Quality Reliability Flexibility
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Quality Reliability Flexibility STOLT-NIELSEN LIMITED ANNUAL REPORT 2017 Contents DIRECTORS’ REPORT FINANCIAL STATEMENTS STOLT-NIELSEN LIMITED ANNUAL ACCOUNTS 08 2017 Financial Highlights 64 Independent Auditors’ Report 10 Our Business 68 Consolidated Income 136 Income Statement 12 Chief Executive Statement 137 Statements of Officer’s Review 69 Consolidated Statement Comprehensive Income 18 Business Review of Comprehensive Income 138 Balance Sheet 18 Stolt Tankers 70 Consolidated Balance Sheet 139 Statement of Changes 22 Stolthaven Terminals in Shareholders’ Equity 26 Stolt Tank Containers 72 Consolidated Statement 30 Stolt Sea Farm of Changes in 140 Statement of Cash Flows 34 Stolt-Nielsen Gas Shareholders’ Equity 141 Notes to the Financial 37 Corporate Responsibility 73 Consolidated Statement Statements 44 Letter from the Chairman of Cash Flows OTHER INFORMATION 45 Corporate Governance Report 74 Notes to the Consolidated 152 Shareholder Information 52 Financial Review Financial Statements 153 Stolt-Nielsen Offices 135 Responsibility Statement and Facilities Forward-looking Statements Included in this publication are various ‘forward-looking statements’, including statements regarding the intent, opinion, belief or current expectations of the Company or its management with respect to, among other things, (i) goals and strategies, (ii) plans for new development, (iii) marketing plans, the Company’s target markets, (iv) evaluation of the Company’s markets, competition and competitive positions, and (v) trends which may be expressed or implied by financial or other information or statements contained herein. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other facts that may cause the actual results, performance and outcomes to be materially different for any future results, performance or outcomes expressed or implied by such forward-looking statements. These factors include in particular, but are not limited to, the matters described in the Principal Risks section on page 61. www.stolt-nielsen.com Focused on delivering long term sustainable growth Stolt-Nielsen Limited (SNL) is a leading global provider of integrated transportation, storage and distribution solutions for chemicals and other bulk-liquid products, delivered through its three largest operating units: Stolt Tankers, Stolthaven Terminals and Stolt Tank Containers. Stolt Sea Farm is a leading producer of premium turbot, sole, sturgeon and caviar. Stolt-Nielsen Gas is developing supply-chain opportunities in the LNG market. STOLT-NIELSEN LIMITED ANNUAL REPORT 2017 Quality Quality in all we do is what sets us apart. From our talented employees to our world-class systems and assets, we are setting the standard for quality across our industry. Reliability We pride ourselves on doing what we say we will, when we say we will do it. Each and every shipment matters to us and we are committed to delivering it safely and on time. Flexibility We are focused on developing cost effective solutions for customers and understand that a flexible approach is essential. We are a leader in many of our markets, which means customers can rely on us to manage their requirements. 2017 FINANCIAL HIGHLIGHTS Our performance Despite challenging markets 2017 was a year of progress for Stolt-Nielsen Limited. Operating revenue (US $ millions) US $1,997m 2,100 2,138 1,984 1,880 1,997 2013 2014 2015 2016 2017 Operating profit (US $ millions) US $194m 246 232 195 189 194 2013 2014 2015 2016 2017 Total assets (US $ millions) US $4,615m 4,615 3,887 3,915 3,895 4,421 2013 2014 2015 2016 2017 — 8 — STOLT-NIELSEN LIMITED ANNUAL REPORT 2017 DIRECTORS’ REPORT FINANCIAL STATEMENTS STOLT-NIELSEN LIMITED OTHER INFORMATION ANNUAL ACCOUNTS Operating revenue by business Operating profit by business Total assets by business (US $ millions) (US $ millions) (US $ millions) 1% 2% 3% 5% 3% 24% 11% 26% Tankers: 1,158 Tankers: 2,470 Terminals: 243 Tankers: 111 Terminals: 1,268 Tank containers: 513 Terminals: 54 50% Tank containers: 530 Sea farm: 73 Tank containers: 54 Sea farm: 136 Corporate Sea farm: 4 Corporate and other: 10 and other: 211 58% 54% 27% 12% 24% Excludes Corporate and other $29 million loss (in US $ millions, except per share data) 2017 2016 2015 Operating revenue 1,997.1 1,879.9 1,983.7 Operating profit 194.4 231.8 246.2 Net profit 50.1 113.2 133.1 Net profit per share: Basic $0.81 $2.05 $2.36 Diluted $0.81 $2.05 $2.36 Weighted average number of Common Shares and Common Share equivalents outstanding: Basic 61.9 55.2 56.11 Diluted 61.9 55.2 56.11 STOLT-NIELSEN LIMITED ANNUAL REPORT 2017 — 9 — OUR BUSINESS At a glance ICELAND A global leader in the transportation and storage of specialty chemicals and other bulk liquids. NORWAY USA UK NETHERLANDS BELGIUM GERMANY MEXICO FRANCE ITALY COLOMBIA SPAIN PORTUGAL BRAZIL ARGENTINA STOLT TANKERS STOLTHAVEN TERMINALS STOLT TANK CONTAINERS Stolt Tankers is the world’s largest operator Stolthaven Terminal’s global network of Stolt Tank Containers is the world’s leading of sophisticated chemical tankers, providing terminals provides safe, high quality storage provider of logistics and transportation safe, reliable and high quality transportation and distribution services for chemicals, clean services for door-to-door shipments services for bulk-liquid chemicals, edible oils, petroleum products and gas in key of bulk-liquid chemicals and food- acids and clean petroleum products. markets worldwide. grade products. 74 4.7 35,396 deep-sea chemical tankers million cubic metres of storage capacity tank containers in the fleet 81 211 127,000 coastal and inland tankers railroad tankers shipments Please see pages 18-21 for more details Please see pages 22-25 for more details Please see pages 26-29 for more details — 10 — STOLT-NIELSEN LIMITED ANNUAL REPORT 2017 DIRECTORS’ REPORT FINANCIAL STATEMENTS STOLT-NIELSEN LIMITED OTHER INFORMATION ANNUAL ACCOUNTS JAPAN CHINA UNITED ARAB EMIRATES TAIWAN SAUDI ARABIA THAILAND PHILIPPINES INDIA MALAYSIA SINGAPORE AUSTRALIA SOUTH AFRICA NEW ZEALAND STOLT SEA FARM STOLT-NIELSEN GAS Stolt Sea Farm is one of the world’s most Stolt-Nielsen Gas focuses on the advanced high-tech aquaculture companies, development of small-scale LNG supply specialising in high quality turbot, sole, chains serving off-the-grid markets lacking sturgeon and caviar produced in an access to LNG pipelines. Shipping Lanes environmentally friendly and sustainable manner. Stolthaven Terminals 15 Two Stolt Tank Containers Depots Stolt Sea Farm environmentally friendly land-based farms 7,500cbm LNG vessels under construction Stolt-Nielsen Gas 5,400 66% Stolt-Nielsen Offices tonnes production capacity of turbot ownership in HIGAS S.r.L Major trade flows Please see pages 30-33 for more details Please see pages 34-36 for more details STOLT-NIELSEN LIMITED ANNUAL REPORT 2017 — 11 — CHIEF EXECUTIVE OFFICER’S REVIEW A strong platform for growth Our focus in 2018 will be on getting a higher return from the assets we have, reducing debt and improving earnings. — 12 — STOLT-NIELSEN LIMITED ANNUAL REPORT 2017 DIRECTORS’ REPORT FINANCIAL STATEMENTS STOLT-NIELSEN LIMITED OTHER INFORMATION ANNUAL ACCOUNTS 2017 was a year of mixed results for Stolt-Nielsen Looking ahead to 2018, we expect another Stolt Tankers Limited (SNL). The Company reported a net profit challenging year for Stolt Tankers. 51 Stolt Tankers reported an operating profit of of $50.1 million for 2017, down from newbuildings are expected to be delivered this $111.0 million, down from $138.4 million in $113.2 million in 2016. While profitable for the year, equal to an 8% increase in the competitive 2016, as results softened for the first time in five year, Stolt Tankers’ operating results decreased by deep-sea fleet. Until the orderbook shrinks years. While revenue rose by $97.6 million, mainly 20% in 2017, as the positive impact of the sometime in 2019 – and the balance between due to the impact of the Jo Tankers acquisition, acquisition of Jo Tankers (JoT) was offset by supply and demand improves – the deep-sea operating expenses and overheads also increased weakness in deep-sea markets. Contract rates fell tanker market is likely to remain soft. On a for the larger fleet, and results were dragged down by 10% and spot rates dropped by 18% positive note, as a result of the acquisition of by the decline in both contracts of affreightment year-on-year, driven by new tonnage entering the Jo Tankers, Stolt Tankers will require no new (COA) and spot rates during the year. In addition, market. Stolthaven Terminals’ underlying deep-sea tonnage to maintain its current market the average price of intermediate fuel oil operating results improved in 2017, mainly share, for at least the next three to four years. consumed in 2017 climbed to $314 per tonne, reflecting ongoing actions to drive sustained At Stolthaven Terminals, the chemical storage from $216 per tonne in 2016, though the impact long-term performance. Results also reflected an market is expected to remain stable in 2018, with was largely offset by lower bunker surcharge increase in total storage capacity, increased some potential upside for growth – roughly in line rebates to customers. For the full year, bunker throughput and higher income from our joint with GDP. Our focus on chemicals – rather than oil hedges generated gains of $13.5 million in 2017, venture terminals. Stolt Tank Containers had an and clean petroleum products (CPP) – is an an increase of $6.1 million over 2016. improved year, with rising demand driving both advantage in the current market, given the current The total volume of cargo carried for deep sea increased shipments and higher utilisation. At volatility in the petroleum space due to the during 2017 increased by 20% from 2016, mainly Stolt Sea Farm, while market prices for turbot and unwinding of the contango market.