The biggest duty free and travel retailer on the Baltic, Tallink Group, saw its restaurant and shop sales fall by -7.6% to €132.1m ($165.4m) in the quarter to September (see table), hit by a passenger decline of -5.8% to 2.56m – and a dearth of Russians in particular.

 

The Estonia-based ferry group has been impeded all year by fewer Russian travellers on its ships. In the third quarter this became even more evident with a -25% collapse in the passenger volume from the Russian market.

 

However, according to a management statement, most of the group’s quarterly decline (see end of story) was due to “a direct one-off effect related to the re-routing of vessels, chartering out Silja Europa, and the Silja Symphony docking”.

 

The latter ship, which plies the key Finland-Sweden route that is core to duty free sales –was out of action for almost two months [in September and October, 41 days in total]. This was for a major refit which included a total retail overhaul ready for the busy winter season. The absence affected traffic on the route which was down by -5.5% in Q3 to 777,727.

 

 

The refreshed vessel Silja Symphony is now back in operation on the Stockholm-Helsinki route with a +50% expanded shopping area, upgraded stores with a more premium offer, new Italian and Sushi restaurants, plus a new children’s playroom called Silja Land.

 

The evolution to include higher-priced products was started in February on sister ship Silja Serenade, which Tallink says is working, despite the Russian tail-off. Commenting on the performance of Silja Serenade, Magnus Skjörshammer (left), Business Development Director for Tallink Duty Free, tells TRBusiness: “The high-end products are moving… we don’t keep products on board that don’t sell. We have continued with them on the Silja Symphony and that is something we would not have done had they not been going in the right direction.”

 

Restaurant and shop sales still make up the biggest component of Tallink Group’s sales but the share in Q3 has dropped to 50% from 52% in the same quarter in 2013. For the first nine months of the year these sales hit €369m, down by -3.5%

 

Q3 GROUP RESULT & CEO CHANGE

The group’s consolidated revenue in the third quarter was €262.7 million, down by -5.7% or €15.7m compared to the same period a year ago. Gross profit of €69.6m dropped even more at -12.8% while Ebitda slumped by -11.8% to €64.0m.

 

From 1 January, CEO and Chairman of the Management Board, Enn Pant (right), is stepping down to become the new Chairman of the Supervisory Board. Chief Financial Officer Janek Stalmeister (left) is expected to replace Pant as CEO and Chairman of the Management Board on the same date.