By
David Mott |
Although the recently reorganised Scandlines achieved record operating profits of €193 million last year, these are uncertain times for the Baltic ferry operator, which was set up as a joint venture by the German and Danish Governments 15 years ago. It is reported – but not confirmed – that the current joint owners, private equity groups 3i in the UK and Allianz Capital Partners in Germany, have received three bids which value the company at about the €1.4 billion the current owners are hoping to get. They paid €1.5 billion six years ago.
It seems likely the southern Baltic ferry operator will stay in financial hands as it is known that Axa Private Equity, Apollo Management (which has cruising interests) and Nordic Capital have shown interest in the past. Danish ferry rival DFDS Seaways was also in the market but its bid was deemed to be too low.
The other element of the current uncertainty is the upgrading of the fleet with new ships for the Rostock-Gedser route, which ground to a halt last year when Scandlines cancelled a €230 million two-ship contract when small German shipyard, P&S Werften, could not carry out the work in time and subsequently went bankrupt.
But now, after several months of searching for a new yard, the owner has signed an outline letter of intent with STX in Finland to build two slightly smaller ships, powered by the increasingly popular LNG. The order is also significant for the shipyard, which has been put up for sale by its troubled South Korean parent. No price is mentioned but it is thought it could be similar to the cancelled order.
“We generally leave ownership considerations with the owners,” says Jensen. “But we have known from day one that the current ownership will end at some point.” He is unwilling to be drawn on whether he would prefer a ferry ownership. “Scandlines has produced great results, which make us attractive to any owner. It is possible other private equity groups will look at us.” He predicts net profits could grow 5 per cent this year and next.
Regarding the new ships, he says yards have been asked to tender for marginally smaller, double-ended ships of 1,300 passengers. They could also be used on the company’s other southern Baltic ferry route between Puttgarden in Germany and the Danish port of Rodby.
Looking at the longer term prospects for the company, Poulsgaard Jensen says a proposed new tunnel between Germany and Denmark in nine years’ time would cause his company to adjust its business model, whatever sort of link there might be. “Our ferries will be amortised by 2017 and will be ready to operate for at least another 10 years,” he adds.
The company sold off most of its freight routes last year and now concentrates on high-frequency combination services which also include the Helsingor-Helsingborg route.
This article appeared in the Autumn/Winter 2013 edition of International Cruise & Ferry Review. To read more articles, you can subscribe to the magazine in printed or digital formats.