Margins remain subdued as market repricing is slower than expected - PRESS RELEASE – THIRD QUARTER 2018 FINANCIAL REPORT
WABERER’S INTERNATIONAL Nyrt., the European leader in full truckload (FTL) transportation, today reports its financial results for the three months ended September 30, 2018.
Highlights Q3 2018
- Revenue in the third quarter stayed flat year-on-year at EUR 183 mn but increased by 10% year-to-date
- International Transportation Segment revenue decreased by 3% as the positive effect of higher prices was offset by adverse volume effects in off-season months
- Revenue in the Regional Contract Logistics segment rose by 11%, driven by higher prices, growing fleet and increasing warehouse capacity
- Recurring EBITDA decreased by 30% year-on-year to EUR 18 mn in the third quarter of 2018
- In the International Transportation Segment, recurring EBITDA was 34% lower in the third quarter of 2018 as margins remained under pressure due to a continued increase of the fuel price (15% year-on-year) and a decrease in truck utilisation
- EBITDA decreased by 11% in the Regional Contract Logistics segment, due to the adverse effect of higher wages and fuel prices
- The labour market situation remains challenging as the industry is currently facing severe driver shortages
- Recurring EBIT decreased to EUR 0.5 mn and recurring net income declined to EUR -2.7 mn mainly due to a one-off deferred tax charge
- Improving working capital management led to EUR 5 mn higher cash in the third quarter
- Net leverage increased to 3.8x recurring EBITDA as a result of a lower EBITDA
- believes the current drop in profitability is due to lower utilisation, which is predominantly due to a slower than expected repricing of the road transportation market;
- has implemented measures to adapt its operational model to the changing market environment.
1 For the definitions of non-IFRS measures and key performance indicators not included in this Report, please refer to the 2017 Annual Report published on April 16, 2018, available on the Company website at http://www.waberers.com/files/document/document/480/Waberer_AR_2017_ENG_small.pdf.
Ferenc Lajkó, CEO of WABERER’S INTERNATIONAL Nyrt. commented: “Market dynamics in the third quarter of 2018 had an unusually unfavourable impact on our financials. As in previous quarters, both of our key segments continued to be characterised by a double digit year-on-year rise in fuel prices coupled with a tight labour market, putting pressure on margins. In this environment, our strategy has been to compensate the squeeze in margins by raising prices, but this was met with adverse volume effects in the summer months when capacities were abundant.
We see that the transportation market has not yet fully priced in the increased fuel costs and tight driver capacities for the past half year. A number of initiatives have already been introduced to counter the unfavourable development. Downtimes are set to decrease as the efficiency of trailer swaps is to improve and waiting times and standby times are planned to be better optimised for by our order matching engines. Driver shortage issues are addressed by sourcing drivers from new labour markets including Serbia and Ukraine.
With the aforementioned development, we expect that the Group recurring EBITDA in 2018 will be 15-20% lower than in 2017.
The company has started to adapt its operational model to the changing market environment by implementing additional immediate measures including cost reduction, network optimisation, operational efficiency improvement, and the upgrade of key IT systems.”