Overcooked commodity markets and the risk of a global economic slowdown are the biggest risks to Norden’s business this year, according to its chief executive. The Danish owner and operator of bulkers and product tankers has just posted its best annual result in 11 years and expects 2022 to be even better. Earlier this month, it said it expects its full-year profit to grow to between $210m and $280m this year, “based on good positioning and active trading in a continued strong and volatile dry cargo market”. Its CEO Jan Rindbo told TradeWinds that the company has much to feel confident about, but there are still plenty of unanswered questions about what lies ahead. “We’ve been through the pandemic, and we have been able to cope with huge volatility in the markets and still generated good results, so I’m confident that we can continue to do that here in 2022,” Rindbo said.

But the big risk remains a slowdown in world economic activity, he explained. “The concern here, of course, is that rising inflation and rising energy costs would eventually lead to a recession in the world economy — and that could disrupt demand. I think there’s a higher risk for that now than maybe a month ago. I think that’s just something to watch. So, we are saying that we have an expectation that the conflict based on how we see the situation today will be slightly negative for the dry cargo market,” Rindbo said. Norden, of course, expects the loss of export volumes of grain from Ukraine and the Black Sea this year, in the wake of conflict in the region that has shut down many ports. The US Department of Agriculture has cut its estimates for Russian wheat exports by 3 MMT and its expectations for Ukrainian exports by 4 MMT for 2022. “So, the question here, of course, is to what degree can other grain-exporting regions replace this volume out of the Black Sea?” Rindbo said. “That could provide some more seasonality in rates, it will potentially put more pressure on the other grain-loading regions — the port infrastructure, more waiting time. Then, of course, the question is will there be enough grain volumes to export from the other regions to replace the lost volume in the Black Sea and Sea volumes?”

Norden has had two vessels on charter that have been affected by the conflict. Any other vessels that were bound for Russia or Ukraine have been redirected, but Norden continues to call at other ports in the Black Sea, such as in Turkey. “In the trade of raw materials – commodities – Russia is more significant than Ukraine as well, so of course, we have Russian customers. If you look at our cargo volumes last year, for example, on dry cargo around 7% of our total volume was loaded in Russia. That clearly impacts both Norden, as well as trade flows. The Ukrainian and Russian grain exports are more than 15% of the total grain exports in the world, so it’s not an insignificant market.”

As TradeWinds has reported, Norden has decided not to take on new business in Russia. Rindbo said this was a moral decision, as well as a choice to avoid the riskier commercial environment. Uncertainty remains around making payments to Russian parties and how that will be affected by sanctions. Then there is the self-sanctioning action being taken by corporations around the world, which are not willing to buy Russian oil, for example. “That is having a significant impact now,” he said.

Norden recorded annual profit of $205m for 2021, its best earnings in 11 years. It is now contemplating a buyback of up to $50m of a $100m bond issue maturing in June 2024. The deal will be a “reverse Dutch auction”, in which bondholders are invited to provide a price they would be willing to accept for the debt. The board has also approved a share buyback worth up to $30m, to adjust the company’s capital structure. A maximum of 2.24m shares can be acquired up to the end of April.

The company last week announced that former Frontline chief executive Robert Hvide Macleod is joining its board.