Viking Line's half year financial report for the period 1.1.2017 - 30.6.2017

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Viking Line Abp                HALF YEAR FINANCIAL REPORT             17.8.2017, 9.00 AM

VIKING LINE'S HALF YEAR FINANCIAL REPORT FOR THE PERIOD 1.1.2017 - 30.6.2017

Consolidated sales of the Viking Line Group for the period January 1 – June 30, 2017 increased by 0.5 per cent to 239.2 million euros (EUR 238.0 M for the period January 1 – June 30, 2016). Other operating revenue amounted to EUR 0.1 M (1.7). Operating income totalled EUR -15.0 M (-10.5). Net financial items totalled EUR -0.6 M (-1.1). Consolidated income before taxes amounted to EUR -15.6 M (-11.6). Income after taxes totalled EUR -12.3 M (-8.9).

Competition in Viking Line’s service area remains tough and implies continued pressure on prices and volumes. Bunker prices are expected to be higher than in 2016, which should have an adverse effect on consolidated income. A revision in Finland’s restitution law for 2017 is expected to have a positive effect on earnings. Operating income is expected to be higher overall in 2017 than in 2016.

 

SALES AND EARNINGS

Consolidated sales of the Viking Line Group for the period January 1 – June 30, 2017 increased by 0.5 per cent to 239.2 million euros (EUR 238.0 M for the period January 1 – June 30, 2016). Other operating revenue amounted to EUR 0.1 M (1.7). Operating income totalled EUR -15.0 M (-10.5). Net financial items totalled EUR -0.6 M (-1.1). Consolidated income before taxes amounted to EUR -15.6 M (-11.6). Income after taxes totalled EUR -12.3 M (-8.9).

Passenger-related revenue increased by 0.5 per cent to EUR 215.0 M (214.0), while cargo revenue increased by 1.4 per cent to EUR 22.8 M (22.5).

Sales for the period increased as a result of higher passenger volume. Consolidated income deteriorated mainly as a result of higher operating expenses. Consolidated operating expenses increased by 3.1 per cent to EUR 171.3 M (166.1). Bunker (vessel fuel) expenses increased by 23.3 per cent to EUR 23.2 M (18.8).

During the second quarter, April 1 – June 30, 2017, consolidated sales increased by 4.6 per cent to EUR 137.1 M compared to the year-earlier quarter (EUR 131.1 M for the period April 1 – June 30, 2016). Second quarter operating income amounted to EUR 2.7 M (1.1). The launch of the vessel Viking FSTR, which has served the Helsinki (Finland)Tallinn (Estonia) route since April 10, 2017, increased consolidated sales, but the vessel did not quite generate the income expected.

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 2016. As of April 10, capacity on the Helsinki–Tallinn route increased with the vessel Viking FSTR.

The number of passengers on Viking Line’s vessels during the report period increased by 178,103 passengers to 3,078,899 (2,900,796). During the report period, Viking Line had a market share on the Turku (Finland)–Mariehamn/Långnäs (Åland Islands, Finland)–Stockholm (Sweden) route of 55.1 per cent, which is a decrease by 0.3 percentage points. On the Helsinki–Mariehamn–Stockholm route, market share increased by 2.8 percentage points to 44.6 per cent. In cruise services between Stockholm and Mariehamn, market share increased by 0.4 percentage points to 57.7 per cent. On the Helsinki–Tallinn route, market share increased by approximately 2.4 percentage points to 24.6 per cent. On the short route over the Sea of Åland between Mariehamn and Kapellskär (Sweden), market share increased by 2.5 percentage points to 43.3 per cent. The Group thus had a total market share in its service area of approximately 33.8 per cent (32.8).

Viking Line’s cargo volume was 64,912 cargo units (67,035). Viking Line achieved a cargo market share of 19.3 per cent (21.2). Meanwhile the number of cars transported increased by 29,925 units to 314,409 (284,484).

INVESTMENTS AND FINANCING

The Group’s investments amounted to EUR 8.9 M (11.9).

On June 30, 2017 the Group’s non-current interest-bearing liabilities totalled EUR 138.8 M (162.3). The equity/assets ratio was 41.4 per cent, compared to 40.3 per cent a year earlier.

At the end of June 2017, the Group’s cash and cash equivalents amounted to EUR 80.0 M (84.3). Net cash flow from operating activities amounted to EUR 8.0 M (6.7). Net cash flow from investing activities was EUR -6.8 M (-6.9) and net cash flow from financing activities amounted to EUR -16.1 M (-26.1).

On July 3, 2017 a shipbuilding contract with the Xiamen Shipbuilding Industry Co. Ltd. shipyard for a passenger ship went into effect. The contract amount is about EUR 194 million, and the planned delivery for the vessel is in 2020. The agreement also includes an option for another vessel.

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 2,688 (2,650), of whom 2,004 (1,985) worked for the parent company. Land-based personnel totalled 644 (645) and shipboard personnel totalled 2,044 (2,005).

In addition to the Group’s own employees, Viking XPRS was staffed by an average of 243 (247) 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 bunker consumption during 2017.

OUTLOOK FOR THE FULL FINANCIAL YEAR 2017

Competition in Viking Line’s service area remains tough and implies continued pressure on prices and volumes. Bunker prices are expected to be higher than in 2016, which should have an adverse effect on consolidated income. A revision in Finland’s restitution law for 2017 is expected to have a positive effect on earnings. Operating income is expected to be higher overall in 2017 than in 2016.


CONSOLIDATED INCOME STATEMENT
       
  Apr 1, 2017– Apr 1, 2016– Jan 1, 2017– Jan 1, 2016– Jan 1, 2016–
EUR M Jun 30, 2017 Jun 30, 2016 Jun 30, 2017 Jun 30, 2016 Dec 31, 2016
           
SALES 137.1 131.1 239.2 238.0 519.6
           
Other operating revenue 0.1 0.2 0.1 1.7 2.0
           
Expenses          
Goods and services 40.3 38.4 69.8 70.1 151.7
Salary and other employment benefit expenses 29.8 31.0 59.1 61.4 122.3
Depreciation and impairment losses 6.0 7.2 13.1 13.9 28.0
Other operating expenses 58.3 53.6 112.2 104.7 206.0
  134.4 130.2 254.3 250.2 507.9
           
OPERATING INCOME 2.7 1.1 -15.0 -10.5 13.7
           
Financial income 2.6 2.8 3.2 3.3 5.4
Financial expenses -2.2 -2.4 -3.8 -4.5 -9.5
           
INCOME BEFORE TAXES 3.2 1.4 -15.6 -11.6 9.6
           
Income taxes -0.3 0.2 3.4 2.8 -1.5
           
INCOME FOR THE PERIOD 2.9 1.6 -12.3 -8.9 8.0
           
Income attributable to:          
Parent company shareholders  2.9 1.6 -12.3 -8.9 8.0
           
Earnings per share before and after dilution, EUR 0.27 0.15 -1.13 -0.82 0.74
           
CONSOLIDATED STATEMENT OF          
COMPREHENSIVE INCOME          
  Apr 1, 2017– Apr 1, 2016– Jan 1, 2017– Jan 1, 2016– Jan 1, 2016–
EUR M Jun 30, 2017 Jun 30, 2016 Jun 30, 2017 Jun 30, 2016 Dec 31, 2016
           
INCOME FOR THE PERIOD 2.9 1.6 -12.3 -8.9 8.0
           
Other comprehensive income          
Items that may be transferred to the income statement          
Translation differences -0.2 -0.4 -0.2 -0.5 -0.8
Investments available for sale - - - - 0.3
  -0.2 -0.4 -0.2 -0.5 -0.5
           
COMPREHENSIVE INCOME FOR THE PERIOD 2.6 1.2 -12.4 -9.3 7.5
           
Comprehensive income attributable to:          
Parent company shareholders  2.6 1.2 -12.4 -9.3 7.5
           
CONSOLIDATED BALANCE SHEET        
           
EUR M Jun 30, 2017 Jun 30, 2016 Dec 31, 2016    
           
ASSETS          
           
Non-current assets          
Intangible assets 2.2 1.1 1.9    
Land 0.6 0.6 0.6    
Buildings and structures 8.9 9.5 9.2    
Renovation costs for rented properties 2.9 1.6 2.3    
Vessels 303.5 320.3 308.5    
Machinery and equipment 5.1 5.7 5.6    
Advance payments 0.2 - -    
Investments available for sale 27.1 26.8 27.1    
Receivables - 0.2 -    
Total non-current assets 350.5 365.7 355.2    
           
Current assets          
Inventories 18.8 18.8 18.1    
Income tax assets 4.3 3.0 1.7    
Trade and other receivables 44.4 39.5 36.1    
Cash and cash equivalents 80.0 84.3 94.9    
Total current assets 147.4 145.6 150.8    
           
TOTAL ASSETS 497.9 511.3 506.0    
           
EQUITY AND LIABILITIES          
           
Equity          
Share capital 1.8 1.8 1.8    
Reserves 1.0 0.7 1.0    
Translation differences -1.3 -1.0 -1.3    
Retained earnings 204.7 204.5 221.4    
Equity attributable to parent company shareholders 206.2 206.1 222.9    
           
Total equity 206.2 206.1 222.9    
           
Non-current liabilities          
Deferred tax liabilities 35.9 34.5 35.9    
Non-current interest-bearing liabilities 138.8 162.3 150.6    
Total non-current liabilities 174.7 196.8 186.5    
           
Current liabilities          
Current interest-bearing liabilities 23.5 19.3 23.6    
Income tax liabilities 0.0 0.0 0.0    
Trade and other payables 93.5 89.2 73.0    
Total current liabilities 117.0 108.5 96.6    
           
Total liabilities 291.8 305.3 283.0    
           
TOTAL EQUITY AND LIABILITIES 497.9 511.3 506.0    
           
           
           
           
CONSOLIDATED CASH FLOW STATEMENT      
           
  Jan 1, 2017– Jan 1, 2016– Jan 1, 2016–    
EUR M Jun 30, 2017 Jun 30, 2016 Dec 31, 2016    
           
OPERATING ACTIVITIES          
           
Income for the period -12.3 -8.9 8.0    
Adjustments          
  Depreciation and impairment losses 13.1 13.9 28.0    
  Capital gains/losses from non-current assets 0.0 -1.5 -1.5    
  Other items not included in cash flow 0.2 0.7 0.9    
  Interest expenses and other financial expenses 2.4 2.6 5.1    
  Interest income and other financial income 0.0 -0.1 -0.2    
  Dividend income -2.0 -2.4 -2.4    
  Income taxes -3.4 -2.8 1.5    
           
Change in working capital          
  Change in trade and other receivables -8.3 -10.1 -6.7    
  Change in inventories -0.7 -1.6 -0.9    
  Change in trade and other payables 20.7 20.5 4.3    
           
Interest paid -2.2 -2.5 -4.8    
Financial expenses paid -0.4 -0.3 -0.6    
Interest received 0.0 0.0 0.0    
Financial income received 0.0 0.1 0.2    
Taxes paid 0.8 -1.0 -2.5    
           
NET CASH FLOW FROM          
OPERATING ACTIVITIES 8.0 6.7 28.6    
           
INVESTING ACTIVITIES          
Investments in vessels -7.2 -9.6 -11.1    
Investments in other intangible and tangible assets -1.5 -2.2 -4.7    
Advance payments -0.2 - -    
Investments in investments available for sale -0.1 - -    
Divestments of other intangible and tangible assets 0.0 2.6 2.6    
Divestments of investments available for sale 0.0 - -    
Payments received for non-current receivables - - 0.2    
Dividends received 2.0 2.4 2.4    
           
NET CASH FLOW FROM INVESTING ACTIVITIES -6.8 -6.9 -10.7    
           
FINANCING ACTIVITIES          
Increase in non-current liabilities - 0.2 0.2    
Amortization of non-current liabilities -11.8 -16.0 -23.5    
Dividends paid -4.3 -10.3 -10.3    
           
NET CASH FLOW FROM FINANCING ACTIVITIES -16.1 -26.1 -33.6    
           
CHANGE IN CASH AND CASH EQUIVALENTS -14.9 -26.3 -15.8    
Cash and cash equivalents at beginning of period 94.9 110.7 110.7    
           
CASH AND CASH EQUIVALENTS AT END OF PERIOD 80.0 84.3 94.9    

 

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, 2017 1.8 1.0 -1.3 221.4 222.9
Income for the period       -12.3 -12.3
Translation differences   0.0 0.0 -0.1 -0.2
Comprehensive income for the period - 0.0 0.0 -12.4 -12.4
Dividend to shareholders       -4.3 -4.3
Equity, Jun 30, 2017 1.8 1.0 -1.3 204.7 206.2
           
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

 

QUARTERLY CONSOLIDATED INCOME STATEMENT  
  2017 2017 2016 2016
EUR M Q2 Q1 Q4 Q3
         
SALES 137.1 102.1 122.3 159.3
         
Other operating revenue 0.1 0.1 0.1 0.2
         
Expenses        
Goods and services 40.3 29.6 36.0 45.6
Salary and other employment benefit expenses 29.8 29.3 29.8 31.0
Depreciation and impairment losses 6.0 7.1 7.0 7.0
Other operating expenses 58.3 53.9 50.7 50.6
  134.4 119.9 123.5 134.2
         
OPERATING INCOME 2.7 -17.7 -1.1 25.3
         
Financial income 2.6 0.5 1.6 0.5
Financial expenses -2.2 -1.6 -2.5 -2.5
         
INCOME BEFORE TAXES 3.2 -18.8 -2.0 23.2
         
Income taxes -0.3 3.7 0.4 -4.7
         
INCOME FOR THE PERIOD 2.9 -15.1 -1.7 18.6
         
         
Income attributable to:        
Parent company shareholders  2.9 -15.1 -1.7 18.6
         
Earnings per share before and after dilution, EUR 0.27 -1.40 -0.16 1.72
         
QUARTERLY CONSOLIDATED STATEMENT OF    
COMPREHENSIVE INCOME        
  2017 2017 2016 2016
EUR M Q2 Q1 Q4 Q3
         
INCOME FOR THE PERIOD 2.9 -15.1 -1.7 18.6
         
Other comprehensive income        
Items that may be transferred to the income statement        
Translation differences -0.2 0.1 0.1 -0.4
Investments available for sale - - 0.3 -
  -0.2 0.1 0.4 -0.4
         
COMPREHENSIVE INCOME FOR THE PERIOD 2.6 -15.1 -1.3 18.2
         
Comprehensive income attributable to:        
Parent company shareholders  2.6 -15.1 -1.3 18.2

 

SEGMENT INFORMATION, VIKING LINE GROUP  
  Jan 1, 2017– Jan 1, 2016– Jan 1, 2016–
OPERATING SEGMENTS, EUR M Jun 30, 2017 Jun 30, 2016 Dec 31, 2016
       
Sales      
Vessels 238.4 236.4 516.8
Unallocated 0.8 1.7 3.0
Total, operating segments 239.3 238.1 519.8
Eliminations -0.1 -0.1 -0.2
Total sales of the Group 239.2 238.0 519.6
       
Operating income      
Vessels 11.7 13.8 60.9
Unallocated -26.7 -24.3 -47.2
Total operating income of the Group -15.0 -10.5 13.7

 

PLEDGED ASSETS AND CONTINGENT LIABILITIES  
       
EUR M Jun 30, 2017 Jun 30, 2016 Dec 31, 2016
       
Contingent liabilities 162.3 181.6 174.1
Assets pledged for own debt 283.0 313.6 313.6
       
FINANCIAL RATIOS AND STATISTICS    
  Jan 1, 2017– Jan 1, 2016– Jan 1, 2016–
  Jun 30, 2017 Jun 30, 2016 Dec 31, 2016
       
Equity per share, EUR 19.09 19.08 20.64
Equity/assets ratio 41.4 % 40.3 % 44.1 %
       
Investments, EUR M 8.9 11.9 15.8
 – as % of sales 3.7 % 5.0 % 3.0 %
       
Passengers 3,078,899 2,900,796 6,502,191
Cargo units 64,912 67,035 131,918
       
Average number of employees, full-time equivalent 2,688 2,650 2,742
       
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 Interim Management Statement for January – September 2017 will be published on November 17, 2017.

 

Mariehamn, Åland, August 16, 2017

VIKING LINE ABP
The Board of Directors



Jan Hanses
President and CEO

 


 

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