Wallenius Wilhelmsen reported a strong final quarter of 2024 with an adjusted EBITDA of USD452 million. FY 2024 proved to be a record year for the ro-ro shipping group with an adjusted EBITDA of USD1.9 billion (up 5 percent year on year) and profit for the period of USD1.06 billion (up 9 percent year on year). However, high and heavy volumes continue to fall by the wayside.
In terms of its fleet, Wallenius Wilhelmsen controlled 125 vessels at the end of Q4 2024. That is one vessel up from Q3 as Grand Sapphire was re-delivered to its owners, and two new charters were added to the fleet. The average duration of these charters is five years. It said that the price for charter vessels in the market fell during Q4, but remains at high levels compared to historical charter rates.
Two purchase options were exercised during the quarter: Morning Celine and Morning Cornelia. The total market values of these vessels were USD 142 million and the purchase option prices “were far below the market values”, it said.
On the newbuilding side, two further options to build Shaper-class vessels were declared in November. Also, following a detailed review of the vessel designs, the capacity of the 11,700 ceu vessels was increased to 12,100 ceu, with “modest additional cost for the last 400 ceu”. Wallenius Wilhelmsen’s newbuilding programme now consists of 14 vessels with delivery from 2026 through 2028. Out of the 14 vessels, seven will be 9,300 ceu and seven will be 12,100 ceu.
Based on the average of two independent broker estimates, Wallenius Wilhelmsen said that the estimated market value of its 90 (Q3: 88) owned vessels was USD6.4 billion at the end of Q4 – down 3.3 percent quarter on quarter (Q3 value of the same 90 vessels: USD6.6 billion).
In terms of shipping services, it said that the net freight rate in Q4 was up quarter on quarter in Q4, ending at USD66.4 per cu m (up from USD61.1 per cu m in Q3), thanks to positive effects from a favourable development in customer mix. Volumes were down 1 million cu m, around half owing to strike in the Hyundai supply chains. There are also effects from more repositioning voyages and a seasonal slowdown. Volumes were hence down more in trades ex Asia vs trades ex Europe and the USA.
Total revenues were USD998 million in Q4, down 1 percent quarter on quarter. Net freight revenue was up by USD10 million quarter on quarter, and fuel surcharge revenue was down by USD24 million driven by reduction the in volumes and somewhat lower fuel prices.
Soft high and heavy segment
Wallenius said Q4 2024 was another soft quarter for its high and heavy equipment segment, as volumes fell to the lowest level since 2019. The decline quarter on quarter was 4 percent. Overall, volumes in 2024 for this segment were down 23 percent year on year.
Wallenius Wilhelmsen said that higher uncertainty and lower global activity levels, mainly due to geopolitical tensions, US elections, increased costs, and a new economic reality, are factors likely to have affected Q4 loaded high and heavy volumes. Once the market adjusts, it anticipates higher demand for rolling high and heavy items, potentially recovering in H2 2025.
In terms of high and heavy demand, global economic growth is the key factor for the activity level, said the shipping group. For the construction industry interest rates, higher costs and political initiatives will affect the short-term outlook and demand for machinery, it said, noting that it has observed more focus on investments in infrastructure, energy, and utilities.
For commercial real estate and residential construction, uncertainty has come down somewhat and there are signs of flattening, it said, with the company assuming “activity in the Western world may pick up in 2025”. It added that the property market in China is still demanding but stimulus packages and political intervention is likely to stabilise the market and give a more positive outlook. The recovery will probably take time, but Wallenius Wilhelmsen expects higher activity level for both real estate and infrastructure projects in the mid-term period.
Sentiment in the farming market remains weak but there are recent signs of optimism among US farmers. The mining industry remains strong and Wallenius Wilhelmsen expects this trend to continue.
Overall, the company is bulish on the prospects for 2025, which is “expected to be another strong year with the adjusted EBITDA at least in line with 2024”, said Lasse Kristoffersen, ceo.
