AS Tallinna Sadam ($TSM1T)

Welcome to our webinar. My name is Valdo Kalm. With me there is Andrus Ait, our CFO. I would like to start then summary from Q1 and the main events. Q1 was quite tough. Revenue remained at the same level, but some volume decrease due to the heavy winter and also many docks on passenger vessels. Also, there was a cost increase, mainly due to the high energy and coal cost. And then in Q1, there was 1 positive influence from last year by one-off insurance payment for Botnica repair works, almost EUR 1 million. But then to the main events. As I mentioned, there was decrease in volumes mainly in the cargo segment to the winter conditions, and we saw the decrease in liquid bulk. And then we had several free docks of passenger vessels. But we also signed agreement to use our ferry Regula until the end of 2028. That means that we have to invest a bit. But all in all, the agreement is good for us. And that means that Regula will be in operation until the end of '28. We finished our new quay in Paldiski South Harbour. And also we got or received use permit. And also, what is more important, we received first ship calls. And here on the slide, you see quite a big vessel carrying the elements of wind farms, and we serve just now via Paldiski and via already this new quay Latvian onshore wind farm. That means that quay is in use already. It's very multifunctional. The ramp is carrying very heavy cargo. Therefore, there are a lot of possibilities, and we already saw first military ships on a quay, and we see increase of that also of military. Positive is that cruise season started very early here already in March. We also got some huge vessels. And overall prognosis for cruise season is very good, some 20% more ships, then we also believe the increase of passengers, at least 20%. Therefore, that definitely supports our passenger volumes. There was also 1 civil court proceeding agreement against former Management Board members. The trends in business segments. As I mentioned, there was decrease in passenger numbers, but more even in vessels due to the 3-ship dock. That was all planned. We need that our operators investing to the ships, and it's quite natural. And now we hope that at least we don't see any big docks in head for the entire year. On cargo, the biggest decrease was in liquid bulk. And at the same time, we managed to have growth in ro-ro. That's now our biggest cargo segment, but shows a positive trend on export/import. We believe that -- we hope that, that will continue, and that's most important because ro-ro is nowadays the far biggest segment. Ferry segment shows very stable numbers and also Botnica under the other segment showed the same number of charter days as last year. Here are the passenger volumes, as we mentioned, and there you see on left -- or right side of the slide, the yearly based numbers. There is -- most important number, of course, is the vessel calls to keep it on a very stable level. That's our aim. Then step-by-step, we increase the passenger numbers. On cargo side, I mentioned, yes, decrease in liquid bulk, increase in ro-ro. And again, yearly basis, we would like to see stable or tiny growth on cargo vessel calls and in cargo volumes. Shipping did -- ferry segment did very stable Q1 and same for Botnica. Here, you see the yearly numbers also. We believe that this year shows better number of utilization rate or charter days. And we signed the first agreement with a Swedish company on the [ North Sea ]. If everything goes well, then Botnica starts in the beginning of June, the first summer job. And there is continuous negotiation with some other summer jobs. Future outlook, very briefly. We believe that we will have also -- we will see a tiny increase of passenger numbers. That's mainly due to the prognosis for the cruise business. As I mentioned, we see quite a good increase of bookings of vessels. And the vessels are bigger and bigger. They carry more passengers. Therefore, we believe in the increase of passenger numbers also. Definitely, it's important to negotiate and try to find new ro-ro or container lines. If that will happen, we'll definitely report that. There are ongoing Q3 negotiations for Muuga and Paldiski ports. And we introduced already Finnish corridor and then on November last year, we signed with Ports of Stockholm Swedish corridor to increase the volumes between Tallinn-Stockholm and Kapellskär-Paldiski. Now we are going to sign a new agreement with Hamburg and Lübeck. There are already vessel calls between our ports, but there are room for increase to introduce better our capabilities. And therefore, we're traveling now in the middle of May to Germany. And in delegation, there are also shipping lines with us. We are -- we believe that there are rooms for increase the capacity, in a sustainable way, of course. As I mentioned, important is to now utilize more multifunctional quay in Paldiski. It's already in use, but we're negotiating also with some other deals to the quay and to the backyard of the quay. If that will happen with bigger volumes, we again will announce about via stock exchange. And we just recently started a new industrial park campaign in Muuga. We got back the area, showed here on a slide, about 20 hectares with excellent quay. There is no need for additional investment. Just we have to find right operator or a constructing company or producer. And this time, this campaign is really international. We also hope that there will be certain interest from Scandinavia. And preparation for the real estate business is ongoing and our plan is now introduce the tender in early autumn for the 2 areas, and we're preparing now for that. And finally, efficiency, efficiency, efficiency. That's what we're working in long term and short term and continuously. I would like to give the floor to Andrus for more precise comments about our results and numbers.

Thank you, Valdo. So these are the financial results of the group for the first quarter. The results were impacted by severe ice conditions, docking works and high energy prices. And in addition to that, last year in the first quarter, we received indemnity payment for icebreaker Botnica. So this also impacted the results or the comparison period. Revenue decreased a bit less than 1% and amounted to EUR 28.2 million. The decrease came mainly from the vessel dues because we had less vessel calls. In cargo harbors the reason was mainly the severe ice conditions and in passenger ports, 3 ships, which are regularly operating in [ Helsinki ] and Stockholm where in docking works, for example, the line ship in Finlandia was off the line more than 3 weeks. So this impacted the vessel calls in passenger harbors. And in connection with that, the number of passengers also decreased. And therefore, we had lower revenue from passenger fees. Cargo charges also decreased because of lower cargo volumes. And the offsetting effect, the revenues came from the sale of electricity because of the cold weather and high electricity prices, the revenue increased. And starting from March this year, we also are implementing new price list for electricity network service. So this also helped to offset the decline in revenues. Adjusted EBITDA decreased by 17% and amounted to EUR 11.6 million. The decline in euros was EUR 2.3 million. And this is -- this can be explained by 3 factors. Firstly, like already mentioned, in the first quarter last year, we received insurance indemnity in the amount of EUR 900,000. So the cost level last year was due to this one-off impact, EUR 900,000 lower. Price conditions caused higher fuel consumption and also the fuel price went up. So this impacted the fuel costs in ferry segment. And there were -- the fuel costs were higher about EUR 800,000. And also the cost of electricity increased by EUR 0.5 million. So therefore, these were the main cost items which impacted the operating costs and also EBITDA. Adjusted EBITDA margin declined by 8 percentage points down to 41%. First quarter, we didn't pay any dividends. Therefore, we didn't have any income tax dividend payout we will make in the second quarter in May. The net financial costs decreased because the outstanding amount of loan decreased, and also the EBITDA level was lower this year. And profit for the period decreased by 1/3 and amounted to EUR 4.6 million. First quarter, we invested EUR 1.3 million. We completed the construction of the multifunctional quay in South Harbour. This was the main investment project. [ The quay itself got ] use permit in February. So in the first months, we made the final investment there. And we also bought some new equipment for the ferries. Moving on with the results divided by the segments. We see that revenue decreased in the cargo harbors and passenger harbors. Ferry harbors, there was some increase due to the indexation. And in segment other revenue was stable. The passenger harbor revenue was impacted by lower number of vessel calls and passenger numbers. Actually, the cargo case in passenger harbors increased because of increase in road, which is the main cargo type for the passengers. On EBITDA level in passenger harbors, there was a decline because of increase in operating costs. We made more repair works this year and also there was increase in salaries of personnel expenses. In cargo harbors, there were also impact from the less vessel calls and cargo charges decreased because we had less cargo, especially the liquid bulk decreased. And on EBITDA level, the decline was lower than in revenues because we made less repair works in the cargo. In the ferry segment, revenue was quite stable, small increase and decline on EBITDA level can be explained by higher fuel costs mainly and also the personnel expenses were a bit higher because we had to bring the Regula on the route because of ice conditions. And usually for Regula in winter period, we have smaller crew. This year had to hire the full crew there and this was the explanation for the higher personnel expenses. And in the second other, the EBITDA was impacted by the indemnity -- insurance indemnity last year, which decreased versus the level of 2025. Other costs were quite similar. And Botnica costs aren't impacted by higher fuel costs or consumption because the icebreaker was chartered out for the full quarter and the fuel costs are fully covered by charter or by the station. On cash flow side, cash from operating activities decreased because of lower revenues and higher costs. We also paid repayment for our client -- we returned actually the advance payment and last year was also impacted by the insurance indemnity here, which was EUR 100,000. Cash used in investing activities was positive almost EUR 1 million. To explain that this year, we received EU grant money in the amount of more than EUR 5 million. Last year, it was EUR 2.6 million. And this grant money we got this year was in connection with OPS or onshore power supply project here in Old City Harbour. And we also invested less than last year in the first quarter. Free cash flow was EUR 12.9 million. Cash used in financing activities was lower because Euribor levels were lower and the outstanding loan was also lower. Due to that we paid less interest. Net cash flow was EUR 11 million and net debt at the end of the period was EUR 130 million and the decline here was more than EUR 19 million. We had more cash on bank accounts and also the level of outstanding loans has decreased compared to the first quarter last year. And in financial position we see that compared to the year-end period, cash and bank accounts has increased because of the positive net cash flow. Noncurrent assets decreased because the amortization exceeded the investments in the first quarter and equity was impacted by the profit of the period. Other liabilities increased because of the -- that we received the EU grant money and debt decreased because of the loan repayments in the first quarter. So this is all from our side. As always, we have also some extra slides about revenue and EBITDA generation. Those slides we will comment separately and you can submit questions via Teams. We have also some questions present upfront. So these questions we address at first, and we are back in a couple of minutes to answer the questions. See you soon.

We are back with our answers the first question looks as follows. Updates on leasing success at Muuga and Paldiski industrial park. As I mentioned, we just started with a new international campaign in Muuga. But from the previous more local campaign, we got one very interesting partner. Negotiations are ongoing, but no contracts yet. And same applies for Paldiski. Definitely, we're already working on a new quay and on the backyard with onshore wind parks in Latvia, but at the same time, we're negotiating already new deals. Second question, the current status of MPG AgroProduction campaign. Yes, that's basically the same area as I described. That's the 20 hectares of backyard of quay, and that's the campaign what we just started. Therefore, any results yet. Any progress on securing new lines of agreement for the Paldiski South Harbour, new quay. Yes. As again, I mentioned, there are also ongoing discussions with shipping lines. And sometimes the shipping clients are interconnected for the bigger project, therefore there are a couple of negotiations ongoing. Definitely, we would like to and we have to utilize this new investment and the very good conditions what we have on this multifunctional quay in Paldiski. What about status in the JetGas LNG project in Muuga? Good news is that they or JetGas got the license or permission to build the terminal. If everything goes well, they will start this year. There is demand on the market for BioLNG. That's -- no doubt on the industry side, but also from shipping company. Therefore, we are quite positive they will start the investment and there is a market for the LNG.

Next question regarding the drop in lease income. We can explain it to the fact that the drop was caused mainly because of the fact that we got back the land -- the same land from the Muuga AgroProduction where we arranged a new competition or tender. And last year, we recorded this income in revenues and immediately estimated it like uncollectible. So there wasn't any impact on EBITDA level. But this year, we got back the land and don't see any revenue from that, and we don't have also any write-offs as well. So on EBITDA level, this is 0 impact.

What are the plans for increasing cargo volumes in the future? Definitely, our cargo volumes are independent of Estonian export/import that means the global economy situation. But we see -- at least already, we have seen in March increase of ro-ro. That means that we see the small increase of Estonian export. That's definitely a positive trend. And we're working heavily with corridors. As I mentioned, we are going to a new corridor agreement with Lübeck and Hamburg ports, plus we're working with shipping lines. That's what we can do -- and of course, that's not only good for the port of Tallinn, but also for the Estonian economy to introduce more export possibilities and export logistic possibilities and increases the competition among them.

Next question regarding the Botnica charter calendar this year. We can say that the first summer charter project agreement we already signed and if everything goes well, the charter work starts in June this year and lasts up to 26 days. And there are some projects under negotiation currently. So we definitely aim to the level of 2025 or even more. So it was like 220 charter days or more for the full year. So this is our target currently, and we're working on it. Next question regarding the real estate development in Old City Harbour and about the cash flows. In the 2nd of April this year, the City Council adopted the detailed plans for the D terminal surrounding area and Terminal A area. So during the summer, the city government should arrange the public state. And after that, they are probably at the beginning of our autumn, ready to impose -- finally impose the development plans for those 2 areas. And after that, we plan to sum up with the tenders. So it means that positive cash flow should be in coming years, not in 2026.

Are there any new developments regarding Kazakh grain? Yes, there was one important event. The big delegation -- high-level delegation visited Muuga Harbour. There was also president of the company, it's the state-owned company from Kazakh with whom we signed the agreement and they studied the possibilities of our grain terminal and the port, and I would say it went very successfully, but no cargo yet.

Now questions from Teams. Are your income or yield expectations from new Paldiski now lower than during original investment decision? No, the expectations and the target level are similar as in initial projects. Would adjusted EBITDA be down also in quarter 2 year-on-year in the ferry segment due to the fuel costs? Actually not, because the indexation model in this contract foresees that the revenues are indexed based on the data of previous quarter. So in the second quarter, there should be some indexation already taken into account. So the revenues also are increasing and -- because we don't have any extra consumption, there won't be any impact from the fuel in the second quarter in case the fuel price remains stable.

Would it be possible to get an update on the planned investment for '26 and also the expected positive government contribution to the investment? Our expected investment level is for this year, EUR 20 million, EUR 25 million altogether. And of course, there are always a possibility to get some [ yield ] money, but not governmental support. Does Botnica have any alternative contracts for autumn '26? As Andrus already mentioned, there are some 4, 5 negotiation project in a pipeline. We believe that this year will be a longer period for Botnica as last year. That means we are quite positive to gain some additional summer work or autumn work for the Botnica.

Have you already seen the growth in cargo volumes in April, May this year?

Yes. As I mentioned, I can only say that we see some positive trends in ro-ro. But yes, it's a little bit too early to comment other flows.

There was a question about fuel cost compensation. This one we already commented. So I updated the questions. So it seems that all the questions we addressed. So thank you for the participation and see you next time.

Thank you for listening and for your interest. Goodbye.