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Interim CEO's editorial - NORDEN NEWS Magazine Spring 2015

Well-equipped for continued challenging markets

2015 looks like it is going to be quite a challenging year in dry cargo just as 2014. The downturn has not only lasted longer but has also been more brutal than expected, and the Baltic Dry Index thus reached an all time low in February this year.

Already halfway through 2014, NORDEN adjusted its strategy and adapted to a continued disappointing market. Some of the initiatives had an immediate effect – as for example the halt to the ordering of new vessels and the initiative to significantly increase coverage for 2015, while other initiatives will improve NORDEN’s opportunities here and now and in the long run. This is for example the reorganisation of the Dry Cargo Department, which you can read more about on pages 4-6. With the new organisational structure, we get a better opportunity to uniformise our approach to the market and our customers across the vessel types in order for us to fully benefit from NORDEN’s size and position in the market with a versatile fleet that can offer exactly the solutions that the customers may need.

Of course, this necessitates that we maintain a modern and efficient fleet which i.a. comprises fuel efficient eco vessels like the ones we describe on pages 14 and 15. Because no matter if the market is good or bad or fuel prices have dropped significantly lately, it is important to focus on costs. And NORDEN focuses on costs. The Company has launched a cost saving programme, which will reduce voyage related costs in the fleet by USD 20 million per year. At the same time, we are also making use of NORDEN’s financial position. Because opportunities also arise in challenging markets.

NORDEN could thus recently enter into agreement with a number of Japanese owners, providing NORDEN with a saving of more than USD 10 million on chartering of 9 dry cargo vessels. By paying USD 51.5 million here and now, we are saving USD 62 million on future hire payments. It is a good deal and a good return on our money, which has been made possible by the basic idea of financial solidity that has been NORDEN’s trademark during the 20 years with Mogens Hugo as chairman. He is now retiring due to age, and on pages 12 and 13, you can read more
about the many good results which Mogens Hugo has been part of creating the prerequisites for.

The Tanker Department has delivered some of these good results in the last year. While the dry cargo market was depressed in most of 2014, the year ended with sharply increasing rates in the tanker market, and our Tanker Department generated the best results since 2008. The strong tanker market has continued into 2015, and with a modern tanker fleet, a trimmed organisation and coverage of 20%, Norient Product Pool and thereby NORDEN are well positioned to benefit from this.

It thus appears that 2015 will see a continued difficult dry cargo market but also a tanker market which has come off to a good start. NORDEN will take advantage of the opportunities in the market and optimise the business in order for the results in 2015 to considerably outperform the results in 2014.

Enjoy your reading.

Klaus Nyborg, Interim CEO

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