Financial Performance

KEY FIGURES
Amounts are in thousands of EUR

Improved Profitability in a Demanding Environment

The EBITDA results of 2020 increased by EUR 1.1 million, or 1.9%, which is very acceptable given the demanding environment as the year progressed with the COVID-19 pandemic. Extensive streamlining measures and structural changes resulted in lower cost and improved profitability. Iceland Domestic and International Operations performed well during the year and continued focus has been on improving the profitability of the container liner services. The COVID-19 pandemic had a huge impact on the Company and the market environment, but considerable effort was put into securing the health and safety of employees, who in turn successfully maintained an unbroken logistic chain and good customer service during this hugely challenging period.

Transported Volume

Volume transported by the Company’s North Atlantic liner services in 2020 was in line with 2019 volume, despite the challenges to the market environment posed by COVID-19. The year started slowly, with volume declining in the first two quarters by 5.0% and 5.1% respectively, but a strong fourth quarter with volume increase of 10.2% closed the whole year on a level with 2019. Export from Iceland was strong during the year and increased by 6.7% from the previous year. Import to Iceland decreased by 4.2% in 2020, mainly due to a slower first half of the year. The fourth quarter, however, was strong, with an increase of 10.1%. Export volume from the Faroe Islands decreased by 12.7% due to the negative effects of COVID-19 on the Islands’ main export markets. The Trans-Atlantic services were marginally down, a decrease of only 1.6% despite the negative effects of the pandemic during the second and third quarters of the year. A strong fourth quarter increase of 14.1% helped to almost close the volume gap.

Transported volume in forwarding services decreased by 4.4% from the previous year, which can mainly be attributed to discontinued dry cargo services in Belgium. Reefer forwarding volume was marginally lower than in 2019, down by 1.5%. Despite less volume in forwarding services, financial results improved between years.

Operational Results

Revenues amounted to EUR 668.3 million, compared to EUR 679.6 million in 2019, a decrease of 1.7%. Market rates in the forwarding services positively affected revenues. However, a decrease in the Company’s revenue due to lower bunker prices and developments in currency exchange rates negatively affected revenues. In 2020, 60% of revenues came from liner services and 40% from forwarding services.

Expenses for the year amounted to EUR 606.6 million, compared to EUR 619.0 million in the previous year. While operating expenses increased by EUR 5.7 million, mainly due to higher rates in the international freight-forwarding markets, salaries and related expenses decreased by EUR 18.1 million, or 13.7%, and amounted to EUR 113.5 million in total. EUR 9.6 million of the salary reduction is directly attributable to managed FTE reduction and streamlining measures, while EUR 8.5 million is due to currency effects

The operating profit, or EBITDA, amounted to EUR 61.7 million, compared to EUR 60.5 million in 2019, an increase of EUR 1.1 million, or 1.9%. Realization of streamlining and integration measures positively affected profitability, but COVID-19 had a negative effect on, for example, the Company's cruise agency and ferry operations, where EBITDA decreased by EUR 1.6 million.

Operating income before interest and tax, EBIT, amounted to EUR 17.1 million, an increase of EUR 3.6 million from 2019, or 26%. Impairment cost in 2019 mainly contributed to depreciation and amortization being lower in 2020.

Eimskip’s net earnings amounted to EUR 4.5 million in 2020, compared to EUR 1.0 million in 2019.

Financial Position and Capital Expenditure

Eimskip’s balance sheet at year-end 2020 remained solid, with assets amounting to EUR 536.1 million and a 43.0% equity ratio. Interest-bearing debt amounted to EUR 225.2 million at year-end; an increase of EUR 20.9 million, of which EUR 24.9 million related to an increase in operational lease liabilities when the Company began operating the new, 20,000-ton cold store Tromsøterminalen in Tromsø, Norway. Net debt was EUR 205.2 million, or an increase of EUR 21.7 million from the previous year. Net cash from operating activities amounted to EUR 51.2 million, a figure that is in line with the previous year. The Company purchased treasury shares amounting to EUR 1.5 million in January 2020, as part of a share buy-back program initiated at the end of 2019. No other dividend or shareholder payments were made, partly due to the uncertainty around the developing COVID-19 pandemic in the spring of 2020. Cash and cash equivalents amounted to EUR 15.6 million at year-end.

Total capital expenditure, or CAPEX, amounted to EUR 52.7 million in 2020, of which maintenance CAPEX, including vessel dockings, was EUR 12.9 million. The investment in new vessels, Dettifoss and Bruarfoss, amounted to EUR 36.9 million. CAPEX in 2019 amounted to EUR 47.4 million.