“Export Credit Norway’s figures for the second quarter of 2015 show that Norwegian exporters are facing difficult conditions. The company is experiencing an increase in the application volume relating to industrial and environmental technology projects, as well as ships for non-offshore operations. When conditions are challenging, our customers give even greater importance to predictable export financing schemes,” says Export Credit Norway CEO Jarle Roth.
Oil & Gas down, fishing vessels up
In the second quarter, Export Credit Norway received 72 loan applications representing a total application volume of NOK 32.2 billion. In comparison, in Q2 2014 the company received 91 new applications representing a total application volume of NOK 37.8 billion. Falling oil prices, cost-cutting by oil companies and geopolitical uncertainty are continuing to have a negative impact on the Norwegian economy. One result is a decline in the number of applications from sectors in which Norway is usually a leader, such as the oil and gas supplier industry.
“Export Credit Norway is experiencing the same trend as can be observed elsewhere in the Norwegian economy: many businesses are struggling in tough market conditions. This makes access to competitive export financing schemes even more important,” says Jarle Roth, Export Credit Norway’s CEO.
The depreciation of the Norwegian krone has given Norwegian exporters a competitive advantage, and the company is experiencing an increase in applications from new segments. For example, Export Credit Norway has noted a substantial increase in the application volume relating to ships for non-offshore operations. In Q1 2015, loan applications linked to the construction of fishing vessels at Norwegian yards amounted to NOK 200 million. In Q2, applications from this sector totalled more than NOK 2.5 billion.
“This is a pleasing development for the industry, and is probably driven by improved competitiveness due to the depreciation of the krone. Although it is too early to draw firm conclusions, we may hope for a fundamental shift that will enable Norwegian yards to succeed in new segments, compensating some for the sharp downturn in the petroleum sector,” says Roth.
Increase in application numbers
Export Credit Norway has registered an increase in application numbers from all segments from Q1 to Q2 2015. The industrial and environmental technology applications have come from 28 different borrower nations, and cover a wide range of projects. Although many of the applicant exporters are known to Export Credit Norway, the company is also establishing numerous new relationships.
“In the second quarter, we received many new applications from segments which previously had low activity levels. It is too early to conclude whether this increase is due to random variation or indicates a trend. However, we do know that exporters are engaged in tough competition every day, and we want to partner with them to realise new, successful projects,” says Roth.