2024-04-23 08:00:00 CEST
2024-04-23 08:00:18 CEST
REGULATED INFORMATION
Viking Line - Interim report (Q1 and Q3)
Viking Line: Somewhat weaker first quarter demand
Viking Line Abp BUSINESS REVIEW
23.04.2024, 9.00 AM
Somewhat weaker first quarter demand
JANUARY-MARCH 2024
(compared to January-March 2023)
· Sales amounted to EUR 93.2 M (EUR 93.9 M).
· Other operating revenue was EUR 0.4 M (EUR 8.8 M).
· Operating income totalled EUR -10.4 M (EUR -0.9 M).
· Net financial items were EUR -3.8 M (EUR -3.7 M).
· Income before taxes totalled EUR -14.2 M (EUR -4.6 M, including the EUR 8.6
M capital gain from the sale of Rosella).
· Income after taxes was EUR -14.3 M (EUR -3.9 M).
· Investments mainly in Viking Cinderella and Birka Gotland totalled EUR 10.2
M (EUR 3.9 M).
Outlook for the financial year 2024
There continues to be significant uncertainty due to the geopolitical situation
and its impact on energy prices, inflation, interest rates and currencies as
well as the effects these uncertainty factors may have on people's propensity to
travel, demand, consumption patterns and costs. In early 2023, Rosella was sold.
Provided that energy prices remain at current levels and people's propensity to
travel is sustained, the Board of Directors expects that income before tax in
2024 will be on a par with the figure for 2023 if the EUR 8.6 M capital gain
from the sale of Rosella in 2023 is excluded, which is the same conclusion in
the previous quarterly report.
COMMENTS FROM PRESIDENT AND CEO JAN HANSES
Earnings for the first quarter of the year, excluding extraordinary items, were
somewhat weaker than expected. After year-end, a downturn in demand was
discernible in the market. Weak economic growth in Finland and Sweden has led to
increased consumer cautiousness. This is mostly reflected in weaker onboard
consumption compared to the same period last year. However, the good news is
that we reached our targets for revenue generated from ticket prices in order to
offset the cost of emission allowances introduced at the start of the year.
Earnings for the quarter were affected by one-off costs in the joint venture
Gotland Alandia Cruises for the launch of Birka Gotland. In addition, Viking
Cinderella underwent an extensive dry-docking prior to being reflagged under the
Finnish flag. Above all, the cabins on the vessel were upgraded, with nearly 300
cabins undergoing a total refurbishment. Various public spaces were also
completely refurbished. On March 8, Viking Cinderella was launched in service on
the Helsinki-Mariehamn-Stockholm route, which once again is now served by two
vessels. In February, Birka Gotland was dry-docked prior to cruise service
between Stockholm and Mariehamn as well as to Visby on the Swedish island of
Gotland. Service was launched on March 20, 2024. This dry-docking was also
extensive, with a number of refurbishments carried out on board.
As a result of these major redeployments, it was possible to reassign shipboard
staff on Viking Cinderella to new positions on Birka Gotland as well as the
company's other vessels. Throughout these labour-intensive operational changes,
staff performance has been excellent, and a high level of service has been
maintained. It is gratifying in this context to note that, due to the
redeployments and expansion in service to Helsinki, we have recruited new
shipboard staff.
Our operations are heavily impacted at present by increasingly stringent
environmental standards. Starting in 2024, our operations are subject to the EU
Emissions Trading System, which means that we are now obliged to shoulder the
cost of emission allowances, which in the medium term we can only partly offset
through our continued energy efficiency work.
Finally, I would like to note that the first quarter of 2024 has entailed
changes in our operations, with expanded service to Helsinki and the launch of
Birka Gotland in partnership with Gotlandsbolaget.
I would like to extend my warm thanks to our customers and partners for the
faith they have shown in us and their good cooperation. I would also like to
give a big thank you to our staff, who worked hard and with great patience
during the first quarter.
SUMMARY OF KEY FIGURES
Jan 1, 2024- Jan 1, 2023- Jan 1, 2023-
EUR M Mar 31, 2024 Mar 31, 2023 Dec 31, 2023
Sales 93.2 93.9 491.4
Other operating revenue 0.4 8.8 9.1
Operating income -10.4 -0.9 55.0
Income before taxes -14.2 -4.6 45.4
Income for the period -14.3 -3.9 36.3
SERVICE AND MARKET
During most of the report period, the Viking Line Group provided passenger and
cargo carrier services using five vessels in the northern Baltic Sea and the
Gulf of Finland. On March 20, the vessel Birka Gotland, which Viking Line owns
jointly with Gotlandsbolaget, launched its cruise service from Stockholm. Prior
to the launch, the vessel underwent a major dry-docking.
Viking Cinderella was dry-docked during the period January 1-19. After this, it
returned to making day cruises between Stockholm and Mariehamn until March 4,
and then on March 8 began service on the Helsinki-Mariehamn-Stockholm route.
Viking Cinderella was out of service for four days in conjunction with its
removal from the Swedish Register of Ships on March 5 and its entry in the Åland
Register of Ships. Since March 5, the vessel has sailed under a Finnish flag.
During the comparative period, Rosella served between Mariehamn and Kapellskär
until January 8, when it was taken out of service. Viking XPRS was out of
service for three days in conjunction with its removal from the Estonian
Register of Bare-Boat Charterers on March 6, 2023, and entry in the Åland
Register of Ships. Since March 6, the vessel has sailed under a Finnish flag.
The total number of passengers on the Group's vessels during the report period
was 871,828 (888,725). The Group had a total market share in its service area of
approximately 34.6% (35.4%).
Market demand for travel in the company's service area as a whole weakened
during the first quarter of the year. We noted some a softening in demand for
service between Finland and Sweden, while traffic between Finland and Estonia
increased slightly. Tighter household finances and a weak Swedish krona impeded
the company's chances of increasing occupancy rates and capacity utilization
during the first quarter of the year.
The period includes disruptions in service, in the form of vessel dry-dockings
for both Viking Line and its competitors, which affects comparative figures.
The Group's total cargo volume was 32,993 cargo units (33,736). The Group's
share of the cargo market was approximately 17.4% (17.5%). Due to uncertain
economic conditions in our service area, total cargo volume transported was at
the same level as in 2023. As a result, the number of cargo units transported by
Viking Line decreased, which was also due to political strikes carried out
during this period in Finland.
The market share for passenger cars was approximately 29.9% (26.8%).
SALES AND EARNINGS FOR JANUARY - MARCH 2024
Consolidated sales decreased 0.7% to EUR 93.2 M during the period January
1-March 31, 2024 (EUR 93.9 M January 1-March 31, 2023). Operating income
totalled EUR -10.4 M (EUR -0.9 M). Consolidated income before tax was EUR -14.2
M (EUR -4.6 M). The comparative figures include the capital gain from the sale
of Rosella, which was EUR 8.6 M. Income before tax excluding the capital gain in
2023 was EUR -13.2 M.
Passenger-related revenue decreased 0.8% to EUR 79.7 M (EUR 80.4 M), while cargo
sales were EUR 12.7 M (EUR 12.7 M) and other operating revenue was EUR 0.8 M
(EUR 0.8 M). The sales contribution was EUR 71.7 M (EUR 71.3 M).
Operating expenses increased 1.1% to EUR 75.1 M (EUR 74.2 M). Salary and other
employment benefit expenses increased 14.4% or EUR 3.5 M. Other operating
expenses decreased 5.5% or EUR 2.7 M. The decrease in operating expenses is
largely due to lower fuel costs, which decreased 15.4% or EUR 2.7 M.
INVESTMENTS AND FINANCING
The Group's investments for the period January 1 to March 31, 2024, totalled
10.2 M (3.9 M). The Group's total investments represent 10.9% of sales (4.1%).
Most of these investments are due to the dry-docking of Viking Cinderella, which
underwent extensive refurbishment. This investment underscores our commitment to
keeping the vessel in service and in our fleet for many years to come. The other
major investment is due to Birka Gotland and its launch in service. Viking Line
and Gotlandsbolaget have each covered 50% of the investment in the vessel.
The Group's long-term interest-bearing liabilities on March 31, 2024, totalled
EUR 141.1 M (EUR 176.5 M).
The debt/equity ratio was 50.5%, compared to 47.8% for the same period last
year.
The Group's cash and cash equivalents at the end of March totalled EUR 65.7 M
(EUR 79.8 M). Unutilized credit lines in the Group totalled EUR 0.1 M (EUR 0.1
M).
Net cash flow from operating activities was EUR 1.3 M (EUR -5.7 M). Net cash
flow from investing activities was EUR -10.1 M (EUR 7.3 M) and net cash flow
from financing activities was EUR -10.8 M (EUR -10.8 M).
Most of the Group's loan agreements include loan covenants according to market
terms. The financial covenants in the loan agreements consist of minimum
requirements for liquidity and solvency and a maximum net financial debt-to
-EBITDA ratio.
The dividend restriction in one of the Group's loan agreements continues to
apply in the event the Group's debt-to-EBITDA ratio exceeds 5.0. The Group's
debt-to-EBITDA ratio is below 5.0, so the dividend restriction does not apply.
Viking Line's Abp's shareholding in Rederiaktiebolaget Eckerö has exceeded 20%
since November 22, 2023, so Rederiaktiebolaget Eckerö has been recognized as a
company with a participating interest undertaking using the equity method since
then. An initial positive income effect of EUR 2.5 M arose in the transition.
Future cash flows related to financial liabilities on March 31, 2024:
EUR
M
Future cash flows Lease Trade Interest- Total
related to
financial liabilities liabilities payables bearing
(incl. financial
expenses)
liabilities
Apr 1, 2024 - Sep 30, 1.4 26.1 23.4 50.9
2024
Oct 1, 2024 - Mar 31, 1.4 22.9 24.3
2025
Apr 1, 2025 - Mar 31, 2.2 29.6 31.8
2026
Apr 1, 2026 - Mar 31, 0.6 35.2 35.9
2027
Apr 1, 2027 - Mar 31, 0.4 25.1 25.5
2028
Apr 1, 2028 - Mar 31, 0.2 20.6 20.8
2029
Apr 1, 2029 - 0.2 63.1 63.2
Total 6.5 26.1 219.8 252.4
IMPAIRMENT TESTING
Recognized values for intangible and tangible assets are tested regularly in
order to identify any external or internal indications of an impairment loss. If
such indications are observed for any asset item, the recoverable amount of the
asset is recognized. One of the most important areas that entail judgements is
valuation of the Group's vessels.
The management has also made the assessment that there is no need for impairment
for the Group's other non-current assets.
ORGANIZATION AND PERSONNEL
The average number of full-time employees in the Group was 2,149 (1,993), 1,680
(1,487) of whom worked for the parent company. Land-based personnel totalled 454
(466) and shipboard personnel totalled 1,694 (1,527). On March 5, Viking
Cinderella was reflagged from a Swedish to a Finnish flag.
During the comparative period, in addition to the Group's own employees, Viking
XPRS was crewed by an average of 131 people employed by a staffing company.
Since its reflagging under a Finnish flag on March 6, 2023, the vessel is only
staffed with the company's own personnel.
RISK FACTORS
Viking Line's operations are exposed to different kinds of risks, which vary in
their scope and impact on operations, financial results and the company's
ability to meet certain social and environmental objectives. The relevant risks
have been classified into four categories: strategic, operational, damage and
financial risks. The risks continue to be the same as when the company's year
-end financial statements were published.
Fluctuations in bunker (vessel fuel) prices have an indirect impact on the
Group's earnings. To partly offset the risk of higher bunker prices, on March
31, 2024, the Group had fixed price agreements entered into for bunker purchases
in effect from the start of the year to June 2024.
Since January 1, 2024, Viking Line records and recognizes emission allowance
costs in accordance with the EU Emission Trading System for greenhouse gases
(ETS). Emission allowances must be surrendered for the first time by September
30, 2025. To reduce its price risk, Viking Line has started purchasing emission
allowances. The company's strategy until further notice is to purchase emission
allowances on a regular basis in order to achieve a cost effect corresponding to
the average price and use.
The company's interest-bearing liabilities amounted to EUR 177.8 M on March 31,
2024, 84.3% of which have a variable interest rate. The total variable interest
rate consists of the market interest rate plus a margin that is specific to the
company. Fluctuations in interest rates can have a negative effect on the
company's costs of funding and increase funding costs in the future.
OUTLOOK FOR THE FINANCIAL YEAR 2024
There continues to be significant uncertainty due to the geopolitical situation
and its impact on energy prices, inflation, interest rates and currencies as
well as the effects these uncertainty factors may have on people's propensity to
travel, demand, consumption patterns and costs. In early 2023, Rosella was sold.
Provided that energy prices remain at current levels and people's propensity to
travel is sustained, the Board of Directors expects that income before tax in
2024 will be on a par with the figure for 2023 if the EUR 8.6 M capital gain
from the sale of Rosella in 2023 is excluded, which is the same conclusion in
the previous quarterly report.
EVENTS AFTER THE BALANCE SHEET DATE
The Board of Directors knows of no events after the balance sheet date that
could affect this Business review. The Finnish government has decided to
increase the fairway fees from 2025. The decision has no effect on earnings for
this financial year.
Mariehamn, April 22, 2024
VIKING LINE ABP
Jan Hanses
President and CEO
Financial information
The management's Business Review was prepared in accordance with IFRS accounting
and valuation principles. The accounting and valuation principles applied are
the same as for the year-end financial statements for 2023. The figures have not
been audited.
Consolidated income statement
Jan 1, 2024- Jan 1, 2023- Jan 1, 2023-
EUR M Mar 31, 2024 Mar 31, 2023 Dec 31, 2023
SALES 93.2 93.9 491.4
Other operating revenue 0.4 8.8 9.1
Expenses
Goods and services 21.5 22.6 113.7
Salary and other employment 28.0 24.5 108.5
benefit expenses
Depreciation, amortization 7.5 6.7 27.5
and impairment losses
Other operating expenses 47.1 49.8 195.9
104.1 103.6 445.5
OPERATING INCOME -10.4 -0.9 55.0
Financial income 0.9 0.3 2.8
Financial expenses -3.4 -2.8 -11.8
Share of after-tax income -1.2 -1.2 -0.6
from joint ventures and
companies with a
participating interest
undertaking
accounted for using the
equity method
INCOME BEFORE TAXES -14.2 -4.6 45.4
Income taxes -0.1 0.7 -9.2
INCOME FOR THE PERIOD -14.3 -3.9 36.3
Income attributable to:
Parent company shareholders -14.3 -3.9 36.3
Earnings per share before and -0.82 -0.23 2.10
after dilution, EUR
Consolidated statement of
comprehensive income
Jan 1, 2024- Jan 1, 2023- Jan 1, 2023-
EUR M Mar 31, 2024 Mar 31, 2023 Dec 31, 2023
INCOME FOR THE PERIOD -14.3 -3.9 36.3
Items that may be
reclassified to the income
statement
Translation differences -0.9 -0.3 0.0
Items that will not be
reclassified to the income
statement
Changes in the fair value of
financial assets at fair
value
through other comprehensive 0.0 - 1.5
income
Other comprehensive income -0.9 -0.3 1.5
COMPREHENSIVE INCOME FOR THE -15.1 -4.2 37.8
PERIOD
Comprehensive income
attributable to:
Parent company shareholders -15.1 -4.2 37.8
CONSOLIDATED INCOME STATEMENT BY QUARTER
2024 2023 2023 2023 2023
EUR M Q1 Q4 Q3 Q2 Q1
SALES 93.2 112.2 152.9 132.4 93.9
Other operating revenue 0.4 0.3 0.0 0.1 8.8
Expenses
Goods and services 21.5 26.7 33.1 31.3 22.6
Salary and other 28.0 27.5 27.9 28.6 24.5
employment benefit
expenses
Depreciation, 7.5 7.1 6.9 6.8 6.7
amortization and
impairment losses
Other operating expenses 47.1 48.5 49.8 47.8 49.8
104.1 109.8 117.7 114.5 103.6
OPERATING INCOME -10.4 2.7 35.3 18.0 -0.9
Financial income 0.9 1.3 0.6 0.6 0.3
Financial expenses -3.4 -3.3 -2.3 -3.4 -2.8
Share of after-tax income -1.2 1.4 0.6 -1.6 -1.2
from joint ventures and
companies with a
participating interest
undertaking
accounted for using the
equity method
INCOME BEFORE TAXES -14.2 2.0 34.2 13.6 -4.6
Income taxes -0.1 -0.3 -6.6 -2.9 0.7
INCOME FOR THE PERIOD -14.3 1.7 27.6 10.6 -3.9
Income attributable to:
Parent company -14.3 1.7 27.6 10.6 -3.9
shareholders
Earnings per share before -0.82 0.10 1.60 0.61 -0.23
and after dilution, EUR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME BY QUARTER
2024 2023 2023 2023 2023
EUR M Q1 Q4 Q3 Q2 Q1
INCOME FOR THE PERIOD -14.3 1.7 27.6 10.6 -3.9
Items that may be
reclassified to the income
statement
Translation differences -0.9 1.0 0.7 -1.3 -0.3
Items that will not be
reclassified to the income
statement
Changes in the fair value of
financial assets at fair
value
through other comprehensive 0.0 0.3 1.2 - -
income
Other comprehensive income -0.9 1.3 1.9 -1.3 -0.3
COMPREHENSIVE INCOME FOR THE -15.1 3.0 29.5 9.3 -4.2
PERIOD
Comprehensive income
attributable to:
Parent company shareholders -15.1 3.0 29.5 9.3 -4.2
Consolidated balance sheet
EUR M Mar 31, 2024 Mar 31, 2023 Dec 31, 2023
ASSETS
Non-current assets
Intangible assets 6.1 3.1 5.4
Land 0.5 0.5 0.5
Buildings and structures 1.6 1.5 1.6
Renovation costs for rented 1.0 1.0 0.9
properties
Vessels 436.9 426.9 435.3
Machinery and equipment 2.6 2.3 2.6
Right-of-use assets 4.3 4.0 4.7
Financial assets at fair
value through
other comprehensive income 0.0 10.6 0.0
Investments accounted for 48.6 35.2 49.8
using the equity method
Receivables 0.5 - 0.6
Total non-current assets 502.2 485.1 501.5
Current assets
Inventories 13.9 13.9 12.7
Income tax assets 0.1 0.1 0.1
Trade and other receivables 45.8 41.6 40.1
Cash and cash equivalents 65.7 79.8 85.3
Total current assets 125.4 135.5 138.3
TOTAL ASSETS 627.6 620.6 639.8
EQUITY AND LIABILITIES
Equity
Share capital 1.8 1.8 1.8
Reserves 49.7 49.7 49.7
Translation differences -3.6 -3.4 -3.2
Retained earnings 260.3 240.0 275.0
Equity attributable to 308.1 288.1 323.2
parent company shareholders
Total equity 308.1 288.1 323.2
Non-current liabilities
Deferred tax liabilities 45.1 35.2 45.2
Interest-bearing liabilities 141.1 176.5 150.6
Lease liabilities 3.4 4.0 4.0
Other payables 2.0 - 2.3
Total non-current 191.6 215.7 202.1
liabilities
Current liabilities
Interest-bearing liabilities 36.7 36.7 36.7
Lease liabilities 2.7 2.3 2.7
Income tax liabilities 0.0 0.0 0.0
Trade and other payables 88.4 77.7 75.1
Total current liabilities 127.8 116.8 114.5
Total liabilities 319.5 332.5 316.6
TOTAL EQUITY AND LIABILITIES 627.6 620.6 639.8
Consolidated cash flow
statement
Jan 1, 2024- Jan 1, 2023- Jan 1, 2023-
EUR M Mar 31, 2024 Mar 31, 2023 Dec 31, 2023
OPERATING ACTIVITIES
Income for the period -14.3 -3.9 36.3
Adjustments
Depreciation, amortization 7.5 6.7 27.5
and impairment losses
Capital gains/losses from - -8.8 -8.9
non-current assets
Income from investments in 1.2 1.2 0.6
associate companies
Other items not included -0.2 -0.2 -0.7
in cash flow
Interest expenses and 3.3 2.6 11.2
other financial expenses
Interest income and other -0.6 -0.3 -2.7
financial income
Dividend income - - 0.0
Income taxes 0.1 -0.7 9.2
Change in working capital
Change in trade and other -5.6 -4.9 -3.4
receivables
Change in inventories -1.1 0.1 1.3
Change in trade and other 11.5 5.0 4.3
payables
Interest paid -1.0 -2.4 -10.0
Financial expenses paid -0.1 -0.2 -0.3
Interest received 0.4 0.2 2.7
Financial income received 0.2 0.1 0.0
Taxes paid 0.0 -0.1 0.0
NET CASH FLOW FROM OPERATING 1.3 -5.7 67.1
ACTIVITIES
INVESTING ACTIVITIES
Investments in vessels -8.9 -3.2 -28.8
Investments in other -1.2 -0.7 -4.5
intangible assets, property,
plant and equipment
Investments in financial
assets recognized at fair
value
through other comprehensive - 0.0 -
income
Investments accounted for 0.0 - -3.6
using the equity method
Divestments of vessels - 11.1 11.1
Divestments of other non - 0.1 0.2
-current assets
Change in non-current 0.1 - -0.6
receivables
Dividends received from - - 1.7
associate companies
Dividends received from - - 0.0
others
NET CASH FLOW FROM INVESTING -10.1 7.3 -24.5
ACTIVITIES
FINANCING ACTIVITIES
Principal payments -10.1 -10.1 -36.8
Depreciation of lease -0.7 -0.7 -2.6
liabilities
Dividends paid - - -6.9
NET CASH FLOW FROM FINANCING -10.8 -10.8 -46.3
ACTIVITIES
CHANGE IN CASH AND CASH -19.7 -9.2 -3.7
EQUIVALENTS
Cash and cash equivalents at 85.3 89.0 89.0
the beginning of the period
CASH AND CASH EQUIVALENTS AT 65.7 79.8 85.3
THE END OF THE PERIOD
Statement of changes in
consolidated equity
Equity
attributable
to parent
company
shareholders
Share Translation Retained Total
EUR M capital Reserves differences earnings equity
EQUITY, JAN 1, 2024 1.8 49.7 -3.2 275.0 323.2
Income for the period -14.3 -14.3
Translation differences 0.0 -0.4 -0.5 -0.9
Remeasurement of
financial assets
recognized at
fair value through 0.0 0.0 0.0
other comprehensive
income
Comprehensive income - 0.0 -0.4 -14.7 -15.1
for the period
EQUITY, MAR 31, 2024 1.8 49.7 -3.6 260.3 308.1
Equity
attributable
to parent
company
shareholders
Share Translation Retained Total
EUR M capital Reserves differences earnings equity
EQUITY, JAN 1, 2023 1.8 49.7 -3.4 244.3 292.4
Income for the period -3.9 -3.9
Translation differences 0.0 0.0 -0.3 -0.3
Remeasurement of
financial assets
recognized at
fair value through -
other comprehensive
income
Comprehensive income - 0.0 0.0 -4.2 -4.2
for the period
EQUITY, MAR 31, 2023 1.8 49.7 -3.4 240.0 288.1
KEY METRICS
Jan 1, 2024- Jan 1, 2023- Jan 1, 2023-
Mar 31, 2024 Mar 31, 2023 Dec 31, 2023
Equity per share, EUR 17.83 16.67 18.71
Equity/assets ratio 50.5 % 47.8 % 51.4 %
Investments, EUR M 10.2 3.9 36.9
- as % of sales 10.9 % 4.1 % 7.5 %
Passengers 871,828 888,725 4,897,494
Cargo units 32,993 33,736 125,269
Average number of 2,149 1,993 2,227
employees, full-time
equivalent
Equity per share = Equity attributable to parent company shareholders / Number
of shares.
Equity/assets ratio, % = (Equity including minority interest) / (Total assets -
advances received).
When rounding off items to the nearest EUR 1,000,000, rounding-off differences
of EUR +/- 0.1 M may occur.
Jan Hanses
President and CEO
jan.hanses@vikingline.com
+358-(0)18-270 00
© 2024 Nasdaq, Inc. All Rights Reserved |