DFDS highlights 'faster than expected pick-up in freight volumes'

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Source: Lloyd's Loading List, 2020-08-12

DFDS saw its quarterly financial results decline sharply on the same period last year to the backdrop of the travel restrictions imposed to limit the spread of COVID-19.

However, the European ferry giant said the outlook for 2020 has improved following “a faster than expected pickup in freight volumes towards the end of Q2 and in July.”

The Denmark-based operator reported a 34% decrease in revenue in its second quarter (April-June 2020) to DKK 2,798m (almost $441.6m) while earnings before interest and taxes (EBIT) and special items plummeted to DKK 48m from DKK 541m a year earlier.

DFDS' Ferry division saw its global freight volumes down 15% but on Channel routes  (-9%), the decline was “offset by cost savings from layup and fewer sailings.”

On North Sea routes, volumes fell by 19%, adjusted for the launch of Gothenburg-Zeebrugge service in June last year. DFDS  noted the “large drop” in automotive shipments while the financial performance was impacted by “negative variance” from the UK Department for Transport income in Q2 2019 (related to provision of  additional freight ferry capacity in the event of a no-deal Brexit).

DFDS' Mediterranean freight routes were hit hardest in Q2 with volumes dropping 34%, “led by automotive and textiles” while air travel for customers’ truck drivers was restricted, it said.

In June 2018, the company completed the purchase of U.N. Ro-Ro, Turkey’s largest operator of freight ferry routes connecting Europe and Turkey -  its ts biggest-ever acquisition. However, the deal was closed as Turkey's brewing economic crisis esclated.

DFDS said the key question in the second half of the year will be whether the current pick-up in freight volumes the company is experiencing is sustainable?

It pointed to the positive volume recovery trend continuing in July although this was slower for the automotive sector where uncertainty remains high. Other factors to take into account are that ferry capacity from competitors is returning, the weakness of the Turkish lira casts doubt on Turkey's economic recovery while there remains a lack of visibility with regard to a EU-UK Brexit deal.

“Uncertainty remains elevated and the outlook and its assumptions can still change significantly in the rest of the year.

Nevertheless, DFDS has narrowed its estimate of the decline in its ferry freight volumes in 2020 compared to last year from 15%  to “less than 10%.”


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