In the second quarter (1 April – 30 June) of the 2021 financial year,
In the second quarter, the Group’s operations and operating results were strongly influenced by the COVID-19 situation, restrictions on international travel and communications advising against travelling by state authorities. The operational factors impacting results were following:
- during the quarter 2 shuttle vessels, 3 cargo vessels, 4 cruise ferries and effectively one hotel were operating in limited capacity;
- short-term charter of Silja Europa in June;
- COVID-related restrictions imposed by state authorities;
- operations of 5 vessels and effectively 3 hotels were suspended due to imposed travel restrictions;
- significant increase in the global fuel prices;
- preparation costs for starting employment of four vessels from
July 2021 onward; - cost savings from previously implemented measures.
To enhance travelling and contribute to resolving the COVID-19 crisis, from the second quarter the Group offers the opportunity for passengers to perform COVID-19 antigen testing and get vaccine shots on board the
Operations during the quarter
Given the uncertainty regarding the duration of the crisis and the course of the post-crisis recovery with progress of vaccinations, the business environment has 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.
Cruise ferry Silja Europa was chartered out in the beginning of June. Cruise ferry Silja Serenade started operating on
Operations of
Sales and segments
In the second quarter of 2021, the Group’s total revenue increased by
Revenue from route operations (core business) increased by
The number of passengers carried on the
The number of passengers carried on the
On
The
Revenue from the segment other increased by a total of
Earnings
In the second quarter of 2021, the Group’s gross profit improved by
Despite continuously strict travelling restrictions, lower impact from support measures and government assistance, increasing fuel prices and expenses made in preparation for employment of vessels from
The Group used temporary salary support measures offered by Estonian government which reduced personnel expenses by
During the quarter, there was a reduction in ships’ fairway dues in
In comparison with the second quarter of 2020 the combined impact of government assistance and support measures was
Amortisation and depreciation expense decreased by
Net finance costs increased by
The Group’s unaudited net loss for the second quarter of 2021 was
Results of the first 6 months of 2021
In the first 6 months (1 January – 30 June) of the 2021 financial year the Group carried 0.7 million passengers which is 64.4% less compared to the same period last year. The Group’s unaudited revenue for the period decreased by 36.4% and amounted to
The financial result of the first 6 months of 2021 was impacted by suspension of operations of vessels and hotels due to the COVID-19 situation and travel restrictions as well as increase in global fuel prices.
Investments
The Group’s investments in second quarter of 2021 amounted to
Due to the changed economic environment and suspension of vessel operations, ship-related investments were kept to minimum and only critical maintenance and repair works were performed.
Investments were also made in the development of the online booking and sales systems as well as other administrative systems and in relation to the opening of Burger King restaurants.
Dividends
Due to a deteriorated operating environment after the reporting date and considering the Company’s long-term interests, the Supervisory Board proposed not to pay dividends, which was approved by the shareholders on annual general meeting on
Financial position
At the end of the second quarter 2021, the Group’s net debt had increased by
In order to relieve the liquidity issues caused by the COVID-19 situation, Group entities were allowed to postpone tax payments in 2020 and 2021 by home markets tax boards. The postponed tax liabilities amounted to
As at
By the end of the quarter, the Group agreed with financial institutions on the amendment and the prolongation of the waivers of financial covenants and the postponement of principal payments under existing loan agreements. From the second quarter of 2021 until the end of first quarter of 2022 repayments in the total amount of
Personnel
As at
Due to the COVID-19 situation the following changes regarding personnel were effective in the second quarter of 2021:
- majority of the Finnish personnel were on unpaid leave, except the staff on duty on vessels; by the end of the quarter, the number of personnel on unpaid leave decreased due to the preparations for starting operations;
- workload reduced to 20% for a large percentage of Swedish employees and up to 80% of salary remunerated by the Swedish Government.
In the second quarter of 2021, staff costs amounted to
Economic Environment
The Group considers
The consumer confidence for Finnish and Swedish consumers improved by the end of the quarter, however, the overall demand in passenger traffic remained very low due to hindrances in travelling. The international travel restrictions and reduced air traffic has effectively meant absence of demand from the customers from outside our home markets since the start of the COVID-19 pandemic. The state-level travelling and border-crossing restrictions effectively allowed to offer only international cargo operations to and from
In the second quarter, the cargo market fared better relative to the passenger business, supported by the recovering business confidence on all home markets. Yet the market conditions regarding price competition remained challenging resulting in a stagnant development in the average revenue per unit compared to the previous year.
Measured in euros the global fuel prices increased, on average, by 107% in the second quarter of 2021 compared to last year’s low base. The annual increase in the effective prices for the Group was lower due to fuel price agreements with the price fixed above the market level effective a year ago. Increase in the fuel prices was the main cause of the Group’s overall fuel cost increasing by 32% compared to the same period last year.
The
For the foreseeable future, the key risk has to do with global and regional developments with the COVID-19 situation, progress of vaccinations and related restrictions on travel and other economic activities, its economic damage and its impact on local and international trade.
Events in Q2
Extensions of the term of office and addition to the Management Board
In April, the Supervisory Board of
Short-term charter agreements
In the beginning of June, Silja Europa was on a short-term charter in the
In late June, the Group and
Changes in AS Tallink Grupp’s loan agreements
The Group and its lending banks signed amendments to loan facility agreements whereby the loan principal repayments were rescheduled and waivers of selected financial covenants were agreed. The loans' final maturities remained unchanged. Repayments in the total amount of
Opening of Burger King restaurant in
In
Completion of renovation and reopening of
The renovation of
Events after the reporting period and outlook
Christening of the new LNG shuttle vessel MyStar
The new LNG shuttle vessel MyStar will be christened according to the traditions of shipbuilding in Rauma shipyard on
Opening of Burger King restaurants
The Group continues preparations for opening additional Burger King restaurants in 2021. In the second half of the year altogether six new Burger King restaurants are planned to be opened in
Short-term outlook of vaccination against COVID-19
At the date of the report nearly 69% of the adult population of
Earnings
The Group’s earnings are not generated evenly throughout the year. The summer period is the high season in the Group’s operations. In management’s opinion and based on prior experience most of the Group’s earnings are generated during the summer (June-August). However, this year, dependent on situation with the vaccinations and cross-border travelling, the period may extend to autumn.
Due to the ongoing COVID-19 situation the earnings outlook is uncertain and continues to be strongly affected by external factors such as the progress of vaccination, states’ decisions regarding the timing of the lifting of travel restrictions and allowing passenger traffic as well as the duration of the recovery period. Management expects the passenger traffic between
Research and development projects
The Group is continuously looking for innovative ways to upgrade the ships and passenger area technology to improve its overall performance through modern solutions. The most recent technical projects are focusing on the solutions for reduction of the ships CO2 footprint.
Risks
The Group’s business, financial position and operating results could be materially affected by various risks. These risks are not the only ones we face. Additional risks and uncertainties not presently known to us, or that we currently believe are immaterial or unlikely, could also impair our business. The order of presentation of the risk factors below is not intended to be an indication of the probability of their occurrence or of their potential effect on our business.
- COVID-19 situation and developments
- Governmental restrictions on business activities
- Accidents, disasters
- Macroeconomic developments
- Changes in laws and regulations
- Relations with trade unions
- Increase in the fuel prices and interest rates
- Market and customer behaviour
For the period | Q2 2021 | Q2 2020 |
Revenue (million euros) | 86.1 | 65.0 |
Gross profit (million euros) | -8.7 | -21.9 |
EBITDA¹ (million euros) | 4.4 | 2.4 |
EBIT¹ (million euros) | -19.4 | -22.7 |
Net profit/loss for the period (million euros) | -24.3 | -27.4 |
Depreciation and amortisation (million euros) | 23.8 | 25.2 |
Capital expenditures¹ ²(million euros) | 3.1 | 14.4 |
Weighted average number of ordinary shares outstanding | 669,882,040 | 669,882,040 |
Earnings/loss per share¹ | -0.036 | -0.041 |
Number of passengers | 427,767 | 388,212 |
Number of cargo units | 91,990 | 86,755 |
Average number of employees | 4,064 | 6,578 |
As at | ||
Total assets (million euros) | 1,524.7 | 1,492.5 |
Total liabilities (million euros) | 869.1 | 812.4 |
Interest-bearing liabilities (million euros) | 744.5 | 728.3 |
Net debt¹ (million euros) | 706.7 | 713.5 |
Net debt to EBITDA¹ | 143.2 | 238.7 |
Total equity (million euros) | 655.7 | 680.1 |
Equity ratio¹ (%) | 43% | 46% |
Number of ordinary shares outstanding | 669,882,040 | 669,882,040 |
Equity per share¹ | 0.98 | 1.02 |
Ratios¹ | Q2 2021 | Q2 2020 |
Gross margin (%) | -10.1% | -33.7% |
EBITDA margin (%) | 5.1% | 3.7% |
EBIT margin (%) | -22.5% | -35.0% |
Net profit/loss margin (%) | -28.3% | -42.1% |
ROA (%) | -6.1% | 1.3% |
ROE (%) | -15.4% | 0.3% |
ROCE (%) | -7.3% | 1.5% |
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 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 margin: gross profit / net sales
EBITDA margin: EBITDA / net sales
EBIT margin: EBIT / net sales
Net profit 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 | Q2 2021 | Q2 2020 | Jan-Jun 2021 | Jan-Jun 2020 |
Revenue (Note 3) | 86,078 | 64,962 | 139,824 | 219,892 |
Cost of sales | -94,783 | -86,857 | -168,504 | -241,959 |
Gross loss /profit | -8,705 | -21,895 | -28,680 | -22,067 |
Sales and marketing expenses | -6,921 | -7,320 | -11,994 | -21,268 |
Administrative expenses | -10,450 | -9,605 | -20,406 | -23,029 |
Impairment loss on receivables | ||||
Other operating income | 6,683 | 16,138 | 11,721 | 17,670 |
Other operating expenses | 5 | -57 | -8 | -79 |
Result from operating activities | -19,388 | -22,739 | -49,367 | -48,773 |
Finance income (Note 4) | -4 | 0 | 1 | 1 |
Finance costs (Note 4) | -5,151 | -4,588 | -9,828 | -8,700 |
Share of profit/loss of equity-accounted investees | 0 | 0 | 0 | 0 |
Loss before income tax | -24,543 | -27,327 | -59,194 | -57,472 |
Income tax | 216 | -44 | 436 | -97 |
Net loss for the period | -24,327 | -27,371 | -58,758 | -57,569 |
Net loss for the period attributable to equity holders of the Parent | -24,327 | -27,371 | -58,758 | -57,569 |
Other comprehensive income | ||||
Items that may be reclassified to profit or loss | ||||
Exchange differences on translating foreign operations | -70 | -504 | 104 | 81 |
Other comprehensive income for the period | -70 | -504 | 104 | 81 |
Total comprehensive loss for the period | -24,397 | -27,875 | -58,654 | -57,488 |
Total comprehensive loss for the period attributable to equity holders of the Parent | -24,397 | -27,875 | -58,654 | -57,488 |
Loss per share (in EUR, Note 5) | -0.036 | -0.041 | -0.088 | -0.086 |
Consolidated statement of financial position
Unaudited, in thousands of EUR | |||
ASSETS | |||
Cash and cash equivalents | 37,816 | 21,892 | 27,834 |
Trade and other receivables | 30,519 | 22,434 | 25,463 |
Prepayments | 13,698 | 10,641 | 7,216 |
Prepaid income tax | 25 | 0 | 0 |
Inventories | 35,609 | 37,035 | 28,707 |
Current assets | 117,667 | 92,002 | 89,220 |
Investments in equity-accounted investees | 245 | 403 | 245 |
Other financial assets and prepayments | 509 | 1,866 | 2,233 |
Deferred income tax assets | 20,270 | 18,674 | 20,270 |
Investment property | 300 | 300 | 300 |
Property, plant and equipment (Note 6) | 1,347,212 | 1,349,733 | 1,363,485 |
Intangible assets (Note 7) | 38,538 | 42,898 | 40,448 |
Non-current assets | 1,407,074 | 1,413,874 | 1,426,981 |
TOTAL ASSETS | 1,524,741 | 1,505,876 | 1,516,201 |
LIABILITIES AND EQUITY | |||
Interest-bearing loans and borrowings (Note 8) | 94,387 | 130,066 | 111,601 |
Trade and other payables | 88,885 | 86,951 | 73,477 |
Derivatives | 0 | 0 | 0 |
Payables to owners | 6 | 6 | 6 |
Income tax liability | 14 | 10 | 10 |
Deferred income | 35,631 | 37,901 | 23,253 |
Current liabilities | 218,923 | 254,934 | 208,347 |
Interest-bearing loans and borrowings (Note 8) | 650,136 | 485,593 | 593,518 |
Derivatives | 0 | 0 | 0 |
Other liabilities | 0 | 0 | 0 |
Non-current liabilities | 650,136 | 485,593 | 593,518 |
Total liabilities | 869,059 | 740,527 | 801,865 |
Share capital (Note 9) | 314,844 | 314,844 | 314,844 |
Share premium | 663 | 663 | 663 |
Reserves | 68,934 | 68,666 | 69,854 |
Retained earnings | 271,241 | 381,176 | 328,975 |
Equity attributable to equity holders of the Parent | 655,682 | 765,349 | 714,336 |
Total equity | 655,682 | 765,349 | 714,336 |
TOTAL LIABILITIES AND EQUITY | 1,524,741 | 1,505,876 | 1,516,201 |
Consolidated statement of cash flows
Unaudited, in thousands of EUR | Q2 2021 | Q2 2020 | Jan-Jun 2021 | Jan-Jun 2020 |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net loss for the period | -24,327 | -27,371 | -58,758 | -57,569 |
Adjustments | 28,153 | 29,084 | 56,376 | 58,471 |
Changes in: | ||||
Receivables and prepayments related to operating activities | -5,790 | 9,649 | -9,097 | 11,294 |
Inventories | -6,048 | 2,417 | -6,902 | 220 |
Liabilities related to operating activities | 37,890 | -9,782 | 26,076 | -7,545 |
Changes in assets and liabilities | 26,052 | 2,284 | 10,077 | 3,969 |
Cash generated from operating activities | 29,878 | 3,997 | 7,695 | 4,871 |
Income tax repaid/paid | -37 | -33 | -76 | -20 |
NET CASH FROM OPERATING ACTIVITIES | 29,841 | 3,964 | 7,619 | 4,851 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchase of property, plant, equipment and intangible assets (Notes 6, 7) | -3,114 | -14,344 | -7,315 | -41,414 |
Proceeds from disposals of property, plant, equipment | 7 | 3 | 14 | 47 |
Proceeds from other financial assets | 0 | 0 | 0 | 0 |
Interest received | 1 | 0 | 1 | 1 |
-3,106 | -14,341 | -7,300 | -41,366 | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from loans received (Note 8) | 0 | 0 | 0 | 15,000 |
Repayment of loans received (Note 8) | 0 | 0 | -14,667 | -14,667 |
Repayment of bonds (Note 8) | 0 | 0 | 0 | 0 |
Change in overdraft (Note 8) | 2,752 | 19,747 | 40,333 | 32,005 |
Payments for settlement of derivatives | 0 | 0 | 0 | 0 |
Payment of lease liabilities (Note 8) | -2,480 | -999 | -6,705 | -4,914 |
Interest paid | -3,953 | -2,941 | -9,097 | -7,689 |
Payment of transaction costs related to loans | 0 | 0 | -201 | -205 |
Dividends paid (Note 10) | 0 | 0 | 0 | 0 |
Reduction of share capital | 0 | 0 | 0 | 0 |
Income tax on dividends paid | 0 | 0 | 0 | 0 |
-3,681 | 15,807 | 9,663 | 19,530 | |
TOTAL | 23,054 | 5,430 | 9,982 | -16,985 |
Cash and cash equivalents at the beginning of period | 14,762 | 16,462 | 27,834 | 38,877 |
Change in cash and cash equivalents | 23,054 | 5,430 | 9,982 | -16,985 |
Cash and cash equivalents at the end of period | 37,816 | 21,892 | 37,816 | 21,892 |
Financial director
Sadama 5
10111
E-mail joonas.joost@tallink.ee
Attachments
- Tallink Grupp 2021 Q2 ENG
- Tallink Grupp 2021 Q2 Financial Data
- Tallink Grupp 2021 Q2 Presentation
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