2008 was a challenging year in many ways. Having started well, the climate took a negative turn in the summer. Record high fuel prices in July/August, followed by a global financial crisis and the subsequent slowdown of the real economy that only escalated in the last quarter, had a detrimental impact on the company’s Shipping and Sea Transportation and Port Operations functions.

One of the highlights of the autumn was the transfer to the new Port of Vuosaari in Helsinki, which provides a whole new setting and future potential for our operations in port.

The move, coupled with the opening of the new port, did cause large-scale one-off expenses that affected our net income for 2008. The new port also altered the competitive scenario for Port Operations, leading to price pressure and loss of customers. We will be able to offset some of these effects thanks to the synergies that arise from operating in just one port instead of two, but the current economic climate will probably force us to make further adjustments.

In the spring we invested in four ro-ro vessels. We already use these vessels in our time freight operations, so they have not increased our capacity. This investment, just as the six ro-ro vessels we ordered from China, will reduce our dependency on outsourced tonnage. The new vessels will have more versatile characteristics than the existing tonnage. They will be better suited for transporting especially cars, thanks to hoistable car decs. They will be brought into traffic gradually in the next two to three years, and, depending on the market at the time, they will either replace some of our time-chartered fleet or be added to our current ro-ro capacity.

One of Finnlines’ financial targets is to maintain a strong balance sheet structure. When the last of the six new ro-ro vessels is completed in China at the end of 2011, we will have invested approximately EUR one billion into our vessels and into the Port of Vuosaari. These investments are highly strategic in terms of the company’s competitiveness, but naturally they affect our solvency in the short term.

The decrease in sea transports is expected to continue in our geographical area of operation, due to the advancing recession in some of the crucial countries for our routes. This includes the development and transport needs of the Russian market.

Due to the challenging situation, we have adjusted our sea transport production capacity by returning some leased vessels to their owners and allocating capacity to areas where we have identified short- and long-term growth opportunities. These measures involved transferring one Star-class ro-pax vessel from the Malmö–Travemünde route to the Helsinki–Travemünde route, where it replaces an older Hansa-class ro-pax vessel. The replaced Hansa ship was transferred to sailing between Germany and St. Petersburg, in order to increase capacity and improve service levels on that line.

We will also strive to enhance services on other routes by optimising schedules and stock. We have set ourselves ambitious targets for 2009. Meeting them will require extensive measures, of which the abovementioned vessel changes account for a significant part. That by itself will not be enough.

The most important of our focus points for 2009 is a purchasing and procurement function development scheme initiated in late 2008 as a part of the Look Forward programme. The first stage of the scheme is now complete and the second stage, where we aim for large-scale savings, has been initiated.

Passenger traffic did not meet the targets set for it in 2008. In 2009 we will persist in developing our passenger traffic function, and its significance as a business area will continue to grow for Finnlines. Meeting our objectives requires commitment and willingness to adopt new work methods and ideas from each of us at Finnlines. We must also be innovative and ready to react quickly to changes in our surroundings.

I believe we have all it takes to come out of this recession stronger than we went in. Competent, committed staff form one of Finnlines’ main resources. So I would like to thank all employees for the efforts, which helped us get through last year’s difficulties, and encourage the whole personnel to tackle new challenges. I also wish to thank our loyal customers and assure you that you will always be welcome onboard at Finnlines.

Helsinki, 18 February 2009
Christer Antson