DFDS Targets Deals as English Channel Route Reaches Record Profit
COPENHAGEN, May 21 (Reuters) – Danish ferry and transportation firm DFDS is on the takeover trail, its chief executive said, after reporting its highest first-quarter operating profit on record and turning around its loss-making English Channel route.
Earnings before interest, taxes, depreciation and amortization (EBITDA) more than doubled to 228 million Danish crowns ($34 million) from a year ago led by the shipping division, the firm said, also raising its full-year forecast.
“We are placing bids on other companies on a regular basis,” Chief Executive Niels Smedegaard told Reuters. Last year it bought British logistic firms Stef Transport and Quayside, both minor players in a fragmented industry.
DFDS operates around 50 freight and passenger ships mainly on routes in Northern Europe. In its results, DFDS said monetary easing in Europe and lower oil prices had supported economic activity.
By 0925 GMT, shares in DFDS were up 4.9 percent while the main Copenhagen index was down 0.02 percent.
COMMITTED TO CHANNEL ROUTE
Smedegaard said the company had sped up the closure of loss-making routes – including the 139-year-old service between Esbjerg in Denmark and Harwich in England – and moved vessels around its network more efficiently.
It was committed to its business in the English Channel, where it faces tough competition and which had swung into profit after losing money in 2013 and 2014.
Operators on the route have complained they were being squeezed by Groupe Eurotunnel, which also runs cross-channel trains.
Eurotunnel was ordered by UK Competition regulators to close the MyFerryLink operation down by July 9 and said it was seeking buyers. But last week, an appeals court said the business could continue to operate there.
The competition authorities can appeal that decision and Smedegaard said he expected the case to rumble on for another year.
DFDS lost around 100 million crowns in 2013 on its activities in the English Channel and around 40 million crowns last year but Smedegaard said the unit has recovered.
“We have no plans to give up the business… We are making money (there) now,” he said.
DFDS raised its full-year EBITDA guidance to between 1.65 billion crowns and 1.75 billion crowns from 1.55 to 1.65 billion.
($1 = 6.7054 Danish crowns) (Reporting by Ole Mikkelsen; editing by John Stonestreet)
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