Norden forms tanker management JV with Synergy Marine Group
Danish shipping company Dampskibsselskabet Norden A/S has established a joint venture with Singapore-based ship manager Synergy Marine Group — Norden Synergy Ship Management (NSSM).
Effective 20 August 2020, the JV will handle the technical management of Norden’s owned tanker vessels comprised of medium range (MR) and Handysize product carriers.
According to Norden, in-house technical management is incompatible with the company’s transition to a trading-oriented business with large and frequent fluctuations in the number of ships owned.
While Norden has delivered technical management of its owned fleet over many years, it does not provide the commercial flexibility required nor economies of scale to invest in digitalisation of technical management, where Synergy provides digital solutions. The JV will take advantage of Synergy’s SMARTShip, an IoT platform that enables the improvement of vessel and fleet efficiency.
“Norden requires a nimble approach to ownership, both commercially and organisationally. The partnership with Synergy enables Norden to be fully focused on optimising trading and commercial operations while ensuring safe, efficient and flexible technical management of the owned fleet,” Jan Rindbo, Norden’s CEO, explained.
In addition to the added flexibility, the new structure is expected to result in significant cost savings as well.
As informed, Norden will transfer 116 employees to the 50/50 owned joint venture, which will be headquartered in Copenhagen, supported by a 100 per cent owned subsidiary in India, and with Danish flagged vessels continuing to sail under the same flag. The 116 employees transferred to the joint venture includes seafarers currently employed directly through Norden. The remaining seafarers will be offered new contracts through Synergy. In addition, 15 employees will be offered employment in new roles in either Norden, the joint venture or Synergy.
However, as a consequence of the restructuring, Norden will lay off 25 colleagues in Copenhagen, Manila and Mumbai.
Last year, Norden also appointed Synergy Group to manage its fleet of owned bulk carriers, with management services provided from Synergy’s head office in Singapore and its technical office in Chennai, India.
Norden delivers strong result despite volatile market conditions
The announcement on the JV coincided with the release of Norden’s financial report for the second quarter and first half of 2020, showing that the company delivered a profit of $29 million in Q2 2020 and $56.7 million in H1 2020, compared to a loss of $8.4 million in Q2 2019 and a loss of $13.7 million seen in H1 2019.
Adjusted result was $29 million for Q2 2020 and $58 million for H1 2020, compared to a loss of $12 million for Q2 2019 and a loss of $5 million for H1 2019.
The company thereby delivered the strongest second-quarter result since 2015 in a continued challenging environment, according to Rindbo.
As explained, the result was mainly driven by strong Tanker Operator performance, but Asset Management also contributed with a positive result, and Dry Operator delivered a break-even result for the first half-year despite unprecedented market disruption due to COVID-19 and a price war in oil markets.
“In a first half-year with extreme market volatility, Norden delivered a strong result while acting on attractive dry cargo asset opportunities,” Rindbo said.
“Tanker Operator delivered an outstanding result, but H2 2020 earnings are expected to be much weaker due to lower rates. Dry Operator navigated well through severe market headwinds and is expected to generate substantial value in H2 2020.”
Norden raised its expectation for the full-year adjusted result to $40-80 million from $30-80 million. This is based on higher expectations for the Dry Operator business unit.