A real asset

Camillo Eitzen & Co (CECO) is a diversified international holding company, controlled by Axel C. Eitzen and based in Norway. CECO has activities in bulk, gas, chemical, ship management and maritime services, organised in wholly owned or stock listed subsidiaries in Oslo and Copenhagen. Eitzen Group is the marketing name of a wide range of shipping and non-shipping activities, represented by a number of companies, subsidiaries and affiliated entities worldwide.

CECO’s roots can be traced back to 1883 when its founder pioneered in transporting oil in bulk in sailing ships. The company – believing ‘through dedication and innovation we will make a difference’ – has a long tradition of experience, dedication, and high ethical standards. While its corporate head office is in Oslo, its commercial headquarters are situated in Copenhagen and the organisation operates offices in over 80 countries.

CECO, with its subsidiaries and affiliated companies, embraces a diversified working environment with 1200 shore-based employees and more than 5000 seafarers from over 20 nations.

Shipping & Marine spoke to CECO’s chief executive officer, Peter D. Knudsen, to find out more about the company’s activities. “CECO is invested in four segments: bulk, gas, chemical and maritime services,” he says. “We’re a holding company for these four investments and three of our subsidiaries are listed: Eitzen Bulk Shipping AS, Eitzen Chemical ASA and Eitzen Maritime Services ASA. Eitzen Gas, on the other hand, is a wholly owned subsidiary.

“As Camillo Eitzen is a holding company, it’s the management teams of our subsidiaries that work very closely with clients. We simply manage our investments by being on the board of directors of those subsidiaries and supporting them in terms of raising capital or enhancing reputation. Being listed on the Oslo Stock Exchange and having the ability to raise capital in the equity market has been an advantage in the past. Transparency and corporate governance goes hand in hand with being publicly listed and we think the group and its subsidiaries will be able to capitalise on these principles going forward.”

Speaking of how else the organisation draws strength, Peter comments: “By working closely with clients and trying to be innovative and proactive, we can accommodate their needs. We have very competent people working in all of the companies that we control or own, so our success is attributable to their commitment to the company. The fact that CECO has worked closely with Japanese ship owners has also been advantageous in the growth of the group over the last 20 years. We have had a good reputation in Japan, mostly because of Mr Axel C. Eitzen’s own commitment to the business.”

Mr Eitzen, a direct descendant of Captain Camillo Eitzen, the founder of CECO, is a fourth generation ship owner. He was chief executive officer of the company between 1980 and 2008, and has since become chairman of the boards of Eitzen Maritime Services, Eitzen Chemical and Eitzen Bulk Shipping. Being family owned is important in respect of Mr Eitzen’s relationship to many of CECO’s clients. “He has built up a good reputation for the company in Japan, which has secured a lot of tonnage in the past,” Peter observes. “He has been actively involved in the businesses for many years, which has given the company a personal touch.”

In terms of the type of work CECO undertakes, it has recently announced that Eitzen Bulk Shipping AS, which is 74 per cent owned by CECO, has secured two milestone contracts. An agreement with ThyssenKrupp Slab International B.V., a joint venture between ThyssenKrupp and Vale, for the transportation of about 50 million metric tons of steel slabs from Brazil to USA and Europe, over a period of 11 years has been entered into.

The contract will commence in the fourth quarter of 2010 and expire in third quarter of 2021. The steels slabs will be transported by a combination of Panamax and Supramax carriers. The commitment is equivalent to approximately 30,000 vessel days corresponding to about 7.5 Panamax/Supramax vessels annually. Owing to the limited number of cargoes in 2010, the contract will not impact earnings expectations for 2010.

The total contract revenue is expected to be approximately $727 million.

In addition, another 11-year contact has been signed with an affiliated company, Thyssen Krupp CSA Siderurgica Atlantico Ltda for the transportation of coal from Atlantic origins to Brazil, over a period of 11 years. Total contract revenue is expected to be approximately $100 million to $150 million. “It will mean that Eitzen Bulk works very closely with Thyssen as an exclusive partner in Brazil for a new industrial plant that it is setting up,” Peter explains. “One ship will depart from Brazil every fifth day for the next 11 years, and our flexibility and service proved key in securing that kind of tonnage for such a long period of time.

“Eitzen Bulk is a cargo-based operator in the sense that it has many long-term contracts, in addition to the Thyssen Krupp contract, which secure employment for its fleet for the next decade. It actually has substantial commitments to other end users, which are very similar to the ThyssenKrupp contract.”

Attracting such long-term agreements safeguards CECO’s longevity and they’re particularly appreciated in light of the downturn. Being exposed to the capital-intensive maritime sector means the organisation has been subjected to the effects of the financial crisis – and is considering divesting certain assets as a result. Sharing his thoughts on the challenges faced at present and on the coming years, Peter reveals: “I joined the company 18 months ago, just as the financial crisis hit, so my focus has been on improving operational efficiency, reducing cost, adjusting to current market conditions and securing stakeholders’ investments in the company.

“Our four subsidiaries are in industrial sectors of the shipping industry and all have certain entrance barriers in the sense that we are contract-based and we provide tailored transportation solutions to make transportation cheaper and more effective to our clients. Each of the subsidiaries will develop positively going forward.

“It’s important to distinguish between what we’re doing at a holding company level and in terms of the subsidiaries because each of the subsidiaries has its own strategy and plan of how to move forward. For us in CECO, the near time focus is to deleverage, and to consolidate rather than continue expand the business. Hopefully the world economy and the shipping markets will improve in the next few years, so the values inherited in the subsidiaries will once again allow us to capitalise on our investments,” he concludes.

History spanning 127 years

Family owned & run

Focusing on making efficiencies