Danish ro-ro and ropax group DFDS has said clients are telling it to be ready to cope with increased production in the second quarter.
The company has laid up 12 of 50 ships and furloughed 2,200 staff members during the coronavirus pandemic, but its capacity may be needed more in the months ahead.
"We have a very little visibility always on forward bookings," chief executive Torben Carlsen said on a conference call, after announcing preliminary first quarter results.
"We have received notifications from car factories starting up again notifying us to be ready, both on the logistics and ferry side so that we can handle it."
He said some factories are starting up with 25% capacity, others with full capacity. While some are ramping up this week and next, others are not coming back online until early May.
"So it's a scattered picture. And of course, we'll have to see what then happens on demand, whether it's a stable picture," Carlsen said.
The hour-long call generated intense analyst interest, as DFDS was one of the first companies to address the actual effects of the coronavirus crisis on financial performance.
Decisions made on a daily basis
"We are monitoring the situation on a daily basis and make decisions on a daily basis. You can see that the number of vessels that we have laid up actually means that we are able to keep relatively good utilisation percentages, which is key for minimising the impact," Carlsen said.
"In terms of our organisation, there are some trade-offs between whether you want to be in the government [wage] packages or whether you are free to make more permanent reductions.
The executive said the company is constantly monitoring the situation to see what moves make sense under the outlook at the time.
He said: "So the next step could also be that we would have to make more permanent changes."
Acquisitions not in focus
Asked if the slump has provided any distressed acquisition opportunities, he said such deals are not the outfit's first priority at the moment.
"We are monitoring closely what is happening out there," Carlsen said.
"And there may be a number of different situations that can occur, whether it's M&A or consolidations or cooperations that maybe did not exist before, and we're monitoring that closely. But there is nothing, no specific M&A that we are set on completely."
Asked about the impact of Covid-19 on working capital, chief financial officer Karina Deacon said DFDS is doing all it can to monitor its receivables.
"And hopefully - or thankfully, we haven't seen any losses yet, but it's clear that we are being met with the request for extended credit terms, etc," she said.
"On the other hand, we are, of course, also working with our close partners, our suppliers and asking for their support to us. So at this point in time, it's really too early to say, but it's not a year where I would expect that we are improving working capital."
Unusual situation
Carlsen concluded by saying that in this unusual situation, it is understandable that there may be some frustration about the amount of answers the company can offer.
"But we are trying to give as much guidance as possible," he said.
"We are at good spirit here in DFDS and also throughout our system experiencing a lot of enthusiasm, getting together to support the operation and the company."
DFDS logged a 43% drop in earnings in the first quarter despite the fact the pandemic only really took a grip in Europe in the last few weeks of the period.
In its preliminary results to 31 March, the company said earnings before interest and taxes was down to DKK 133m ($19m) from DKK 234m in 2019, while profit before tax dropped to DKK 98m from DKK 159m.
Revenue was down slightly at DKK 3.81bn, against DKK 3.87bn.
DFDS said the quarter was relatively unaffected until March lockdowns started being imposed in Europe.
