BEAT TO QUARTERS

Qatar 2014 | TRANSPORT | VIP INTERVIEW

TBY talks to HE Sheikh Ali bin Jassim bin Mohammed Al-Thani, Chairman and Managing Director of Milaha, on improving maritime services in Qatar, and the search for growth opportunities abroad.

Milaha's vision is “to be a globally recognized player in the shipping and maritime services sector, building on a strong regional foothold in transportation and logistics." What are your strategies to achieve this?

Our strategy is one for the long term; we don't develop strategies on an annual basis. We have a clear idea of where we want to be in five to 10 years, and are working our way toward that. Of course, we will adjust mid course as circumstances dictate, but our vision remains the same. We intend to continue strengthening our presence in the region in various sectors, while targeting an increased presence in others on the global stage. Ultimately, shareholder value creation and alignment with the Qatar National Vision 2030 is our guiding principle. More specifically, Milaha is looking to grow organically in areas where we already have a significant presence and strong foundation. We will seek to acquire in order to add a larger footprint beyond our current markets or expand our service offering. We are actively seeking to partner with other established companies that can bring complementary capabilities or innovative business models that allow us to compete more effectively and sustainably. Internally, as part of our transformation efforts, we have, and will continue to significantly invest in our people, processes, systems, and capabilities, which will lay the foundation that takes us to the next level as a group.

Milaha reported a 30% jump in net profit to QAR574 million in the first half of 2013. What do you attribute this success to?

Milaha's ongoing internal transformation initiatives, along with improved market conditions, drove strong performance. Externally, volume growth, combined with increased efficiencies, resulted in a continued upward trend for Milaha's port services unit. Container shipping and logistics results also improved significantly over 1H2012. Deployment of two new vessels, combined with significantly higher utilization of the offshore fleet, led to robust improvement in Halul Offshore's results relative to 1H2012. Milaha's investment portfolio posted strong results, mainly driven by dividend growth, revaluations, and market trading activities. Our internal efforts over the past couple of years to restructure our organization, capabilities, and processes have also played a role in the improved results.

“Milaha plays a critical role, both directly and indirectly, in Qatar's LNG sector."

How does Milaha cement Qatar's role as the largest LNG exporter in the world?

Milaha plays a critical role, both directly and indirectly, in Qatar's LNG sector. The group has a 30% stake in Qatar Gas Transport Company (QGTC), which is the state LNG transportation company. Milaha also has varying ownership stakes in nine LNG vessels, which are under long-term charters to Qatari gas producers and exporters. In 2012, Milaha increased its ownership in two of the joint-owned LNG vessels, and also began to operate these vessels commercially. These vessels were renamed Milaha Ras Laffan and Milaha Qatar. Gulf LPG, a 50-50 joint venture between Milaha and Qatar Gas Transport Company (QGTC), was formed in 2008 to own four Very Large Gas Carriers (VLGCs). The vessels are engaged in the transportation of LPG cargoes worldwide, and these include loading LPG cargoes from Qatar. Our offshore subsidiary, Halul Offshore, is the single largest provider of offshore supply service vessels to Qatar's oil and gas industry, while also holding the largest diving services contract anywhere in the world. So you can see this is a critical sector for us and we are continuously looking for ways to enhance our capabilities to play a larger role across the supply chain in this sector.

Qatar is aiming to position itself as a leading exporter of petrochemicals. To what extent is Milaha involved in the shipment of these products?

At this time, Milaha is a key transporter for petrochemicals exports from Qatar. We are involved in the transport of ammonia using our gas carriers, which are time-chartered to Muntajat, the newly formed petrochemicals marketing company of Qatar. In addition, Milaha is feedering, on an exclusive basis, Low-Density Polyethylene (LDPE), High Density Polyethylene (HDPE) and Linear Low Density Polyethylene (LLDPE) from QAPCO, Q-Chem, and Qatofin, from Mesaieed to hub ports in the Gulf. We are currently positioning ourselves to expand our offering in this critical downstream segment. Given the anticipated growth in exports from Qatar over the coming years, we are evaluating ways to build a long-term relationship with Muntajat, and bring new tonnage to this sector.

In 2011, Milaha took over operations and management duties at Doha Port. What were the strategic decisions behind this, and how has it increased the efficiency of port operations?

Milaha has been a provider of stevedoring services at Doha Port since the late 1950s. As part of our strategic direction setting in 2010, and in alignment with Qatar's National Vision 2030, Milaha renewed its focus on supply chain-related businesses, and was awarded the contract to fully manage Doha Port in 2012. Since then, the port services unit has embarked on a comprehensive operational excellence program, which targeted, but was not limited to, health and safety, training, operations, management, and administration. We are undertaking a process of continuous improvement to achieve internationally recognized operating standards. Milaha is currently executing a ten-point plan in Doha Port to increase throughput capacity to a minimum of 750,000 TEUs, which will be completed on schedule during 2013. Through process improvement and better utilization of equipment, Milaha has increased net vessel productivity from 10 to 15 moves per hour. Restructuring of yard and operational process has reduced truck turnaround time from 16 hours to three hours, inclusive of customs inspection procedures. Milaha has also installed the Jade Mastercare Terminal Operating System (TOS), which benefits Doha Port and the entire port community.

Who are Milaha's main customers in Qatar, and how do you intend on expanding your customer base?

The group is focused on providing solutions and filling critical gaps in the supply chain for three core customer segments, including the oil, gas, and petrochemical sectors; non-energy customers; and shipowners and operators. Milaha is playing a key role in the offshore oil and gas industry value chain, from supporting early stage exploration and production activities to transporting end products globally. Milaha also provides integrated freight and logistics solutions for Qatar-based customers. Our 3PL services include freight forwarding, warehousing, and land transport, complemented by ocean transport services. Milaha additionally operates a shipping agency, representing 50 different ship owners, which have regular services operating to Qatari ports. The company's port management unit manages Doha Port, the main commercial port in Qatar, as well as a dedicated container terminal at Mesaieed Port, the base for the downstream industries sector in Qatar. Our long-term strategic plan is built around expanding our capabilities and services in each of these segments to become a partner, collaborator, and solutions provider of choice to our customers.

As Milaha is one of the leading companies in its field, do you intend to expand operations regionally or internationally?

Looking to the future, we believe that Milaha will be able to leverage its reputation, capabilities, and strong financial base to grow its footprint in Qatar, the region, and beyond. Our aim is to expand our participation in the supply chain in Qatar through careful development of capabilities and assets, and thereby continue to play an important role in Qatar's expansion over the coming years. In the medium term, we hope to expand Milaha's global presence. We want to leverage our capabilities to build a greater presence in ocean transport, particularly in gas and clean petroleum products. We are also actively expanding our strong offshore support capabilities into neighboring markets, and exploring opportunities beyond the region. This is a time of enormous change and opportunity. We have a new vision and a fresh focus to capitalize on the benefits of having a much larger and financially strong company. There is no time like the present to leverage our strong foundation to take the company to the next level.

© The Business Year - November 2013