Tallink revenue falls 75 percent on year to Q2 2020 in wake of pandemic

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

Tallink Grupp, owner of the shipping line of the same name, has reported €65 million in turnover for the second quarter of 2020 (Q2 2020), and a net loss of €27.4 million over the same period. Turnover has fallen by 75 percent on year, largely the result of the coronavirus pandemic.

The fall in turnover, from €256 million was mainly caused by a 96 percent fall in turnover for the group's hotels, 82 percent decrease in the turnover for the group's shops and restaurants segment, as well as an 81 percent fall in ticket sales revenue, and a 29 percent fall in turnover in the cargo sector.

The group reported Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of €2.4 million for Q2 2020, compared with €51 million for the same quarter in 2019. The group noted this was a positive figure despite the pandemic.

The net loss for the second quarter was €27.4 million, and net profit was stood at €14.9 million, the company says.

Passenger and cargo statistics had already revealed an 85 percent drop in passenger numbers and 13 percent fall in cargo volumes, on year to June 2020.

The worst-hit passenger routes on year to Q2 2020 were Latvia-Sweden (99 percent fall), Estonia-Sweden (97 percent) and Finland-Sweden (93 percent).

Routes between Estonia and Finland were slightly healthier, seeing a 77 percent fall in passenger numbers over the same period.

Commenting on the second quarter results, Tallink Grupp's CEO Paavo Nõgene said: "The second quarter of 2020 was a completely unprecedented period not only in our company's history, but world history in general due to the COVID-19 pandemic. As we have said throughout the crisis, it was the global tourism industry that was hit by the pandemic first and the hardest, so the results we are reporting for this challenging period today, will not surprise anyone."

"While the first quarter of this year still held much promise for the year and its results were mainly negatively impacted by the events of the last two weeks of March, then the picture for the second quarter is a complete mirror image of first quarter with only the last two weeks of June bringing some relief and first positive signs and developments after the easing of some of the travel restrictions in our region.

Nõgene added that the results were actually slightly better than expected in the wake of the pandemic, though not what was originally budgeted for 2020.

The CEO also said that flexibility in offering new or short-term routes had been well-received and was something the company could build on in the next quarter.

Cargo, whose transport remained essential through the pandemic, unlike most passenger travel, still saw an 89 percent fall on year to Q2 2020 on the Latvia-Sweden route.

Cargo shipping between Estonia and Sweden fell by 25 percent over the same period, Tallink says.

The company, which received a €100 million state-funded loan during the pandemic, due to its status as a strategically important business, also managed to mitigate its losses somewhat ny reducing its cost of sales by 56 percent, which it says it did through tighter cost control.

Cutting maritime workers hours, layoffs, and the use of the government's wage support scheme, helped reduce overall staff costs by €30 million as well, the company says, adding that Sweden and Latvia's governments also offered wage support schemes which positively affected its activities.

One-off redundancy payments came to €1.9 million in Q2 2020; positive budgetary effects arising from layoffs will not be known until Q4 2020, Tallink says.

Tallink also managed to make some investments in the blighted Q2 2020, to the tune of €14 million, which included work on the Silja Serenade ferry and the purchase of a new ro-pax vessel, as well as the arrival of Burger King in Estonia, where Tallink Grupp is the franchisee.

Paavo Nõgene said making the rest of summer and preparing for fall and winter was challenging, but flexibility was key in the face of threats of a resurgence of the coronavirus and its accompanying regulations.

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Editor: Andrew Whyte

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