Shipping company with historically high volumes and operating profit

Rolling cargo shipping and logistics company Wilh. Wilhelmsen ASA (OSE: WWASA) reported quarterly earnings on Thursday. The newly incorporated company made its highest quarterly operating profit to date at 104 million USD (~610 mNOK) on continued high volumes and a favourable cargo and trade mix. Total income grew by approximately 6% to 710 million USD (~4.16 bNOK). Reported net profit totalled 88 million USD (~515 mNOK) for an EPS of 0.40 USD (~2.35 NOK). The stock finished the week with strong gains.

The company offers transportation and integrated logistics solutions mainly to global car and ro-ro customers. Ro-ro cargo (high and heavy cargo and non-containerized cargo) mainly comprises of large vehicles, construction, mining and agricultural equipment plus large industrial equipment and parts while the autos are transported for many leading car manufacturers around the world. It has a modern and cost efficient fleet. In total it has around 70 subsidiaries, joint ventures and Light vehicles.

Light vehicle exports from Japan returned strongly following the continuing recovery from the tsunami disaster. In the first quarter sales were up vs. the previous quarter in India and Europe with Brazil and Russia down, the former due to increased import restrictions. Year-on-year numbers look a bit different, with Europe down and Russia up. US car market was described as having low replacement and low stock levels, with the car fleet now being at a historically high average age of 13 years. Based on these factors, the company foresees a need for further stock rebuilding amongst the car dealers.

High and heave cargo demand was continuously strong and mainly coming from Oceania, China, Africa and Brazil. Mining activity continues to stay strong on elevated commodity prices. Construction equipment derived demand is also robust due to non-residential, particularly infrastructure spending, in the developing economies, while weaker residential construction equipment demand from mature economies lessens demand for such transportation. China is a big exception as credit tightening impacted property market in the country.

Over 150-year old parent company Wilh. Wilhelmsen Holding ASA (OSE:WWI), which owns just over 72% of WWASA and also has a wholly-owned maritime services subsidiary Wilhelmsen Maritime Services also touted historically high total income and operating profit from the shipping segment. Its Q1 2012 operating profit came in at 106 million USD and Net profit after tax and minority interest was 69 million. The company is cautiously optimistic on medium term prospects but cautions that the development of the world economy will have a big effect. It aims to pay a dividend semi-annual going forward.