VIKING LINE'S INTERIM REPORT FOR THE PERIOD JANUARY - JUNE 2014



Viking Line Abp           INTERIM REPORT             27.8.2014, 9.00 A.M.

VIKING LINE'S INTERIM REPORT FOR THE PERIOD JANUARY - JUNE 2014

Consolidated sales of the Viking Line Group during the period January 1 June 30, 2014, decreased by 5.6 per cent to 241.0 million euros compared to the same period of 2013 (EUR 255.3 M). Operating income amounted to EUR -12.5 M (6.1 including and -16.7 excluding the capital gain from the sale of the Isabella). Net financial items totalled EUR -5.0 M (-3.5). Consolidated income before taxes amounted to EUR -17.6 M (2.6) Income after taxes totalled EUR -14.2 M (1.9 including and -20.9 excluding the capital gain from the Isabella).

Competition in Viking Line’s service area implies further pressure on both prices and volume. The economic downturn in Finland is another uncertainty factor. At present, the Board of Directors is nevertheless of the opinion that operating income will improve in 2014 compared to operating income in 2013, excluding the capital gain from the sale of the Isabella (EUR 11.9 M).

SALES AND EARNINGS

Consolidated sales of the Viking Line Group during the period January 1 June 30, 2014, decreased by 5.6 per cent to 241.0 million euros compared to the same period of 2013 (EUR 255.3 M). Operating income amounted to EUR -12.5 M (6.1 including and -16.7 excluding the capital gain from the sale of the Isabella). Net financial items totalled EUR -5.0 M (-3.5). Consolidated income before taxes amounted to EUR -17.6 M (2.6) Income after taxes totalled EUR -14.2 M (1.9 including and -20.9 excluding the capital gain from the Isabella).

Passenger-related revenue decreased by 6.7 per cent to EUR 219.2 M (235.7), while cargo revenue increased by 9.1 per cent to EUR 19.9 M (18.2). Net sales revenue decreased by 5.7 per cent to EUR 173.4 M (183.8). The Group’s operating expenses decreased by 6.8 per cent to EUR 169.8 M (182.2).

Consolidated sales during the second quarter, April 1 June 30, 2014, decreased by 2.0 per cent to EUR 137.5 M compared to the same quarter of 2013 (EUR 140.3 M during April 1 – June 30, 2013). Operating income in the second quarter amounted to EUR 4.5 M (25.0 including and 2.2 excluding the capital gain from the Isabella).

The decrease in consolidated sales is primarily explained by the prevailing pressure on prices in today’s tough competitive situation, which had a negative impact on net sales revenue per passenger.

The Group’s bunker (vessel fuel) expenses decreased during the period by EUR 1.6 M, equivalent to 5.1 per cent. The decrease is explained by lower average bunker prices and the Group’s continued efforts to optimize the bunker consumption of its vessels.

The Board of Directors also sees that the Group’s action programme aimed at improving operational efficiency is continuing to have a positive impact on operating expenses.

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 2013. During the period June 12 – September 2, 2014 the Gabriella and the Mariella are serving the Helsinki (Finland) –Tallinn (Estonia) route, while continuing to sail on their regular Helsinki–Mariehamn (Åland Islands, Finland)–Stockholm (Sweden) route.

The number of passengers on Viking Line’s vessels during the report period decreased by 52,708 to 2,962,436 (3,015,144). During the report period, Viking Line reduced its market share on the Turku (Finland)–Mariehamn/Långnäs (Åland Islands, Finland)–Stockholm route by 2.3 percentage points to 56.6 per cent. On the Helsinki–Mariehamn–Stockholm route, market share increased by 0.4 percentage points to 45.7 per cent. In cruise services between Stockholm and Mariehamn, market share decreased by 1.5 percentage points to 51.6 per cent. On the Helsinki–Tallinn route, market share increased by approximately 0.3 percentage points to 23.5 per cent. On the short route over the Sea of Åland, market share increased by 2.3 percentage points to 42.5 per cent. The Group thus had a total market share in its service area of approximately 33.6 per cent (34.6).

Viking Line’s cargo volume was 64,428 cargo units (59,364). Viking Line achieved a cargo market share of 21.8 per cent (20.8).

INVESTMENTS AND FINANCING

The Group’s investments amounted to EUR 5.7 M (168.7).

On June 30, 2014 the Group’s non-current interest-bearing liabilities amounted to EUR 209.3 M (232.9). The equity/assets ratio was 32.7 per cent, compared to 30.0 per cent a year earlier.

At the end of June 2014, the Group’s cash and cash equivalents amounted to EUR 80.6 M (82.5). Net cash flow from operating activities amounted to EUR 2.9 M (1.1).

FINANCIAL REPORTING

This Interim 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 judgments 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. This Interim Report is unaudited.

ORGANIZATION AND PERSONNEL

On January 16, 2014, the M/S Rosella was recorded in the Finnish ship register and on January 22, 2014 the M/S Viking XPRS was recorded in the Estonian ship register.

The average number of Group employees was 2,761 (3,069), of whom 2,029 (1,951) worked for the parent company. Land-based personnel totalled 646 (697) and shipboard personnel totalled 2,115 (2,372).

In addition to the Group’s own employees, the Viking XPRS was staffed by an average of 215 people employed by a staffing company. The expenses for them are recognized among “Other operating expenses”.

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 during the immediate future are primarily related to bunker prices.

Viking Line is continuing its efforts to adapt to the European Union’s sulphur directive, which goes into effect on January 1, 2015.

DE-MUTUALISATION AND MERGER WITHIN THE ALANDIA INSURANCE GROUP

Implementation of the de-mutualisation and merger plan, which is described in Viking Line Abp’s stock exchange release dated July 14, 2014, also requires consent from the Finnish Financial Supervisory Authority in compliance with the Insurance Companies Act, Chapter 19, Section 5 and Chapter 22, Section 4. According to plans, the process will be carried out in such a way that both the change in the legal form of Redarnas Ömsesidiga Försäkringsbolag and the merger are registered on December 31, 2014.

According to preliminary calculations, Viking Line Abp's ownership share in the merged company will amount to slightly more than 20 per cent.

For further information on Alandia Insurance, please see www.alandia.com.

OUTLOOK FOR THE FULL FINANCIAL YEAR 2014

Competition in Viking Line’s service area implies further pressure on both prices and volume. The economic downturn in Finland is another uncertainty factor. At present, the Board of Directors is nevertheless of the opinion that operating income will improve in 2014 compared to operating income in 2013, excluding the capital gain from the sale of the Isabella (EUR 11.9 M).

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  
  Apr 1, 2014– Apr 1, 2013– Jan 1, 2014– Jan 1, 2013– Jan 1, 2013–
EUR M Jun 30, 2014 Jun 30, 2013 Jun 30, 2014 Jun 30, 2013 Dec 31, 2013
           
SALES 137.5 140.3 241.0 255.3 549.4
           
Other operating revenue 0.3 22.9 0.4 23.0 23.5
           
Expenses          
Goods and services 39.1 39.6 67.6 71.5 150.6
Salary and other employment benefit expenses 30.3 33.7 61.9 66.6 130.1
Depreciation and impairment losses 8.0 9.3 16.6 18.6 35.7
Other operating expenses 55.8 55.6 107.9 115.6 221.9
  133.3 138.3 253.9 272.2 538.2
           
OPERATING INCOME 4.5 25.0 -12.5 6.1 34.7
           
Financial income 0.1 0.4 0.2 0.6 1.2
Financial expenses -3.1 -2.0 -5.2 -4.1 -8.3
           
INCOME BEFORE TAXES 1.6 23.3 -17.6 2.6 27.7
           
Income taxes -0.2 -5.8 3.3 -0.8 -0.2
           
INCOME FOR THE PERIOD 1.4 17.6 -14.2 1.9 27.5
           
Other comprehensive income          
Items that may be transferred to the income statement          
Translation differences -0.4 -0.2 -0.5 -0.3 -0.4
Investments available for sale - - - - 0.0
  -0.4 -0.2 -0.5 -0.3 -0.4
           
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 1.0 17.4 -14.7 1.6 27.1
           
Income attributable to:          
Parent company shareholders  1.4 17.6 -14.2 1.9 27.5
           
Total comprehensive income attributable to:          
Parent company shareholders  1.0 17.4 -14.7 1.6 27.1
           
Earnings per share before and after dilution, EUR 0.13 1.63 -1.32 0.17 2.54
           
CONSOLIDATED BALANCE SHEET        
           
EUR M Jun 30, 2014 Jun 30, 2013 Dec 31, 2013    
           
ASSETS          
           
Non-current assets          
Intangible assets 0.7 1.0 0.8    
Land 1.1 1.1 1.1    
Buildings and structures 11.3 12.0 11.7    
Renovation costs for rented properties 0.6 0.5 0.7    
Vessels 353.6 377.9 365.2    
Machinery and equipment 7.4 8.5 8.0    
Investments available for sale 0.0 0.0 0.0    
Receivables 0.5 0.7 0.5    
Total non-current assets 375.3 401.7 388.1    
           
Current assets          
Inventories 16.2 16.6 15.0    
Income tax assets 4.5 0.4 0.2    
Trade and other receivables 40.6 43.8 31.0    
Cash and cash equivalents 80.6 82.5 96.1    
Total current assets 141.8 143.2 142.2    
           
TOTAL ASSETS 517.1 544.9 530.3    
           
EQUITY AND LIABILITIES          
           
Equity          
Share capital 1.8 1.8 1.8    
Reserves 0.0 0.0 0.0    
Translation differences -0.5 -0.2 -0.3    
Retained earnings 167.5 161.9 187.5    
Equity attributable to parent company shareholders 168.9 163.6 189.0    
           
Total equity 168.9 163.6 189.0    
           
Non-current liabilities          
Deferred tax liabilities 29.7 29.7 29.7    
Non-current interest-bearing liabilities 209.3 232.9 221.2    
Total non-current liabilities 239.0 262.6 250.8    
           
Current liabilities          
Current interest-bearing liabilities 19.3 23.6 15.1    
Income tax liabilities 0.0 0.9 -    
Trade and other payables 89.9 94.4 75.4    
Total current liabilities 109.2 118.8 90.4    
           
Total liabilities 348.2 381.4 341.3    
           
TOTAL EQUITY AND LIABILITIES 517.1 544.9 530.3    
           
CONSOLIDATED CASH FLOW STATEMENT      
  Jan 1, 2014– Jan 1, 2013– Jan 1, 2013–    
EUR M Jun 30, 2014 Jun 30, 2013 Dec 31, 2013    
           
OPERATING ACTIVITIES          
           
Income for the period -14.2 1.9 27.5    
Adjustments          
  Depreciation and impairment losses 16.6 18.6 35.7    
  Capital gains from non-current assets -0.2 -22.8 -22.8    
  Other items not included in cash flow 1.3 -0.3 -0.4    
  Interest expenses and other financial expenses 3.4 3.5 7.1    
  Interest income and other financial income 0.0 0.0 -0.1    
  Dividend income 0.0 0.0 0.0    
  Income taxes -3.3 0.8 0.2    
           
Change in working capital          
  Change in trade and other receivables -9.6 -14.8 -1.9    
  Change in inventories -1.2 -1.3 0.3    
  Change in trade and other payables 14.7 14.8 -4.1    
           
Interest paid -3.1 -0.5 -3.7    
Financial expenses paid -0.4 -0.4 -0.8    
Interest received 0.0 0.0 0.1    
Financial income received 0.0 0.0 0.1    
Taxes paid -0.9 1.6 1.4    
           
NET CASH FLOW FROM          
OPERATING ACTIVITIES 2.9 1.1 38.4    
           
INVESTING ACTIVITIES          
Investments in vessels -5.1 -166.4 -168.6    
Investments in other tangible and intangible assets -0.6 -2.3 -3.7    
Divestments of vessels - 29.9 29.9    
Divestments of other tangible and intangible assets 0.3 0.2 0.2    
Payments received for non-current receivables - 0.0 0.2    
Dividends received 0.0 0.0 0.0    
           
NET CASH FLOW FROM INVESTING ACTIVITIES -5.4 -138.6 -142.0    
           
FINANCING ACTIVITIES          
Increase in non-current liabilities 0.0 179.0 179.1    
Amortization of non-current liabilities -7.6 -4.3 -24.6    
Dividends paid -5.4 - -    
           
NET CASH FLOW FROM FINANCING ACTIVITIES -13.0 174.7 154.4    
           
CHANGE IN CASH AND CASH EQUIVALENTS -15.5 37.2 50.8    
Cash and cash equivalents at beginning of period 96.1 45.3 45.3    
           
CASH AND CASH EQUIVALENTS AT END OF PERIOD 80.6 82.5 96.1    

 

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, 2014 1.8 0.0 -0.3 187.5 189.0
Income for the period       -14.2 -14.2
Translation differences   0.0 -0.2 -0.3 -0.5
Total comprehensive income for the period - 0.0 -0.2 -14.6 -14.7
Dividend to shareholders       -5.4 -5.4
Equity, Jun 30, 2014 1.8 0.0 -0.5 167.5 168.9
           
Equity, Jan 1, 2013 1.8 0.0 0.1 160.0 162.0
Income for the period       1.9 1.9
Translation differences   0.0 -0.3 0.0 -0.3
Total comprehensive income for the period - 0.0 -0.3 1.9 1.6
Equity, Jun 30, 2013 1.8 0.0 -0.2 161.9 163.6

 

QUARTERLY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
  2014 2014 2013 2013
EUR M Q2 Q1 Q4 Q3
         
SALES 137.5 103.4 129.7 164.4
         
Other operating revenue 0.3 0.1 0.3 0.2
         
Expenses        
Goods and services 39.1 28.4 35.7 43.4
Salary and other employment benefit expenses 30.3 31.6 31.5 31.9
Depreciation and impairment losses 8.0 8.5 8.3 8.8
Other operating expenses 55.8 52.1 52.5 53.8
  133.3 120.6 128.1 137.9
         
OPERATING INCOME 4.5 -17.1 2.0 26.6
         
Financial income 0.1 0.1 0.3 0.3
Financial expenses -3.1 -2.2 -2.2 -2.0
         
INCOME BEFORE TAXES 1.6 -19.1 0.1 25.0
         
Income taxes -0.2 3.5 6.7 -6.1
         
INCOME FOR THE PERIOD 1.4 -15.6 6.7 18.9
         
Other comprehensive income        
Items that may be transferred to the income statement        
Translation differences -0.4 -0.1 0.0 -0.1
Investments available for sale - - 0.0 -
  -0.4 -0.1 0.0 -0.1
         
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 1.0 -15.8 6.7 18.8
         
Income attributable to:        
Parent company shareholders  1.4 -15.6 6.7 18.9
         
Total comprehensive income attributable to:        
Parent company shareholders  1.0 -15.8 6.7 18.8
         
Earnings per share before and after dilution, EUR 0.13 -1.45 0.62 1.75

 

SEGMENT INFORMATION, VIKING LINE GROUP  
  Jan 1, 2014– Jan 1, 2013– Jan 1, 2013–
OPERATING SEGMENTS, EUR M Jun 30, 2014 Jun 30, 2013 Dec 31, 2013
       
Sales      
Vessels 238.7 252.8 544.7
Unallocated 2.4 2.6 4.9
Total, operating segments 241.1 255.4 549.6
Eliminations -0.1 -0.1 -0.2
Total sales of the Group 241.0 255.3 549.4
       
Operating income      
Vessels 10.9 29.8 81.2
Unallocated -23.4 -23.7 -46.4
Total operating income of the Group -12.5 6.1 34.7

 

PLEDGED ASSETS AND CONTINGENT LIABILITIES
       
EUR M Jun 30, 2014 Jun 30, 2013 Dec 31, 2013
       
Contingent liabilities 229.1 257.9 236.9
Assets pledged for own debt 315.7 316.2 315.7
       
FINANCIAL RATIOS AND STATISTICS  
  Jan 1, 2014– Jan 1, 2013– Jan 1, 2013–
  Jun 30, 2014 Jun 30, 2013 Dec 31, 2013
       
Equity per share, EUR 15.64 15.14 17.50
Equity/assets ratio 32.7 % 30.0 % 35.6 %
       
Investments, EUR M 5.7 168.7 172.3
 – as % of sales 2.4 % 66.1 % 31.4 %
       
Passengers 2,962,436 3,015,144 6,533,650
Cargo units 64,428 59,364 119,704
       
Average number of employees, full time equivalent 2,761 3,069 3,104
       
       
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 2014) will be published on November 13, 2014.


Mariehamn, Åland, August 26, 2014
 

VIKING LINE ABP
The Board of Directors



Jan Hanses

President and CEO
 

 

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