Valdo Kalm: Morning, ladies and gentlemen. Welcome to our webinar. My name is Valdo Kalm, and Andrus Ait is our CFO.
Andrus Ait: Good morning.
Valdo Kalm: As usually, we will describe the results of, in this case, Q3, and also we are adding some comments about nine months. All right. Generally, Q3 for Port of Tallinn Group was quite good due to the increase of revenue by 6.7%, mostly coming from passenger segment and ferry segment. Although there was increase of expenses, we managed to increase also EBITDA, and we also measure our EBITDA margin, what is reached magical 49%.
Valdo Kalm: That is the margin what we had actually before the crisis. Therefore, we are happy with that. Also, profit made increase by 10%. Main events. There was increase in number of passengers, and good news that we got increase of more than 2% from all the directions. The biggest increase came from cruise, about 26%, but also the other directions showed the increase.
Valdo Kalm: We signed the agreement for Botnica in North Sea, started in September, and it goes well. It impacts Q3, but also we see quite good prognosis for Q4. Therefore, that was definitely good. We also signed the agreement for next year, governing almost for 3 months in South Africa region for Botnica, and that, of course, fixes our positive prognosis for this segment.
Valdo Kalm: There, a public discussion of detail plans took place in Q3 and went very well. No big showstoppers. That means that we can now move on with city government for the final fixing of detail plans. We really would like to start as soon as possible, probably in Q1, with real estate development on D area.
Valdo Kalm: We got Best Employer Brand title. There was announcement of the competition for the new chairman of the board role starting from 1 March next year. Now to the segments more precisely. As I mentioned, there was increase of passengers numbers. All in all, revenue increase in this segment almost 9%. That is due to the bigger vessels and indexation. On cargo, we still had decrease coming mainly from liquid bulk.
Valdo Kalm: Positive thing that we still see biggest growth in RoRo, around 4%, and that is our most profitable and biggest segment. In ferry, we have seen increase of revenue. It comes mostly from the indexation, and so in volumes also very stable quarter. Charter days for the Botnica were a little bit lower than last year, but in 9 months, it is more than last year. As I mentioned, passenger volumes increased 2%.
Valdo Kalm: Vessel calls are stable, and if you take 9 months, then we are on a last year's level. Now we hope that Q4 will be slightly better due to the Christmas cruises started last week already. We hope that competition between operators in regular range will also increase the number of passengers. Let us see how we will end the year.
Valdo Kalm: Cargo decrease was 3%, and in 9 months, 4%, mainly coming from liquid bulk. The project-based liquid bulk volumes, and it is very difficult to predict what will come on Q4. Let us see. Shipping volumes on ferry segment very stable in Q3 and also in 9 months.
Valdo Kalm: As we mentioned, Botnica had a little bit smaller charter days in Q4, but in 9 months, some increase. We believe that also Q4 will be successful and we will increase the total charter days by the end of the year. Future outlook. As I mentioned, we still see the growth potential in cruise vessels by the end of the year. We also have the reservation of ship calls for the next year, what is bigger than this year. Therefore, cruise drives the increase on passenger side.
Valdo Kalm: Very important event happened also just recently. In October, we signed new ferry operator agreement for Muuga–Vuosaari route with TT-Line. That is a German-based company, and they planning to start operation in Q1. If everything goes well, even in January, with a quite a big RoPax ship, Eckerö Vironmaa, and we have a free quay available.
Valdo Kalm: We just preparing some other technicalities. If everything goes well, then this new operator start with three calls per day. That means altogether with Eckerö Line Finbo Cargo, there will be six calls per day. That is of course very good for our business, but it is very important even for Estonian exporters. It is really like a bridge between Finland and Estonia. I
Valdo Kalm: t is important mentioning again the charter agreement signed by private operator for South Africa for the next year, 3 months for Botnica secures certain revenues and profits for the next year. All in all, it is important develop our maritime transport corridors.
Valdo Kalm: Just remind you that in Q2, we signed the agreement with Hamburg Port and Lübeck Port. Of course, the biggest aim of this agreement is to increase the capacity or units between Paldiski–Lübeck, between Muuga–Hamburg.
Valdo Kalm: We are still negotiating, and it is ongoing, industrial park campaign in Muuga Industrial Park, and there is one serious negotiation ongoing, but it is a little bit too early to be more concrete. If there will be news, we will announce it. As I mentioned, we are preparing the real estate business start in Old City Harbour. Still, efficiencies are on the table all the time. With that, I would like to give the floor to Andrus.
Andrus Ait: Thank you, Valdo. These are the financial results for Q3 and 9 months period. Q3 was the strongest in terms of financial results in 2026. The main positive effect came from cruise vessel calls, which we had more than last year. Also, the number of passengers increased. Botnica started its second charter work in the middle of September.
Andrus Ait: Also, the indexation of contractor fee of ferry services increased, and sale of electricity increased as well. These were the main positive supporters for the better results. Revenue in Q3 increased by 6.7% up to EUR 33.8 million, and the main effect came from the indexation of ferry service revenues based on the fuel price index.
Andrus Ait: In Q3, first time during this year, the effect from the indexation was positive, so the costs increased, the fuel costs increased less than the indexation was in revenues. Also, the sale of electricity increased because of higher volumes and also because of higher prices, but there were also higher costs on cost side as well. The revenues increased mainly because of more higher number of cruise vessel calls, and actually all the revenue streams increased.
Andrus Ait: This was also positive sign for Q3. Adjusted EBITDA increased by 7% and amounted to EUR 16.6 million. The growth here was EUR 1 million. Operating costs and personnel costs increased, but less than revenues. In operating costs, the main cost items which impacted the cost growth were fuel costs because of higher prices, electricity costs also because of higher prices and higher volumes.
Andrus Ait: We also had some extra costs for waste management, which were connected with higher number of vessel calls, especially cruise vessels. They gave up more waste, and therefore we had higher costs. Also, Botnica started its charter work, and we did some repair works and also rented some technical equipment, so the rental costs also increased to some extent. Adjusted EBITDA margin reached over 49%, which is quite a good number.
Andrus Ait: Operating profit increased by 10% to EUR 10.6 million, and the growth was about EUR 900,000. Also, the depreciation and amortization increased a bit because during the year we have completed some investments. From that, we had some increase for amortization as well. We did not pay any dividends, so we did not have any income tax on dividends in Q3. Profit for the period increased by 11% to EUR 9.5 million.
Andrus Ait: In euros, the growth was EUR 1 million. Net finance costs were stable. We earned less from the deposits. At the same time, the outstanding loan balance was lower, but at the same time, EURIBOR levels increased. All in all, the finance costs were stable. In Q3, we invested EUR 3.3 million. The biggest investments were the quay reconstruction in Old City Harbour. We also improved one quay in Muuga Harbour,
Andrus Ait: where we plan to install the OPS, or onshore power supply, for container ships. In Q3, we also upgraded the video surveillance systems for our ports. On 9-month period, revenue increased by 4%, once again, mainly because of increase in ferry service revenues due to the indexation. Also, sale of electricity impacted that. Botnica was chartered out more, 70 days more than last year during 9 months.
Andrus Ait: From that, we had also extra positive effect on revenues. Rental revenues, of course, were positively impacted by higher number of cruise vessel calls. Adjusted EBITDA decreased by 6.5%. In H1, we had negative impacts from the fuel costs. The indexation of it came mainly from the ferry segment, and the higher costs, they weren't transferred to the revenues in H1 because we have some time lag there for the indexation.
Andrus Ait: In Q1, there were also severe ice conditions, which impacted the fuel consumption of the ferries. That also impacted the costs. After the difficult ice season, we had to make some extra repair works for the ferries and also for Botnica's, so we had some extra costs from that as well.
Andrus Ait: Just a reminder, last year, during the first 9 months, we had also two positive one-off effects. The first one was the insurance indemnity for Botnica's repair works, which we conducted in 2024. This was EUR 900,000. The other one was the sale of land in Muuga Harbour to build the freight station for Rail Baltica there, and this impact was also EUR 900,000.
Andrus Ait: This year, we didn't have those positive effects. Adjusted EBITDA on 9-month period was 45.5%, still over the 45%. Income tax was EUR 5.4 million, which is same as last year. The dividend payout was also in the same amount, EUR 19.2 million. Profit for the period decreased by 17.8% and amounted to EUR 15.5 million.
Andrus Ait: In the first 9 months, we invested EUR 6.8 million, in addition to the investments which I described. On Q3, we also made some dock works for ferries. Also, we had one main engine replacement for the ferry, which was regular work, nothing extraordinary there. We also completed the quay construction in Paldiski South Harbour in Q1, and we continued to invest with the design of the quay terminal in Old City Harbour. Also, we made some IT investments to software and also for hardware.
Andrus Ait: These are the results divided between the segments. In Q3, the revenue increased in three segments out of four, same goes to EBITDA. Revenue increased by 9% in the passenger harbours, mainly because of the rental revenues, which increased because of more cruise ship calls, but also we indexed the tariff rates at the beginning of this year.
Andrus Ait: Also cargo charges in passenger harbours increased as the RoRo increased, this transferred to the EBITDA as well. In cargo harbours, there was a slight decrease in revenues, also in EBITDA. Residues decreased as we had smaller ships. We had less tankers because the liquid bulk volumes decreased, but it was to some extent offset by the sale of electricity, also rental costs, which increased. Rental arenas, which increased.
Andrus Ait: Also EBITDA decreased a bit in Q3 in the cargo harbours. The ferry segment revenue increased, like already noted, because of the indexation of the fuel component mainly. In Q3, the indexation effect was positive, so indexation covered the cost increase, there was actually a positive effect which covered up to some extent the negative impact from the previous quarters. In segment other, revenue was quite stable.
Andrus Ait: Botnica started its second charter work on North Sea this year in the middle of September, EBITDA was more positive than last year. Last year, we made more repair works for Botnica in the summer period. On 9-month period, we see that revenue increased also in three segments. In passenger harbours, the reasons or explanations are similar as in Q3. More cruise ships, more passengers, so this supported the results.
Andrus Ait: In cargo harbours, revenue decreased, but the drop on EBITDA level was higher. Last year, we had one-off positive effect from the sale of land, so therefore EBITDA was more positive in the amount of EUR 500,000 last year. The other negative effect comes from the less vessel calls, less cargo in cargo harbours.
Andrus Ait: The ferry segment revenue increased, but the main positive effect came from Q3, so the results of the H1 of the year were more negative. Like I described already, we made some extra repair works, also there were severe ice conditions in Q1. Botnica in segment other, their revenue increased by EUR 1 million during the first 9 months because we still had 70 days more charter period than last year. But EBITDA was quite stable.
Andrus Ait: There was a small decrease because last year we received insurance indemnity. Mainly due to that, the EBITDA remained stable. On cash flow side, on 9-month, cash from operating activities was EUR 32 million. It decreased mainly because of the payments to the suppliers were higher because of higher costs.
Andrus Ait: Last year, we had also one-off positive effect as we received payment for Botnica's charter work, which the vessel conduct or the job was done in 2024. So, there was extraordinary positive effect last year.
Andrus Ait: Cash used in investing activities was -EUR 2.2 million. We invested almost EUR 7 million, but at the same time, we received some EUR 6 million from EU grant money in connection with the project where we installed the onshore power supply for the cruise vessels in Old City Harbor.
Andrus Ait: Last year, it was positive because there was the effect on deposits. We got EUR 22 million, received EUR 22 million from deposits which we were placed on previous periods. So there was also one of positive effect last year. Free cash flow for the year 2026, 9 months was EUR 13 million.
Andrus Ait: Cash used in financing activities was minus EUR 13 million, which is higher than last year because in July, we had final term for one of our long-term loan agreements, and we made one of bigger loan repayment. Therefore, the number was bigger here. Net cash flow amounted to minus EUR 800,000, and net debt at the end of the period decreased by EUR 3 million because cash and bank accounts decreased less than outstanding loan.
Andrus Ait: Therefore, net debt has decreased. On financial position, cash and bank accounts is similar as at the end of the last year. Fixed assets decreased as depreciation and amortization exceeded the investments for the period. Equity decreased because of dividend payout and profit for the period has been, I think, for the nine months has been lower. Debt has decreased because of loan repayments.
Andrus Ait: It is also important to note that at the end of September this year, the current liabilities or short-term loans, the volume of short-term loans was quite high, over EUR 100 million. This was because we had the final term for our long-term loans and actually bonds. The final date was at the end of October, so we successfully refinanced those bonds. This was the reason why the current liabilities was so high. But for now, it is already normalized.
Andrus Ait: With that, we conclude our presentation. We have some extra slides, like always, about revenue and EBITDA generation. These we will not explain separately. We will make a short break. We have some questions which we got upfront, and those questions we address at first, and then we answer the questions which you will submit throughout the Teams. We will back in couple of minutes.
Valdo Kalm: We are back with Q&As, and the first question sounds like, what are the current volumes of cargo still moving across the Russian border? Are they continue the decline? Already, there is already more than two years there is no export coming from Russia. That means we are not serving export anymore. But it is still some import to Russia of products of food production, what is not under the sanctions, and we are talking about 150,000, 200,000 tons.
Valdo Kalm: We do not see that now it will show the decrease. That means that honestly, no impact is prognosed. Second question, what is planned for real estate development at Old City Harbour by the end of next year, including Terminal A? As we mentioned very briefly, our public observation of detailed plans went very well, and now we try to finalize agreement with the city government.
Valdo Kalm: That means we moving now towards final fixing of our detailed plans. As soon as possible next year, we would like to start with real estate development in D area. It is the area close to the Reidi Street.
Valdo Kalm: There are couple of excellent properties to develop, and we also would like to start reconstruction of A Terminal on the second half of next year. Third question, what is the latest status of lawsuit against former members of the management board? Honestly, there is no news about that.
Andrus Ait: Okay, the next question. Can we expect positive impact in Q4 2026 from the indexation of ferry service revenues? I can say that the main positive effect was in the third quarter. We do not expect such a big effect from the fourth quarter, but still it depends on the fuel prices and also about the number of trips. We can say there might be some positive effect, but not as big as in the third quarter.
Andrus Ait: What is the outlook for the fourth quarter cargo, and what are the management's current expectation regarding next year? We can comment that we do not expect any changes in liquid bulk, so there has been drop, and we do not see that in the fourth quarter it will change. What we see is that it is a seasonal effect that in the fourth quarter we have more dry bulk, especially grain.
Andrus Ait: From that, we expect positive effect. The grain transport started this year later than last year, so there might be some positive effect in the fourth quarter. Regarding the next year, let's say we do our forecast based on the overall economic situation.
Valdo Kalm: What is the current utilization of the new Paldiski quay? In Q3, we had a lot of military traffic, that means classical RoRo ships, and they served by this quay, and we had one onshore What's the word?
Andrus Ait: Wind farm.
Valdo Kalm: Wind farm, yeah. What we served in Q3, and now expecting quite a big project for the Latvian wind farm. If everything goes well, then we see the start on Q4 of that.
Andrus Ait: Okay. Next question regarding the investments. What are the estimated investments for the full year 2026 and 2027? For 2026, we expect about EUR 12 million for investments. Initially, it was higher, about EUR 20 million, but to explain the difference, in the beginning of the year, we expected that the grid connection for the onshore power supply for cruise ships will be paid and invested at once, but actually it is divided between several years.
Andrus Ait: Therefore, the investment for this year remained lower, and also some investments we see that will be cheaper or not as expensive as we expected in the beginning of the year. Regarding the next year, definitely we go on with the onshore power supply investments, and we currently are making our next year prognosis.
Andrus Ait: Definitely the investments will be higher, because we continue to build onshore power supply in Old City Harbour and in Muuga Harbour as well for the container ships. It is too early to say, but I would say that it is more than EUR 20 million for those projects. But it depends how the partners are constructing and those new systems for us. The plan is still in process, and it is not the final number yet. Real estate project. Please, next, Jaak.
Valdo Kalm: Please give some insight of where we are with real estate project. As I mentioned, we are in a final phase to fix the agreement with the city government and to finally confirm the A and D areas. As you remember, we have five areas, but just now we try to fix two of them.
Valdo Kalm: On this D area, we would like to launch real estate development. The model and the timing we will introduce as soon as possible, and we would like to have first revenues from that area next year. Please explain the business plan of reconstruction of terminal A for estimated EUR 30 million.
Valdo Kalm: As we acting on this Old City Harbour as a dominant player, or we basically have to treat all the operators equally, then we have the obligation, if we renovated the D terminal for the Tallink, now we have to treat also equally Eckerö Line and Viking Line. Therefore, there is even obligation to restore the terminal.
Valdo Kalm: Of course, we will see increased revenues, but with this reconstruction, we definitely will redesign our processes, and we will see more efficiency or lower cost. And of course, this old terminal is very heavily already amortized, and use of energy is not very efficient. Therefore, we will see more effect on cost side.
Andrus Ait: Maybe it is important to add that this investment decision has not been made yet, and it does not impact the investments of the 2026. It will be 2028 if the decision will be positive.
Valdo Kalm: Right.
Andrus Ait: Next question regarding the trade receivables. Which project does the EUR 3.8 million of post and Estonian government grants receivable related to, and when do you expect to receive the payment? Actually, this is related to the project where we are constructing the onshore power supply for container ships in Muuga Port, and this is still related with this project.
Andrus Ait: The investments started already in 2024, 2025, and we continued this year, and also will continue next year as well. We expected to receive this amount in the beginning of next year. And the second question regarding the insurance indemnity or insurance claim of EUR 1.1 million regarding the Botnica situation. This claim is related to the same claim which was made after the technical incident in 2024.
Andrus Ait: Last year we received EUR 900,000, but we continued to negotiate with the insurance about the damages and impacts for the vessel. And the other part of the claim is this EUR 1.1 million, and we actually got most of it already in October this year, received it in October this year. Check, do we have any extra questions? It seems that we do not have now. Thank you for attention and see you on next time webinar.
Valdo Kalm: Thank you.
