Arctic Securities has hiked its profit forecast for Wilh Wilhelmsen ASA suggesting its pending merger with Wallenius Lines will bring a step-change in earnings.
Wilhelmsen and Wallenius have been joint-venture partners for the past 17 years and announced in 2016 that their shared interest in Wallenius Wilhelmsen Logistics, American Roll-on Roll-Off Carrier and Eukor would be combined.
The deal will be completed this year, with Arctic suggesting today $50m in cost savings for fiscal 2017, rising to $100m next year.
In a report authored by Andreas Wikborg and Golar Power bound Erik Nikolai Stavseth, Arctic suggested core operating profit for the merged platform would run to $891m in 2017. This compared with the pre-merger $398m the boutique bank was projecting.
With the full cost savings in place in 2018, EBITDA is set to reach $1.029bn, Arctic says, up from the $440m previously charted.
Further aiding the optimism is the expected start of a high and heavy equipment replacement cycle this year.
“Mining is the biggest driver for WWASA, but increased infrastructure spending (in US and elsewhere) should also support demand for construction equipment,” Stavseth and Wikborg wrote.
Wilhelmsen and Wallenius have been working together since 1999, with the single joint venture developing to span four businesses.
“There are a lot of efficiencies and agility to be gained by changing the governance model. We are strong believers this will be to the benefit of everybody involved,” group chief executive Thomas Wilhelmsen told TradeWinds in an interview last autumn.
