AS Tallink Grupp, the listed Estonian cruise ferry company that operates in the Baltic, has reported sa strong recovery in earnings for the second quarter and the first half of 2015, the company said in a statement.
Net profit in the second quarter rose to €28.5 million from €6.1 million in the same period last year, while revenues increased to €253.8 million from €246.9 million.
“The increase in the Group’s results is mainly attributed to the growth in passenger numbers, increased charter revenues and decreased costs related to operations. The increase in the pre-tax profit was affected by higher financial income mainly due to the increase in the fair value of derivative instruments (interest rate swaps) which resulted in €7.3 million lower net finance cost,” Tallink said.
For the first six months of the year, the group reported a net profit of €15.2 million compared to a loss of €17.2 million a year earlier. Revenues rose to €444.0 million from €43.6 million.
“The Group made various changes to the operations during the past year, these changes have continued to positively affect the operating result in the second quarter with increased revenue and profitability,” Tallink said
In the second quarter the Estonia-Finland route revenue increased by 6.2%, driven by 4.8% growth in passenger number and 19.9% increase in cargo units, the cargo growth is supported mainly by added capacity.
The Estonia-Sweden route, where capacity is lower than last year, experienced a 5.1% decrease in passengers and a 12.3% decrease in cargo volumes. The Latvia-Sweden route, operating with one vessel compared to two vessels last year, showed a decline with passenger numbers decreasing by 42.3%, cargo units transported decreased by 59.2%.
Throughout the second quarter price pressure from competition remained visible on all routes. The group was able to keep the total number of passengers on same level despite the total lower capacity from Latvia-Sweden route. The passenger number was supported by growth in Estonia-Finland and Finland-Sweden routes.
The upgrades of the public areas and improvements to restaurant and shop concept throughout the fleet in past year, combined with the operational changes, have resulted in a 2.0% increase in on-board revenue per passenger.
Due to the increased number of chartered vessels compared to the same period last year the revenue from charters increased by €4.8 million or 57.8% to the total of €13.2 million. “Main contribution to the charter revenue growth comes from the Silja Europa charter agreement from August 2014 onwards,” Tallink noted.
In February 2015 AS Tallink Grupp and Meyer Turku Oy signed a contract for the construction of the LNG powered fast ferry for Tallinn-Helsinki route shuttle operations. The ship will cost around €230 million, 20% of the total cost will be paid during the construction period and the rest 80% upon the delivery of the vessel in the beginning of 2017.
AS Tallink Grupp's subsidiary Tallink Line Ltd. and Nordea Bank Finland Plc have signed the loan agreement in June 2015 in amount of €184 million with maturity of twelve years from drawdown to finance the construction of the new fast ferry in Meyer Turku shipyard. Finnish Export Credit Agency “Finnvera” guarantees 95% of this post-delivery buyer credit and the loan bears OECD Commercial Interest Reference Rate (CIRR) based fixed interest rate.
Two of the vessels that were chartered out, Silja Festival and Regina Baltica were sold in the second quarter of the 2015 financial year. The sale of the two vessels generated a positive cash flow of €25 million which was used for the €11.5 million down payment of the new LNG vessel and repayment of loans. Altogether the Group successfully continued the deleveraging strategy and the net debt decreased by €62 million to a total of €614 million in the second quarter resulting in a solid net debt to EBITDA ratio of 3.4.
“In the first half year of 2015 the positive effect from chartering activities has been clearly visible as in the comparable period last year fewer ships were in charter. Looking forward to the second half of the 2015 financial year the chartering revenues will decrease compared to the previous year as Silja Europa charter becomes comparable with the last year and two ships previously in charter were sold in the second quarter of 2015,” Tallink said
