Stolt-Nielsen gets a fillip from tanks

PLAIN SAILING

RESULTS • STOLT-NIELSEN’S BUSINESS MODEL HAS REMAINED EFFECTIVE IN SEEING IT THROUGH A TURBULENT YEAR, THOUGH THERE ARE SOME MAJOR CHANGES AND CHALLENGES AHEAD

STOLT-NIELSEN ENJOYED a healthy 2021, with its range of operating divisions providing a good bulwark against sectoral weakness. Group revenues were up 11.6 per cent compared to 2020 at $2.18bn, with operating profit rising by 23 per cent to $233.7m and net profit shooting up from $25.4m to $78.8m. Much of that improvement was delivered by Stolt Tank Containers, although Stolt Sea Farm also contributed to growth.

“The strong performance and market conditions that we saw in the third quarter at both Stolt Tank Containers and Stolt Sea Farm

STOLT-NIELSEN’S BREADTH OF INTERESTS IN THE

INTERNATIONAL CHEMICAL SUPPLY CHAINS HAVE

ALLOWED IT TO PROSPER DESPITE WEAKNESS IN THE

CHEMICAL TANKER SECTOR AND FLAT EARNINGS continued through the fourth quarter,” says CEO Niels G Stolt-Nielsen. “At Stolt Tankers lower volumes and higher voyage expenses reduced our trading margins. The underlying steady operating performance and long-term build-up in value at Stolthaven Terminals was overshadowed by the impairment of the Newcastle terminal in Australia. For terminals overall there was further improvement in utilisation, although lower throughput volumes reflected modest dockside activity. Stolt Tank Containers’ markets strengthened, with rising freight rates and higher demurrage revenue compensating for the rising costs.”

Results from Stolt Tankers were indeed weak, with the market for deepsea shipping dropping further as the year ended. Fourthquarter revenues of $307.8m were down on the previous quarter as contract of affreightment (COA) volumes fell by 6.6 per cent and could not be fully compensated for by spot market activity, where rates were off from the third quarter by 1.4 per cent. Freight revenue from the regional fleets did improve slightly.

Stolt Tankers’ fourth-quarter operating profit of $19.2m was down by 20 per cent against the prior quarter and compared badly to the $31.9m posted for the same period in 2020. This reflected the decline in deepsea revenue, higher timecharter hire expenses relating to the addition of pool ships in the third quarter, and higher barging and transhipment costs. Covid restrictions are still causing high crew change-over costs, the company reports.

For the financial year as a whole, Stolt Tankers recorded an operating profit of $68.8m, down by 18.4 per cent compared to the figure of $84.6m posted in 2020.

During the fourth quarter, Stolt Tankers determined that it would not be viable to repair Stolt Groenland, which suffered an explosion in Ulsan in 2019. As a result, it settled with its underwriters, booking a net loss of $13.0m. Stolt Tankers also disposed of Stolt Sequioa and Stolt Spruce for recycling.

TANKS AND TANKS Results at Stolthaven Terminals, the group’s bulk liquids terminalling division, were relatively flat compared to the third quarter,

with higher storage and utility revenue offset by lower wharfage income. Utilisation at the wholly owned terminals rose slightly from 92.3 per cent in the third quarter to 92.8 per cent. Fourth quarter operating profit was impacted by a $10m impairment charge on Stolthaven’s terminal assets in Australia; there was also the impact of lower operating revenues and a smaller contribution from joint-venture operations. For the year as a whole, Stolthaven’s operating profit dipped by 9.5 per cent to $62.3m.

Stolt Tank Containers (STC), on the other hand, had quite a bumper year. In the fourth quarter, revenues rose from $174.4m in the prior quarter to $191.5m, with a steep rise in ocean freight costs driving a 12 per cent increase in transport revenue overall, despite a normal seasonal reduction in the number of shipments. STC, like other operators, also had to contend with port congestion and operational delays caused by tight ship capacity and a shortage of truck drivers. On the other hand, those delays helped to drive a 9.4 per cent increase in demurrage revenue, with customers holding more tanks in their supply chains to offset logistical bottlenecks. For the year as a whole, STC saw its operating profit jump from $51.2m to $81.6m.

Stolt-Nielsen’s investment in the LNG supply chain is also beginning to pay off, with Stolt-Nielsen Gas recording a fourth quarter profit of $1.8m and annual operating profit of $2.1m, compared to a loss of $4.0m in 2020. Avenir LNG, in which Stolt-Nielsen is a significant shareholder, now has four small-scale LNG tankers operating as bunker vessels as well as supplying LNG to meet stranded demand. It has also put the new import terminal in Sardinia into operation. “With the progress made, Avenir is well positioned to capitalise on the growing LNG distribution and bunkering markets,” the company states.

A DIFFERENT FUTURE “I am positive about the 2022 market outlook for all our businesses,” says Niels G StoltNielsen. “Although the first quarter tends to be our seasonally weakest quarter, initial signs are that volumes and rates in all three logistics businesses are holding or even improving. Stolt Tankers’ markets are poised to strengthen as the delivery rate of newbuildings slows down and volumes increase. At Stolthaven Terminals utilisation continued to firm during the quarter, and with higher utilisation I expect higher rates to follow. The market for Stolt Tank Containers continues to look strong, with good demand and inefficiencies in the supply chain causing capacity tightness, improving margin per shipment.”

Stolt-Nielsen will have to face that future under new leadership, as Niels G StoltNielsen has announced he intends to step down from the position of CEO, a role he has held since he took over from his father, the late Jacob Stolt-Nielsen, in 2000. Niels will assume the role of chairman of the board of directors, subject to shareholder approval, replacing Sam Cooperman, who will stay on as a board director.

“I joined Stolt-Nielsen in 1990 and have served as CEO since 2000,” Niels StoltNielsen says. “It has been a privilege to lead and work with talented and dedicated individuals throughout the organisation for so long. However, I feel now is the right time for me to step aside and let a fresh pair of hands take the company forward. I have dedicated my career to Stolt-Nielsen Ltd and will continue to do so in the future.”

In another significant move, Hans Augusteijn has been appointed president of STC, succeeding Mike Kramer, who will assume the role of executive vice-president, marketing and business development, at Stolt-Nielsen Ltd. Augusteijn joined Stolt Tankers as director of strategy in 2019 after a 17-year career with Maersk.

“The expertise in strategy and business transformation that Hans Augusteijn brings to the role, together with his passion for shipping and logistics, will help us to extend our leading position in the tank container industry,” says Niels G Stolt-Nielsen. www.stolt-nielsen.com