Demand still weak in northern Europe, says DFDS

11/16/2012

Ferry operator DFDS has warned of continued weakening of demand in northern Europe, creating overcapacity in several markets and pressure on earnings.

The Denmark-based company recorded a 2012 third-quarter operating profit of Dkr 503 million (US$86m), in line with expectations, but improved results in most business areas were “overshadowed” by a large decrease on the North Sea sector.

Chief Executive Niels Smedegaard said: “The wheels of Europe’s economies, and thereby the transport sector, turned somewhat more slowly in [the third quarter]. 

“This was foreseen and included in our profit expectation for the full-year 2012, which therefore remains unchanged.

“We will, however, most likely pass the finishing line at the low end of the expected interval, as halfway through [the fourth quarter] we see continued weakening of demand in northern Europe.”

DFDS’s Q3 revenue was Dkr3.2 billion, up from DKr3.1 billion in the same period of 2011. Results were as expected in the quarter, which is the high season for DFDS.

“The weakening of demand is causing overcapacity on several markets and pressure on earnings,” Smedegaard said. “The return on the invested capital is therefore lower than our goal.

“We continue to strive to improve our competitiveness by adjusting costs to market conditions and strengthening relations with our customers, including an increase in customer focus that involves everybody in the company.

“Net interest-bearing debt has been reduced substantially, and this enables us to pursue interesting opportunities that may arise to expand our activities.”