Financial results for 2020 Q3 and 9 months

The impact of the COVID-19 pandemic continued in the third quarter, which resulted in a decrease in revenue, adjusted EBITDA and profit of Port of Tallinn group (AS Tallinna Sadam). In Q3 2020, the revenue amounted to EUR 31.8 million decreasing by 18.9% compared to the same period previous year. The adjusted EBITDA was EUR 19.9 million decreasing by 16.2% and profit of Q3 amounted to EUR 13.6 million decreasing by 23.1%. At the same time, the adjusted EBITDA margin increased by 2.1 percentage points and the volume of investments by almost 50% to EUR 11.5 million.

The results of Q3 were mostly affected by the restrictions on passenger movement due to the COVID-19 pandemic, which were significantly milder in the summer period than in Q2. According to Valdo Kalm, Chairman of the Management Board, a diverse business model significantly mitigates the impact of the pandemic on the Group’s financial results. Kalm noted that the cargo harbours segment continued to grow strongly, but due to competition, revenue per tonne decreased somewhat, especially for liquid bulk. Ferries and the icebreaker Botnica, or the shipping business, keeps a stable course.

“Passenger business is currently in decline, but we will continue to invest heavily in the Old City Harbour passenger port, because we believe that in the long run the impact of the pandemic will be temporary and passenger traffic will recover in the coming years,” said Kalm.

The impact of the cost-cutting measures implemented in Q2 took effect predominantly from Q3. “Continuously strong positive EBITDA and secure cash flow will enable us to ensure the company’s liquidity and profitability and meet the dividend policy, i.e. to pay at least 70% of the previous year’s profit as dividends in 2021,” Kalm confirmed.

Major events in Q3:

• The impact of the COVID-19 pandemic continued
• Dividend payment in the amount of EUR 30.2 million
• Completion of the reconstruction of passenger terminal D.
• Connecting the first ship to onshore power supply
• Hybrid ferry Tõll started servicing passengers on the Virtsu-Kuivastu route
• Conclusion of the design contract for Rail Baltica Muuga freight terminal
• Completion of the second stage of dry bulk operator PK Terminal development in Muuga
• Extension of the term of office of the members of the Management Board Valdo Kalm and Marko Raid for a new 3-year period
• Changes in the Management Board of OÜ TS Laevad

Revenue
Revenue for the nine months of 2020 decreased by EUR 18.5 million, i.e. 18%, year on year to EUR 82.1 million. The decrease was mainly influenced by the decline in vessel dues and passenger fees from international ferries and cruise ships due to restrictions on cross-border passenger movements imposed in connection with the COVID-19 pandemic. In terms of segments, the largest year-on-year change in nine-month revenue occurred in the Passenger harbours segment, followed by the Ferry segment and the Cargo harbours segment. The revenue of the segment Other did not change. In Q3, revenue increased year-on-year in the Cargo harbours segment and decreased in other segments.

The revenue of the Passenger harbours segment decreased by 41% in Q3 and by 43% in the first 9 months due to the decrease in the number of passenger and vessel calls due to the COVID-19 pandemic (starting from Q2).
The revenue of the Cargo harbours segment increased by 3% year on year. In the first 9 months, the revenue of Cargo harbours decreased by 2% due to the combined effect of various items of revenue, mostly affected by the brokered revenue from electricity and cargo charges. Cargo volume increased primarily due to liquid bulk, but the increase in the volume of liquid bulk with lower charge did not cover the effect of the decrease in the volume of other types of cargo in total cargo charge revenue.
The revenue of the Ferry segment decreased slightly because the state did not order an additional vessel for extra trips during the summer season. Instead, a smaller number of additional trips was made by the existing replacement ferry Regula. The decline was partly offset by a rise in fee rates, which are linked to the Estonian consumer and fuel price indices and wage inflation.
The revenue of the segment Other remained stable. The number of days for which the icebreaker Botnica was chartered out did not change. The number of days with lower charter rates was somewhat higher but the effect was offset by the indexation of the contractual fees to the Estonian and Canadian consumer price indices.

EBITDA
Adjusted EBITDA for Q3 decreased by EUR 3.8 million year-on-year mostly due to the Passenger harbours segment (EUR -5.5 million) but also the Cargo harbours segment (EUR +1.9 million). Adjusted EBITDA margin decreased from 59.1% to 56.4% whereas in Q3 the margin increased from 60.6% to 62.7%. In 9 months, adjusted EBITDA was EUR 46.3 million, decreasing by EUR 13.1 million compared to the same period last year.

Profit
The profit of Q3 (EUR 13.6 million) fell short of the profit for the comparative period by EUR 4.1 million. Profit for the first 9 months was EUR 22.8 million, which was EUR 13.2 million less year-on-year. Profit decreased more than operating profit because the Group’s equity-accounted associate Green Marine incurred a loss.

Investments
In the first 9 months of 2020, the Group invested EUR 28.9 million, significantly more than in the same period last year (EUR 18.8 million). Investments were mostly related were mostly related to the construction of a cruise terminal, phase 2 of the reconstruction of passenger terminal D, the installation of automated mooring systems and the beginning of the construction of a multi-storey car park at the Old City Harbour. Investments made in the third quarter totalled EUR 11.5 million.

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