The markets where Torvald Klaveness operates continued to be challenging in 2016. Results for the combination carriers weakened compared to 2015, but were still satisfactory. The container segment was impacted by lower rates and impairments, whilst the results for dry bulk suffered from continued weak markets and low volatility.

Torvald Klaveness celebrated its 70th anniversary in 2016. This special occasion was marked by both internal and external celebrations, and offered a unique chance to connect past achievements with future ambitions. Klaveness started the year by launching a virtual reality trip through its history, visualising how we bring a long tradition of innovation into a future where the need for change is accelerating. Reaching the age of 70 without serious stretch-marks is no simple act in an industry riddled with prevailing low markets. When we still feel strong and relevant it is because we have been able to think and act across cycles. One of our strong values is commitment, meaning we seek lasting solutions and never “bet the company”.

We have proved this by setting aside funds during good markets and making investments when prices are low, most recently exemplified by our relatively large newbuilding program. In addition, innovation and development is in our veins. We are proud of our pioneering histories related to carrying cement in bulk, establishing pools and developing new ship types. In fact, the pool concept can be viewed as a forerunner of the ideas behind the sharing economy. Still, it is hard to celebrate and be too optimistic when markets are at historic lows, when many of our peers are struggling, and there are political movements against trade. Brexit and the US election are signs of an underlying discontent with how benefits from globalisation are distributed. While this development is not likely to have short-term consequences for shipping, we are in the longer term dependent on continued trust, positive interaction and trade between the larger nations of the world. On the environmental front we note the IMO regulations related to ballast water treatment and lower sulphur emissions as positive steps towards making shipping greener. Klaveness remains committed to running its business in an environmentally friendly manner, and our combination carrier concept is already a great contribution to improved energy efficiency for our customers.

While the combination carrier business continues to provide relatively stable earnings during difficult markets, Klaveness is not unaffected by lower rates, which is especially apparent in the container segments which experienced both lower rates and impairments in 2016. Looking back, however, the year marked a significant achievement in broadening the combination carrier business to a global business with a 50 per cent fleet growth and increased trade in both Brazil and across the basins. With the delivery of a new generation of vessels in 2018 and 2019 we expect to broaden the concept further. As the year closes we have also secured additional financing which together with cost reduction initiatives makes us comfortable that we can sustain continued low markets and are able to continue our focus on business development and growth opportunities. Our strategic focus remains on energy efficient solutions and digitization. The journey towards our 75th anniversary in 2021 will probably have its bumps and surprises, but we push forward with youthful energy and expect to be even more relevant and vibrant when we celebrate 75 years of improving the nature of shipping.

Klaveness achieved an EBITDA of USD 44.2 million in 2016 (USD 52.3 million). Mainly due to impairment of container vessel values of USD 58.5 million, the company made a loss before tax (EBT) of USD 58.2 million (loss of USD 23.2 million). The sale of five selfunloader vessels contributed with a profit of USD 31.5 million. Cash flow from operating activities was negative USD 4.4 million (USD 55.3 million) mainly due to lower EBITDA as a result of sale of the selfunloader vessels and lower earnings in other segments. The balance sheet remains solid with a book equity including minority interest of USD 261.2 million at year-end corresponding to an equity ratio of 47 per cent. High solidity and good liquidity was maintained in 2016. Klaveness took delivery of two combination carriers and one kamsarmax in 2016. EGD Shipholding AS joined as 50 per cent partner in two combination carriers, one delivered in 2016 and one with delivery in 2017. The kamsarmax was sold later in 2016.

The newbuilding program now consists of four combination carriers. The total number of vessels under management was 132 by the end of 2016, whereof 16 vessels were partly or wholly owned. Earnings for the combination carriers weakened in 2016, mainly due to a weaker tanker market, higher spot exposure and lower transported caustic volumes. Results were nevertheless satisfactory and Klaveness was able to expand its fleet by establishing new trades.

The container market weakened further in 2016 resulting in an increase in idle days for the Klaveness container vessels, however rates above the general market were still achieved due to the vessels’ fuel efficiency. As a result of weak dry bulk markets and reduced margins, chartering and trading focused more on industrial type of cargo clients and tailor-made services. Due to a strong cash position Klaveness repaid debt in the fourth quarter, thereby taking down interest costs, aligning covenants and extending the maturity of bond and bank debt. Klaveness also took measures to reduce operating and administration costs further in 2016 and is well positioned to withstand continued low markets.

Klaveness’ vision is to improve the nature of shipping and the strategy focuses on three core areas; establish a global combination carrier service, build the leading digital operator, and provide useful and intuitive digital services. As a result, Klaveness in 2016 has continued to expand the combination carrier concept into new areas, sold the only owned standard dry bulk vessel and has continued to invest in digital initiatives.

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Source: Klaveness