WHILE acknowledging “some signs of softness in the auto segment” Wallenius Wilhelmsen has upgraded its outlook for the remainder of 2024 and is expecting even better things in 2025, according to it’s just released outlook update.
WW now anticipates adjusted EBITDA for 2024 to be in the range of USD 1,880 million to USD 1,910 million, representing a year-over-year improvement from 2023 of 4-6%. Based on the current market situation, WW’s current expectations on contract renewals and own forecast, it anticipate adjusted EBITDA for 2025 to be 5-10% higher than in 2024.
This guidance is based on the following assumptions: Sale of Melbourne International RoRo & Auto Terminal completed in Q1 [NB this is currently under ACCC review]; Continued avoidance of the Red Sea; and no material adverse events. “If we exclude earnings from MIRRAT in both years, the expected YoY increase in adjusted EBITDA will be 7-12%,” the company says.
WW says it expects 2025 to be another solid year based on cargo volumes and contract coverage. “While we observe some signs of softness in the auto segment, we see potential for volumes to recover in 2025 as several OEMs have cut back production in the latter half of 2024 to balance inventories.
“The introduction of new models in 2025 may contribute positively to volumes. High and heavy volumes are assumed to remain muted for much of 2025, with a possible uptick towards the end of the year. Vessel supply is expected to grow throughout 2025, which may push utilisation down if cargo volumes do not grow,” the company projects.
“Development in Logistics will largely depend on auto and High and heavy production volumes. The expected conclusion of the MIRRAT sale in Q1 will also reduce income from Logistics.
“We continue to see strong demand for Government services.”
The WW outlook statement is based on current market conditions and considers several risk factors, including slower global economic growth, potential tariffs hindering world trade, conflicts, and the avoidance of the Red Sea. “Geopolitical risks remain in focus, and we see increased risks associated with trade conflicts. The impact of such events on our operations cannot be assessed at this time.
“Other risk factors include supply chain challenges, labour conflicts, and cost escalation. We also note that several auto OEMs and High and Heavy equipment manufacturers are struggling with sales.
“Overall, we see growing uncertainties for 2025, but we expect our solid contract base, including 2024 renewals, to support our business and counterbalance possible market softening.
Earlier, WW announced the signing of two more multi-year shipping contracts with large auto OEMs, both including biofuel. Both contracts are with leading auto OEMs and span over multiple years.
The first is a three-year deal, valued at approximately USD 263 million over the contract period based on the assessed volume, and adopts WW’s re-engineered bunker adjustment factor, BAF2.0, for the Asia to North America trade lane.
The second is a two-year shipping contract worth approximately USD 112 million and includes a fixed surcharge for biofuel use.
WW says the rates obtained are in line with current market levels. The contracts commence in January and April 2025 respectively.
