Tallink enjoys near 50% revenue increase

2022-10-28T14:08:35+00:00 October 28th, 2022|Finance|

In the third quarter of this year, Tallink Grupp and its subsidiaries carried 1, 893, 603 pax, a rise of 65.5% on the third quarter of last year’s figures.

The number of cargo units transported increased by 13.1%.

Tallink’s unaudited consolidated revenue increased by 49.9% or €85.1 mill to €255.6 mill. Unaudited EBITDA was €67.7 mill (€35.1 mill in 3Q21) and the unaudited net profit for the quarter was €37.9 mill, versus a net profit of €5.5 mill in 3Q21.

Revenue from Tallink’s core route operations increased by €68.1 mill to €210.8 mill, during the quarter, compared to 3Q21.

The Group’s operations and operating results showed overall improvements in most home markets during 3Q22. Moreover, the number of passengers increased by a fifth in comparison to the third quarter and by 66% compared to the previous year.

However, to a limited effect, the recovery in demand was negatively affected by the war in Ukraine that started at the end of February, 2022.

Given the uncertainties regarding the geopolitical situation, the business environment has improved but remained challenging. In the current situation, the focus has remained on costs and cash flow management to ensure the sustainability of the Group’s core business, Tallink said.

Despite the global challenges, the company is on the path of recovery, which is also evidenced by the best third quarter financial result in the last three years and the September results, which show the positive impact of the company’s charter contracts to meet the low season goals.

The following operational factors impacted 3Q22 results:

  • Two shuttle vessels and two cargo vessels, five cruise ferries and three hotels were operating.
  • Long-term charter of two vessels, including the extension of one of them.
  • Short-term charter of four vessels
  • Drydocking of one vessel, totalling 11 days.
  • High global fuel prices.
  • Cost savings from previously implemented measures.

During the quarter, most of the routes were operating according to the schedules but with a few differences.

For example, the cruise ship Victoria I’s operations were mostly suspended during the quarter. In the beginning of July, she was chartered out to Scotland on a short-term agreement, which resulted in the company temporarily suspending the daily departures on the Tallinn/Stockholm route.

‘Silja Europa’ operated on the Tallinn/Helsinki route and temporarily served the special cruises on the Helsinki/Visby and Tallinn/Saaremaa routes. In August, she and the ‘Galaxy’ were chartered to provide accommodation in the Netherlands under a short-term contract.

As a result, Tallink no longer operates a cruise ship on the Tallinn/Helsinki route and only the ‘Baltic Princess’ will continue to operate on the Turku/Stockholm route.

Only one cruise ship ‘Baltic Queen’ operated on the Tallinn/Stockholm route and briefly replaced ‘Silja Europa’ on the Tallinn/Helsinki and Helsinki/Åland routes in September.

Estonia/Finland route’s shuttle vessels ‘Megastar’ and ‘Star’, and the three Finland/Sweden routes’ cruise ferries continued their operations throughout 3Q22.

In the first nine months of this financial year, the Group carried 4.2 mill pax, which was 126.5% more compared to the same period last year.

The Group’s unaudited revenue for the period increased by 82.9%, amounting to €567.7 mill. Unaudited EBITDA for the first nine months was €85.4 mill (€33.2 mill for the same period of 2021) and an unaudited net loss of €2.8 mill (minus €53.2 mill in 2021) was recorded.

Due to the continuously challenging economic environment ship-related investments were kept to minimum. Only critical maintenance and repair work were performed, as well as investments in relation to the building of the ropax ‘MyStar’.

At the end of 3Q22, Tallink’s net debt amounted to €608.7 mill, a decrease of €47.3 mill, compared to the end of the previous quarter and by €51 mill, compared to the end of 3Q21.

As of 30th September, 2022, the Group’s cash and cash equivalents amounted to €102.8 mill (€143.1 mill on 30th September, 2021) and the Group had €123.2 mill in unused credit lines (€109.3 mill on 30th September, 2021).

The total liquidity buffer (cash, cash equivalents and unused credit facilities) amounted to €226 mill (€252.5 mill on 30th September, 2021).

For the foreseeable future and according to current best knowledge and estimates, the key risks for the business continue to be related to the developments with fuel prices, the war in Ukraine, the rising interest rates and the changing customer travel and consumption habits, Tallink said.

Following 3Q22, the new dual fuel (LNG, MGO) shuttle vessel, ‘MyStar’ built at Rauma Shipyard, successfully passed her first sea trials  on 14th-18th September and the next sea trials will take place at the beginning of November, 2022.

She is expected to be delivered and start operating on the Tallinn/Helsinki route in next month.

Most of the Group’s earnings are generated during the summer months (June to August).

The Ukraine situation is expected to have a negative impact on the demand of certain customer groups, mainly customers from the countries directly participating in the conflict and from Asian countries, together with the risk of an increase in some input prices, mainly fuel and raw materials.

The exact magnitude and duration of the potential effects from the conflict remain difficult to assess.

Despite the uncertainties in the outlook of the economic environment, the management is continuously looking for ways to manage risks for the low season for example through charters, the Group said.