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Eimskip: Fourth quarter and full year 2023 results
Highlights of Q4 2023 results
Highlights of the year 2023
VILHELM MÁR THORSTEINSSON, CEO
"At the same time we are pleased with the good financial results for the year 2023 as a whole, the results for the fourth quarter were below our expectations, especially concerning our liner operations. Our liner volume showed resilience with a slight 2% decrease, but the main driver behind lower income was the dramatic change in Trans-Atlantic rates that occurred over the course of 2023. It is important to recall that during 2021 and 2022, global freight rates surged in response to supply chain disruptions resulting from the pandemic. The only international trade lane that remained at an elevated level into 2023 was Trans-Atlantic, but as of Q1, we started to see the rates fall sharply and reach pre-pandemic levels at the end of Q3 before leveling off. This inevitably affected our results significantly in comparison to the record year of 2022 as a large portion of the operating cost of our liner system is not directly correlated to the revenues but based on the assets and infrastructure behind the sailing system.
When we started recognizing the trend of declining freight rates at the beginning of the year, we initiated the design of sailing system changes. The purpose of the changes was clear from the beginning: to save costs, decrease bunker consumption, and reduce carbon emissions while maintaining excellent and reliable service. Changing a system of this scale and complexity takes time, and we implemented the first phase of the system changes in May 2023 and harvested the benefits over the next months. The second phase will be implemented at the end of February 2024. It was not solely the revenue decrease caused by swift changes in the market environment that incentivized us to draw up sailing system changes, but we are also responding to new environmental regulations such as IMO's CII rules and the implementation of shipping into the EU ETS system. On top of the regulatory requirements, we feel more demand than ever from our customers to make ocean transportation, already one of the most efficient modes of transportation in terms of carbon emissions, even more environmentally friendly. That aligns well with our ambitious target of reaching carbon neutrality by 2040.
Our international forwarding business had an overall solid year. We have been on a journey since 2019 with that part of the business, streamlining and increasing efficiency, along with implementing modern digital solutions to support both sales and operations. The benefits of these changes are becoming clearer now that we are past the extraordinary situation we saw in 2021 and 2022. The results of 2023 prove that our forwarding business can make a healthy profit in a challenging market, supported by our niche status in reefer logistics.
Now that we are well into the first quarter of 2024, we are generally optimistic for the weeks and months ahead. In our home market, the year started in line with expectations, with increasing exports from Iceland and imports that have remained at a solid level. In the Faroe Islands, the outlook is stable, with consistent and good export volume, while we saw a softening of imports around the middle of last year, which has remained at that level. In Norway, we are preparing for the whitefish season to take off, with a lower quota than last year but nevertheless expected to have a good impact in Q1.
The shipping market is extremely dynamic, and in mid-December, we entered, again, a period of highly volatile rates when the Suez Canal was effectively closed for commercial sea traffic due to militant attacks on commercial vessels. This grave situation has increased turnaround times of vessels and containers between Asia and Europe, leading to sharp rises in freight rates on the respective trade lanes. Recently, we have started to see the effects of these events reflected in increases in rates on trade lanes that are not directly affected, e.g., Trans-Atlantic, due to the capacity decrease resulting from the changed sailing routes. How these geopolitical events will unfold will have a lot to say when it comes to the outlook for our international operations in the coming months, but we are generally optimistic.
Finally, I'd like to express my gratitude to Eimskip's employees across the world for their efforts throughout the year, demonstrating both resourcefulness and resilience, in providing excellent service to our customers in a highly dynamic environment."
INVESTOR MEETING 14 FEBRUARY 2024
The Board of Directors of Eimskipafélag Íslands hf. approved the Company's Consolidated Financial Statements for the year 2023 at its meeting on 13 February 2024. Investors and market participants are invited to a meeting on Wednesday, 14 February 2024, at 8:30 a.m. at the Company's headquarters, Sundabakki 2, second floor. The meeting will also be webcasted live in Icelandic at www.eimskip.com/investors . Vilhelm Már Thorsteinsson, CEO and María Björk Einarsdóttir, CFO, will present the Company's financial results for Q4 2023 and the financial year 2023. Investor presentation and a recording of the meeting will be available on the Company's investor relations website.
FURTHER INFORMATION
María Björk Einarsdóttir, CFO, tel: +354 774 0604, email: investors@eimskip.com.
Guðbjörg Birna Björnsdóttir, Head of Treasury and Investor Relations, tel: +354 844 4752, email:
investors@eimskip.com
FORWARD-LOOKING STATEMENTS
Statements contained in this financial press release that refer to the Company's estimated or anticipated future results or future activities are forward-looking statements which reflect the company's current analysis of existing trends, information and plans. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially depending on factors such as the availability of resources, the timing and effect of regulatory actions and other factors. Eimskip undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.
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