Good morning, ladies and gentlemen, dear investors. Welcome to our webinar. My name is Valdo Kalm. I'm the CEO of Port of Tallinn, and Andrus Ait is our CFO. As usual, we will start with main events from last quarter. I would like to start with continuous growth, and let's say, rapid recovery of passenger business. I will come back to the numbers later, but Q3 was quite successful, and also nine-month recovery is better than we prognosed.
We closed operations finally in Paljassaare Harbour. Before we sold out our quays, after that, the infrastructure, now in Q3, we also stopped the administration of the port. Therefore, Paljassaare is totally closed.
Just to remind you that it wasn't possible to do business there as cargo, therefore, I guess it was very reasonable to sell the assets and close the cost. Also important for us, for the port is that the competition authority terminated supervision proceeding regarding the penalties of worldwide cargo establishment. Before that, we had the court case also for us that was successful for us. After the court case, also, competition authority made a reaction and terminated the supervision.
Very important for our group is that the state will not exercise the option to purchase the ferries. In our agreement, that was the option, and the government decided not to use that.
I guess that sets quite a good platform for the next tender that will be in force next year. Therefore we preparing for that. Also we got newly renewed supervisory board, but in Q3 there was some changes in audit committee and remuneration committee. The head of audit committee is Marek Helm, and the head of remuneration committee is Veiko Sepp. Both gentlemen are very experienced in business, and therefore already both committees started in action. Some changes in supervisory boards in our daughter companies.
That means our commercial officer, member of management board, Margus Vihman, became the supervisory board member in TS Laevad and Green Marine, and Ahti Kuningas left as he got the new position.
We had quite interesting investor day. It's already such a tradition, but this time we really talk about the future and about the growth possibilities for the group. Important is that there are projects in the pipeline and possibilities for growth. Trends in our business segments. As I already mentioned in passengers business, we see the continuing strong growth in passenger numbers and also in revenue. We increased or we got the growth in rental fees because of cruise terminal, because it works also for the events. That's actually additional revenue. Parking house what wasn't last year yet in our budget.
Last year, we decreased some rental fees for our operators, therefore, nice growth in rental fees also. On the cargo side, we see a continuous decline in volumes. I will come to the numbers, but it comes mainly from the fertilizers and liquid bulk due to the war. What is positive that in Q3 also have seen continuous growth of Ro-Ro and Containers. That's very important because we consider the Ro-Ro and Containers as our growth potential for the coming years.
We're working on that quite heavily, and we're further developing North-South corridor and how better serve the Finnish and Swedish import-export. About the sanctions, I will have a separate slide.
Our ferry business shows also quite strong growth, and it comes from additional trips ordered by the state plus indexation. Under the other segment, Botnica did also nice summer job in Canada. Plus, we also by the contract have the indexation included. Therefore, good growth from Botnica side also. Here are the volumes. As we said, numbers on absolute terms are also quite high.
Biggest growth coming definitely from Helsinki, more than one million new visitors also from cruise, Stockholm, all together then some 87%. On the left side of the slide, you see that we are recovering from the COVID. In 2019, we had record year.
Now with this nine months, we showed a quite good growth from last periods, I mean, from the COVID period. Important is also that we have quite stable ship visits in passenger business and same is valid for this year. On cargo side, the liquid bulk made the biggest drop, and dry bulk shows also due to the fertilizers. As you remember, our one terminal is closed from Q2 already. Therefore, these are the numbers. As I already mentioned, good news is that roro and containers showing also in Q3, the growth in nine months also.
From the other part of the slide, I would like to again show that the ship visits show stable numbers, and that's very important for the port because more than 50% from our revenues and profits coming from the port dues, therefore, the visits are extremely important and that shows quite a stable trend. Hopefully, we will have the stable numbers for the last quarter, and then cumulatively also. Our shipping business volumes, the local operations have recovered quite quickly, also from pandemic.
In nine months, we have record number again from passenger side, and hopefully, by the end of the year, we will have a bigger number than last year.
On Botnica, we count the charter days, and hopefully, there will be also a quite stable and flat result by the end of the year. About the future. We believe that passenger business recovery continues. There are many elements showing that if there will be now a new wave of pandemic, then we're preparing quite heavily. Our operators preparing for that, for the last quarter, for the Christmas campaigns, but also for next year. We made investments.
We have cruise terminal for cruisers. We just recently opened the terminal plots or area. That means that we really have a good cooperation with our operators to prepare the recovery and growth. Impact on sanctions to Russia, we now know the final sanctions, and we can calculate quite precisely what is that.
In the beginning of the year, immediately after the war, we announced that estimated impact is around EUR 6 million for us yearly basis. Now it shows smaller numbers. It's EUR 5 million, and for this year, the negative impact is EUR 2.5 million. Of course, we see rising input costs. It's energy, labor, and the services.
We're working quite heavily on efficiency plans. This year, we established such a process management in our group. That means we renewed our processes, and we're not only for the functional costs, but we have quite a good view to our main process, and via that, we definitely see still possibilities for cost savings. That means that we have to react with costs also.
About the future development, I will just for the next year point out that we're working heavily for a new business area that's offshore wind farms. We are going to build next year base harbour in Paldiski. The international tender for construction will open in this coming weeks. We have to start, and we believe that this business is a good growth possibility for us as a group. Of course, we're preparing for new contracts in shipping and a new tender in our ferry business.
As I already mentioned, we are quite well prepared. We have new ships. We have possibilities and knowledge how to rebuild it to electrical or hybrid.
Therefore, we're preparing for the tender also. Yes, that's it. Andrus will continue.
Yeah. Thank you, Valto. I will proceed with the financial results. These are the results for third quarter and nine-month period. It's visible here that the growth we see in almost all main figures. The revenue growth for the third quarter was more than 12%. It was mainly supported by the passenger harbour segment. We had 87% more passengers than last year at the same period. The cruise sector has also supported the revenue growth. In passenger harbour segment, we had 110 cruise ship calls compared to the 39 last year in the third quarter. We had a good result in the ferry segment and in the segment other.
However, the cargo segment is showing a downtrend because of the lower cargo volumes. Still the positive effect from other sectors was higher than the negative impact from cargo harbour segment. Therefore, we see the growth in revenue in the third quarter. Adjusted EBIT also grew by 5.4%, almost more than EUR 900,000. Adjusted EBIT margin lowered a bit from 53% to 49.6%. It's mainly due to the higher costs, especially electricity costs. Part of them we can intermediate or put in our service prices, but part of them we bear ourselves.
Operating profit grew by 11%, and also profit for the period was EUR 1.2 million higher than in the third quarter last year. We didn't pay any income tax in the third quarter. Investments, we invested almost EUR 3.5 million, which is more than 50% higher than last year. The main project was made in Old City Harbour, where we renovated or reconstructed all the surrounding area of D Terminal. The project is completed for now, and the area is open. We hope that the port area is more attractive for citizens and for travelers. It's a good foundation for the continuous growth in passenger harbour segment.
We also improved the ro-ro capacity in Muuga Harbour, where we are building the new two-story ramp for ro-ro ships to serve them better and to support higher cargo volumes in ro-ro. We made some maintenance investments. For example, in Old City Harbour, we reconstructed the shoreline reinforcement. On nine-month period, the pattern is quite similar as in third quarter, but the growth rates are a bit higher. To explain that, I can bring out mainly two reasons. Firstly, the third quarter in passenger harbour segment last year, we saw already the growth.
Therefore, the first half of the year, the growth rate in passenger numbers was higher and therefore, also the financial numbers or the growth of financial numbers in the passenger harbour segment. Secondly, the sanctions which the EU and the governments has imposed after the outbreak of the war in Ukraine, the governments has imposed them progressively during the year. Therefore, the impact from there has been lower in the first half of the year than in the third quarter. Therefore we see a bit higher numbers on nine-month period. The revenue grew by 15%, adjusted EBIT margin remain at the same level as in 2021.
Operating profit and profit for the period has increased more than 20%. The profit for the period even the growth was 25% and was almost EUR 5 million. Investments were basically the same for investment projects, and we invested 21% more than last year. Income tax we pay dividends in the second quarter, and dividend payment was EUR 5 million higher than last year.
Therefore, we see growth also in income tax on nine-month period. When we look at the revenue and profitability over the years since 2017, we see that the adjusted EBIT margin has been quite stable despite of the crisis, Corona crisis, starting from 2020.
We have managed to keep the level quite stable, and this trend has continued also this year. Adjusted EBIT in this year, we see already the number of EUR 47 million, which is almost the level which is last year for the whole year. The growth in adjusted EBIT has been quite significant this year. Here are the results by segment-wise. Like I already mentioned, this year has been very successful for the passenger harbour segment. It's a decent recovery there. In the third quarter, there was more cruise ship calls than last year. The passenger harbour supported therefore most of our results.
We see growth also in segment ferry and in the other segment. The ferry segment we have made more trips this year due to the higher demand. Last year, on nine-month period, we had also more repair costs, some dock works for the ferries. Therefore, the EBIT and EBIT margin in this segment has also increased.
Also the other segment has supported the growth to Botnica. The revenue for Botnica has been indexed. We had good result from our joint venture company, Green Marine, where the results have also improved compared to the last year. Cargo harbour segment we have seen a downturn in volumes and also in revenue.
This is also the segment where what is mostly or the most impacted by higher energy prices. The decrease has been lower in financial numbers than in volumes because of the growth in ro-ro and container cargo. These are the cargo types where the cargo charges are higher. Cash flow and financial position.
On cash flow statement, we see that cash from operating activities has improved, has increased by more than almost EUR 4 million due to the higher revenue. The revenue growth has exceeded the growth in costs. Cash used in investing activities is a bit lower despite the fact that we invested more than last year on nine-month period.
On the second quarter, we received a grant payment from EU, from TWIN-PORT 2 project, and therefore, the cash used in investing activities has increased compared to last year. Free cash flow has improved, and amounted to EUR 35 million. Cash used in financing activities has increased by almost EUR 5 million. To explain that, we paid out more dividends this year, EUR 25 million. Last year it was a bit more than EUR 20 million.
This reflects in these numbers. Net cash flow, as a result of previous growth, has increased by EUR 2.5 million. Net debt has decreased by EUR 18, almost EUR 19 million due to the loan repayments. On financial position, we don't see any strong change here.
Cash on accounts has a bit increased due to the better cash flow and debts are a bit lower due to the loan repayments and non-current assets have decreased due to the depreciation. With that, I will conclude the presentation. We have some extra slides about revenue generation and dividend generation for information.
If somebody has more interest, we upload the presentation and you can browse it later. With that, we will make a short break, and we'll be back in five minutes and are ready to answer your questions. Thank you.
Mm-hmm.
We are back.
Mm-hmm
Thank you for the questions. We have here more than five questions, and try to answer them. The first question: How do raising interest rates impact your cash flow in the next three years? Definitely, there will be impact, negative impact, on our cash flow. In our investment project, we haven't taken into account such a low interest rate as it has been in previous years. Therefore, we can manage the increasing costs there, and there is impact. It's. Let's say we have in our business plans, we have taken it into account in advance, and this is not a problem in the future for us.
Mm-hmm. Next question: Under your opinion, is it realistic that 2019 passenger numbers could be reached in 2023 or 2024? It looks that we hope that the recovery, 100% recovery and passenger number what we had before reaching probably 2024. Next question: At what stage now is real estate development project? Yeah. We have had again good developments, and I don't want to comment or promise nothing just now. Maybe we will have in Q4 good news.
If you remember, then we worked with the detailed planning, design, and hopefully there will be some important decision and event by the end of this year. It's better to comment on a next press conference.
Price and sanctions impact, -EUR 5 million, is it the revenue or profit? Already in the second quarter said that the impact of sanctions is almost the same for revenue and EBITDA. Maybe it's a bit lower on EBITDA level, but yeah, it's we have, let's say, mostly the fixed costs and therefore it impacts both the revenue and EBITDA in the same amount.
Mm-hmm.
EBITDA margin decreased below 50% in the third quarter, and what is your long-term target? Actually we haven't set such a long-term target, but we definitely try to keep this level and the historical data support it that in even tough times the company has managed to keep the level and we take some steps and put our effort there that the margin level will be in the future also around 50%.
May I add that we consider 50% is very high because we try to benchmark it with other listed ports. There are very few ports, unfortunately, in Europe, but there are some airports. With this 50% margin, we are in a very top, honestly, and we really try to keep that magic number. Next question, do you expect pax growth or passenger growth next year will mainly come from Estonia-Finland or other countries? Yes, the main source is Finland.
We have seen a positive trend, and there are new segments, youth, families, that means younger segments coming to Estonia. That's very positive. Secondly, we believe that there are some growth possibilities in Sweden also because just now Tallink operates with only one vessel.
We're planning some marketing activities together that means that there are some potential in Swedes also, and then the cruise. Just recently, for example, yesterday, today, there is an important event in Tallink, Cruise Europe Conference. That means all the main players, shipowners, also cruising companies are there. It seems that Tallink is very attractive. That means we were working, of course, to market better our Tallink and medieval city and our port.
Therefore, all these three segments are promising. Yeah. Is the drop in Ro-Ro cargo volumes related to the seasonality matters, or are you seeing less activity in this cargo group due to the macro environment or some other factors impacting Q3? That's true.
First, in Q2, we had stronger growth, although in Q3, we had 6.4% growth. There are many factors. It's not so easy to say, but definitely there are some macro impact. That means export, import decrease. Therefore, maybe that's the biggest. Otherwise, we supporting as a port. It's very strong stevedore company in Muuga, HHLA. In Paldiski, we have Steveco. That means the conditions are very good to support the growth. Yeah, I guess macro plays the most important role.
Will a Russian embargo be fully implemented in the beginning of next year? If yes, what is the estimated impact in euros? Actually, the impact which we said, minus EUR 5 million is the total impact when we compare to the full year before sanctions and the full year after the sanctions, which will be 2023. The drop has already, let's say, here we don't see any significant drop, additional drop in the future. It's according to our terminal operators. As we mentioned, they are looking for new customers, cargo, and therefore there won't be any additional drop in the future or there is, but this is due to the fact that this year we...
The sanctions were imposed during the year progressively but in the future it will influence the full year.
Right. Next question is, will the Russian oil price cap have any impact on liquid bulk? The answer is no, because as already Andrus described, basically by the end of this year, the Russian oil transit will stop, therefore no impact from price cap. Please. Next question. Please explain what does it mean for you when government decided not to use option to buy ferries? Any financial expression.
For us, the governmental decision is very positive because we then have a clear message that we will own the assets or ships. They are brand new ships still, and with this fleet or ships, it's easier to compete or to go to the next tender.
That's definitely positive, and it shows that the government, as a service agreement holder, is satisfied also with our service and there isn't any financial exception on that just recently.
I can add that, directly there isn't any financial expression, just that this decision put us a good position to participate on the tender and to that it gives us a possibility to be or to continue after 2026 in ferry business. The impact will be there. Nothing in the nearer future.
Correct. All right. Okay. Sorry, one question more. Is it possible to give some indication on cruise booking for some next year? Honestly, I don't have a precise figure to be honest. We have the bookings. It's really too early to say what will be the trend. Therefore, we're working hard, as I already mentioned, and even big decision makers all are here in Tallinn yesterday, today. We do what we can to support the recovery. Still, I don't have just now here on the table the bookings or the number.
It seems that there are no more questions. Thank you for watching, and thank you for interest, and see you next time.
Thank you for listening, and all the best.