Speak from the film first half of 2011 in 5 minutes
Below please find translated speak (from Danish) from NORDEN's film, where CEO Carsten Mortensen presents first half of 2011 results.
NORDEN performed a little better in the first half-year than expected. Our activities in Tankers proved a positive surprise, while our Dry Cargo business performed as expected. NORDEN therefore generated operated earnings – what we call EBITDA – of USD 88 million or more than DKK 460 million. On the bottom line, we achieved a profit for the period of USD 79 million – more than DKK 400 million.
I am satisfied with these results as problems this year have been numerous and without interruption: Natural disasters in Australia, Japan and along the Mississippi River – political unrest and revolution in the Middle East and North Africa – soaring oil prices – galloping debt crisis in Europe and the USA – weakened global growth – and not to mention the imbalance in the dry cargo market, where a great supply of newbuildings is being delivered, making it impossible for demand to keep up.
In light of this – with working conditions that difficult – we deliver what we have promised. And then some.
In the second quarter, NORDEN’s Dry Cargo vessels were employed at rates which were 37% better than the spot rates in the Baltic Dry Index. Far the majority of NORDEN’s vessels are employed at fixed and solid rates, but we also performed well in the short-term market. Fine craftsmanship by our operators and charterers.
Also in Tankers, we outperformed the market again. There were periods of satisfying demand, and we had positioned us accordingly. Again fine craftsmanship – and all in all, Tankers thus contributed to NORDEN’s total results.
There were other important aspects to be pleased with in the first half-year: above all, the fact that NORDEN is gaining market shares in Dry Cargo and making a lot of new business.
In a market which has grown 5-6% in volume, we have transported 40% more cargo. We are working more determinedly at entering into COAs with solid, global customers, and things are going our way. In times of uncertainty, customers prefer to work with solid shipping companies which are able to deliver today as well as in 5, 10 or 15 years. And this is definitely an advantage to NORDEN.
So far this year, we have entered into contracts of 35 million tonnes of cargo to be transported in future. In this illustration, the target for the year is shown by the red line, whereas the columns represent the cargo which we have already secured. As can be seen, we are well on our way towards the 15% growth rate in both contractually secured and transported cargo, which are the targets in the Dry Cargo strategy for 2011-2013.
In Tankers, we have 2 key strategic priorities. We must continue beating the market; which is what we are doing – our daily earnings are 9-10% above market rates. The second priority is to own more tanker vessels. As owners, we are able to meet the strictest requirements on safety, environment and quality. We have recently ordered 4 new ECO vessels, which will be some of the most energy efficient and eco-friendly vessels in the business. We are also taking other measures to grow the fleet, and we are sure to achieve an owned fleet of 25 tankers which is the target in 2013 – supplemented with chartered vessels naturally.
Thus, the strategy is well underway, though the targets in our strategy plan must be seen over a period of 3 years, not 6-8 months. But well begun is half done.
Well begun is also the headline of NORDEN’s start to the year, and now the work must be completed, though it is not likely to become any easier. It is true that more dry cargo vessels are being scrapped and that, by and large, no newbuildings are being ordered, but this does not change the fact that growth in supply is picking up, and this may put pressure on the market. But we have protected ourselves against this. 94% of our ship days are employed, and even though coverage is somewhat uneven – in some vessel types, we are above 100%, while below in other types – coverage of 94% provides good security. With this few open ship days, we will only be affected to a minor extent, should the spot rates drop any further.
In Tankers, coverage of ship days does not provide the same profit, and we would like to save free capacity for better markets. Therefore, coverage is 37%, and the rest of the ship days will be employed in the spot market even though it looks like a challenge at the moment with the off-season weakening the tanker market.
Challenges are high in number in the markets – and in the world in general. We have taken care of everything within our control, in order to make the best possible of a difficult situation. That is why we are also maintaining the expectations for the year – that is operating earnings (EBITDA) of USD 135-175 million and a profit from operations (EBIT) of USD 55-95 million. These will be decent profits in a year marked by troubled waters.
Thank you for your attention.
This text contains certain forward-looking statements reflecting the management’s present judgment of future events and financial results. Statements relating to the remainder of 2011 and subsequent years are subject to uncertainty, and NORDEN’s actual results may therefore differ from the projections.
Factors that may cause such variance include, but are not limited to, changes in macro-economic and political conditions, particularly in the Company’s principal markets; changes to the Company’s rate assumptions and operating costs; volatility in rates and tonnage prices; regulatory changes; any disruptions to traffic and operations as a result of external events, etc.
CEO Carsten Mortensen presents NORDEN's frist half of 2011 in a short film - available in Danish only.