(published in the Interim Report on October 25, 2018)
Aspo's strong profit-making trend continued during the third quarter. The operating profit increased, even though the transaction costs of EUR 0.9 million related to the acquisition of AtoB@C weighed it down.
The shipping company's new vessel investments were completed through the delivery of ms Viikki and ms Haaga during the third quarter. The new vessels navigated from Japan to the Baltic Sea via the Northern Sea Route. The vessels have also proven their mettle in challenging arctic conditions. As a result of the delivery of the new environmentally friendly LNG-fueled vessels and the completed acquisition, ESL Shipping and AtoB@C together are the largest shipping company in the Baltic Sea region with their 50 vessels. The shipping company's net sales are expected almost to double. Through the acquisition of AtoB@C, ESL Shipping developed from a shipping company which owns its vessels into a shipping company which also operates effectively chartered and manned vessels. The shipping operations serve new customer sectors, such as the forest industry, the transportation of bioenergy for the energy industry and the transportation of industrial products.
The shipping company's net sales and operating profit increased during the third quarter. The business acquisition and the new vessels have not yet improved profitability. Telko's net sales and operating profit remained nearly unchanged, while Leipurin's net sales and operating profit decreased. The devaluation of the local currencies in the eastern markets decelerated the increase of Telko and Leipurin. Despite the fluctuation in the value of the currencies, the profitability of Telko and Leipurin improved in eastern markets. Kauko's operating profit improved as a result of activities carried out during the second quarter to improve operational efficiency and the busy sales season for energy-efficiency equipment which usually takes place during the third quarter. The efficiency of Kauko's operations will be improved even further.
As a result of the investments, acquisitions and efficiency measures carried out, Aspo's profit potential has improved. According to my estimates, ESL Shipping will improve its results starting from the fourth quarter, even though the impact of the new vessel investments and the completed acquisition will not be fully reflected in profits before 2019.
Aspo's capital structure weakened during the third quarter above the long-term target due to the delivery of the new vessels and the completion of the acquisition. Being a conglomerate, Aspo's gearing may be high at times. Aspo's cash flow and debt servicing capacity are estimated to be even stronger than before.
Aspo will announce more news of its goals and the strategies, development stages and financial targets of its businesses at its capital markets day on November 21, 2018.