Baltic ferry operator Scandlines delivered satisfactory profitability despite a dramatic decline in traffic volumes and revenue following travel restrictions and border closures, the company claimed.
The two ferry routes status as critical infrastructure was underlined and the company continued to build a more competitive business and invest in green initiatives in 2020.
COVID-19’s severe negative impact on Scandlines’ traffic machines and BorderShops resulted in a significant decline in revenue to €273 mill (2019 = €475 mill) last year.
Following the lockdown period last spring, shopping traffic quickly rebounded on the back of the temporary easing of restrictions during the summer, and leisure traffic recovered to some extent before new regional and national travel restrictions saw a new drop in leisure traffic in the autumn.
Revenue from the two ferry routes dropped to €216 mill (2019 = €352 mill) as travel restrictions and border closures had a major detrimental impact on car and passenger traffic volumes, which declined by more than 50% on the back of the outbreak of COVID-19.
Freight delivered relatively stable traffic figures only declining by 6% as Scandlines maintained operations and continued to provide frequent departures, a high reliability level and
flexibility to meet customer demand and keep the vital supply of medicine, food and other necessities flowing.
BorderShop revenue declined sharply to €57 mill (2019 = €124 mill) as a result of various travel restrictions and border closures imposed since March, 2020.
The effect of lower revenue on profitability was alleviated through strict cost control measures and continued efficiency enhancements in 2020, and the profit from ordinary activities (recurring EBITDA) came to €84 mill (2019 = €188 mill) corresponding to a recurring EBITDA margin of 31% (2019 = 40%).
Scandlines qualified for COVID-19 compensation from the Danish state, enabling the group to retain employees and cover fixed costs in a highly uncertain situation.
Despite the turbulence in 2020, Scandlines generated a positive result and decided to return the Danish compensation of €9 mill allocated to cover fixed costs.
“The dramatic developments during the outbreak of COVID-19 underlined the status of our sustainable traffic machine as critical infrastructure. While private passenger traffic and visits to our BorderShops declined sharply, due to travel restrictions, border closures and other initiatives to curb the spread of COVID-19, we maintained operations to serve our freight customers ensuring crucial cross-border deliveries in challenging times.
“We continued sailing throughout the year even though we saw car traffic decline by more than 96% in April and transported fewer than 200 cars per day on our two routes during the strictest lockdown period in the spring,” explained CEO Søren Poulsgaard Jensen.
Scandlines continued to invest in the fleet – with the installation of a rotor sail on ‘Copenhagen’ and new thrusters on ‘Deutschland’ – to maintain and expand the position as a front runner in green ferry operations, reduce the group’s footprint and contribute positively to its surroundings.
“While COVID-19 entailed an exceptional decline in revenue and earnings in 2020, we are extremely thankful for the extraordinary performance delivered by all employees to safeguard Scandlines.
“Based on the global community’s joint efforts to mitigate the impact of COVID-19, the unique dedication of our employees, and the long-term investments made in our sustainable traffic machine, we are confident that we will see a gradual rebound in 2021,” Poulsgaard Jensen added.
Car and passenger traffic as well as shopping and bus travel is expected to be significantly impaired by the effects of COVID-19 until such time as the joint efforts to mitigate its impact allow for the demand for travel to return.
Freight traffic is expected to remain relatively stable at a high level throughout 2021, and Scandlines maintains a strict focus on efficiency and cost control to alleviate the impact of these negative external effects in a period of continued uncertainty, the company said.