Auto demand triples Wilhelmsen profits

Auto demand triples Wilhelmsen profits

Strong demand in the global automobile industry for the services of Norwegian car carrier Wilh. Wilhelmsen ASA fueled a threefold rise in the group's pre-tax profits in the first quarter of 2004 compared to the same period last year.

The Oslo-based shipping group said that the earnings increase was a result of a marked improvement in fortunes for the automotive sector compared with a year earlier. "The beginning of 2003 was weak while the car market has been strong in 2004," the group said in a media release.

Pre-tax income was $21 million, a 323 percent increase over $6.5 million in the first quarter of 2003. Operating income totaled $16 million, up 78 percent from $9 million. Total operating income was $249 million, up 13.2 percent from $220 million.

The board of directors forecast that the group was on target this year to surpass pre-tax profit of $73 million in 2003.

The group's ship agent Barwil delivered an improved $2 million pre-tax profit compared with $1.1 million a year earlier, and ship manager Barber International contributed a $1.6 million pre-tax result up from $1.1 million.

"These reflect buoyant financial markets during the period as well as the fact that [Wilhelmsen's] share portfolio has been weighted towards the Norwegian stock market," the group noted. The results included a positive currency effect of $1.9 million.

The group also announced long-term 15-year charters with options on three Ray Shipping car carriers, with the hire terms reflecting a price per vessel of $55 million. The 6,500-unit carriers will be delivered by the Gdynia Shipyard in Poland in 2006 and employed in the group's joint venture Wallenius Wilhelmsen Lines.

Wilhelmsen operates the 60-vessel Wallenius Wilhelmsen joint venture with Sweden's Wallenius Lines.

In March the group exercised options for the fifth and sixth 6,500-car carriers from Japan's Mitsubishi Heavy Industries.

The venture also holds an 80 percent stake in the Korean operation Eukor Car Carrier that has a total of 80 units. Strong demand for Eukor's car carrier tonnage put pressure on its contracts with Hyundai and Kia Motors.

These carriers -- worth $50 million each -- are scheduled for delivery at the end of 2006 and early 2007, with the second contract to be transferred to Wallenius.

"Both companies experienced a high availability of cargo in virtually all their trades, and the biggest challenge has been to adapt the tonnage commitment to rising demand," the group stated.

Five older ro-ro carriers owned with Wallenius are under conversion in China for delivery next month, with the installation of 1,800-car capacity garages on the container deck of each vessel.

"These measures will provide Eukor in particular with substantial extra car capacity," said the group.

The Norwegian ship owner said it was paying "close attention" to a proposed government white paper on shipping, and that "competitive and credible shipping and tax policies would have a key influence on the way the group is operated in future".

All the group's operations reported positive results, and the liner and car carrier business, which represent its main activity, almost doubled its result compared with the first quarter of 2003, according to the company's report.