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30 passenger shipping
DFDS annual report 2009
Markets, activities and customers
DFDS Seaways operates overnight passenger shipping services on three
routes in the North Sea and Kattegat/Skagerrak. Its main target groups
are Mini Cruise passengers, holidaymakers travelling in their own cars,
group travel and transport, and conference passengers. The onboard
experience is important for all travellers. The routes also carry freight.
Ticket sales and related services account for approximately 40 %
of revenue, onboard sales for approximately 50 %. Freight revenue
represents about 8 %, and the remaining revenue is generated from
charter activity.
Market trends
As a result of the recession, the Northern European market for passenger
shipping experienced an overall decline in passenger numbers
of around 5 % in 2009.
In the Kattegat area, the market between Denmark and Norway
was relatively stable after adjustment for the restructuring of several
routes in 2008. The market trend between Sweden and Denmark
was in general considerably weaker. On the North Sea, routes are
operated between Denmark and the Continent/the United Kingdom.
The British market was substantially weakened by the recession
and a lower pound sterling, but the decline in the number of British
travellers was offset by an increase in the number of travellers from
the Continent to the United Kingdom. The total passenger market
between the east coast of England and the Benelux countries as a
whole was stable in 2009.
The recession had a negative impact on passenger shipping activities
in 2009 and most shipping companies have experienced a decline
in the number of passengers. Moreover, currencies have weakened in
several economies outside of Northern Europe raising the cost for
travel in Northern Europe. In addition, several airports expanded their
capacity in 2009, which has intensified competition.
As a result of the lower demand, pricing strategies in the travel
market have been further differentiated in order to secure volumes
and onboard earnings.
Passenger Shipping’s success criteria
The onboard maritime experience is key to fulfilling passengers’ expectations.
A positive experience depends upon an attractive onboard
environment that offers a varied, contemporary range of food, drinks,
shops and entertainment. In order to maintain and further develop
a high level of service, staff skills are constantly enhanced by a variety
of courses. In 2010, staff will also be involved in external marketing
campaigns under the slogan “Yes, We Will”.
To meet customers’ needs, new concepts will continue to be
developed and introduced, and the onboard physical environment will
be adapted and improved. The quality of cabins and cleaning are also
important for passenger comfort. Other important factors include
timetables, punctuality and safety.
Implementation of efficiency programmes
Project Lighthouse: In May 2008, a streamlining plan for Passenger
Shipping was launched under the heading “Project Lighthouse”.
The overall improvement plan was originally expected to lead to
an improvement in financial performance of DKK 100 million in 2009,
compared with 2007. Improvements were achieved in all of the
activities launched in 2009. Measured against 2008, the streamlining
plan has accounted for an impact on the 2009 result of approximately
DKK 50 million.
The main points of the improvement plan implemented in 2008 were:
n closure of the loss-making Bergen-Newcastle route and
the discontinuation of 270 posts
n reorganisation and rationalisation of the land-based organisation
(i.e. headquarters and agency organisation)
n new industrial-relations agreements, including more flexible
principles for manning the two passenger ships on the
Copenhagen-Oslo route
n a new, flat management structure on board all ships
n discontinuation of 130 posts related to the last three points above.
In addition to making the organisation and operations more efficient
in general, commercial responsibility for ship organisation has been
decentralised, which has underpinned earnings linked to onboard sales.
The new route management structure has optimised co-operation
between sales organisations on land and on board, which has led to
better and quicker adaptation to different customer segments’ requirements
and their expectations of individual routes/markets.
Project Lightship: Launched in autumn 2009, this project aims to make
ship operations more efficient. The target for Passenger Shipping is to
achieve total savings of approximately DKK 40 million in 2010.
Improvements and savings are mainly related to the priority areas
ship maintenance, procurement with a focus on port contracts, catering
and bunker optimisation.
Passenger Shipping 2008 2009
DKK miLLION Q1 Q2 Q3 Q4 FULL YEAR Q1 Q2 Q3 Q4 FULL YEAR
Revenue 320 503 602 354 1,779 280 443 545 352 1,620
Operating profit before depreciation
(EBITDA) -88 55 164 63 194 -41 105 187 63 314
Profit/loss on disposal of tangible assets 0 1 0 0 1 0 0 0 0 0
Depreciation -47 -46 -44 -43 -180 -44 -62 -45 -60 -211
Operating profit (EBIT) -135 10 120 20 15 -85 43 142 3 103
Operating profit margin (EBIT), % -42.2 2.0 19.9 5.6 0.8 -30.4 9.7 26.1 0.9 6.4
Invested capital, average 1,840 1,767 1,750 1,782 1,794 1,758 1,693 1,659 1,644 1,693
Return on invested capital (ROIC) p.a., % -29.3 1.9 26.5 4.4 0.8 -18.2 9.6 33.1 0.7 5.7
Passengers, '000 271 390 462 289 1,412 249 368 427 279 1,323