Odfjell SE Annual Report 2012

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PREPARED Shipping is often said to be a cyclical industry characterised by long periods of unsustainable earnings. Having closed 2012, the fourth year in a row of loss making within our shipping business, the saying seems true with history therefore repeating itself. In this context one can of course look back and reflect on how we handled our business prior to the start of the down-cycle, and equally important, evaluate the effect of our choices and major strategic discussions so far during the recent period of overcapacity in the chemical tanker market combined with lower economic growth. A key qualification for survival in a business environment of this nature is to be prepared, for bad times as well as good times, for unexpected circumstances in general. In 2008 we did not foresee what was ahead of us. With the benefit of hindsight, we certainly would have handled some aspects of our business differently if we only had known. Nevertheless, I will argue that we were prepared for adverse conditions, proven by the fact that we are still in control of our own destiny, different from many of our competitors. However, we cannot change what is behind us, except learning from any mistakes. A far more interesting question is whether we are prepared for the future. If the theory that shipping is cyclical remains true, the future should look better from a market perspective. There are signs now that we potentially are at the bottom of this down-cycle, and that the next couple of years will bring improved market conditions. So we want to be prepared for that, but at the same time in view of the aforesaid, be ready for the contrary. In my opinion, we are well prepared. Our fleet of chemical tankers for instance, is unique in terms of size and capacities, but most importantly when it comes to technical standards. During difficult years, we have not jeopardized on maintenance and upkeep. And despite unfavourable market conditions, we have been able to renew and keep the fleet modern by selling or recycling older and therefore commercially obsolete tonnage, acquiring newer second-hand ships and most importantly, by entering into agreements for construction of new ships. When it comes to our tank terminal business, we have also prepared well for the future; particularly by bringing in Lindsay Goldberg as a global partner. Together we are going to build a larger and more successful terminal business for which there is growing demand both at the key junctions where we already are located and have possibility to make expansions, and at new locations in developing markets. More than in shipping generally, the chemical tanker and terminal business is said to be very complex with a high dependency on people; which in essence means competence, experience and organisational structure. Despite our many challenges and the hardship we have been subject to both ashore and on board, we have purposely kept the organisation intact. So in that sense, we are also favourably positioned and well prepared. Our organisation from sea to shore is by many considered our biggest comparative advantage. Most fundamental is that we are still financially strong and able to pursue new opportunities, allowing us to continue developing our business and company. Both our cash position and gearing for example are satisfactory and safely within the limits required as part of our loan agreements. JAN Arthur HAMMER President/CEO 4 odfjell annual report 2012
LEADING Logistic service provider for chemicals, other specialty bulk liquids AND LPG/Ethylene Odfjell is a leading company in the global market for transportation and storage of chemicals and other specialty bulk liquids. Originally established in 1914, the Company pioneered the development of chemical tanker trades in the middle of the 1950s and the tank storage business in the late 1960s. Odfjell owns and operates chemical tankers and LPG/Ethylene carriers in global and regional trades, as well as a network of tank terminals. Odfjell’s business is an important contributor to industrial and societal development around the world. Our core business comprises transporting and storing organic and inorganic bulk liquid chemicals, acids, animal fats, edible oils, potable alcohols, LPG/Ethylene and clean petroleum products - important ingredients and raw materials for everyday life in products like medicines, medical equipment, building materials, cosmetics, food, textiles, cars, plastics, etc. STRATEGY Odfjell’s strategy is to maintain its position as a leading logistics service provider with customers across the world, through continuous development of safe and efficient operation of deep-sea and regional chemical tankers, LPG/ Ethylene carriers and tank terminals worldwide. CHEMICAL TANKERS Odfjell has unprecedented experience of deep-sea transportation of chemicals and other liquids. Our operations are fully integrated, with in-house functions for chartering, operation and ship management. Our major trade lanes cover the US, Europe, Asia, India, the Middle East and South America. Odfjell’s sophisticated fleet currently consists of about 100 ships including owned, time chartered and commercially managed vessels.Per end of March 2013 the Company and its joint ventures also have six newbuildings on order. The total capacity of the current fleet is around 2.7 million DWT. The chemical tanker business posted a gross revenue of USD 1,066 million in 2012. LPG/EtHylene In 2012 Odfjell re-entered the LPG/Ethylene market and established the company Odfjell Gas Carriers AS. For the time being it operates two LPG/Ethylene carriers of 9,000 cbm each. The ships are owned and managed by Odfjell. TANK TERMINALS Our terminal operations yield synergies with our transportation activities and improve quality and efficiency control across the entire transportation chain. The tank terminal business contributes to stable and stronger results for the Company. Our tank terminal operations also offer opportunities to develop new markets where the infrastructure for specialised bulk liquids is limited. Odfjell has direct investments in part-owned tank terminals in the Netherlands, Belgium, the USA, Singapore, South Korea, Oman, China and Iran. We are currently expanding our tank terminal activities. Two new part-owned tank terminals are currently under construction in Charleston, USA, and in Tianjin, China. They will become operational in 2013. The Company also cooperates with eleven terminals in South America and one in Canada. These tank terminals are partly owned by related parties. The terminal business generated a gross revenue of USD 145 million in 2012. Assets / equity usd million 3 000 2 500 2 000 1 500 1 000 500 0 03 04 05 06 07 08 09 10 11 12 Total assets Equity gross revenue / editda usd million 1 600 1 400 1 200 1 000 800 600 400 200 0 03 04 05 06 07 08 09 10 11 12 Gross revenue EBITDA 5 odfjell annual report 2012
Page 1 and 2: ANNUAL REPORT odfjell 2012
Page 3: Mission statement Odfjell shall be
Page 7 and 8: 27.07 Odfjell decided to do a tempo
Page 9 and 10: odfjell management group JAN ARTHUR
Page 11 and 12: and Jannicke Nilsson. The Audit Com
Page 13 and 14: Finally, we also have a 50/50 joint
Page 15 and 16: to reduce the Company’s exposure
Page 17 and 18: Development of new and yet untapped
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Page 23 and 24: odfjell group evaluations. Further
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Page 39 and 40: odfjell group The major categories
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odfjell group (USD 1 000) Per 15 Au
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odfjell se statement of financial p
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odfjell se Note 3 Derivative financ
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odfjell se Note 4 Long - term debt
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odfjell se Note 6 Shareholders’ e
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odfjell se Maturity receivables as
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odfjell se 20 largest shareholders
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Gram CO 2 per tonne transported 1 k
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Energy-saving campaign In 2012 an i
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Following the incidents at OTR, inv
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fleet distribution (chemical tanker
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ships are used for the most special
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chemical and plastic metal commodit
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operating out of Sao Paulo, Brazil,
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estimation of world seaborne ethyle
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5.3 MILLION cbm storage capacity 2
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Rotterdam’s main shipping artery
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current capacity is 365,000 cbm in
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employees 1 881 Ship crew Internati
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Power of Attorney to the Board of D
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THE WORK OF THE BOARD OF DIRECTORS
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The Board shall ensure that the Com
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good understanding of the Company
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in short-term interest rates, inter
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LPG/Ethylene carriers Year built DW
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offices and aDdresses MAIN OFFICE O
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Odfjell SE Annual Report 2012

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