Viking Line Abp INTERIM REPORT 14.11.2013, 9.00 A.M.
VIKING LINES INTERIM REPORT FOR THE PERIOD JANUARY - SEPTEMBER 2013
Consolidated sales of the Viking Line Group during the report period, January 1 – September 30, 2013, increased by 7.7 per cent to EUR 419.7 M compared to the corresponding period of 2012 (EUR 389.5 M during January 1 – September 30, 2012). Other operating revenue amounted to EUR 23.2 M (0.3). Operating income amounted to EUR 32.7 M (3.2). Net financial items totalled EUR -5.1 M (-0.7). Consolidated income before taxes amounted to EUR 27.6 M (2.5). Income after taxes totalled EUR 20.7 M (1.7).
Competition in Viking Line’s service area remains tough and implies continued pressure on prices. Market growth is very low, but service on the Viking Grace is expected to continue its positive performance. The Group has an ongoing action programme to improve the efficiency of its operations. The Board of Directors believes that operating income excluding capital gains will improve in 2013 compared to operating income in 2012. Income before taxes, excluding the capital gain related to the sale of the Isabella, is expected to be at about the same level as last year. In addition, the capital gain from the sale of the Isabella will improve income before taxes by EUR 22.8 M.
SALES AND EARNINGS
Consolidated sales of the Viking Line Group during the report period, January 1 – September 30, 2013, increased by 7.7 per cent to EUR 419.7 M compared to the corresponding period of 2012 (EUR 389.5 M during January 1 – September 30, 2012). Other operating revenue amounted to EUR 23.2 M (0.3). Operating income amounted to EUR 32.7 M (3.2). Net financial items totalled EUR -5.1 M (-0.7). Consolidated income before taxes amounted to EUR 27.6 M (2.5). Income after taxes totalled EUR 20.7 M (1.7).
Viking Line’s market share increased to 34.4 per cent (33.7). Passenger-related revenue increased by 7.9 per cent to EUR 389.7 M (361.1), while cargo revenue increased by 5.3 per cent to EUR 27.1 M (25.8). Net sales revenue increased by 9.6 per cent to EUR 304.8 M (278.1). The placement into service of the Viking Grace on the Turku (Finland)–Mariehamn/ Långnäs (Åland Islands, Finland)–Stockholm (Sweden) route was the main reason for the improved passenger-related revenue. Market growth was weak, but the company's earnings trend was somewhat better than last year. Earnings were pulled down by the Viking Grace’s start-up expenses as well as the Gabriella’s unforeseen dry-docking and 23-day service interruption during the late spring of 2013. The Group’s operating expenses increased by 7.3 per cent to EUR 295.3 M (275.2). Consolidated income before taxes, excluding a capital gain from the sale of the Isabella, totalled EUR 4.8 M (2.5).
Consolidated sales during the third quarter, July 1 – September 30, 2013, increased by 5.1 per cent to EUR 164.4 M compared to the same quarter of 2012 (EUR 156.4 M during July 1 – September 30, 2012). Operating income in the third quarter amounted to EUR 26.6 M (21.0) and income after taxes totalled EUR 18.9 M (15.8).
SERVICES AND MARKET TRENDS
The Viking Line Group provides passenger and cargo carrier services using seven vessels on the northern Baltic Sea. In January 2013, the Isabella was replaced by the Viking Grace on the Turku–Mariehamn/Långnäs–Stockholm route. The Isabella was sold in April 2013.
The number of passengers on Viking Line’s vessels during the report period increased by 144,432 to 4,998,757 (4,854,325). Viking Line’s cargo volume was 88,819 cargo units (88,488). Viking Line achieved a cargo market share of 20.7 per cent (20.0).
During the report period, Viking Line strengthened its market share on the Turku–Mariehamn/Långnäs–Stockholm route by 8.3 percentage points to 58.3 per cent. Market share increased on the Helsinki (Finland)–Mariehamn–Stockholm route by 0.3 percentage points to 45.4 per cent. In cruise services between Stockholm and Mariehamn, market share decreased by 0.6 per cent to 51.9 per cent. On the Helsinki–Tallinn (Estonia) route, market share decreased by 1.1 percentage points to 23.0 per cent. On the short route over the Sea of Åland, market share decreased by 3.1 percentage points to 41.6 per cent, primarily due to a reduced number of departures. The Group thus had a total market share in its service area of 34.4 per cent (33.7).
INVESTMENTS AND FINANCING
Of the Group’s investments during the report period, its investment in the Viking Grace totalled EUR 163.5 M, while its other investments amounted to EUR 6.0 M. The Group’s total investments were thus EUR 169.5 M (39.9).
The Isabella was sold to Hansalink Limited on April 22, 2013. The sale of the Isabella was a planned step in the financing of Viking Line’s new cruise vessel Viking Grace. The total sale price was about EUR 30 M and represented a capital gain of EUR 22.8 M.
On September 30, 2013 the Group’s non-current interest-bearing liabilities amounted to EUR 225.5 M (77.4). The equity/assets ratio was 33.8 per cent, compared to 45.7 per cent a year earlier.
At the end of September 2013, the Group’s cash and cash equivalents amounted to EUR 88.9 M (41.8). Net cash flow from operating activities amounted to EUR 19.9 M (15.4).
FINANCIAL REPORTING
This Interim Report was prepared in compliance with International Financial Reporting Standards (IFRSs) and was drawn up as a summary of the financial statements for the period in compliance with IAS 34. Estimates and judgments as well as accounting principles and calculation methods are the same as in the latest annual financial statements. Recognized income taxes are based on an estimated average tax rate, which is expected to apply throughout the fiscal year. This Interim Report is unaudited.
ORGANIZATION AND PERSONNEL
The average number of Group employees was 3,151 (3,048), of whom 1,986 (1,860) worked for the parent company. Land-based personnel totalled 708 (725) and shipboard personnel totalled 2,443 (2,323).
Andreas Remmer, LL.M, has been a new member of Group Management since September 2013 as Head of Finance and IT (Chief Financial Officer, CFO).
RISK FACTORS
Since the Year-End Report was published, no changes have occurred that affect the Group’s short-term assessment of the risks in its business operations. Special risks during the immediate future are primarily related to bunker (vessel fuel) prices.
OUTLOOK FOR THE FULL FINANCIAL YEAR 2013
Competition in Viking Line’s service area remains tough and implies continued pressure on prices. Market growth is very low, but service on the Viking Grace is expected to continue its positive performance. The Group has an ongoing action programme to improve the efficiency of its operations. The Board of Directors believes that operating income excluding capital gains will improve in 2013 compared to operating income in 2012. Income before taxes, excluding the capital gain related to the sale of the Isabella, is expected to be at about the same level as last year. In addition, the capital gain from the sale of the Isabella will improve income before taxes by EUR 22.8 M.
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||||
| Jul 1, 2013– | Jul 1, 2012– | Jan 1, 2013– | Jan 1, 2012– | Jan 1, 2012– | |
| EUR M | Sep 30, 2013 | Sep 30, 2012 | Sep 30, 2013 | Sep 30, 2012 | Dec 31, 2012 |
| SALES | 164.4 | 156.4 | 419.7 | 389.5 | 516.1 |
| Other operating revenue | 0.2 | 0.1 | 23.2 | 0.3 | 0.4 |
| Expenses | |||||
| Goods and services | 43.4 | 44.2 | 114.9 | 111.5 | 149.6 |
| Salary and other employment benefit expenses | 31.9 | 30.8 | 98.5 | 93.3 | 125.2 |
| Depreciation and impairment losses | 8.8 | 7.0 | 27.4 | 21.2 | 28.5 |
| Other operating expenses | 53.8 | 53.4 | 169.4 | 160.6 | 210.7 |
| 137.9 | 135.5 | 410.2 | 386.6 | 514.1 | |
| OPERATING INCOME | 26.6 | 21.0 | 32.7 | 3.2 | 2.4 |
| Financial income | 0.3 | 0.8 | 0.9 | 1.3 | 1.6 |
| Financial expenses | -2.0 | -0.7 | -6.0 | -2.0 | -2.5 |
| INCOME BEFORE TAXES | 25.0 | 21.1 | 27.6 | 2.5 | 1.6 |
| Income taxes | -6.1 | -5.2 | -6.9 | -0.8 | -0.7 |
| INCOME FOR THE PERIOD | 18.9 | 15.8 | 20.7 | 1.7 | 0.9 |
| Translation differences | -0.1 | 0.2 | -0.3 | 0.2 | 0.1 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 18.8 | 16.0 | 20.4 | 1.9 | 1.0 |
| Income attributable to: | |||||
| Parent company shareholders | 18.9 | 15.8 | 20.7 | 1.7 | 0.9 |
| Total comprehensive income attributable to: | |||||
| Parent company shareholders | 18.8 | 16.0 | 20.4 | 1.9 | 1.0 |
| Earnings per share before and after dilution, EUR | 1.75 | 1.47 | 1.92 | 0.16 | 0.09 |
| CONSOLIDATED BALANCE SHEET | |||||
| EUR M | Sep 30, 2013 | Sep 30, 2012 | Dec 31, 2012 | ||
| ASSETS | |||||
| Non-current assets | |||||
| Intangible assets | 0.9 | 1.0 | 0.9 | ||
| Land | 1.1 | 1.1 | 1.1 | ||
| Buildings and structures | 11.8 | 10.4 | 12.3 | ||
| Renovation costs for rented properties | 0.5 | 0.5 | 0.5 | ||
| Vessels | 370.5 | 179.5 | 174.2 | ||
| Machinery and equipment | 8.3 | 6.8 | 8.1 | ||
| Advance payments | - | 56.5 | 61.1 | ||
| Investments available for sale | 0.0 | 0.0 | 0.0 | ||
| Receivables | 0.7 | 0.8 | 0.7 | ||
| Total non-current assets | 393.6 | 256.6 | 258.9 | ||
| Current assets | |||||
| Inventories | 15.3 | 15.4 | 15.2 | ||
| Income tax assets | 0.5 | 2.4 | 1.9 | ||
| Trade and other receivables | 40.7 | 40.2 | 29.1 | ||
| Cash and cash equivalents | 88.9 | 41.8 | 45.3 | ||
| Total current assets | 145.4 | 99.8 | 91.5 | ||
| TOTAL ASSETS | 539.0 | 356.4 | 350.4 | ||
| EQUITY AND LIABILITIES | |||||
| Equity | |||||
| Share capital | 1.8 | 1.8 | 1.8 | ||
| Reserves | 0.0 | 0.0 | 0.0 | ||
| Translation differences | -0.2 | 0.2 | 0.1 | ||
| Retained earnings | 180.8 | 160.8 | 160.0 | ||
| Equity attributable to parent company shareholders | 182.4 | 162.8 | 162.0 | ||
| Total equity | 182.4 | 162.8 | 162.0 | ||
| Non-current liabilities | |||||
| Deferred tax liabilities | 29.7 | 31.2 | 29.7 | ||
| Non-current interest-bearing liabilities | 225.5 | 77.4 | 73.1 | ||
| Total non-current liabilities | 255.2 | 108.6 | 102.8 | ||
| Current liabilities | |||||
| Current interest-bearing liabilities | 19.4 | 8.7 | 8.7 | ||
| Income tax liabilities | 7.0 | 0.0 | - | ||
| Trade and other payables | 75.1 | 76.3 | 76.9 | ||
| Total current liabilities | 101.5 | 85.0 | 85.6 | ||
| Total liabilities | 356.6 | 193.6 | 188.4 | ||
| TOTAL EQUITY AND LIABILITIES | 539.0 | 356.4 | 350.4 | ||
| CONSOLIDATED CASH FLOW STATEMENT | |||||
| Jan 1, 2013– | Jan 1, 2012– | Jan 1, 2012– | |||
| EUR M | Sep 30, 2013 | Sep 30, 2012 | Dec 31, 2012 | ||
| OPERATING ACTIVITIES | |||||
| Income for the period | 20.7 | 1.7 | 0.9 | ||
| Adjustments | |||||
| Depreciation and impairment losses | 27.4 | 21.2 | 28.5 | ||
| Other items not included in cash flow | -23.1 | 0.2 | 0.1 | ||
| Interest expenses and other financial expenses | 5.3 | 1.3 | 1.6 | ||
| Interest income and other financial income | -0.1 | -0.3 | -0.4 | ||
| Dividend income | 0.0 | 0.0 | 0.0 | ||
| Income taxes | 6.9 | 0.8 | 0.7 | ||
| Change in working capital | |||||
| Change in trade and other receivables | -11.6 | -11.3 | -0.2 | ||
| Change in inventories | -0.1 | -1.8 | -1.6 | ||
| Change in trade and other payables | -3.0 | 6.4 | 7.1 | ||
| Interest paid | -3.5 | -1.3 | -1.6 | ||
| Financial expenses paid | -0.6 | -0.1 | -0.1 | ||
| Interest received | 0.0 | 0.4 | 0.5 | ||
| Financial income received | 0.0 | 0.0 | 0.1 | ||
| Taxes paid | 1.5 | -1.8 | -2.7 | ||
| NET CASH FLOW FROM | |||||
| OPERATING ACTIVITIES | 19.9 | 15.4 | 32.8 | ||
| INVESTING ACTIVITIES | |||||
| Investments in vessels | -166.7 | -2.9 | -4.0 | ||
| Investments in other property, plant and equipment | -2.8 | -6.9 | -11.0 | ||
| Advance payments | - | -30.1 | -34.7 | ||
| Divestments of vessels | 29.9 | - | - | ||
| Divestments of other property, plant and equipment | 0.2 | 0.1 | 0.1 | ||
| Change in non-current receivables | 0.0 | 0.0 | 0.2 | ||
| Dividends received | 0.0 | 0.0 | 0.0 | ||
| NET CASH FLOW FROM INVESTING ACTIVITIES | -139.3 | -39.8 | -49.5 | ||
| FINANCING ACTIVITIES | |||||
| Increase in non-current liabilities | 179.1 | 0.3 | 1.0 | ||
| Amortization of non-current liabilities | -16.0 | -4.4 | -9.4 | ||
| Dividends paid | - | -5.4 | -5.4 | ||
| NET CASH FLOW FROM FINANCING ACTIVITIES | 163.1 | -9.5 | -13.7 | ||
| CHANGE IN CASH AND CASH EQUIVALENTS | 43.6 | -33.9 | -30.4 | ||
| Cash and cash equivalents at beginning of period | 45.3 | 55.7 | 55.7 | ||
| Change in held-to-maturity investments | - | 20.0 | 20.0 | ||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 88.9 | 41.8 | 45.3 | ||
| 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, 2012 | 1.8 | 0.0 | 0.1 | 164.4 | 166.3 |
| Income for the period | 1.7 | 1.7 | |||
| Translation differences | 0.0 | 0.1 | 0.1 | 0.2 | |
| Total comprehensive income for the period | - | 0.0 | 0.1 | 1.8 | 1.9 |
| Dividend to shareholders | -5.4 | -5.4 | |||
| Equity, Sep 30, 2012 | 1.8 | 0.0 | 0.2 | 160.8 | 162.8 |
| Equity, Jan 1, 2013 | 1.8 | 0.0 | 0.1 | 160.0 | 162.0 |
| Income for the period | 20.7 | 20.7 | |||
| Translation differences | 0.0 | -0.3 | 0.0 | -0.3 | |
| Total comprehensive income for the period | - | 0.0 | -0.3 | 20.7 | 20.4 |
| Dividend to shareholders | - | ||||
| Equity, Sep 30, 2013 | 1.8 | 0.0 | -0.2 | 180.8 | 182.4 |
| QUARTERLY CONSOLIDATED INCOME STATEMENT | ||||
| 2013 | 2013 | 2013 | 2012 | |
| EUR M | Q3 | Q2 | Q1 | Q4 |
| SALES | 164.4 | 140.3 | 115.0 | 126.6 |
| Other operating revenue | 0.2 | 22.9 | 0.1 | 0.1 |
| Expenses | ||||
| Goods and services | 43.4 | 39.6 | 31.9 | 38.2 |
| Salary and other employment benefit expenses | 31.9 | 33.7 | 32.9 | 31.9 |
| Depreciation and impairment losses | 8.8 | 9.3 | 9.3 | 7.3 |
| Other operating expenses | 53.8 | 55.6 | 59.9 | 50.0 |
| 137.9 | 138.3 | 133.9 | 127.4 | |
| OPERATING INCOME | 26.6 | 25.0 | -18.9 | -0.7 |
| Financial income | 0.3 | 0.4 | 0.2 | 0.3 |
| Financial expenses | -2.0 | -2.0 | -2.0 | -0.5 |
| INCOME BEFORE TAXES | 25.0 | 23.3 | -20.7 | -0.9 |
| Income taxes | -6.1 | -5.8 | 5.0 | 0.1 |
| INCOME FOR THE PERIOD | 18.9 | 17.6 | -15.7 | -0.8 |
| Translation differences | -0.1 | -0.2 | 0.0 | -0.1 |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 18.8 | 17.4 | -15.8 | -0.8 |
| Income attributable to: | ||||
| Parent company shareholders | 18.9 | 17.6 | -15.7 | -0.8 |
| Total comprehensive income attributable to: | ||||
| Parent company shareholders | 18.8 | 17.4 | -15.8 | -0.8 |
| Earnings per share before and after dilution, EUR | 1.75 | 1.63 | -1.45 | -0.07 |
| SEGMENT INFORMATION, VIKING LINE GROUP | |||
| Jan 1, 2013– | Jan 1, 2012– | Jan 1, 2012– | |
| OPERATING SEGMENTS, EUR M | Sep 30, 2013 | Sep 30, 2012 | Dec 31, 2012 |
| Sales | |||
| Vessels | 416.0 | 385.7 | 511.1 |
| Unallocated | 3.9 | 4.0 | 5.3 |
| Total, operating segments | 419.9 | 389.7 | 516.3 |
| Eliminations | -0.2 | -0.2 | -0.2 |
| Total sales of the Group | 419.7 | 389.5 | 516.1 |
| Operating income | |||
| Vessels | 66.3 | 38.4 | 52.5 |
| Unallocated | -33.6 | -35.3 | -50.0 |
| Total operating income of the Group | 32.7 | 3.2 | 2.4 |
| PLEDGED ASSETS AND CONTINGENT LIABILITIES | |||
| EUR M | Sep 30, 2013 | Sep 30, 2012 | Dec 31, 2012 |
| Contingent liabilities | 246.2 | 87.0 | 84.1 |
| Assets pledged for own debt | 316.2 | 134.9 | 112.2 |
| Investment commitments not included in the accounts | - | 198.9 | 191.9 |
| – contractual amount | - | 254.2 | 253.0 |
| FINANCIAL RATIOS AND STATISTICS | |||
| Jan 1, 2013– | Jan 1, 2012– | Jan 1, 2012– | |
| Sep 30, 2013 | Sep 30, 2012 | Dec 31, 2012 | |
| Equity per share, EUR | 16.88 | 15.07 | 15.00 |
| Equity/assets ratio | 33.8 % | 45.7 % | 46.2 % |
| Investments, EUR M | 169.5 | 39.9 | 49.7 |
| – as % of sales | 40.4 % | 10.2 % | 9.6 % |
| Passengers | 4,998,757 | 4,854,325 | 6,349,903 |
| Cargo units | 88,819 | 88,488 | 116,906 |
| Average number of employees, full time equivalent | 3,151 | 3,048 | 3,014 |
| Earnings per share = (Income before taxes – income taxes +/– minority interest) / Average number of shares | |||
| Equity per share = Equity attributable to parent company shareholders / Number of shares on balance sheet date | |||
| 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. | |||
The Year-end Report for the financial year 2013 will be published on February 13, 2014.
Mariehamn, Åland, November 13, 2013
VIKING LINE ABP The Board of Directors
Mikael Backman CEO and President
CEO Mikael Backman, mikael.backman@vikingline.com, +358-(0)18-27000
