AS Tallinna Sadam unaudited financial results for Q4 and 2023

In 2023, Tallinna Sadam earned 117 million euros in revenue (-4%) and 16 million euros in profit (-38%). Adjusted EBITDA was 49 million euros (-12%) and investments increased to 21 million euros (+50%).

Last year's results were most affected by the continuing decline in the cargo volumes of Tallinna Sadam (-29 %), due to the Russian-Ukrainian war and the general economic downturn. The number of passengers increased to 8 million passengers (13%) and the growth was mainly on regular lines, while the number of cruise ship visits fell (-45%) as the attractiveness of the region has decreased due to geopolitical risk and also due to the increase in costs related to environmental requirements. The rise in interest rates increased interest expense despite the reduction in debt, so net profit fell more than operating profit and EBITDA.


Valdo Kalm, chairman of the management board of Tallinna Sadam, states that times are difficult, and we have moved from one crisis to another, but the company continues to earn a decent profit. Different business areas balance each other, making the group as a whole resistant to the risks of the external environment, which is why we are still ready to pay dividends and at the same time continue with investments. "At the moment, there is a strong focus on cost savings while preparing and launching new growth projects such as offshore wind farms quay and real estate development. As an infrastructure company, we must be ready to invest during the economic downturn, to be ready to offer the required amount of service and grow during the new hightide," said Kalm.

Considering the company's continued strong cash flow and dividend policy, the management board proposes to pay a dividend to shareholders for 2023 in the same amount as the previous year, i.e. 0.073 euros per share.

The management board of Tallinna Sadam will present the group's financial results on February 28 in webinars, including a webinar in Estonian at 10:00 a.m. (EET) (link to Estonian-language seminar) and a seminar in English at 11:00 a.m. (EET) (link to English-language seminar).

Main financial indicators (million EUR):

Major events in Q4:

• Amendment to construction contract for quay to serve offshore wind farms in Paldiski South Harbour (increase in price and extension of term date)
• Agreement with Estonian Stockpiling Agency on operating LNG quay in Pakrineeme harbour
• Bankruptcy proceedings against the client of Tallinna Sadam MPG AgroProduction OÜ and initiation of its reorganisation
• Selecting the winner of the architectural design competition for passenger terminal A
• Signing of memorandum of understanding on Green Corridor between Estonia and Finland
• Tallinna Sadam Investor Day at the cruise terminal
• Extension of contract of chairman of the management board until 28.02.2027
• Extension of contract of CEO of the subsidiary TS Laevad until 04.01.2027.

Revenue
Tallinna Sadam ended 2023 with consolidated revenue of EUR 116.6 million, EUR 5.1 million (–4.2%) less than a year earlier. The decline is mainly attributable to lower revenue from vessel dues, electricity sales and cargo charges. In terms of revenue streams, the strongest rise was in ferry service revenue (+5%), charter fees revenue (the icebreaker Botnica; +13%) and passenger fees revenue (+12%). Vessel dues revenue decreased the most by EUR 5.8 million (–16%) to EUR 31.4 million due to fewer calls by tankers and cruise ships. In segment terms, revenue grew in 2023 in the Ferry segment and the segment Other, but the growth could not offset the revenue decline in the Passenger harbours and the Cargo harbours segments.
In the fourth quarter, revenue decreased by 0.8%. The decline in revenue is primarily attributable to lower revenue from electricity sales, cargo charges and vessel dues. Revenue from electricity sales (–32%) declined due to a lower electricity price and a decrease in consumption in the Cargo harbours segment.
The revenue of the Passenger harbours segment decreased by 0.9% because revenue from vessel dues, other services, cargo charges and electricity sales declined. Vessel dues decreased due to fewer cruise ship calls. This in combination with the leaving of the vessel which accommodated Ukrainian war refugees in the previous summer reduced revenue from other services. Cargo charges declined due to the overall economic slowdown. Growth in passenger numbers increased passenger fees revenue. In the fourth quarter, the revenue of the Passenger harbours segment grew by EUR 0.6 million (+8%) due to higher revenue from vessel dues and passenger fees.
More than a half of the revenue decrease (-21%) in the Cargo harbours segment was related to lower revenue from vessel dues. There were fewer calls by cargo vessels and the vessels that called were smaller on average. Although total vessel calls decreased, on certain routes the number of vessel calls increased, which meant higher discounts and lower vessel dues per call. The decline in cargo throughput reduced cargo charges revenue. Cargo charges revenue decreased less than cargo throughput, because the decline was sharper for cargo with lower charge rates and revenue from contractual penalties increased. The decrease in electricity sales revenue was attributable to a lower electricity price and smaller consumption. The fourth-quarter revenue of the Cargo harbours segment declined by EUR 1.9 million (–19%), because port dues revenue decreased by EUR 1.0 million, electricity sales revenue by EUR 0.6 million and cargo charges revenue by EUR 0.3 million.
The revenue of the Ferry segment grew due to the indexation of the contractual fee rates and a higher number of trips made (+0.6%). Revenue for the fourth quarter grew by EUR 0.2 million (+2%).
The revenue of the segment Other increased, although the summer charter of the icebreaker Botnica was shorter than a year earlier. Charter fee revenue for the icebreaking season grew and three summer charter projects increased revenue despite the drop in charter days. The fourth-quarter revenue of the segment grew by EUR 0.9 million (+49%) as the number of charter days increased (+44%). In the fourth quarter, the revenue from Botnica grew due to the increase in average charter fee rate for the non-icebreaking season.

EBITDA
Adjusted EBITDA decreased by EUR 6.6 million (–12%) to EUR 49.2 million due to a decrease in the Cargo harbours segment (–EUR 5.6 million) and the segment Other (the icebreaker Botnica). The adjusted EBITDA margin declined from 45.9% to 42.2%. Adjusted EBITDA for the fourth quarter increased by EUR 1.4 million (+16%), with the largest contribution from the Ferry segment through growth in vessel calls and passenger numbers and from the segment Other, where Botnica had more charter days in the project in Canada.

Profit
The Group's net profit for 2023 amounted to EUR 15.9 million, which is EUR 9.7 million (–38%) less than a year earlier. Fourth-quarter profit was EUR 2.9 million (+EUR 1.2 million, +75%).

Investments
In 2023, the Group invested EUR 20.7 million, EUR 6.9 million (+50%) more than a year earlier. Investments in harbour infrastructure assets, acquisition of non-current assets and improvements to existing infrastructure totalled EUR 16.6 million. Investments in the icebreaker Botnica amounted to EUR 3.0 million and investments in the Ferry segment to EUR 1.1 million.
The largest investment in 2023 was made in launching the construction of a new quay to serve offshore wind farms in Paldiski South Harbour. At Muuga Harbour, the largest investments were related to improving the conditions of ro-ro traffic, the design and construction of a new workshop and the construction of a sewerage system for the quays. In Old City Harbour, investments were made in the marina quay next to the new tramway and ferry traffic improvement (the ramp of berth 5). Major works on the icebreaker Botnica included dry docking and ice class upgrade. Significant investments in the Ferry segment were the replacement of the cooling systems of the vessels' main engines and acquisition of critical equipment to ensure smooth operation of ferry traffic.
Investments of the fourth quarter amounted to EUR 9.8 million, EUR 8.4 million more than a year earlier. The high volume of investments in the fourth quarter was driven by the construction of the new quay in Paldiski.

Interim condensed consolidated statement of financial position:

* Based on the results of an additional analysis carried out in 2023, the Group concluded that properties (land plots) not is use, which used to be accounted for as items of property, plant and equipment, meet the definition of investment property and ought to be classified as such. Accordingly, the properties were reclassified to investment properties in 2023 and the opening balances were restated to ensure comparability.

Interim condensed consolidated income statement

Condensed Consolidated Statement of Cash Flows:

Tallinna Sadam is one of the largest cargo- and passenger port complexes in the Baltic Sea region. In addition to passenger and freight services, Tallinna Sadam group also operates in shipping business via its subsidiaries – OÜ TS Laevad provides ferry services between the Estonian mainland and the largest islands, and OÜ TS Shipping charters its multifunctional vessel Botnica for icebreaking and offshore services in Estonia and projects abroad. Tallinna Sadam group is also a shareholder of an associate AS Green Marine, which provides waste management services.

Additional information:

Marju Zirel
Head of Investor Relations
Tel. +372 53 42 6591
E-mail: [email protected]

Attachments

• Tallinna Sadam interim report Q4 2023 ENG
• Presentation of Q4 2023 webinar ENG
• Tallinna-Sadam-Financial-Results-Q4-2023-Data