BC Ferries Releases Year-End Results

·10 min read

COVID-19 pandemic continues to have significant impact

VICTORIA, BC, June 18, 2021 /CNW/ - BC Ferries released its year-end results today for the fiscal year ended March 31, 2021 (fiscal 2021). The COVID-19 global pandemic has had a significant impact on the company's operations and financial results. During the year, BC Ferries carried 13.1 million passengers and 6.7 million vehicles, a decrease of 40 per cent and 24 per cent, respectively, compared to the fiscal year ended March 31, 2020 (fiscal 2020).

Logo: BC Ferries (CNW Group/British Columbia Ferry Services Inc.)
Logo: BC Ferries (CNW Group/British Columbia Ferry Services Inc.)

These results represent a full 12-months of operations impacted by COVID-19, which has had unprecedented consequences to BC Ferries' traffic and revenues over the year. However, BC Ferries expects financial results to continue to improve, in part due to Safe Restart funding and as the provincial economy recovers from the effects of the pandemic. The company remains optimistic that traffic will begin to return as more travellers become vaccinated and as the Provincial Health Officer eases travel restrictions.

In December 2020, BC Ferries received $308 million through the Safe Restart Program, a federal-provincial initiative intended to help provinces and territories safely restart their economies. Assistance to the public transportation sector, including BC Ferries, has been a critical part of the BC Safe Restart Plan.

"We recognize the vital contributions from the federal and provincial governments with the Safe Restart funding, which we have used to continue to provide a safe and reliable ferry service for British Columbians who need to travel, as well as ensuring the delivery of essential goods to Vancouver Island and to rural and remote communities. This funding has also helped us to protect the long-term viability of the coastal ferry service," said Mark Collins, BC Ferries' President and CEO.

The goals of the federal-provincial Safe Restart Program are to mitigate the impact of BC Ferries' revenue losses and additional COVID-19-related spending, help restore the level of annual earnings required to maintain service levels, and to keep fare increases to affordable levels through the current performance term ending March 31, 2024. Maintaining this level of earnings also supports the long-term sustainability, reliability and affordability of the ferry system and continues to provide for essential vessel, terminal and IT investments over the coming year.

Impacts of Safe Restart funding:

  • In the year ended March 31, 2021, net earnings were $21.0 million, a decrease of $7.8 million compared to net earnings of $28.8 million in the prior year. This reflects BC Ferries' recognition of $186.0 million from the $308 million in Safe Restart funding received this fiscal year. Without the $186.0 million in Safe Restart funding – recognized as revenue – the net loss for the year would have been $165.0 million.

  • Inclusive of the Safe Restart funding, revenues decreased by $76.1 million, or 8.1 per cent in fiscal 2021 compared to the prior year. Without the revenue contributed by Safe Restart funding, fiscal 2021 total revenues would have decreased by $262.1 million to $679.3 million, or 27.8 per cent lower than in fiscal 2020.

In response to the impact of COVID-19 on ferry operations, BC Ferries reviewed all spending and reduced its operating expenses in fiscal 2021 by $76.3 million or 8.9 per cent – to $779.8 million from $856.1 million in the previous year. The reduction was mainly due to reduced round trips on the major routes and the deferral of certain discretionary costs. The expense reduction includes reduced labour costs, fuel consumption, contracted services, depreciation expense and other miscellaneous costs.

Capital expenditures for the year ended March 31, 2021 totalled $122.0 million, down from $238.1 million the prior year and down significantly from BC Ferries' pre-pandemic Capital Plan. Despite the pandemic, significant investments continued to be made and included the four battery-electric hybrid Island Class vessels and one liquefied natural gas fuelled Salish Class vessel that were already under construction. This demonstrated that BC Ferries continues to modernize the fleet and decrease its carbon footprint. In response to pandemic-related reductions in traffic, BC Ferries deferred more than $100 million of capital spending beyond fiscal 2021. The company continues to review and adjust both operating and capital plans as appropriate to reduce costs and responsibly defer spending to preserve cash while operating a safe, reliable and sustainable service.

BC Ferries' full financial statements, including notes and Management's Discussion and Analysis, are filed on SEDAR and will be available at www.sedar.com.

BC Ferries is one of the largest ferry operators in the world based on passengers transported annually and transportation infrastructure, and carried 13.1 million passengers and 6.7 million vehicles during the fiscal year ended March 31, 2021.
BC Ferries provides frequent year-round ferry transportation services to the west coast of Canada on 25 routes, currently supported by 35 vessels and 47 terminals, and also manages other remote routes through contracts with independent operators.

FORWARD LOOKING STATEMENTS
This news release contains certain "forward looking statements". These statements relate to future events or future performance and reflect management's expectations regarding our growth, results of operations, performance, business prospects and opportunities, and industry performance and trends. They reflect management's current internal projections, expectations or beliefs and are based on information currently available to management. Some of the market conditions and factors that have been considered in formulating the assumptions upon which forward looking statements are based include traffic, the value of the Canadian Dollar relative to the US Dollar, fuel costs, construction costs, the state of the local economy, fluctuating financial markets, demographics, tax changes, the requirements of the Coastal Ferry Services Contract, and the impact of the COVID-19 pandemic.

Forward looking statements included in this release include statements with respect to: the impact of the COVID-19 pandemic, the impact of the federal-provincial Safe Restart Funding, and capital spending forecasts. In some cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. A number of factors could cause actual events or results to differ materially from the results discussed in the forward looking statements. In evaluating these statements, prospective investors should specifically consider various factors including, but not limited to, the risks and uncertainties associated with: vendor non-performance, capital market access, interest rates, foreign currency, fuel price, and traffic volume fluctuations, the implementation of major capital projects, security, safety, and environmental incidents, confidential or sensitive information breaches, changes in laws, vessel repair facility limitations, economic regulatory environment changes, tax changes, and Indigenous rights and claims.

Actual results may differ materially from any forward looking statement. Although management believes that the forward looking statements contained in this release are based upon reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward looking statements. These forward looking statements are made as of the date of this release, and British Columbia Ferry Services Inc. assumes no obligation to update or revise them to reflect new events or circumstances except as may be required by applicable law.

NON-IFRS MEASURES
In addition to providing measures prepared in accordance with International Financial Reporting Standards (IFRS), we present certain financial measures that do not have any standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental financial measures are provided to assist readers in determining our ability to generate cash from operations and improve the comparability of our results from one period to another. We believe these measures are useful in assessing operating performance of our ongoing business on an overall basis.

Significant events fiscal 2021

Significant events during fiscal 2021 include the following:

  • The Province initially amended the Coastal Ferry Services Contract in April 2020 for a 60-day period, expiring in early June and subsequently extended through to September 7, 2020, to reflect temporary reduced service levels in response to the COVID-19 pandemic while maintaining the related ferry transportation fees.

  • On June 10, 2020, the Island Discovery commenced service between Powell River and Texada Island and on June 18, 2020, the Island Aurora commenced service between Port McNeill, Alert Bay and Sointula. Island Class vessels, constructed by Damen Shipyard Group, are hybrid-electric ships designed for future full electric operation. The addition of the Island Discovery and the Island Aurora allowed BC Ferries to retire the 62-year old North Island Princess in the first quarter of fiscal 2021 and the 54-year old Howe Sound Queen in fiscal 2020.

  • On September 22, 2020, BC Ferries launched its new mobile-friendly website that lets customers easily book and manage their bookings online. The website delivers dynamically updated schedules and current conditions information. Features of the new website include dynamically generated, real-time daily and seasonal schedules available for all routes, as well as travel conditions at major terminals to provide greater travel certainty. Enhanced account management capabilities let customers manage all their bookings in one place, and add, change or cancel bookings with ease on their own. The new trip planner tool helps customers find sailings and calculate fares on any route before travelling.

  • On October 28 and December 16, 2020, and February 18 and April 21, 2021, respectively, four more Island Class vessels were launched at Damen Shipyards Galati in Romania. On May 19, 2021, and on June 8, 2021, the first and second of four new Island Class vessels departed Damen Shipyard Galati in Romania for the voyage to Canada. These vessels will make the transatlantic journey under their own power in approximately 60 days. These ships will enter service on the Campbell River – Quadra Island route and Nanaimo Harbour – Gabriola Island route in 2022. The Island Class vessels are outfitted with hybrid-diesel electric propulsion and will operate as fully electric ships in the future when shore-side infrastructure is available.

  • On December 16, 2020, BC Ferries and the BC Ferry & Marine Workers' Union announced the ratification of a Memorandum of Agreement that was reached on October 22, 2020. This agreement provides certainty for employees, helps ensure uninterrupted ferry service for customers and will mark 22 years of labour stability. The term of the new Collective Agreement is from October 31, 2020 through October 31, 2025 and provides for wage increases of 0 per cent, 2 per cent and 2 per cent over the first three years of the agreement, with year four and five having wage re-openers.

  • On December 19, 2020, BC Ferries' fourth Salish Class vessel, the Salish Heron, was launched from Remontowa Shipbuilding S.A. in Gdansk, Poland. The Salish Heron is scheduled to go into service in the Southern Gulf Islands in early fiscal 2023, and will be identical to our three existing Salish Class vessels. The Salish Class are dual-fuel capable, designed to run primarily on liquefied natural gas with marine diesel fuel as a backup.

  • On March 3, 2021, BC Ferries announced the launch of new fare options on the three Metro Vancouver – Vancouver Island routes. The Saver fare is BC Ferries' most affordable fare and will be available on less busy sailings, while the Prepaid fare lets customers book and pay for their full travel in advance, saving time at terminal check-in. These new fare options are available for advanced purchase only. BC Ferries expects these additional fare options will reduce sailing waits at popular times, make better use of all sailings and help make the ferry system more efficient. BC Ferries implemented the new fare choices in the spring so the company could be prepared for increased demand once the Province lifts essential travel orders.

  • Effective April 1, 2021, Brenda J. Eaton became Chair of the Board of Directors of BC Ferries. Former Board Chair, John A. Horning stepped down effective March 31, 2021, as his maximum eight-year term limit on the Board came to a close.

SOURCE British Columbia Ferry Services Inc.

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