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The sales revenue of Tallinna Sadam in the first quarter decreased by 2.2% on year and exceeded Swedbank's expectations with the sales result. Revenues from operating passenger ferries and chartering the icebreaker Botnica increased by a total of 300,000 euros. The number of passengers on ferries fell by 12% in the first quarter and Botnica did not have to deal with ice-breaking due to the lack of ice.

"As the number of passengers visiting the ports of Tallinna Sadam also decreased by 13%, we expected the revenue to decrease by 1.7 million euros. As sales were approximately 1 million euros higher than our expectations, EBITDA before depreciation exceeded expectations by the same amount," Marek Randma, chief of equity analysis at Swedbank, said in the latest overview. 

In the first quarter, Tallinna Sadam profitably sold the assets of Paljassaare port, which was offset by higher costs for the maintenance of Botnica and the expansion of terminal D.

"In the first quarter, the cargo transport volumes of Tallinna Sadam increased by 2%, which was mainly supported by the increase in liquid cargo by 11%. As the growth of liquid cargo volumes of Tallinna Sadam has recently come from short-term contracts and the ports of northwest Russia are aggressively increasing their market share, we nevertheless expect a 15% decrease in the volume of liquid cargo in 2020," Randma said.

In the first four months of this year, the ports of northwest Russia increased the volumes of both liquid cargo and coal transport, while the Latvian ports lost almost three-quarters of the coal transport volumes in four months, mainly to the coal terminals in Ust Luga. "We expect a 9% decrease in the cargo volumes of Tallinna Sadam in 2020, but we expect a 40% decrease in the number of passengers," Randma said.

He highlighted that since a large part of the group's revenues are resilient to the decline in operating volumes, Swedbank expects the Tallinna Sadam's sales in 2020 to decline by 13% to 113 million euros, despite the sharp drop in passenger numbers.

According to Swedbank's expectations, the company's EBITDA will fall to 61.5 million euros due to the decline in revenue. "We expect that from 2021 onward, revenue and profits will slowly recover. As Tallinna Sadam traded at 10 times the company's value/EBITDA ratio and 15 times the price/earnings ratio upon the issuing of the analysis, we considered the market price of the share to be fair and maintained a neutral recommendation and a price target of 1.8 euros per share," Randma said.

Tallinna Sadam closed at 1.94 euros at Nasdaq Tallinn on Friday.