Havila Kystruten AS: Second quarter 2024 accounts

Summary

The company's positive development continues with solid top-line growth, and Havila Kystruten delivers its first positive operating result (EBITDA) in the second quarter of 2024.

Revenues in the second quarter of 2024 amounted to MNOK 369, an increase from MNOK 172 in the same period last year. For the first half of the year, revenues were MNOK 662, up from MNOK 289 the previous year. Adjusted for growth in the number of vessels, this corresponds to a revenue increase of 7% for the second quarter and 15% for the first half-year. Havila Pollux was temporarily out of service for two round trips in May due to technical issues. The revenue loss related to this is primarily covered through the company’s loss of hire insurance.

The growth in revenues is due to both higher occupancy (69% versus 62% last year) and increased average cabin revenue (pre-sales) of NOK 5,200 compared to NOK 4,500 in the second quarter of 2023. Occupancy and average cabin income also increased in the first half of the year compared to last year. Contract revenues are CPI-adjusted relative to 2023.

Operating expenses were MNOK 311 in the second quarter, mainly related to ordinary operating costs for four vessels. Some costs are dependent on passenger volume, but the largest items are not significantly affected by occupancy.

EBITDA was positive at MNOK 58 in the second quarter, up from negative MNOK 15 in the same period last year. For the first half-year, EBITDA was MNOK 41, compared to negative MNOK 111 last year.

The result and the balance sheet are significantly affected by fluctuations in exchange rates, especially the value of the Norwegian kroner against the euro, which creates unrealized foreign exchange loss since the ship financing is in euros. Unrealized exchange rate losses have also affected the book equity. However, when adjusting for broker valuations of the ships and considering that the second-hand market for the vessels operates in foreign currency, the value-adjusted equity is significantly positive.

The fleet's operational uptime was 94% in the second quarter. CO2 emissions were 36% lower compared to the reference figures from the Coastal Route in 2017. The company met its goal of less than 75 grams of food waste per guest night in the second quarter with a result of 70 grams.

As of August, 70% of the capacity for 2024 has been sold, and expectations for the year are slightly adjusted. High-season sales started late for the last two vessels, and higher-than-expected cancellations in group allotments have been challenging to re-sell at short notice. The company has therefore implemented stricter conditions for group allocations going forward. An average occupancy of about 75% is expected for 2024.

Outlook

The outlook for continued positive development is promising. The ships have been very well received by both passengers and the coastal population, and the company expects that the modern and environmentally friendly vessels, along with a strengthened brand, will contribute to increased demand moving forward.

The strategy of offering shorter trips opens up new and exciting commercial opportunities aimed at travellers with higher willingness to pay - opportunities that the company is actively working to develop. In particular, we see potential to increase occupancy and passenger numbers on the southbound route from Kirkenes to Bergen, which traditionally has lower occupancy compared to the northbound route from Bergen to Kirkenes.

The company is also well-positioned for further revenue growth through increased prices. Prices realized so far in 2024 have been partially influenced by ticket sales from previous years, where rebookings due to cancellations have been made at the original price, as well as campaigns with lower prices for larger groups to build the brand and secure a base level of occupancy during the startup phase. However, digital sales through the company's own channels close to the departure date have achieved significantly higher prices, and the company is seeing continuous growth in direct bookings through its own channels.

Results for the second quarter of 2024

- Revenue totalled MNOK 369, of which MNOK 97 was revenue from the Ministry of Transport.

- Total operating costs consisted of MNOK 42 in cost of goods sold, MNOK 103 in salary costs, and MNOK 166 in other operating costs.

- Operating profit before depreciation was MNOK 58.

- Depreciation was MNOK 62.

- Net financial items were MNOK - 96.

- Profit before tax was MNOK - 99.

Balance sheet and liquidity as of 30.06.2024

- Total fixed assets were MNOK 4 260, of which ships accounted for MNOK 4 200. At the end of the period, the average broker value for the ships was estimated at 704 million euros (MEUR).

- Current assets were MNOK 497, of which cash and cash equivalents accounted for MNOK 280, of which MNOK 5 are restricted funds for tax deductions.

- The carrying amount of long-term debt was MNOK 4 083, of which debt to financial institutions amounted to MNOK 2 982.

- Book equity was MNOK 8. The value adjusted equity, based on shipbrokers' valuations, is significantly higher.

- Total current liabilities were MNOK 667.

- Net cash flow from operating activities was MNOK 28. Other accrued items are mainly related to advance payments for future voyages.

- Net cash flow from investing activities was MNOK - 13.

- Net cash flow from financing activities was MNOK 74.

Employees

Havila Kystruten had a total of 533 permanent employees as of March 31, 2024, of which 482 were seafarers and 51 were in administration.

Contacts:

Chief Executive Officer: Bent Martini, +47 905 99 650

Chief Financial Officer: Aleksander Røynesdal, +47 413 18 114

This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act

Attachments

• HKY Q2 2024 Report
• HKY Q2 2024 Result Presentation