Dan Sten Olsson - December 2018

SEEKING AND SEEING ALTERNATIVES IN BAD AND GOOD TIMES

It is tough to be a profit-driven company, when all our oil-related shipping and offshore drilling activities are creating enormous losses. Nevertheless that is the business we have chosen to be in and huge fluctuations are the natural norm for this type of activities. Our striving over the years to reduce the impact of these fluctuations has only been marginally successful.

Delivering a little bit better results than our competitors in all phases of an economic cycle unfortunately only dampens our misgivings, but hardly change the fact that:

– When there is no demand or too much competitive supply depressing rates the burden of heavy investments is terrible.

– Being the preferred supplier enables us normally to keep our units employed at low rates though, such that it only helps our companies to remain intact over the cycles.

The structure of Stena AB with Stena Property, Stena Line, Stena RoRo and Stena Adactum as countercyclical profitable activities this year has once again enabled Stena AB to produce a positive result for its total entity in 2018. My family loves properties and Stena Sessan has therefore, when Stena AB sold out 18% of their properties acquired a substantial part thereof. 

Stena Metall, through Stena Recycling, is now with the investment in the Nordic Recycling Center in Halmstad and the acquisition of IL waste-paper collection-company well established as the leading recycler in the Nordic countries. Its financial results have recovered up to the high level we enjoyed ten years ago. 

The yearly results for the Stena Sphere of companies for 2017 and 2018 are estimated to be about MSEK 1,500. In comparison to a turnover of about MSEK 60,000 this is far from satisfactory.

For 2019 we believe the tanker markets for gas, crude and refined oil will significantly improve. Stena Drilling might cover their operating cost but will have more or less nothing to cover their very heavy capital costs with. Stena Line and Stena Adactum might maintain their positive developments, whereas Stena RoRo and Stena Property will meet increasing supply by other actors dampening their markets.

Stena Recycling is of course a very interesting piece of business. As what they collect has less and less value they are very dependent on strict adherence to environmental laws by the authorities and actors in society at large.

Digitalization goes on. At a recent trip to Israel I was overwhelmed by the enthusiasm the Israeli society embraces the new opportunities by going digital. They love science, digital and Nano technologies. They love creating apps. They also love AI or artificial intelligence. The possible combinations are immense. Per capita Israel is the leading country for starting new companies. To start new activities in old companies as well as starting new companies is changing the world. Past year we have ourselves some good examples of activities:  

New trade management tools to monitor and optimize our volume forecasts and capacity planning by AI and machine-learning. The Stena Danica is a new platform for testing digital techniques and services in order to achieve more personalized experiences and more efficient processes caring for our customers, consumers as well as customers of freight. The power of Big Data is there to build upon and drive more value from our consolidated data platforms in place. Stena Bulk’s digital platform Orbit, is deve-loped by our company and starts to be used for more efficient and simpler operation planning. Robotics and Machine Learning technology will continue making our Human Relation and Finance processes faster and more reliable and precise. By better using the sensors on board our ships we can better be warned of latent risks for break downs and alternatively prolong main-tenance cycles, when there are no risks. 

Digitalization goes very well to combine with sustainability. Stena Recycling will introduce AI for planning the optimal routes and time intervals for waste collection by trucks. The Stena Scandinavica is already saving 5% fuel per trip by combining AI with skilled people on the bridge.

Further sustainability actions though by conventional means have been undertaken by Stena Line, who has replaced 85% of identified 50 disposable plastic items on-board with sustainable alternatives. Stena Metall has successfully as the first industrial company issued a Green Bond in Oslo. In our modern ships we have and are installing exhaust gas scrubbers effectively cleaning sulfur away from the ship´s exhaust gas. Phase I in our project to install batteries on Stena Jutlandica for reduced emissions and operational costs has been completed. Phase II is initiated. Stena Property has increased their provided summer jobs with 50 to 350 summer jobs to our tenants this year. I am glad that the first volunteers from Stena Line to work on the Mercy Ship’s vessel Africa Mercy has been sent out.

Despite all negative financial news said above about this year, our commercial achievements in difficult markets deserves some admiration.

Every drilling unit secured new contracts for 2019 in 2018. The gas market is booming from past October and we have entered short contracts for our LNG ships putting us in a good position for negotiating profitable contracts in 2019. With 54 gas-carriers under management Northern Marine constitutes a very valuable support to our negotiations. Suezmax tanker rates start to pick up and we have chartered in six ships on advantageous terms. Two RoRo ships have been sold, with a net gain of MSEK 339. New profitable charter contracts for existing and ships on order have also been entered into. For Stena Line car and freight volumes are up 3% versus last year. Stena Property sold properties with a net gain of MSEK 500 to outside parties and to Stena Sessan Group with a net gain of MSEK 3,500. Ongoing production covers 1,400 new apartments 50% rental and 50% condo-miniums. To facilitate anticipated investments in 300 new windmill projects Stena Adactum has sold 65% of Stena Renewable with a net gain of MSEK 160 to AMF Pensionsförsäkring AB and Kommunal Landspensjonskasse.  

All our achievements would never have been possible, if it was not for everyone contributing to a very positive Collaboration. This capacity is our trade mark and a big cause for our pieces of success. It is a day to day work. It is in projects. It is in digital transformation. Many people from outside look at us as loving Speed paired with Simplicity and Courage. Simplicity creates speed. It shall be easy to do the right thing. Taking initiatives is good as long as everyone keeps up being Ready for Anything and always communicates and faces the Truth in time. Failure shall not disgrace a person. Caring for each other, we shall not blame each other as long as an act has been well prepared and risks have been evaluated in earnest and the Truth is told in time. Everything we do has hopefully a positive side, but normally also a difficult side to handle. Our future success is so dependent on how we with good judgement and care can handle the dualities and keep on stepping forward.

With this I want to thank everybody for all your endeavors during 2018 and wish you a Merry Christmas and a Happy New Year.

Dan Sten Olsson

Gothenburg 3 December 2018

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