Breaking Records Against All Odds
Regardless of the sluggish economic growth in Europe, the situation in Russia and the prevailing EU sanctions, Finnlines broke records quarter after quarter during the 2015 financial year. The aftermath of the financial crisis and Europe’s slow recovery from it have had a prolonged effect on Finland’s foreign trade. The balance of traffic and the changes in the production infrastructure have also forced us to think things through again over the years. In spite of this, the Finnlines Group made its best ever operative result during the financial year 2015.
The Finnlines Group’s strong performance stems from the right strategic decisions made during the past decade. We have invested over EUR 1 billion in our fleet over the past ten years, and, as a result, we now have the youngest and most modern fleet in the Baltic Sea compared to all competitors. This EUR 1 billion investment programme has been coupled with another strategic decision i.e. to own all our vessels and to cease to charter a single vessel. This has given the required flexibility to manage the vessel capacity better in this cyclical business. The Company is no longer dependent on the volatile charter market and can buy vessels which best meet its customers’ needs and are more cost-efficient to operate. Similarly, we can sell the vessels that are not cost-efficient or do not meet the Company’s ROCE targets.
Finnlines’ EUR 1 billion Capex programme for the years 2006–2016 is nearing completion. We have basically renewed most of our fleet, invested close to EUR 100 million in the Vuosaari Harbour and currently, we implement the EUR 100 million Environmental Technology Investment Programme in order to meet the new strict MARPOL sulphur emission regulations which came into force at the beginning of 2015.
Despite these investments, we continued to perform better and were able to retain a strong liquidity position in the Group. Over the years, the Group has focused on improving its financial position and strengthening its balance sheet: it reserved all excess cash flow which was available after implementing an ambitious and extensive EUR 1 billion Capex programme to reduce its interest-bearing debt and to improve its equity ratio. The Group’s balance sheet is now stronger than ever and the equity ratio stood at 45.7 per cent at the year-end.
Finnlines’ result in 2015 was highly impacted by several dockings to install emission abatement technology (“scrubbers”) in our vessels which are related to our ongoing EUR 100 million Environmental Technology Investment Programme. We continued our Programme throughout the year and 15 scrubber installations were completed. In 2016, we will install scrubbers on five more ships. Apart from scrubbers, we are also investing in propulsion systems and reblading, and in “silicon paint” hull projects for better fuel economy and for the environment.
The bunker prices continued to fall throughout 2015 and are at historically low levels. Through the bunker surcharge mechanism our clients have shared the benefits of lower prices with us. In addition to lower bunker prices, fuel consumption in 2015 was reduced by 8.3 per cent compared to the previous year.
In the ongoing Turnaround Programme, we rigorously analysed every line, every vessel, every function and every cost item to find out whether there was room for further lowering of costs. Cargo flows and vessel routes were also analysed to find out whether there was room for further improvement in efficiency. As a result of this analysis, we have started a new service from Turku, located on the west coast of Finland, to Travemünde and created connections from the southern port of Hanko to both Rostock and Gdynia.
We take good care of environmental issues and safety matters, while also investing in the training of our personnel. Finnlines prides itself on being a responsible and reliable partner and a shipping industry operator providing high-quality, environmentally friendly and sustainable sea transport services.
Needless to say, all these investments have been made to retain our long-term strategic position and the long-term savings and benefits that these investments bring us in order to be the number one player in the Baltic Sea. Finnlines is aiming to claim an even stronger position in the Baltic Sea and the North Sea cargo traffic, in the Baltic Sea passenger traffic as well as in the Russian traffic. For efficiency, we focus on routes where the vessels’ capacity utilisation is as high as possible. We invest in the operations in our current transport areas and also open new routes when we see a market and business opportunity.
All the aforementioned strategic and operational decisions have impacted our Company in a very positive way, and as part of the Grimaldi Group, one of Europe’s most powerful and well-organised shipping companies, Finnlines has generated the best shareholder value to all of our shareholders – be they small or large. As one of the strongest companies in the Baltic shipping sector, we have always strived to reach our goals in improving our productivity and profitability, and now, with the record-breaking performance levels, Finnlines can justifiably say that these goals need to be reset to an even higher level.
I am very pleased to thank all our customers for choosing us as their business partner, our shareholders for patiently allowing us to generate the long-term shareholder value and our skilled and motivated personnel for breaking records.