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UPS: MULTI-MILLION PENALTY FOR UNFAIR EARNINGS DISCLOSUREWTC: PUNISHEDVW: UNDER PRESSUREKNIN: APAC LEADERSHIP WATCHZIM: TAKING PROFITPEP: MINOR HOLDINGS CONSOLIDATIONDHL: GREEN DEALBA: WIND OF CHANGEMAERSK: BULLISH CALLXPO: HEDGE FUNDS ENGINEF: CHOPPING BOARDWTC: NEW RECORDZIM: BALANCE SHEET IN CHECKZIM: SURGING
UPS: MULTI-MILLION PENALTY FOR UNFAIR EARNINGS DISCLOSUREWTC: PUNISHEDVW: UNDER PRESSUREKNIN: APAC LEADERSHIP WATCHZIM: TAKING PROFITPEP: MINOR HOLDINGS CONSOLIDATIONDHL: GREEN DEALBA: WIND OF CHANGEMAERSK: BULLISH CALLXPO: HEDGE FUNDS ENGINEF: CHOPPING BOARDWTC: NEW RECORDZIM: BALANCE SHEET IN CHECKZIM: SURGING
Danish ferry and road freight operator DFDS saw weaker road freight demand across Europe in the third quarter, and today reported reduced profits despite carrying higher volumes.
“Q3 was, as expected, a challenging quarter,” chief executive Torben Carlson said this morning. “The European slowdown in demand and manufacturing that began in Q2 became more widespread.
“Instead of a rebound in Q4, we are now expecting a further slowdown in the rest of the year,” he added.
Last week, the company reduced its full-year outlook, partly due to the collapse of a €500m deal to buy the international transport network of Turkish firm Ekol Logistics, “a large and valued customer in our Mediterranean route network”, Mr Carlson said.
“Given our customer relationship and an ongoing dialogue about the future post-termination, I can’t provide any more information about the situation, but we continue to see Turkey as a compelling growth market. In the coming weeks we will continue the dialogue with Ekol, both as a supplier and as a customer of the owner’s terminal in Yalova.
“The termination of the purchase agreement is, of course, unfortunate, but we believe it’s the right decision under the circumstances,” he added.
Today, DFDS reported group-wide revenue up 11%, to Dkr8bn ($1.15bn), with organic growth at 4%, while EBIT reduced 11% to Dkr785m.
“Despite the market headwinds, we continued in line with our organic growth ambitions to protect and grow volumes in Q3 on the back of our network strength.
“This did not, however, translate into earnings growth as price and margin pressures were intensified through our exposure to the automotive sector, the Baltic region and eastern Europe, and the new Brexit border checks that are holding back food exports to the UK,” Mr Carlson explained.
Its ferry division saw 4% organic growth during the quarter, but freight rates were hit by overcapacity in some regions, although Mr Carlson said this had been addressed on the cross-Channel Dover-Calais route, where 11 vessels had been deployed across the trade’s three operators.
P&O Ferries has since removed two vessels from the trade and Irish Ferries one, but “whether this is a permanent adjustment remains to be seen but it means we are in a stronger position when it comes to rate negotiations for 2025″, he said.
DFDS also saw the entrance of a new competitor in the Turkish market with the September launch of a twice-weekly Grimaldi ro-ro service between Trieste and Ambarli.
“There were two ro-ro operators, now there are three, and with approximately half of the Turkey-Europe cargo moved by road and half by ferry, that’s a challenging situation.
“However, compared to the overcapacity we have seen in the English Channel, Turkey is a growth market and therefore it is easier to handle new capacity,” he added.
The results in DFDS’s logistics and road freight arm were a mixed bag: around 70% of its business was described as stable and saw an EBIT of 4%, while the remaining 30%, particularly its full-trailer load (FTL) carryings, saw considerable headwinds, due to combination of a weak automotive market and challenges posed to UK food imports by the third phase of Brexit.
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