Letter to the stakeholders by the new President and CEO Emanuele Grimaldi
Helsinki 8/11/2013
A new era is starting for Finnlines
Dear Finnlines Stakeholders,
I am writing this letter to inform you that I am taking over again the full responsibility of the management of our company. Mr Uwe Bakosch requested to leave his function as CEO/President, as he wishes to entirely concentrate on heading our German subsidiary Finnlines Deutschland GMBH. From 5th of November 2013 I will be acting both as President and Chief Executive Officer of Finnlines.
You may recall that I acted once in this double role from the beginning of 2009 to June of the same year. In fact, as a result of one of the worst global financial crisis since the thirties which broke out at the end of 2008 and hit the maritime sector very hard, I had to step in to rescue our company which was reporting losses in the region of Eur 11mln per month.
Due to my intervention, the company was brought in a very short time to a substantial break-even final line result after building up a considerable positive EBITDA. Therefore I left the top management position in June 2009.
Unfortunately during the last 4 years and a half, despite the efforts of the management and some capital and cash injections by the Grimaldi Group and the other shareholders, my hopes of a gradual return to a significant profit have not materialised and the Company is still floating in a territory of around zero profit results.
This trend has to change. That is why, following Mr Bakosch decision, I am taking back the direct and full control of the management in the interest of the Company shareholders and other stakeholders.
Here below, I will describe what my actions as President and CEO will focus on:
1. Finnlines has very professional managers and employees, with valuable skills and diversified expertise in various fields. What is often missing - and fixing this could add a lot to our company - is an entrepreneurial attitude. So, I will make sure that the old attitude is replaced by a new entrepreneurial spirit. This will spread passion for working long hours, if necessary, and will set a true hunger for profit and value creation for the benefit of the Company. As I did all my working life long, I will be doing this first myself and I am sure that, as usual, my commitment will be infectious.
But this is not enough. Some sort of a more international mindset is also needed in order to achieve the ambitious goals I have in mind. Finnlines has to combine and benchmark its potentially excellent features with the strengths, the economies and the resources of the Grimaldi Group network. And this will inevitably lead Finnlines’ management to think globally.
2. As a result of my analysis, our company shows a debt/asset-earnings ratio which is neither in line with the strict Grimaldi Group policies nor with the cautious standards of the best private (family) owned shipping companies. Our equity ratio has improved during the last 4 years – despite the crisis - and moved from just above 25% up to the present 33,4%. Notwithstanding this, I am committed to reduce further both the debt ratio and the overall financial exposure of Finnlines. Such a task will be achieved by the punctual repaying of mortgaged loans instalments, by the selling of heavy-to-sustain/non-productive assets and, if necessary, through increases of capital.
All this will start to materialise in the very short term.
3. All well-managed companies increased their efforts, after the 2008 crisis, in cutting unnecessary expenses. Finnlines did its homework as well and cut fuel consumption, unproductive services, operative costs, real estate and equipment leases costs, concession expenses, etc. It is my intention to do even more, and speed up this process, as there is room for further significant savings.
In parallel, productivity has to grow among Finnlines units and employees, especially in the port sector, and I will make sure of reaching this goal by adopting any available sensible solution.
4. Energy efficiency is a crucial goal for all shipping companies today. We are working very hard to succeed here. I will dedicate increased efforts in this field with the intention of meeting the strict requirements set by the Jan 2015 new SECA rules on sulphur emissions in an efficient way.
- First of all, as you may know, we start in this task from a quite good position thanks to two recent cycles of investments in the latest generation of eco-friendly new-buildings. Finnlines’ fleet is, in fact, one of the youngest fleets in the Baltic and North Sea, and it shows much lower consumption figures per linear meter transported than its competitors in the markets. This is mainly because all the latest vessels which entered into Finnlines’ service have a very large average intake (3-4.000 lane meters) and enjoy economies of scope and scale arising out from their substituting much older, smaller and more fuel consuming ships.
- Secondly I have set up an international team of engineers for the whole Grimaldi Group that is investigating all the best options offered worldwide by technological providers. This is in order to gain engine and hydrodynamic efficiency. We are not saving efforts in scouting applicable solutions from any kind of supplier which could be implemented to our fleet.
- Thirdly, common sense suggests what is logical to do - while technical solutions are searched and are going to be implemented - in order to increase fuel efficiency through operative steps. Slow steaming policies are programmed on a steady basis for saving bunkers in order to render our service sustainable. It is my intention to reach also a better fleet utilization, which is one of the best cost rationalisation and efficiency improvement in itself.
- It remains an open problem the most suitable and efficient solution to adopt for coping with the January 2015 SECA zone regulation challenge. In any decision timing is crucial in setting the policies. Our strategy - for the time being – is to study, test and wait. As technology advances, it will become easier to judge which solutions are the most adequate to our ships and services. For the time being several options are available, including scrubber installation, LNG retrofit, MDO retrofit. We could even opt for changing nothing, as there are already contacts with various fuel producers for purchasing 0,1% sulphur products at competitive prices. Thanks to the young age of Finnlines’ ships and the large size of our group, we are ready to promptly invest wherever it is, in absolute terms, most worth doing it.
5. Finally, in order to compete on international markets, Finnlines has to lean on a global strategy where only a multinational group like Grimaldi can operate in almost all European Coastal states, in the USA, in many South American, North and West African ports and even in some Asian ports. Grimaldi Group has a wide commercial network and owns more than 100 modern and big ships (operating a few more), modern terminals and logistic platforms, large equipment. They also have a vast clients' and constantly benchmarked suppliers' portfolio, since we are one the biggest roro/ropax market operators in the world with a solid expertise in the field. Synergy will make Finnlines much more flexible and stronger to overcome its next challenges.
I would like to take this opportunity to thank the directors, managers and employees of Finnlines for the valuable contribution they are giving to the company and for responding, as I am sure they will, to the new demanding task I expect they will achieve. Many efforts have been made since 2009. The momentum is now to accelerate and grab the first important results!
Last but not least I would like to express my gratitude to my predecessor Mr Bakosch for his work as CEO/President in years of global distress, constantly defending the value of our company. I look forward to continuing the strict cooperation with him in the respect of German part of Finnlines activities in the future.
Sincerely,
Emanuele Grimaldi