An interview with Haico Halbesma, CEO of Oceanteam ASA
Find out his view on the market, strategy and competitors.
What is your background?
“After finishing a business degree in Britain, in 1994 I joined offshore service provider Seateam Technology ASA, where I held various positions until 1998. From there on I was a director in various companies in the offshore service provider sector. After co-founding Oceanteam IRM in 2000, I became CFO in 2004. After Oceanteam IRM merged with DeepOcean in 2005, I became COO of DeepOcean’s operation in Mexico. In late 2005 I co-founded Oceanteam ASA and have been the CEO ever since.”
Do you own shares and bonds within the company?
“The Halbesma family owns 33% of the Oceanteam ASA shares, but no bonds.”
How would you describe the markets you are active in? Who are your main competitors?
“If we look at our shipping business, we are a medium-sized player. That also applies to our engineering activities. In equipment though, I think we are one of the world’s largest players. We are dealing with different competitors and competing colleagues in all three sectors.
What makes our strategy really different is that we link our assets and our services as standard. It is important to underline that Oceanteam is a real niche player. We are active in various markets, but always as a provider of specialty services. Oceanteam is, quite simply, not in the business of commodity ships and commodity projects. We merely facilitate complex underwater construction work and that is what our ships are built to do. That's really our focus and that’s what makes us stand out from our competitors.
Being a niche player has two advantages. Firstly, the contracts are generally long-term. In the commodity segment, contract periods are usually shorter and it is often a spot market: there is always supply, regardless of the demand. That's clearly different in our segment.
When it comes to larger assets in particular, Oceanteam has a long backlog, where ships are already fully booked for the period to come. Secondly, we are less vulnerable when the market goes down, because there will always be a need for complex operationsin the field of inspection, repair and maintenance. Our risks are the normal operating risks for any company, such as a contract being cancelled or the bankruptcy of a partner.”
Why does Oceanteam have a low leverage compared to its peers?
“Oceanteam already deployed deleverage in late 2013 and has focused since on repaying external loans. We do so because we feel our cost of capital is too high. However, we are aware that deleverage can be at the expense of growth. So we grow primarily in the solutions business, which is lighter in terms of investment needs. In short, Oceanteam is heading from asset heavy to asset light growth.”
When and why did you decide to change the strategy?
“That decision was taken in 2013 and rolled out in 2014 and 2015. We had realised the projects our end customers were involved in were becoming increasingly complex and more demanding. And the more complex the project, the greater the risks and the greater the chance the project costs would rise. So we asked ourselves: how can we reduce these risks for our end customers? It became clear that we needed both high-end engineering services and a broad range of standardised equipment. We think in this new set-up Oceanteam can actually create more value for our customers, just by doing things in a smarter way.”
What are the new-look company’s USPs?
“We know what our end customers are doing. And we use that knowledge to invest in the latest technology, procedures and other tools to provide them with maximum flexibility.”
Oil sector volatility has created significant market challenges. How are you dealing with this?
“Given the current developments in the oil & gas sector, this is indeed an insecure market. But Oceanteam is not only a shipping company – it is much more than that. We are a full service offshore solutions provider, so we can take advantage of all sorts of offshore developments. For example, we see growth in the market for offshore wind energy, FSV-operation and in the Gulf of Mexico. These are also the key focus areas for 2016 and beyond, alongside improving the capital structure.”
How does The Next Step programme add value for both clients and shareholders?
“Oceanteam started the The Next Step programme in October 2014 to make the company more efficient and able to meet our new strategy. We need to make use of the latest technology, procedures, quality and HSE control. In addition, project management and control tools are being improved so that our project and risk management are internationally recognised. This led to the development of standardised tools, software and procedures which have been rolled out through the entire group. As a result, our G&A costs have gone down significantly, project risks have been reduced and our level of service has increased, allowing us to provide a better service for a better price.”