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Containerships, Q3 interim report

Containerships plc’s Q3 2018 interim report

January-September 2018: Net Sales up almost 17 % and Net Profit up EUR 2.7 million

– Net Sales EUR 194.5 (166.2) million
– EBITDA EUR 11.7 (10.8) million
– Net Profit EUR 2.8 (EUR 0.1) million
– The majority owner of Containerships plc, Container Finance Ltd Oy, and CMA CGM group have signed an agreement 31st of October 2018, pursuant to which the container shipping and logistics business Containerships and Container Finance’s holdings in Multi-Link Terminals Ltd and CD Holding Oy, will become part of CMA CGM Group.

July-September 2018: Continued strong Net Sales growth, challenge from change in bunker price

– Net Sales EUR 68.3 (EUR 55.8) million
– EBITDA EUR 3.7 (EUR 3.7) million
– Net Profit EUR 0.9 (EUR 0.0) million
– Net Sales are expected to grow over 10% and EBITDA for the full year is expected to improve on the previous year

Key figures

Key figures, IFRS7-9/20187-9/2017Change1-9/20181-9/2017Change1-12/2017
Net Sales, €m68,355,822,4 %194,5166,217,0 %226,7
EBITDA, €m3,73,70,0 %11,710,88,3 %15,2
as % of Net Sales5,4 %6,6 %6,0 %6,5 %6,7 %
EBIT, €m2,02,00,0 %6,65,129,4 %7,8
as % of Net Sales2,9 %3,6 %3,4 %3,1 %3,4 %
Net Profit, €m0,90,07400,0 %2,80,12700,0 %0,2
as % of Net Sales1,3 %0,0 %1,4 %0,1 %0,1 %
Equity ratio16,0 %
Equity ratio, adjusted20,8 %
Personnel, on average697610633*
Containerships discloses EBITDA and adjusted equity ratio as alternative key figures because management considers them to better describe the Group’s EBIT and financial position and to improve comparability. The consolidated statement of comprehensive income shows the reconciliation of EBITDA on EBIT. Equity ratio adjusted (Equity/total assets x 100) includes a capital loan of €5 million. However, these alternative key figures do not replace key figures in accordance with IFRS.
*2018 personnel on average figure is 697. Updated number of personnel for 31.12.2017 is 633, original figure of 2017 (562) did not include part of the truck drivers.

Market conditions and significant events

Containerships is a full-service logistics company providing safe, fast container transportation in the Baltic Sea, North Sea and the Mediterranean. Containerships offers both standard and customised containers and variable logistics solutions from door to door. The group’s business focus is in the Baltics, where Containerships is one of the leading companies in the business. In the 2010s, the group successfully expanded operations to the Mediterranean Sea, where operations currently account for 12% of the group’s revenue.

There were no significant changes in the operating environment during the reporting period. The Russian market has remained challenging due to economic sanctions and the country’s overall economic situation. The United Kingdom’s Brexit decision has at least not yet impacted the company’s business. No significant changes are estimated to occur in the operating environment in the near future.

The company continues to progress on its chosen investment path based on its environmentally friendly LNG strategy. A start has been made on building the four LNG vessels of which one will be delivered to the company during November 2018 and three will be delivered during January-June 2019. The company has increased the number of LNG-fuelled trucks in Great Britain and has increased the LNG- transport capacity also in the Netherlands. Company is exploring the possibilities to increase the LNG-transport capacity in Finland.

In the Mediterranean region, the group’s own agency activities in Algeria began in autumn 2016 continue to show profitable growth. Business in Tunisia and Libya is being developed in partnership with local agents.

Container Finance Ltd Oy and CMA CGM group have 31st of October 2018 signed an agreement according to which the container shipping and logistics business Containerships and Container Finance’s holdings in Multi-Link Terminals Ltd and CD Holding Oy, will become part of CMA CGM group. Upon closing Container Finance’s entire container logistics operations will integrate CMA CGM intra-regional market offering in Europe and Mediterranean area. The CMA CGM group is one of leading maritime transport companies in the world.

Financial performance

The group’s net sales for the third quarter were EUR 68.3 (55.8) million, up 22.4% year on year. Falling freight prices in the Baltic Sea and North Sea levelled out and showed a slight rise towards the end of the quarter. Market conditions and competition in the Mediterranean were challenging during the quarter and both business volumes and the price level were in retreat. The group developed its operations to better respond to customer needs in the Mediterranean. This resulted in sales growth in third quarter. Thanks to the measures introduced, the group sees that the positive trend in sales will continue and profitability will improve in the Mediterranean for the rest of the year.

Operating profitability the in the third quarter remained in the previous year level. EBITDA for the third quarter was EUR 3.7 million, equating to 5.4% of net sales (EUR 3.7 million, 6.6%). Operating profit was EUR 2.0 million, equating to 1.3% of net sales (EUR 2.0 million, 3.6%). The rise in the price of oil on the global market and 45 % higher fuel costs compared to previous year increased operating costs significantly, which in turn eroded profitability.

Net profit for the third quarter was EUR 0.9 (EUR 0.0) million, up EUR 0.9 million. Part of the interest costs on the bond have been capitalised in the cost of building the ships in accordance with general practice since the prepayments for the vessels were made in October 2016. The equity stated in the IFRS report does not include a capital loan of around EUR 5 million. Adjusted equity is around EUR 26 million, whereas in the IFRS calculation it is around EUR 20 million.

The group’s operational cash flow was significantly better than previous year and was EUR 9.2 (-1.1) million positive.

General information

Containerships Group is part of the Container Finance group, whose parent company Container Finance Ltd Oy and domicile are in Finland. Containerships group is a family-owned company and 98 percent of its shares are owned by Container Finance Ltd Oy and two percent of its shares are owned by Containerships’ CEO. The home member state of Containerships Finance Ltd is Finland.

Containerships group consists of the parent company Containerships plc and the 19 subsidiaries each of which it owns 90 per cent at minimum. The group operates in 22 countries.

Containerships plc’s bond totaling €60.0 million is listed on Nasdaq Helsinki (Helsinki stock exchange) and is repayable in 2021.Events after the reporting period.

Container Finance Ltd Oy and CMA CGM group have 31st of October 2018 signed an agreement according to which the container shipping and logistics business Containerships and Container Finance’s holdings in Multi-Link Terminals Ltd and CD Holding Oy, will become part of CMA CGM group.

Most significant risks looking ahead

The most significant risks in Containerships’ business relate to fluctuations in the price of oil and to political uncertainty in the Russian and Turkish markets. Risks and risk management are detailed on the group’s website and in the financial statements. The group does not consider there to have been any material changes in risks during the reporting period.

Outlook

Group has updated its estimation for the future outlook. In 2018, Net Sales are expected to grow by 10% and EBITDA for the full year is expected to improve on the previous year.

Work will continue on improving operating efficiency. Efforts will be made to develop sales work in particular by focusing on those segments and regions where growth can be captured and by further improving efficiency especially in those regions. The company does not expect any major changes in market conditions. The challenging situation in the Mediterranean is expected to continue.

Work on building the LNG vessels is ongoing and delivery will take place as planned in 2018 and during first quarter of 2019. In addition, the company will continue to focus on developing LNG-fuelled truck traffic.

Containerships will publish its 2018 annual financial statement on Thursday 28 February 2019.

 

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