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CEO's Column - NORDEN News Magazine Summer 2012

A challenging 2012

NORDEN has had a reasonable start to a challenging year. The first quarter is successfully over with an operating profit of USD 50 million before write-downs, which was in line with expectations. The result was achieved in a challenging market where market rates for both Dry Cargo and Tankers came under significant pressure, and this tendency has been intensified after the end of the quarter. And when market rates are under pressure, vessel prices come under pressure as well.

At the same time, the shipping industry is also affected by the financial crisis. It has simply become significantly more difficult to obtain bank financing for the purchase of vessels, which reduces the number of purchase and sale transactions. There are simply fewer buyers.

Decreasing vessel prices also affect NORDEN. Therefore, we wrote down the value of NORDEN's fleet by USD 300 million in connection with the financial statements for the first quarter so that the carrying amounts are more level with the estimated value. I would of course have preferred to be without the write-downs, but it is important to point out that they do not affect our operating profit before write-downs or our cash position.

After the write-downs, NORDEN remains financially strong, and at the end of the first quarter, NORDEN had cash and securities of USD 450 million and undrawn credit facilities of USD 150 million. This means that NORDEN has the strength to make use of the advantages created by large fluctuations. Therefore, we maintain our expectations for the year even though 2012 proves to be just as challenging as we anticipated already at the turn of the year.

Besides the article on write-downs, this issue of NORDEN News also features stories about i.a. our product tanker pool, Norient Product Pool (NPP), which we have operated together with our Cypriot partner Interorient Navigation Company since 2005. NPP is now the world's second largest product tanker pool and has lived up to expectations. NORDEN News also describes how we from the Company's side seek and actively cultivate the opportunities which provide long-term growth and prosperity for NORDEN through a long-term partnership with Shanghai Maritime University and appointment of a Finance Director in NORDEN's subsidiary in Singapore.

At the same time, we make a daily effort to do whatever achievable to run NORDEN as efficiently as possible and to the highest possible extent meet the daily, serious challenges in the market and turn them into an advantage for NORDEN.

Enjoy your reading and have a great summer.

CARSTEN MORTENSEN

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