DP World's P&O Maritime Logistics CEO urges more consolidation

More offshore service operators are in a state of crisis, and a part of the solution is more consolidation, says René Kofod-Olsen, CEO of DP World subsidiary P&O Maritime Logistics. "We'll look into this wherever it makes sense," he tells ShippingWatch in an interview.
Photo: PR-FOTO
Photo: PR-FOTO

Money is leaking out of several of the world's largest offshore operators these years, and this has forced multiple companies to implement fatiguing rescue plans.

Asking René Kofod-Olsen, Chief Executive of DP World subsidiary P&O Maritime Logistics, the situation demands that the sector start more consolidation.

"The industry needs more consolidation. And it's clear that this is something we'll look this into wherever it makes sense," Kofod-Olsen tells ShippingWatch in an interview.

The CEO has personally taken a small action toward consolidation.

DP World recently decided to merge two of its subsidiaries, Topaz Energy and P&O Maritime, under the name P&O Maritime Logistics and appointed Kofod-Olsen to lead the new company.

The main idea behind the merger is that the big oil companies want fewer suppliers, which are able to, on the other hand, offer more services.

"Oil and wind service companies want to continue to be sure that they have a viable supplier, and that's why there's no room for a fragmented market like we have at the moment," Kofod-Olsen says, adding:

"We'll see fewer and larger companies. That's the vision I have for our company."

In an interview with ShippingWatch, Kofod-Olsen says this will take place by, among other things, transforming P&O Logistics into a logistics operator capable of taking on more tasks for energy companies than just ship management.

"We're not big speculators"

Since 2012, Kofod-Olsen has led Topaz Energy and Marine, which, prior to the merger, operated a fleet of 117 vessels, mainly catering to the oil industry.

Recent years have been tough on the oil sector following the oil price collapse in 2014 that hurled many competitors into economic problems.

This especially applies to two big rivals, Norwegian Solstad and French Bourbon, both of which are struggling with deep deficits and billions in debt.

Topaz has also felt this crisis, Kofod-Olsen says, even though the company almost doubled its result in the first half of 2019 and turned a deficit into profit in 2018.

The explanation for Topaz Energy and Marine having more or less escaped the crisis unscathed can be attributed to a shift in strategy, the CEO says.

"We changed our strategy a few years back and became for contract based rather than spot based,"  he says and continues:

"We also haven't purchased too much, even though credit has been cheap. That has helped us out of this crisis."

The cautious procurement policy, in terms of buying new vessels, will also remain unchanged, even though DP World has taken over ownership.

"We won't become a better company by having more ships. We'll improve as a company because we can earn more money per ship. That's the way we look at it – also throughout the crisis. We're not big speculators, nor will we begin to be," Kofod-Olsen says.

Advantages of new ownership

Just over a year ago, DP World paid USD 1.1 billion for Topaz Energy and Marine from sellers Renaissance Services and private equity firm Affirma Capital, which files under British multinational bank Standard Chartered's PE unit.

In other words, Kofod-Olsen has gone form having a financial owner to an industrial owner, and that is tangible in several ways, he says.

"Our owners weren't necessarily familiar with the shipping industry. They were financial owners, and we were pleased with that, but we reached a size that made it impossible to keep up with the demands they expected," he explains.

"That's why it was fantastic becoming a part of DP World, which understands shipping. They comprehend where the industry is going and are willing to invest long-term capital in developing this business."

When DP World purchased Topaz Energy and Marine, the company's order book was worth USD 1.5 billion. Now it has grown to a value of USD 2 billion, the CEO relays.

P&O Logistics and Marine is headquartered in Dubai and owns and operates a fleet of roughly 400 vessels.

English Edit: Daniel Frank Christensen

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