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CEO's Column - NORDEN News Magazine Winter 2011

Well prepared for 2012

Some weeks ago, NORDEN presented the financial statements for the third quarter. In markets still characterised by tough economic crisis and low freight rates, we swam against the tide and managed to show both an increase in operating earnings and a minor upwards adjustment for the year as a whole.

Naturally, we are satisfied with this performance. Since, to say the least, it has been an uphill battle throughout the year. Nothing comes on a silver platter for any company these days; not for NORDEN either.

Soon we will be writing 2012. Even though according to a known, now deceased, Danish humorist, it is difficult to make predictions, especially about the future, I think it is safe to say that in 2012 we will not be sailing on smooth waters either.

There are no indications that the financial and debt crisis is about to be replaced by anything remotely similar to the growth rates in the gross domestic products of former times. On the contrary. In Europe, a number of heavily indebted countries are on the verge of or in the middle of an abrupt slowdown at the same time as their banking sectors are burdened by massive bad debt problems. And the outlook is not much better in the USA where growth is disappointing.

Fortunately, NORDEN has most of its business in markets where despite everything there is some growth – China, India, other Asian countries, South and Central America as well as parts of Africa. But the economies of today’s world have come to be so closely connected that an ongoing pause in growth in the western hemisphere may have global consequences.

Low demand in Europe and the USA has already made tanker rates plummet, and as it is also a known fact that deliveries to the global dry cargo fleet will peak in 2012, we are preparing for yet another challenging year.

As much as we would like to, we cannot change the markets. But there are many other aspects that we can influence in NORDEN, and we are focusing on these.

In Dry Cargo, we are steadily working on entering into COAs and increasing our long-term coverage. Coverage is actually easily obtainable if only we are willing to lower our price. But we are not. We want quality coverage – contracts with good, solid commodity and mining companies, industrial groups and energy producers who acknowledge that NORDEN must also get a reasonable price taking into account the market levels.

We have become better at making use of our strengths – a solid financial position, modern fleet, flexibility, transparency, and delivering what we promise. This year, we have therefore increased our cargo volumes by 32% whereas the market has only grown by 5-6%. We have satisfying coverage for next year and an interesting pipeline, and the aim is naturally to continue outperforming the market.

In Tankers, we can hope that demand will increase, tonnage will disappear from the market, or a consolidation will take place in a sector with far too many suppliers. But it is no good just hoping, and neither is blaming everything on the market. We must seek new ways, and we must optimise – we must make use of our adaptability, flexibility and craftsmanship to our fingertips. We must do even more of what it is we do best in NORDEN.

It is all about getting down to business. We are not forced to take drastic measures, but there is always something which can be done in a simpler, better and more efficient way. We must maintain high quality and bring costs down. We must avoid unnecessary risks. We must safeguard our strong financial position so that we can counter unforeseen, negative fluctuations and make use of attractive purchase opportunities when or if they present themselves.

So indeed, 2012 will be yet a challenge. But NORDEN is well prepared.

Thank you for this year and happy new year.

CARSTEN MORTENSEN

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