A year of progress
2006 was a year of progress for DFDS – the market position was further strengthened and financial performance improved considerably.
Return on invested capital exceeded the cost of capital due to a high level of activity in the freight market, as well as the adaptation and streamlining of operations introduced since 2001.
We successfully completed several major, forward-looking investments in 2006, which was also the year in which the fleet-renewal process instigated in 2001 was completed. The need for investment in new tonnage will therefore be more limited in the coming years.
Financial performance
Pre-tax profit was DKK 402 million, an increase of 74% compared to 2005.
The improved performance can be attributed to DFDS Tor Line’s freight activities, where the market growth exceeded expectations, which increased capacity utilisation and thereby earnings. In addition, the effect of the renewal of the fleet, started in 2001, has contributed to establish a competitive level of costs.
In terms of DFDS Seaways’ passenger activities, 2006 was, as expected, characterised by continued difficult market conditions as a result of over-capacity in the passenger market. Furthermore, routes were restructured and new tonnage deployed, which led to more one-off costs. There was also a significant rise in the cost of bunkers, which could only be offset to a limited extent through price rises.
Revenue rose by 20% to DKK 7,524 million. The increase was primarily due to a higher than expected level of activity for DFDS Tor Line.
Profit forecast 2007
DFDS expects to achieve a total revenue growth of approximately 8-10% in 2007.
DFDS Tor Line’s operating profit (EBITA) for 2006 included profits from sales of ships, properties and terminals totalling DKK 26 million. Adjusted for these one-off items, DFDS Tor Line’s operating profit (EBITA) is expected to rise by approximately 5-7% in 2007.
DFDS Seaways’ operating profit (EBITA) for 2007 is expected to improve considerably in 2007. Adjusted for one-off items of DKK 17 million, a profit increase of approximately 30% is expected.
Total investments in 2007 are presently expected to amount to around DKK 150 million. No additional major investments are planned, although investment in, for example, ro-pax tonnage for the Baltic Sea could become relevant. Opportunities to acquire companies and activities may also arise.
Against this background, the DFDS Group expects a pre-tax profit in 2007 of approximately DKK 425 million.
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For further information, please contact CEO, Niels Smedegaard, direct line +45 3342 3400 or CFO Chr. Merrild, direct line +45 3342 3201