1H & 2Q 2012 Performance Review - APLThe following presentation includes forward-looking statements,...

1H & 2Q 2012 Performance Review8 August 2012

Forward Looking StatementsThe following presentation includes forward-looking statements, which involve known and unknown risks and uncertainties, that could cause actual results or performance to differ. Forward looking information is based on current views and assumptions of management, including, but not limited to, prevailing economic and market conditions. Such statements are not, and should not be interpreted as a forecast or projection of future performance.

1 1H & 2Q 2012 R lt Hi hli ht B N Y t Ch1. 1H & 2Q 2012 Results Highlights By Ng Yat ChungGroup President & CEO

NOL achieves Core EBIT turnaround

• Core EBIT of US$16m in 2Q 2012• Net loss (before Non-recurring items) of US$6m( g )• Net loss (after Non-recurring items) of US$118m

Efficiency program on track:•US$125m savings in 2Q 2012

$

Freight rate and fuel price conditions improve

•US$225m savings in 1H 2012

Organizational Slot cost improvement:streamlining:• One-time charge of US$29m, US$70m annual savings from 2013Positions future competitiveness

• 6 new vessels received• Sale of obsolete ships & retire charter ships without increasing capacity in weak market

$

| 8 August 2012 | 1H & 2Q 2012 Performance Review

• Positions future competitiveness• One-time US$82m impairment loss for sale of obsolete ships

Key priorities progressing as plannedGOAL ACTION PROGRESS

Manage Costs

• Ordered 32 newbuild vessels • Sale of obsolete vessels & retire

charter ships

Renew fleet, improve slot cost and bunker efficiency

ELP to save US$500 million/year (US$225 million saved 1H12)

Lower operating costs

Manage Capital

• Raised S$400 million MTN• Secured sizeable committed

credit facilities

Strengthen asset base

Unlock capital for core business • NOL building• Sold 5 obsolete vessels• Impairment loss on 5 more

obsolete vessels

Nimble & responsive

i ti

Faster decision making cycles

obsolete vessels

Organization streamlining


organization cycles

Two consecutive quarters of improved Group financial performancefinancial performance

400 3,000 Revenue (LHS) Net profit (RHS) Core EBIT (RHS)

US$m US$m

2,333

200

300 2,500

16

100

1,500

2,000

(118)(100)

‐

1,000

(300)

(200)

‐

500


Note: 1Q and 4Q are normalised to 12-week periods

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

Liner returns Core EBIT profit in 2Q 2012

764 692 699

824 791 720 7

1501,000

Volume('000s FEU)

Core EBIT(US$m)

-8-53

-88

7

0

500

-297

-246

-350-500

0

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

Volume (FEU) (LHS) Liner Core EBIT (US$m) (RHS)

2 800

US$/FEU724800

US$/MT Spot Bunker PricesAPL Average Revenue/FEU

2,539 2,615

2,400

2,800

+3%+3%

650 724

400

600

800

+11%+11%


2,000 2Q11 2Q12

200 2Q11 2Q12

US$500 million full year cost savings on track

Efficiency Leadership Program (ELP) delivers US$225 million cost savings in 1H 2012, mainly from:

• Lower fuel consumption

7% less7% less

Volume+4%

Volume+4%

fuel usedfuel used

• Network optimization

• Terminals productivityTerminals productivity

• Empty repositioning costs


Logistics sustains profitable growth

• Double digit revenue growth, Core EBIT of US$9m in 2Q 2012

• Investments in technology and business platform to grow the• Investments in technology and business platform to grow the business

361

400 US$m

755800

US$m2Q Logistics Revenue 1H Logistics Revenue

314

300

682

600

700

15%15% 11%11%

200 2Q11 2Q12

5001H11 2H12

+15%+15% +11%+11%


2 1H & 2Q 2012 Fi i l P f2. 1H & 2Q 2012 Financial Performance By Cedric FooGroup Deputy President & CFO

Group Financial Highlights

US$m 1H12 1H11 % ▲ 2Q12 2Q11 % ▲

US$57 million Core EBIT turnaround in 2Q 2012

Revenue 4,711 4,595 3 2,333 2,152 8

Core EBITDA (60) 116 n.m. 91 27 237

• Depreciation & Amortisation (157) (144) 9 (75) (68) 9Depreciation & Amortisation (157) (144) 9 (75) (68) 9

Core EBIT (before non-recurring items)

(217) (28) 675 16 (41) n.m.

Non-recurring items (111) (1) 11,000 (112) - n.m.

EBIT (328) (29) 1,031 (96) (41) 134

Net loss to equity holders (371) (67) 457 (118) (57) 107

Net loss to equity holders (before non-recurring items)

(260) (66) 294 (6) (57) (89)


Fleet renewal and organizational streamlining will generate long term benefitsMaking room for more efficient vessels, faster decision making process

will generate long term benefits

making process

Manage Costs

• Sale of obsolete vessels -Non rec rring impairment

Renew fleet, improve slot Costs Non recurring impairment

loss of US$82mcost and bunker efficiency

Nimble & responsive organization

Faster decision making cycles

• Organization streamlining -Non recurring cost of US$29mg


Financial Highlights by Business Segment

R (US$ ) 1H12 1H11 % ▲ 2Q12 2Q11 % ▲

Liner US$60 million Core EBIT turnaround, Logistics continues profitable growth in 2Q 2012Revenue (US$m) 1H12 1H11 % ▲ 2Q12 2Q11 % ▲

Liner 4,004 3,964 1 1,994 1,861 7

Logistics 755 682 11 361 314 15

Elimination (48) (51) (6) (22) (23) (4)

Total Revenue 4,711 4,595 3 2,333 2,152 8

Core EBIT (US$m) 1H12 1H11 % ▲ 2Q12 2Q11 % ▲

Liner (239) (61) 292 7 (53) n.m.

Logistics 22 33 (33) 9 12 (25)

Total Core EBIT (217) (28) 675 16 (41) n.m.


Group Financial ProfileSt th i t b d l ki it l

• Shareholders’ funds of US$2.3 billion

Strengthening asset base and unlocking capital

• Raised S$400 million 4.25% 5-year Fixed Rate Notes in April 2012, under our US$1.5 billion MTN Programme

• Fully financed newbuild vessel program, by bonds and committed ship financing

• The Group has sizeable committed long term credit facilities from large reputable financial institutions to meet its commitments as well as to repay any debts as and when they fall due

• Unlocking capital for strategic investment from sale of obsolete vessels and NOL building


Group Balance Sheet Highlights

US$m 29 Jun’ 12 30 Dec’ 11

Total Assets 7,364 6,962

Total Liabilities 5,098 4,310Total Equity 2,266 2,652

Total Debt 3 089 2 354Total Debt 3,089 2,354

Total Cash 238 228

Net Debt 2,851 2,126

Gearing (Gross) 1.36x 0.89x

Gearing (Net) 1.26x 0.80x

NAV per share (US$) 0 86 1 01NAV per share (US$) 0.86 1.01

(S$) 1.09 1.31


Group Cash Flow Highlights

US$m 1H12 1H11

Cash & Cash Equivalents - Beginning 228 977

Cash (Outflow)/Inflow

Operating Activities (302) 58Operating Activities (302) 58

Investing/Capex Activities (414) (485)

Financing Activities 726 131g

Cash & Cash Equivalents – Closing 238 681


Group Capital Expenditure

US$m 1H12 FY11

1. Vessels 393 1,204

2. Equipment / Facilities 63 153

3. Drydock 16 45

4. IT 13 62

5 Others 4 75. Others 4 7

Total 489 1,471,


3 Li B K th Gl3. Liner By Kenneth GlennPresident, APL

Liner Results Highlights• Core EBIT profit of US$7m in 2Q12• Core EBIT loss of US$105m in 2Q12 due to non-

i it

Solid efficiency gains in 1H12:Volume up 4% fleet capacity down 2% and fuel consumption down 7%

recurring items

•Volume up 4%, fleet capacity down 2% and fuel consumption down 7%•Empty repositioning costs reduced 8%

Improving slot cost:Improving slot cost:•Received 6 new 10,000 TEU vessels•Sold obsolete ships, retired charter ships

Freight rate and fuel price conditions improve:•Average Revenue/FEU up 3% in 2Q12•Recent bunker prices stabilizing around US$600/MT


Recent bunker prices stabilizing around US$600/MT

1H & 2Q 2012 Results Summary

US$m 1H12 1H11 % ▲ 2Q12 2Q11 % ▲

Revenue 4,004 3,964 1 1,994 1,861 7

Core EBITDA (87) 78 n.m. 79 12 558

Core EBIT (239) (61) 292 7 (53) n.m.

EBIT (349) (61) 472 (105) (53) 98EBIT (349) (61) 472 (105) (53) 98

Core EBIT margin (%) (6.0) (1.5) 0.4 (2.8)

Liner achieved 1H 2012 revenue of US$4 billion, a year-on-year (YoY) increase of 1% $ , y y ( )mainly due to higher volumes transported, partly offset by lower freight rates.

Average revenue per FEU was US$2,513 or 2% lower YoY mainly due to lower freight rates in the Transpacific and the Asia-Europe trade.Volume rose by 4% YoY mainly due to higher volumes in the Intra Asia and LatinVolume rose by 4% YoY mainly due to higher volumes in the Intra-Asia and Latin-America trade.Cost of sales per FEU increased 2% mainly due to 21% rise in bunker prices to US$691/metric tonne. Excluding the bunker price rise, Cost of sales per FEU were 3% l d t t i t f l ti ti l t ffi i i d l


3% lower due to stricter fuel consumption, operational cost efficiencies and slow steaming.

Volume and Average Revenue/FEU TrendSustained rate increases improve Average Revenue/FEU by 3%

70 3,600Average Period Volume (RHS) Average Revenue per FEU (LHS)

'000 FEU/ weekUS$/FEU

2Q11 Average Revenue/FEU

US$2,539

2Q12 Average Revenue/FEU

US$2,615

Sustained rate increases improve Average Revenue/FEU by 3%

50

60

2,800

3,200

30

40

2,400

10

20

1,600

2,000

-

0

1,200

P1 P2 P3 P4 P5 P6 P7 P8 P9 P10

P11

P12 P1 P2 P3 P4 P5 P6 P7 P8 P9 P10

P11

P12 P1 P2 P3 P4 P5 P6 P7 P8 P9 P10

P11

P12 P1 P2 P3 P4 P5 P6


2009 2010 2011 2012

PeriodNote: Average Period volumes are normalised based on number of weeks in the period

Operational UpdateStronger emerging market gro th and impro ed backha l ol meVolume (‘000 FEUs) 1H12 1H11 % ▲ 2Q12 2Q11 % ▲Transpacific 418 420 - 202 193 5

Stronger emerging market growth and improved backhaul volume

Latin America 103 91 13 49 43 14

Asia-Europe 242 244 (1) 110 114 (4)

Transatlantic 80 71 13 40 32 25

Intra-Asia 668 630 6 319 310 3

Total 1,511 1,456 4 720 692 4

Average Revenue/FEU (US$) 1H12 1H11 % ▲ 2Q12 2Q11 % ▲Transpacific 3,741 3,897 (4) 3,651 3,935 (7)Latin America 3,497 3,443 2 3,596 3,415 5Asia-Europe 2,422 2,543 (5) 2,750 2,390 15Transatlantic 2,894 3,232 (10) 2,815 3,317 (15)Intra-Asia 1,579 1,498 5 1,732 1,526 13

| 8 August 2012 | 1H & 2Q 2012 Performance ReviewNote: Based on point of sailing and inclusive of headhaul and backhaul trade.

Total 2,513 2,570 (2) 2,615 2,539 3

Improved utilization and roundtrip yield focus drives empty repositioning costs down 8%empty repositioning costs down 8%

94% 94%95%100% Headhaul utilization Backhaul utilization

92% 91%94%

92%93%

94%

91%

95%

91%90%

95%

87% 86% 85%80%

85%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

US$19md ti i+ 5%

1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

reduction in repositioning

costs for 1H12+4%

Total volume

+ 5%Trade balance improvement


Fleet RenewalB ilding a modern and cost competiti e fleet si 10 000 TEU essels

8,100 TEU 9,000 TEU 10,000 TEU 14,000 TEU Total vessels

Building a modern and cost-competitive fleet, six 10,000 TEU vessels already delivered in 2012

250,000 20

TEUs

150,000

200,000

9 x 14,000 TEU

100,000

10

49 x 9,000 TEU

4 x 10,000 TEU

0

50,000

2012 2013 2014

6 x 10,000 TEU vesselsdelivered

,

1 x 14,000 TEU

3 x 9,000 TEU2 x 8,100 TEU


Note: 5 out of the 10 x 14,000 TEU vessels for delivery between 2013 and 2014 will be chartered out to MOL

Fleet RenewalImpro ing slot costs b retiring charters & sale of obsolete esselsImproving slot costs by retiring charters & sale of obsolete vessels

APL FleetStart 1H 2012

APL FleetEnd 1H 2012

Charters expiring

2H 2012 toNet capacity

changeStart 1H 2012

149 vessels641,000 TEUs

End 1H 2012

141 vessels630,000 TEUs

2H 2012 to 2014

36 vessels

g-11,000 TEU

+6 newbuilds- Charters retired

207,000 TEUs- Charters retired- Obsolete ships sold

Current Future


4 L i ti4. Logistics By Jim McAdamPresident, APL Logistics

Logistics Results Highlights

Sustained profitable growth with US$9m Core EBIT in

Double digit revenue growth:

2Q 2012

•15% revenue growth in 2Q 2012, 11% in 1H 2012•Strong demand for rail and land-based logistics services

Continued investments for expansion:• Investments in technology products and commercial infrastructure to expand the businessexpand the business


1H & 2Q 2012 Results Highlights

US$m 1H12 1H11 % ▲ 2Q12 2Q11 % ▲

Revenue 755 682 11 361 314 15

Core EBITDA 27 38 (29) 12 15 (20)

Core EBIT 22 33 (33) 9 12 (25)

EBIT 21 32 (34) 9 12 (25)EBIT 21 32 (34) 9 12 (25)

Core EBIT margin (%) 2.9 4.8 2.5 3.8

• Logistics achieved 1H 2012 revenue of US$755 million, growing 11% year-on-year g $ , g g y y(YoY) while facing softer economic conditions in developed markets.

Contract Logistics achieved revenue of US$508 million, a 17% YoY increase due to strong demand for rail and land-based logistics services.International Services achieved revenue of US$247 million a 1% decrease YoYInternational Services achieved revenue of US$247 million, a 1% decrease YoYdriven by a softer retail and apparel environment.

• Core EBIT of US$22 million for 1H 2012, a 33% decrease YoY mainly due to increased investments to improve our technology products and commercial infrastructure, and


p gy p ,lower contribution from associated company.

Performance Breakdown

US$m 1H12 1H11 % ▲ 2Q12 2Q11 % ▲

Sustained profitable growth across both business segments

Revenue 755 682 11 361 314 15

• Contract Logistics 508 433 17 239 200 20Co ac og s cs 508 33 39 00 0

• International Services 247 249 (1) 122 114 7

Core EBIT 22 33 (33) 9 12 (25)

• Contract Logistics 12 14 (14) 7 5 40

• International Services 10 19 (47) 2 7 (71)

Core EBIT Margin (%) 2.9 4.8 2.5 3.8Core EBIT Margin (%) 2.9 4.8 2.5 3.8

• Contract Logistics 2.4 3.2 2.9 2.5

• International Services 4.0 7.6 1.6 6.1


Revenue and Core EBIT Margin Trend

Weekly Revenue(US$m)

Core EBITMargin (%)

Record weekly revenue growth

15.0%

30

35Weekly Revenue (US$m) (LHS) Core EBIT Margin (%) (RHS)

(US$m) Margin (%)

10.0%25

30

5.1%4.3%

6.0%5.3% 5.7%

3.8%4.8% 5.1%

3.3%2.5%

5.0%

15

20

0.0%101Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12


Revenue Trend by RegionRevenue growth led by Americas which benefited from expansionRevenue growth led by Americas which benefited from expansion into US intermodal and strong demand from automotive sector

23% (Asia/Middle East)

25% (Asia/Middle East)

68% (Americas)

$175

63%

$174

68% (Americas)

$511

$6963% (Americas)

$428$80

1H12 Revenue Breakdown – 1H11 Revenue Breakdown

9% (Europe) 12% (Europe)


1H12 Revenue Breakdown by Region (US$m) – by Region (US$m)

5 G O tl k5. Group Outlook

Group Outlook

The Group’s performance improved in the second quarter due to rate increases and cost savings. However, the Group’s financial performance will depend on freight rates, global economic position, over-capacity in container shipping and f l i Th tl k f th f t i t i N th l thfuel prices. The outlook for these factors remain uncertain. Nevertheless, the Group will continue to focus on managing its costs and capacity.


A diAppendix

Logistics - Revenue Trend by Customer SegmentG t d d f t l t d l i ti i i A t /I d t i l tGreater demand for our auto-related logistics services increases Auto/Industrial segment share.

3% (Electronics/Hi tech)

10% (Others)9% (Others)

3% (Electronics/Hi tech)

42% (Auto/Industrial)54% (Auto/Industrial)

12% (Consumer)

1H11 Revenue Breakdown –by Customer Segment

33% (Retail)

12% (Consumer)

1H12 Revenue Breakdown –by Customer Segment

22% (Retail)

12% (Consumer)


by Customer Segmentby Customer Segment

Group Fuel and Currency Exposures

Bunker

• The Group continues to recover part of its fuel price increases from customers through bunker adjustment factors.j

• The Group also maintains a policy of hedging its bunker exposures.

Foreign exchange

• Major foreign currency exposures are in Euro, Singapore Dollar, Canadian Dollar, Japanese Yen and Chinese Renminbi.

• The Group maintains a policy of hedging its foreign exchange exposures.


Neptune Orient Lines Ltd456 Alexandra Road, NOL BuildingEnd of Presentation

Thank You

NOL BuildingSingapore 119962Tel: (65) 6278 9000Fax: (65) 6278 4900Company registration number : 196800632Dnumber : 196800632DWebsite: www.nol.com.sg

1H & 2Q 2012 Performance Review - APLThe following presentation includes forward-looking statements,...

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