Finnish ferry operator Viking Line has reported that weaker demand has impacted its results for the first half of this year.
For 1H24, sales amounted to €219.1 mill (€226.3 mill for 1H23). Operating income totalled a negative €4.3 mill (€17.1 mill in 1H23, which included €8.6 mill capital gain from the sale of ‘Rosella’).
Income before taxes totalled minus €12.5 mill (€7.2 mill in 1H23, including the capital gain from the sale of Rosella).
Investments mainly in ‘Viking Cinderella’ and ‘Birka Gotland’ totalled €15.4 mill (€7.7 mill in 1H23).
As a result, Viking’s Board decided to revise its earnings forecast for 2024. Income during the peak season – from June to August, when most of the company’s income is generated – is forecast to be on a par with the strong figure posted for the same period in 2023.
Initial traffic for ‘Birka Gotland’ has not met the company’s expectations and entailed higher start-up costs than expected. In addition, ‘Viking Glory’s’ drydocking and ‘Viking Grace’s’ and ‘Gabriella’s’ cancelled departures, had a negative impact on sales and earnings in 2Q24.
There is significant uncertainty, due to the recession underway in Finland, which has a negative impact on customers’ consumption patterns. The current geopolitical situation and its potential impact mostly on energy prices are also a factor contributing to this uncertainty.
In view of this, the Board expects that income before taxes in 2024 will be weaker than in 2023 if the €8.6 mill capital gain from the sale of’ Rosella’ in 2023 is not included.
For the second quarter of this year, sales amounted to €125.9 mill (€132.4 mill in 2Q23), while income after taxes was €1.8 mill (€11.1 mill).
CEO Jan Hanses (pictured), said: “Results for the first six months of the year were characterised by consumer caution. The Finnish economy is in recession and the recovery is going slowly. While inflation in Finland has eased, this is not reflected so far in consumer behaviour. The weak Swedish krona has reduced purchasing power in the Swedish market.
“The launch of Gotland Alandia Cruises has entailed additional one-off costs, while occupancy rates during the period up to June did not meet our expectations. Occupancy rates have improved during the summer and are expected to remain at a good level during the autumn.
“In April, ‘Viking Glory’ was drydocked. The date for the drydocking, originally planned for January, 2025, was moved up. In addition, ‘Viking Grace’ and ‘Gabriella’ both had unplanned service disruptions in April and May.
“Results for the first six months of the year excluding one-off items and particularly for the second quarter were thus weaker than expected. However, it is gratifying that ticket proceeds reached our targets, so we have been able to offset the cost of emission allowances, which are to be surrendered starting in 2024.
“The geopolitical situation, with war in nearby regions, has not had any noticeable impact on people’s propensity to travel but contributes to continued uncertainty about energy prices.
“Results for the 2024 peak season are on a par with results for the same period last year, while our outlook for the autumn is characterised by some degree of uncertainty.
“Maritime transport is being impacted at present by future environmental standards. Starting this year, our operations are subject to the EU Emissions Trading System, which means that we are now obliged to shoulder the cost of emission allowances, which in the medium term we can only partly offset through our continued energy efficiency work.
“The lack of alternative fuels at realistic prices is the greatest challenge for the industry. Viking Line works actively for reduced emissions in various projects. Passengers and cargo customers on the Turku/Mariehamn/Långnäs/Stockholm route can now reduce their climate impact by purchasing renewable biofuel in proportion to the amount used for their travel and thus reduce carbon dioxide emissions from their journey by up to 90%.
“Viking Line is also taking part in two major projects where work is being carried out to create green transport corridors for the Helsinki/Tallinn and Turku/Åland/Stockholm routes.
“The first six months of 2024 have entailed changes in our operations, with expanded service between Finland and Sweden and the launch of cruise service in partnership with Gotlandsbolaget. This has entailed changes for our staff in the form of switches to our other vessels and reflaggings. Because of these changes, we have been able to hire new staff since the number of vessels in the fleet has increased.
“I would like to extend my warm thanks to our customers and partners for the faith they have shown in us and their good co-operation. I would also like to give a big thank you to our staff for their fine performance during this period,” he concluded.
