DFDS’ Earnings Rise Despite Brexit Woes
Danish ferry and logistics company DFDS closed the second quarter of this year with an increase in its earnings despite challenges posed by Brexit.
DFDS’ revenue was up 9% in Q2 2019, rising to DKK 4.2 billion (USD 629.9 million) from DKK 3.9 billion seen in the corresponding quarter last year.
In addition, EBITDA increased 4% to DKK 989 million in the quarter ended June 30, 2019, from DKK 802 million posted in Q2 2018.
A reversal of the UK stockpiling in Q1 lowered freight revenue and earnings in Q2 for most activities linked to UK trade. The latter was mitigated by income from an agreement with UK Department for Transport, according to DFDS.
“Brexit is an exceptional situation currently lowering volumes in our ferry and logistics network. In spite of this headwind, we are still on track to continue our growth this year. The work to deliver on our new strategic and financial ambitions has started and progress is well under way,” Torben Carlsen, CEO of DFDS, commented.
The company said that the visibility on Europe’s growth path, particularly in northern Europe, has been further reduced in recent months following political changes in the UK.
Rising uncertainty about Brexit is currently contributing to a considerable slowdown in UK trade as manufacturers and importers/exporters are adopting a wait-and-see approach to gain more visibility.
On the other hand, trading between Europe and Turkey has become an important driver for DFDS. The Turkish economy continues to rebalance following the extraordinary TRY depreciation in August 2018.
As a result of the above factors, the expected revenue growth is lowered at 6-8% (previously: 10-12%) and EBITDA before special items is lowered 6% to a range of DKK 3.5-3.8bn (previously: DKK 3.8-4.0bn).
In 2019, DFDS plans to invest in the further development of digital capabilities to improve operational efficiency. This would entail additional costs of up to DKK 100 million.