Good afternoon, everyone, and welcome. Today we'll be presenting Tallink's Financial Results for the First Quarter of 2026. 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 Peep Jalakas, the newest Chairman of the Management Board of Tallink for a brief introduction. After Peep's introductory remarks, Harri Hanschmidt, Member of the Management Board, will walk you through the detailed presentation covering our operations and the Q1st results. Following the 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 of the webinar. It would be helpful if you could also include your name when submitting your question. With that, I will now hand it over to Peep.
Thank you, Anneli, and good afternoon, dear investors, clients and partners. My name is Peep Jalakas, and I have been in the CEO role since April 6th. My brief background is in banking, and before joining Tallink, I spent my professional career in SEB Bank, latest being the head of corporate banking and member of the Management Board. I would like to highlight that following changes have taken place in Management Board. As I said, I joined as a CEO on April 6th. Former CEO, Paavo Nõgene will continue as the member of the Management Board until annual general meeting, to secure smooth transition. Former CFO, Margus Schults, stepped back from the Management Board, and he will continue to run Tallink operations in Finland. Rest of the Management Board is unchanged.
I am sure that we have opportunity to interact in the future, but now I will give over the word to Harri Hanschmidt, who will present Q1 2026 results.
Thank you very much. Also good afternoon from my side, and thank you everyone for joining for the First Quarter Webinar of 2026. My name is Harri Hanschmidt. I'm Board Member for Tallink Grupp, and it's my pleasure to do this presentation today, after which questions will be answered by our former Chairman of the Management Board, Mr. Paavo Nõgene, and current Chairman, Mr. Peep Jalakas. Here I would also like to take a moment to thank Paavo for all the hard work and numerous webinars held together, and also welcome aboard, Peep. Now we move to the presentation, and as always, we take a look at Tallink Grupp today. Tallink at a glance. Tallink Grupp is the leading European provider of leisure and business travel and sea transportation services in the Baltic Sea region.
We have two strong brands, the Tallink brand and the Silja Line brand, plus a growing Club One program. At the end of the first quarter, we had all together 11 vessels, and we operate five regular Baltic Sea routes. Two vessels are currently in charter. We also operate four hotels, three of them in Tallinn, one in Riga. Here is a good place to say that the Express Hotel, our two-star hotel, is receiving currently a renovation that started from 3rd of November 2025, and is expected to be finished in May this year. 166 hotel rooms are getting renovated. Also, public spaces and the restaurant are getting a very nice facelift. We also have 20 Burger King restaurants, eight of them in Estonia, six in Latvia, and six in Lithuania, and a 3.6 million members and growing Club One program.
In the end of low season quarter, we had about 4,600 employees. Our business model is very diversified. It combines passenger transportation, cargo transportation, hospitality, retail, charter operations, and more. We believe this is good strength in today's economy. If you look at our fleet composition, our fleet consists of high-speed shuttle vessels, cruise ferries, and a ro-pax ferry. The Estonia-Finland shuttle route continues to be operated by Megastar and MyStar, and supported by a cruise product with Victoria I. Cruise operations continue on Helsinki-Stockholm, Turku-Stockholm, and Tallinn-Stockholm routes. Two vessels in charter are Silja Europa, current charter contract running until January 2027, and Galaxy. The contract is running until October 2026. These vessels are generating a stable income and optimizing the current fleet utilization.
Our vessel Romantika returned from charter on 3rd of March and is currently in layup waiting for new work, and currently not planned for a regular route operation. For Paldiski-Kapellskär route, the last day of operations for Superfast IX before she heads out to the charter is April 30. Currently, we do not have a good vessel for the route, but the plan is to look for a suitable vessel. Until then, we offer connections over the Tallinn-Helsinki route and Tallinn-Stockholm route for our cargo clients. Fleet optimization and discipline continued to be important themes also in 2026. If you look at the first quarter highlights, we saw slight improvement in consumer confidence, but unfortunately, that was met with negative news, increased fuel prices, and the different effects of the Middle East crisis.
Looking at our business, the year definitely started on a positive note with passenger numbers up by 6.8%, altogether 1,036,000 passengers. Cargo units up by 13.4%, and passenger cars up by 1.2%. This also was visible in top line and the revenue increased to EUR 149 million. This is a very welcomed increase of 8.8%. EBITDA was quite low, but this is our low season, so we reached a positive EBITDA of EUR 2.1 million. Last year, it was in the same period, negative of EUR 3.8 million, so definitely a positive number. The net loss amounted to EUR 22 million. This is EUR 11.2 million better than last year in the same period, so we do have a much better start to this year than we had in the last year. There are many factors that contributed to that, but we will through the presentation, cover them all.
We also had maintenance CapEx of EUR 14 million. This covered maintenance works for three vessels over a period of 47 days altogether. Symphony, 22 days, Queen, 12, and Victoria, 13 days. Low quarter, we used this time to keep the vessels in good shape, do necessary repairs and upgrades. Interest-bearing debt remained on the same level, in total EUR 449 million. Net debt actually increased a bit, but this is also usual for the low season. We did actually repay loans and also interest in the amount of EUR 14.8 million, but we did use some overdraft in the amount of EUR 21 million. Last year, the used overdraft was actually more than double than that. First quarter actually was quite good in that perspective. The liquidity remains sufficient at EUR 91 million, and obviously in the next quarters, we expect the liquidity to grow.
Lower depreciation expense, and following revised useful life estimates positively impacted the first quarter results. To understand maybe better, last year obviously was also a low baseline because we had in the first quarter four idle vessels, Superfast , Romantika, Regal Star, and Sailor. On the next slide, we can see the sales and results from a geographical segment perspective. We maintain strong market positions, 48% market share in Estonia-Finland passenger traffic, 37% in Finland-Sweden, and we are the only operator in the Estonia-Sweden passenger traffic. The first quarter revenue performance was affected by the impact of the mentioned dry dockings, and also savings from idle vessel disposal on a year-on-year comparison, and sales surplus of FuelEU Maritime allowances, and a stable passenger demand in our core routes. We can see that on the top line, Estonia-Finland and Finland-Sweden were the main contributors.
On the result level, all the segments were positive, and the other, the charter and FuelEU part, was driving the positive segment result. If you look at the revenue by operational segments, the first quarter revenue was well diversified. 47% came from restaurant and shop sales, 24% from ticket sales, cargo attributed for 14%, charter 9%, and accommodation only 1%. Charter income improved year-over-year due to the optimized charter portfolio. Sales of cargo transportation show clear signs of improvement despite the competition and economic uncertainties. We have a modern fleet and use biofuels, port electricity, and our vessels have high ice class. Therefore, we are able to offset some of the environmental costs. Our business is seasonal, and we always like to highlight this seasonality. First quarter, we transported slightly over 1 million passengers.
As we can see, typically in the past few years, the second quarter will be stronger volumes, but also top line and bottom line. Third quarter is our main summer season. Obviously, the summer generates the most EBITDA as well. This is, I think, the biggest change where right now we're on basically a zero level, then we can be expecting more positive numbers in the next quarters. If you look at the bottom line result, here is the same picture. First quarter, we earned negative -EUR 22 million, but this is a slightly better result than last year. Next quarters will be, of course, the most important for us. If you look at the consolidated income statement, we can see that the sales went from EUR 137 million to EUR 149 million.
Cost of sales and marketing and administrative costs remained on the same level, and we ended up with a better result from operating activities. On the cash flow, we can see that basically all the operating cash flow, EUR 14 million, we used up for the mandatory CapEx investments in the first quarter. The free cash flow was 0, and change of cash was slightly negative. If you look at the financial position, our total asset base is EUR 1.3 billion. Non-current assets, EUR 1.2 billion, and this is mostly the vessels. Total liabilities are down from last year. We can see a very healthy level both in net debt to EBITDA, 3.2x , and also equity asset ratio of 55%. We are continuously de-leveraging. If you look at our loan portfolio structure here, we can see the same picture.
The long-term bank loans are going down, but this year we used overdraft by EUR 21 million, and obviously, overdraft is paid back as quickly as possible. Let's see. Also, we can see that the long-term bank loans amounted to together EUR 360 million, and maturities ranged between three and nine years. We have both fixed and floating interest structure, and we can say that about half of our loans are with fixed interest rate. If there are questions about Euribor pricing, then some of it is softened by the fixed interest rate. Debt reduction remains a strategic focus. We keep de-leveraging and paying dividends. As already mentioned in the fourth quarter webinar, the proposal to annual general meeting is to pay out EUR 0.06 dividend in two parts. This means shareholders need to be mindful of the ex-dividend dates.
The first one is on the 17th of June, and the second is on the 12th of November. This is all from my side. I will now give word to Paavo and Peep, who will answer questions. Thank you very much.
Thank you, Harri. We can now start with the Q&A. We'll follow the same procedure as usual. I will read out the questions, and then the forward-looking questions will be answered by Peep. While the questions related to past performance and reported results will be answered by Paavo. Due to the number of questions received and some of those on the same topic, we have grouped them to address similar topics, and I will start with those received earlier via email. First, we'll start with Peep. Congratulations to Mr. Paavo Nõgene on the strong work and crisis management at Tallink, and best of luck in the future endeavors. A question to the new CEO, Mr. Peep Jalakas, what will be the focus points for this year, and what are the midterm strategic priorities and goals?
Thank you. If looking short-term, then key focus areas for 2026 are securing stable operations in our main routes and also a focus on profitability. We are clearly targeting also growth in passenger numbers and also cargo volumes. In midterm perspective, the priorities are finding new growth opportunities and strengthen Tallink and Silja Line brand further. It's important to secure that this growth is also profitable. All in all, we aim to ensure shareholders that Tallink is a good stable dividend stock for a long run.
Thank you. How do you assess the current availability and near-term outlook for bunker fuel and LNG supply? How significant is the risk that some departures may need to be canceled due to potential fuel shortage?
We have spoken with all our fuel suppliers, and they have confirmed us that Tallink needs for 2026 are well covered. We feel strong there.
Have you been able to pass on the increased fuel costs to your customers, and if so, to what extent?
Yes, we have increased fuel surcharges both for passengers and also cargo clients. The exact impact depends on the development of fuel prices and also the passenger and cargo business volumes. To give a guidance then, we believe that majority of the extra cost will be passed on to the customers in midterm time horizon.
Thank you. What is the total amount of scheduled loan amortization payments for this year?
It depends slightly on development of Euribor, because half of our loans are with variable interest rate. The best forecast to give at the moment is that the total amortization, including principal and interest payments, is around EUR 60-69 million for the full year 2026.
Thank you. Since you will be chartering out Superfast, what are your plans about this Paldiski-Kapellskär route in the future?
As Harri also pointed out then, we are currently looking for an alternative ship, and if there is anything to communicate further, then we'll let you know.
Will Victoria I stay in Tallinn-Helsinki route for this summer, or will there be plans to add another vessel to Tallinn-Stockholm route?
The plan is that Victoria operates on Tallinn-Helsinki route, but also makes special cruises to Riga, Visby, and Saaremaa.
Thank you. What are the plans for Romantika?
With Romantika, we are also currently working to find the solution there, a new job and partner for the ship, and the negotiations are actively ongoing.
We will now move on with questions related to past performances, and these will be answered by Paavo. The first one goes, please advise on the sales prices of cargo vessels Sailor and Regal Star, and the value of the charters of Galaxy I, Silja Europa, and Superfast.
Yes, good afternoon from my side as well. We do not have the right to publish the prices exactly as there is no such agreement with buyers or ship charterers.
Thank you. Could you please comment on the year-over-year negative impact on fuel costs in Q1 2026, resulting from increased bunker and LNG prices, and then as well, comment on the upcoming quarter?
Yes, during the first quarter, the impact was EUR 1.2 million, as the impact started only in March. Definitely, we will see some increase in the second quarter, but what is the exact increase depends on when the situation in the Middle East comes to an end.
Thank you. Do I understand correctly that during financial year 2026, Tallink will have to purchase CO2 emission allowances that cover 70% of your financial year 2025 emissions, and from next year, you will have to purchase allowances that covers 100% of your 2026 financial year emissions?
In principle, you understand correctly, but to answer more precisely, Tallink actually has already bought 70% of the CO2 emission quotas generated in 2025, so to speak, and we have to hand them over to the states this year. This year, we are already buying quotas for the needs of 2026, which we have to hand over to the states in the autumn of 2027.
Thank you. What was the total cost of CO2 emissions purchased in financial year 2025?
It was around EUR 14 million, and this was the 70% from generated CO2 emissions in 2025.
Please clarify what was the annual consumption of fuel in 2025 in tons?
The total consumption was 116,826 tons.
Thank you. We will now move on with the question submitted through the Q&A function of the webinar. What are the options that you are currently considering for Paldiski-Kapellskär route once Superfast charter begins? Is there a possibility you will not deploy a vessel to this route?
Thank you for that question. We are considering different options, but the base scenario is to find the right type of vessel for Baltics capacity route, which is then mostly meant to service the cargo customers. The process is ongoing, but I'm not able to give any clear guidance when this process materializes. We will continue looking for the new vessel.
Thank you. How would you assess how Tallink's vertical integration positions you in cost inflationary environments like this compared to competitors focusing solely on operating ferries?
Good question. I would say that if we look at Tallink's negotiation power when it comes to our cost base, then we are in a good position to negotiate with our suppliers. Clearly, if the inflationary environment continues for the longer period of time, then we need to find possibilities to increase efficiency and also partly then transfer this increased cost base to our customers. Overall, I think that having this vertical integration surely gives us a bit more flexibility.
There is one more question about Romantika, which I believe we already answered, so I'm not going to read this out. There is a question about depreciation, and I'll read it out. I know that Paavo already wrote the answer, but I'll still read it out. D&A cost in Q4 2025 stood at EUR 11 million after the revision of fleet's useful lives, with recent periods normalized level around EUR 24 million per quarter. The figure was again close to EUR 20 million per quarter in Q1 this year. What causes this dynamic?
Yes, in the fourth quarter, the change in the depreciation was reflected retrospectively for the entire year 2025. That was the reason.
The question, in the management opinion, what was the most positive event or surprise in the first quarter?
First quarter, I am happy to see that our passenger number and cargo numbers have started to increase again. We worked hard last year to make different changes and put a lot of efforts to start seeing again the increasing passenger numbers and turned around the cargo situation. This wasn't a surprise, but that was a positive event. Maybe Peep wants to add.
Actually, I echo what Paavo said, so nothing to add.
All right. That was the last question for today. On behalf of Tallink, we would like to thank everyone for participating and for your questions. Our second quarter 2026 results will be published in July. We appreciate your continued interest and support. We wish you a pleasant rest of the day. Thank you and goodbye.