Interest expenses hedged for a long time to come

Stena Finance’s is mainly engaged in managing the funding requirements and liquidity planning of the Stena Group, in both the short and long term. Stena Finance manages the operational business units’ financial risks regarding interest rates, currencies and oil markets, and also manages the Group’s financial investments. Another important role is to serve as a resource in the identification, analysis and achievement of new business. Stena is a capital-intensive company with several business areas that operate in markets subject to the risk of sudden fluctuations, which was highlighted in conjunction with the outbreak of the pandemic in early 2020, with extensive effects on both ferry traffic and offshore drilling.

Summary of 2022

2022 was a positive financial year for the Stena Group, with all business units contributing to increased revenue. In a situation with stable income in an unstable global situation, one of Stena Finance’s focus areas was to hedge both interest and fuel costs. “At the same time, we continue to prioritise our strategy of high liquidity,” comments Director of Finance Peter Claesson.

 

Positive year

In 2022, all of the Group’s business areas recorded increased revenue compared with the previous year. The effects of the war in Ukraine in the form of rising interest rates and increased fuel costs resulted in intensive measures by Stena Finance to hedge the future expenses. This work resulted in around 80 per cent of interest costs being hedged for a long period ahead, as well as a significant proportion of fuel costs.

 

“Of course, we’ve also been affected by market developments, but our measures have mitigated the effects,” comments Peter Claesson. According to Peter Claesson, the uncertain global situation makes it even more important for Stena Finance to focus on the basic strategies of the business, i.e. high liquidity, positive cash flows and achieving the best possible return in the financial portfolio.

 

“In 2021, the focus was on the financing issue, and now we’re concentrating on refinancing and maintaining a high level of liquidity. The focus is affected by how the Group is doing and the state of the world.”

 

“To cope with economic changes, Stena needs strong liquidity – currently SEK 19 billion. Our policy is to be able to handle cyclical financial strains for at least a three-year period,” says Peter Claesson.

 

The refinancing concerns bonds maturing in 2024 and 2025, for which new agreements are currently being negotiated. The strategy is to spread risk by balancing equities holdings in relation to holdings of bonds and interest-bearing securities, in order to safeguard capital and high liquidity. Another task for Stena Finance is to manage the financing of new vessels. Of the 14 new vessels in total ordered by the various Stena business units, nine have been delivered.