Eimskip has revealed higher-than-expected costs as it sold and took delivery of ships during the pandemic-blighted first quarter.
One of the ships — the company's biggest ever — was handed over on Saturday.
The 2,150-teu Dettifoss is one of two of the Icelandic boxship and reefer player's $32m, delayed newbuildings due from Huangpu Wenchong Shipbuilding in China.
The shipowner sees the delivery as an important milestone for its vessel-sharing agreement with Greenland carrier Royal Arctic Line (RAL) that is scheduled to start in June. RAL is also contributing a newbuilding.
"Eimskip’s employees have been in China to prepare for the delivery of the vessel, some of them for an extended period due to Covid-19, including a 14-day quarantine, which has been a challenging task given the circumstances," the outfit said.
The vessel is scheduled to depart from China in early May for the journey to the North Atlantic which will take around 40 days.
Voyage home to begin
The ship will load cargo in Taicang, China, then head to Singapore, Sri Lanka and into the Mediterranean via Suez and then to Denmark, where the vessel will formally start its service.
Estimated arrival in Iceland is by late June.
The second vessel, the Bruarfoss, is scheduled to be delivered late in the third quarter.
Eimskip had previously highlighted difficulties getting newbuilding teams into China when it went it lockdown.
The delays have meant some additional costs.
Vessel sales more complicated
Additionally, the ocmpany said that one-off costs related to delivery of reefer vessels held for sale in Norway was substantially higher than expected.
The shipping company sold three veteran reefers for $12m.
The 181,180-cbf Langfoss (built 1991), Stigfoss and Vidfoss (both built 1990) have been operating in the country for 20 years and owned by Eimskip for the last eight.
One of the vessels will be chartered back for two years.
And the company said there had been "challenges and additional cost of delivering Godafoss and Laxfoss to its new owner."
The 1,457-teu boxship duo (both built 1995) were taken out of service earlier than previously planned, which will lower fixed operating costs, as Eimskip adjusted its container sailing system. They had been held for sale since April, 2019.
This year, the shipowner has made 170 staff members redundant, including at management level, about 10% of full-time workers.
Various investments have been put on hold or delayed to secure its "strong" liquidity position during this uncertain time, it said.
Profit falls as volumes drop
The full impact of the Covid-19 pandemic on global economies, including in the North-Atlantic region which is the company’s core market area, remains to be seen, it added.
Preliminary accounts for the first quarter show Ebitda will be between €9m ($9.8m) and €9.5m, against €13.2m last year.
"The results are below expectations," said chief executive Vilhelm Mar Thorsteinsson.
"The performance in the first quarter of this year was somewhat mixed as previously announced when the company’s Ebitda guidance for 2020 was withdrawn."
He said the year got off to a reasonable start, followed by "considerable under-performance" in February
But March was according to expectations," the executive said.
Volume in the liner services was 5% down year on year.
Although import volume to Iceland was lower compared to last year, it was in line with expectations. On the other hand, export volume from Iceland and the Faroe Islands was considerably below expectations, due to a low catch and less export of fresh salmon due to the virus.
Full results are due on 13 May.
