Viking Line's Year-End Report January - December 2018
Viking Line Abp FINANCIAL STATEMENT RELEASE 14.2.2019, 9.00 AM
VIKING LINE’S YEAR-END REPORT JANUARY – DECEMBER 2018
Consolidated sales of the Viking Line Group during the financial year January 1–December 31, 2018 were 497.8 million euros (EUR 513.6 M for January 1–December 31, 2017). Other operating revenue amounted to EUR 0.3 M (1.7). Operating income totalled EUR 9.3 M (10.0). Net financial items totalled EUR -2.8 M (-3.4). Consolidated income before taxes amounted to EUR 6.5 M (6.6). Income after taxes totalled EUR 5.5 M (5.3).
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. The Board of Directors' assessment is that operating income for 2019 will remain on a par with operating income for 2018 or improve. At this stage, however, this forecast is subject to the uncertainty factors mentioned above.
SALES AND EARNINGS
FULL CALENDAR YEAR
Consolidated sales of the Viking Line Group during the financial year January 1–December 31, 2018 were 497.8 million euros (EUR 513.6 M for January 1–December 31, 2017). Other operating revenue amounted to EUR 0.3 M (1.7). Operating income totalled EUR 9.3 M (10.0). Net financial items totalled EUR -2.8 M (-3.4). Consolidated income before taxes amounted to EUR 6.5 M (6.6). Income after taxes totalled EUR 5.5 M (5.3).
During the report period, passenger-related revenue was EUR 450.3 M (467.5), while cargo revenue amounted to EUR 45.3 M (43.8). Net sales revenue was EUR 362.0 M (372.6).
Due to lower operating expenses compared to the previous year, consolidated income for 2018 improved somewhat despite lower sales. Consolidated operating expenses decreased by 2.9 per cent to EUR 329.2 M (339.1). Bunker expenses increased by 8.6 per cent to EUR 50.8 M (46.7). The weak Swedish krona had a negative impact on consolidated income.
The placing in service of the vessel Viking FSTR, which operated on the Helsinki–Tallinn route during the period April 10–October 16, 2017, increased consolidated sales and capacity during 2017 but did not contribute materially to income.
FOURTH QUARTER
During the fourth quarter, October 1–December 31, 2018, consolidated sales was EUR 119.8 M (EUR 121.5 M for October 1–December 31, 2017). Fourth quarter operating income amounted to EUR 1.6 M (3.7).
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 2017. During the period April 10–October 16, 2017, capacity on the Helsinki–Tallinn route increased with the leased vessel Viking FSTR. Viking FSTR was not in service during 2018.
The number of passengers on Viking Line’s vessels during the report period was 6,411,537 (6,881,149). The Group had a total market share in its service area of approximately 32.4 per cent (34.5).
Viking Line’s cargo volume was 128,549 cargo units (127,668). Viking Line achieved a cargo market share of approximately 17.8 per cent (18.7). The number of cars transported was 704,799 (762,253).
INVESTMENTS AND FINANCING
The Group’s investments amounted to EUR 15.9 M (34.7), of which EUR 4.3 M was related to capitalized costs for vessel under construction. The Group’s total investments represent 3.2 per cent of sales (6.8).
On December 31, 2018, the Group’s non-current interest-bearing liabilities amounted to EUR 103.5 M (127.0). The equity/assets ratio was 49.4 per cent, compared to 46.2 per cent a year earlier.
At the end of December 2018, the Group’s cash and cash equivalents amounted to EUR 61.8 M (68.0). Unutilized credit lines in the Group totalled EUR 15.1 M on December 31, 2018 (EUR 0.1 M). Net cash flow from operating activities amounted to EUR 33.0 M (31.8). Net cash flow from investing activities was EUR -13.5 M (-30.8) and net cash flow from financing activities amounted to EUR -25.7 M (-27.9).
RISK FACTORS
Fluctuations in bunker (vessel fuel) prices have a direct impact on the Group’s earnings. In order to 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, 2018 and 2019.
The Group is also exposed to various financial risks, among them fluctuations in currency exchange rates. Revenue is generated in euros and Swedish kronor. Most operational influx of cash and cash equivalents consists of euros. Purchase prices of goods for sale and bunker are affected by other currencies, especially the US dollar. The Group endeavours to maintain good liquidity in order to be prepared to deal with adverse changes in operational cash flow.
SUSTAINABILITY REPORT
The Sustainability Report for 2018 is published as part of Viking Line’s Annual Report. Information about Viking Line’s sustainability work is also available on Vikingline.com.
ORGANIZATION AND PERSONNEL
The average number of Group employees was 2,671 (2,746), of whom 2,005 (2,048) worked for the parent company. Shipboard personnel totalled 2,037 (2,086) and land-based personnel totalled 634 (660).
In addition to the Group’s own employees, the Viking XPRS was crewed by an average of 242 (248) people employed by a staffing company.
At the end of 2018, the total number of Group employees was 2,874 (2,889), of which 2,299 (2,238) resided in Finland. The number residing in Sweden was 453 (527). There were 111 (116) employees residing in Estonia and 11 (8) in other countries.
CORPORATE GOVERNANCE STATEMENT
Viking Line applies the Finnish Corporate Governance Code, which was approved by the Securities Market Association. The Code entered into force on January 1, 2016, and is available on the Securities Market Association’s website, Cgfinland.fi. Viking Line complies with the Code in full. The Corporate Governance Statement for 2018 is published as part of Viking Line’s Annual Report. Information about Viking Line’s corporate governance is available on Vikingline.com.
EVENTS AFTER THE BALANCE SHEET DATE
The Board of Directors of the Company is not aware of any major events after the balance sheet date that might influence the financial statements.
OUTLOOK FOR 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. The Board of Directors' assessment is that operating income for 2019 will remain on a par with operating income for 2018 or improve. At this stage, however, this forecast is subject to the uncertainty factors mentioned above.
THE BOARD’S PROPOSAL ON DISTRIBUTION OF EARNINGS
According to the balance sheet of Viking Line Abp on December 31, 2018, unrestricted equity totalled EUR 76,137,466.51.
The Board of Directors proposes to the Annual General Meeting that:
A dividend of EUR 0.20 per share be paid, totalling EUR 2,160,000.00
Remaining unrestricted equity EUR 73,977,466.51
No material changes in the Company’s financial position have occurred after the end of the financial year. In the assessment of the Board of Directors, the dividend is justifiable in light of the demands with respect to the size of the equity capital which are imposed by the nature, scope, financing and risks associated with the business.
| CONSOLIDATED INCOME STATEMENT | ||||
| Oct 1, 2018– | Oct 1, 2017– | Jan 1, 2018– | Jan 1, 2017– | |
| EUR M | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2018 | Dec 31, 2017 |
| SALES | 119.8 | 121.5 | 497.8 | 513.6 |
| Other operating revenue | 0.1 | 0.4 | 0.3 | 1.7 |
| Expenses | ||||
| Goods and services | 33.2 | 33.6 | 135.8 | 140.9 |
| Salary and other employment benefit expenses | 28.5 | 29.5 | 117.3 | 120.6 |
| Depreciation, amortization and impairment losses | 5.9 | 6.0 | 23.8 | 25.2 |
| Other operating expenses | 50.6 | 49.0 | 211.8 | 218.5 |
| 118.2 | 118.1 | 488.8 | 505.2 | |
| OPERATING INCOME | 1.6 | 3.7 | 9.3 | 10.0 |
| Financial income | 0.1 | 0.0 | 2.4 | 2.2 |
| Financial expenses | -0.8 | -1.8 | -5.2 | -5.6 |
| INCOME BEFORE TAXES | 0.9 | 1.9 | 6.5 | 6.6 |
| Income taxes | -0.2 | -0.5 | -1.0 | -1.3 |
| INCOME FOR THE PERIOD | 0.7 | 1.5 | 5.5 | 5.3 |
| Income attributable to: | ||||
| Parent company shareholders | 0.7 | 1.5 | 5.5 | 5.3 |
| Earnings per share before and after dilution, EUR | 0.06 | 0.14 | 0.51 | 0.49 |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||
| Oct 1, 2018– | Oct 1, 2017– | Jan 1, 2018– | Jan 1, 2017– | |
| EUR M | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2018 | Dec 31, 2017 |
| INCOME FOR THE PERIOD | 0.7 | 1.5 | 5.5 | 5.3 |
| Items that may be reclassified to the income statement | ||||
| Translation differences | 0.2 | -0.5 | -0.8 | -0.6 |
| Changes in the fair value of investments available for sale | - | 0.7 | - | 0.7 |
| Items that will not be reclassified to the income statement | ||||
| Changes in the fair value of financial assets recognized at | ||||
| fair value through other comprehensive income | 4.1 | - | 4.1 | - |
| Other comprehensive income | 4.2 | 0.3 | 3.3 | 0.1 |
| COMPREHENSIVE INCOME FOR THE PERIOD | 4.9 | 1.8 | 8.8 | 5.4 |
| Comprehensive income attributable to: | ||||
| Parent company shareholders | 4.9 | 1.8 | 8.8 | 5.4 |
| CONSOLIDATED BALANCE SHEET | ||||
| EUR M | Dec 31, 2018 | Dec 31, 2017 | ||
| ASSETS | ||||
| Non-current assets | ||||
| Intangible assets | 3.2 | 2.5 | ||
| Land | 0.6 | 0.6 | ||
| Buildings and structures | 7.7 | 8.6 | ||
| Renovation costs for rented properties | 2.5 | 2.7 | ||
| Vessels | 281.2 | 294.6 | ||
| Machinery and equipment | 4.9 | 5.2 | ||
| Advance payments | 25.9 | 21.6 | ||
| Financial assets recognized at fair value through | ||||
| other comprehensive income | 32.0 | - | ||
| Investments available for sale | - | 27.9 | ||
| Total non-current assets | 358.0 | 363.5 | ||
| Current assets | ||||
| Inventories | 16.3 | 17.3 | ||
| Income tax assets | 0.4 | 1.6 | ||
| Trade and other receivables | 30.7 | 34.3 | ||
| Cash and cash equivalents | 61.8 | 68.0 | ||
| Total current assets | 109.2 | 121.1 | ||
| TOTAL ASSETS | 467.2 | 484.6 | ||
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Share capital | 1.8 | 1.8 | ||
| Reserves | 5.8 | 1.7 | ||
| Translation differences | -2.3 | -1.7 | ||
| Retained earnings | 225.3 | 222.2 | ||
| Equity attributable to parent company shareholders | 230.7 | 224.1 | ||
| Total equity | 230.7 | 224.1 | ||
| Non-current liabilities | ||||
| Deferred tax liabilities | 37.5 | 37.0 | ||
| Non-current interest-bearing liabilities | 103.5 | 127.0 | ||
| Total non-current liabilities | 141.0 | 164.1 | ||
| Current liabilities | ||||
| Current interest-bearing liabilities | 23.5 | 23.5 | ||
| Income tax liabilities | 0.3 | - | ||
| Trade and other payables | 71.6 | 73.0 | ||
| Total current liabilities | 95.5 | 96.5 | ||
| Total liabilities | 236.5 | 260.6 | ||
| TOTAL EQUITY AND LIABILITIES | 467.2 | 484.6 | ||
| CONSOLIDATED CASH FLOW STATEMENT | ||||
| Jan 1, 2018– | Jan 1, 2017– | |||
| EUR M | Dec 31, 2018 | Dec 31, 2017 | ||
| OPERATING ACTIVITIES | ||||
| Income for the period | 5.5 | 5.3 | ||
| Adjustments | ||||
| Depreciation, amortization and impairment losses | 23.8 | 25.2 | ||
| Capital gains/losses from non-current assets | -0.1 | -1.1 | ||
| Other items not included in cash flow | 0.9 | 0.6 | ||
| Interest expenses and other financial expenses | 4.0 | 4.7 | ||
| Interest income and other financial income | -0.1 | -0.2 | ||
| Dividend income | -2.3 | -2.0 | ||
| Income taxes | 1.0 | 1.3 | ||
| Change in working capital | ||||
| Change in trade and other receivables | 3.6 | 1.8 | ||
| Change in inventories | 1.0 | 0.8 | ||
| Change in trade and other payables | -1.1 | 0.3 | ||
| Interest paid | -3.6 | -4.2 | ||
| Financial expenses paid | -0.6 | -0.8 | ||
| Interest received | 0.0 | 0.0 | ||
| Financial income received | 0.1 | 0.1 | ||
| Taxes paid | 1.0 | -0.1 | ||
| NET CASH FLOW FROM | ||||
| OPERATING ACTIVITIES | 33.0 | 31.8 | ||
| INVESTING ACTIVITIES | ||||
| Investments in vessels | -9.2 | -9.5 | ||
| Investments in other intangible and tangible assets | -2.3 | -2.8 | ||
| Advance payments | -4.3 | -22.4 | ||
| EU funding | - | 0.8 | ||
| Investments in financial assets recognized at fair value | ||||
| through other comprehensive income | 0.0 | - | ||
| Investments in investments available for sale | - | -0.1 | ||
| Divestments of other intangible and tangible assets | 0.1 | 1.1 | ||
| Divestments of financial assets recognized at fair value | ||||
| through other comprehensive income | 0.0 | - | ||
| Divestments of investments available for sale | - | 0.0 | ||
| Dividends received | 2.3 | 2.0 | ||
| NET CASH FLOW FROM INVESTING ACTIVITIES | -13.5 | -30.8 | ||
| FINANCING ACTIVITIES | ||||
| Principal payments, non-current liabilities | -23.5 | -23.6 | ||
| Dividends paid | -2.2 | -4.3 | ||
| NET CASH FLOW FROM FINANCING ACTIVITIES | -25.7 | -27.9 | ||
| CHANGE IN CASH AND CASH EQUIVALENTS | -6.2 | -26.9 | ||
| Cash and cash equivalents at the beginning of the period | 68.0 | 94.9 | ||
| CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | 61.8 | 68.0 | ||
| 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, 2018 | 1.8 | 1.7 | -1.7 | 222.2 | 224.1 |
| Income for the period | 5.5 | 5.5 | |||
| Translation differences | 0.0 | -0.6 | -0.2 | -0.8 | |
| Divestments of financial assets recognized at | |||||
| fair value through other comprehensive income | 0.0 | 0.0 | 0.0 | ||
| Remeasurement of financial assets recognized at | |||||
| fair value through other comprehensive income | 4.1 | 4.1 | |||
| Comprehensive income for the period | - | 4.1 | -0.6 | 5.3 | 8.8 |
| Dividend to shareholders | -2.2 | -2.2 | |||
| Transactions with owners of the parent company | - | - | - | -2.2 | -2.2 |
| EQUITY, DEC 31, 2018 | 1.8 | 5.8 | -2.3 | 225.3 | 230.7 |
| 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 | 5.3 | 5.3 | |||
| Translation differences | 0.0 | -0.4 | -0.2 | -0.6 | |
| Remeasurement of investments available for sale | 0.7 | 0.7 | |||
| Comprehensive income for the period | - | 0.7 | -0.4 | 5.1 | 5.4 |
| Dividend to shareholders | -4.3 | -4.3 | |||
| Transactions with owners of the parent company | - | - | - | -4.3 | -4.3 |
| EQUITY, DEC 31, 2017 | 1.8 | 1.7 | -1.7 | 222.2 | 224.1 |
| QUARTERLY CONSOLIDATED INCOME STATEMENT | ||||
| 2018 | 2018 | 2018 | 2018 | |
| EUR M | Q4 | Q3 | Q2 | Q1 |
| SALES | 119.8 | 152.3 | 125.5 | 100.3 |
| Other operating revenue | 0.1 | 0.1 | 0.1 | 0.1 |
| Expenses | ||||
| Goods and services | 33.2 | 40.1 | 34.5 | 27.9 |
| Salary and other employment benefit expenses | 28.5 | 30.1 | 30.2 | 28.5 |
| Depreciation, amortization and impairment losses | 5.9 | 5.7 | 6.3 | 6.0 |
| Other operating expenses | 50.6 | 55.2 | 54.5 | 51.5 |
| 118.2 | 131.1 | 125.6 | 113.9 | |
| OPERATING INCOME | 1.6 | 21.3 | 0.0 | -13.5 |
| Financial income | 0.1 | 0.0 | 2.3 | 0.0 |
| Financial expenses | -0.8 | -0.4 | -1.4 | -2.6 |
| INCOME BEFORE TAXES | 0.9 | 20.9 | 0.9 | -16.1 |
| Income taxes | -0.2 | -4.2 | 0.2 | 3.2 |
| INCOME FOR THE PERIOD | 0.7 | 16.6 | 1.1 | -12.9 |
| Income attributable to: | ||||
| Parent company shareholders | 0.7 | 16.6 | 1.1 | -12.9 |
| Earnings per share before and after dilution, EUR | 0.06 | 1.54 | 0.11 | -1.20 |
| QUARTERLY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||
| 2018 | 2018 | 2018 | 2018 | |
| EUR M | Q4 | Q3 | Q2 | Q1 |
| INCOME FOR THE PERIOD | 0.7 | 16.6 | 1.1 | -12.9 |
| Items that may be reclassified to the income statement | ||||
| Translation differences | 0.2 | 0.2 | -0.3 | -0.8 |
| Items that will not be reclassified to the income statement | ||||
| Changes in the fair value of financial assets recognized at | ||||
| fair value through other comprehensive income | 4.1 | - | 0.0 | - |
| Other comprehensive income | 4.2 | 0.2 | -0.3 | -0.8 |
| COMPREHENSIVE INCOME FOR THE PERIOD | 4.9 | 16.8 | 0.8 | -13.7 |
| Comprehensive income attributable to: | ||||
| Parent company shareholders | 4.9 | 16.8 | 0.8 | -13.7 |
| SEGMENT INFORMATION, VIKING LINE GROUP | ||||
| Jan 1, 2018– | Jan 1, 2017– | |||
| OPERATING SEGMENTS, EUR M | Dec 31, 2018 | Dec 31, 2017 | ||
| Sales | ||||
| Vessels | 489.5 | 505.3 | ||
| Unallocated | 8.5 | 8.4 | ||
| Total, operating segments | 498.0 | 513.7 | ||
| Eliminations | -0.1 | -0.1 | ||
| Total sales of the Group | 497.8 | 513.6 | ||
| Operating income | ||||
| Vessels | 55.2 | 56.8 | ||
| Unallocated | -45.9 | -46.8 | ||
| Total operating income of the Group | 9.3 | 10.0 | ||
| SALES | ||||
| Passenger-related revenue | 450.3 | 467.5 | ||
| Cargo revenue | 45.3 | 43.8 | ||
| Miscellaneous sales revenue | 2.3 | 2.3 | ||
| Total | 497.8 | 513.6 | ||
| PLEDGED ASSETS AND CONTINGENT LIABILITIES | |||||
| EUR M | Dec 31, 2018 | Dec 31, 2017 | |||
| Contingent liabilities | 142.2 | 150.6 | |||
| Assets pledged for own debt | 301.0 | 283.0 | |||
| Investment commitments not included in the accounts | 175.3 | 175.1 | |||
| – contractual amount | 195.8 | 195.0 | |||
| FINANCIAL RATIOS AND STATISTICS | |||||
| Jan 1, 2018– | Jan 1, 2017– | ||||
| Dec 31, 2018 | Dec 31, 2017 | ||||
| Equity per share, EUR | 21.36 | 20.75 | |||
| Dividend per share, EUR | 0.20 | 0.20 | |||
| Number of shares on balance sheet date | 10,800,000 | 10,800,000 | |||
| Return on equity (ROE) | 2.4 | % | 2.4 | % | |
| Return on investment (ROI) | 2.9 | % | 2.9 | % | |
| Equity/assets ratio | 49.4 | % | 46.2 | % | |
| Investments, EUR M | 15.9 | 34.7 | |||
| – as % of sales | 3.2 | % | 6.8 | % | |
| Passengers | 6,411,537 | 6,881,149 | |||
| Cargo units | 128,549 | 127,668 | |||
| Average number of employees, full time equivalent | 2,671 | 2,746 | |||
| Earnings per share = (Income before taxes – income taxes +/– minority interest) / Average number of shares | |||||
| Equity per share = Equity attributable to parent company shareholders / Number of shares on balance sheet date | |||||
| Return on equity (ROE), % = (Income before taxes – income taxes) / Equity including minority | |||||
| interest (average for the year) | |||||
| Return on investment (ROI), % = (Income before taxes + interest and other financial expenses) | |||||
| / (Total assets – interest-free liabilities [average for the year]) | |||||
| Equity/assets ratio, % = (Equity including minority interest) / (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 above figures from the financial statements have been audited. | |||||
ANNUAL GENERAL MEETING
The Annual General Meeting of Viking Line Abp will be held at 12 noon on Thursday, April 25, 2019 at the Alandica Kultur och Kongress auditorium, Strandgatan 33, Mariehamn, Åland, Finland.
An electronic version of the Annual Report for the financial year 2018 will be published during the week of March 4, 2019 on the Company’s website, Vikingline.com. The printed Annual Report will be published in Swedish and Finnish during the week of March 18, 2019.
FINANCIAL INFORMATION FOR 2019
During the financial year 2019, Viking Line Abp’s financial reports will be published for the periods January 1 to March 31, 2019; January 1 to June 30, 2019; and January 1 to September 30, 2019. The Business Review for January–March will be published on April 25, the Half-Year Financial Report for January–June on August 20 and the Business Review for January–September on October 25. The Year-End Report for the financial year 2019 will be published on February 13, 2020. An electronic version of the Annual Report will be published on Vikingline.com during the week of March 2, 2020. The printed Annual Report will be published in Swedish and Finnish during the week of March 16, 2020.
Mariehamn, Åland, February 13, 2019
VIKING LINE ABP
The Board of Directors
Jan Hanses
President and CEO
jan.hanses@vikingline.com +358-18-27000