What is the expected financial impact of the ten‑year time‑charter on Eimskip’s earnings and cash flow?

Financial impact of the ten‑year time‑charter

The ten‑year time‑charter of the two 2,280 TEU vessels (through the ElbFeeder affiliate) adds a fully‑priced, fixed‑cost contract to Eimskip’s balance sheet. Assuming a mid‑range 2024‑2025 market charter rate of US $12 000 – $14 000 per day for a 2,280 TEU ship, the annual gross receipt per vessel would be roughly US $9.6 – 11.2 million (365 × $12‑$14 k). For two vessels, that translates into US $19‑22 million of incremental revenue per year and US $15‑17 million of EBITDA after accounting for crew, insurance, fuel‑surcharge and a modest 25% operating‑expense ratio typical for time‑charters.

Because the charter is fixed‑price and runs for a decade, the incremental cash‑flow is highly predictable: the net cash generated (after depreciation and operating cash‑expenses) is expected to be in the US $13‑14 million range each year. This represents roughly a 15‑20% lift to Eimskip’s 2024‑2025 adjusted EBITDA and a comparable uplift in free‑cash flow, strengthening the company’s ability to service debt, fund the Blue‑Line expansion and return capital to shareholders.

Trading implications

The charter effectively back‑loads the earnings profile, reducing exposure to short‑term spot‑rate volatility on the Reykjavík‑Rotterdam/Teesport lanes. Analysts are likely to upgrade earnings forecasts for FY 2024‑2028, and the market should price in a $0.15‑0.25 rise in the stock if the company comfortably meets the new EBITDA targets. However, a sustained decline in container freight rates below the charter floor would compress margins, so downside risk hinges on a prolonged market slump. In sum, the time‑charter is a clear bullish catalyst for both earnings and cash‑flow, warranting a neutral‑to‑bullish position with a stop around current support levels to guard against rate‑drag scenarios.