DFDS hit by Brexit slowdown
Rising uncertainty about Brexit is contributing to a considerable slowdown in UK trade as manufacturers and importers/exporters are adopting a wait-and-see approach to gain more visibility. In line with the stockpiling that took place in Q1 ahead of the previous Brexit date.
“Brexit is an exceptional situation currently lowering volumes in our ferry and logistics network. In spite of this headwind, we are still on track to continue our growth this year. The work to deliver on our new strategic and financial ambitions has started and progress is well under way”, Torben Carlsen, CEO
The total trading volume of goods between UK - a major market for DFDS - and the rest of Europe decreased in the first two months of Q2 2019 as UK import and export volumes were down 8% and 4% year-on-year, respectively.
Turkey’s real GDP continued to decrease in Q2 2019 but at a lower rate than in Q1 2019. Inflation expectations are decreasing following an interest rate reduction of 425bps on 25 July 2019. The economy is thus starting to recover and growth is currently expected to resume end of 2019/beginning of 2020. In Q2, exports increased 1% while imports decreased 21%.
In Q2, revenue increased 9% to DKK 4.2bn and EBITDA before special items increased 4% to DKK 989m. In H1, revenue increased 10% to DKK 8.1bn and EBITDA before special items increased 8% to DKK 1.7bn. The growth in revenue and earnings in Q2 was mainly driven by the expansion in the Mediterranean and higher passenger revenue. A reversal of the UK stockpiling in Q1 lowered freight revenue and earnings in Q2 for most activities linked to UK trade. The latter was mitigated by income from an agreement with UK Department for Transport.
The exceptional uncertainty on the outcome of Brexit is currently reducing UK trade and visibility.
Therefore, expected revenue growth is lowered to 6-8% (previously: 10-12%) and EBITDA before special items is lowered 6% to a range of DKK 3.5-3.8bn (previously: DKK 3.8-4.0bn), (2018 restated to IFRS 16: DKK 3,589m).