Spiralling operating costs hit Viking Line’s recovery

2022-09-12T22:22:46+00:00 September 12th, 2022|Finance|

Finnish ferry company, Viking Line has reported strong sales amounting to €199.8 mill for the first half of this year, compared to €71.5 mill for 1H21.

However, 1H22 income after taxes was a negative €9.8 mill, compared with plus €2.7 mill for the same period in the previous year.

In 2Q22, sales totalled €141 mill, compared with €46.9 mill in 2Q21, while operating income totalled €10.1 mill, compared to €12.2 mill in 2Q21.

Viking Line admitted that operating income for this financial year will be somewhat worse than that of 2021. However, last year’s income was affected by capital gains to a much greater extent than this year.

However, there is still a significant and material uncertainty, due to the geopolitical situation and its impact on energy prices, inflation, interest rates and currencies, as well as the impact that these uncertainty factors may have on people’s inclination to travel, demand and costs.

Viking Line President and CEO, Jan Hanses, said: “The beginning of 2022 was challenging. The omicron variant of the COVID virus rapidly spread through society and affected demand. Passenger volumes again declined, and we were forced to increase the degree of staff furloughs.

“In early February, these measures took effect but the markets recovered in conjunction with the annual winter break. This recovery continued during the report period, and the summer got off to a promising start.

“On 1st March, the new ‘Viking Glory’ launched service on the Turku/Åland/Stockholm route. The vessel has been well received by the market. ‘Viking Glory’ has also performed well and made a significant contribution to the results for the report period, especially to second quarter earnings.

“Despite weak results for 1Q22, the significant improvement during the second quarter has meant that, overall, the company’s half-year results should be considered satisfactory given external factors affecting operations during this period and the uneven distribution of earnings generated during a normal financial year,” he said.

During 1H22, passenger-related revenue increased 249.7% to €175.2 mill (€50.1 mill in 1H21), while cargo revenue was €23.2 mill (€20.4 mill) and other revenue was €1.4 mill (€1 mill).

Sales contributions were €151.7 mill (€55.2 mill), while operating costs increased 109.6% to €155.4 mill (€74.1 mill), mainly due to fuel costs rising by 169.6% to €26.8 mill.

Initially, results for the first quarter continued to be affected by the pandemic and related restrictions. Starting in mid-February, demand increased in the passenger segment, while cargo transport demand was stable.

In late February, Russian started a war with Ukraine and energy prices were severely affected.

During 2Q22, Viking Line provided passenger and cargo transport services using seven vessels in the northern Baltic Sea and the Gulf of Finland.

As of 30th June, 2022, the Group’s long-term interest-bearing liabilities totalled €227.3 mill (€99.3 mill in 1H21). The Group’s cash and cash equivalents at the end of June totalled €103.6 mill (€41.8 mill).

The new ‘Viking Glory’ enticed a larger share of younger adults to enjoy holiday travel at sea, and an all-time passenger record on the Turku/Mariehamn/Stockholm route was the icing on the cake for Viking Line’s splendid summer, the company claimed.

Viking Line also revealed that more than 740,000 people travelled on ‘Viking Glory’ and ‘Viking Grace’ between June and August, while nearly 2 mill passengers sailed on all of the company’s vessels during the three summer months.

“We are both pleased and grateful that customers have returned to our vessels after two difficult years of pandemic and that this summer was such a success. Our climate-smart ‘Viking Glory’ and ‘Viking Grace’ offer an unbeatable experience on the Turku/Mariehamn/Stockholm route, which resulted in an all-time passenger record on the route and a market share of more than 65%.

“Over 700,000 people have already sailed or booked a trip with ‘Viking Glory’ since it was placed in service, and we can only be happy about that,” said Viking Line’s Senior Vice President of Corporate Communications, Johanna Boijer-Svahnström.

“Apart from the novelty of a new vessel, we see that many younger adults are attracted by the magnificent outdoor decks, the delicious food and the luxurious spa and massage treatments – which have also been fully booked on many departures,” added Ninna Suominen, Viking Line’s Marketing Director.

The destination cruises on ‘Viking Cinderella’ and ‘Gabriella’ to Visby, Bornholm, Ystad and Sweden’s High Coast, among other places, were also popular during the summer, and a number of departures were fully booked. The Helsinki/ Stockholm service also started to take off post-pandemic, with people showing a strong interest in experiencing both capitals.

“We are really pleased that travel between our countries is recovering but also that there is continued interest in new destinations such as Visby. Finns have rediscovered Stockholm, and Swedes have returned to Helsinki and Turku. During the pandemic, many Finns travelled to Åland, and this summer our Swedish passengers have been able to return to Åland,” Suominen concluded.