Dan Sten Olsson - December 2019
LIVING IN DUALITY WE STRIVE ALONG TO CARE FOR THE BEST PERFORMANCE AND PROFIT SHORT TERM AS WELL AS LONG TERM
For 2019 most of our business units have improved their situations and positions in the market.
Stena Line is an important part of European infrastructure, but as an organization we do not organize the door to door cargo shipped by lorries and trailers transported on our ferries. In order to better understand and influence such transports, we have acquired a substantial part of a Swedish road forwarding company named NTEX. The financial result for NTEX is developing well together with increased cargo revenues for Stena Line from their use of our ferries. Our acquisition of a substantial share of NMT, a Dutch forwarder of cars and heavy equipment on wheels, is also generating good financial results and increased revenues for Stena Line. The business of NMT is basically transports overseas but their inter European activities have also generated new rolling cargo for our ferry lines.
Another joint venture with Glovis, a South Korean shipping company specialized in transporting cars and heavy equipment for Hyundai and Kia factories is starting well. Among other things Stena Glovis our joint venture company has already entered contracts generating as much in revenues as MUSD 150 p.a. for Glovis in return cargoes from Europe to Asia. Organizing traffic with the same forwarders as Stena Line, Stena Glovis will and already have generated new traffic for Stena Line.
Co-operation between the new three logistic companies and Stena Line I am sure will be very positive for our future development.
For Stena Recycling we continue to invest in new recycling technologies prioritizing recirculation of plastics. Together with the leading Swedish industries the “Circular Initiative Forum” is established. The purpose is not only to recover more waste. A most important purpose is to enable Swedish industries to technically reuse the recovered materials by new processes. Being very happy with the technical progress by our plant in Halmstad the ‘Stena Nordic Recycling Center’ we are going to use our knowledge to expand in all our home markets. Poland in particular is a market close to our capabilities.
To our fame Stena Recycling was appointed the most sustainable trademark for 2018 in Sweden. Stena Metall AB was also the first Swedish industrial company to issue a green bond during 2018.
For Stena Line digital transformation plays a most important part. One-hundred and forty co-workers work continuously cross-functionally in 40+ projects within five prioritized areas. Stena Line was appointed number three in marketing sophist-ication among all Swedish companies for 2019. Other areas of prioritized interest for Stena Line are projects leading to increased perfection and efficiency.
AI-assisted technology reducing fuel consumption of up to 3% was installed on five vessels in 2019 and will be introduced for the entire fleet in 2020. A number of digitization projects increase efficiency and security in Stena Line’s ports and terminals.
In order to grow our Stena Line business five new ferries are under construction in China. At the same time with the same yard in Weihai Stena Ro-Ro has ordered four ships and chartered them out to Brittany Ferries and DFDS on long term charters. Ro-Ro has ordered four ships and chartered them out to Brittany Ferries and DFDS on long term charters.
Stena Lagan & Mersey will be modified and extended by 36 meters during 2020 – a capacity increase of 30%.
At last we are enjoying a substantial turnaround for our tanker business. After years with over-supply of tankers, it looks as if there will be a shortage of tonnage for the next eighteen months. With approximately 110 tankers owned or chartered by us there is a chance for Stena Bulk and Concordia Maritime to make substantial profits in 2020.
Thanks to Northern Marine our operation has a first-class repute among our clients and in the industry. As substantial new legislation applicable to saving the environment and climate is imminent, our presence in industrial forums is important in order to influence the setting to practical and relevant new rules. Stena Teknik is another very important enabler to achieve a first class operation. Our first new building from China the Stena Estrid will consume thirty percent less bunkers than our existing ship the Stena Adventurer on the Dublin to Holyhead route. With ten years charter at hand we signed a new-building contract with GSI shipyard in Guangzhou for two technically advanced tankers to ship methanol in November.
About MUSD 30 is yearly spent by Northern Marine and Stena Line in training our seafarers.
Despite in principle achieving best in class performance combined with best in class frugality the financial results for Stena Drilling are horrendous. The volume for drilling is going up, but the overhang in supply of drill-ships will last. We are achieving full employment for many of our drill-ships, but the rate of income only covers operating costs with not much to serve our capital costs. Though the going is slow the direction is positive. It will take another two years until all costs for our operation will be covered.
Thirty-eight years ago by investing in real estate we set out to make Stena AB less dependent on marine activities. Our first investment in real estate has been followed by many more. Today our total real estate portfolio amounts to roughly MESK 45,000. With more than 26,000 apartments we continue to build more to the tune of 1,000 per year and we renovate and upgrade close to 1,000 per year. Despite our ongoing expansion we plan to reduce our climate impact with 25% for 2023 and with 50% for 2030. To get help with repair and maintenance and other tasks related to facility management we today employ 350 young people among our tenants during summer season and hope to expand that to 500 people in 2023. Being responsible not only for physical conditions in our real estate areas, but also for safety and favorable social conditions we keep on investing in relationship management and facilitating social structures. Our latest investments are in a school and a community center.
Our non-marine pieces business today constitutes 58% of totally invested capital for the Sphere companies and 52% of the Stena AB assets.
Stena Adactum started seventeen years ago. Our wholly owned companies namely Ballingslöv, Blomsterlandet and Envac have together a yearly turnover of about MSEK 7,500. The kitchen manufacturer Ballingslöv has grown so much in size by now that it can be considered a business area in its own right. Including Scandic Hotels, more than MSEK 3,500 are now invested in part-owned companies, where we are the largest shareholder.
Expected results for 2019 and turnover figures are published on the last outside page of this magazine. Getting close to Christmas I want to thank you all for your valuable contributions during 2019. Our position is in many ways glorious, but financially sensitive. Our culture praises itself for care, innovation and performance along with customer satisfaction and quality. Keeping on being like that is our best guarantee for the future.
Wishing you a Merry Christmas and a Happy New Year!
Dan Sten Olsson
Gothenburg 1 December 2019
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