Interim report for Stena Line

Third quarter report January 1 -September 30, 1999 Stena Line is an international transport and travel service company and one of the world's largest ferry operators. The route network comprises 12 strategically located routes in Scandinavia and around the UK. In addition the Company has interests in three ferry routes through its ownership in P&O Stena Line and a company jointly-owned with another ferry operator. On March 10, 1998, Stena Line's English Channel routes were transferred to P&O Stena Line Ltd., a company 40% owned by Stena Line. For the period from January 1 to March 10 1998, the revenues and expenses of the routes transferred to P&O Stena Line are included in Stena Line's revenues and expenses. After March 10, 1998, Stena Line's share of the results of P&O Stena Line are included as income from associated companies. As a consequence, the results of operations for the first nine months of 1998 and 1999 are not fully comparable. To facilitate comparisons, additional information is provided excluding all revenues, expenses and income from associated companies related to the English Channel for the nine-month periods ending September 30, 1998 and 1999. Highlights for the first nine months, 1999 (Comparisons are with the nine-month period 1998, unless otherwise indicated) The third quarter 1999 was the first period without tax and duty free retail sales and this had a substantial negative impact on both revenue and income. Income from operations, including the English Channel, improved to SEK 358 million from SEK 241 million. Income from operations includes Stena Line's share of P&O Stena Line's income. No dividends were received from P&O Stena Line. The loss before income taxes improved to SEK 18 million from a loss of SEK 115 million. The loss for the 12-month period, ending September 30, 1999, amounts to SEK 227 million. Revenue, excluding the English Channel, fell by SEK 236 million to SEK 5,670 million from SEK 5,906 million. EBITDA, excluding the English Channel, fell by SEK 98 million to SEK 700 million from SEK 798 million. Average passenger ticket rates rose 10% in Scandinavia and 8% in the UK compared to the first nine months in 1998. Freight rates increased by 6% in Scandinavia and 8% in the UK over the same period. Volumes fell 3% for passengers and rose 2% and 1% for private cars and freight respectively, for the nine-month period, excluding the closed Halmstad-Grenaa route. On November 15, Stena Line signed an agreement to acquire the Swedish ferry company Scandlines AB. Scandlines runs five ferry routes in the south of Sweden and had revenue totaling SEK 1,441 million in 1998. The purchase price amounts to SEK 560 million. Results, July-September 1999 (Comparisons are with the same period in 1998, unless otherwise indicated) Revenue Revenue fell by SEK 432 million or 16%, to SEK 2,275 million compared to SEK 2,707 million for the same period in 1998. The fall in revenue in the third quarter is mainly due to the reduction in onboard retail sales following the abolition of tax and duty free retail sales within the EU. Exchange rate fluctuations had a negative impact of SEK 6 million. Revenue in Scandinavia dropped by SEK 188 million to SEK 1,061 million compared to SEK 1,249 million in the same period in 1998. Revenue in the UK fell by SEK 244 million to SEK 1,214 million compared to SEK 1,458 million in 1998. Freight/Port revenue increased by 1% to SEK 522 million from SEK 515 million in 1998. Average freight rates rose 13% in Scandinavia and 5% in the UK. Freight volumes fell 8% in Scandinavia and 5% in the UK. Onboard revenue fell by SEK 352 million or 39% to SEK 552 million from SEK 904 million in 1998. The abolition of tax and duty free retail sales significantly impacted passenger spending. Average retail spending per passenger fell to SEK 136 from SEK 216 in Scandinavia and to SEK 48 from SEK 148 in the UK. In addition other onboard revenue declined as a result of lower passenger volumes. Passenger revenue decreased by SEK 87 million or 7% to SEK 1,201 million from SEK 1,288 million in 1998. Average passenger ticket rates increased by 19% in Scandinavia, due to a combination of increased prices and a change in passenger mix. Average increase in ticket rates in the UK was 2%. The lower rate of increase in the UK was due to severe competition on the Irish Sea. Volumes fell 12% for passengers and 3% for private cars during the third quarter compared to the third quarter 1998, excluding the closed Halmstad- Grenaa route. Passenger volumes fell by 17% in Scandinavia and 8% in the UK. Operating expenses Operating expenses fell by SEK 161 million or 8%, to SEK 1,871 million from SEK 2,032 million, primarily as a result of the reduction in retails goods sold following the abolition of tax and duty free retail sales within the EU. Exchange rate fluctuations had a positive impact of SEK 3 million. EBITDA EBITDA declined by SEK 191 million to SEK 436 million compared to SEK 627 million in the third quarter 1998. Income from associated companies Income from associated companies amounted to SEK 74 million compared to SEK 81 million in 1998. Stena Line's 40% share of P&O Stena Line's income was SEK 73 million compared to SEK 80 million in 1998. No dividends were received from P&O Stena Line in either period. Income from operations Income from operations totaled SEK 332 million compared to SEK 546 million in 1998. Results, January-September 1999, (Comparisons are with January-September 1998 excluding all revenues, expenses and income from associated companies related to the English Channel, for the nine-month periods ending September 1998 and September 1999.) Revenue Revenue fell by SEK 236 million to SEK 5,670 million compared to SEK 5,906 million in 1998, mainly due to the decline in onboard retail sales in the third quarter following the abolition of tax and duty free retail sales within the EU. Exchange rate fluctuations had a positive impact of SEK 51 million. Revenue in Scandinavia declined by SEK 169 million to SEK 2,773 million compared to SEK 2,942 million in 1998. Revenue in the UK declined by SEK 67 million to SEK 2,897 million from SEK 2,964 million in 1998. Freight/Ports revenue rose by SEK 82 million to SEK 1,497 million, compared to SEK 1,415 million in 1998. Freight rates in Scandinavia and the UK increased 6% and 8% respectively, while total freight volume fell 2%. Onboard revenue dropped by SEK 265 million to SEK 1,788 million compared to SEK 2,053 million in 1998. Average spending per passenger fell by 4% and 12% in Scandinavia and the UK, respectively, principally as a result of lower retail spending in the third quarter following the abolition of tax and duty free retail sales within the EU. Passenger revenue fell by SEK 53 million to SEK 2,385 million from SEK 2,438 million. Passenger volume fell by 3% compared to last year. Average passenger ticket rates rose 10% in Scandinavia and 8% in the UK. Operating expenses Operating expenses fell by SEK 73 million to SEK 5,028 million compared to SEK 5,101 million last year. Exchange rate fluctuations had a negative impact of SEK 48 million. Excluding exchange rate fluctuations, operating expenses declined by SEK 121 million. The principal reason for the decrease in operating expenses was the reduction in retail goods sold in the third quarter following the abolition of tax and duty free retail sales within the EU. This has partly been offset by higher charter hires and refit costs for vessels. EBITDA EBITDA declined by SEK 98 million to SEK 700 million from SEK 798 million. Depreciation and amortization Depreciation and amortization rose by SEK 23 million to SEK 437 million compared to SEK 414 million in 1998. Income/loss from operations Income from operations fell by SEK 115 million to SEK 210 million compared to SEK 325 million last year. Results, January-September 1999, (Comparisons are with January-September 1998 including all revenue, expenses and income from associated companies related to the English Channel, for the nine-month periods ending September 1998 and September 1999) Revenue Revenue fell by SEK 456 million to SEK 5,670 million compared to SEK 6,126 million in 1998. This was mainly due to the transfer of the English Channel operations to P&O Stena Line in March 1998 and the decline in onboard retail sales in the third quarter following the abolition of tax and duty free retail sales within the EU. Exchange rate fluctuations had a positive impact of SEK 50 million. Operating expenses Operating expenses were reduced by SEK 345 million to SEK 5,028 million compared to SEK 5,373 million in 1998. This was mainly due to the transfer of the English Channel operations to P&O Stena Line in March 1998 and to the reduction in retail goods sold in the third quarter following the abolition of tax and duty free retail sales within the EU. Exchange rate fluctuations had a negative impact of SEK 46 million. EBITDA EBITDA decreased by SEK 6 million to SEK 700 million compared to SEK 706 million in 1998. Income from associated companies Income from associated companies was SEK 153 million compared to SEK 19 million in 1998. This improvement is attributable to the good performance of P&O Stena Line despite the abolition of tax and duty free retail sales within the EU. P&O Stena Line made a profit before restructuring expenses of GBP 44.7 million in the first nine months of 1999. P&O Stena Line incurred a GBP 10.8 million restructuring charge due to the closure of the Newhaven-Dieppe route in January 1999 compared to a restructuring charge of GBP 17.7 in 1998. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/11/16/19991116BIT00030/bit0001.doc Full report http://www.bit.se/bitonline/1999/11/16/19991116BIT00030/bit0002.pdf Full report