BEING AFRAID IS NECESSARY FOR BEING REALLY CAREFUL AND COURAGEOUS

Despite the present situation, our companies perform comparatively well. When Stena AB closed its books in September, earnings before tax amounted to SEK 1.8 billion. Stena Metall AB achieved their second-best year results ever, with SEK 1.34 billion in profit. By being afraid, we mobilized the courage and covered in principle all our costs for future interest payments by covering the interest rates for close to ten years.

When other companies with real estate activities now fight for their survival, Stena Fastigheter can continue to develop our projects. It is not only about building new premises. It is also about investing in less consumption of energy, water and other consumables. Investing in solar cells and AI management creates better cash flows and less environmental footprints. Also investing in social well-being is close to our beliefs in the purpose of our group of companies. We are grateful we have the resources to continue doing so.

With most of our markets in principle in decline or with lower margins, we are back to shaving costs more relentlessly. Luckily we have a culture used to that and I am sure we shall once again find the avenues to improve our competitive position. Nevertheless, it requires attention and an unsentimental attitude to our activities but not to each other. By continuously investing in our personal capabilities our employees have in principle no difficulties in finding alternative employment. We prefer of course that our people stay with us continuing to improve their skills and our company.

BUSINESS AREA UPDATE

Stena Line is noticing a softer freight market, but Its travel market has performed in line with expectations during the very important summer high season. Passengers and car volumes are in line with budget and rates are holding up nicely. We can conclude that despite inflation and increasing interest rates, people are spending an increasing part of their disposable income on travel and not only on tickets but also onboard our ships. Looking ahead, we are cautiously optimistic but are aware that a slowdown in the general economy may eventually impact our travel segment.

A major challenge in the Stena Line budget for 2024, is the introduction of EU’s emission trading system (ETS). The system will be phased in during a three-year period with 40% applied in 2024, 70% in 2025 and then 100% in 2026. Besides continuously keeping cutting our energy consumption our objective is to pass on of the increased cost to our customers, but we do not know how successful this will be.

STENA ADACTUM COMPANIES, STENA BULK AND STENA DRILLING

It seems like inflation is under control. Our diversified business model has proved resilient to yet another obstacle. The business is developing well in general, but Stena Adactum is losing some momentum. On the other hand, Stena Bulk performs at all-time-high levels and Stena Drilling continues to improve meaningfully. Northern Marine’s management skills and supervision services are appreciated and we are gaining new profitable management contracts. Northern Marine’s trading skills in marine equipment are not enough though and we are reducing the size of these activities.

The Stena AB budget for next year is, as always uncertain, but with an increasing share of cash flows linked to fixed contracts and a fully recovered offshore drilling market, it looks promising.

A new drillship the Stena Evolution will join our fleet in February next year. This is the world’s most modern drillship and has a profitable long-term contract with Shell. Its operation will be development drilling in the extreme depths of the US Gulf.

It is not so well known that sadly the consumption of oil is still increasing. Offshore production is the most environ-mentally friendly way of oil production.

Scandinavian Renewable (SR Energy), started by Stena Adactum, is now the largest windmill company in Sweden. Stena Adactum keeps its share of 20%. It is regretful that the disadvantages of windmill production will limit its potential for completely solving our need for stable electricity production. Nevertheless, the company keeps on expanding and will defend its position as the largest producer of electricity by wind in Sweden.

On another note, Stena Adactum finally managed to acquire the Austrian kitchen manufacturer Dan Küchen as a bolt-on acquisition in Ballingslöv. Despite present near-term demand difficulties long-term outlook is favourable and the company will strategically fit very well into Ballingslöv.

For Stena Metall the first two months started up surprisingly well bearing all uncertainties around us. Most of the companies performed rather well even though there is always room for improvements.

Within Stena Recycling we have managed to maintain the volumes, but we saw some signs in early November that volumes may drop somewhat. Almost all our established companies contribute with positive results. In Finland, there is a high focus on our new acquisition to implement and establish our operative model based on delegated business acumen. Stena Recycling Sweden has started a notice of termination for around 100 people.

Stena Aluminium has good volumes, but heavy pressures prevail on the margins. Hopefully, the margins will come back in January.

In order to make our market presence significant enough, we have signed an agreement with Repono to sell 100 percent of the shares in BatteryLoop. Repono is a newly established company supporting the energy transition to reach the environmental targets in Europe toward net zero by owning and operating large-scale battery storage.
The immense fluctuations in the production of windmill and solar electricity make electricity storage a critical condition for the effective distribution of electricity. We are going to keep a substantial shareholding in Repono.

AN INTERESTING CONCLUSION

Coming back from an interesting holiday in Egypt I have visited the world’s first large building project the pyramids. By planning and working together it is amazing how such big-scale projects could successfully be accomplished. Each pyramid, it is estimated, was also accomplished in a relatively short time span. Some estimate the production time to be less than thirty years.

I also studied the influence of Hellenism in Egypt. Hellenism is built on a different aspect namely intense curiosity and energy paired with flexibility to create new productive thoughts and concepts have led to big steps forward for mankind.

Thinking of our Stena Culture I feel a lot of pride in registering the high energy level among all of us plus the curiosity to develop the company and ourselves.

We have a lot to be grateful for and a lot of means to achieve a prosperous future together.

Wishing you all a fruitful December and a Happy New Year.

With many thanks.

Dan Sten Olsson, CEO

Göteborg November 2023