Viking Line's half year financial report for the period 1.1.2016 - 30.6.2016

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Viking Line Abp            HALF YEAR FINANCIAL REPORT           18.8.2016, 9.00 AM

VIKING LINE'S HALF YEAR FINANCIAL REPORT FOR THE PERIOD 1.1.2016 - 30.6.1016.

Consolidated sales of the Viking Line Group for the period January 1 – June 30, 2016 was 238.0 million euros (EUR 239.0 M for the period January 1 – June 30, 2015). Operating income totalled EUR -10.5 M (-7.6). Net financial items totalled EUR -1.1 M (-0.2). Consolidated income before taxes totalled EUR -11.6 M (-7.7). Income after taxes totalled EUR -8.9 M (-5.7).

Competition in Viking Line’s service area means there is greater pressure on prices as well as volumes. The economic trend in Finland is still an uncertainty factor. However, the bunker price has so far had a favourable effect on earnings. The Board of Directors' assessment is now that operating income will be lower in 2016 than in 2015. The Board's previous assessement was that operating income would be somewhat lower.

SALES AND EARNINGS

Consolidated sales of the Viking Line Group for the period January 1 – June 30, 2016 was 238.0 million euros (EUR 239.0 M for the period January 1 – June 30, 2015). Operating income totalled EUR -10.5 M (-7.6). Net financial items totalled EUR -1.1 M (-0.2). Consolidated income before taxes totalled EUR -11.6 M (-7.7). Income after taxes totalled EUR -8.9 M (-5.7).

Passenger-related revenue increased by 0.6 per cent to EUR 214.0 M (212.8), while cargo revenue decreased by 7.2 per cent to EUR 22.5 M (24.3).

Consolidated operating income declined mainly due to higher operating expenses and lost revenue in connection with planned and completed vessel dry-dockings for modernization and maintenance of vessels. Consolidated expenses for salaries and other employment benefits increased due to the limiting of restitution in conjunction with a change in the Seamen’s Pensions Act in Finland. However, the cost effect of this is expected to decrease during the financial year. Operating expenses increased by 1.9 per cent to EUR 166.6 M (163.1).

During the second quarter, April 1 – June 30, 2016, consolidated sales decreased by 2.2 per cent to EUR 131.1 M compared to the year-earlier quarter (EUR 134.1 M for the period April 1 – June 30, 2015). Second quarter operating income amounted to EUR 1.1 M (2.3).

SERVICES AND MARKET TRENDS

The Viking Line Group provides passenger and cargo carrier services using seven vessels on the northern Baltic Sea. The Group’s vessels served the same routes as during 2015. The extensive vessel modernizations that were carried out during the spring caused longer service interruptions than normal, which adversely affected the Group’s market share.

The number of passengers on Viking Line’s vessels during the report period amounted to 2,900,796 passengers (2,939,696). During the report period, Viking Line decreased its market share on the Turku (Finland)–Mariehamn/Långnäs (Åland Islands, Finland)–Stockholm (Sweden) route by 1.1 percentage points to 55.4 per cent. On the Helsinki (Finland)–Mariehamn–Stockholm route, market share decreased by 1.1 percentage points to 41.7 per cent. In cruise services between Stockholm and Mariehamn, market share increased by 2.5 percentage points to 57.3 per cent. On the Helsinki–Tallinn (Estonia) route, market share decreased by 1.3 percentage points to 22.2 per cent. On the short route over the Sea of Åland between Mariehamn and Kapellskär (Sweden), market share decreased by 0.7 percentage points to 40.8 per cent. The Group thus had a total market share in its service area of 32.8 per cent (34.2).

Viking Line’s cargo volume was 67,035 cargo units (67,639). Viking Line achieved a cargo market share of 21.2 per cent (22.5).

INVESTMENTS AND FINANCING

The Group’s investments amounted to EUR 11.9 M (7.5).

In March 2016 Viking Line Abp sold Park Alandia Hotell, which resulted in a minor increase in consolidated other operating revenue. The hotel served as a support unit for vessel operations and did not have a material effect on the Group’s sales, operating income or assets.

On June 30, 2016 the Group’s non-current interest-bearing liabilities totalled EUR 162.3 M (185.7). The equity/assets ratio was 40.3 per cent, compared to 38.0 per cent a year earlier.

At the end of June 2016, the Group’s cash and cash equivalents amounted to EUR 84.3 M (75.9). Net cash flow from operating activities amounted to EUR 6.7 M (4.2).

FINANCIAL REPORTING

This Half-year Financial 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 judgements 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. The Half-year Financial Report is unaudited.

ORGANIZATION AND PERSONNEL

The average number of Group employees was 2,650 (2,653), of whom 1,985 (1,977) worked for the parent company. Land-based personnel totalled 645 (649) and shipboard personnel totalled 2,005 (2,004).

In addition to the Group’s own employees, the Viking XPRS was staffed by an average of 247 (237) people employed by a staffing company.

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 in the immediate future are primarily related to bunker (vessel fuel) prices. Fluctuations in bunker prices have a direct impact on the Group’s earnings. In order to partly offset the risk of higher bunker prices, the Group has entered into fixed-price agreements related to a portion of its estimated bunker consumption during 2016.

ONGOING LEGAL ACTIONS

On February 27, 2015, the Helsinki District Court announced its ruling in a case between Viking Line and the Finnish State regarding fairway charges levied during the years 2001–2004. According to the judgement, the Finnish State was required to pay approximately EUR 12.4 M in accordance with Viking Line's claim as well as legal expenses plus interest. Following the appeal by the Finnish State, on August 8, 2016, the Helsinki Court of Appeal reversed the Helsinki District Court’s decision and rejected Viking Line’s claim due to the statute of limitations. Viking Line is considering filing an appeal with the Supreme Court of Finland.

OUTLOOK FOR THE FULL FINANCIAL YEAR 2016

Competition in Viking Line’s service area means there is greater pressure on prices as well as volumes. The economic trend in Finland is still an uncertainty factor. However, the bunker price has so far had a favourable effect on earnings. The Board of Directors' assessment is now that operating income will be lower in 2016 than in 2015. The Board's previous assessment was that operating income would be somewhat lower.

 

CONSOLIDATED INCOME STATEMENT        
  Apr 1, 2016– Apr 1, 2015– Jan 1, 2016– Jan 1, 2015– Jan 1, 2015–
EUR M Jun 30, 2016 Jun 30, 2015 Jun 30, 2016 Jun 30, 2015 Dec 31, 2015
           
SALES 131.1 134.1 238.0 239.0 530.5
           
Other operating revenue 0.2 0.1 1.7 0.2 0.5
           
Expenses          
Goods and services 38.4 39.5 70.1 70.2 153.2
Salary and other employment benefit expenses 31.0 30.2 61.4 58.9 118.1
Depreciation and impairment losses 7.2 7.0 13.9 13.6 27.7
Other operating expenses 53.6 55.2 104.7 104.1 205.5
  130.2 131.9 250.2 246.8 504.6
           
OPERATING INCOME 1.1 2.3 -10.5 -7.6 26.4
           
Financial income 2.8 2.2 3.3 3.2 5.0
Financial expenses -2.4 -1.9 -4.5 -3.4 -8.2
           
INCOME BEFORE TAXES 1.4 2.6 -11.6 -7.7 23.2
           
Income taxes 0.2 -0.1 2.8 2.0 -4.4
           
INCOME FOR THE PERIOD 1.6 2.5 -8.9 -5.7 18.7
           
           
Income attributable to:          
Parent company shareholders  1.6 2.5 -8.9 -5.7 18.7
           
Earnings per share before and after dilution, EUR 0.15 0.23 -0.82 -0.53 1.73
           
CONSOLIDATED STATEMENT OF          
COMPREHENSIVE INCOME          
  Apr 1, 2016– Apr 1, 2015– Jan 1, 2016– Jan 1, 2015– Jan 1, 2015–
EUR M Jun 30, 2016 Jun 30, 2015 Jun 30, 2016 Jun 30, 2015 Dec 31, 2015
           
INCOME FOR THE PERIOD 1.6 2.5 -8.9 -5.7 18.7
           
Other comprehensive income          
Items that may be transferred to the income statement          
Translation differences -0.4 0.1 -0.5 0.3 0.5
Investments available for sale - -2.1 - -0.8 0.7
  -0.4 -1.9 -0.5 -0.5 1.2
           
COMPREHENSIVE INCOME FOR THE PERIOD 1.2 0.6 -9.3 -6.3 19.9
           
Comprehensive income attributable to:          
Parent company shareholders  1.2 0.6 -9.3 -6.3 19.9
           
CONSOLIDATED BALANCE SHEET        
           
EUR M Jun 30, 2016 Jun 30, 2015 Dec 31, 2015    
           
ASSETS          
           
Non-current assets          
Intangible assets 1.1 0.7 0.8    
Land 0.6 1.1 1.1    
Buildings and structures 9.5 10.5 10.0    
Renovation costs for rented properties 1.6 0.7 1.2    
Vessels 320.3 335.4 324.5    
Machinery and equipment 5.7 6.3 5.5    
Investments available for sale 26.8 25.3 26.8    
Receivables 0.2 0.3 0.2    
Total non-current assets 365.7 380.3 370.0    
           
Current assets          
Inventories 18.8 18.3 17.2    
Income tax assets 3.0 2.9 0.5    
Trade and other receivables 39.5 47.0 29.4    
Cash and cash equivalents 84.3 75.9 110.7    
Total current assets 145.6 144.1 157.8    
           
TOTAL ASSETS 511.3 524.3 527.8    
           
EQUITY AND LIABILITIES          
           
Equity          
Share capital 1.8 1.8 1.8    
Reserves 0.7 -0.8 0.7    
Translation differences -1.0 -0.6 -0.4    
Retained earnings 204.5 199.1 223.6    
Equity attributable to parent company shareholders 206.1 199.5 225.7    
           
Total equity 206.1 199.5 225.7    
           
Non-current liabilities          
Deferred tax liabilities 34.5 31.4 34.5    
Non-current interest-bearing liabilities 162.3 185.7 174.0    
Total non-current liabilities 196.8 217.1 208.4    
           
Current liabilities          
Current interest-bearing liabilities 19.3 19.3 23.5    
Income tax liabilities 0.0 0.0 1.3    
Trade and other payables 89.2 88.5 68.9    
Total current liabilities 108.5 107.7 93.7    
           
Total liabilities 305.3 324.8 302.1    
           
TOTAL EQUITY AND LIABILITIES 511.3 524.3 527.8    
           
CONSOLIDATED CASH FLOW STATEMENT      
  Jan 1, 2016– Jan 1, 2015– Jan 1, 2015–    
EUR M Jun 30, 2016 Jun 30, 2015 Dec 31, 2015    
           
OPERATING ACTIVITIES          
           
Income for the period -8.9 -5.7 18.7    
Adjustments          
  Depreciation and impairment losses 13.9 13.6 27.7    
  Capital gains from non-current assets -1.5 0.0 0.0    
  Other items not included in cash flow 0.7 -0.6 -0.5    
  Interest expenses and other financial expenses 2.6 3.0 5.9    
  Interest income and other financial income -0.1 0.0 -0.1    
  Dividend income -2.4 -1.6 -1.6    
  Income taxes -2.8 -2.0 4.4    
           
Change in working capital          
  Change in trade and other receivables -10.1 -17.7 -0.1    
  Change in inventories -1.6 -2.2 -1.1    
  Change in trade and other payables 20.5 21.2 1.7    
           
Interest paid -2.5 -2.7 -5.4    
Financial expenses paid -0.3 -0.5 -0.7    
Interest received 0.0 0.0 0.1    
Financial income received 0.1 0.0 0.0    
Taxes paid -1.0 -0.5 -0.3    
           
NET CASH FLOW FROM          
OPERATING ACTIVITIES 6.7 4.2 48.7    
           
INVESTING ACTIVITIES          
Investments in vessels -9.6 -6.5 -7.6    
Investments in other intangible and tangible assets -2.2 -1.0 -2.4    
Divestments of other intangible and tangible assets 2.6 0.1 0.1    
Payments received for non-current receivables - - 0.2    
Dividends received 2.4 1.6 1.6    
           
NET CASH FLOW FROM INVESTING ACTIVITIES -6.9 -5.8 -8.1    
           
FINANCING ACTIVITIES          
Increase in non-current liabilities 0.2 - -    
Amortization of non-current liabilities -16.0 -16.0 -23.5    
Dividends paid -10.3 -7.6 -7.6    
           
NET CASH FLOW FROM FINANCING ACTIVITIES -26.1 -23.6 -31.1    
           
CHANGE IN CASH AND CASH EQUIVALENTS -26.3 -25.2 9.5    
Cash and cash equivalents at beginning of period 110.7 101.1 101.1    
           
CASH AND CASH EQUIVALENTS AT END OF PERIOD 84.3 75.9 110.7    

 

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, 2016 1.8 0.7 -0.4 223.6 225.7
Income for the period       -8.9 -8.9
Translation differences   0.0 -0.5 0.1 -0.5
Comprehensive income for the period - 0.0 -0.5 -8.8 -9.3
Dividend to shareholders       -10.3 -10.3
Equity, Jun 30, 2016 1.8 0.7 -1.0 204.5 206.1
           
Equity, Jan 1, 2015 1.8 0.0 -0.8 212.3 213.3
Income for the period       -5.7 -5.7
Translation differences   0.0 0.2 0.1 0.3
Remeasurement of investments available for sale   -0.8     -0.8
Comprehensive income for the period - -0.8 0.2 -5.6 -6.3
Dividend to shareholders       -7.6 -7.6
Equity, Jun 30, 2015 1.8 -0.8 -0.6 199.1 199.5

 

QUARTERLY CONSOLIDATED INCOME STATEMENT  
  2016 2016 2015 2015
EUR M Q2 Q1 Q4 Q3
         
SALES 131.1 106.9 127.4 164.1
         
Other operating revenue 0.2 1.5 0.2 0.1
         
Expenses        
Goods and services 38.4 31.7 37.0 46.0
Salary and other employment benefit expenses 31.0 30.5 29.6 29.6
Depreciation and impairment losses 7.2 6.7 7.3 6.7
Other operating expenses 53.6 51.1 49.7 51.7
  130.2 120.0 123.7 134.0
         
OPERATING INCOME 1.1 -11.6 3.9 30.1
         
Financial income 2.8 0.5 1.2 0.5
Financial expenses -2.4 -2.0 -1.6 -3.2
         
INCOME BEFORE TAXES 1.4 -13.1 3.5 27.4
         
Income taxes 0.2 2.6 -1.0 -5.4
         
INCOME FOR THE PERIOD 1.6 -10.5 2.5 22.0
         
         
Income attributable to:        
Parent company shareholders  1.6 -10.5 2.5 22.0
         
Earnings per share before and after dilution, EUR 0.15 -0.97 0.23 2.03
         
QUARTERLY CONSOLIDATED STATEMENT OF    
COMPREHENSIVE INCOME        
  2016 2016 2015 2015
EUR M Q2 Q1 Q4 Q3
         
INCOME FOR THE PERIOD 1.6 -10.5 2.5 22.0
         
Other comprehensive income        
Items that may be transferred to the income statement        
Translation differences -0.4 -0.1 0.5 -0.3
Investments available for sale - - 0.8 0.6
  -0.4 -0.1 1.4 0.3
         
COMPREHENSIVE INCOME FOR THE PERIOD 1.2 -10.6 3.9 22.3
         
Comprehensive income attributable to:        
Parent company shareholders  1.2 -10.6 3.9 22.3

  

SEGMENT INFORMATION, VIKING LINE GROUP  
  Jan 1, 2016– Jan 1, 2015– Jan 1, 2015–
OPERATING SEGMENTS, EUR M Jun 30, 2016 Jun 30, 2015 Dec 31, 2015
       
Sales      
Vessels 236.4 236.7 525.1
Unallocated 1.7 2.5 5.6
Total, operating segments 238.1 239.1 530.7
Eliminations -0.1 -0.1 -0.2
Total sales of the Group 238.0 239.0 530.5
       
Operating income      
Vessels 13.8 16.8 71.2
Unallocated -24.3 -24.3 -44.7
Total operating income of the Group -10.5 -7.6 26.4

 

PLEDGED ASSETS AND CONTINGENT LIABILITIES  
       
EUR M Jun 30, 2016 Jun 30, 2015 Dec 31, 2015
       
Contingent liabilities 181.6 205.0 197.5
Assets pledged for own debt 313.6 313.6 313.6
       
FINANCIAL RATIOS AND STATISTICS    
  Jan 1, 2016– Jan 1, 2015– Jan 1, 2015–
  Jun 30, 2016 Jun 30, 2015 Dec 31, 2015
       
Equity per share, EUR 19.08 18.47 20.89
Equity/assets ratio 40.3 % 38.0 % 42.8 %
       
Investments, EUR M 11.9 7.5 10.0
 – as % of sales 5.0 % 3.2 % 1.9 %
       
Passengers 2,900,796 2,939,696 6,568,684
Cargo units 67,035 67,639 133,163
       
Average number of employees, full-time equivalent 2,650 2,653 2,735
       
Earnings per share = (Income before taxes – income taxes +/– non-controlling interests) / 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 non-controlling interests) / (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 next Interim Report (January – September 2016) will be published on November 16, 2016.

 

Mariehamn, Åland, August 17, 2016

VIKING LINE ABP
The Board of Directors


Jan Hanses
President and CEO

 

 

         CEO Jan Hanses, jan.hanses@vikingline.com, +358-(0)18-27000