2023 Newsletter week 46

Outlook firmed up by solid Q3, 2023

• Q3 EBITDA of DKK 1.6bn was ahead of expectations.
• Passengers: strong high season.
• Freight: performance as expected below last year.
• Revenue decreased 2% to DKK 7.2bn
• Cash flow further improved.
• EBITDA outlook firmed up to DKK 4.9-5.2bn (DKK 4.8-5.2bn).

“We have firmed up our outlook on the back of a solid quarter, not least a very good passenger result. Freight markets are currently challenging, and we continue to adapt our ferry and road capacity to optimise utilisation.”

Torben Carlsen, CEO

Key freight outlook assumptions for 2023:

• Q4 Freight Ferry Volumes: Expected to be on par with the volumes from the previous year.
• Logistics Activity Levels: Anticipated to be below the levels seen in the previous year.
• 2023 Q4 Passenger Volumes: Expected to be higher compared to the same period in the previous year.
• Revenue Outlook: Overall Group revenue expected to remain at around the same level as 2022. Higher passenger and logistics revenue offset by lower revenue primarily from bunker surcharges.
• Earnings Outlook: The Group’s EBITDA for 2023 is expected to be within a range of DKK 4.9-5.2 billion. This is a slight adjustment from the previous range of DKK 4.8-5.2 billion provided earlier. In 2022, the EBITDA was DKK 5.0 billion.

The improved outlook is attributed to better than expected earnings in the Ferry Division, while the Logistics Division faces more challenging market conditions, leading to a reduced outlook in that segment.

“Every Minute Counts”

Continued improvements in the quarter ensured that short-term emission reductions targeted towards 2030 continues to be on track. Ferry improvements were driven by various incremental vessel upgrades and the schedule optimisation program “Every Minute Counts” focused on reducing turnaround time in port terminals, and updated schedules enabling lower speed and reduced fuel consumption.

Ferry CO2 emissions per GT nautical mile were in Q3 2023 reduced 4% compared to Q3 2022 across the route network.

Ferry – freight:

• Total volumes in October 2023 were 1.4% below 2022.
• North Sea volumes were just below 2022 as robust automotive volumes were offset by lower volumes between primarily Sweden and the UK.
• Mediterranean volumes were below 2022 as demand currently is stagnating in both Europe and Türkiye.
• Channel volumes were above 2022 driven by the Dover Strait routes.
• Baltic Sea volumes were below 2022 due to lower activity levels, not least in the Swedish construction sector, and a continued negative impact from the war in Ukraine.
• For the last twelve months 2023-22, the total transported freight lane metres decreased 9.9% to 38.6m from 42.8m in 2022-21.

Ferry – passenger:

• The number of passengers increased 4.0% driven by more Channel passengers. The number of cars increased 1.6%.
• The total number of passengers increased 29% to 4.5m for the last twelve months, 2023-22, from 3.5m in 2022-21.

In October 2023 AS Tallink Grupp transported:

• 470,702 passengers = +3.6% compared to October 2022
• 27,137 cargo units = -17.7%
• 63,151 passenger vehicles = +1.5%

Italy experienced robust growth in ferry traffic during the summer of 2023, according to official data from the Ministry of Infrastructure and Transport. The ferry sector witnessed a noteworthy surge in the number of passengers transported, as revealed by the statistics for the July-August 2023 period.

Comparing this two-month interval with the same period in 2022, there was a remarkable 7% increase in ferry passengers. The growth becomes even more apparent when juxtaposed with the figures from July-August 2019, with a substantial 22% rise. Looking at the broader picture, the January-August 2023 period showcased a 25% surge in ferry passenger traffic compared to the same period in 2019.

This positive trend in 2023 follows a challenging period in 2020, marked by a 29% drop in ferry passenger numbers. The sector showed signs of recovery in 2021, narrowing the gap to -10%, and continued the upward trajectory in 2022 with a notable 15% increase.

The buoyant growth in ferry traffic during the summer of 2023 not only signifies a rebound from the setbacks of 2020 but also demonstrates the resilience and vitality of Italy’s maritime transportation sector. The significant year-over-year and pre-pandemic comparisons underscore the sector’s ability to adapt and thrive in a dynamic environment.