Norway’s Wallenius Wilhelmsen says its financial position remains solid after accounting changes knocked $929m off its equity.
The Oslo-listed car carrier group decided to change how it accounts for the put option held by Hyundai Motor Group on a 20% non-controlling interest in the two companies’ car carrier joint venture, Eukor. Wallenius Wilhelmsen owns the other 80%.
The decision was taken following a review and recommendation by the group’s new auditor, EY.
Hyundai has had the right to exercise its sale option since 2018, as a result of Wallenius Wilhelmsen’s share of the car maker’s transported volumes falling below 50%, at 40%.
Any non-cash changes in the fair value of the option have until now been recognised as an extraordinary gain or loss.
The idea now is to recognise a liability for the put option in full and remove it as a non-current asset.
Equity for 2023 will be reduced by $977m, and by $929m in the first quarter of this year.
“The group is financially solid, and this accounting change does not affect the group’s strong performance or ability to deliver on dividend policy and planned payout,” the shipowner said.
“While the equity ratio will be reduced, the group continues to deliver on all financial targets,” it added.
Current liabilities will be increased by $878m for 2023 and $847m for the first three months of this year.
Profit rises
Equity for 2023 has been restated at $3.08bn.
Net profit has increased to $974m from $967m, as a loss on the option was removed.
First-quarter equity has been revised down to $3.2bn, with net earnings rising to $201m from $185m.
Shareholder Wilh Wilhelmsen Holding said that as a result of the changes, its own net profit for the first quarter will rise $6m.
Fearnley Securities analyst Fredrik Dybwad said: “We believe the adjustment highlights Wallenius Wilhelmsen’s strong financial performance and sturdy balance sheet, as the company is able to take such a large hit to its equity without it affecting their financial performance, dividend payments or debt covenants.”
