Tallink’s 2013 on-board sales dip below $700m

By Kevin Rozario |

Tallink Group, which has the world’s biggest duty free and travel retail ferry operation, saw its on-board restaurant and shops sales (including port shops) slide by -2.0% to €507.3m ($696m) in 2013 due to falling passenger numbers (see table below).

 

Traffic fell by -1.6% last year to 9.11m passengers, but on its most lucrative revenue generating route, Finland-Sweden, the Baltic Sea operator was hit hardest with a -8.6% fall in traffic which dipped below 3m (at 2.81m). This was caused by “increased competition and structural changes” says the group.

 

This contrasts with 2012, when Tallink, which operates 18 vessels, managed to increase its overall on-board shop and restaurant sales to €517.5m ($710m), a rise of +6.0%, despite a much smaller rise in passenger traffic of +1.3% to 9.26m.

 

One of the major differences in the two periods is the strength of the rouble which might have affected Russian spending over the year. In 2012 the rouble was stable against the euro, but in 2013 it saw a steady erosion of -11.3%, and it has dropped further with the crisis in Ukraine.

 

NET PROFIT DOWN -23.1%

For Tallink Group as a whole, 2013 unaudited consolidated revenue at €942.0m was slightly lower than the previous year’s €943.9m but gross profit of €190.2m was down by -5.5% which produced net profit of €43.3m, a big decline of -23.1% (see table, bottom).

 

Tallink admits that the overall result “did not meet the management’s expectations”. Commenting further it says: “During the 2013 financial year the group’s operations were affected by an overall weak macroeconomic environment in the region. The Nordic countries continue to experience a noticeable slowdown in their economies and there is an impact to the group’s passengers’ spending behaviour.”

 

In order to drive up revenue generation in 2014, improvements in product development are now being made with an emphasis on retail sales and upgrades to the public areas on selected vessels.

 

TRBusiness recently revealed, exclusively, that at the heart of this move is a fleet-wide tax free rebrand and the shift to a higher end offer on Silja cruise ships, Serenade and Symphony, both on the crucial Finland-Sweden route. The development is designed to attract more passengers, and also encourage them to spend more on luxury brands and products.

 

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