Despite a 2% decrease in concession volumes, the result is in line with expectations and the company’s management is satisfied with the result.
The Group’s result before tax is a profit of DKK (-47) million. This is DKK 45 million better than the same period in 2022 (DKK -92 million). The company normally has a negative result in the first half of the year due to the low season as a result of ice in large parts of Greenland. Excluding the transition year 2022, the result is at the same level as in previous years.
The increase in concession revenue excluding the oil and exchange rate surcharge is DKK 11 million compared to 2022 and is therefore below the expected proceeds from the rate increase for exports. As a result, the company has lowered the outlook for the full year 2023 concession revenue accordingly.
“We maintain our expectations of a decline in northbound freight volumes to Greenland for the year, and we see signs that the volumes may turn out to be lower than originally expected,” says the company’s CFO, Jørgen Aqe Møller.
The result has been achieved without corresponding price increases for the revenue-dominant northbound traffic, despite general cost increases in society, especially in the last year. The northbound freight rates have not been changed for over 8 years.
Despite the result for the first half of 2023 being better than budget, a result for the full year 2023 is still expected in the range of DKK 1-15 million.
Commercial revenue outside Greenland shipping contributes positively to the bottom line
In the first half of 2023, we have seen a 70% growth in this area. The revenue is strategic as it comes from the utilization of already existing assets and thus contributes directly to the bottom line.
“The company’s management is pleased with the result as it shows that the new cost structure with the use of external suppliers outside Greenland is, all things considered, as expected in the first half of 2023. At the same time, it can be noted that the strategic focus on growing the top line has given a visible return in the first half of 2023” , says CFO, Jørgen Aqe Møller.
The freight volumes outside Greenlandic shipping mean that the decline in freight volumes to Greenland of over 2% is reversed to a plus of over 2%. Thus, the reorganization has made the company more robust in relation to economic developments in Greenland.
Costs are as expected
Despite a positive development in the overall cost picture compared to the first half of 2022, there is significant cost pressure from personnel-related costs and operational costs compared to the original expectations. There is therefore a very strong focus on continuing to keep the cost development under control.
Management continues to focus on strengthening the core service from an operational perspective and has launched a number of initiatives, including identifying the company’s properties for possible divestment, focusing on the use of robotics technologies (RPA) and artificial intelligence (AI) for automation/digitization and ongoing optimization of the container area to reduce empty positioning. The purpose of the initiatives is to reduce costs and improve the customer experience. The reduction in costs will help ensure the financial strength for a sustainable transformation of the company.
Sustainable development
Royal Arctic Line’s efforts to increase sustainable development must be seen in conjunction with the need for an efficient infrastructure, and must be done in collaboration with the company’s stakeholders.
The company is in the process of concretizing its objectives in the ESG area, and the environmental profile plays an important role here. It is already clear that a green transition requires investments in ships and more environmentally friendly containers (reefers). It is our expectation that the green transition will lead to technological breakthroughs that can significantly reduce emissions from ships. The company will follow developments closely and wants to have the necessary financial strength to utilize the new technologies and therefore sees a need for a larger cash surplus in the coming years.
If you have any questions regarding the above, please contact Communications & Marketing Manager, Ann-Britta A. Olsvig
Tel. 34 91 04, E-mail: abr@ral.gl
