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AS Tallink Grupp Unaudited Consolidated Interim Report Q3 2024

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The Q3 2024 results of AS Tallink Grupp will be introduced at an Investor Webinar held today at 12:00 (EEST). To participate, please join via the following link [https://teams.microsoft.com/dl/launcher/launcher.html?url=%2F_%23%2Fl%2Fmeetup-join%2F19%3Ameeting_NTgyYmQ2MjQtNzNiNS00ZjQxLWEyMDMtMjZjYzgyNjk3MTdi%40thread.v2%2F0%3Fcontext%3D%257B%2522Tid%2522%253A%252286359415-f0d5-4ea5-bb32-42128c4493be%2522%252C%2522Oid%2522%253A%2522fbc24b3a-8623-42c6-8311-65b8899e63dd%2522%252C%2522IsBroadcastMeeting%2522%253Atrue%252C%2522role%2522%253A%2522a%2522%257D%26btype%3Da%26role%3Da%26anon%3Dtrue&type=meetup-join&deeplinkId=f152d913-6f3d-4640-91a3-ab97519a6dcc&directDl=true&msLaunch=true&enableMobilePage=true&suppressPrompt=true]; we kindly ask participants to provide their questions latest by 11:00 by email to: [email protected]. Further details are available in a previously published announcement [https://view.news.eu.nasdaq.com/view?id=b3197709aa286a677048fcf2a7608e34d&lang=en].

In the third quarter (1 July – 30 September) of the 2024 financial year, AS Tallink Grupp and its subsidiaries (hereinafter referred to as “the Group”) carried 1 715 496 passengers, which is 3.4% less than in the third quarter of 2023. The number of cargo units transported decreased by 11.7% compared to the same period a year ago. The number of passenger vehicles was down by 8.3% year-on-year and amounted to 250 810. The Group’s unaudited consolidated revenue amounted to EUR 231.9 million (EUR 240.7 million in Q3 2023), down by 3.7%. Unaudited EBITDA was EUR 68.4 million (EUR 82.1 million in Q3 2023) and the unaudited net profit for the period was EUR 36.8 million (EUR 48.7 million in Q3 2023).

The following operational factors impacted the Group’s revenue and operating results in the third quarter of 2024:

-Demand continued to be affected by low consumer and business confidence levels, the economic challenges in the Group’s core markets as well as mounting global geopolitical tensions.
-As at the end of the quarter, the Group operated 14 vessels including 2 shuttle vessels, 2 cargo vessels, 5 operating cruise ferries as well as 3 vessels that were chartered out and 2 vessels that were in lay-up.
-During the quarter the Tallinn-Stockholm route was operated with two cruise ferries. The cruise ferry Victoria I returned to -Tallinn-Helsinki route on 31 August 2024.
-The Group operated 3 hotels in Tallinn and 1 in Riga.
-The Group’s net debt was EUR 555.7 million as at the end of the quarter (EUR 548.9 million as at 30 June 2024) bringing the net debt to EBITDA ratio to 2.98 as at 30 September 2024.
-Payment of dividends in the amount of EUR 44.6 million and related income tax in the amount of EUR 4.9 million impacted the cash balance.
-As a result of the voluntary takeover bid, the shareholding of AS Infortar, the core shareholder of the Group, increased from 46.8% to 68.5% as at 9 August 2024. 
-The Group continues to focus on cost efficiencies from the previously implemented measures and maintaining 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 Segments

In the third quarter of 2024, the Group’s total revenue decreased by EUR 8.8 million to EUR 231.9 million compared to EUR 240.7 million in the third quarter of 2023. 

Revenue from route operations (the Group’s core business) decreased by EUR 2.0 million to EUR 193.6 million compared to the third quarter of 2023. The segment result from route operations (the Group’s core business) amounted to EUR 48.1 million, down by EUR 6.9 million compared to the third quarter of 2023.

The number of passengers carried on the Estonia-Finland route dropped by 1.7% in year-on-year comparison. The number of transported cargo units decreased by 13.0%. Revenue from the Estonia-Finland route increased by EUR 0.4 million compared to the same period a year ago and amounted to EUR 86.8 million. The segment result decreased by EUR 0.9 million amounting to EUR 31.4 million. The segment reflects the operations of two shuttle vessels until 31 August 2024 and two shuttle vessels and one cruise ferry from thereon. From 31 May 2024 until 31 August 2024, the cruise ferry Victoria I operated the Tallinn-Stockholm route.

In the third quarter of 2024, the year-on-year decrease in the number of passengers on Finland-Sweden routes was 18.1%. The number of transported cargo units increased by 9.9%. The routes’ revenue decreased by EUR 11.1 million to EUR 72.6 million and the segment result decreased by EUR 5.6 million to EUR 13.2 million, year-on-year. The segment reflects the operations of one cruise ferry on the Turku-Stockholm route and two cruise ferries on the Helsinki-Stockholm route.

On Estonia-Sweden routes the number of carried passengers increased by 34.2% while the number of transported cargo units decreased by 21.6% compared to the third quarter of 2023. Year-on-year, the revenue of Estonia-Sweden routes increased by EUR 8.6 million to EUR 34.2 million. The segment result declined by EUR 0.4 million compared to the third quarter of 2023 and amounted to EUR 3.5 million. Estonia-Sweden routes reflect the operation of two cargo vessels and two cruise ferries until 31 August 2024. The cruise ferry Victoria I returned to the Tallinn-Helsinki route on 31 August 2024 and the Tallinn-Stockholm route was from thereon operated by the cruise ferry Baltic Queen.

Revenue from the segment Other decreased by a total of EUR 7.2 million and amounted to EUR 40.2 million. The decrease was mainly driven by less vessels on charter. As at the end of the third quarter of 2024, the Group had 3 vessels on charter, of which one was on long-term and two on short-term charter (Q3 2023: 5 vessels including 3 on long-term and 2 on short-term).

At the end of the third quarter of 2024, the following vessels were chartered out:

-The shuttle vessel James Joyce (formerly Star) was chartered out from 5 May 2023 for 20 months with an option to extend the charter by 2+2 years and an option to purchase the vessel.
-The cruise ferry Galaxy I was chartered out in September 2022. In October 2024, the agreement was extended by 12 months until October 2025 with the option of extending the agreement at the end of the agreement period by 6+6 months.
-The cruise ferry Silja Europa was chartered out in August 2022. In October 2023, the charter agreement was extended until the end of 2024.

Earnings

In the third quarter of 2024, the Group’s gross profit declined by EUR 10.6 million to EUR 67.0 million compared to EUR 77.7 million in the third quarter of 2023. EBITDA declined by EUR 13.7 million and amounted to EUR 68.4 million.

Amortisation and depreciation expense decreased by EUR 0.9 million to EUR 24.4 million compared to the third quarter of the financial year 2023.

The Group’s unaudited net profit for the third quarter of 2024 was EUR 36.8 million or EUR 0.050 per share compared to EUR 48.7 million or EUR 0.065 per share in the third quarter of 2023.

Investments

The Group’s investments in the third quarter of 2024 amounted to EUR 5.6 million (EUR 6.1 million in Q3 2023). Main investments in vessels included maintenance and repair works i.e., technical works as well as interior upgrades. The Group also continued to invest in the improvement of its IT systems.

Financial Position

At the end of Q3 2024, the Group’s net debt amounted to EUR 555.7 million, up by EUR 6.8 million compared to the end of second quarter of 2024. The net debt to EBITDA ratio was 2.98 at the reporting date (2.7 as at 30 June 2024).

As at 30 September 2024, the Group’s cash and cash equivalents amounted to EUR 32.6 million (EUR 70.9 million as at 30 June 2024) and the Group had EUR 75.0 million in unused credit lines (EUR 75.0 million as at 30 June 2024). The total liquidity buffer (cash, cash equivalents and unused credit facilities) amounted to EUR 107.6 million (EUR 145.8 million as at 30 June 2024). The decline in cash and cash equivalents as well as in the liquidity buffer was driven by the payment of dividends and related income tax in the third quarter of 2024. In the third quarter of 2024, the Group repaid loans in the total amount of EUR 27.0 million (EUR 30.9 million in the third quarter of 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.

The Annual General Meeting of Shareholders held on 7 May 2024 adopted a resolution to pay dividends of EUR 0.06 per share for the financial year of 2023. The dividends in the amount of EUR 44.6 million were paid out on 3 July 2024.

Results of the first 9 months of 2024

In the first 9 months (1 January – 30 September) of the 2024 financial year, the Group carried 4.3 million passengers which is down by 2.2% compared to the same period last year. The Group’s unaudited revenue for the period decreased by 6.1% and amounted to EUR 602.3 million. Unaudited EBITDA for the first 9 months was EUR 149.5 million (EUR 177.7 million in January-September 2023) and unaudited net profit was EUR 45.5 million (EUR 76.7 million in January-September 2023).

The financial result of the first 9 months of 2024 was impacted by the following factors:

-Low consumer and business confidence in the home markets as well as mounting geopolitical tensions.
-The number of vessels on charter dropped from 5 in the beginning of the year to 3 as at the end of the third quarter.
-Sale of the cruise vessel Isabelle in the first quarter of 2024.
-Two vessels in lay-up including the cruise vessel Romantika the charter agreement of which was prematurely terminated in September 2023 and MV Superfast IX (formerly Atlantic Vision) the charter agreement of which ended in May 2024.
-Payment of dividends in the amount of EUR 44.6 million in the third quarter of 2024.
-Income tax expense on dividends in the amount of EUR 9.2 million was recorded in the second quarter of 2024. In the third quarter of 2024, income tax on dividends was paid in the amount of EUR 4.9 million (EUR 4.3 million of the dividend tax expense was offset by prepaid income tax).
-Repayment of long-term loans in the amount of EUR 59.5 million.

Key Figures

For the period	                        Q3 2024     Q3 2023	  Jan-Sep         Jan-Sep
                                                                    2024	     2023

Revenue (EUR million)	                  231.9	      240.7	   602.3	    641.6
Gross profit/loss (EUR million)	           67.0	       77.7	   127.6	    168.9
EBITDA¹ (EUR million) 	                   68.4	       82.1	   149.5	    177.7
EBIT¹ (EUR million)	                   44.0	       56.8	    76.1	    101.9
Net profit/loss for the period 
(EUR million)	                           36.8	       48.7	    45.5	     76.7
 	 	 	 	 
Depreciation and amortisation 
(EUR million)	                           24.4	       25.2	    73.3	     75.7
Capital expenditures¹ ²(EUR million)        5.6 	6.1	    16.5	     22.3
Weighted average number of ordinary 
shares outstanding	            743 569 064	743 569 064  743 569 064      743 569 064
Earnings/loss per share¹ (EUR)	          0.050	      0.065	   0.061	    0.103
 	 	 	 	 
Number of passengers	              1 715 496	  1 775 821    4 270 002	4 366 679
Number of cargo units	                 66 865	     75 701	 238 628	  247 792
Average number of employees	          5 063	      4 756	   5 004	    4 878
 	 	 	 	 
As at	                             30.09.2024	  30.06.2024  30.09.2023       30.06.2023
Total assets (EUR million)	        1 498.9	     1 567.0	 1 597.4	  1 613.6
Total liabilities (EUR million)	          711.5	       816.6	   813.7	    878.4
Interest-bearing liabilities
(EUR million)	                          588.3 	619.8	   684.8	     722.5
Net debt¹ (EUR million)	                  555.7	        548.9	   620.4	     664.9
Net debt to EBITDA¹	                    3.0	          2.7	     2.7	       3.1
Total equity (EUR million)	          787.4	        750.4	   783.7	     735.2
Equity ratio¹ (%)	                    53%	          48%	     49%	       46%
 	 	 	 	 
Number of ordinary shares 
outstanding                         743 569 064	  743 569 064 743 569 064	743 569 064
Shareholders’ equity per share (EUR)	   1.06	         1.01	    1.05	       0.99
 	 	 	 	 
Ratios¹	                                Q3 2024	      Q3 2023	  Jan-Sep            Jan-Sep
                                                                     2024	        2023
Gross margin (%)                          28.9%	        32.3%	    21.2%	       26.3%
EBITDA margin (%)	                  29.5%	        34.1%	    24.8%	       27.7%
EBIT margin (%)	                          19.0%	        23.6%	    12.6%	       15.9%
Net profit/loss margin (%)	          15.9%	        20.2%	     7.6%	       12.0%
 	 	 	 	 
ROA (%)	                                   5.6%	         7.7%	     5.6%	        7.7%
ROE (%)                                    6.1%	        12.9%	     6.1%	       12.9%
ROCE (%)	                           6.7%   	 9.6%	     6.7%	        9.6%
 
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          Q3 2024	      Q3 2023	    Jan-Sep        Jan-Sep
                                                                       2024	      2023
Revenue	                                231 868	      240 668	    602 317	   641 588
Cost of sales	                       -164 849	     -163 013	   -474 695	  -472 682
Gross profit/loss	                 67 019	       77 655	    127 622	   168 906
 	 	 	 	 
Sales and marketing expenses	        -10 684	      -10 399	    -32 347	   -30 781
Administrative expenses	                -12 770	      -11 175	    -39 009	   -37 494
Other operating income	                    469           789	     20 868	     1 382
Other operating expenses	            -42	          -35	     -1 001	       -68
Result from operating activities	 43 992	       56 835	     76 133	   101 945
 	 	 	 	 
Finance income	                            144	          133	        633	       804
Finance costs	                         -7 319	       -8 507       -22 376	   -26 803
Profit/loss before income tax	         36 817	       48 461	     54 390	    75 946
 	 	 	 	 
Income tax  	                             -1	          222	     -8 896	       762
 	 	 	 	 
Net profit/loss for the period	         36 816	       48 683	     45 494	    76 708
Net profit/loss for the period 
attributable to equity holders 
of the Parent	                          36 816       48 683	     45 494	    76 708
 	 	 	 	 
Other comprehensive income	 	 	 	 
Items that may be reclassified to profit 
or loss	 	 	 	 
Exchange differences on translating 
foreign operations	                     -11	-244	        358	        29
Other comprehensive income for the period    -11	-244	        358	        29
 	 	 	 	 
Total comprehensive profit/loss for 
the period	                          36 805      48 439	     45 852	     76 737
Total comprehensive profit/loss for the 
period attributable to equity holders 
of the Parent                             36 805      48 439	     45 852	     76 737
 	 	 	 	 
EPS (in EUR)	                           0.050       0.065	      0.061	      0.103
Diluted EPD (in EUR)	                   0.049       0.065	      0.061	      0.103
 

Consolidated statement of financial position

Unaudited, in thousands of EUR    	30.09.2024	30.09.2023	31.12.2023
ASSETS	 	 	 
Cash and cash equivalents	            32 609	    64 433	    41 921
Trade and other receivables	            30 290	    34 577	    31 766
Prepayments	                            11 018	    11 485	     7 661
Prepaid income tax	                        13	         1	       193
Inventories	                            45 180	    39 758	    41 411
Short-term intangible assets                 5 166	         0	         0
Current assets                             124 276         150 254	   122 952
 	 	 	 
Investments in equity-accounted investees	 0	        75	         0
Other financial assets and prepayments	       515	     4 510	     4 794
Deferred income tax assets	            21 840	    21 840	    21 840
Investment property	                       300	       300	       300
Property, plant and equipment	         1 327 413	 1 391 682	 1 377 664
Intangible assets	                    24 556	    28 734	    27 671
Non-current assets	                 1 374 624	 1 447 141	 1 432 269
TOTAL ASSETS	                         1 498 900	 1 597 395	 1 555 221
 	 	 	 
LIABILITIES AND EQUITY	 	 	 
Interest-bearing loans and borrowings	   104 508	   126 148	   104 097
Trade and other payables	            88 940	    83 593	    85 406
Payables to owners	                         0 	         0      	 0
Income tax liability	                         6	         6	         6
Deferred income                               	 9	        35	        10
Current liabilities	                    34 261	    45 237	    34 788
 	                                   227 724	   255 019	   224 307 
Interest-bearing loans and borrowings	 	 	 
Non-current liabilities                    483 812	   558 659	   545 160
Total liabilities	                   711 536	   813 678	   769 467
 	 	 	 
Share capital	                           349 477	   349 477	   349 477
Share premium	                               663	       663	       663
Reserves	                            66 251	    67 694	    67 056
Retained earnings	                   370 973	   365 883	   368 558
Equity attributable to equity holders
of the Parent	                           787 364	   783 717	   785 754
Total equity	                           787 364	   783 717	   785 754
TOTAL LIABILITIES AND EQUITY	         1 498 900	 1 597 395	 1 555 221
 

Consolidated statement of cash flows

Unaudited, in thousands of EUR	          Q3 2024	 Q3 2023         Jan-Sept       Jan-Sept
                                                                             2024	    2023
 	 	 	 	 
CASH FLOWS FROM OPERATING ACTIVITIES	 	 	 	 
Net profit/loss for the period	           36 816	  48 683	   45 494	  76 708
Adjustments	                           31 858	  33 283	   86 268	 100 721
Changes in:	 	 	 	 
Receivables and prepayments related to 
operating activities	                    5 341	   2 480	   -1 568	   -5 282
Inventories	                            1 230	   2 496	   -8 935	      207
Liabilities related to operating 
activities                                -20 215	 -27 274	    5 970	   -2 703
Changes in assets and liabilities	  -13 644	 -22 298	   -4 533	   -7 778
Cash generated from operating activities   55 030	  59 668	  127 229	  169 651
Income tax repaid/paid	                      178	     -20	      153	     -111
NET CASH FROM/USED OPERATING ACTIVITIES	   55 208	  59 648	  127 382	  169 540
 	 	 	 	 
CASH FLOWS FROM INVESTING ACTIVITIES	 	 	 	 
Purchase of property, plant, equipment 
and intangible assets	                   -5 575	  -6 083	  -16 337	  -22 249
Proceeds from disposals of property,
plant, equipment	                       26	     164	   24 516	      244
Interest received	                      144	     133	      633	      804
NET CASH USED IN INVESTING ACTIVITIES	   -5 405	  -5 786	    8 812	  -21 201
 	 	 	 	 
CASH FLOWS FROM FINANCING ACTIVITIES	 	 	 	 
Repayment of loans received	          -27 040	 -30 858	  -59 492	 -155 477
Change in overdraft	                      -26	     -15	        0	      -15
Payment of lease liabilities	           -4 751	  -8 219	  -13 887	  -17 025
Interest paid	                           -6 722	  -7 982	  -22 159	  -25 212
Payment of transaction costs related to loans	0	       0	     -450	   -1 112
Dividends paid	                          -44 614	       0	  -44 614       	0
Income tax on dividends paid	           -4 904	       0	   -4 904	        0
NET CASH FROM/USED IN FINANCING 
ACTIVITIES                                -88 057	 -47 074	 -145 506	 -198 841
 	 	 	 	 
TOTAL NET CASH FLOW	                  -38 254	   6 788	   -9 312	  -50 502
 	 	 	 	 
Cash and cash equivalents at the 
beginning of period	                   70 863	  57 645	   41 921	  114 935
Change in cash and cash equivalents	  -38 254	   6 788	   -9 312	  -50 502
Cash and cash equivalents at the 
end of period	                           32 609	  64 433	   32 609	   64 433
 
Anneli Simm
Investor Relations Manager

AS Tallink Grupp
Sadama 5
10111 Tallinn, Estonia
E-mail [email protected]