European slowdown hits Finnlines’ bottom line

2023-11-16T17:35:36+00:00 November 16th, 2023|Finance|

The Finnlines Group has reported revenue totalling €513.2 mill for the first nine months of this year, a decrease of 8%. compared to the same period in the previous year.

Shipping and Sea Transport Services generated revenue of €497.1 mill (€539.6 mill) during the period, of which passenger related revenue was €65.7 mill (€56.4 mill). Port Operations revenue was €32.1 mill (€35.9 mill).

During the reporting period, transported cargo volumes declined slightly, compared to 2022, whereas the number of private passengers increased substantially from last year. In addition, the cargo-related fuel surcharge was on a lower level, compared to 2022.

EBITDA was €131.7 mill (€169.2 mill), a decrease of 22%, while EBIT was €63.6 mill (€106.2 mill). Due to a general rise in interest rates, net financial expenses increased to €10.9 mill (€3.4 mill).

The result before taxes (EBT) decreased by €50.2 mill to €52.7 mill (€102.9 mill), while the result was €56.9 mill (€105.2 mill).

For the third quarter, the Group recorded revenue totalling €176.8 mill (€201.5 mill).

Shipping and Sea Transport Services generated revenues of €171.8 mill (€195.9 mill) and Port Operations €10.6 mill (€11.1 mill).

During the 3Q23, cargo volume was below that recorded last year, but the number of private passengers increased significantly.

EBITDA for 3Q23 was €42.1 mill (€71.5 mill), a drop of 41%, while EBIT was €18.4 mill (€49.5 mill.

The result before taxes fell by €34.7 mill to €13.5 mill (€48.2 mill), while the 3Q23 result was €15.1 mill (€48.8 mill).

Finnlines’ interest-bearing debt increased by €52.4 mill to €457.1 mill, excluding leasing liabilities of €23.6 mill. Net interest-bearing debt at the end of the first nine months of 2023 was €455 mill.

The Group’s liquidity position is strong and at the end of the period, cash and cash equivalents together with unused committed credit facilities totalled €166.2 mill. Net cash generated from operating activities stood at €101.6 mill, the company said.

Finnlines’ gross capital expenditure during the period was €106 mill, including tangible and intangible assets.

Investments included normal replacement expenditure of fixed assets, new cargo handling equipment, drydockings, buildings at the Port of Vuosaari and environmental investment payments related to green ro-ro and ropax newbuildings.

Finnlines’ €500 mill green newbuilding programme is nearing completion. In 2022, three hybrid ro-ros commenced operations, and ‘Finnsirius’, the first of the two eco-sustainable ropaxes, was delivered by China Merchants Jinling Shipyard (Weihai) on 18th July, 2023.

Following her voyage from China to Europe, ‘Finnsirius’ started her regular service between mainland Finland, Åland and Sweden in September, 2023. The second ropax and the last vessel in the programme, ‘Finncanopus’, is expected to be delivered by the end of 2023.

Tom Pippingsköld, Finnlines’ President and CEO, said: “The Finnlines Group’s revenue in January/September, 2023 amounted to €513.2 mill (€558.4 mill in 2022), a decrease of 8% t compared to the corresponding period in 2022.

“The result for the reporting period was €56.9 mill (€105.2 mill). Earnings before interest, taxes, depreciation and amortisation, EBITDA, amounted to €131.7 mill (€169.2 mill).

“The geopolitical situation continues to be uncertain and the global, as well as the Euro area, demand is sluggish, which means that within EU, we have either negative growth or no growth at all.

“According to the current outlook, Gross Domestic Product growth in the EU area in 2023 and 2024 is expected to be 0.6%  and 1.1%, respectively. Central banks are still concerned about inflation, although it has decreased considerably.

“The European Central Bank’s (ECB) rapid increases in interest rates have reduced private consumption, construction activity and corporate investments, and, as a result, hindered the economic activity in EU countries.

“Change of Finland’s export volumes during the latest 12 months was minus 4.7% (12 month moving average September, 2022/August, 2023). The corresponding figure for import volume was minus 9.6%. The ECB should quickly react to deteriorating growth outlook and reduce the interest rates.

“While the negative development in Finland’s exports and imports have resulted in lower cargo volumes for Finnlines and reduced our result, the upward trend in passenger volumes has been very good. Despite the reduced cargo volumes, Finnlines was able to retain its market share.

“Finnlines took delivery of three hybrid ro-ro vessels already in 2022 and this year, in mid-July, the first of the two Superstar class vessels, ‘Finnsirius’, was delivered and entered the Naantali/Långnäs/Kapellskär (Finland/Åland Islands/Sweden) route on 15th September, 2023.

“ ‘Finnsirius’ arrival marked a new era on the route as the ship is larger and more eco-friendly than any of the previous ropax vessels. She also represents a completely new standard for ropax transportation in the Baltic Sea – both for freight and passengers. The second Superstar ropax vessel, ‘Finncanopus’, will be delivered at the end of the year.

“Our ropax vessels have huge battery banks and will be using onshore power, which ensures zero emissions in port. Auto-mooring systems in all three ports speed up cargo operations and increase our efficiency further on this route.

“ ‘Finnsirius’ replaced the smaller Star class ropax vessel, ‘Europalink’, which was transferred to the Sweden/Germany line where she replaced a chartered vessel.

“The existing EU Emissions Trading Scheme will be extended to concern maritime transport from 2024 onwards. Finnlines has made substantial investments in sustainable and eco-friendly technologies, positioning itself competitively.

“Finnlines’ investment programmes to reduce CO2 emissions align with the company’s strategy aimed at enhancing operational efficiency. The new vessels support customers in their transition towards sustainability and environmental responsibility. Therefore, Finnlines continues its green transition and thus makes its best efforts to serve its customers in the most sustainable way.

“We have not only invested over several years in environmental technology, but Finnlines’ €500 mill Green Newbuilding Investment Programme, which started in 2018, is nearly completed. This programme clearly demonstrates our unwavering commitment to the environment, to our customers, and to our other stakeholders,” he concluded.