Steamships’ new chief in Papua New Guinea keeps powder dry for coming challenges and opportunities

The next 12 months or so is a time to digest and consolidate, says Peter Langslow, the incoming head of one of Papua New Guinea’s largest and oldest companies, Steamships Trading Company. He told Business Advantage PNG, however, it is also a time to prepare for fresh opportunities.

Steamships' Peter Langslow

Steamships’ Peter Langslow

Peter Langslow is a 30-year veteran with London-headquartered John Swire and Sons, which owns 72% of Steamships. He took up the CEO/MD position with Steamships in mid-January, replacing Geoff Cundle, who now manages the Australian arm of the Swire group.

Steamships, one of PNG’s biggest employers, providing employment to some 4,000 people, has been through a transition phase in recent years.

‘One of the big questions for Port Moresby in the years to come as that materialises, is the way in which this part of town develops. It will need some planning and co-ordination because there’s a very large amount of land.’

After divesting itself of supermarkets, auto dealerships, insurance, and construction or building services, Steamships now concentrates on three divisions: Logistics (shipping, ports and transport), Property and Hotels (Coral Seas Hotels and Pacific Palms Property), and Commercial (Laga Industries, and a joint venture with Colgate Palmolive PNG).

Cool reception

Prior to actually taking over as MD, Langslow’s introduction to Steamships’ PNG operations was hands-on, spending five weeks in Lae, running food and food services subsidiary, Laga Industries,  while awaiting the arrival of its new general manager, Gerard O’Brien.

‘Laga is an interesting and exciting business at the moment,’ he says.

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‘Our brand Gala ice cream is the only producer of ice cream in the country, and we’re about to complete the expansion and enhancement of the ice cream plant, which will increase capacity by two and a half times, and give us a lot of exciting opportunities in term of future product enhancements as well.

‘Laga’s ice cream factory development reflects our confidence in the prospects for this sector of the consumer goods market in PNG.’

Upgrading hotels

2015 will be a busy year for Coral Sea Hotels, Steamships’ hotels division. ‘Our focus is on quality and operational excellence, as evidenced by the Grand Papua as the premier hotel in Port Moresby.’

‘Laga’s ice cream factory development reflects our confidence in the prospects for this sector of the consumer goods market in PNG.’

‘We’re redeveloping the Huon Gulf Hotel in Lae this year, and we’ll also be building more rooms, food and beverage options and conference facilities at the Highlander Hotel in Mt Hagen.’

A new Coral Seas Hotel hotel will be built and operated for OK Tedi Development Foundation in Kiunga in Western Province, and plans are underway to refurbish all eight hotels in the Coral Seas group around the country.

Langslow is thoughtful however about how much the hotel sector in Port Moresby can grow. Three years ago, there were about 900 rooms available. But with new ventures such as Raintree and the Holiday Inn, the projections are for as many as 3,000 beds within three years.

‘I think we’ll see what the market can bear, but certainly that rate of increase in the number of keys gives one something to think about.’

Port Moresby property opportunities

In 2014, Steamships’ Pacific Palms Property division completed development of its new retail centre (Waigani Central), and is now leasing out its newly built office block in Port Moresby’s CBD (Harbourside). On the ground floor of the Harbourside, Langslow promises Port Moresby’s ‘most exciting new F&B destination’ – comprising four restaurants, a sports bar, and a coffee shop, ‘all with fantastic harbour views and already leased out’.

Port Moresby Harbour, showing Steamships' Harbourside development

Port Moresby Harbour, showing Steamships’ Harbourside development (bottom right, on the shore line)

Looking ahead, Langslow says the relocation of the port of Port Moresby will open up space and more opportunity in the CBD: ‘One of the big questions for Port Moresby in the years to come as that materialises, is the way in which this part of town develops.

‘It will need some planning and co-ordination because there’s a very large amount of land.

‘This is an important question for Steamships because we have quite a land bank of properties in the central business district, so it’s an issue we’ll be following very closely.

Consolidation in logistics

While the Commercial, Hotel and Property Divisions are expanding, Steamship’s Logistics Division is consolidating.

Since February, East West Transport no longer operates the Highlands Highway route.

‘There’s reduced levels of activity, the economy’s slower, the Kina value is not helping, the agricultural commodity prices that inject the money into the economy which enables people to buy things have all declined.’

And, while Steamships’ two coastal shipping companies, Consort Shipping and Steamships Coastal, have upgraded their fleets, Langslow describes the business environment as ‘difficult’.

‘There’s reduced levels of activity, the economy’s slower, the Kina value is not helping, the agricultural commodity prices that inject the money into the economy which enables people to buy things have all declined,’ he notes.

Consort Shipping, which connects 15 ports and runs a service to Townsville, is seeing flat tonnages.

‘Steamships Coastal, which is much more about projects and charter work on the Papuan coast and going up the Fly and Kikori Rivers, has seen reduced activity after the completion of the Exxon Mobil-led LNG project.

‘Our balance sheet is strong.  We’re well positioned and we’ll do what we need to do in order to get through the challenges, as we have through all the ups and downs we’ve seen during our 97 years here in PNG.’

‘So with oil and gas prices where they are, the risk of course is that the future developments may slow down.

‘We hope not, because that’s the sort of business that we’re well positioned to serve.

‘So, the focus within the logistics category is to look for synergies and efficiencies.’

East West Transport will combine with the company’s stevedoring activities to create a land-based logistics division.

Optimistic and confident

Over all, Langslow is positive about Steamships future.

‘While we expect the environment to remain a challenging one as we go forward through 2015, we remain optimistic and confident in the longer term.

‘We’re taking a somewhat cautious view in the present environment, but at the same time it’s quite deliberately a case of keeping our powder dry, so that as opportunities arise, we’ll be in a position to pursue them, rather than being overextended,’ says Langslow.

‘Our balance sheet is strong.  We’re well positioned and we’ll do what we need to do in order to get through the challenges, as we have through all the ups and downs we’ve seen during our 97 years here in PNG.’

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