Our newbuilding program in Croatia has now been given a well-deserved breathing space before work on the remaining four P-MAX tankers begins in a few months time. These vessels were ordered at a later date and will be delivered at the end of 2009 and the end of 2010, respectively.
The vessels so far delivered have performed well during the year. In summer, 2007, yet another time charter agreement was signed with the French oil company TOTAL covering one of the tankers to be delivered at the end of 2009, the Stena Progress. At the same time, the charters for the two sisters, Stena Paris and Stena Provence, were each extended two years.
This means that we now have four vesselson charter to TOTAL with a total remaining charter period of 21 years.
Positive result
The result for the full year was SEK 48 million, which is lower than we had anticipated at the beginning of the year. The profit generated by our new product tanker fleet was in line with expectations. The lower result was mainly a consequence of additional costs of a non-recurring nature in the large tanker segment, in particular the repair costs relating to the tanker Stena Vision. The whole repair process was both complex and time-consuming but the vessel
Strong seagoing organisation
At present, about 160 persons are employed on our vessels. Recruiting, training and also retaining competent crews is a critical success factor in our business. It is also one of the largest challenges since the demand for seagoing personnel in all categories has increased dramatically and will continue to increase as a result of strong markets in practically all the shipping segments.
Together with our ship manager Northern Marine Management, we are investing considerable resources in this area. This work will continue.
Effective ship operation
Generally speaking, the cost of ship operation, which largely consists of personnel costs, is rising in shipping. This also applies in our case. Our revenue fl ows are secured and keeping the vessels’ operating costs under control will be one of our most important tasks in the next few years.
Continued high demand for transportation
Since the record years 2004/2005, the tanker market has fallen back overall, although from high levels. This is no surprise to us and we expect the tanker market to weaken still further in 2008 and 2009. Even though downward adjustments are being made to the growth figures in some parts of the world, the demand for oil and thus the transportation of oil is still high.
However, in the next couple of years, a very large number of new vessels will be delivered. In our size segment, between 300 and 350 new tankers will be delivered in 2008 and 2009, which represents about 40 per cent of the existing fl eet. Our assessment is that it will not be possible for the market to absorb these tankers without considerable downward pressure on freight rates.
IMO’s ban on the transportation of oil by single-hull tankers will come into force in 2010. This will force a number of tankers out of the market and the market will then be able to begin to move towards a state of balance again.
Innovation and performance
When we talk about the market trend and the weak prospects for the years immediately ahead, it is very important to point out that it is just this scenario for which we positioned ourselves quite some time ago. All the vessels in service are signed to fixed long-term charters, which means that we have secured a base for our revenue fl ows, irrespective of the market. Our strong balance sheet and secured cash flows give us opportunities and the ability to act as regards new business deals, not least in weak shipping markets.
Concordia Maritime is a niche player in terms of the market as a whole. We do not strive to be the largest, but we do strive to be best in the areas and segments where we are active. Satisfying our customers’ need for safe and cost-effective tanker transportation based on innovation and performance has been our business concept for many years.
Interesting shipping markets
We are now entering a period with shipping markets that could be very interesting and we have a solid business concept and the ability to act resulting from stable fnances and a long-term approach.
We also have our highly competent employees ashore and at sea in our own organisation as well as our partners’ employees. In the fi nal analysis, it is these employees who are our greatest asset and strength in our work on continuing the positive development of the company’s business activities.
Gothenburg, March, 2008
Hans Norén, President