Development of Financial Ratios
DEVELOPMENT OF FINANCIAL RATIOS Excluding IFRS 16, leverage ratio decreases from year-end 2018 NET DEBT / EBITDA NET DEBT AND EQUITY RATIO EUR million 18
Slide 19: Cash Flow in Q2 and 6M
CASH FLOW IN Q2 AND 6M Substantial increase in cashflow from operation continues ▪ Management has increased Million EUR Q2 2019 Q2 2018 6M 2019 6M 2018 focus on cash generation which has been improving EBITDA 13.2 14.9 23.8 22.2 Working capital changes & other 4.0 (3.0) 7.6 (8.7) Taxes (0.4) (0.1) (
Slide 20: Cash Flow in Q2 and 6M
CASH FLOW IN Q2 AND 6M Substantial increase in cashflow before debt service continues ▪ Management has increased Million EUR Q2 2019 Q2 2018 6M 2019 6M 2018 focus on cash generation which has been improving EBITDA 13.2 14.9 23.8 22.2 Working capital changes & other 4.0 (3.0) 7.6 (8.7) ▪ A decrease o
Slide 21: Development in Maintenance CAPEX
DEVELOPMENT IN MAINTENANCE CAPEX Management intention is to keep maintenance CAPEX at lower levels than previous years ▪ Maintenance CAPEX in 2019 at a different level than previous years ▪ 6M 2019 maintenance CAPEX EUR 7.0 million, slightly under budget, compared to EUR 15.4 million for same period
Slide 22: Cash Flow in Q2 and 6M
CASH FLOW IN Q2 AND 6M Substantial increase in cashflow before investments continues ▪ Management has increased Million EUR Q2 2019 Q2 2018 6M 2019 6M 2018 focus on cash generation which has been improving EBITDA 13.2 14.9 23.8 22.2 Working capital changes & other 4.0 (3.0) 7.6 (8.7) ▪ A decrease of
Slide 23: Development in Investments
DEVELOPMENT IN INVESTMENTS Large scale infrastructure investments in 2019 for long term use ▪ Investments expected to be substantially lower in coming years compared to 2019 and 2017 levels ▪ Investments for 6M 2019 amounted to EUR 14.7 million ▪ Lower than planned at 6M ▪ Full year investments expe
Slide 24: Cash Flow in Q2 and 6M
CASH FLOW IN Q2 AND 6M Substantial increase in cashflow before debt service continues ▪ Management has increased focus Million EUR Q2 2019 Q2 2018 6M 2019 6M 2018 on cash generation which has been improving EBITDA 18.5 14.9 34.0 22.2 ▪ Share buy-back program initiated Working capital changes & other
Slide 25: Headquarters Consolidated in Vöruhótel in First Half of 2020
HEADQUARTERS CONSOLIDATED IN VÖRUHÓTEL IN FIRST HALF OF 2020 An investment not in current investment plan but attractive payback ▪ The Board of Directors has approved to work towards consolidating Eimskip’s headquarters in the office facility in the warehouse Vöruhótel ▪ A reduction of office space
Slide 26: Summary and Guidance
SUMMARY AND GUIDANCE 1 COOLDOWN OF THE ICELANDIC ECONOMY AFFECTING IMPORT VOLUME 2 STRONG FOCUS ON CASHFLOW FROM OPERATION 3 SAILING SYSTEM UNDER REVIEW TO ADJUST FOR LOWER VOLUME AND ROYAL ARCTIC LINE COOPERATION 4 CONTINUED FOCUS ON OPERATIONAL EFFICIENCY TO IMPROVE CORE OPERATION 5 EBITDA GUIDANC
Slide 27: Thank You
THANK YOU 27
Slide 28: Appendix
APPENDIX 28
Slide 29: Results by Business Segments for Q2 and 6M
RESULTS BY BUSINESS SEGMENTS FOR Q2 AND 6M Improvements for 6M but Liner Services affected by declining volume in Q2 IFRS 16 Q2 2019 EUR thousand Q2 2019 Q2 2018 Change % Impact Adjust. Liner Services: Revenue 107,568 107,568 115,854 (8,286) (7.2%) Expenses 94,907 4,162 99,069 105,609 (6,540) (6.2%)
Slide 30: Eimskip Is Already Operating in Low SOx Zones
EIMSKIP IS ALREADY OPERATING IN LOW SOx ZONES IN EUROPE AND NORTH AMERICA BLUE AREA IS 0,1% SOx FROM 1.1.2015 WHITE AREA IS 3,5% SOx UNTIL 1.1.2020 AND 0,5% THERE AFTER 14
Slide 31: Fuel Price Development
FUEL PRICE DEVELOPMENT Average spread between gas oil and heavy oil has been approx. USD 200 ▪ Approx. 53% of total fuel consumption of the vessel fleet is gas oil and 47% heavy USD/MT fuel oil ▪ From 1.1.2020 it is estimated that share of gas oil will increase to approx. 75% given comparable sailin
Slide 32: China Forwarders Freight Index
CHINA FORWARDERS FREIGHT INDEX Average price increased by 12% between Q2 2018 and Q2 2019 +12% 11
Slide 33: 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
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