Eimskip Scraps Boxship Order in China

 The Icelandic Steamship Company (Eimskip) has decided to cancel a container ship ordered at Chinese shipbuilder Rongsheng Shenfei.

The vessel forms part of a contract signed in 2011 that entails construction of two 875-teu container ships.

The first vessel, Lagarfoss, was delivered in June last year and has served the company well, Eimskip said.

However, the shipping company decided to scrap the second unit as there have been construction delays which are likely to resume.

“The construction of the second vessel has not proceeded according to schedule and it is evident that further delay is ahead. The company has now decided to exercise its right under the abovementioned agreement and cancel the second vessel,” Eimskip explained.

The second ship was planned to be delivered in the fourth quarter this year at the latest.

Eimskip added it would seek refund of USD 13.1 million (plus interest) which the company has already paid in relation to the construction of the second vessel. The refund sought plus interest is secured by a bank guarantee.

As a result, Eimskip said it would now evaluate other opportunities regarding investments in a comparable vessel.

Eimskip had a very strong first half of the year, posting an operating revenue of EUR 239.3 million compared to EUR 213.2 million for the same period last year,  a growth of 12.2%. The company’s net earnings amounted to EUR 7 million compared to EUR 3.8 million, up by 85.2%.

According to Eimskip’s President and CEO, Gylfi Sigfússon, operating revenue and EBITDA in the second quarter are the highest in one single quarter since the company’s restructuring in 2009.

“Operating revenue was up by 16.2% from the second quarter last year and EBITDA amounted to EUR 13.3 million, up by 20.4% from 2014. Net earnings of the quarter amounted to EUR 5.5 million compared to EUR 4.6 million in the same period last year, up by 20.1%,” he said.

Transported volumes in the company’s liner system in the third quarter have so far been growing beyond expectations, Eimskip said.