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CEO's Review

Finnlines Excelled in the Reset Goals – Unprecedented Performance

The Finnlines Group – once again – delivered a record financial performance. For the fourth year in a row, we recorded an improvement in operating profit to date. Finnlines performed extremely well in an operating environment that can be described as both demanding and challenging. Europe’s economic growth has not yet picked up but remained subdued. In addition, the prevailing sanctions and counter sanctions in Russian trade continued to impact negatively on commercial activities across the Baltic Sea region.

Over the years, Finnlines has diligently focused on improving its operational and financial position. Despite the slow growth in Europe, the Company has succeeded in improving its result year after year. In 2016, the result for the period was EUR 68.1 million, representing a 20 per cent increase over the 2015 financial year, which was then the best ever result in Finnlines’ history. This superb result development and yearly result improvement has been achieved partly due to the successful implementation of the EUR 1 billion Capex Programme in 2006–2016 targeted towards fleet renewal, and partly due to our ability to react quickly to changes in the market in order to optimise the use of vessels and routes and prudently control our costs. We are running the biggest shipping line of the Baltic Sea, and we have made sure that each route gets exactly the type and number of ships it requires, with the right capacity, the right cargo flexibility and right speed.

In addition, we have utilised modern IT and other technological innovations and added good-quality, modern features into our vessels, not to mention that also passengers on HansaLink, NordöLink and FinnLink vessels will now enjoy beautifully refurbished ships and upgraded services. Thanks to our EUR 1 billion Capex Programme, we now have a modern fleet, with an average age of less than 12 years and consisting of 22 owned vessels, almost all equipped with scrubbers, i.e. sulphur emission abatement technology.

It is important to bear in mind that the global shipping industry plays a tremendously important role in ensuring the steady flow of both goods and people. The best companies within the industry have always been geared towards sustainability in order to maintain long-term competitive industry prospects. The global shipping industry’s carbon emissions account for a relatively small part of the world’s carbon emissions. Even though the shipping sector represents about 90 per cent of global trade, its carbon emissions are approximately 2.2 per cent of global emissions. For example, while the volume of cargo, in tonnes, increased by over 14 per cent, during a period of high economic growth between 2007 and 2012, the total CO2 emissions produced by the shipping industry dropped by 15 per cent. These figures show how shipping is today rather a solution than a problem in terms of climate change.

Our EUR 100 million Environmental Technology Investment Programme, apart from installing scrubbers, also included new propulsion systems and silicone anti-fouling – all are measures that also improve vessel efficiency and reduce emissions. As a result of a successful scrubber strategy, 20 out of 22 ro-ro and ro-pax vessels are equipped with scrubbers, 9 have been rebladed and 2 repainted with silicone anti-fouling. Scrubbers, new propellers and the reduced hull friction have improved fuel efficiency further, which in turn has also reduced overall fuel consumption over the years, leading to a reduction in the CO2, NOX and SO2 emissions. Since 2008, the Finnlines fleet’s fuel consumption has decreased by almost 35 per cent, which has reduced emissions and thus contributed to sustainable operations. During 2016, Finnlines installed, for the first time, a pair of flexible hybrid open/closed loop scrubbers from the world top producers onboard two of its Sweden–Finland vessels, marking a step toward leadership in the domain of environmental friendly shipping. The programme is continuing in 2017 onboard a further vessel.

To improve efficiency further and thus to contribute more to global sustainability, we are currently planning to lengthen six of the ships built in Jinling yard. This process, called “jumboisation”, will increase vessel capacity by around 1,000 lane metres which will enable us to generate profitable growth and improve shipping efficiency through use of bigger transport units. The technical specification (i.e. concept study) was prepared during autumn 2016 and the work is scheduled to begin in 2017.

The Grimaldi Group has had a long-lasting and strong sense of responsibility for the preservation of the environment. In addition to complying with regulatory requirements, the Group has invested and will continuously invest in environmentally sustainable technology. Therefore, in Finnlines, we put a lot of emphasis on environmental issues and safety matters. Finnlines prides itself on being a responsible and reliable partner and a shipping industry operator providing high-quality, environmentally sound and sustainable sea transport services. The Company’s work for sustainability has also been recognised internationally: last year Finnlines was awarded a Ruban d’Honneur by the European Business Awards. Competition for sustainability is fierce, and being ranked among the most sustainable companies in Europe is a significant achievement. We have continued our hard work over the years and are committed towards the new even more stringent regulatory requirements on ballast water treatment and continuously improve our energy savings and environmental impact.

During 2016, the parent company Grimaldi Group, concluded the redemption of the remaining Finnlines shares and Grimaldi Group Companies became a 100 per cent shareholder of Finnlines Plc. This led to a logical decision to delist the Company from the Helsinki Stock Exchange in August, bringing one historical chapter to an end. Finnlines became an integral part of the world’s premier roll-on roll-off specialist – the Grimaldi Group. 

In my role as the CEO, I have always sought to be as transparent as possible. This will not change now even though Finnlines Plc is no longer a Stock Exchange listed company. Transparency in our operations generates trust among our stakeholders, and the trust of our customers, our employees, our financial institutions and investors, and other stakeholders, has always been a key tenet of the Grimaldi Group’s business philosophy.

Finnlines celebrates an important milestone in 2017 – 70 years has passed since its foundation. We must, however, look forward to the next chapter in Finnlines’ future. Again, with your support, I will ensure that we will remain a very strong competitor in the market and continue to provide you all with safe, reliable, efficient and environmentally sound services – with an eye to further improvements.

I thank all our customers, our stakeholders and our employees for their long-term support. Through our seamless co-operation, once again, Finnlines was able to excel – in an unprecedented way – in both operational and financial performance.

Emanuele Grimaldi