AS Tallink Grupp Unaudited Consolidated Interim Report Q3 2023

The Q3 2023 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; 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 third quarter (1 July – 30 September) of the 2023 financial year, AS Tallink Grupp and its subsidiaries (the Group) carried 1 775 821 passengers, which is 6.2% less than in the third quarter of 2022. The number of cargo units transported decreased by 26.1% compared to the same period a year ago. The Group’s unaudited consolidated revenue amounted to EUR 240.7 million (EUR 255.6 million in Q3 2022), down by 5.8% year-on-year. Unaudited EBITDA was EUR 82.1 million (EUR 67.7 million in Q3 2022) and the unaudited net profit for the period was EUR 48.7 million (EUR 37.9 million in Q3 2022), up by 21.3% and 28.5%, respectively.

The following operational factors impacted the Group’s revenue and operating results in the third quarter of 2023:

• The volume of cargo and passenger transportation was impacted by less vessels in operations due to chartering and by 17% less trips made compared to the same period a year ago.
• The demand was also impacted by low consumer confidence levels, and weak economic environment in all Group’s core markets but also by global geopolitical instability.
• As at the end of the quarter the Group operated 15 vessels including 2 shuttle vessels, 2 cargo vessels and 4 cruise ferries as well as 5 vessels that were chartered out (3 vessels on long-term and 2 vessels on short-term charter). During the quarter, 2 charter agreements ended. The charter agreement of the Group’s 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.
• The planned dry docking of the cruise ferry Baltic Queen for 12 days in September 2023.
• The Group operated 3 hotels in Tallinn and 1 in Riga.
• Declining global fuel prices and the optimal fleet size 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’s net debt to EBITDA ratio was down to 2.7 as at 30 September 2023 compared to 3.1 as at 30 June 2023.
• 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 third quarter of 2023, the Group’s total revenue decreased by EUR 14.9 million to EUR 240.7 million compared to EUR 255.6 million in the third quarter of 2022. 

Revenue from route operations (core business) amounted to EUR 195.7 million, which is EUR 15.1 million less than in the third quarter of 2022. The segment result from route operations (core business) amounted to EUR 55.0 million compared to EUR 39.1 million in the third quarter of 2022.

The number of passengers carried on the Estonia-Finland route decreased by 0.6% year-on-year. The number of transported cargo units decreased by 27.0%. While the revenue from the Estonia-Finland route decreased by EUR 7.1 million to EUR 86.4 million, the segment result improved by EUR 5.6 million to EUR 32.3 million. The decline in passenger numbers, cargo volumes and revenue were mostly driven by less vessels in operations and less trips made compared to the same period a year ago. In the third quarter of 2023, the segment reflects the operations of two shuttle vessels, compared to two shuttle vessels and one cruise ferry in the third quarter of 2022. The cruise ferry Silja Europa stopped operating on the Estonia-Finland route in August 2022 due to a charter agreement. During the third quarter of 2022, the Tallinn-Helsinki route was operated by the shuttle vessels Megastar and Oscar Wilde (formerly Star). The shuttle vessel Oscar Wilde stopped operating the route in May 2023 due to a charter agreement. In the third quarter of 2023, a route was operated by shuttle vessel Megastar and a new shuttle vessel MyStar that was launched to the Tallinn-Helsinki route in December 2022.

In the third quarter of 2023, the year-on-year decrease in the number of passengers on Finland-Sweden routes was 18.1%. The number of transported cargo units decreased by 41.0%. The routes’ revenue decreased by EUR 10.0 million to EUR 83.7 million while the segment result improved by EUR 8.0 million to EUR 18.9 million, year-on-year. The decline in passenger numbers, cargo volumes and revenue were mostly driven by less vessels in operations and less trips made compared to the same period a year ago. In the third quarter of 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 5.3% while the number of transported cargo units decreased by 1.1% compared to the third quarter of 2022. The revenue of Estonia-Sweden routes increased by EUR 2.0 million to EUR 25.5 million and segment result improved by EUR 2.3 million to EUR 3.9 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 0.6 million and amounted to EUR 47.4 million. The segment result declined year-on-year by EUR 5.2 million amounting to EUR 12.2 million. As at the end of third quarter 2023, the Group had 5 vessels on charter including 3 on long-term and 2 on short-term charter. During the quarter, 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.

In the third quarter of 2023, 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.

In the third quarter of 2023, 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.

Earnings
In the third quarter of 2023, the Group’s gross profit improved by EUR 11.6 million to EUR 77.7 million compared to EUR 66.0 million in the third quarter of 2022. EBITDA improved by EUR 14.4 million and amounted to EUR 82.1 million.

Amortisation and depreciation expense increased by EUR 1.5 million to EUR 25.2 million compared to the third quarter of the financial year 2022.

As a result of increased interest rates and increased financing obligations related to the shuttle-vessel Mystar, net finance costs increased by EUR 2.1 million year-on-year to EUR 8.4 million in the third quarter of 2023.

The Group’s unaudited net profit for third quarter 2023 was EUR 48.7 million or EUR 0.065 per share compared to a EUR 37.9 million or EUR 0.051 per share in Q3 2022.

Investments
The Group’s investments in the third quarter of 2023 amounted to EUR 6.1 million.

Majority of the investments were related to the maintenance and repair works of the vessels. The cruise ferry Victoria I was prepared for operating a 22-hour cruise service between Tallinn and Helsinki from October 2023.

During the planned docking of the cruise ferry Baltic Queen both technical works as well as interior upgrades were carried out. The ferry’s propellers were re-bladed to enhance the speed of the ferry and to make the ferry more energy efficient. The expected fuel-saving from the re-blading is more than 13%. Additionally, the graphite paint was piloted on the cruise ferry Baltic Queen for hull painting to significantly reduce the water resistance of the vessel’s hull and thus increase the vessel’s efficiency. 

Financial Position
At the end of the third quarter 2023, the Group’s net debt amounted to EUR 620.4 million, a decrease of EUR 44.5 million compared to the end of second quarter of 2023. The net debt to EBITDA ratio was 2.7 at the reporting date (3.1 as at 30 June 2023).

As at 30 September 2023, the Group’s cash and cash equivalents amounted to EUR 64.4 million (EUR 57.6 million as at 30 June 2023) and the Group had EUR 135.0 million in unused credit lines (EUR 135.0 million as at 30 June 2023). The total liquidity buffer (cash, cash equivalents and unused credit facilities) amounted to EUR 199.4 million (EUR 192.6 million as at 30 June 2023). In the third quarter of 2023, the Group repaid loans in the total amount of EUR 30.9 million compared to EUR 105.3 million in the second quarter of 2023. The current trade and other payables amounted to EUR 83.6 million (EUR 96.3 million as at 30 June 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.

Results of the first 9 months of 2023
In the first 9 months (1 January – 30 September) of the 2023 financial year, the Group carried 4.4 million passengers which is 4.8% more compared to the same period last year. The Group’s unaudited revenue for the period increased by 13.0% and amounted to EUR 641.6 million. Unaudited EBITDA for the first 9 months was EUR 177.7 million (EUR 85.4 million in January-September 2022) and unaudited net profit was EUR 76.7 million (net loss of EUR 2.8 million in January-September 2022).

The financial result of the first 9 months of 2023 was impacted by the following factors:

• The volume of cargo and passenger transportation was impacted by less vessels available due to chartering of vessels resulting in 12% less trips made compared to the same period a year ago. 
• The chartering of vessels supporting the stability of cash flows.
• Planned maintenance works of 57 days which affected both the Finland-Sweden segment’s first quarter and the Estonia-Sweden segment’s third quarter passenger and cargo levels as well as the financial result.
• Repayment of long-term loans in the amount of EUR 155.5 million compared to EUR 71.0 million in 9 months 2022.
• The lower operating cost base compared to the same period in 2022 arising from chartering of vessels but also lower global fuel costs.

Key Figures

For the period	Q3 2023	Q3 2022	Jan-Sep 2023	Jan-Sep 2022
Revenue (EUR million)	240.7	255.6	641.6	567.7
Gross profit/loss (EUR million)	77.7	66.0	168.9	71.6
EBITDA¹ (EUR million)	82.1	67.7	177.7	85.4
EBIT¹ (EUR million)	56.8	43.9	101.9	14.2
Net profit/loss for the period (EUR million)	48.7	37.9	76.7	-2.8
Depreciation and amortisation (EUR million)	25.2	23.7	75.7	71.2
Capital expenditures¹ ²(EUR million)	6.1	5.5	22.3	23.6
Weighted average number of ordinary shares outstanding	743 569 064	743 569 064	743 569 064	743 569 064
Earnings/loss per share¹ (EUR)	0.065	0.051	0.103	-0.004
Number of passengers	1 775 821	1 893 603	4 366 679	4 166 038
Number of cargo units	75 701	102 399	247 792	313 717
Average number of employees	4 756	5 256	4 878	5 048
As at	30.09.2023	30.06.2023	30.09.2022	31.06.2022
Total assets (EUR million)	1 597.4	1 613.6	1 535.3	1 550.1
Total liabilities (EUR million)	813.7	878.4	845.1	897.8
Interest-bearing liabilities (EUR million)	684.8	722.5	711.5	746.5
Net debt¹ (EUR million)	620.4	664.9	608.7	655.9
Net debt to EBITDA¹	2.7	3.1	5.5	8.4
Total equity (EUR million)	783.7	735.2	690.2	652.3
Equity ratio¹ (%)	49%	46%	45%	42%
Number of ordinary shares outstanding	743 569 064	743 569 064	743 569 064	743 569 064
Shareholders’ equity per share (EUR)	1.05	0.99	0.93	0.88
Ratios¹	Q3 2023	Q3 2022	Jan-Sep 2023	Jan-Sep 2022
Gross margin (%)	32.3%	25.8%	22.8%	1.8%
EBITDA margin (%)	34.1%	26.5%	23.8%	5.7%
EBIT margin (%)	23.6%	17.2%	11.3%	-9.5%
Net profit/loss margin (%)	20.2%	14.8%	7.0%	-13.0%
ROA (%)	7.7%	1.0%	7.7%	1.0%
ROE (%)	12.9%	-0.9%	12.9%	-0.9%
ROCE (%)	9.6%	1.2%	9.6%	1.2%

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

Consolidatedstatement of profitor loss and othercomprehensiveincome

Unaudited, in thousands of EUR	Q3 2023	Q3 2022	Jan-Sep 2023	Jan-Sep 2022
Revenue (Note 3)	240 668	255 555	641 588	567 726
Cost of sales	-163 013	-189 536	-472 682	-496 090
Gross profit/loss	77 655	66 019	168 906	71 636
Sales and marketing expenses	-10 399	-9 455	-30 781	-27 397
Administrative expenses	-11 175	-12 156	-37 494	-35 050
Impairment loss on receivables
Other operating income	789	-463	1 382	5 112
Other operating expenses	-35	0	-68	-84
Result from operating activities	56 835	43 945	101 945	14 217
Finance income (Note 4)	133	-133	804	48
Finance costs (Note 4)	-8 507	-6 188	-26 803	-17 847
Share of profit/loss of equity-accounted investees	0	0	0	0
Profit/loss before income tax	48 461	37 624	75 946	-3 582
Income tax	222	248	762	794
Net profit/loss for the period	48 683	37 872	76 708	-2 788
Net profit/loss for the period attributable to equity holders of the Parent	48 683	37 872	76 708	-2 788
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences on translating foreign operations	-244	43	29	491
Other comprehensive income for the period	-244	43	29	491
Total comprehensive profit/loss for the period	48 439	37 915	76 737	-2 297
Total comprehensive profit/loss for the period attributable to equity holders of the Parent	48 439	37 915	76 737	-2 297
Basic and diluted profit/loss per share (in EUR, Note 5)	0.065	0.051	0.103	-0.004

Consolidatedstatement of financialposition

Unaudited, in thousands of EUR	30.09.2023	30.09.2022	31.12.2022
ASSETS
Cash and cash equivalents	64 433	102 813	114 935
Trade and other receivables	34 577	39 988	31 380
Prepayments	11 485	14 522	9 379
Prepaid income tax	1	1	37
Inventories	39 758	39 757	39 965
Current assets	150 254	197 081	195 696
Investments in equity-accounted investees	75	165	75
Other financial assets and prepayments	4 510	3 377	3 622
Deferred income tax assets	21 840	21 840	21 840
Investment property	300	300	300
Property, plant and equipment (Note 6)	1 391 682	1 279 659	1 438 286
Intangible assets (Note 7)	28 734	32 878	31 823
Non-current assets	1 447 141	1 338 219	1 495 946
TOTAL ASSETS	1 597 395	1 535 300	1 691 642
LIABILITIES AND EQUITY
Interest-bearing loans and borrowings (Note 8)	126 148	249 707	165 049
Trade and other payables	83 593	85 257	86 934
Derivatives	0	0	0
Payables to owners	6	6	6
Income tax liability	35	47	35
Deferred income	45 237	48 299	44 222
Current liabilities	255 019	383 316	296 246
Interest-bearing loans and borrowings (Note 8)	558 659	461 765	688 465
Derivatives	0	0	0
Other liabilities	0	0	0
Non-current liabilities	558 659	461 765	688 465
Total liabilities	813 678	845 081	984 711
Share capital (Note 9)	349 477	349 477	349 477
Share premium	663	663	663
Reserves	67 694	66 885	66 363
Retained earnings	365 883	273 194	290 428
Equity attributable to equity holders of the Parent	783 717	690 219	706 931
Total equity	783 717	690 219	706 931
TOTAL LIABILITIES AND EQUITY	1 597 395	1 535 300	1 691 642

Consolidatedstatement of cashflows

Unaudited, in thousands of EUR	Q3 2023	Q3 2022	Jan-Sep 2023	Jan-Sep 2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit/loss for the period	48 683	37 872	76 708	-2 788
Adjustments	33 283	29 671	100 721	88 590
Changes in:
Receivables and prepayments related to operating activities	2 480	5 254	-5 282	-14 602
Inventories	2 496	4 736	207	-5 126
Liabilities related to operating activities	-27 274	-17 051	-2 703	21 033
Changes in assets and liabilities	-22 298	-7 061	-7 778	1 305
Cash generated from operating activities	59 668	60 482	169 651	87 107
Income tax repaid/paid	-20	-39	-111	-115
NET CASH FROM/USED OPERATING ACTIVITIES	59 648	60 443	169 540	86 992
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, equipment and intangible assets (Notes 6, 7)	-6 083	-5 500	-22 249	-23 633
Proceeds from disposals of property, plant, equipment	164	-38	244	2 743
Proceeds from other financial assets	0	0	0	0
Interest received	133	4	804	6
NET CASH USED IN INVESTING ACTIVITIES	-5 786	-5 534	-21 201	-20 884
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans received (Note 8)	0	0	0	0
Repayment of loans received (Note 8)	-30 858	-25 042	-155 477	-71 030
Repayment of bonds (Note 8)	0	0	0	0
Change in overdraft (Note 8)	-15	-6 481	-15	11 646
Payments for settlement of derivatives	0	0	0	0
Payment of lease liabilities (Note 8)	-8 219	-4 332	-17 025	-12 844
Interest paid	-7 982	-6 548	-25 212	-18 022
Payment of transaction costs related to loans	0	-298	-1 112	-601
Dividends paid (Note 10)	0	0	0	0
Issue of shares	0	0	0	0
Income tax on dividends paid	0	0	0	0
NET CASH FROM/USED IN FINANCING ACTIVITIES	-47 074	-42 701	-198 841	-90 851
TOTAL NET CASH FLOW	6 788	12 208	-50 502	-24 743
Cash and cash equivalents at the beginning of period	57 645	90 605	114 935	127 556
Change in cash and cash equivalents	6 788	12 208	-50 502	-24 743
Cash and cash equivalents at the end of period	64 433	102 813	64 433	102 813

Anneli Simm
Investor Relations Manager

AS Tallink Grupp
Sadama 5
10111 Tallinn, Estonia
E-mail anneli.simm@tallink.ee

Attachments

• Tallink Grupp 2023 Q3 ENG
• Tallink Grupp 2023 Q3 Financial Data
• AS Tallink Grupp Q3 2023 Presentation

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