Wilh Wilhelmsen Holding suffered a huge hit to passive investments in the second quarter but is brushing off that unrealised loss and plotting growth.
Instead of mourning the fair value of its interest in South Korea’s Hyundai Glovis, the Oslo-listed investor and ship service provider is touting a new $300m financing for its maritime services division and the completion of its acquisition of shore supply base company NorSea Group.
The loan from six Scandinavian and Dutch banks gives it flexibility for further acquisitions in the ship service sector, especially in port agency bolt-ons.
Meanwhile, the recent exercise of options to take its 75% shareholding in NorSea up to 99% could lead to sales of some non-essential pieces of NorSea’s large portfolio of Norwegian, Danish and Scottish coastal real estate.
The company reported fairly stable development year on year in operations-related figures for the second quarter.
But a whopping loss on financial items put it deep in the red, at least in theory.
The largely unrealised loss comes mostly on the fair value of Hyundai Glovis stock.
Wilh Wilhelmsen’s Ebit of $39m on quarterly total income of $238m was only slightly down year on year from the $40m Ebit on $224m total income reported in the second quarter of 2021.
Its share of profits from joint ventures and associates added $45m more, mostly thanks to the continuing strong performance that car carrier giant Wallenius Wilhelmsen reported the day before.
The bad news came on the line below that.
Financial items made a negative difference of $117m, for a bottom-line net loss of $38m after taxes for the quarter, down from a positive $112m year on year.
The financial items included a $30m unrealised loss on currency rate hedges and a $92m change for the worse in the fair value of the Hyundai Glovis share.
About half of that fair value write-down was also foreign exchange-related, and half based on the underlying change in value of the Hyundai Glovis stock itself, chief financial officer Christian Berg told investors on an earnings call on Friday morning.
Wilh Wilhelmsen took what was originally a 25% stake in the South Korean logistics company then called Glovis in November 2004 for $100m.
The size of the holding in what is now Hyundai Glovis is such that it often constitutes the largest post in Wilh Wilhelmsen’s results, and a year ago it accounted for the lion’s share of a healthy profit, likewise an unrealised paper result.
The company breaks out results into three segments:
- Strategic holdings (including its 37.8% share in Wallenius Wilhelmsen and an interest of 8.3% in Hyundai Glovis in the form of an 11% shareholding through 77%-owned Wilh Wilhelmsen subsidiary Treasure);
- Maritime services (including its large ship management operation, port services and ship services, a sub-segment that acquired cargo-hold cleaning company Stromme in June); and
- New energy (including NorSea, a 25.7% stake in Edda Wind and other technology-oriented investments).
In remarks to investors, chief executive Thomas Wilhelmsen highlighted a new $300m revolving credit facility from old friends DNB, SEB, Danske Bank, Swedbank, Nordea and ABN Amro for the maritime services division, and indicated that this would give the company financial flexibility for consolidation through acquisitions in asset-light businesses including port agency and ship management.
Singapore-based Wilhelmsen Ship Management, led by Carl Schou, is one of the world’s leading third-party technical managers.In January, it revived its Barber Ship Management through a stake in German tanker owner Ahrenkiel.
