Lasse Kristoffersen is confident heading into a key period of the year for Wallenius Wilhelmsen.
But he is not saying how confident.
The chief executive told the third-quarter earnings call that he is expecting a strong 2025, as the car carrier giant still has significant contracts up for renewal, but he would not budge when pushed on how much better it could be.
“This time last year, we didn’t know anything about the Red Sea,” he said, noting the continuous string of Houthi attacks prompting Cape of Good Hope reroutings dented the bottom line by $100m.
“It’s just the fact we’re a global business. Whatever happens in the world and where it happens affects us.
“What we do know is that we’re writing a very strong book of business that has stronger rates and stronger terms.”
Heading into 2024, Wallenius Wilhelmsen had 46% of its contracts up for renewal, and speaking to TradeWinds after the call, Kristoffersen said the majority are still open.
He said the ones still under negotiation run from 1 January, meaning they will close at some point in the fourth quarter.
The company is getting more “balanced terms” with a better split of risks.
“In general, the contract negotiations are going very well. If anything, we see that we are above our expectations, not below,” Kristoffersen said, pointing to a $766m contract announced on Monday.
“We see significant rate increases as we saw with the contract we just announced. We also see the duration of the contracts are increasing. The contract we just announced was a five-year fixed contract.”
The automotive market is also not a cause for concern.
Although car sales have slowed, they are not down, and automaker profit warnings are largely from Western companies and due to declining profit margins as they try to clear out inventories, Kristoffersen said.
“We expect for the next years an average annual growth rate of global car sales of 2% and we see a global increase in deepsea volume of 4%, meaning that the deepsea [volume] is growing twice as fast as the general market,” he said following the call.
Investor reaction
For the quarter, Wallenius Wilhelmsen posted a $259m profit, down from $279m year over year, despite revenue tipping up to $1.4bn from $1.3bn.
Net freight rate for the quarter hit $60.80 per cbm, up from $52 per cbm a year earlier.
But its Oslo-listed shares still took a dive, falling by NOK 7.90 ($0.72) to NOK 111.70 in midday trading on Wednesday.
The dip followed an even bigger drop last week following rival Hoegh Autoliners’ earnings, when shares fell from NOK 129.90 to NOK 120.60 and further to NOK 119 in a two-day period.
The decline prompted DNB analyst Jorgen Lian to wonder about a “perhaps overly optimistic consensus” on the sector.
Kristoffersen touted his company’s quarterly adjusted Ebitda figure, which came in at $503m, its second-highest ever.
“We see a very strong performance in this quarter, and if you take out some one-off effects, we are actually on par or slightly above the second quarter, which was the best we’ve ever had,” he told TradeWinds.
“We are very confident in the performance we just delivered and in the performance development of Wallenius Wilhelmsen going forward. And then investors need to speak for themselves.”
