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Monday, 28 March 2011

An SMS from Ernst. Short Messages Service (8)

Spyker / Saab is reporting a mega loss. CEO Jan Ake Jonsson of Saab resigns

For the bulls in The Netherlands and abroad, the take-over of the Swedish car brand Saab by the small Dutch manufacturer of luxury sportscars Spyker was like a fairytail come true. The bearish people see it just like something that is too good to be true.

It seems now that the bears lead by 1-0, according to the Financial Times. Here are the most important snips of this article.
Saab Automobile is facing fresh upheaval after its chief executive said he was stepping down and the company’s owner announced plans to raise fresh capital to help keep the struggling Swedish carmaker afloat.  Victor Muller, the Dutch entrepreneur who saved Saab from bankruptcy last year, said he would take over as interim chief executive until a replacement was found for Jan Ake Jonsson, who has led the company for the past six years. Both men insisted there had been no falling out, but analysts said the loss of such an experienced executive, who had been with Saab for 40 years, was a further blow to the company as it struggles for survival.
Saab’s Amsterdam-listed parent, Spyker Cars, on Friday reported a full-year net loss of €218m on sales of €819m for 2010 after buying the Swedish carmaker from General Motors last year. Mr Muller, who controls about 35 per cent of Spyker, said Saab remained on course for profitability in 2012 and voiced frustration over the widespread scepticism about his chances of success.
“There is so much cynicism that if I say something is red, people think it must be black,” he told the Financial Times. “The only way we can prove the doubters wrong is through performance.” He said the decision to raise €13.6m (£19.2m) through the issue of new shares and the conversion of a €9.5m loan from his own investment company into equity were prudent measures to reduce debt rather than a sign of renewed financial crisis. Saab sold just under 32,000 cars last year, down from a peak of 130,000 in 2006, but Mr Muller predicted recovery as new models are introduced and consumers see “that we’re still going to be around in three years’ time”.
Victor Muller, the Dutch entrepreneur that co-founded Spyker, is a real entrepreneur in the sense that he likes to take risks and wants to achieve the impossible. Most of the time that is a true quality.

In case of his take-over of Saab, however, you should notice three things:
-     Spyker never made a profit and never managed to reach the quality standards of real supercar brands like Ferrarri, Lamborghini or Noble.
-     Saab is already hopeless for many years. In the eighties the brand was as good as dead, before it was taken over by GM. In 1995 it made a real profit on the production and sales of cars after 7 years of losses, but since then the results are often terrible.
-     The demand for more loans (among others) from Vladimir Antonov, a Russian venture capitalist of doubtful repute, sounds a lot like throwing good money at bad money.

It seems like the blind is leading the blind and we know where that usually ends. The net loss of €218 mln seems like a bad omen for the future of Saab.

Delta wants to go ahead with building a nuclear power plant in The Netherlands.

Delta, a small Dutch energy company, had well-established plans for the development of a second nuclear power plant in the Dutch city of Borssele, where already one older nuclear power plant is active. These plans were supported by a majority in Dutch politics, until the events in Fukushimi Daiichi began to unfold. The cabinet of Prime-Minister Mark Rutte is still in favor of the development of the nuclear power plant, but some political parties begin to get cold feet. Also the growing acceptance of nuclear energy by the Dutch people came to a sudden halt by the Japanese events.

Delta reacted with a marketing offensive towards the new power plant. The Financieel Dagblad reports (link in Dutch):

More leaflets and extra meetings concerning the plans for a second nuclear powerplant. Public utility-company Delta is doing damage control after nuclear disaster in Japan. 
And suddenly it was busy in Zeeland. Even the BBC and German broadcaster WDR were able to find to the small energy company Delta during the last weeks. The images of the smouldering nuclear power plant Fukushima in Japan turned the tide for nuclear energy. Therefore companies with nuclear ambitions are in the spotlights. This includes Delta that wants to develop a nuclear power plant near the Zeeland city of Borssele. 
CEO Peter Boerma of Delta understands the waning public support for nuclear energy. He kept his guard up when this subject came up and wants to keep the discussion factual. “The situation in Japan was never out-of-control, according to a report of French nuclear experts”, he states. 
Boerma says not to be worried about the waning support, but states:”We are aware that the events in Japan can have consequences for the public support”. Information supply is of paramount importance. “We will be busy doing that”. A planned leaflet concerning the existing nuclear power plant is moved forward and printed in a bigger issue. Also the efforts in parliament in The Hague are increased.

I can imagine that Delta and especially CEO Peter Boerma wants to move on with this new power plant, as this will be a strategic asset for the small energy company. But it is naïve that you can alter public opinion with just a leaflet and an extra meeting in townhall. And in public opinion nowadays nuclear energy is just as popular as a root canal treatment at the dentist.
In my opinion Delta should better wait for half a year until the final damage of Fukushima is known, instead of pushing through now. The people of Zeeland and The Netherlands otherwise won’t understand this marketing offensive.

Eneco takes over Oxxio

One of the top three energy companies in The Netherlands, Eneco, wants to take over Oxxio, Dutch subsidiary of British energy giant Centrica.  According to the Financieel Dagblad, this was a surprising move (link in Dutch). Here are some pertinent snips:

Eneco surprises with taking-over Oxxio. 
Energy company Eneco takes over price fighter Oxxio from British company Centrica. Eneco pays €72 mln to the British, that were already looking for a buyer for their subsidiary for 1.5 years. 
Market watchers call it a surprise move that precisely Eneco steps forward as a buyer for Oxxio. Eneco has very little energy-generation capacity of their own in comparison to the number of customers it services. This makes the company vulnerable. All electricity Eneco doesn’t generate itself, must be bought on the energy market. Price peaks can cause high costs of energy. The take-over of Oxxio makes this problem only more urgent. Eneco gets 426,000 extra customers by taking over Oxxio, totalling the number of customers to 2.1 mln.

Eneco must have a good reason for taking over Oxxio. I don’t mind, however: the three giants in The Netherlands Nuon, Essent and Eneco are working towards establishing an oligopoly in the Dutch energy market. For me this is a bad development. It can never be the intention of the free market to let near-monopolist companies arise. And this is exactly what the ‘three sisters’ are in The Netherlands.

Damen Shipyards increase their profits strongly

Damen Shipyards, the biggest shipbuilder in The Netherlands, saw profits increase strongly in 2010, according to the Financieel Dagblad (; no direct link present)

The company booked a profit before taxes of €140 mln. This can be read in the annual report of the shipbuilder. 
The amount of profit is much higher than in 2009 (€82 mln), which was already a good year for the shipbuilder.The result is also surprising, as CEO René Berkvens only anticipated a profit of ony €50-60 mln in May 2010, in an interview with the FD. At that time he warned of a diminishing order portfolio and price pressure. 
The strong increase of profit is attributed to efficiency improvements (i.e. cost savings).
The turnover was with €1.3 bln) a fraction higher than in 2009 (€1.23 bln). The volume of the order portfolio, €2.8 bln at the beginning of 2009, dimished to €2.1 bln.

These are good results, but not every company can pride oneself in having the Dutch queen as a marketing tool. It is also good to remember that in shipyards the difference between good results and bad results can lie in the sales of only a few ships. 

With the diminishing order portfolio the results next year might not be so good. Therefore we should hope that the queen – as always – did a wonderful job in convincing the sultan of Oman.

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