Wallenius Wilhelmsen limped to the end of 2023 as the Red Sea security crisis dragged on earnings and pushed the company to soften this year’s outlook.
On Wednesday, the world’s largest car carrier owner reported a $134m profit for the three months to 31 December, a 45% drop from the $246m earned for the same period in 2022 amid lower shipping volumes.
Chief executive Lasse Kristoffersen blamed the fall in volumes on vessels being rerouted south to avoid potential attacks — the same reasoning that prompted him to take a more measured approach towards 2024 expectations.
“We said after last quarter that we expect ’24 to be better than ’23. This time we said somewhat better,” he told the company’s earnings presentation at its headquarters in Lysaker.
“That means there’s no doubt that the situation in the Red Sea will have some impact on our numbers. However, we don’t think it’s so material that ’24 will be lower than ’23.”
He said if the situation persisted the whole year, the company’s volumes would fall by as much as 6%, but “there is also upside if this situation is resolved”.
Wallenius Wilhelmsen was the first car carrier owner to announce it was avoiding the Red Sea following a spate of attacks on ships heading to the Suez Canal by Houthi militants in Yemen.
It said the increased cost of longer voyages south was offset by avoiding the Suez Canal toll, but the company was still bearing the brunt of other costs on its older contracts.
For the fourth quarter, its shipping revenue slipped to $961m from $1.1bn year over year.
At the same time, net freight rates rose to $56.50 per cbm from $52 per cbm, offset by volumes falling to 14.6m cbm from 15.8m cbm.
The company also experienced what it described as seasonal weakness in its government services division, which contracts with the US government: revenue slipped from $88m in the fourth quarter of 2022 to $81m a year later.
Its logistics division showed strength, with revenue rising from $261m to $298m year over year.
In early trading on Wednesday, Wallenius Wilhelmsen shares fell NOK 6.30 ($0.60) to NOK 110.
Analysts said the earnings fell short of expectations. DNB’s Jorgen Lian described it as a “relative underperformance” versus competitors such as Hoegh Autoliners.
He expects shares to fall, as optimism around Wallenius Wilhelmsen earnings was driven by a positive reports from competitors.
“Overall, the [fourth-quarter] results were slightly below consensus expectations due to lower volumes not sufficiently offset by rate increases in shipping,” Lian said.
He added that the company’s new proposed dividend policy, which will pay out 30%-50% of net income after tax twice a year, should be reason for investor optimism.
