Viking Line's half year financial report for the period 1.1.2019 - 30.6.2019

Viking Line Abp                 HALF YEAR FINANCIAL REPORT        20.8.2019 9.00 AM

VIKING LINE’S HALF YEAR FINANCIAL REPORT FOR THE PERIOD 1.1.2019 -30.6.2019

Consolidated sales of the Viking Line Group for the period January 1 – June 30, 2019 were 227.0 million euros (EUR 225.7 M for the period January 1 – June 30, 2018). Operating income totalled EUR -8.8 M (-13.5).

Competition in Viking Line's service area entails continued pressure on prices and volumes, which will have an adverse effect on net sales revenue per passenger. Income during the third quarter will be crucial to the Group’s earnings for the full financial year. The currency trend for the Swedish krona affects the Group’s results. Fixed-price agreements related to a portion of the Group’s bunker consumption for 2019 mitigate the risk of higher bunker costs. Overall, operating income for 2019 is expected to remain on a par with operating income for 2018 or improve. At this stage, however, this forecast can be affected by the uncertainty factors mentioned above.

Sales and earnings

Consolidated sales of the Viking Line Group for the period January 1 – June 30, 2019 were 227.0 million euros (EUR 225.7 M for the period January 1 – June 30, 2018). Operating income totalled EUR -8.8 M (-13.5).

Passenger-related revenue was EUR 201.7 M (201.7), while cargo revenue amounted to EUR 24.0 M (22.9). Net sales revenue was EUR 165.8 M (163.3).

Consolidated operating expenses decreased by 1.5 per cent to EUR 162.3 M (164.7). Bunker (vessel fuel) expenses decreased by 2.5 per cent to EUR 23.5 M (24.1). The weak Swedish krona had a negative impact on consolidated income.

During the second quarter, April 1–June 30, consolidated sales increased and operating income totalled EUR 5.4 M (0.0). The improvement in operating income is driven by improved passenger-related operations and cargo operations. Easter in 2019 fell during the month of April, while in April 2018 capacity was reduced due to the dry-docking of Gabriella.

Service and market trends

The Viking Line Group provides passenger and cargo carrier services using seven vessels on the northern Baltic Sea. The vessels served the same routes as in 2018.

The number of passengers on Viking Line’s vessels during the report period amounted to 2,772,427 (2,844,433). The Group had a total market share in its service area of approximately 31.4 per cent (31.6).

Viking Line’s cargo volume was 69,030 cargo units (65,544). The Group achieved a cargo market share of approximately 19.0 per cent (17.9). The number of cars transported was 300,543 units (295,246).

Investments and financing

The Group’s investments amounted to EUR 27.0 M (9.5), of which EUR 22.2 M (1.7) primarily pertains to an advance payment for vessels under construction. The Group’s total investments represent 11.9 per cent of sales (4.2).

On June 30, 2019, the Group’s non-current interest-bearing liabilities totalled EUR 111.8 M (115.3). The equity/assets ratio was 46.3 per cent, compared to 43.8 per cent a year earlier.

At the end of June 2019, the Group’s cash and cash equivalents amounted to EUR 51.3 M (56.7). Unutilized credit lines in the Group totalled EUR 15.1 M on June 30, 2019 (15.1). Net cash flow from operating activities amounted to EUR 9.4 M (9.7). Net cash flow from investing activities was EUR -25.0 M (-7.1) and net cash flow from financing activities amounted to EUR 5.1 M (-13.9).

Financial reporting and changes in accounting principles

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.

IFRS 16 “Leases” is effective starting from the financial year 2019. The Group previously recognized all leases as operating leases. As of January 1, 2019, the Group reports a lease liability recognized at the present value of the remaining lease payments, discounted by the rate implicit in the lease or the Group’s incremental borrowing rate on the date of initial application. At the same time, a right-of-use asset is recognized at an amount equal to the lease liability. Comparative figures will not be adjusted. The table below illustrates the effects of the application of IFRS 16 on the opening balance for the Group.

Application of IFRS 16 will entail a larger consolidated balance sheet and a reallocation of items in the consolidated income statement and cash flow statement. Financial ratios will also be affected. The effect on consolidated income is not considered to be material. During the first six months of 2019, the application of IFRS 16 had an effect on consolidated income of EUR -0.04 M.

There is a more detailed account of the application of IFRS 16 in the notes to the consolidated financial statements 2018.

This Half-year Financial Report is otherwise prepared in accordance with the same accounting principles, estimates and judgements as in the latest annual financial statements. The Half-year Financial Report is unaudited.

When rounding off items to the nearest EUR 1,000,000, rounding-off differences of EUR+/- 0.1 M may occur.

Organization and personnel

The average number of Group employees was 2,572 (2,603), of whom 1,943 (1,951) worked for the parent company. Land-based personnel totalled 592 (630) and shipboard personnel totalled 1,980 (1,973).

In addition to the Group’s own employees, Viking XPRS was crewed by an average of 238 (238) 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.

Outlook for the full financial year 2019

Competition in Viking Line's service area entails continued pressure on prices and volumes, which will have an adverse effect on net sales revenue per passenger. Income during the third quarter will be crucial to the Group’s earnings for the full financial year. The currency trend for the Swedish krona affects the Group’s results. Fixed-price agreements related to a portion of the Group’s bunker consumption for 2019 mitigate the risk of higher bunker costs. Overall, operating income for 2019 is expected to remain on a par with operating income for 2018 or improve. At this stage, however, this forecast can be affected by the uncertainty factors mentioned above.

The Business Review for January – September 2019 will be published on October 25, 2019.

Mariehamn, Åland, August 19, 2019

VIKING LINE ABP
The Board of Directors

Jan Hanses
President and CEO

CEO Jan Hanses jan.hanses@vikingline.com /+358 18 270 00