AS Tallink Grupp unaudited consolidated Interim Report for the fourth quarter and 12 months of 2023
The results of AS Tallink Grupp for the fourth quarter and 12 months 2023 will be introduced at an Investor Webinar held today at 12:00 (EEST). To participate, please join via the following link; we kindly ask participants to provide their questions latest by 11:00 am by email to: investor@tallink.ee. Further details are available in a previously published announcement.
In the financial year 2023 (1 January – 31 December), AS Tallink Grupp and its subsidiaries (hereinafter referred to as “the Group”) carried 5 705 600 passengers, which is 4.5% more than in the financial year 2022. The number of cargo units transported decreased by 20.9% compared to the previous financial year. The Group’s unaudited consolidated revenue amounted to EUR 835.3 million (EUR 771.4 million in the financial year 2022), up by 8.3% year-on-year. Unaudited EBITDA was EUR 214.5 million (EUR 135.8 million in 2022 financial year) and the unaudited net profit for the period was EUR 78.9 million (EUR 13.9 million in 2022 financial year), up by 58.0% and 466.0%, respectively.
The following operational factors impacted the Group’s revenue and operating results in the financial year 2023:
· The volume of cargo and passenger transportation was impacted by less vessels in operations due to chartering and by less trips made compared to the same period a year ago.
· The demand was also impacted by low consumer and business confidence levels, and weak economic environment in all Group’s core markets but also by global geopolitical instability.
· As at the end of the financial year, the Group operated 15 vessels including 2 shuttle vessels, 2 cargo vessels and 5 cruise ferries as well as 5 vessels that were chartered out (3 vessels on long-term and 2 vessels on short-term charter) and one in lay-up.
· During the financial year, 2 charter agreements ended. The charter agreement of the cruise vessel Romantika was terminated in September 2023 prior to the agreement’s expiration date. The short-term charter agreement of the cruise ferry Victoria I ended in July 2023. In addition, the Group extended the charter agreements of cruise vessels Galaxy I and Silja Europa until April 2024 and end of 2024, respectively. The shuttle vessel Oscar Wilde (former Star) was chartered out in May 2023 for 20 months with the option to extend the charter period by 2+2 years and purchase option.
· The planned maintenance works of vessels totalled to 61 days.
· The Group operated 3 hotels in Tallinn and 1 in Riga.
· Declining global fuel prices, the optimal fleet size and strict cost control had a positive impact on the Group’s cost base. However, while the fuel prices have dropped the fuel transportation cost component has increased.
· The Group repaid loans in the amount of EUR 487.6 million, which includes refinancing of loans in the amount of EUR 298 million. The net repayment of interest-baring loans was EUR 189.6 million.
· The Group’s net debt to EBITDA ratio amounted to 2.8 as at the end of the financial year 2023 compared to 5.4 as at the end of the financial year 2022.
· The Group continues to focus on cost efficiency from previously implemented measures and retaining profitable operations on its core routes.
· The Group regularly monitors the developments on its core routes including the capacity of each route and continues to look for new chartering options for vessels not used on the main routes and to work on extending the existing chartering agreements.
*Sales and Results by Segments*
In the financial year 2023, the Group’s total revenue increased by EUR 63.9 million to EUR 835.3 million compared to EUR 771.4 million in the financial year 2022.
Revenue from route operations (core business) amounted to EUR 645.8 million, which is EUR 16.9 million more than during the financial year 2022. The segment result from route operations (core business) amounted to EUR 107.2 million compared to EUR 39.7 million in the financial year 2022.
In the financial year 2023, the Group’s vessels carried a total of 3.5 million passengers on the Estonia-Finland route, up by 10.8% year-on-year. The number of transported cargo units decreased by 20.4%. The revenue from the Estonia-Finland route increased by EUR 20.2 million to EUR 298.0 million and the segment result improved by EUR 27.3 million to EUR 79.0 million. In the financial year 2023, the segment reflects the operations of the following vessels:
· 1 January – 2 May 2023: the shuttle vessels MyStar, Megastar and Oscar Wilde (formerly Star). The latter stopped operating the route in May 2023 due to a charter agreement.
· 2 May – 11 October 2023: the shuttle vessels MyStar and Megastar.
· 12 October – 31 December 2023: the shuttle vessels MyStar and Megastar and the cruise ferry Victoria I that was added to the route in October 2023.
The cruise ferry Silja Europa stopped operating on the Estonia-Finland route in August 2022 due to a charter agreement.
In the financial year 2023, the Group carried a total of 1.7 million passengers on Finland-Sweden routes, down by 9.9% year-on-year. The number of transported cargo units decreased by 41.6%. The routes’ revenue decreased by EUR 17.2 million to EUR 257.1 million while the segment result improved by EUR 24.7 million to EUR 23.8 million, year-on-year. The decline in passenger numbers and cargo volumes were mostly driven by less vessels in operations, 26% of less trips made compared to the financial year 2022 and change of route to Turku-Kappelskär. In the financial year 2023, the segment reflects the operations of one cruise ferry on Turku-Stockholm/Kapellskär routes and two cruise ferries on the Helsinki-Stockholm route. The cruise ferry Galaxy I stopped operating on the Turku-Stockholm route from September 2022 due to a charter agreement.
On Estonia-Sweden routes the number of carried passengers increased by 19.0% in the financial year 2023 and amounted to 0.6 million. The number of transported cargo units increased by 3.0% year-on-year. The revenue of Estonia-Sweden routes increased by EUR 13.9 million to EUR 90.8 million and segment result improved by EUR 15.5 million to EUR 4.5 million, year-on-year. Estonia-Sweden routes reflect the operation of two cargo vessels on the Paldiski-Kapellskär route and one cruise ferry on the Tallinn-Stockholm route.
Revenue from the segment Other increased by a total of EUR 48.6 million and amounted to EUR 196.0 million. The segment result was up by EUR 19.5 million year-on-year amounting to EUR 54.5 million. As at the end of the financial year 2023, the Group had 5 vessels on charter including 3 on long-term and 2 on short-term charter.
As at the end of the 2023 financial year, the long-term charters included:
· The vessel Atlantic Vision was chartered to Canada in November 2008. The current agreement has been signed until May 2024 with an extension option for another 12 months.
· The shuttle vessel Oscar Wilde (formerly Star) was chartered out from 5 May 2023 for 20 months with the option of extending the charter by 2+2 year and the option of purchasing the shuttle.
· The cruise ferry Isabelle has been on long-term charter since 1 July 2023 and the charter agreement includes a purchase option.
As at the end of the 2023 financial year, the short-term charters included:
· The cruise ferry Galaxy I was chartered out in September 2022. In September 2023, the agreement was extended for six months until April 2024.
· The cruise ferry Silja Europa was chartered out in August 2022. In October 2023, the charter agreement was extended until the end of 2024.
During the year, the charter agreements of 2 vessels ended. The agreement for chartering out the cruise ferry Romantika, signed in March 2022, was terminated on 1 September 2023. The cruise ferry Victoria I, the charter agreement of which ended in July, started operating the Tallinn-Helsinki route on 12 October 2023.
*Earnings*
In the financial year 2023, the Group’s gross profit improved by EUR 90.4 million amounting to EUR 203.8 million compared to EUR 113.5 million in the financial year 2022. EBITDA improved by EUR 78.7 million and amounted to EUR 214.5 million.
Amortisation and depreciation expense increased by EUR 3.1 million to EUR 101.2 million year-on-year.
As a result of increased interest rates and increased financing obligations related to the shuttle-vessel Mystar, net finance costs increased by EUR 10.9 million year-on-year to EUR 35.5 million in financial year 2023.
The Group’s unaudited net profit as at the end of the 2023 financial year was EUR 78.9 million or EUR 0.106 per share compared to a EUR 13.9 million or EUR 0.019 per share as at the end of the 2022 financial year.
*Investments*
The Group’s investments in the financial year 2023 amounted to EUR 28.2 million.
Majority of the investments were related to the maintenance and repair works of the vessels which lasted for a total of 61 days during the financial year. Main investments in vessels included the preparation of cruise ferry Victoria I for cruise service operations between Tallinn and Helsinki, technical works as well as interior upgrades of the cruise ferry Baltic Queen and maintenance and repairs of the cruise ferries Silja Serenade, Silja Symphony and Baltic Princess.
During the financial year, the Group opened 3 new Burger King restaurants in Riga and Kaunas. Additionally, the hotel in Riga was re-opened in April 2023.
*Financial Position*
At the end of the financial year 2023, the Group’s net debt amounted to EUR 607.3 million, a decrease of EUR 13.0 million compared to the end of third quarter of 2023. The net debt to EBITDA ratio was 2.8 at the reporting date (2.7 as at 30 September 2023).
As at the end of the financial year 2023, the Group’s cash and cash equivalents amounted to EUR 41.9 million (EUR 64.4 million as at 30 September 2023). The Group’s available credit lines were scaled back from EUR 135 million as at 30 September 2023 to the pre-COVID-19 levels of EUR 75.0 million as at the end of the reporting period. The total liquidity buffer (cash, cash equivalents and unused credit facilities) amounted to EUR 116.9 million (EUR 199.4 million as at 30 September 2023). During the financial year 2023, the Group repaid loans in the total amount of EUR 487.6 million, which includes refinancing of loans in the amount of EUR 298.0 million. The net repayment of interest-bearing loans amounted to EUR 189.6 million in the financial year 2023. During the financial year 2022, the Group repaid loans in the amount of EUR 110.1 million. The current trade and other payables amounted to EUR 85.4 million (EUR 83.6 million as at 30 September 2023).
*Dividends*
In 2018, the Group adopted a dividend policy subject to which dividends of a minimum amount of EUR 0.05 per share would be paid if the economic performance enables it.
Due to continued global uncertainties the Annual General Meeting of Shareholders held on 13 June 2023 decided not to pay dividends for the financial year 2022.
Concorded with the Supervisory Board of the Group, the Management Board of the Group has decided to prepare a proposal to the General Meeting of Shareholders to pay a dividend of 6 cents per share in 2024 for the financial year of 2023.
*Results of the Q4 2023*
In the fourth quarter 2023 (1 October – 31 December), the Group carried 1.3 million passengers which is 3.3% more compared to the same period last year.
The restaurant and shop sales on-board and onshore increased by EUR 1.0 million and ticket revenue by EUR 2.4 million year-on-year. The cargo revenue decreased EUR 2.4 million year-on-year. Revenues from hotel operations were up by EUR 0.5 million and other revenues by EUR 1.0 million year-on-year. Revenues from chartering decreased by EUR 12.3 million compared to fourth quarter 2022 due to less vessels being chartered out.
The Group’s unaudited revenue for the period decreased by 4.9% year-on-year and amounted to EUR 193.7 million. Unaudited EBITDA of the fourth quarter 2023 was EUR 36.8 million (EUR 50.4 million in the fourth quarter 2022) and unaudited net profit was EUR 2.2 million (net profit of EUR 16.7 million in the fourth quarter 2022).
The financial result of the fourth quarter of 2023 was impacted by the following factors:
· The chartering of vessels supporting the stability of cash flows.
· The cruise vessel Romantika remained in lay-up during the Q4 2023.
· Repayment of long-term loans in the amount of EUR 332.1 million, which includes refinancing of loans in the amount of EUR 298.0 million.
· Higher financing costs due to increased Euribor and transaction costs related to refinancing.
*Key Figures*
*For the period* *Q4 2023* *Q4 2022* *Q4 2021* *Jan-Dec*
* 2023* *Jan-Dec*
* 2022* *Jan-Dec*
* 2021*
Revenue (EUR million) 193.7 203.7 166.6 835.3 771.4 476.9
Gross profit/loss (EUR million) 34.9 41.8 20.0 203.8 113.5 21.7
EBITDA¹ (EUR million) 36.8 50.4 25.1 214.5 135.8 58.3
EBIT¹ (EUR million) 11.4 23.5 0.9 113.3 37.7 -37.0
Net profit/loss for the period (EUR million) 2.2 16.7 -3.3 78.9 13.9 -56.6
Depreciation and amortisation (EUR million) 25.5 27.0 24.2 101.2 98.1 95.3
Capital expenditures¹ ²(EUR million) 5.9 179.7 9.2 28.2 203.3 20.2
Weighted average number of ordinary shares outstanding 743 569 064 743 569 064 743 569 064 743 569 064 743 569 064 694 444 381
Earnings/loss per share¹ (EUR) 0.003 0.022 -0.004 0.106 0.019 -0.081
Number of passengers 1 338 921 1 296 047 1 122 892 5 705 600 5 462 085 2 961 975
Number of cargo units 76 198 96 052 101 486 323 990 409 769 369 170
Average number of employees 4 879 4 947 4 743 4 879 5 023 4 360
*As at* *31.12.2023* *30.09.2023* * * *31.12.2023* *31.12.2022* *31.12.2021*
Total assets (EUR million) 1 555.2 1 597.4 1 555.2 1 691.6 1 585.9
Total liabilities (EUR million) 769.5 1 152.0 769.5 984.7 893.4
Interest-bearing liabilities (EUR million) 649.3 684.8 649.3 853.5 779.9
Net debt¹ (EUR million) 607.3 620.4 607.3 620.4 652.4
Net debt to EBITDA¹ 2.8 2.7 2.8 2.7 11.2
Total equity (EUR million) 785.8 783.7 785.8 706.9 692.5
Equity ratio¹ (%) 51% 49% 51% 42% 44%
Number of ordinary shares outstanding 743 569 064 743 569 064 743 569 064 743 569 064 743 569 064
Shareholders’ equity per share (EUR) 1.06 1.05 1.06 0.95 0.93
* *
*Ratios¹* *Q4 2023* *Q4 2022* *Q4 2021* *Jan-Dec*
* 2023* *Jan-Dec*
* 2022* *Jan-Dec*
* 2021*
Gross margin (%) 18.0% 20.5% 12.0% 24.4% 14.7% 4.5%
EBITDA margin (%) 19.0% 24.8% 15.1% 25.7% 17.6% 12.2%
EBIT margin (%) 5.9% 11.5% 0.5% 13.6% 4.9% -7.8%
Net profit/loss margin (%) 1.1% 8.2% -2.0% 9.4% 1.8% -11.9%
ROA (%) 7.0% 2.4% -2.4% 7.0% 2.4% -2.4%
ROE (%) 10.6% 2.1% -8.2% 10.6% 2.1% -8.2%
ROCE (%) 8.4% 3.1% -2.8% 8.4% 3.1% -2.8%
1 Alternative performance measures based on ESMA guidelines are disclosed in the Alternative Performance Measures section of this Interim Report.
2 Does not include additions to right-of-use assets.
*EBITDA*: result from operating activities before net financial items, share of profit of equity-accounted investees, taxes, depreciation and amortization
*EBIT*: result from operating activities
*Earnings/loss per share*: net profit or loss/ weighted average number of shares outstanding
*Equity ratio*: total equity / total assets
*Shareholder’s equity per share*: shareholder’s equity / number of shares outstanding
*Gross profit/loss margin*: gross profit / net sales
*EBITDA margin*: EBITDA / net sales
*EBIT margin*: EBIT / net sales
*Net profit/loss margin*: net profit or loss / net sales
*Capital expenditure*: additions to property, plant and equipment – additions to right-of-use assets + additions to intangible assets
*ROA*: earnings before net financial items, taxes 12-months trailing / average total assets
*ROE*: net profit 12-months trailing / average shareholders’ equity
*ROCE*: earnings before net financial items, taxes 12-months trailing / (total assets – current liabilities (average for the period))
*Net debt*: interest-bearing liabilities less cash and cash equivalents
*Net debt to EBITDA*: net debt / EBITDA 12-months trailing
*Consolidated* *statement of profit* *or loss and other* *comprehensive* *income*
*Unaudited, in thousands of EUR* *Q4 2023* *Q4 2022* *Jan-Dec*
* 2023* *Jan-Dec*
* 2022*
Revenue (Note 3) 193 737 203 661 835 325 771 387
Cost of sales -158 809 -161 827 -631 491 -657 917
Gross profit/loss 34 928 41 834 203 834 113 470
Sales and marketing expenses -11 381 -11 399 -42 162 -38 796
Administrative expenses -14 978 -12 658 -52 472 -47 708
Other operating income 2 893 5 759 4 275 10 871
Other operating expenses -103 -80 -171 -164
Result from operating activities 11 359 23 456 113 304 37 673
Finance income (Note 4) 528 167 1 332 215
Finance costs (Note 4) -10 061 -7 024 -36 864 -24 871
Share of profit/loss of equity-accounted investees -75 -90 -75 -90
Profit/loss before income tax 1 751 16 509 77 697 12 927
Income tax 413 214 1 175 1 008
Net profit/loss for the period 2 164 16 723 78 872 13 935
Net profit/loss for the period attributable to equity holders of the Parent 2 164 16 723 78 872 13 935
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translating foreign operations -201 -11 -172 480
Other comprehensive income for the period -201 -11 -172 480
Total comprehensive profit/loss for the period 1 963 16 712 78 700 14 415
Total comprehensive profit/loss for the period attributable to equity holders of the Parent 1 963 16 712 78 700 14 415
Basic and diluted profit/loss per share (in EUR, Note 5) 0.003 0.022 0.106 0.019
*Consolidated* *statement of financial* *position*
*Unaudited, in thousands of EUR* *31.12.2023* *31.12.2022*
ASSETS
Cash and cash equivalents 41 921 114 935
Trade and other receivables 31 766 31 380
Prepayments 7 661 9 379
Prepaid income tax 193 37
Inventories 41 411 39 965
Current assets 122 952 195 696
Investments in equity-accounted investees 75
Other financial assets and prepayments 4 794 3 622
Deferred income tax assets 21 840 21 840
Investment property 300 300
Property, plant and equipment 1 377 664 1 438 286
Intangible assets 27 671 31 823
Non-current assets 1 432 269 1 495 946
TOTAL ASSETS 1 555 221 1 691 642
LIABILITIES AND EQUITY
Interest-bearing loans and borrowings 104 097 165 049
Trade and other payables 85 406 86 934
Payables to owners 6 6
Income tax liability 10 35
Deferred income 34 788 44 222
Current liabilities 224 307 296 246
Interest-bearing loans and borrowings 545 160 688 465
Non-current liabilities 545 160 688 465
Total liabilities 769 467 984 711
Share capital 349 477 349 477
Share premium 663 663
Reserves 67 056 66 363
Retained earnings 368 558 290 428
Equity attributable to equity holders of the Parent 785 754 706 931
Total equity 785 754 706 931
TOTAL LIABILITIES AND EQUITY 1 555 221 1 691 642
*Consolidated* *statement of cash* *flows*
*Unaudited, in thousands of EUR* *Q4 2023* *Q4 2022* *Jan-Dec*
* 2023* *Jan-Dec*
* 2022*
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit/loss for the period 2 164 16 723 78 872 13 935
Adjustments 34 603 33 557 135 324 122 147
Changes in:
Receivables and prepayments related to operating activities 6 622 10 964 1 340 -3 638
Inventories -1 653 -208 -1 446 -5 334
Liabilities related to operating activities -7 754 -3 618 -10 457 17 415
Changes in assets and liabilities -2 785 7 138 -10 563 8 443
Cash generated from operating activities 33 982 57 418 203 633 144 525
Income tax repaid/paid -75 -112 -186 -227
NET CASH FROM/USED OPERATING ACTIVITIES 33 907 57 306 203 447 144 298
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, equipment and intangible assets -5 882 -179 689 -28 131 -203 322
Proceeds from disposals of property, plant, equipment 369 25 613 2 768
Interest received 528 209 1 332 215
NET CASH USED IN INVESTING ACTIVITIES -4 985 -179 455 -26 186 -200 339
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans received (Note 8) 59 972 196 290 59 972 196 290
Repayment of loans received (Note 8) -95 954 -39 025 -251 431 -110 055
Change in overdraft (Note 8) -11 811 -15 -165
Payment of lease liabilities (Note 8) -4 494 -4 313 -21 519 -17 157
Interest paid -7 615 -5 494 -32 827 -23 516
Payment of transaction costs related to loans -3 343 -1 376 -4 455 -1 977
NET CASH FROM/USED IN FINANCING ACTIVITIES -51 434 134 271 -250 275 43 420
TOTAL NET CASH FLOW -22 512 12 122 -73 014 -12 621
Cash and cash equivalents at the beginning of period 64 433 102 813 114 935 127 556
Change in cash and cash equivalents -22 512 12 122 -73 014 -12 621
Cash and cash equivalents at the end of period 41 921 114 935 41 921 114 935
Anneli Simm
Investor Relations Manager
AS Tallink Grupp
Sadama 5
10111 Tallinn, Estonia
E-mail anneli.simm@tallink.ee
*Attachments*
· Tallink Grupp 2023 Q4 ENG
· Tallink Grupp 2023 Q4 Financial Data
· AS Tallink Grupp Q4 2023 Presentation