Ferry shipping company DFDS expects lowered growth in 2020 due to Brexit.
In 2020, the company expects revenue growth of 4 percent, which should be compared to 2019's 6-percent revenue growth. This new expectation was announced in relation with the company's year-end report.
It is largely the UK's decision to leave the EU that has caused DFDS to expect a more subdued growth this year.
Most importantly, we have to be cautious on the UK market outlook due to uncertainty about the Brexit outcome
"We see continued headwind in 2020. Most importantly, we have to be cautious on the UK market outlook due to uncertainty about the Brexit outcome. On the positive side, our strategic initiatives are moving forward as planned and therefore I still expect earnings to grow in 2020," says DFDS Chief Executive Torben Carlsen.
Brexit has already started to leave a mark on DFDS, which conducts 50 percent of its business in the UK.
Bottom line dwindles
At the beginning of 2019, the company expected revenue growth to land between 10 and 12 percent. But evidently, it ended up only being 6 percent, while dropping all the way to 1 percent in the fourth quarter.
"The UK market for freight and passengers slowed further in Q4 due to Brexit uncertainty. This lowered earnings for several business units, particularly Channel and North Sea," writes the company.
In 2019, the bottom line also declined, which is largely attributable to a weaker fourth quarter. For the year as a whole, DFDS booked a profit of DKK 1.47 billion (USD 216.3 million) against a DKK 1.74 billion profit in 2018. In the fourth quarter, the bottom line dropped all the way to DKK 181 million against a profit of DKK 422 million in the same period of 2018.
Conversely, DFDS managed to increase its operating profit (EBITDA) by 1.2 percent to DKK 3.63 million for 2019, while only incurring a small drop of 8.9 percent in the fourth quarter. Here, the operating result lands at DKK 771 million compared to DKK 847 million in the same period of 2018.
The 2020 outlook for EBITDA before one-off items is estimated to be between DKK 3.5 and 3.9 billion.
English Edit: Ida Jacobsen