star reefers
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Presentation 23 November
Reefer Market Caracteristics Reefer Market Caracteristics
Commodities in specialised reefers over 300,000 cbftBananasDecidiousCitrus
South north lanesSesonal businessLow valueHigh VolumLow draftSmall vesselsLoading in ports with limited infrastructureVessels have Cranes
The Forgotten Segment
Presentation 23 November
Conventional reefer landscapeConventional reefer landscape
Source: Drewry
Reefer commodities Conventional reefer vessels distance volume
Bananas43 %
Deciduous10 %
Citrus11 %
Exotics2 %
Fish21 %
Meat10 %
Others2 %
Dairy1 %
Presentation 23 November
Recent Reefer Industry DevelopmentsRecent Reefer Industry Developments
Market growth expected to exceed 2,5% p.a.Significant increase in spot ratesCustomers concerned about availability of tonnageFruit major securing tonnage on 3 year contractAggressive competition amongst operatorsOperators chartering in vessels on medium term (3 – 5 years)Container lines concentrated on dry cargoCompetition for quality 2nd hand shipsScrapping continuing in strong marketOld fleet Almost no new orders
Star well positioned to take advantage of this period of change
Presentation 23 November
Conventional reefer landscapeConventional reefer landscape
MAJOR REEFER OPERATORS (Post split)
Source: Drewry
Source: Star
Reefer commodities Conventional reefer vessels distance volume
Bananas43 %
Deciduous10 %
Citrus11 %
Exotics2 %
Fish21 %
Meat10 %
Others2 %
Dairy1 %
Presentation 23 November
2004 With 2nd Peak in May and a Strong Summer and 2004 With 2nd Peak in May and a Strong Summer and Fall Market Fall Market
YEARLY SPOT RATES
0
20
40
60
80
100
120
140
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
USC per cbft
Modern 03
Older 03
Small 03
Modern 04
Older 04
Small 04
Source: Orion Shipping AS, Oslo
Presentation 23 November
2004 With 2nd Peak in May and a Strong Summer and 2004 With 2nd Peak in May and a Strong Summer and Fall Market Fall Market
Presentation 23 November
Are Rates Returning to 1997 Levels?Are Rates Returning to 1997 Levels?
REEFER 12 MONTHS ESTIMATED EARNINGSSize: 350-550.000 cbft vessel
30
35
40
45
50
55
60
65
70
75
80
85
US
Cen
ts p
er c
bft
Source: Orion Shipping AS, Oslo
---- Conventional type - "old / new " ---- Modern high quality vessels
Presentation 23 November
Factors influencing demandFactors influencing demand
Consumer expenditures and general economic conditions
A Theoretical Approach
A B C
GDP per capita
Consumption pr. capita
0
2
4
6
8
10
12
14
Russia
1930
SaudiArabia6870
Germany
25280
USA
25820
OtherE. Eur.2355
OtherW. Eur.1)
25927
OtherEU
19755
A) Low income, basic need coverage
B) Rising income changing spending (eating) habit. Economy in focus by multinationals (Distribution network/promotion).
C) Consumption reaches top point. Rising income triggers substitution to more sophisticated fruits
Presentation 23 November
Strategic matrix – Reefers vs containersStrategic matrix – Reefers vs containers
REEFERS
SOUTH – NORTH LANE
SPEED ADVANTAGE
PORT TO PORT
LOW DRAFT
GEAR
HIGH AVERAGE AGE
QUALITY PAYS
NO ORDER BOOK
HIGH VOLUME – LOW VALUE
BANANA TRADE
CHANGE OF BANANA REGIME 06
WEAK SERVICE & CHAIN MANAGEMENT
CONTAINERS
EAST – WEST LANE
SPEED IMPROVEMENTS TO COME
TERMINAL TO TERMINAL / DOOR TO DOOR
DRAFT LIMITATIONS
NO GEAR
LOW AVERAGE AGE
ESTABLISHED QUALITY
HIGH ORDER BOOK IN 3000 TEU RANGE
LOW VOLUME – HIGH VALUE
NO BANANA TRADE EXCEPT FOR BRAZIL/USWCNO IMPACT TO THE CONTAINER
STRONGER LOGISTICAL BASE
Presentation 23 November
Net Scrapping Continues in a Strong Market... Net Scrapping Continues in a Strong Market...
0
1
2
3
4
5
6
7
8
Mill cbft
1999 2000 2001 2002 2003 Sep-04
...but most of it is the older frozen vessels.
Source Orion Shipping
Presentation 23 November
Reefer Age Distribution Fleet over 300 000 cbft Reefer Age Distribution Fleet over 300 000 cbft 231 mill. cbft.231 mill. cbft.
Over 20
15-20
10-15
0-10
39% of fleet is over 20 years and almost no newbuildings
Presentation 23 November
Star Strategy Star Strategy
Objective
Strategy
To generate a RoE better than our major competitors
Simplify and improve the management of the Company
Optimise fleet structure
Business risk management
Reduce costs
To evaluate new reefer shipping and terminal opportunities.
Presentation 23 November
.
# of Ships Capacity Average Average
(mill cbft.) Age Size
1 000 cbft.
Owned 16 7.9 14 490
Bare Boat Charter 6 3.2 12 540
Time Charter 14 7.7 10 553
Total Fleet 36 18.8 12 523
STAR Core FleetSTAR Core Fleet
Presentation 23 November
Reefer Age Distribution of Fleet over Reefer Age Distribution of Fleet over 300 000 cbft (231 mill) 300 000 cbft (231 mill)
0
10
20
30
40
50
60
70
Mill cbft
Age >25 20-25 20-15 15-10 10-5 >5
# Ship Star Owned/BB - 1 5 12 4 -
# Ships Star Chartered - - 1 9 2 2
Presentation 23 November
STAR Reefers Highlights in 3QSTAR Reefers Highlights in 3Q
EPS $ 0.48 against $ -0.32 last year
Freight rates 49 cents in 2Q vs. 39 cents last year
Sale of 2 ships generating profit of $ 4.6 million
Contract renewals 2005 at levels up 15-25%
Strenghening balance sheet
Presentation 23 November
.
3 Q 2004 3 Q 2003 YTD YTD
30-Sep-04 30-Sep-03
Net operating revenues 28.6$ 23.0$ 102.0$ 88.0$ Ships operating expenses -10.4 -10.2 -30.9 -30.4 Time charter hire -12.8 -10.3 -41.7 -33.5 Administrative expenses -0.4 -0.6 -1.5 -2.5 EBITDAR 5.0 1.9 27.9 21.6Bare boat charter hire -2.4 -1.5 -6.9 -4.6 Depr. and amortization -2.1 -2.2 -6.9 -6.6 Gain sale ships/subsidiary 4.6 0.8 5.0 1.5Operating profit 5.1 -1.0 19.1 11.9Interest expense -0.9 -1.7 -3.4 -5.1 Other financial items -0.1 0.2 -0.2 0.1Net income 4.1$ -2.5 $ 15.5$ 6.9$
EPS 0.48$ -0.32 $ 1.84$ 0.90$
Profit & Loss AccountProfit & Loss Account
Presentation 23 November
.
30-Sep-04 30-Sep-03
Vessels 141.2$ 157.5$ Other fixed assets 5.8 5.5 Other current assets 18.8 19.9 Bank deposits 32.2 20.4 Total assets 198.0$ 203.3$
Equity 85.4$ 62.3$ Provisions 0.1 1.2 Interest-bearing debt 92.4 120.6 Short term liabilities 20.1 19.2 Total equity and liabilities 198.0$ 203.3$
Equity ratio 43% 31%
Equity per share $10.09 $8.15
Balance SheetBalance Sheet
Presentation 23 November
STAR Reefers Recent DevelopmentsSTAR Reefers Recent Developments
Time Charters for 2 newbuildings
Vessels to be built at Shikoku Yard in Japan
Delivery Q1 2006 and Q4 2006
Specialised Reefers of 585,000 cbft.High Speed
High containerintake
Low bunker consumption
10 year duration of charters
STAR secruing modern long term tonnage as a leading quality reefer operator
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