Tallink Grupp 2019 net profit up nearly quarter on year ({{contentCtrl.commentsTotal}})

Tallink CEO Paavo Nõgene.
Tallink CEO Paavo Nõgene. Source: Siiim Lõvi/ERR

According to the unaudited financial results released to the Tallinn Stock Exchange (TSE) on Thursday, Tallink Grupp AS has reported an unaudited net profit of €49.7 million for the 2019 financial year, up from €40 million in 2018. The group also reported the highest fourth quarter result of the last five years at a net profit of €5.5 million, up from a loss of €1.8 million on year.

Based on the group's positive financial results, the management board of Tallink Grupp will propose a dividend of €0.06 per share at the shareholders' annual general meeting, the company said in a press release on Thursday.

Tallink's unaudited earnings before interest, taxes, depreciation, and amortization (EBITDA) for the financial year also increased from €142.8 million in 2018 to €171.1 million in 2019. This result was achieved despite the group's unaudited consolidated revenue decreasing somewhat from €949.7 million in 2018 to €949.1 million in 2019.

Primary contributors to the €600,000 decrease in revenue were the decrease in revenue of the company's core business as a result of the dockings and planned maintenance on seven of the company's vessels at the beginning of the year, as well as lower revenue from the company's hotels due to the number of hotels operated by the company being reduced from five to four in late 2018.

As a whole, the company's financial results in 2019 were positively impacted by record numbers of passengers transported during a number of months that year, as well as passenger numbers increasing in almost all of the company's geographical segments. Results were negatively impacted, however, by increased competition in maritime traffic, particularly on its Estonia-Finland routes, and a weaker than expected cargo market due to economic uncertainties in Europe as well as labor strikes in Finland in late 2019.

"The overall positive outcome for 2019 is the result of strong cost control, more group-wide centralized procurement activities, business optimization projects, the automation of certain activities, investments already made into increasing energy efficiency and reduced fuel consumption on our vessels and many other activities aimed at improving the profitability of our business," Tallink Grupp CEO Paavo Nõgene said, commenting on the company's 2019 results. "It is also clear that the partial fixing of the fuel price at a very favorable level for our business has been a good achievement, and one that has contributed greatly to the overall financial result for the year."

Challenges alleviated, investments made

Challenges faced by the company included planned ship dockings, which allowed the company to modernize and upgrade its fleet, as well as the general postal strike in Finland in late 2019 and an increasingly competitive cargo market, particularly on its Estonia-Finland routes.

Some of the challenges posed by declining passenger numbers and revenue on its Finland-Estonia route were alleviated, however, by the reduction of the alcohol excise duty in Estonia last summer, which according to Nõgene led to a recovery of passenger flow and an increase in the revenue of this segment in the second half of 2019.

"Tallink Grupp also made several crucial investments in 2019 in the total amount of €60.9 million, such as technical upgrades and renovations to ships' public areas for continuously reducing their impact on the environment, and the order of the new LNG-operated vessel MyStar to further develop the vital connection between Tallinn and Helsinki," the CEO highlighted.

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Editor: Aili Vahtla

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