TALLINN - The announcement of a major jump in Tallink's quarterly profits failed to buoy the shipper's stock, which has been falling due to a significant number of offers on the market.
Last week Tallink, the Baltics' largest passenger shipping company and one of Estonia's largest corporations, announced that its first quarter earnings (which straddle the calendar years 2005-2006) soared 45 percent to 62.6 million kroons (4 million euros).
Sales were flat, amounting to 992.1 million kroons, according to non-audited figures.
Investors were not swayed by the announcement, as the company's share price dropped 3.6 percent during the week ending Jan. 13 and then a further 2.5 percent on Jan. 16.
"In Tallink's case, it seems the financial results released on Jan. 12 were taken under closer scrutiny and the conclusion was that they do not give grounds for bigger optimism," said Henno Viires, a trader for LHV, an investment bank.
Board Chairman Enn Pant said the company considered the three months successful. "Previous decisions have borne fruit, and growth of nearly 46 percent in net profit delights us. Although operations on the St. Petersburg line were suspended and the number of passengers remained slightly below the figure of last year's first quarter, the change in the sales proceeds was marginal," he said.
Pant added that freight volumes increased 16 percent during the period, which helped offset the seasonal nature of passenger traffic.
He also stressed that shipbuilding contracts were signed during the quarter with Italian and Finnish shipyards, the company's international competitiveness improved since going public and progress was made in talks involving the launch of a Riga-Stockholm route.
"We believe that the strong beginning of this financial year, with its good results and the company's investment policy in the framework of which more than 200 million kroons has already been invested into shipbuilding, will ensure our strong and stable development in the future," Pant said.
Meanwhile, the construction company Merko Ehitus announced it has signed a contract with Sunbeam to design and build a 20 million euro spa hotel for Tallink. The new hotel will be situated at Sadama 1A in the Tallinn port area.
Sunbeam is a 100-percent subsidiary of Tallink's core owner, Infortar, whose owners are Tallink executives Pant and Kalev Jarvelill, as well as the former Uhispank executive Ain Hanschmidt.
Sunbeam has a cooperation agreement with TLG Hotell, which also belongs to Tallink and will rent and later operate the hotel after its completion. According to the Tallink IPO prospectus, the sum of the rent is 10 percent of the investment made for the construction of the hotel plus 25 percent of the operating profit of the hotel.
According to a preliminary cooperation agreement the rental contract will be in effect for 10 years.