Viking Line Abp                       BUSINESS REVIEW                        24.4.2025, 9.00 AM

A quarter characterized by ship dockings and a challenging market environment

JANUARY-MARCH 2025 

(compared to January-March 2024) 

• Sales amounted to EUR 87.3 M (EUR 93.2 M). 
• Other operating revenue was EUR 0.4 Meur (EUR 0.4 M). 
• Operating income totalled EUR -18.0 M (EUR -10.4 M). 
• Net financial items were EUR -4.0 M (EUR -3.8 M). 
• Income before taxes totalled EUR -22.0 M (EUR -14.2 M). 
• Income after taxes was EUR -22.1 M (EUR -14,3 M).
• Investments mainly in Gabriella and Viking XPRS totalled EUR 9.0 M (EUR 10.2 M mainly in Viking Cinderella and Birka Gotland).

Significant uncertainty prevails as a result of the economic downturn in our traffic area in recent years, which has negatively affected customer consumption patterns. Uncertainty is also contributed by the current geopolitical situation and its potential impact mainly on energy prices. This uncertainty makes it difficult to predict passenger-related market developments. The Board assesses that the result before taxes for 2025 will be in line with 2024, which is the same conclusion as at the latest reporting occasion.

COMMENTS FROM PRESIDENT AND CEO JAN HANSES

During the first quarter of the year, we achieved a result that is in line with our expectations, but weaker than the previous year. The main reason for this is that we docked two vessels during the period. Demand in our markets remains somewhat weak and is reflected in passenger volumes, although on-board consumption is slightly stronger than last year. The weak economic development in our service area leads to continued cautiousness among consumers.

We expect improved demand during the second quarter, although this improvement may be shifted towards the latter part of the quarter. The strengthening of the Swedish krona at the end of March improves our conditions in the Swedish market.

During the quarter, Gabriella and Viking XPRS were docked. Gabriella's docking was of a technical nature, while Viking XPRS's public areas have been refurbished in combination with a rebuild of the vessel's shop area. Our joint venture company, Gotland Alandia Cruises, is affected by the same market conditions that apply to our other traffic, and the result has not yet fully met our expectations.

From January, the result is also burdened by increased fairway fees in Finland as a result of the halving of the fees that was carried out in connection with the implementation of the so-called sulfur directive being reversed. Furthermore, from the beginning of the year, increased ETS fees are also levied, which now correspond to 70 percent of a fully implemented emission trading system. Our operations are currently greatly affected by upcoming environmental standards, and we are subjected to a cost burden that in the medium term can only be partially mitigated through continued work with energy efficiency. The availability of alternative fuels for shipping remains poor.

In summary, I can state that the first quarter of 2025 has been characterized by a relatively heavy docking program and a challenging market situation, where we hope for a change for the upcoming high season.

I would like to extend a warm thank you to our customers and partners for their trust and good cooperation. A big thank you also goes to our staff who have contributed to achieving record-high customer satisfaction scores.

SUMMARY OF KEY FIGURES

SERVICE AND MARKET

During the report period, the Viking Line group provided passenger and cargo services using five wholly-owned vessels in the northern Baltic Sea and Gulf of Finland during the year.

Gabriella was docked during the period January 1 to 18. Viking XPRS was docked during the period January 18 to February 6. From January 21 to February 6, she was replaced by Viking Cinderella on the Helsinki-Tallinn route, which then returned to her regular traffic on the Helsinki-Mariehamn-Stockholm route. Birka Gotland, which Viking Line owns together with Gotlandsbolaget, had a planned traffic break during the period January 6 to 15.

During the comparison period, March 20, 2024, the jointly owned vessel Birka Gotland began its cruise traffic from Stockholm. Before the start of traffic, a major docking and upgrading of the vessel was carried out. During the comparison period, Viking Cinderella was also docked, after which she was removed from the Swedish ship register and entered into the Åland ship register.

The number of passengers on the group's wholly owned vessels amounted to 767,353 (871,828) during the reporting period. The group had a total market share within the traffic area of approximately 31.2% (34.6%). The number of passengers on Birka Gotland amounted to 108,359 (14,975 for the period March 20-31, 2024).

Passenger volume decreased compared to the corresponding period of the previous year, which is largely related to the occurrence of Easter, which took place in March last year and takes place in April this year. In addition, extensive traffic deviations occurred due to vessel docking, which causes comparison-distorting effects during the period.

Demand development during the first quarter was weak compared to the previous year. Passenger volumes between Finland and Sweden decreased, and the market between Finland and Estonia also saw a decline. Viking Line's market share in traffic between Finland and Sweden increased, mainly thanks to Viking Cinderella being put into traffic between Helsinki, Mariehamn, and Stockholm. In traffic between Finland and Estonia, the market share decreased slightly, which was due to Viking XPRS being docked for a period.

The group's total cargo volumes amounted to 36,352 cargo units (32,993). The group's cargo market share was estimated at 20.5% (17.4%). Viking Line's focus on long-term business relationships, traffic structure, and the implementation of the green corridor for cargo units and trade goods between Finland and Sweden has resulted in a very positive volume outcome despite an otherwise declining market. The persistent geopolitical and political uncertainty has led to the expected growth not materializing in the international transport market within our market area. The decreased transport demand is a direct result of this uncertainty and the lack of clear long-term prospects in international trade between countries.

The market share for passenger cars was estimated at approximately 26.0% (29.9%).

The recent increase in geopolitical concern creates uncertainties about demand development in the near future for both the passenger and cargo market.

SALES AND EARNINGS FOR JANUARY - MARCH 2025

Consolidated sales decreased by 6.3% to EUR 87.3 M during the period January 1 - March 31, 2025 (EUR 93.2 M January 1 - March 31, 2024). Operating income amounted to EUR -18.0 M (EUR -10.4 M). Consolidated income before tax amounted to EUR -22.0 M (EUR -14.2 M).

The deterioration compared to 2024 is mainly due to reduced demand in our markets and the docking of two vessels during the period, which negatively affected our capacity and revenue. The results for the beginning of the year are weak, reflecting the challenges we face. Despite this, we see improved demand during the second quarter, especially towards the end of the period, which may contribute to positive development going forward. Additionally, Easter fell in the second quarter of 2025 compared to the first quarter of 2024.

Passenger-related revenue decreased by 8.8% to EUR 72.7 M (EUR 79.7 M), while cargo sales increased by 11.7% to EUR 14.2 M (EUR 12.7 M), and other operating revenue was EUR 0.5 M (EUR 0.8 M). The sales contribution was EUR 68.8 M (EUR 71.7 M).

Operating expenses increased by 6.0% to EUR 79.6 M (EUR 75.1 M), of which the costs for emission allowances were EUR 1.4 M (EUR 1.0 M). Salary and other employment benefit expenses increased by 2.6% or EUR 0.7 M, with the majority of the increase due to Viking Line staffing Birka Gotland with service personnel. Other operating costs increased by 8.1% or EUR 3.8 M. Increased costs for emission allowances, higher fairway fees, and repair and maintenance costs during dockings account for a large part of the increase. Other operating expenses also include a provision for repayment of traffic support received during the pandemic years of EUR 1.1 M.
 

INVESTMENTS AND FINANCING

The group's investments for the period January 1 to March 31, 2025, amounted to EUR 9.0 M (EUR 10.2 M). The group's total investments represented 10.3% of sales (10.9%). The majority of investments can be attributed to the dockings of Gabriella and Viking XPRS, which were extensive. The comparison year's investments mainly consisted of investments in connection with the dockings of Viking Cinderella and the jointly owned vessel Birka Gotland.

The group's long-term interest-bearing liabilities amounted to EUR 120.0 M on March 31, 2025 (EUR 141.1 M). It is noteworthy that the group's loans for financing Viking Grace were fully repaid in January 2025.

The debt/equity ratio was 52.5% compared to 50.1% the previous year.

The Group's cash and cash equivalents amounted to EUR 26.0 M at the end of March (EUR 65.7 M). Unutilized credit lines in the Group totalled EUR 22.1 M (EUR 0.1 M).

Net cash flow from operating activities amounted to EUR -10.0 M (EUR 1.3 M). Net cash flow from investing activities was EUR -9.0 M (EUR -10.1 M), and net cash flow from financing activities amounted to EUR -10.8 M (EUR -10.8 M).

The group's loan agreements contain market-based loan covenants. The financial covenants in the loan agreements consist of minimum requirements for liquid assets and solvency, as well as a maximum level of the group's total financial net debt in relation to EBITDA.

The dividend restriction that exists in one of the group's loan agreements remains in effect if the group's indebtedness in relation to EBITDA exceeds the ratio of 5.0. The group's indebtedness in relation to EBITDA is below the ratio of 5.0, therefore the dividend restriction is not in effect.

Future cash flows related to financial liabilities on March 31, 2025:

IMPAIRMENT TESTING

The reported values for intangible and tangible assets are regularly tested to detect any external or internal indications of impairment needs. If such indications are observed for any asset item, its recoverable value is determined. One of the most important areas involving assessments is the valuation of the group's vessels.

Management has also assessed that there is no need for impairment for the group's other long-term assets.

ORGANIZATION AND PERSONNEL

The average number of employees converted to full-time positions in the Group was 2,258 (2,149), of which in the parent company 1,852 (1,680). The number of land-based personnel was 444 (454) and shipboard personnel 1,815 (1,694).

277 people (81) employed in one of Viking Line Abp's subsidiaries have been rented out to the associated company Gotland Alandia Cruises AB, which operates cruise traffic with the vessel Birka Gotland during the period. The personnel rented out by Viking Line have mainly been service personnel.

During the comparison period, Viking Cinderella was reflagged from Swedish to Finnish flag.

RISK FACTORS

Viking Line's operations are exposed to risks of various kinds, with varying scope and impact on operations, financial results, and the company's ability to meet certain social and environmental goals. The relevant risks have been classified into four categories: strategic, operational, damage, and financial risks. During the fiscal year 2025, Viking Line is working to expand the classification with a category for sustainability risks. The risks remain unchanged since the annual report was published.

The company's interest-bearing liabilities amounted to EUR 141.8 M as of March 31, 2025, of which 92.2% have a variable interest rate. The total variable interest rate consists of the market interest rate and a company-specific margin. Fluctuating interest rates have an impact on the company's financing costs and can affect the costs of financing in the future.

Regarding the review of the traffic support that passenger ship companies that operated in Finland received during the pandemic years 2020-2022, Viking Line has since the annual report received information that some form of repayment will be required. Viking Line has reserved EUR 1.1 M for this purpose.

OUTLOOK FOR THE FINANCIAL YEAR 2025

Significant uncertainty prevails as a result of the economic downturn in our traffic area in recent years, which has negatively affected customer consumption patterns. Uncertainty is also contributed by the current geopolitical situation and its potential impact mainly on energy prices. This uncertainty makes it difficult to predict passenger-related market developments. The Board assesses that the result before taxes for 2025 will be in line with 2024, which is the same conclusion as at the latest reporting occasion.

EVENTS AFTER THE BALANCE SHEET DATE

To somewhat counteract the risk of increased bunker prices, the group has entered into fixed price agreements regarding parts of MDO consumption for May-December 2025 after March 31, 2025.

Mariehamn, April 23, 2025

VIKING LINE ABP



Jan Hanses
President and CEO

Financial information:

The management's Business Review was prepared in accordance with IFRS accounting and valuation principles. The accounting and valuation principles applied are the same as for the year-end financial statements for 2024. The figures have not been audited.

CONSOLIDATED INCOME STATEMENT BY QUARTER

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME BY QUARTER

KEY METRICS

Equity per share = Equity attributable to parent company shareholders / Number of shares.

Equity/assets ratio, % = (Equity including minority interest) / (Total assets - advances received).

When rounding off items to the nearest EUR 1,000,000, rounding-off differences of EUR +/- 0.1 M may occur.

This Business Review has been partially translated by artificial intelligence.