Good afternoon, and welcome to everyone joining us for today's investor webinar, where we will present Tallink's financial results for the fourth quarter and full year of 2025. My name is Anneli Simm, and I'm the Investor Relations Manager at Tallink. Before we move to the presentation slides, I will first give the floor to Paavo Nõgene, Chairman of the Management Board, who will provide a brief overview of the year and the key highlights. After Paavo's introductory remarks, Harri Hanschmidt and Margus Schults, Members of the Management Board, will walk you through the detailed presentation, covering our operations, the Q4 results, and the full year performance. Following their presentation, we will open the floor for questions.
We have already received a number of questions in advance, but please feel free to submit additional questions using the Q&A function during the webinar. It would be also helpful if you could include your name when submitting your question. With that, I will now hand over to Paavo.
Dear webinar listeners, 2025 was a difficult year for Tallink, as the economic environments in which we operate have not shown significant recovery from the economic recession. There is still war going on in Europe, and the economy of one of our main markets, Finland, has not started to grow or is showing very first modest signs of a possible recovery. At the beginning of last year, we had lay up up to four ships, which resulted in a deep loss in the first quarter of 2025, which continued to weigh on the results for the entire year. Overall, we ended the year with an EBITDA of EUR 130 million and net profit of EUR 17 million. Despite the difficult year, Tallink considers it's important that Tallink's image for the investors is established as a stable dividend stock for shareholders.
Therefore, the Management Board, in coordination with the Group Supervisory Board, proposes to the General Meeting of the Shareholders to pay a dividend of EUR 0.06 per share. However, my colleagues will provide now a more detailed overview of the results, and I will be happy to answer questions later.
Thank you, Anneli, and thank you, Paavo. Good afternoon from my side, and also welcome to the fourth quarter and full year 2025 results webinar. Today, we will walk you through the key financial results and operational developments for the company, following what has been, as Paavo already said, a challenging but also strategically important year. I will get the presentation started, and later, I will give word to our CFO, Margus Schults, as well. For the new listeners, we also always show the slide where we have the Tallink Grupp in a glance as at the end of 2025. Tallink Grupp remains the leading European provider of leisure and business travel and sea transportation services in the Baltic Sea region.
We have strong brands, Tallink brand, Silja brand, and a club, a growing Club One membership program with 3.5 million members. Overall, the Q3 picture is exactly the same as Q4. We have 11 vessels, 5 regular routes, 3 vessels are in charter, 4 hotels, 20 Burger King restaurants throughout the Baltics, and around 4,800 employees in Estonia, Finland, Germany, Sweden, Latvia, and Lithuania. When we look at the fleet composition and deployment here, the picture is also same. Our fleet consists of high-speed shuttle vessels, cruise ferries, and a fast Ro-Pax ferry. The Estonia-Finland shuttle route continues to be operated by Megastar and MyStar, and supported by Victoria.
Cruise operations continue on Helsinki-Stockholm, Turku-Stockholm, and Tallinn-Stockholm, with three vessels currently in charter. Here we have to also say that, as we speak, Romantika is traveling back to Estonia, and the charter contract will not be extended and is ending currently on third of March, 2026. We will be looking for new opportunities for the vessel. On the next slide, we can see the fourth quarter and full year highlights. It was a challenging year because of low consumer confidence and quite uncertain market environments. The fourth quarter results were positively impacted by lower depreciation expenses. We aligned the useful life of the group's cruise and passenger vessels, but this excludes the shuttle vessels.
There was also in the financial year the sale of three vessels that eased the cost base. Payment of dividends and related income tax amounted to EUR 55.9 million, and EUR 28.6 million of this was in the fourth quarter 2025. Repayment of loans and related interest expense was in total EUR 113.5 million, EUR 18.7 million in the fourth quarter as well. Cargo sales still decreased, but at a moderating pace. The majority of the EUR 33 million CapEx cost was related to the maintenance and repair of vessels, the cruise ferries Silja Serenade and Baltic Princess.
Here we can remind you that during the period of five years, the vessels have to do two dry dockings for a more comprehensive maintenance, and this schedule is not always similar for every year for the fleet. There were 73 maintenance days during the 2025 financial year. If you look at the key numbers, the passenger number was 5.5 million passengers, 245,000 cargo units, and 760,000 passenger cars transported. Revenue amounted to EUR 765 million, with EBITDA for the full year EUR 130 million, and the net result for the period was EUR 17.3 million.
This number was affected by the alignment of the vessel depreciation. CapEx amounted to EUR 33 million. I want to highlight that the interest-bearing debt decreased by EUR 110.5 million, and the net debt decreased by EUR 105 million. This is not all the regular debt repayment schedule but also has one of debt repayment component in it tied to the sale of the vessel, Star. Sometimes when we sell vessels, if there is debt, there is a contract connected to it, and this obliges us to pay back a bullet.
When we continue now to the next slide, we can see the geographical results and the bridge graphs. The group accounts for 48% of the passenger traffic between Estonia and Finland and 36% between Finland and Sweden. We are the only operator providing passenger traffic between Estonia and Sweden. The operational results and segment results were affected by sale of surplus FuelEU Maritime allowances. Basically, what this means is that because we have a modern fleet, we use biofuel and port electricity and so forth, we were able to offset some of the environmental costs. When we go to the next slide, we can also see the revenue structure.
This is quite a familiar picture. 49% of the sales come from shop and restaurant sales, 25% from ticket sales, 10% cargo, 8 charter, and 2% accommodation. We also already mentioned the weak consumer confidence and also cargo transportation remains a challenging area of our business. It is 10%, and it is a more stable component throughout the year. We with focus to stabilize revenues because we are very seasonal business after all. When we continue, we can see this seasonality in numbers. In 2025, in the first quarter, we transported 1 million passengers, but in the third quarter, 1.8. Clearly, summer is the high season. We can see this number also in revenues and EBITDA.
First quarter EBITDA negative and third quarter, EUR 69 million. This seasonality is similar every year. We ended up with a net profit of EUR 17 million. Here we also have this seasonality picture on a net result level. As Paavo mentioned, the first quarter was heavily affected by vessels that were idle, but currently there are no idle vessels. Thank you from my side. I will give word to Margus Schults, our CFO, who will continue with the presentation.
Thank you, Harri. Good afternoon also from my side. I will provide some further details about the annual result and also Q4 result. If we start from our income statement, then sales in Q4 last year was EUR 188 million, which is an improvement from previous year, 2.5%. It means that even the number of passenger was very much flat comparing 2024, then we were able to improve slightly the revenue per passengers. Cost of sales is normally correlating very much to the sales numbers, but in 2025 case, Q4 2025 case, the change what we made in our depreciation schedules affected the cost of sales. Q4 cost of sale was EUR 12 million lower than in Q4 2024.
The other cost, marketing and other items, were very much flat, but due to these two facts, change in amortizations, some one-off items, as well as improved sales, basically, the result from operating activities increased from approximately EUR 1 million in 2024 Q4 to EUR 17 million in last year. Although we paid dividends last year in November, then the cost of dividends, the income tax is taken always when the shareholders decide the amount of dividends. The cost of dividend taxes is already reflected in Q2, and even the payment from cash flow was done in Q4, it does not impact our result in Q4. Improved business basically resulted that we had slightly improved EBITDA, EUR 28 million in Q4.
It means also automatically that our EBITDA margin has improved almost by 1%. As already mentioned, we were able to turn the Q4 result to +EUR 12 million, comparing -EUR 5 million 2024. On cost side, it's very stable. We have some cost, which is variable cost, basically reflecting very much the volumes. We have obviously some costs which are fixed costs, and then some costs, like staff cost, are semi-fixed, so there are some variable component, but not 100% correlation with the volumes. Our biggest cost item is still cost of goods, so EUR 161 million in 2025, a little bit down from last year from the year before.
The second largest item is obviously our staff costs, which was increased by 5% from EUR 143 million in 2024 to EUR 150 million, and this increase very much reflects the salary inflation, what we have in all countries, but extremely high in Estonia. The other cost, like marketing, port costs, ship operating costs, they are very much flat. There are some procurement prices which are going up, but basically reflecting the inflation, what we have in countries. It was already mentioned that we started to use biofuel in our shuttle vessels during the year, especially during the second half of year.
The biofuel, which is, is more expensive than the fossil fuel, reflecting the increased fuel price or fuel cost, totally by 1%. The increased price is offset partly also by sold vessels. As already mentioned, we have sold three vessels during 2025, and also by income from the FuelEU certificates. Other cost, which is here percentage-wise, include quite a big increase, is basically a few one-off items, which are categories under other cost category. As mentioned already, depreciation is around, around 18% lower than the year before, and reflecting two things: three sold vessels and the change in our amortization schedule. The total cost very much the same as in 2024, couple of percentage lower.
If we look on the cash flow statement, then in Q4, the operating cash flow was EUR 25 million, but under operating cash flow, we also include income tax. Since in 2024, we paid all the dividends in Q3, but in 2025, we paid it in Q3 half and Q4 another half, then this EUR 6.3 million of income tax is reflected on the operating cash flow, and therefore, the result is a little bit more poorer than a year ago. EUR 6 million, about EUR 6 million of capital expenditures was the same as in 2024. Then, as mentioned several times, we sold our vessel, Sailor, in Q4 and had asset disposal cash flow EUR 8 million.
All in all, we had cash flow, which is slightly improved from Q4 2024, from EUR 25 million to EUR 27 million. Debt financing net effect was also had positive effect to our cash flow. We changed our syndicate loan repayment schedule in spring 2025, and as a result of that, we prolonged the payment schedule of this loan. As you know, we have a very strong balance sheet. Our equity is already fixed at 56% of our total assets, and therefore, we found reasonable to prolong this very aggressive loan repayment schedule to a little bit smoother one, and these effects that we had in Q4 somewhat smaller debt financing burden.
Interest was also lower by EUR 2 million and basically reflects one-off item sales of Star, which lowered the total outstanding loan amount. Then obviously, also the regular payment of loans have decreased the loan amount further. The loan amount helped us also to decrease interest cost. As already mentioned, the dividends was paid in Q4, comparing the whole dividend in Q3 2024, and resulted a little bit more negative change in cash than a year earlier. In our balance sheet, no major changes. Basically, the changes reflects a down payment of loans and amortization of vessels. Still, our biggest asset is our vessels. We have totally assets of EUR 1.3 million.
Oh, sorry, EUR billion. Then on liability side, we have almost EUR 450 million of interest-bearing liabilities and then EUR 750 million of equity, which makes our equity ratio basically 56%, which is very, very strong. Therefore, we are also considering to propose of paying dividends on the amount of EUR 0.06 per share. Net Debt/EBITDA is also on healthy level currently, the ratio is 3.3x, and our liquidity was, at the end of year, on the level of EUR 110 million. As mentioned, also, the loan portfolio has not changed very much, except the change of schedule what we made in the first half of 2025.
We still have three loans, two project loans related to Megastar and MyStar, and one syndicated loan. The remaining maturity of those loans is 3-9 years. They are all euro-denominated, and some of those loans have a fixed-rate interest and some floating-rate interest. Totally, we paid back loan and interest during the year, almost EUR 114 million, out of which EUR 19 million in Q4. To summarize, yes, it has been agreed with the Supervisory Board that the proposal for dividends on the AGM in springtime will be EUR 0.06 per share. Thank you.
Thank you, Harri and Margus. We will now continue with the Q&A. As usual, I will read the questions out loud, and then Paavo will provide the answers. I'll start with those which were sent to us by email and then proceed with the ones in the Q&A section. There have been few questions about the dividends. "Regarding the dividends, a minimum amount of EUR 0.05 per share would be paid if the economic performance enables it. Could you give me the motivation of the proposed dividend of EUR 44.6 million, which is more than two times the profits?
Yes, actually, already Margus mentioned that today's debt load and low investments in the coming years create an opportunity to fulfill the dividend policy. We see that it's kind of like healthy situation, and that debt 3.3, and definitely we pay back some debt also this year, so it's even lowering. It's the motivation back of this.
Thank you. Does Tallink plan to launch a share buyback program in 2026 to support the stock price?
No, we don't have such a plan at the moment.
With the weak consumer confidence, do you see a risk of intensified price competition in ticket sales on your routes?
Yes, the competition is always tough, but we work daily to provide competitive services and prices.
How do you plan to adapt to the highlighted tough competition in cargo transportation?
We're seeing already some moderate growth in the cargo volumes, and we are not talking about January, which was a bit exceptional because our competitor were in dock, but also in the February, the moderate growth is ongoing, and we're working to increase the volumes.
Are you still looking to strengthen your balance sheet, or are you comfortable with the current levels of net debt?
We are in comfortable level.
Despite large investments, the current Sweden ships cannot use LNG or LBG and have a significantly lower profit. What is the future of these routes? Do you intend to replace the ships, or if so, when do you see the need to do so?
First of all, we have no plans to make any changes to the routes between Finland and Sweden at the moment. To build the new ships, there are still no consensus between the shipbuilders that which one will be the fuel for the future for the maritime sector. We have some time. We don't have any hurry with the building the new ships. As we see, as we know, that Silja Serenade and Silja Symphony are 45 years old, they can easily operate next 10 years, so we have time to make the decisions.
What is the plan for Romantika, Isabelle, and Galaxy and Silja Europa if the charter agreements end, and in what conditions are they?
Yes, for Romantika, we are looking for a new job. Galaxy and Europa are in the good condition. They're accommodating the refugees in the Holland. We keep them in the vessels in good condition. We making the maintenance needed and investing if needed. When the contracts will end one day, they are easily ready to start operations in our routes. Currently, Galaxy contract is going to end mid of October, but they have extension possibility to extend the contract with one year, and Europa is going to end end of next January, but also there are the possibility to extend the contract with one year. Definitely, as the both contracts are profitable, we working and trying to keep them chartered out in the Netherlands.
Thank you. Are there any changes planned regarding routes and ships for this year?
Not at the moment.
Moving on with the Q&A, with the questions on the Q&A section, could you elaborate what led to the decision to revise useful lives of vessels?
Yes, the reason is or was very practical. Our ships are very well kept and maintained, and as already mentioned, Silja Serenade and Silja Symphony, for example, are 45 years old, but can operate for another decade. Maybe another example, just to open up this, we sold Seawind when she was over 50 years, 50 years old, and she's still sailing today. Also, one former vessel of Tallink, Regina Baltica, is 45 years old and still sailing today. We maintain our vessels very well, and this gives us the opportunity to use the vessels quite long, and that is the practical background of this question.
What is the effect on annual depreciation from the sale of Star, Regal Star, and Sailor?
It is around EUR 3.5 million.
Did the sale of vessels yield any gains, or were they done at book values?
Mainly book values.
You have posted strong volume recovery year-to-date in cargo. What has driven this, and have you recovered market share?
As already mentioned, January was a bit exceptional because our competitor were in dock, but we see also moderate growth in February. There are tough competition. Of course, we hope that economies are going to recover, because when the Finnish economy going to recover, we will see more demand for the cargo services as well. Currently, it's just our cargo people good work to get back clients we maybe lost a year ago.
Was the decision to not prolong charter agreement for Romantika initiated on behalf of the counterparty, or was this in-house decision?
It was on behalf of the contract party.
Another question about the depreciation. Given the prolongation of useful lives for vessels, is it reasonable to expect that mid-term you do not plan to allocate any capital to purchase new vessels?
We can say that we are not going to purchase the new vessels, but definitely in coming three years, we are not going to build the new vessels. We'll see what life will bring us. Yes, as I mentioned already, to build the new vessels, we need to have the consensus, which is the fuel for the future for next 40 years. We take our time to analyze it before we going to invest into the new buildings again.
Thank you, and that was the last question for today. On behalf of Tallink, we would like to thank everyone for participating and for your questions. Our first quarter 2026 results will be published in April, and we appreciate your continued interest and support, and we wish you a pleasant rest of the day. Thank you and goodbye.