Wilh. Wilhelmsen hit by decline in volumes
Wilh. Wilhelmsen said Thursday that lower cargo volumes resulted in reduced first quarter operating profit to $36.4 million compared to $59.9 million in the same 2008 period.
Revenue was $606.9 million down from $819.4 million in the same 2008 period for the Norwegian company whose holdings include a half-share in roll-on/roll-off carrier Wallenius Wilhelmsen Logistics.
But first quarter net profit was $32.6 million, up from $2.7 million. This reflected a much smaller net financial loss of $4.5 million in the first quarter of 2009 compared to $55.5 million in the same 2008 period. The company said the main reason for the improvement was increased U.S. dollar long-term interest rates, which have improved the market valuation of its interest rate instruments. In addition, depreciation of the dollar against the Norwegian kroner resulted in an unrealized gain on currency instruments.”
“The continued global economic weakness has had a significant negative impact on demand for ocean transportation of cars and ro/ro cargo, which is reflected in an abrupt decline in operating income and operating profit for our shipping segment. Volumes are also down for the logistics segments, but adjusted operations resulted in a stable operating profit for the segment,” said Ingar Skaug, group chief executive officer at Wilh Wilhelmsen.
“Based on an outlook of continued weak volumes and consequently a tonnage overcapacity, we will continue to adjust our fleet to available cargo volumes through redelivery, layups and dismantling of vessels,” he said.
Wilh Wilhelmsen, which also owns a 40 percent stake in Eukor Car Carriers and 50 percent stake in American Roll-On Roll-Off Carrier, said its operating companies carried 10.9 million cubic meters of cargo in the quarter compared to 18.4 million in the same time the prior year.
At Wallenius Wilhelmsen Logistics it said there was “a significant slide' in operating income. 'Cargo volumes dropped considerably compared with the first quarter of 2008, in the wake of the global financial crisis and economic downturn. Among WWL's cargo categories, car volumes were hit the most, following the slump in car sales world wide.”
It said the most significant decline during the quarter was in the Asia/Europe trade, reflecting the significant decline in Japanese car exports. It also said the Atlantic trades were also severely hit during the quarter, with the largest drop in U.S. car exports to Russia.
“The decline in WWL's operating profit during the quarter was limited by lower bunker prices, deferred bunker cost compensation and efficiency initiatives,” the company said. “The latter include adjustment of sailing patterns to cargo flows, fleet adjustments including idling and lay up of vessels and less use of transshipments. In addition, implemented and ongoing cost efficiency programs had a positive effect on WWL's profitability during the quarter.”
At Eukor it said operating income was somewhat lower and operating profit was higher year over year. Cargo volume was down, mainly as a result of the weak global demand for cars, with the largest decline in the Korea/North America trade.
American Roll-On Roll-Off Carrier “recorded somewhat lower operating income for the quarter, while operating profit remained in line with the same quarter in 2008. Both the North Atlantic and Middle East trades performed well.”
Wilh. Wilhelmsen said based on the considerable drop in cargo volumes worldwide its companies have “a significant oversupply of tonnage. It said its ro/ro units have idled ships, put them into long-term lay and also actively redelivered chartered tonnage.
The company said its maritime services segment has to a lesser degree been affected by the deep cyclicality in the shipping segment.
“For Wilhelmsen Maritime Services, the overall activity level in the merchant fleet has remained reasonably strong and the past quarter has not been severely impacted by announced fleet dispositions,” Skaug said.