Tallink first quarter financial results negatively impacted by coronavirus

Tallink's MS Silja Europa.
Tallink's MS Silja Europa. Source: Siim Lõvi/ERR

Estonian shipper Tallink Grupp's unaudited consolidated revenue in the first quarter of 2020 decreased by 13.4 percent on year to €154.9 million, while its net losses increased by 19.6 percent on year to €30.2 million, according to first quarter financial results published to the Tallinn Stock Exchange (TSE) on Friday.

Tallink's unaudited earnings before interest, taxes, depreciation, and amortization (EBITDA) in the first quarter totaled -€1.3 million, down from €3.8 million in the first quarter of 2019, according to a company press release.

While the first two months of 2020 had seen the company off to a positive start with passenger numbers up in both January and February  — by 12.4 and 8 percent, respectively — passenger numbers fell off steeply in March and April — by 59.3 and 95.9 percent, respectively — after emergency situations were declared in Estonia, Latvia and Finland in mid-March and the company's home market governments closed borders due to the global coronavirus pandemic.

Despite the decline in passenger numbers, the shipping group managed to increase the number of cargo units transported by its vessels by 7 percent in the first quarter. Support from both Estonian and Finnish authorities played a vital role in securing the continued transport of goods and supplies between the Nordic and Baltic countries, however the increase in the number of cargo units transported was not enough to offset the near complete absence of all other company revenue.

Together with declining passenger numbers, the company's revenue has also plummeted since mid-March, with just five of the company's 14 vessels currently still operating on he Baltic Sea, primarily to ensure the ongoing transport of vital supplies between the group's home markets, and just one of its four hotels currently open with an occupancy rate near zero.

The company's primary focus at the moment remains strict cost control and cash flow management and liquidity support negotiations for securing the sustainability of the group.

CEO: Company taking steps to mitigate impact

"We are living in unprecedented times," Tallink Grupp CEO Paavo Nõgene said, commenting on the first quarter results. "Even two months ago, we could not have foreseen that in mid-March, we would find ourselves in a world where state borders are closed, airline and shipping fleets are suspended across the globe, people are not just unable to travel but unable to leave their own homes, millions of people are sick, and hundreds of thousands no longer with us. But this is the harsh reality we are now faced with."

In this context, the group's first quarter results are positive, but they are a false positive during a time of crisis, Nõgene continued, adding that placing the results in a pre-coronavirus and post-coronavirus context paint two very different pictures. He also noted that as there is no clarity or certainty regarding when this global crisis would end or how the company would come out of it, it is also difficult to predict what the months ahead will bring.

"Naturally we have been taking several steps to limit the damage and impact on our company over the last few months," he said. "We have introduced extremely tight cost control measures, have negotiated and concluded agreements with our key partners and suppliers regarding existing agreements and contracts, have worked closely with our governments to secure support measures, have worked hard to identify and launch new revenue streams, and have had to make some difficult decisions regarding our employees. All the steps we have taken thus far and will continue to take in the months ahead are taken to secure the long-term sustainability and viability of our operations and in order to preserve as many jobs as possible."

The CEO noted that as the company starts to see the very first tentative signs of a possible end to the pandemic, it is now working on service recovery plans and preparing for the implementation of enhanced safety measures onboard its vessels as well as in its hotels, restaurants, stores and offices.

"It is clear that the restoration of our services will be a gradual process and will require various sectors and our entire countries to work together to rebuild peoples trust and confidence in traveling, but it is also clear that our customers are ready to return to the seas and to their neighboring countries, providing that we are doing everything we can to provide our services with health and safety at the forefront," Nõgene said.

Tallink Grupp provides operates passenger and cargo routes connecting Estonia, Finland, Latvia and Sweden.


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Editor: Aili Vahtla

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