Stolt-Nielsen S.A.

views updated

Stolt-Nielsen S.A.

Aldwych House
71-91 Aldwych
London WC2B 4HN
United Kingdom
Telephone: ( + 44) 207-611-8963
Fax: ( + 44) 207-611-8952
Web site: http://www.stoltnielsen.com

Public Company
Incorporated: 1959 as Parcel Tankers Inc.
Employees: 12,000
Sales: $2.27 billion (2000)
Stock Exchanges: Oslo; NASDAQ
Ticker Symbols: SNIB; SNSA
NAIC: 483111 Deep Sea Freight Transportation; 483211 Inland Water Freight Transportation; 112511 Finfish Farming and Fish Hatcheries

Registered in Luxembourg, but headquartered in London, Stolt-Nielsen S.A. is the internationally operating holding company for five primary businesses: Stolt-Nielsen Transportation Group (SNTG) ; Stolt Sea Farm, Stolt Offshore (formerly Stolt Comex Seaway, in which the company holds a 53 percent controlling share), the Internet-based Optimum Logistics, and SeaSupplier, formed after the May 2001 merger between PrimeSupplier and OneSea.com. SNTG was formed in 1999 by merging the company’s sea-based transportation businesses, the company’s founding activity, and represents more than 40 percent of Stolt-Nielsen’s annual sales. Stolt Offshore is a leading services provider to the offshore oil and gas industry, specializing in offshore and subsea engineering, pipeline laying, diving and related construction, maintenance, and inspection services. Stolt Offshore added 43 percent to the company’s annual sales. One of Stolt-Nielsen’s fastest-growing and most profitable divisions is its Stolt Sea Farm unit, one of the world’s leading “aquaculturists.” Stolt Sea Farms produces and markets a variety of fish species in the fresh and prepared fish categories, including Atlantic salmon, salmon trout, turbot, halibut, sturgeon, caviar, tuna, and others. Stolt-Nielsen attempted to take Stolt Sea Farms public in 2000, but lack of interest, resulting in a low introductory price, led it to withdraw the IPO. Stolt-Nielsen has also set sail on the Internet, launching the e-commerce sites Optimum Logistics, providing Internet-based logistics software, and a controlling share of SeaSupplier, which has adapted the company’s logistics software to the marine procurement market. Stolt-Nielsen is led by chairman and founder Jacob Stolt-Nielsen, and his son and CEO Niels Stolt-Nielsen. Another son, Jacob B. Stolt-Nielsen, is behind the start-up of the company’s PrimeSupplier subsidiary.

Parcel Tanker Pioneer in the 1960s

Norway’s Stolt-Nielsen family had been involved in shipping since the late 19th century when Jacob Stolt-Nielsen began working as a shipbroker in the 1950s. After working in Norway, England, and the United States, Stolt-Nielsen set up his own business in New York, called Parcel Tankers Inc. Stolt-Nielsen had come up with a new idea for the international chemicals shipping trade, that of subdividing a ship’s hold into parcels, that is, into several tanks, each outfitted with its own piping and deepwell pumping systems. In this way, a large ship was able to offer more economical transportation to its customers’smaller cargo needs.

Stolt-Nielsen started with just one chartered ship in 1959. By 1963, the company operated a fleet of 18 vessels, and had opened offices in Oslo and Japan. The company continued to expand its fleet throughout the 1960s as it added new shipping routes. By the end of the 1960s, Stolt-Nielsen operated not only transatlantic and transpacific lines, but also provided liquid cargo shipping and handling across the Great Lakes and along the South American coasts.

In 1970, Stolt-Nielsen once again took the lead in the industry it had launched when it ordered seven new vessels. These were to represent a new generation of parcel tanker, featuring double bottoms, double skin and partly stainless steel hulls that provided greater security for the company’s cargo. These new ships were later to form the basis of international parcel tanker standards and specifications. By then, the company had been so successful that “parcel tanker” had become a generic name. The company then became known as Stolt Parcel Tanker.

The company’s fleet expansion was soon joined by growth on land. In 1971, the company acquired a storage terminal, the first of many and the foundation of the company’s transition into a full-scale sea-based logistics group. Jacob Stolt-Nielsen was also looking about for new opportunities in the early 1970s.

The discovery of rich hydrocarbon deposits beneath Norway’s coastal shelf in 1968 was to transform that small country into one of the world’s largest oil producers, giving birth to new numbers of companies providing support and services for the blossoming Norwegian offshore oil industry. Offshore oil exploration and production was still a relatively young business, developed in the comparatively calm waters of the Gulf of Mexico. Norway’s coast represented a challenge of an entirely different sort. Stolt-Nielsen quickly recognized the opportunity to get in on the floor of that country’s offshore services industry, and joined with another company to develop the so-called “moon-pool” diving support ship—allowing divers to enter the water through a hole in the bottom of the ship’s hull, rather than over the side into the rough Norwegian coastal waters. In 1973, Jacob Stolt-Nielsen formed a new company, Stolt-Nielsen Seaway, governing the operations of the vessel Seaway Falcon launched the year before.

That year marked the debut of another of Stolt-Nielsen’s operations. Norway had long been at the center of the world’s fishing industry. By the late 1960s, however, world attention had come to focus on the increasing threat of over-fishing and the resulting worldwide and long-term fish shortages expected to come in the future. Stolt-Nielsen recognized the interest in developing “aquaculture” or fish-farming methods as a means of meeting the demands of the quickly growing world population. In 1972, Jacob Stolt-Nielsen launched a new business, Sea Farm A/S. That company soon became one of the top producers of smolt (young salmon) to the Norwegian market. Sea Farm also began research and breeding programs to develop other farmable fish species, starting with trout and then adding salmon as well.

Both Stolt-Nielsen Seaway and Sea Farm were privately owned by the Stolt-Nielsen family but remained separate from the growing Stolt-Nielsen logistics wing. Nonetheless, the family set up a holding company for their businesses, Stolt-Nielsen SA, registered in Luxembourg, that was eventually to become the vehicle for the formation of the larger Stolt-Nielsen group of companies.

Stolt Parcel Tankers ran into rough seas during the 1970s as the worldwide economy plunged into a deep recession. By 1977, Stolt-Nielsen was losing money and its financial troubles had forced it to seek deeper pockets. In that year, the company reached an agreement giving British Petroleum an option to acquire 50 percent of Stolt-Nielsen. That agreement was never fully completed, however. By 1980, Stolt was once again profitable—posting net earnings of $100 million in that year—and by 1987, BP and Stolt ended their relationship.

By then Stolt had been growing strongly. In 1982, the logistics business acquired United Tank Containers, giving Stolt-Nielsen 400 tank containers and a new subsidiary, Stolt Tank Containers. That year, the company set up another subsidiary, Stolt-Nielsen Inter-Asia Services, entering the small tanker market in Southeast Asia. Another subsidiary, Stolt Tankers Joint Service, was formed in joint partnership with PanOcean-Anco, placing Stolt-Nielsen in charge of marketing that company’s 11-vessel fleet.

Conglomerate in the 1990s

By the mid-1980s Stolt-Nielsen had become convinced of the potential for offering door-to-door logistics and transportation services for liquid chemicals. The idea was to bundle all of the various handling points in the typical liquid chemicals move. Stolt-Nielsen would also benefit by being able to market all of its various logistics operations and services from a single office. The company began shopping its new operation, dubbed Stolt Through Transportation Services, in 1987. The company found few early customers for its new service; yet such integrated logistics services were to become an industry norm by the late 1990s.

After ending its shareholder agreement with BP in 1987, Stolt-Nielsen took on a new shareholder, in the form of Japan’s NYK Line, which purchased a 10 percent stake in the company. This proved the prelude to a wider opening of the company’s shares. In 1988, Stolt-Nielsen went public, taking a listing on the NASDAQ stock exchange. The Stolt-Nielsen family retained majority control of the company. In that same year, the company launched a new subsidiary, Stolt-Nielsen Inter-European Service, adding small tanker service operations to the Northern European market.

The Stolt-Nielsen family’s two other ventures, Seaway and Sea Farm, were also progressing during the 1980s. Sea Farm in particular continued to capture Stolt-Nielsen’s interest. Fish farming remained a largely marginal industry, and Sea Farm slipped in and out of profitability during the decade. Yet the company was also steadily gaining size. In 1982, Sea Farm acquired a number of turbot, sea bass, and sea bream farming operations located in Spain and France. Two years later, the company acquired salmon farming businesses in the United States and Canada.

The company was also actively exploring new breeding species, such as halibut, the development of which was launched in 1986. By 1993, this research resulted in the launch of the company’s Sterling halibut farm stock. The company also entered sturgeon production in California, in 1987, and by the 1990s caviar became one of the company’s key products. Both Sea Farm and Seaway remained fairly small operations—neither were capable of generating the revenues needed to pursue a more aggressive expansion program. Nonetheless, both companies were operating in potentially high-growth markets.

Company Perspectives:

“We have a commitment to deliver better and more cost-effective solutions to the increasingly complex challenges facing our customers globally.”

—Jacob Stolt-Nielsen, founder and chairman

Stolt-Nielsen’s 1988 public offering gave it the funding to pursue the growth of its logistics operations. But it also encouraged the company to diversify its operations, and to seek further funding through shareholder placements. In 1991, Stolt-Nielsen decided to diversify while remaining close to home, acquiring two Stolt-Nielsen family private holdings. Sea Farm and Seaway both became part of the now larger Stolt-Nielsen SA. The company capped its new sea farming operations with the opening of a sales and marketing office in Norway, as the company began to develop new markets for farm-raised fish products.

In 1992, the company acquired rival offshore services company Comex (UK) Ltd., merging that company with its existing subsidiary to form the new Stolt Comex Seaway company. In that year, parent company Stolt-Nielsen’s revenues topped $1 billion for the first time. Stolt-Nielsen then spun off Stolt Comex Seaway in a public offering the following year, nonetheless retaining a 54 percent majority control. At the same time, the parent company made a strategic decision to expand Stolt Comex Seaway beyond its original focus on diving and ROV to become a full-scale subsea engineering and services company. The reorganization began in earnest in 1994, with funding from Stolt-Nielsen, and was boosted in 1997 when Stolt Comex Seaway placed a secondary stock offering.

During this time, Stolt-Nielsen continued to expand its logistics operations, developing three subsidiary businesses, Stolt Parcel Tankers, Stolt Tank Containers, and Stolthaven Terminals, formed to govern its growing terminals activities. The company continued to focus on its specialty, the storage and moving of bulk liquids. From the mid-1980s, Stolt-Nielsen had been steadily expanding the company’s capacity, developing a strong interregional business.

The drive toward developing a truly global business continued, however, through the late 1990s. In 1998, the company beefed up its presence in the Asian Pacific with the purchase of a stake in Dovechem Terminals Holdings Ltd. The following year, Stolt-Nielsen moved to simplify its structure and combined its three logistics subsidiaries into a single new entity, Stolt-Nielsen Transportation Group (SNTG). The new subsidiary brought the company still closer to its goal of offering door-to-door services to its customers. One of SNTG’s first moves as a new subsidiary was the acquisition of a 50 percent share of the Jeong-II Tank Terminal, in the South Korean port of Ulsan. That year, Stolt-Nielsen celebrated its 40th anniversary with sales of nearly $2 billion.

The SNTG reorganization also sent Stolt Sea Farm out on its own as an independent company. Formerly attached to Stolt Tanker, Stolt Sea Farm was by then one of the fastest growing segments of the Stolt-Nielsen empire. The company had continued growing through the decade, acquiring new turbot plantations in Spain and Portugal in 1992, then acquiring a 12.5 percent stake in a Chilean salmon farming company in 1994. After opening a sales office in Singapore in 1995, Stolt Sea Farm consolidated its Asian presence with the purchase of Cocoon Ltd. Two years later, the company acquired Gaelic Seafoods Scotland Ltd., giving the company a position in another major fish and fish products center. That subsidiary was then renamed Stolt Sea Farm UK.

If aquaculture had remained a minor industry throughout the company’s 25-year involvement, its fortunes began to rise dramatically by the end of the 1990s. A number of meat scares—including mad cow disease and foot-and-mouth disease—had shocked consumers into seeking alternative food sources. Continued concern over the depletion of the oceans led a growing number of food producers and distributors to turn to the world’s fish farmers. These, in turn, had succeeded in driving down the high cost of farmed fish to within competitive levels of wild fish. Stolt Sea Farm met the rising demand with both internal and external growth. In 1999, the subsidiary purchased U.K.-based International Aqua Foods Ltd. That same year, Stolt Sea Farm opened the world’s largest inland fish farm, in Galacia, Spain. Acquisitions continued into 2000, with the purchases of Ocen Horizen, based in Chile, Australian Bluefin Pty, adding tuna operations, and Rokerij La Couronne, of Belgium. By that year, Stolt Sea Farm’s revenues reached 14 percent of the company’s total sales—but led the other divisions in profitability. Nonetheless, an attempt to float the subsidiary on the Oslo exchange failed when lack of interest left the introductory price too low.

After acquiring 49 percent of NKT Fleibles and all of French offshore construction company ETPM in 2000, the company renamed its subsea engineering subsidiary as Stolt Offshore. That company acquired Paragon Engineering Services Inc. in 2001, becoming the leading player in its market. By then, also, the company had turned to the Internet, launching the e-commerce logistics software sites Optimum Logistics Ltd. and Prime Supplier Ltd. in 2000. The latter agreed to merge with OneSea.com, changing its name to SeaSupplier, in May 2001.

Key Dates:

1959:: Jacob Stolt-Nielsen founds Parcel Tanker Inc.
1963:: Company opens offices in Oslo, Japan, and New York.
1971:: Company acquires its first storage terminal.
1972:: Sea Farm A/S is founded and soon becomes one of the top producers of smolt (young salmon) for the Norwegian market.
1982:: Company acquires United Tank Containers.
1983:: Sea Farm enters North America.
1986:: Company establishes Stolt Through Transportation Services.
1988:: Stolt-Nielsen is listed on the NASDAQ exchange.
1993:: Company offers Stolt Comex Seaway on Oslo exchange.
1996:: Company acquires Cocoon Ltd.
1998:: Company acquires Gaelic Seafoods.
2000:: Stolt Comex Seaway becomes Stolt Offshore; company launches Optimum Logistics and Prime Supplier; acquires Australian Bluefin Pty Ltd.
2001:: PrimeSupplier merges with OneSea.com to form Sea Supplier; acquires control of Paragon Engineering Services.

Jacob Stolt-Nielsen stepped down from his CEO position—he remained as chairman—at the end of 2000, naming son Niels as the growing conglomerate’s CEO. Another son, Jacob, Jr., was also becoming active in the company, notably in the launch of its Internet subsidiaries. Now led by a second generation, Stolt-Nielsen continued to make growth moves in 2001, acquiring Ingerop Litwin, through Stolt Offshore, in July of that year. At the same time, Stolt Sea Farm grew through its acquisition of full control of France’s Ferme Marine de l’Adour, from the Aqual ande Group.

Principal Subsidiaries

Stolt Offshore S.A. (53%) ; Stolt-Nielsen Transportation Group Ltd.; Stolt Sea Farm Holdings Ltd.; Optimum Logistics Ltd.; PrimeSupplier Ltd.

Principal Competitors

A.P. Moller; B + H Ocean Carriers Ltd.; Bouygues Offshore; BT Shipping Limited; Evergreen Marine Corporation (Taiwan) Ltd.; GATX Corporation; Global Industries, Ltd.; Halliburton Company; Hanjin Shipping Co., Ltd.; Horizon Offshore, Inc.; Hyundai Heavy Industries Co., Ltd.; Kawasaki Kisen Kaisha, Ltd.; Matlack Systems, Inc.; McDermott International, Inc.; Neptune Orient Lines Limited; Norsk Hydro ASA; Oceaneering International, Inc.; Odfjell ASA; The Peninsular and Oriental Steam Navigation Company; Royal Vopak NV; Saipem S.p.A.; SEACOR SMIT Inc.; Statia Terminals Group N.V.