Published: 2018-08-09 08:50:00 CEST
Tallink Grupp
Quarterly report

AS Tallink Grupp Unaudited Consolidated Interim Report Q2 2018

In the second quarter (1 April – 30 June) of the 2018 financial year Tallink Grupp AS and its subsidiaries (the Group) carried 2.6 million passengers, which is 1.7% more than in the second quarter last year. The Group’s unaudited revenue for the second quarter decreased by 1.7% to a total of EUR 255.4 million. Unaudited EBITDA for the second quarter was EUR 43.5 million (EUR 48.9 million in Q2 2017) and unaudited net profit was EUR 15.3 million (net profit of EUR 17.9 million in Q2 2017).

In the second quarter, the Group’s revenue and operating result were impacted by the following operational factors:

  • The number of passengers travelling on the Group’s ships increased in almost all geographical segments (Estonia-Finland, Estonia-Sweden and Latvia-Sweden).
  • The competition on the maritime traffic between Estonia and Finland puts pressure on ticket prices.
  • Strong growth of cargo volumes.
  • Higher fuel cost due to increase in bunker prices.
  • Charter revenue decrease compared to the same period last year as fewer ships are chartered out.

„The results were significantly impacted by the increase in fuel prices in global markets compared to the same period last year. The decline in the absolute number of passengers on the Tallinn-Helsinki route in the second quarter of 2018 according to the Port of Tallinn statistics has also had an impact on the wider market and the competitive landscape, although Tallink has managed to increase both passenger numbers and market share on this route as a result of investments made by the company. The excise duty levels in place in Estonia also have an impact on the results and affect the Estonian tourism and service sectors negatively as a whole. In today’s world, where the travel and recreational choices are increasingly abundant in the target markets for our services, every aspect is important in keeping Estonia attractive as a tourism destination,“ Paavo Nõgene, CEO of Tallink Grupp AS, said.

Sales and segments
In the second quarter, the revenue from route operations increased in almost all geographical segments (Estonia-Finland, Estonia-Sweden and Latvia-Sweden), total by EUR 1.8 million.

The number of passengers travelling on the Group’s ships on the Estonia-Finland routes increased by 2.2% or more than 30 thousand to a total of 1 379 thousand passengers. Due to higher competition, there was pressure on ticket prices that resulted in a decline in average ticket prices and lower ticket revenue. However, the cargo revenue showed strong growth also in second quarter and the total segment revenue increased by 0.7% to EUR 96.2 million. The Estonia-Finland segment result increased by 6.3% and was EUR 21.0 million.

The Finland-Sweden routes passenger number and revenue were almost on the same level compared to second quarter last year, being respectively 761 thousand passengers and EUR 88.6 million segment revenue. The segment result decreased by EUR 2.2 million to a total of EUR 7.2 million mainly due to higher fuel cost.

The Estonia-Sweden route’s second-quarter revenue increased by 2.3% compared to the same period last year. The growth was supported by a 1.3% rise in the number of passengers and 17.2% increase in transported cargo units. The segment result decreased by EUR 1.2 million to a total of EUR 2.5 million mainly due to higher fuel cost.

The Latvia-Sweden route’s second-quarter revenue increased by 4.6% compared to same period last year. The growth was supported by a 7.7% rise in the number of passengers and a 32.3% increase in transported cargo units. The segment result decreased by EUR 0.3 million to a total of EUR -0.9 million mainly due to higher fuel cost.

Earnings
In the second quarter of 2018, the Group’s gross profit decreased by EUR 2.2 million compared to the same period last year, amounting to EUR 57.1 million. Second-quarter EBITDA decreased by EUR 5.3 million to EUR 43.5 million. The Group’s second quarter result from operations was impacted mainly by:

  • EUR 2.8 million lower charter revenue compared to last year as fewer ships were chartered out.
  • Higher fuel cost due to increase in bunker prices globally, which had negative effect on the results of all geographical segments.

Amortisation and depreciation expense decreased by EUR 1.9 million to EUR 19.7 million compared to the second quarter of 2017. The decline is a result of less depreciation cost from two sold Superfast ferries and addition of depreciation cost of Shuttle ferry Megastar, compared to the second quarter last year.

Net finance costs decreased by EUR 0.3 million compared to the first quarter last year. The change includes decline of EUR 0.9 million in interest costs compared to same period the previous year and increase of EUR 0.6 million in losses from foreign exchange differences and the revaluation of cross currency and interest rate derivatives.

The Group’s unaudited net profit for the second quarter of 2018 was EUR 15.3 million or EUR 0.023 per share compared to a net profit of EUR 17.9 million or EUR 0.027 per share in the same period last year.

Results of the first 6 months of 2018
In the first 6 months (1 January – 30 June) of the 2018 financial year the Group carried 4.6 million passengers which is almost 35 thousand passengers more compared to the same period last year. The Group’s unaudited revenue for the period decreased by 2.6% and was EUR 439.6 million. Unaudited EBITDA for the first 6 months was EUR 47.7 million (EUR 54.1 million, 6M 2017) and unaudited net loss was EUR 4.3 million (EUR 2.4 million, 6M 2017 net loss).

The financial result of the first 6 months of 2018 was impacted by following factors:

  • The maintenance and repair of the cruise ferry Baltic Princess that lasted for 68 days.
  • Lower charter revenue compared to last year.
  • Higher fuel cost due to increase in bunker prices.
  • Competition on the maritime traffic between Estonia and Finland, which puts pressure on ticket prices.

Investments

In the second quarter, the Group’s investments amounted to EUR 6.4 million. Most of the investments were made to upgrades of the ships cabins, public areas and to the development of online booking and sales systems.

Dividends

In June 2018 the shareholders’ annual general meeting decided to pay a dividend of EUR 0.03 per share from net profit for 2017. The total dividend amount of EUR 20.1 million was paid out on 05 July 2018 (third quarter).

Financial position

In the second quarter, the Group’s net debt decreased by EUR 33.9 million to EUR 447.0 million and the net debt to EBITDA ratio was 2.9 at the reporting date.

At the end of the second quarter, total liquidity (cash, cash equivalents and unused credit facilities) amounted to EUR 165.4 million (EUR 92.2 million at 30 June 2017) providing a strong financial position for sustainable operations.

The Group had EUR 90.4 million (EUR 82.0 million at 30 June 2017) in cash and cash equivalents and EUR 75.0 million (EUR 10.2 million at 30 June 2017) in unused credit lines.


Key figures

For the periodQ2 2018Q2 2017Change %
Revenue (million euros)255.4259.9-1.7%
Gross profit (million euros)57.159.3-3.8%
Net profit for the period (million euros)15.317.9-14.7%
EBITDA (million euros)43.548.9-10.9%
    
Depreciation and amortisation (million euros)19.721.5-8.6%
Capital expenditures (million euros)6.45.3 
Weighted average number of ordinary shares outstanding669 882 040669 882 0400.0%
Earnings per share 0.0230.027-14.7%
    
Number of passengers2 631 3262 587 0331.7%
Number of cargo units101 07291 81910.1%
Average number of employees7 6117 5820.4%
    
As at30/06/201831/03/2018Change %
Total assets (million euros)1 554.51 531.61.5%
Total liabilities (million euros)741.8714.63.8%
Interest-bearing liabilities (million euros)537.4551.0-2.5%
Net debt (million euros)447.0480.9-7.0%
Net debt to EBITDA2.943.06-3.9%
Total equity (million euros)812.7817.1-0.5%
Equity ratio (%)52.3%53.3% 
    
Number of ordinary shares outstanding669 882 040669 882 0400.0%
Equity per share1.211.22-0.5%
    
RatiosQ2 2018Q2 2017 
Gross margin (%)22.3%22.8% 
EBITDA margin (%)17.0%18.8% 
Net profit margin (%)6.0%6.9% 

EBITDA: Earnings before net financial items, share of profit of equity accounted investees,
taxes, depreciation and amortisation
Earnings per share: net profit / weighted average number of shares outstanding
Equity ratio: total equity / total assets
Equity per share: shareholder’s equity / number of shares outstanding
Gross margin: gross profit / revenue
EBITDA margin: EBITDA / revenue
Net profit margin: net profit or loss / revenue
Net debt: interest-bearing liabilities less cash and cash equivalents
Net debt to EBITDA: net debt / 12-months trailing EBITDA


Consolidated statement of profit or loss and other comprehensive income

Unaudited, in thousands of EURQ2 2018Q2 2017Jan-Jun
2018
Jan-Jun
2017
Revenue (Note 3)255 409259 858439 564451 406
Cost of sales-198 356-200 579-368 804-377 257
Gross profit57 05359 27970 76074 149
     
Sales and marketing expenses-20 329-19 334-36 642-37 114
Administrative expenses-13 805-12 844-26 533-25 454
Other operating income9542131 067336
Other operating expenses-54-9-81-144
Result from operating activities23 81927 3058 57111 773
     
Finance income (Note 4)2 8805 4175 9587 908
Finance costs (Note 4)-7 844-10 696-15 217-17 969
Profit/loss before income tax18 85522 026-6881 712
     
Income tax -3 576-4 112-3 599-4 126
     
Net profit/loss for the period15 27917 914-4 287-2 414
     
Other comprehensive income104120
Exchange differences on translating foreign operations46162939318
Other comprehensive income for the period46262980518
     
Total comprehensive income/expense for the period15 74118 543-3 482-2 396
     
Earnings per share (in EUR per share, Note 5)0.0230.027-0.006-0.004


Consolidated statement of financial position

Unaudited, in thousands of EUR30.06.201831.12.2017
ASSETS  
Cash and cash equivalents90 40288 911
Trade and other receivables56 05246 466
Prepayments14 3675 395
Prepaid income tax4940
Inventories40 95340 675
Current assets201 823181 487
   
Investments in equity-accounted investees403403
Other financial assets324344
Deferred income tax assets18 71818 722
Investment property300300
Property, plant and equipment (Note 7)1 285 7751 308 441
Intangible assets (Note 8)47 19948 900
Non-current assets1 352 7191 377 110
TOTAL ASSETS1 554 5421 558 597
   
LIABILITIES AND EQUITY  
Interest-bearing loans and borrowings (Note 9)163 235159 938
Trade and other payables (Note 13)107 00395 548
Derivatives (Note 6)28 44129 710
Payables to owners20 0993
Income tax liability3 56234
Deferred income45 28431 429
Current liabilities367 624316 662
   
Interest-bearing loans and borrowings (Note 9)374 201400 968
Derivatives (Note 6)04 688
Other liabilities160
Non-current liabilities374 217405 656
Total liabilities741 841722 318
   
Share capital (Note 10)361 736361 736
Share premium639639
Reserves70 64168 946
Retained earnings379 685404 958
Equity attributable to equity holders of the Parent812 701836 279
Total equity812 701836 279
TOTAL LIABILITIES AND EQUITY1 554 5421 558 597


Consolidated statement of cash flows

Unaudited, in thousands of EURJan-Jun
2018
Jan-Jun
2017
   
CASH FLOWS FROM OPERATING ACTIVITIES  
Net loss for the period-4 287-2 414
Adjustments52 54356 637
Changes in:  
Receivables and prepayments related to operating activities-18 538-18 542
Inventories-278-12 904
Liabilities related to operating activities25 42018 511
Changes in assets and liabilities6 604-12 935
Cash generated from operating activities54 86041 288
Income tax paid-7140
NET CASH FROM OPERATING ACTIVITIES54 78941 328
   
CASH FLOWS FROM INVESTING ACTIVITIES  
Purchase of property, plant, equipment and intangible assets (Notes 7, 8, 9)-14 649-209 411
Proceeds from disposals of property, plant, equipment42189
Interest received11
NET CASH USED IN INVESTING ACTIVITIES-14 606-209 221
   
CASH FLOWS FROM FINANCING ACTIVITIES  
Proceeds from loans received (Note 9)0184 000
Repayment of loans received (Note 9)-27 334-26 050
Change in overdraft (Note 9)024 682
Payments for settlement of derivatives-1 746-1 819
Payment of finance lease liabilities (Note 9)-52-52
Interest paid-9 560-9 466
Payment of transaction costs related to loans0-216
NET CASH USED IN/FROM FINANCING ACTIVITIES-38 692171 079
   
TOTAL NET CASH FLOW1 4913 186
   
Cash and cash equivalents at the beginning of period88 91178 773
Increase in cash and cash equivalents1 4913 186
Cash and cash equivalents at the end of period90 40281 959


Veiko Haavapuu
Financial Director

AS Tallink Grupp
Sadama 5/7
10111 Tallinn, Estonia
Tel. +372 640 9914
E-mail veiko.haavapuu@tallink.ee

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Tallink Grupp 2018 Q2 ENG.pdf