Stena Line acquires two DFDS routes
SHIPPING: DFDS has sold the two routes in the northern part of the Irish Sea, Belfast-Birkenhead and Belfast-Heysham, plus two ro-ro vessels - Hibernia Seaways and Scotia Seaways - and two chartered ro-pax vessels, to Stena Line.
Stena Line will in addition take over operations at the port terminals of Belfast, Birkenhead and Heysham. Turnover on the routes in 2009 was 520m kroner..
"The Irish routes we took over at the purchase of Norfolkline have, in the last two years, lost around a quarter of a billion Danish kroner. The prospect of continuing very difficult market conditions and overcapacity on the Irish Sea means it could be a long time before earnings improve significantly. That is not in harmony with our financial objectives and we have therefore decided to scale down our activity in this region", says Niels Smedegaard, CEO of DFDS.
Stena Line acquires a company that owns and operates the routes, plus two ships. The overall consideration, on a debt-free basis, is 354m kroner, and will result in an accounting profit in 2010 of approximately 185m kroner.
There are no conditions attached to the completion of the sale.
Improving profitability on the Irish Sea has been, and remains, an important area of focus in DFDS' integration plan for Norfolkline. Besides the two routes that are now divested, the activities include two routes from Dublin to Birkenhead and Heysham respectively, plus agency and port activities.
"The Irish Sea activities have in recent years made substantial losses due to considerable overcapacity on the market. This is a result of a sharp decline in demand since 2008 and lack of adjustment of capacity. Against this background it has not been possible to develop a business plan that in the short term is able to create a satisfactory return through optimisation and more efficient operations on the northern routes. DFDS has therefore chosen a structural solution and divested these routes", DFDS says in at statement.
Operation of the routes between Dublin and the UK will continue as before, with two ro-pax ships on the route to Birkenhead and one ro-ro ship on the route to Heysham. Port terminal operations in Dublin and sales agency activities will likewise continue. Terminal services in Birkenhead and Heysham will be provided through Stena Line.
DFDS will continue the strategic and operational analysis that was initiated when Norfolkline was acquired will continue for the remaining activities. This work is expected to be completed in the first quarter of 2011.
As a result of the above-mentioned gain of 185m kroner, DFDS' profit forecast for 2010 is upgraded accordingly from a pre-tax profit of 250m kroner to a pre-tax profit of 435m kroner.
Source: DFDS / maritimedanmark.dk
