Viking Line's Interim Report for the period January 1 - September 30, 2016

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Viking Line Abp                 INTERIM REPORT                16.11.2016, 9.00 AM

VIKING LINE'S INTERIM REPORT FOR THE PERIOD JANUARY 1 - SEPTEMBER 30, 2016.

Consolidated sales of the Viking Line Group for the period January 1 – September 30, 2016 were 397.3 million euros (EUR 403.1 M for January 1 – September 30, 2015). Other operating revenue amounted to EUR 2.0 M (0.3). Operating income totalled EUR 14.8 M (22.5). Net financial items totalled EUR -3.2 M (-2.9). Consolidated income before taxes amounted to EUR 11.6 M (19.7). Income after taxes totalled EUR 9.7 M (16.2).

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 that operating income will be lower in 2016 than in 2015.

SALES AND EARNINGS

Consolidated sales of the Viking Line Group for the period January 1 – September 30, 2016 were 397.3 million euros (EUR 403.1 M for January 1 – September 30, 2015). Other operating revenue amounted to EUR 2.0 M (0.3). Operating income totalled EUR 14.8 M (22.5). Net financial items totalled EUR -3.2 M (-2.9). Consolidated income before taxes amounted to EUR 11.6 M (19.7). Income after taxes totalled EUR 9.7 M (16.2).

Passenger-related revenue decreased by 0.7 per cent to EUR 362.3 M (364.9) as a result of lower passenger volume, while cargo revenue decreased by 6.4 per cent to EUR 32.9 M (35.1). Net sales revenue decreased by 1.9 per cent to EUR 281.5 M (286.9).

Consolidated operating income declined mainly due to lost revenue in connection with planned and completed vessel dry-dockings for modernization and maintenance of vessels as well as lower demand during the latter period of the reporting period. Salary and other employment benefit expenses 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. Consolidated operating expenses increased by 1.4 per cent to EUR 247.8 M (244.3). The weaker Swedish krona had a negative effect on consolidated income.

Consolidated bunker expenses decreased by 22.0 per cent to EUR 29.2 M (37.5) as a result of lower average bunker prices combined with the Group’s continued efforts to optimize the bunker consumption of its vessels.

During the third quarter, July 1 – September 30, 2016, consolidated sales decreased by 2.9 per cent to EUR 159.3 M compared to the year-earlier quarter (EUR 164.1 M for the period July 1 – September 30, 2015). Third quarter operating income amounted to EUR 25.3 M (30.1).

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 in 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 5,015,177 (5,066,883). During the report period, Viking Line decreased its market share on the Turku (Finland)–Mariehamn/Långnäs (Åland Islands, Finland)–Stockholm (Sweden) route by 1.5 percentage points to 55.4 per cent. On the Helsinki (Finland)–Mariehamn–Stockholm route, market share decreased by 0.7 percentage points to 42.2 per cent. In cruise services between Stockholm and Mariehamn, market share increased by 0.5 percentage points to 57.6 per cent. On the Helsinki–Tallinn (Estonia) route, market share decreased by 0.8 percentage points to 23.3 per cent. On the short route over the Sea of Åland, market share decreased by 0.3 percentage points to 42.0 per cent. The Group thus had a total market share in its service area of 33.7 per cent (34.8).

Viking Line’s cargo volume was 98,327 cargo units (99,371). Viking Line achieved a cargo market share of 20.7 per cent (21.9). Meanwhile the number of cars transported increased by 28,510 units (+5.5 per cent) to 545,708 (517,198).

INVESTMENTS AND FINANCING

The Group’s investments amounted to EUR 13.4 M (8.0).

In March 2016 Viking Line Abp sold Park Alandia Hotell, which resulted in a slight 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 September 30, 2016, the Group’s non-current interest-bearing liabilities amounted to EUR 154.8 M (178.2). The equity/assets ratio was 44.1 per cent, compared to 42.2 per cent a year earlier.

At the end of September 2016, the Group’s cash and cash equivalents amounted to EUR 86.1 M (93.5). Net cash flow from operating activities amounted to EUR 17.5 M (29.7).

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 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 financial year. This Interim Report is unaudited.

ORGANIZATION AND PERSONNEL

The average number of Group employees was 2,772 (2,765), of whom 2,078 (2,068) worked for the parent company. Land-based personnel totalled 666 (676) and shipboard personnel totalled 2,106 (2,089).

In addition to the Group’s own employees, the Viking XPRS was staffed by an average of 250 (241) 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 has filed a leave to 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 that operating income will be lower in 2016 than in 2015.

 

CONSOLIDATED INCOME STATEMENT        
  Jul 1, 2016– Jul 1, 2015– Jan 1, 2016– Jan 1, 2015– Jan 1, 2015–
EUR M Sep 30, 2016 Sep 30, 2015 Sep 30, 2016 Sep 30, 2015 Dec 31, 2015
           
SALES 159.3 164.1 397.3 403.1 530.5
           
Other operating revenue 0.2 0.1 2.0 0.3 0.5
           
Expenses          
Goods and services 45.6 46.0 115.7 116.2 153.2
Salary and other employment benefit expenses 31.0 29.6 92.5 88.5 118.1
Depreciation and impairment losses 7.0 6.7 20.9 20.3 27.7
Other operating expenses 50.6 51.7 155.3 155.8 205.5
  134.2 134.0 384.4 380.8 504.6
           
OPERATING INCOME 25.3 30.1 14.8 22.5 26.4
           
Financial income 0.5 0.5 3.8 3.8 5.0
Financial expenses -2.5 -3.2 -7.0 -6.7 -8.2
           
INCOME BEFORE TAXES 23.2 27.4 11.6 19.7 23.2
           
Income taxes -4.7 -5.4 -1.9 -3.4 -4.4
           
INCOME FOR THE PERIOD 18.6 22.0 9.7 16.2 18.7
           
Income attributable to:          
Parent company shareholders  18.6 22.0 9.7 16.2 18.7
           
Earnings per share before and after dilution, EUR 1.72 2.03 0.90 1.50 1.73
           
CONSOLIDATED STATEMENT OF          
COMPREHENSIVE INCOME          
  Jul 1, 2016– Jul 1, 2015– Jan 1, 2016– Jan 1, 2015– Jan 1, 2015–
EUR M Sep 30, 2016 Sep 30, 2015 Sep 30, 2016 Sep 30, 2015 Dec 31, 2015
           
INCOME FOR THE PERIOD 18.6 22.0 9.7 16.2 18.7
           
Other comprehensive income          
Items that may be transferred to the income statement          
Translation differences -0.4 -0.3 -0.9 0.0 0.5
Investments available for sale - 0.6 - -0.2 0.7
  -0.4 0.3 -0.9 -0.2 1.2
           
COMPREHENSIVE INCOME FOR THE PERIOD 18.2 22.3 8.8 16.0 19.9
           
           
Comprehensive income attributable to:          
Parent company shareholders  18.2 22.3 8.8 16.0 19.9
           
CONSOLIDATED BALANCE SHEET        
           
EUR M Sep 30,2016 Sep 30, 2015 Dec 31, 2015    
           
ASSETS          
           
Non-current assets          
Intangible assets 1.7 0.7 0.8    
Land 0.6 1.1 1.1    
Buildings and structures 9.4 10.3 10.0    
Renovation costs for rented properties 2.1 0.8 1.2    
Vessels 313.3 328.6 324.5    
Machinery and equipment 5.4 6.1 5.5    
Investments available for sale 26.8 25.9 26.8    
Receivables 0.2 0.3 0.2    
Total non-current assets 359.4 373.7 370.0    
           
Current assets          
Inventories 17.8 17.5 17.2    
Income tax assets 0.4 0.1 0.5    
Trade and other receivables 44.3 41.0 29.4    
Cash and cash equivalents 86.1 93.5 110.7    
Total current assets 148.6 152.0 157.8    
           
TOTAL ASSETS 508.0 525.7 527.8    
           
EQUITY AND LIABILITIES          
           
Equity          
Share capital 1.8 1.8 1.8    
Reserves 0.7 -0.2 0.7    
Translation differences -1.3 -0.9 -0.4    
Retained earnings 223.1 221.0 223.6    
Equity attributable to parent company shareholders 224.2 221.8 225.7    
           
Total equity 224.2 221.8 225.7    
           
Non-current liabilities          
Deferred tax liabilities 34.5 31.4 34.5    
Non-current interest-bearing liabilities 154.8 178.2 174.0    
Total non-current liabilities 189.3 209.6 208.4    
           
Current liabilities          
Current interest-bearing liabilities 19.3 19.3 23.5    
Income tax liabilities 1.9 3.1 1.3    
Trade and other payables 73.3 71.9 68.9    
Total current liabilities 94.5 94.3 93.7    
           
Total liabilities 283.8 303.9 302.1    
           
TOTAL EQUITY AND LIABILITIES 508.0 525.7 527.8    
           
CONSOLIDATED CASH FLOW STATEMENT      
           
  Jan 1, 2016– Jan 1,    2015– Jan 1,    2015–    
EUR M Sep 30, 2016 Sep 30,   2015 Dec 31,   2015    
           
OPERATING ACTIVITIES          
           
Income for the period 9.7 16.2 18.7    
Adjustments          
  Depreciation and impairment losses 20.9 20.3 27.7    
  Capital gains from non-current assets -1.5 0.0 0.0    
  Other items not included in cash flow 1.1 0.0 -0.5    
  Interest expenses and other financial expenses 3.9 4.4 5.9    
  Interest income and other financial income -0.1 -0.1 -0.1    
  Dividend income -2.4 -1.6 -1.6    
  Income taxes 1.9 3.4 4.4    
           
Change in working capital          
  Change in trade and other receivables -14.9 -11.7 -0.1    
  Change in inventories -0.6 -1.4 -1.1    
  Change in trade and other payables 5.7 5.9 1.7    
           
Interest paid -4.7 -5.3 -5.4    
Financial expenses paid -0.5 -0.5 -0.7    
Interest received 0.0 0.0 0.1    
Financial income received 0.1 0.0 0.0    
Taxes paid -1.1 -0.1 -0.3    
           
NET CASH FLOW FROM          
OPERATING ACTIVITIES 17.5 29.7 48.7    
           
INVESTING ACTIVITIES          
Investments in vessels -9.9 -6.7 -7.6    
Investments in other intangible and tangible assets -3.6 -1.3 -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 -8.5 -6.3 -8.1    
           
FINANCING ACTIVITIES          
Increase in non-current liabilities 0.2 - -    
Amortization of non-current liabilities -23.5 -23.5 -23.5    
Dividends paid -10.3 -7.6 -7.6    
           
NET CASH FLOW FROM FINANCING ACTIVITIES -33.6 -31.1 -31.1    
           
CHANGE IN CASH AND CASH EQUIVALENTS -24.5 -7.6 9.5    
Cash and cash equivalents at beginning of period 110.7 101.1 101.1    
           
CASH AND CASH EQUIVALENTS AT END OF PERIOD 86.1 93.5 110.7    

 

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       9.7 9.7
Translation differences   0.0 -0.9 0.0 -0.9
Comprehensive income for the period - 0.0 -0.9 9.7 8.8
Dividend to shareholders       -10.3 -10.3
Equity, Sep 30, 2016 1.8 0.7 -1.3 223.1 224.2
           
Equity, Jan 1, 2015 1.8 0.0 -0.8 212.3 213.3
Income for the period       16.2 16.2
Translation differences   0.0 -0.1 0.1 0.0
Remeasurement of investments available for sale   -0.2     -0.2
Comprehensive income for the period - -0.2 -0.1 16.3 16.0
Dividend to shareholders       -7.6 -7.6
Equity, Sep 30, 2015 1.8 -0.2 -0.9 221.0 221.8

 

QUARTERLY CONSOLIDATED INCOME STATEMENT  
  2016 2016 2016 2015
EUR M Q3 Q2 Q1 Q4
         
SALES 159.3 131.1 106.9 127.4
         
Other operating revenue 0.2 0.2 1.5 0.2
         
Expenses        
Goods and services 45.6 38.4 31.7 37.0
Salary and other employment benefit expenses 31.0 31.0 30.5 29.6
Depreciation and impairment losses 7.0 7.2 6.7 7.3
Other operating expenses 50.6 53.6 51.1 49.7
  134.2 130.2 120.0 123.7
         
OPERATING INCOME 25.3 1.1 -11.6 3.9
         
Financial income 0.5 2.8 0.5 1.2
Financial expenses -2.5 -2.4 -2.0 -1.6
         
INCOME BEFORE TAXES 23.2 1.4 -13.1 3.5
         
Income taxes -4.7 0.2 2.6 -1.0
         
INCOME FOR THE PERIOD 18.6 1.6 -10.5 2.5
         
Income attributable to:        
Parent company shareholders  18.6 1.6 -10.5 2.5
         
Earnings per share before and after dilution, EUR 1.72 0.15 -0.97 0.23
         
QUARTERLY CONSOLIDATED STATEMENT OF    
COMPREHENSIVE INCOME        
  2016 2016 2016 2015
EUR M Q3 Q2 Q1 Q4
         
INCOME FOR THE PERIOD 18.6 1.6 -10.5 2.5
         
Other comprehensive income        
Items that may be transferred to the income statement        
Translation differences -0.4 -0.4 -0.1 0.5
Investments available for sale - - - 0.8
  -0.4 -0.4 -0.1 1.4
COMPREHENSIVE INCOME FOR THE PERIOD 18.2 1.2 -10.6 3.9
         
Comprehensive income attributable to:        
Parent company shareholders  18.2 1.2 -10.6 3.9

 

SEGMENT INFORMATION, VIKING LINE GROUP  
  Jan 1, 2016– Jan 1, 2015– Jan 1, 2015–
OPERATING SEGMENTS, EUR M Sep 30, 2016 Sep 30, 2015 Dec 31, 2015
       
Sales      
Vessels 395.1 399.2 525.1
Unallocated 2.3 4.1 5.6
Total, operating segments 397.4 403.3 530.7
Eliminations -0.2 -0.2 -0.2
Total sales of the Group 397.3 403.1 530.5
       
Operating income      
Vessels 49.4 55.5 71.2
Unallocated -34.6 -32.9 -44.7
Total operating income of the Group 14.8 22.5 26.4

 

PLEDGED ASSETS AND CONTINGENT LIABILITIES  
       
EUR M Sep 30, 2016 Sep 30, 2015 Dec 31,   2015
       
Contingent liabilities 174.1 197.5 197.5
Assets pledged for own debt 313.6 313.6 313.6
       
FINANCIAL RATIOS AND STATISTICS    
  Jan 1, 2016– Jan 1, 2015– Jan 1,   2015–
  Sep 30, 2016 Sep 30, 2015 Dec 31,   2015
       
Equity per share, EUR 20.76 20.54 20.89
Equity/assets ratio 44.1 % 42.2 % 42.8 %
       
Investments, EUR M 13.4 8.0 10.0
 – as % of sales 3.4 % 2.0 % 1.9 %
       
Passengers 5,015,177 5,066,883 6,568,684
Cargo units 98,327 99,371 133,163
       
Average number of employees, full-time equivalent 2,772 2,765 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 Year-end Report for the financial year 2016 will be published on February 16, 2017.

 

Mariehamn, Åland, November 15, 2016

VIKING LINE ABP
The Board of Directors

 

Jan Hanses
President and CEO

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