TALLINN - Estonia's largest ferry company has reported unaudited profits of 318 million kroons (20.3 million euros) in the last financial year, representing a 70 percent decline year-on-year.
The Tallink Group has denied that they are feeling heat from the global financial crisis, claiming that, aside from the interest rate decrease over last summer, the company remains largely unaffected by the downturn.
Company representatives said their loans average a 10 year maturity and are being paid under the agreed repayment schedule. The ferry giant, which owns 11 ships and operates multiple services in the Baltic Sea region, instead cited multiple reasons for the drop in earnings in a press release issued on Oct. 31.
"The results were also influenced by the late delivery of the new cruise ferry Baltic Princess, significant increases of fuel costs and interest rates and difficulties during the launching phase of the new booking and check-in system," the release said.
Tallink's announcement comes only a week after the company's majority shareholders 's Ain Hanschmidt, Enn Pant and Kalev Jarvelill 's claimed the top three spots on the Estonian rich list.
The list, published by local business newspaper Aripaev, branded Ain Hanschmidt Estonia's richest businessman with estimated total assets exceeding four billion kroons (255.6 million euros).
Hanschmidt's co-managers trailed only slightly behind, with just less than four billion kroons each. The rich list revelation may help dispel investor concerns stemming from the company's disastrous year on the Tallinn bourse, which saw Tallink lose 66 percent of its share value.
Additionally, the assurance of plentiful wealth behind the company offers more credibility to the managing board's explanation of the poor profit figures. The board said the previous financial year has seen the company perform an overhaul of its services, incurring short-term loss in favor of strengthening their long-term position.
"In one year we took delivery of two new vessels, made several changes in the route's operations and launched a new booking and check-in system. The start of the new 2008/2009 financial year is very good. Traffic volumes are indicating strong growth in autumn 2008 as an impact of the previous development," the board stated.
The report also outlined healthy revenues of 12.3 billion kroons 's a 3.4 percent increase on last year 's again signifying that abnormally heavy expenditures are likely accountable for the plummet in profit. Tallink has a significant bump on the balance sheet from the outset, with the acquisition of two new ships, Superstar and the Baltic Princess, costing a combined total of 4.4 billion kroons.
Another display of Tallink's competence came during September's Best Business Awards, when Enterprise Estonia bestowed the company with the Estonian Chamber of Commerce and Industry Award for competitiveness, granting the ferry operator the title of Estonia's most competitive company.