BC Ferries Releases Third Quarter Results
British Columbia Ferry Services Inc. (BC Ferries) released its third quarter results today for the fiscal year ending March 31, 2016. The company reported a net loss of $3.7 million for the three months ended December 31, 2015, as compared to a net loss of $6.1 million in the same quarter last year. Net earnings for the nine-month period ended December 31, 2015 were $99.6 million, up from $84.2 million for the same period in the previous year.
Due to the seasonality of ferry travel, BC Ferries typically generates higher net earnings in the first and second quarters, which are subsequently reduced by net losses in the last two quarters of the fiscal year.
In the third quarter of fiscal 2016, BC Ferries carried 1.8 million vehicles and 4.4 million passengers. Vehicle traffic increased 5.3 per cent (4.4 per cent year-to-date) and passenger traffic increased 3.9 per cent (4.0 per cent year-to-date) compared to the same period in the prior year.
“The lower Canadian dollar and the falling price of gasoline have helped contribute to a strong year for BC Ferries from a traffic standpoint. This allows us to focus on fare stability for our customers, while we ensure we operate a safe and reliable marine transportation system,” said Dennis Dodo, BC Ferries’ chief financial officer. “With the price of fuel dropping, we are in a position to offer a larger fuel rebate this spring, offsetting the scheduled tariff increase, which is welcome news for the travelling public.”
From March 10 – 29, 2016, regular passenger fares will be discounted by 30 per cent on off-peak days of the week and certain times of the day on all routes throughout the fleet. This spring promotion will help BC Ferries gather information as it prepares pricing strategies for the Fare Flexibility and Digital Experience Initiative currently scheduled to launch in 2017, which will make variable pricing a permanent part of the company’s service delivery model.
On April 1, 2016, BC Ferries will increase its fuel rebate from 1.0 per cent to 2.9 per cent on the major and minor routes and will implement a 1.9 per cent fuel rebate on the northern routes. As a result, customers will not see an increase in the cost of ferry travel this spring.
Total revenue for the three-month period ended December 31, 2015 increased by $4.2 million to $186.6 million as compared to the same quarter last year. Total revenue for the nine months ended December 31, 2015 increased by $17.1 million to $696.8 million as compared to the same period last year. Operating expenses increased by $2.2 million to $176.4 million as compared to the same quarter last year. For the nine months ended December 31, 2015, operating expenses increased from $549.3 million to $555.0 million as compared to the same period the year prior.
Capital expenditures in the three and nine months ended December 31, 2015 totaled $45.6 million and $110.9 million respectively. Projects included vessel replacements, upgrades and modifications, terminal marine structures, information technology, and terminal building upgrades and equipment.
Significant events during the third quarter of fiscal 2016 include the November 12, 2015 execution of a loan agreement with KfW IPEX-Bank GmbH, a German export credit bank. This loan agreement is secured under the Master Trust Indenture and allows for three loans of up to $45 million each. These amortizing loans will be repaid over a 12-year term with an annual interest rate of 2.09 per cent. The net proceeds from the loans will be used to partially finance the purchase of the three new Salish Class vessels.
On November 19, 2015, BC Ferries officially took ownership of the new cable ferry, the Baynes Sound Connector. Following extensive crew training and familiarization, and Transport Canada certification, the vessel commenced regularly scheduled service between Buckley Bay on Vancouver Island and Denman Island on February 9, 2016. The cable ferry will provide significant fuel cost savings, using less than half the fuel of the Quinitsa which was previously on the route, and will serve the route for the next 40 years.
On November 24, 2015, the Salish Orca, the first of the new Salish Class vessels, was launched and christened at Remontowa Shipbuilding S.A. in Gdansk, Poland. The construction of the other two vessels is progressing on schedule. These vessels will be dual-fuel capable, designed to operate primarily on liquefied natural gas with marine diesel as a backup. The Salish Orca, Salish Eagle and the Salish Raven are scheduled for delivery in August 2016, November 2016 and February 2017 respectively.
On December 18, 2015, BC Ferries announced the ratification of a Memorandum of Agreement that was reached on October 30, 2015 with the BC Ferry & Marine Workers’ Union. The five-year term of this Collective Agreement provides stability for employees and marks 17 years of labour stability.
BC Ferries’ full financial statements, including notes and Management’s Discussion and Analysis, are filed on SEDAR.