Q1 Presentation - Wallenius Wilhelmsen Logistics...2017 Q1 2016 Q4 2016 Q1 FY 2016 Operating income...

Q1 PresentationMay 10th 2017

Craig Jasienski (President & CEO)

Rebekka Glasser Herlofsen (CFO)

Today’s Presenters

2

Craig JasienskiPresident & CEO

• Number of years in industry: >30 years• Born: 1969• Key Experience:

– CEO, Eukor Car Carriers– CEO, United European Car Carriers (UECC)– Various leadership positions in WWL AS

Rebekka Glasser Herlofsen CFO

• Number of years in industry: >20 years• Born: 1970• Key Experience:

– CFO, The Torvald Klaveness Group– Director, Business Development, Bergesen d.y. ASA– Board Member, Statoil ASA & DNVGL– Chair of the Board, Cermaq

Agenda

3

Financial Performance

Market and Business Outlook

Business Update

Summary and Q&A

BUSINESS UPDATE

by Craig Jasienski

4

Business update Q1 at a glance…

5

Business Update Financial Performance Market and Business Outlook Summary and Q&A

Total fleet increased to 128 vessels, with one delivery in Q1

Continued positive developments for the landbased segment

Volume and cargo mix shows positive development

Main trades show positive development out of Asia

Merger moving ahead as per plan

WWL ASA listed on Oslo Børs April 5th 2017

6

- Merger received final regulatory approval on 1 April, and WWL ASA started trading on Oslo Stock Exchange April 5th

- Organizational restructuring well underway, target to have new organisation fully established before summer

- New structure will allow up towards USD 100 million in cost synergies and provide revenue growth opportunities with full effect from 2019

- Free float market cap of more than USD 0.5 billion, representing more than 70% increase


A new and more efficient structure in place…

7


Wilh.

Wilhelmsen

Holding ASA

Wallenius

Wilhelmsen

Logistics

EUKOR

ARC

WW ASAWallenius

50%50%

73%

Soya Group

Wallenius’

fleet

100%

40%40%

50%50%

WW ASA’s

fleet

100%

100% 27%

Public

minority

38%38%

Wilh.

Wilhelmsen

Holding ASA

Public

minority

24%

WWL ASA

Wallenius

From a structure of jointly controlled entities... ...to an integrated and more efficient WWL structure

HMG20%

Ocean1 Landbased

Integrated Structure: from 5 to 1 Executive Management Team and organization→ stronger co-operation, speed up decision-making and significant GSA synergies

From 3 stand-alone operating companies to 1 integrated structure→ increase fleet utilization and flexibility

Management Team: all entities structured under WWL ASA→ increase transparency, both internally and externally

1) Hyundai Motor Group will continue to own 20% of EUKORNote: ARC retains a separate and independent management structure

Strong Top Management Team with average +20 years experience

8


WWL ASA

Craig JasienskiPresident & CEO

Rebekka Glasser Herlofsen CFO

Jan Dahm-Simonsen1

Organizational development & HR

Christer NygrenBusiness Planning & Marine

Ari MarjamaaBusiness Transformation & IT

WWL ASA Senior Management Team

Erik NoeklebyeCEO

Mike HynekampCOO

Ray FitzgeraldCOO

EUKOR WWL Ocean WWL Landbased

1) Appointed April 2017

Volume and cargo mix shows positive development

9

Comments

• Ocean transported volumes down 2% q-o-q

mainly due to seasonality, but increased 3%

y-o-y, primarily driven by:

- Increased volumes exported from Asia to both

Europe and South America

- Export from Asia to North Americas declined

- Increased import to Oceania from Europe

• Cargo mix

- Improvement in cargo mix from 21% to 23% HH

(High & Heavy) share of total volumes q-o-q

- Stable development in cargo mix y-o-y

Volume and Cargo Mix developmentMillion CBM and %


0

5

10

15

20

25

30

35

20

0

8

18

16

14

12

10

6

4

2

22

25%

Million CBM

Q1’17

15.9

Q4’16Q1’15

18.2

Q4’14

19.6

Q1’16

15.5

Q2’16

16.7

-2%3%

%

20%

16.2

Q3’16

15.2

Q3’14

18.7

Q2’14

20.5

Q4’15

18.3

Q3’15

23%23%

25%

22%

24% 24%24%24%24%

21%

18.0

Q2’15

19.4

HH share of volumesVolume

WWL trade routes

EUKOR trade routes

ARC trade routes

10


Positive development in export from Asia to Europe and NA q-o-q

Atlantic Shuttle

2.8 3.0 2.9

Q4 ’16Q1 ’16

1%

Q1 ’17

-3%

EU/NA – Oceania1)

Q1 ’16

1.0

-8%

Q4 ’16 Q1 ’17

1.2

8%

1.1

EU - ASIA

-5%

2.8

-5%

Q1 ’17

2.9

Q1 ’16

2.9

Q4 ’16

Asia - EU

2.6

Q4 ’16 Q1 ’17

3.0

6%14%

2.8

Q1 ’16

Asia - NA

3.2

14%

Q1 ’17

-8%

3.5

Q4 ’16Q1 ’16

2.8

Asia - SAWC

0.8

Q1 ’16 Q4 ’16

1.1

-9%18%

1.0

Q1 ’17

Note: All numbers given in million CBM per quarter

1) Including Cape sailings (South Africa)

Total fleet is 128 vessels, with one delivery in Q1

11

Fleet developmentCEU, # of vessels

Comments

• One Eukor vessel delivered 30th March

• No further CAPEX planned past five post

Panamax newbuildings with expected delivery

between 2017 and 2019 (remaining CAPEX of

USD ~200 million)

• Additional capacity need will be acquired in

the charter market

• WWL ASA strives to have fleet flexibility

through combination of owned, long- and

short-term T/C tonnage

• Flexibility to redeliver 9 vessels by end of 2017

130134

137139140143147

125

140

128127133

0

20

40

60

80

100

120

140

160

180

400

200

800

600

1,000

0Q1’14 Q2’14

929

146

873

Q3’15Q2’15 Q1’ 16Q4’15

897 886

CEU ‘000

Q3’ 16Q2’ 16

865889

865 873

Q1’17Q4’16

# of vessels

Q4’14

924 934

Q3’14

900917

Q1’15

913


• Continued strong performance for technical services supported by stable volumes and high content value adding services for VSA

• Build-up of auto inventories in the US during Q1 2017

• Terminals show stable performance in line with overall ocean volumes, but pulled back by planned intermediate low volumes during start-up of MIRRAT in Australia, which is expected to come in with full effect from 2018

Continued positive developments for the landbased portfolio

12

Landbased segment business update


13

Financial Performance

by Rebekka Glasser Herlofsen

WWASA – Profit & Loss

14

WWASA Profit & Loss1

USD million

• Total operating income adjusted for non

recurring items and “Treasure ASA” slightly

down q-o-q and slightly up y-o-y

• EBITDA adjusted for non recurring items and

“Treasure ASA” declined 12% q-o-q and 2% y-

o-y mainly driven by weaker performance in

the ocean segment

• Net financial expenses impacted by market

movements in USD interest rates and

appreciation of USD vs our major currencies


1) Reported figures (non adjusted)

2) Incl. minority interests

2017 Q1 2016 Q4 2016 Q1 FY 2016

Operating income 439 450 432 1,751

Gain on sale of assets 9 80 455

Share of profits from JV's and associates 13 13

Total income 448 450 525 2,219

EBITDA 79 43 161 728

Depreciation and impairments (38) (38) (35) (148)

EBIT 41 4 126 580

Financial income/(expense) (11) 0 (15) (37)

Profit/(loss) before tax 30 4 111 543

1 1 1 Net profit

2) 26 (21) 104 500

Earnings per share (USD) 0.12 -0.09 0.47 2.27

Comments

WWASA – Ocean segment

15

Total income and EBITDA ocean segment1

USD million Comments


• Ocean income adjusted for non recurring

items declined 3% q-o-q, but stable y-o-y

• EBITDA adjusted for non recurring items

declined 15% and 5% y-o-y respectively (USD 9

million gain on sale of vessel to group

company in Q1 ’17 as non recurring)

• Ocean transported volumes fell 2% q-o-q, but

increased 3% y-o-y

• Earnings negatively impacted by increased

bunker costs due to time lag in BAF clauses

• Continued pressure on ocean rates

Total income EBITDA

1) Adjusted for non recurring items

365337

372357

-3%-1%

Q1’17

354

Q2’16Q1’16

-9

Q4’16Q3’16

-9

31

61

Q2’16

73 62

Q4’16

73

Q1’16

65

Q1’17

-15%-5%

Q3’16

4 2

Non recurring items

WWASA – Landbased segment

16

Total income and EBITDA landbased segment1

USD million Comments


• Landbased income adjusted for non recurring

items and “Treasure ASA” was stable q-o-q, but

increased 14% y-o-y

• EBITDA adjusted for non recurring items and

“Treasure ASA” stable q-o-q , but increased with

32% y-o-y

• Continued strong performance for technical

services supported by stable volumes and high

content value adding services for VSA

• Terminals show stable performance in line with

overall ocean volumes, but pulled back by

planned intermediate low volumes during start-

up of MIRRAT in Australia

1) Adjusted for non recurring items and “Treasure ASA”

175

-93

93928988

+1%

Q1’17

+14%

Q4’16Q2’16 Q3’16

82

Q1’16

102

-93

111111

Q2’16

9

Q1’16

11

Q3’16

2

+1%+32%

Q1’17Q4’16

9

Non recurring items

Total income EBITDA

ASSETS EQUITY & LIABILITIES

WWL ASA pro-forma balance sheet year-end 2016

17

Unaudited Pro-forma Balance Sheet WWL ASA IFRS, 20161USD billion Comments

• Net interest bearing debt per 31.12.2016 of

~3.1bn USD, of which cash and cash

equivalents and financial investments of

~0.7bn USD

• Opening balance for WWL ASA will be

reported as part of Q2 reporting where fair

value of assets and liabilities will be

recognized at the date of the merger (except

for 100% owned WW ASA entities)

• USD ~310M in provisions remain2 to cover

potential extraordinary costs in jurisdictions

with ongoing anti-trust investigations


1. Overview sets out the unaudited pro forma balance sheet information for WWL ASA as of 31th December 2016

2. Provisions made are based on detailed bottom-up assessment in all operating entities (WW ASA provision increased with 31 MUSD and OW provisions taken in full)

Non current assets

1.3

7.3

Current assets

6.1

0.9

Equity

Non current liabilities 4.1

Current liabilities

2.3

7.3

WWL ASA debt overview year-end 2016

18

WWL ASA group interest bearing debt 20162)

USD billion Comments

• Bank loans are the “base funding” of the WWL

ASA fleet

Wilhelmsen Lines AS, Wallenius Lines AB or the respective ship-owning company are the borrowers with no parent (WWL ASA) guarantee

• Investments and operations funded from

several capital sources, including the

commercial bank market (incl. export credit

agencies), through financial lease structures

and from the Norwegian bond market


3.9

Net Debt

3.1

Cash and Cash Equivalents1

Total DebtBondsFinancial LeaseCommercial Banks

1. Includes financial investments

2. Per 31.12.2016

New dividend policy was approved by the Board May 9th

19

DIVIDEND POLICY

“Wallenius Wilhelmsen Logistics ASA’s (“WWL ASA”) objective is to provide shareholders with a competitive return over time through a combination of rising value for the WWL ASA share and payment of dividend to the shareholders. The Board targets a dividend which over time shall constitute between 30 and 50% of the company’s profit after tax. When deciding the size of the dividend, the Board will consider future capital requirements to ensure the implementation of its growth strategy as well as the need to ensure that the Group’s financial standing remains warrantable at all times. Dividends will be declared in USD and paid out semi-annually”

FINANCIAL TARGETS

Key ratios Target

Equity ratio >35%

Return on capital employed («ROCE») >8%


WWL ASA – What can you expect for Q2 reporting?

20

• Opening balances as per April 5th 2017 and

Balance sheet as per Q2 2017

• Comparable pro-forma P&L for Q2 2016

• Ongoing process to review additional

information elements to be shared, whether at

Quarterly presentations or Capital Markets Day


INVESTOR RELATIONS POLICY

“Wallenius Wilhelmsen Logistics ASA (“WWL ASA”) strives to be available and to pursue a professional, transparent and active dialogue with investors and analysts. WWL ASA is committed to disclose and share relevant information in a timely, reliable and accurate manner with all financial stakeholders in accordance with relevant legal requirements and sound corporate governance principles. The objective is to ensure equal treatment of all stakeholders and fair valuation of the WWL ASA share”

21

Market and Business Outlook

by Craig Jasienski

Total light vehicle sales in the first quarter increased by 4% y-o-y

22


Global auto sales development forecastMillion units, 2016-2021E

2020E

Deepsea

84,5

16,2

2019E 2021E

1,8%

Domestic 77,5

2018E2017E

92,1

14,6

2016

Global auto sales per main sales region1

CAGR 2016-2021, CAGR Q1’17 vs Q1’16

Source: IHS1) Size of circle indicates auto sales Q1 2017

2.1%

CAGR

1.7%

-2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

-5% 0% 5% 10% 15% 20%

CAGR ’16-21

East Europe

West Europe

Central Europe

Japan/Korea

Greater China

Middle East & Africa

Q1’17 vs Q1’16

South America

ASEAN

NAFTA

India & Pakistan

Oceania

ME AFEUR APAC AM

Positive outlook for all main High & Heavy segments

23


Improving outlook for mining shipments000s, 2005-2020E1

1) Source: Parker Bay (Mining)2) Source: IHS Construction3) CEMA (AG machinery association Europe) Business Barometer. Index = sum of 1) evaluation of the current business situation & 2) turnover expectation, scale from -100 to +100

4.5

5.5

3.5

2.5

3.0

5.0

6.0

4.0

1.5

2.0

1.0

0.5

0.0’09 ’10’08

2.9

’13 ’16’14 ’15

3.2

’12’11

2.0

5.8

2.2

2.0

’06 ’07

3.7

2.9

3.6

3.2

4.3

’05

3.1

’17E

2.4

’19E

5.4

’20E

4.2

3.7

’18E

Continued solid growth for construction2007-2020E2

Down-cycle about to turn for AgricultureCEMA business barometer3

Pe

rce

nta

ge g

row

th (

y/y)

• The global demand for mining equipment remained

low in the first quarter but the sentiment is

improving backed by a further increase in

commodity prices

• Global construction markets continued their overall

positive development into 2017

• Particularly Asia, Middle East and Africa see strong

growth going forward (>4% per year)

• Global demand for agriculture equipment continued

the weak trend in the first quarter, but early

indications that the down-cycle in Agriculture might

be about to turn (particularly in Europe)

Q3’17Q2’11

Source: SeaWeb and Llouds List Intelligence Unit

Moderate net fleet growth forecasted going forward

24


4% of fleet are recycling candidates…Fleet by year of build, 1000 CEU

..contributing to moderate net fleet growthForecasted net fleet growth, % p.a.

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

16%

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

Net fleet growth, %

41 vessels>25 years old

4% of fleet CEU

45-50 firm vessels8-9% of

fleet CEU

Board view

25

«In mature markets, auto sales are expected to be relatively flat while the outlook for the emerging markets are mixed. Overall, the expectations are slightly positive. Global construction, mining and agriculture equipment sales are forecasted to improve slightly from low levels.»

Business OutlookMarket outlook

«The board expects that the merger will have positive impact on the group profitability. While the positive effects in 2017 to a large degree will be offset by restructuring costs, the synergies will be substantial in 2018 and have full effect in 2019 (estimated up towards USD 100 million on annual basis). However, continued rate pressure combined with some overcapacity in the market will continue to put pressure on the ocean segment.»


26

Q&A

by Craig Jasienski and Rebekka Glasser Herlofsen

27

Thank you!

Q1 Presentation - Wallenius Wilhelmsen Logistics...2017 Q1 2016 Q4 2016 Q1 FY 2016 Operating income...

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