As the management and finance department at Odfjell maintain a close working relationship with both our lenders and investors throughout the year, the annual Bank Day and Capital Markets Day hold particular significance. The exclusive events provide a platform for in-depth conversations, fostering strong collaborations and offering a holistic perspective of the market and the entire bank portfolio.
Both events served as a testament to Odfjell's strong current position in the industry, exemplifying our focus on commercial and operational excellence.
CFO Terje Iversen, in his introduction and welcome, highlighted the recent upturn Odfjell has experienced with its string of strong financial quarters, while reminding attendees about Odfjell's positions in 2018. He also emphasized the importance of safety:
“We have to think about safety all the time: Not just for ourselves but for our colleagues, neighbors, friends.”
CEO Harald Fotland began his presentation on Odfjell's strategic orientation at the Bank Day by emphasizing the necessity of keeping good relationships with banking partners and holding these events:
“Odfjell is reliant on your trust and support, so this is, in my opinion, one of the most important events Odfjell organizes each year.”
He went on to say that Odfjell's strategic approach is based on capturing the short term while de-risking the long term. He highlighted the extraordinary results in decarbonization, fleet composition, renewal, and restructuring of tank terminals, and emphasized that safety is our ticket to operate.
VP Corporate Analysis & IR Nils Jørgen Selvik shed light on the complexity of the chemical tanker industry and explained where chemicals fit into the value chain. He noted the limited supply side and expected negative net fleet growth in the coming years, which will support a strong market.
Furthermore, Nils discussed key trends such as China's path to self-sufficiency, geopolitical factors, and the energy transition giving rise to new products. Concerning China's journey to self-sufficiency, Nils emphasized that it is too early to speculate on the concrete consequences. He did, however, end it on a positive note:
"Although China is increasingly self-sufficient, we expect a significant flow of products in and out to continue for the foreseeable future."
Chief Commercial Officer Bjørn Hammer presented Odfjell's trading- and commercial strategy. Bjørn highlighted the importance of flexible fleet composition in capturing market opportunities and mentioned efforts to push the age limitations set by customers. “We are working diligently to overcome the age restrictions imposed on our vessels by our customers. To that aim, we have attempted to engage in conversation with limited success; however, due to the current market condition, our clients now appear to be more willing to engage in conversations.”
The justification for wishing to extend the lifetime of vessels was stated as such by Bjørn:
“Despite their age, we demonstrate the quality of our vessels. We believe that extending the lives of current vessels will give our clients a more sustainable option. We are confident that we will be able to push the age restrictions in the upcoming years and trade more of our ships with more of our clients.”
Managing Director Terminals Adrian Lenning discussed Odfjell's terminal business, characterizing it as highly resilient and acyclical. He highlighted our terminals' top-tier position at strategic locations. Taking one step back, Adrian said our terminal business is essentially an infrastructure business. “It ticks all the boxes of an infrastructure business, we are an integrated and essential part of our customers' value chains. We have long-term customer relationships. We are also often the only one offering these specialized storage services.”
Adrian further elaborated on Odfjell’s expansion plans within current terminals and a decentralized organizational model.
"Odfjell is in a unique position to invest in this market segment. We possess something that other owners lack: track records, customer access, and market intelligence. This creates a compelling value proposition not only for consumers but also for other partners."
Terje returned to the stage and expressed his satisfaction at Odfjell's improved position in the capital and banking markets. He demonstrated our current stage in the cycle, pointing to rising interest rates and OPEX inflation. He mentioned Odfjell's share price outperforming the shipping index, and expressed confidence in the company's future based on the results it is producing.
“We are still not at the level we would like it to be. At the same time, I think Odfjell will be more interesting in the years to come based on the results that we are now generating.”
VP Finance/Deputy CFO Gustav Sannem focused on the financing aspect of the green transition and the importance of matching financing with the economic lifetime of vessels. He discussed Odfjell's life extension program and efforts to document the environmental benefits of keeping vessels in trade rather than recycling them. Gustav also expressed the company's commitment to exploring opportunities within sustainable finance.
“As you probably know, Odfjell was the first in our segment to implement a sustainability-linked framework - a measure we still consider to be aspirational. We will continue to explore opportunities within sustainable finance.”
VP Technology Erik Hjortland highlighted Odfjell's data-driven approach to decision-making, emphasizing the importance of having accurate information to estimate costs and simulate projections. He mentioned the company's plan to achieve at least a C-rating for all ships and discussed upcoming novelty projects. Among the unique proposals, he noted the possibility of investing in a Wind Assisted Propulsion System, which would make Odfjell the first chemical tanker company to pilot this technology.
“Our strategy has been to make use of the low-hanging fruits first. Now we're moving on to the next phase, with groundbreaking novelty projects like Air Lubrication and potentially Wind Assisted Propulsion Systems.”
CSO Øistein Jensen touched upon the controversial topic of recycling and its implications for the industry. He discussed the case of Bow Flower's recycling, stating that recycling onboard materials will reduce the need for new steel.
“By reusing the material onboard, the demand for new steel is reduced, leading to a decrease in carbon emissions associated with its production. Furthermore, utilizing recycled steel in the manufacturing of new steel has a positive impact on air pollution, water use, and water pollution.”
After the seminar, the Bank Day group embarked on a fjord adventure on board the veteran boat Atløy (which coincidentally had a Captain that had previously sailed with Odfjell) and sailed to the rustic and picturesque Villa Vestre where they were served seafood and an engaged speech from Chair Laurence Odfjell.
