EIMSKIP: EBITDA results for Q1 below expectations

According to the preliminary management accounts EBITDA in Q1 will be in the range of EUR 9.0-9.5 million compared to EUR 13.2 million last year (EUR 5.0-5.5 million compared to EUR 10.6 million excl. IFRS 16). Result for Q1 2019 was very strong and although same level was not expected for Q1 this year, the results are below expectations.

The performance in the first quarter of this year was somewhat mixed as previously announced when the Company's EBITDA guidance for 2020 was withdrawn. The year started reasonably in January, followed by a considerable underperformance in February but March was according to expectations. Volume in the liner services was 5,0% below same period last year. Although import volume to Iceland was lower compared to last year, it was in line with expectations. On the other hand, export volume from Iceland and the Faroe Islands was considerably below expectations which can be explained by low catch and less export of fresh salmon due to capacity reduction in airfreight solutions due to COVID-19 outbreak in China. Additionally, one off cost related to delivery of reefer vessels held for sale in Norway was substantially higher than expected. Volume in forwarding services was down approximately 7% quarter on quarter. Reefer forwarding held relatively well although affected by some challenges in access to equipment, capacity reduction with deep-sea carriers and cargo congestion in Chinese terminals during the quarter due to COVID-19.

Various streamlining measures have been taken YTD

The Company has taken many steps on its journey to streamline and integrate the operation. Key measures that have been taken year today are:

• The number of FTE's in Eimskip Group has been reduced by 170 in all layers including management, an equivalent of 10% of total number of FTE's at the beginning of the year.
• The container sailing system has been temporarily adjusted, enabling the Company to off-hire two vessels earlier than expected. The adjusted sailing system will apply until the arrival of Dettifoss and the cooperation with Greenlandic carrier Royal Arctic Line commences which is expected in mid-June. Estimated cost savings during this three-month period is approximately EUR 2 million.
• Various investments have been put on hold or delayed to secure the Company's strong liquidity position during this uncertain times.

The full impact of the COVID-19 pandemic on global economies, including in the North-Atlantic Region which is the Company's core market area remains to be seen.

The Company is incurring some cost directly associated with COVID-19, e.g. cost due to delays in delivery of Dettifoss, challenges and additional cost of delivering Godafoss and Laxfoss to its new owner and to less extend various other measures that the Company has taken to secure the safety and health of employees and to maintain and secure the logistic chain and customer services.

Eimskip is still working on the Q1 results and the EBITDA result is therefore subject to change during that process.

Financial results for Q1 will be published on May 19th.

For further information please contact Edda Rut Björnsdóttir, Executive Vice President of Human Resources & Communications via phone [phone] or [e-mail].