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