At the time of writing, the coronavirus has impacted massively on Sweden. Gatherings have been banned for over a month, and it has been recommended that we citizens should not travel, and that we should stay at home as much as possible. We are encouraged to collectively take responsibility for protecting our elderly and people around us who belong to particularly vulnerable groups. Swedish trade and industry has taken a hard knock. The tourist industry and the transport industry are some of those most deeply affected. Rederi AB Gotland has also been affected.
As things stand at present, it is difficult to assess the extent of the adverse impact on our business due to COVID-19. The amount of revenue we lose is largely dependent on how long the authorities’ restrictions continue to be implemented. In the scenarios we are expecting to see, it will make a big difference if travel can be resumed in May/June, or significantly later. This is because so much travel using the Gotland service takes place between June and August.
We have been working intensively since March to adapt our activities and take action to reduce our expenses so that we can prepare for a situation where we see major loss of revenue. At the same time, we are giving priority to sustained security of supply for Gotland, where daily ferry services are crucial for access to goods, foods and medications. This is being achieved by concentrating services on what are referred to as basic services, with two ships. These measures are allowing us to reduce the risk of infection among our employees, while also making us less vulnerable in a scenario whereby we see a dramatic increase in the number of staff on sick leave. We have also implemented a number of initiatives to support other social functions on the island of Gotland. For instance, we have obtained dispensation from the Swedish Transport Agency to provide special ambulance services.
While we are implementing adaptations and measures in order to deal with significant loss of revenue, we are preparing for a situation in which demand for domestic travel and the attractiveness of Gotland could be greater than ever. We may see this effect if the restrictions on foreign travel are upheld and the recommendations against domestic travel are toned down. This is how unusual and complex the situation is in Sweden in May 2020.
Equipped for the future
The end of 2019 saw delivery of the company’s other newly built LNG ship from the GSI shipyard in China. Its working name, M/S Thjelvar, has now been changed to M/S Gotland. This is in line with a tradition that has existed since 1865. The first ship, M/S Visborg, will also be changing her name to M/S Visby in accordance with the same tradition. We are reducing our climate impact further with two LNG ships on the Gotland service, and giving us even better opportunities to run our services with elements of renewable energy thanks to the gradual introduction of LBG (Liquefied BioGas). Over the year, Destination Gotland has also adopted a green roadmap that describes how the Gotland service can reduce its climate impact by 70 per cent by 2030. This means we are well-equipped for the forthcoming contract period.
A positive aspect
For product tankers, 2019 was another year with a relatively weak market. However, the shipping rates increased during the winter and spring and this – in combination with a massive drop in the price of oil – has improved the profitability of Gotland Tankers. This gives us a much-needed glimmer of light in an otherwise dark period.
Overall account – and warmest thanks
Our balance sheet has expanded enormously on account of the generational shift with regard to Gotland service ships. We have also reduced our fleet by selling a number of ships during the year, which has resulted in positive capital gains. This explains the improvement in profit that we see for 2019. This is of course positive for the business year, but at the same time it is a one-off event that places greater emphasis on our challenge; to improve profitability in order to increase competitiveness in future procurement procedures. Our staff are absolutely crucial to our attempts to improve our business. This is why we would like to pass on our warmest thanks to all of you for your fantastic efforts throughout the year!
Ann-Marie Åström, Chairman
Håkan Johansson, CEO