CEO's Column - NORDEN News Magazine Autumn 2011

Another active quarter

NORDEN has experienced another active quarter in the Company’s 140th anniversary year.

In this edition of NORDEN News, you can read about the transportation of coal from arctic Svalbard in Norway to power plants in Continental Europe, about the way NORDEN is building close and direct relations with employees of our major customers, about securing a fleet that also creates quality in terms of costs, about the importance of good old craftsmanship in a modern business, etc. Indeed, a lot is happening in NORDEN.

The financials for the first half-year proved that NORDEN delivered as promised – and then some. Earnings were somewhat above expectations thanks to better results in the Tanker Department than expected. Excluding non-recurring income, operating earnings in the second quarter were up 8% on the first quarter of the year. We maintain our expectations for the full year, and I am very pleased with this in light of the dark clouds that continue to loom over the world economy.

To put it mildly, the worldwide economic uncertainty remains a reality. I think that many economists, politicians and senior executives have long had the feeling that the crisis had peaked and that, since mid-2009, the situation has slowly but steadily been getting better. Unfortunately, this is not the case.

Europe is marked by major structural problems. Far too many countries – none mentioned, none forgotten – have immense debt issues. Banks have not cleared their balances. Companies are expecting that past glories of ever growing consumer confidence are returning so that it is safe to invest in anticipation of a grant. And if we turn to the world’s still largest economy, the USA, what we see is an economy with feet of clay.

In my view, there are no smart, easy or pain-free solutions to the economic problems of the western world. Even if it boils down to something as simple as making and then staying within budgets that are based on the simple principle of living within your means – then this would still require political leadership, political courage and political power of determination.

It is a matter of fact that freight rates remain under pressure due to too many dry cargo and tanker newbuildings being delivered. When in spite of this NORDEN is doing well, this is very much due to the fact that the majority of our business is within markets where the economy is flourishing with annual GDP growth rates of close to 10%. This includes countries such as China, India and Brazil.

There are two further aspects which have influence on NORDEN’s satisfying results in a volatile business where you should only play along if you can live with the constant ups and downs:

Firstly, we have become better at making use of NORDEN’s strengths which build on a flexible business model – we can always provide a ship when there is a cargo – high quality, high safety, a rock solid financial position and an immense base of knowledge and experience.

Secondly, in times of uncertainty, customers tend to turn to shipping companies that can also deliver in 5, 10 or 15 years. We have seen this with the banks – in times of uncertainty, people prefer to have their money deposited with solid banks. The same goes for the shipping business, and NORDEN is benefitting from this.

In spite of all the worries, I am optimistic on NORDEN’s behalf. Things are going our way.


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