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Jan Rindbo preparing new strategy for Norden

Norden's newly appointed CEO, Jan Rindbo, faces one of his first tasks, namely to design a completely new strategy for the carrier. Two challenges come to mind: The dry bulk crisis will be drawn out. And the tanker boom will not last.

Norden's newly appointed CEO Jan Rindbo will soon start work on a new strategy for the carrier which been through a turbulent period in the last six months as the otherwise stable dry bulk market fell apart.

Rindbo, formerly of Pacific Basin, is pleased with the result that he presented today, Wednesday, which came to combined a profit of USD 82 million, attributable to a strong development in the tanker market.

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But at the same time, the strategy on which Norden operates was created during a period where the market looked significantly better than it does now. For this reason, the company needs a new plan to run the carrier with a total fleet of 243 vessels.

"I am pleased that we can present the best quarterly result since 2011 and the best operating result for the tanker division ever. The nice result was achieved because of a good tanker market, although at the same time it is pleasing that we can present black numbers for the dry bulk division in a very challenged market, which is mainly due to good cargo contracts which we entered at the end of 2014," Jan Rindbo tells ShippingWatch after the release of the interim report.

Boost from booming tanker

In the first half of 2015, the dry bulk market has experienced a record low for the trend-setting dry bulk index Baltic Dry Index, although this has been crawling slowly back up in recent weeks. But the booming tanker market benefited all segments - from super tankers to the small vessels - and is operated widely geographically and by refineries across the globe working overtime due to the low oil price. This has benefited Norden along with many other players in the tanker segment.

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For this reason, Norden was able to upgrade the full-year forecast for 2015, but but beyond this it becomes more difficult to predict how the carrier's two divisions will perform. And this is basically the essence of what the new strategy needs to be built to handle.

"We can't promise that dry bulk won't dive back into the red, and we can't say whether a balance will return to the market in 2016. Maybe you have to look even further to see this. However, we are seeing a certain improvement in the market right now, due to the fact the more ships are being scrapped and that there is a certain, although only seasonal, stockpiling in China. The market will however continue to be volatile and this will probably continue into 2016," says Jan Rindbo.

Fewer new orders

He expects that the industry will generally hold back on ordering many new ships, though he declines to say whether Norden has decided to stop ordering.

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"The market contributes in deciding that," he says, referring to the fact that the prices for used tonnage have been at rock bottom for a while and are only just beginning to increase.

"But the market will presumably achieve balance again. And on the other hand, I think that we have to get used to lower growth," Jan Rindbo adds.

The strategy work which is taking place under the name "Focus and Simplicity" will especially focus on what Norden, with its fleet and staff, is good at, and how to use this in the best way. The stage has not been set for the balance between tanker and dry bulk to change. Tanker is boosted by extraordinarily great demand, but Rindbo acknowledges that the question is how long this will last.

Danske Bank: Tanker will improve Norden result 

"Right now it looks like it will continue. In the fourth quarter 2014 we said that this couldn't keep going, but we are still experiencing an incredibly strong market. This will continue throughout the year at least we think, but in 2016 there may be big changes, because a lot of new tonnage will enter the market - especially in big crude oil tankers. These are all the conditions we need to consider in our assessment of a new strategy. We have to go into the details," Rindbo states.

The total half-year result for the carrier landed at USD 82 million.

The projected full-year operating result for 2015 is also upgraded to USD 70-100 million compared to a previous USD 50-90 million.

Norden delivers best tanker result ever

Norden CEO explains management cut

New Norden CEO: Bulk will become interesting again 

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