Germany’s Ernst Russ Group expects earnings to drop by perhaps one-third this year.
But the boxship tonnage provider is “cautiously optimistic” that charter markets will stabilise.
The Frankfurt and Hamburg-listed company expects operating earnings (Ebit) to fall by up to 37%.
Ebit is projected to fall to between €57m and €77m ($61m to $83m) this financial year, down from €90.1m last year.
However, last year’s operating profit was skewed by the sale of vessels and shares, and the adjusted Ebit in 2022 was only €64m.
The forecast is based on a fleet size of around 30 vessels and the assumption that the charter markets will continue to be stable.
That fleet includes the 1,025-teu Bakkafoss (built 2009), which the company acquired this month together with Eimskip of Iceland
Consolidated revenue in 2023 is forecast to remain broadly stable in the region of €180m to €200m. That is roughly in line with €191.7m last year.
The lower earnings forecast follows a sharp correction in ship charter rates.
These are primarily linked to the small container ship market, where charter rates are down 75% year on year.
However, that has had the effect of bringing supply and demand into balance at the end of January 2023, the company said.
“As far as the 2023 financial year is concerned, we are cautiously optimistic that the sentiment will lift slightly and the charter markets relevant to us will stabilise at an adequate level,” chief executive Robert Gartner added.
Profits treble again
Ernst Russ celebrated one of its best years with a three-fold increase in profits in 2022.
Consolidated net income after non-controlling interests increased to €47.3m, up from €15.8m, rising to €83.9m with the inclusion of €36.6m attributable to minority interests.
Revenues more than doubled in 2022 to €191.7m.
Ebit tripled to €90.1m last year, up from €30.8m in 2021, and liquidity increased to €57.8m despite the extensive repayment of ship mortgage loans.
The group’s equity ratio increased from 54.2% to 73.2%.
The company proposes to pay a dividend of €0.20 per share.
Ernst Russ, 38.2% controlled by the Dohle Group, is a majority owner of 29 vessels.
Most of the fleet is smaller container ships with a capacity of between 700 teu and 6,600 teu.
