Second Quarter/First Half Year Presentation 2017Second Quarter/First Half Year Presentation . 2017....
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Second Quarter/First Half Year Presentation 2017 24 August 2017
Transcript of Second Quarter/First Half Year Presentation 2017Second Quarter/First Half Year Presentation . 2017....
Second Quarter/First Half Year Presentation 2017
24 August 2017
Agenda
• Highlights
• Financials
• Operational review
• Market update and prospects
Highlights
• Second quarter was slightly weaker than first quarter and in line with guidance from the previous quarter
• EBITDA of USD 41 mill, compared with USD 46 mill in first quarter 2017
• Net results of –USD 5 mill compared to USD 2 mill in the previous quarter
• Odfjell chemical freight index (ODFIX) down 1.3% compared with previous quarter
• Acquisition of 5 vessels from Chemical Transportation Group (CTG) is completed
• The potential sale of our share of the terminal in Singapore has received high interest
• Final refund from cancellation of eight gas carriers was received in July
• Financing for total outstanding capital expenditure in Odfjell Tankers secured
Highlights
0
300
250
200
150
100
50
2016 201720152014201320122011201020092008
Chemical tankersTank terminalsLPG/Ethylene
Annualised EBITDA1, USD mill
«We are not satisfied reporting a net loss for the quarter, but our operational performance remains strong. The CTG
transaction completed our current growth ambitions to ensure that Odfjell can continue to offer competitive and efficient service to our customers. We expect 2H 2017 to
be in line with 1H 2017»
Kristian Mørch, CEO Odfjell SE
1. Proportional consolidation method according to actual historical ownership share
*2Q17 annualised
3
Financials
USD mill 2Q 2017 1Q 2017Gross revenue 238 243
Voyage expenses (79) (82)
TC expenses (50) (48)
Operating expenses (46) (45)
General and administrative expenses (22) (22)
Operating result before depr. (EBITDA) 41 46
Depreciation (27) (29)
Impairment - -
Capital gain (loss) on non-current assets (0) 0
Operating result (EBIT) 14 18
Net finance (18) (15)
Taxes (1) (1)
Net result (5) 2
1. Proportional consolidation method
Income statement¹ - Odfjell Group
4
Quarterly figures¹ – Odfjell Group
Financials
Quarterly Gross Revenue and EBITDA, USD mill
• Quarterly direction in gross revenue leads to similar drop in quarterly EBITDA • Weaker results in Odfjell Tankers marginally offset by improved results in Odfjell
Terminals
238243238240241249253276279
Q2 2015 Q4 2016Q3 2016 Q2 2017Q1 2017Q4 2015Q3 2015 Q2 2016Q1 2016
4146486061
69
455753
Q2 2017Q1 2017Q4 2016Q3 2016Q4 2015Q3 2015Q2 2015 Q2 2016Q1 2016
Gross Revenue
EBITDA
1. Proportional consolidation method5
Quarterly figures¹ – Odfjell Group
Financials
Operating Result (EBIT)¹, Net Finance² and Net Result, USD mill
• Positive EBIT in ten consecutive quarters• Net finance quarterly deviation due to repurchase of 2018 bond above par value (106.5)
1418
45
283041
0
2612
-5
2
43
1616
-17
77
Q2 2017Q3 2016Q2 2016 Q1 2017Q4 2016Q3 2015Q2 2015 Q1 2016
24
Q4 2015
1. Proportional consolidation method2. Equity method
Operating Result (EBIT)¹
Net Finance²
Net Result
-14 -14-12-12-11-11-12-12 -7117
-11-14 -9-18
-3 -13
5
-9-10 -4
Net interest Other financial/currency
6
Income statement¹ – Chemical tankers
USD mill 2Q 2017 1Q 2017
Gross revenue 209 213
Voyage expenses (79) (81)
TC expenses (50) (48)
Operating expenses (33) (31)
General and administrative expenses 2 (17) (17)
Operating result before depr. (EBITDA) 31 36
Depreciation (18) (20)
Impairment - -
Capital gain/loss on fixed assets 0 0
Operating result (EBIT) 13 16
Financials
Gross revenue reflecting a weaker spot market
1. Proportional consolidation method2. Including corporate functions
7
Financials
EBITDA variance – Chemical tankers
2Q 2017versus
1Q 2017
• Net gross revenue down 2%
• Net voyage expenses down 3%
• Operating expenses up 7%
TC exp.
-1.6
Bunker der.
-3.9
1Q 2017
36.00.2
OPEX
-2.1
2Q 2017
31.0
G&A
-0.1
Voy exp.
2.2
Bunker cl.
0.0
Gross rev.
Quarterly EBITDA, USD mill
8
129.2
87.7
G&A
3.7
OPEX
3.8
TC exp.
-15.7
Voy exp.
-25.1
Gross rev.
-8.3
YTD 2016 YTD 2017
YTD 2017
versusYTD 2016
• Gross revenue down 2%
• Voyage expenses up 18%
• OPEX down 4%
• G&A down 8%
• EBITDA reduced 32%
Bunker development
Financials
• Net bunker cost in 2Q USD 377 per tonne before hedging vs. USD 391 in 1Q• Bunker clauses in CoAs cover about 64% of the exposure• 6% of 2017 exposure is hedged at USD 229 per tonne
3.3
26.7
9.9
2Q16
32.9
21.0
11.4
2Q17
37.338.6
35.8
3.3
-0.5
4Q16
34.1
28.0
6.2
-0.1
3Q16
36.7
34.3
-0.3
1Q17
Quarterly net bunker costUSD mill 2Q 2016 - 2Q 2017
Platts 3.5% FOB RotterdamJanuary 2013 - July 2017
USD per metric tonne
9
Bunker purchaseBunker clausesincl. in revenue
Bunker hedging0
100
200
300
400
500
600
700
01.201601.201501.2013 01.2014 01.2017
USD mill 2Q 2017 1Q 2017
Gross revenue 28 28
Operating expenses (13) (13)
General and administrative expenses (4) (5)
Operating result before depr. (EBITDA) 10 9
Depreciation (8) (8)
Impairment - -
Capital gain/loss on fixed assets (0) -
Operating result (EBIT) 1 1
Financials
• Some negative effects from the end of the contango for middle distillates• Lower G&A driven by non-recurring management costs in the previous quarter
1. Proportional consolidation method (Odfjell SE share)
Income statement¹ – Tank terminals
10
Financials
EBITDA Tank terminals
EBITDA, USD mill YTD
EBITDA Tank Terminals 2Q 2017 1Q 2017
Europe 2 1North America 5 5Asia 3 3
Total EBITDA 10 9
6
4
10
AsiaNorth AmericaEurope
11
• Stable results in all areas• Odfjell Terminals Singapore EBITDA USD 5
mill in 1H 2017 (Odfjell SE share)
Balance sheet 30.06.2017 – Odfjell Group¹
Assets, USD millShips and newbuilding contracts 1 249
Other non-current assets/receivables 23
Investment in associates and JV’s 335
Total non-current assets 1 608
Cash and cash equivalent 190
Other current assets 114
Total current assets 304
Total assets 1 912
Equity and liabilities, USD millTotal equity 718
Non-current liabilities and derivatives 35
Non-current interest bearing debt 907
Total non-current liabilities 942
Current portion of interest bearing debt 187
Other current liabilities and derivatives 64
Total current liabilities 252
Total equity and liabilities 1 912
Financials
1. Equity method12
• Cash balance of USD 190 mill - excluding JV’s cash• Net investment in tank terminals JV’s USD 320 mill • Sale/lease back structures for two vessels at favourable terms at the
end of June gave USD 28 mill in additional liquidity
Debt Portfolio, USD mill Debt Repayments, USD mill
Financials
0
50
100
150
200
250
300
20212020201920182017NOK bond 12/17
NOK Bond 12/18NOK Bond 16/19NOK Bond 17/21
Secured loansBalloonLeasing
Debt development – corporate and chemical tankers 30.06.2017
13
0
200
400
600
800
1 000
1 200
20212020201920182017RepaymentEnding balance
• We have secured financing of all six vessels ordered at the Hudong Yard in China • Financing of the five vessels acquired from CTG is also in place• NOK bond maturing in December 2018 of USD 84 mill
Financial ratios – Odfjell Group
14
2013
27.7x
2017 YTD annualised
8.3x*
2016
4.8x
2015
8.5x
2014
17.6x
Gross interest bearing debt / EBITDA
38%38%33%31%
37%
2Q 20172016201520142013
Equity ratio
Return on capital employed (ROCE)1 Return on equity (ROE)
3%
8%
2%
-1%-3%
2017 YTD annualised
2016201520142013
-1%
15%
-6%-12%-14%
20142013 2015 2016 2017 YTD annualised
Note figures are by the equity method, year-end (or annualised) and not adjusted for extraordinary items such as impairments, capital gains, etc.1. EBIT divided by end of period total equity plus net interest-bearing debt
Equity method method
Financials
*adjusted for NOK bond repayment in April 2017
USD mill Remaining2017 2018 2019 2020 2021
Chemical Tankers
Newbuildings 4 x 49,000 dwt¹ 6 24 144 42 -
Newbuildings 2 x 38,000 dwt1 - 6 12 87 -
CTG 5 x 25,000 dwt 92 108 - - -
Docking 6 12 12 12 12
Other investments * 6 7 7 7 -
Total 110 157 175 148 12
Tank Terminals, 100%
Planned capex 25 57 39 29 -
Financials
Capital expenditure programme – 30.06.2017
1 Construction cost USD 60/58 mill per vessel, payment terms 3 x 10 +70, delivery June 2019 - 2020
* Includes propeller upgrade and ballast water treatment systems 15
Liquidity situation
16
Operational review
Our balance sheet remains robust and we have secured financing for our recent growth initiatives
Our current fleet growth in Odfjell Tankers is almost completed. We do not want to stretch our balance sheet, but have sufficient liquidity to act if the right opportunities arises
Financing of newbuilding programme in Odfjell Tankers is completed
Total equity instalments on the newbuilding programme limited to USD 50 mill, of which USD 20 mill will be paid in 3Q 2017
The remaining instalments will be funded by operational cash flow and existing cash
Repayment of USD 25 mill bridge financing will be done in 3Q 2017
Equity instalments on newbuilding programme
0003
0
9
06
06
06
20
0
10
20
30
40
50
Q1-
18
Q3-
17
Q2-
18
Q4-
18
Q2-
19
Q3-
19
Q4-
19
Q2-
20
Q3-
18
Q1-
19
Q1-
20
Q3-
20
Q4-
17
US
D m
ill
Fleet additions DWT Built Tanks TransactionAugust 2017 Chem Bulldog 21 306 2010 Stainless Short TC
June 2017 Bow Compass* 33 609 2009 Stainless Purchase
June 2017 Bow Neon 25 000 2017 Stainless Purchase
April 2017 Sun Triton 12 670 2017 Stainless Long TC
March 2017 Southern Quokka 26 077 2017 Stainless Long TC
February 2017 Stellar Orchid 12 571 2011 Stainless Short TC
January 2017 Stellar Wisteria 12 601 2011 Stainless Short TC
January 2017 Argent Eyebright 33 609 2009 Stainless Short TC
Short-term TC: Up to one yearMedium-term TC: 1-3 years
Fleet disposals DWT Built Tanks TransactionMay 2017 Bow Aratu 13 843 1997 Stainless Sale
April 2017 Chembulk Sydney 14 271 2005 Stainless Redelivered
Feb 2017 Chembulk Wellington 14 312 2004 Stainless Redelivered
Operational review
Fleet development – Year-to-Date
17
* Former Argent Eyebright
CTG transaction almost completes our growth ambitions for chemical tankers
18
Operational review
• Growth target of operating 100 chemical tankers is almost completed
• CTG transaction to positively contribute to our returns with limited downside risk
Deal facts: Attractive equity returns Consolidates the 25k segment which
is in need of more consolidation Attractive financing terms secured
• Transaction was concluded at an attractive stage of the asset cycle
Projected fleet growth
SS 38k 30 tanks and 20k 20 tanks Newbuild prices
Source: Maersk Brokers
Odfjell Terminals Possible Ethylene project Houston
We have finalised the basic engineering and have all the required permits
We are ready to start construction as soon as we have the appropriate commitments from customers, with whom we are in continuous dialogue to finalise agreements
If satisfactory customer commitment and financing is achieved, final investment decision can be made in 2H 2017
• Initiated a process to explore a sale of our share in Odfjell Terminals Singapore• We have received high interest from numerous potential buyers• A potential sale would be in line with our strategy of focusing on core terminals where we have
operational control• A transaction seems likely to materialise in 2H 2017
• Development in Rotterdam• We have secured a long-term contract for most of our PID in Rotterdam at attractive terms• This counters a weaker development in the tank terminal market, which is negatively affected by
the end of the contango for middle distillates• The value creation programme in Rotterdam is progressing
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Operational review
20
Source: Odfjell, various brokersNote there are different definitions of core fleet between sources
Supply CAGR 2017 – 2019E Demand CAGR 2017 – 2019E
3.7%
Consensus
3.4%
Steensland
3.4%
MaerskBroker
4.4%
Clarksons
2.3%
Odfjell
4.0%
Consensus
3.7%
World GDP
3.9%
Steensland
3.3%
OdfjellClarksons
4.2%
3.5%
MaerskBroker
Market update and prospects
Our overall view on market fundamentals is in line with consensus, indicating demand will outgrow supply
Market update and prospects
Market update – Chemical tankers
Source: Clarkson Platou
1. Odfix Index (1Q 1990 = 100) 2. Chemical tanker spot earnings index (midcycle = 100)
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Odfix quarterly average index (1990=100)
60
70
80
90
100
110
120
130
140
150
2012
-0.3%
-1.3%
201720162015201420132011201020092008
% change 2Q vs. 1Q
Odfix average 2008-2016
Chemical tanker spot earnings index (midcycle = 100)Source: Clarkson Platou
Odfix index• Second quarter was in line with guidance
from the first quarter 2017, with a slightly weaker market
• Odfjell chemical freight index (ODFIX) down 1.3% compared with prevoius quarter.
• We expect 3Q17 timecharter results to be marginally lower than 2Q17
Odfix average 2008-2016
Odfix index
22
Prospects
• We reiterate our view that both chemical tankers and
terminals markets will remain challenging in 2017
• Our contract portfolios in both tankers and terminals
continues to soften the impact of the challenging
markets
• In the medium-term, we believe the current
oversupply of tonnage to gradually be absorbed
• We expect 3Q17 results to be marginally lower than
2Q17, but 2H 17 to be in line with 1H 17
ODFJELL SE - Conrad Mohrs veg 29, P.O. Box 6101 Postterminalen - 5892 Bergen, Norway Tel: +47 55 27 00 00 - Fax: +47 55 28 47 41 - E-mail: [email protected] - Org. no: 930 192 503
Odfjell.com
Company representatives:
Kristian Mørch, CEO | Tel: +47 55 27 00 00 | E-mail: [email protected]
Terje Iversen, CFO | Tel: +47 55 27 00 00 | Mobile: +47 93 24 03 59 | E-mail: [email protected]
IR Contact: Bjørn Kristian Røed, Research & IR | Tel: +47 55 27 47 33 | Mobile: +47 40 91 98 68 | E-mail: [email protected]
Media Contact: Anngun Dybsland, Communications Manager | Mobile: + 47 41 54 88 54 |E-mail: [email protected]
