Tallink Grupp
Quarterly report

AS Tallink Grupp Unaudited Consolidated Interim Report Q3 2018

In the third quarter (1 July – 30 September) of the 2018 financial year Tallink Grupp AS and its subsidiaries (the Group) carried 2.9 million passengers, which is 1.2% more than in the third quarter last year. The Group’s unaudited revenue for the third quarter increased by 0.3% to a total of EUR 283.6 million. Unaudited EBITDA for the third quarter was EUR 71.1 million (EUR 75.4 million in Q3 2017) and unaudited net profit was EUR 46.1 million (net profit of EUR 47.8 million in Q3 2017).

In the third 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 all geographical segments.
• The number of cargo units transported on the Group’s ships increased in all geographical segments.
• 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.

Sales and segments

In the third quarter, the revenue from route operations increased in almost all geographical segments (Estonia-Finland, Estonia-Sweden and Latvia-Sweden), total by EUR 4.2 million.

The number of passengers travelling on the Group’s ships on the Estonia-Finland route’s increased by 1.2% or more than 18 thousand to a total of 1 503 thousand passengers. The segment revenue increased by 4.1% to EUR 100.8 million in third quarter. The Estonia-Finland segment result increased by 8.8% and was EUR 31.3 million.

The Finland-Sweden route’s passenger number increased by 0.5% compared to third quarter last year. Number of cargo units increased by 7.9% compared to the same period last year. Routes’ revenue was EUR 103.9 million that is a similar level compared to the same period last year (EUR 104.4 million in Q3 2017). The segment result decreased by EUR 2.1 million to a total of EUR 15.8 million mainly due to higher fuel cost.

The Estonia-Sweden route’s third-quarter revenue increased by 0.6% compared to the same period last year. The growth was supported by a 1.1% increase in the number of passengers and 6.8% increase in transported cargo units. The segment result decreased by EUR 1.6 million to a total of EUR 6.3 million mainly due to higher fuel cost.

The Latvia-Sweden route’s third-quarter revenue increased by 2.4% compared to same period last year. The growth was supported by a 3.6% rise in the number of passengers and a 16.5% increase in transported cargo units. The segment result was EUR 4.4 million that is on the same level compared to the same period last year. The revenue increase did not translate into a higher segment result mainly due to higher fuel cost.

Earnings

In the third quarter of 2018, the Group’s gross profit decreased by EUR 3.5 million compared to the same period last year, amounting to EUR 78.5 million. Third-quarter EBITDA decreased by EUR 4.3 million to EUR 71.1 million. The Group’s third-quarter result from operations was impacted mainly by:

• EUR 2.9 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 2.4 million to EUR 19.8 million compared to the third quarter of 2017. The decline is mainly a result of less depreciation cost from two sold Superfast ferries compared to the third quarter last year.

Net finance costs decreased by EUR 0.2 million compared to the third quarter last year. The change includes a decline of EUR 0.6 million in interest costs compared to same period in the previous year and a decrease of EUR 0.5 million in profits from the revaluation of cross currency and interest rate derivatives and foreign exchange differences.

The Group’s unaudited net profit for the third quarter of 2018 was EUR 46.1 million or EUR 0.069 per share compared to a net profit of EUR 47.8 million or EUR 0.071 per share in the same period last year.

Results of the first 9 months of 2018

In the first 9 months (1 January – 30 September) of the 2018 financial year the Group carried 7.5 million passengers which is almost 70 thousand passengers more compared to the same period last year. The Group’s unaudited revenue for the period decreased by 1.5% and was EUR 723.2 million. Unaudited EBITDA for the first 9 months was EUR 118.8 million (EUR 129.5 million, 9M 2017) and unaudited net profit was EUR 41.8 million (EUR 45.4 million, 9M 2017 net profit).

The financial result of the first 9 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.
• Pressure on ticket prices from competition.

Investments

In the third quarter, the Group’s investments amounted to EUR 5.6 million. Most of the investments were made to upgrades of the ships cabins and 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.

Financial position

In the third quarter, the Group’s net debt decreased by EUR 24.8 million to EUR 422.3 million and the net debt to EBITDA ratio was 2.9 at the reporting date.

At the end of the third quarter, total liquidity (cash, cash equivalents and unused credit facilities) amounted to EUR 168.0 million (EUR 87.5 million at 30 September 2017) providing a strong financial position for sustainable operations.

The Group had EUR 93.0 million (EUR 80.2 million at 30 September 2017) in cash and cash equivalents and EUR 75.0 million (EUR 7.3 million at 30 September 2017) in unused credit lines.

Key figures

¹ Alternative performance measures based on ESMA guidelines are disclosed in the Alternative Performance Measures section of this Interim Report.

EBITDA: result from operating activities before net financial items, share of profit of equity-accounted investees, taxes, depreciation and amortization

EBIT: result from operating activities

Earnings per share: net profit / weighted average number of shares outstanding

Equity ratio: total equity / total assets

Shareholder’s equity per share: shareholder’s equity / number of shares outstanding

Gross margin: gross profit / net sales

EBITDA margin: EBITDA / net sales

EBIT margin: EBIT / net sales

Net profit margin: net profit / net sales

Capital expenditure: additions to property, plant and equipment + additions to intangible assets

ROA: earnings before net financial items, taxes 12-months trailing / average total assets

ROE: net profit 12-months trailing / average shareholders’ equity

ROCE: earnings before net financial items, taxes 12-months trailing / (total assets – current liabilities (average for the period))

Net debt: interest-bearing liabilities less cash and cash equivalents

Net debt to EBITDA: net debt / EBITDA 12-months trailing

Consolidated statement of profit or loss and other comprehensive income

Consolidated statement of financial position

Consolidated statement of cash flows

Veiko Haavapuu
Financial Director

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

Attachment

• Tallink Grupp 2018 Q3 ENG