j. lauritzen a/s investor update interim financial report ... · - net interest bearing debt usdm...

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J. Lauritzen A/S

Investor Update – Interim Financial Report 2016 Q2

August 2016

Please read the disclaimer placed as the

last slide in this presentation. Thank you.

2016 H1: As expected; guidance unchanged- Continued depressed dry cargo markets causes an EBITDA unsatisfactory low- Cash improving initiatives causing additional write-downs, negatively impacting the net results

• Markets

• Dry bulk markets (BHSI) on average down 8% on same period last

year; despite some improvements in 2016 Q2 markets remained

at historically depressed levels

• Vessel values on average down 9% since end-2015;

Dry bulk down 24%; Small gas carriers down 5%

• Business

• Activity: 127 vessels on average in 2016 Q2; down 6% on same

period last year

• Cash improving initiatives continued, including reduction in new

building programme

• Mr. Mads P. Zacho appointed new CEO; taking over from

Jan Kastrup-Nielsen on 19 September 2016

• Financials

• LTV inclusive undrawn facilities at 73% of market values

• NIBD of USDm 173 at 44% of market values

• Cash and committed, undrawn credit facilities stood at USDm 157

• Net results of USDm (30.7) in 2016 H1; hereof USDm (22.4) in Q2

Up USDm 113.9 on 2015 H1.

• EBITDA guidance unchanged

2

Key messages

2016 Q2 Interim Financial Report – Investor Update

Baltic Exchange Handysize Index (BHSI)

150

250

350

450

550

650

Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16

Source: Bloomberg

0

50

100

150

200

250

300

350

Q1 Q2 Q3 Q4 Q1 Q2

2015 2016

USDmNet interest bearing debt and cash incl. unused RCFs

Net interest bearing debt Cash incl. unused facilites

2016 H1 Net results of USDm (30.7) – up on 2015 H1

3

Income statementEBITDA per quarter in USDm

• EBITDA down USDm 12.1 to USDm (30.1)

• Lauritzen Bulkers down USDm 10.0 to USDm (34.9)

• Lauritzen Kosan down USDm 0.8 to USDm 10.4

• Depreciation improved USDm 8.2 to USDm (15.2)

• Due to sale of vessels and impairment losses

• Special items improved by USDm 93.0m to USDm 7.0

• Finance net up USDm 27.4 to USDm 10.0

• Profit from sale of non-strategic assets

• Net results up USDm 113.9 to USDm (30.7)

- EBITDA before special items suffered from weak dry cargo markets

- EBIT before special items at USDm (47.7), slightly down on 2015 H1

Comparing H1-2016 to H1-2015


1st half

USDm 2015 2016

EBITDA

Lauritzen Bulkers (24.9) (34.9)

Lauritzen Kosan 11.2 10.4

Not allocated a.o. (4.1) (5.6)

EBITDA (18.0) (30.1)

Sale of assets (0.0) (0.0)

Depreciation (23.4) (15.2)

Joint ventures 0.3 (2.3)

Operating income (EBIT)

before special items (41.0) (47.7)

Special items (86.0) 7.0

Net financial items (17.4) 10.0

Results before tax (144.4) (30.7)

Tax (0.1) 0.0

Discontinued operations and minorities (0.1) 0.0

Net results (144.6) (30.7)

(25)

(20)

(15)

(10)

(5)

0

5

10

Q1 Q2 Q3 Q4 Q1 Q2

2015 2016

Lauritzen Bulkers Lauritzen Kosan Total

Special items

2016 Q2 Interim Financial Report – Investor Update4

- One-off items: Sale of claims, settlements, compensation for contract termination

- Write-downs, impairment losses and provisions

USDm 2015 H1 2016 H1

One-off revenue from sale of claims and

claim settlements, contract termination 77.2 3.9

Sale of vessels as a consequence of

counterparty defaults - -

Impairment losses on vessels and

vessels under construction (151.6) (16.3)

Provisions and use of provisions

for onerous contracts 6.6 25.9

Impairment losses on vessels

owned by joint ventures (14.9) (5.5)

Financial items related to contract

termination (3.3) 1.0

Special items, net (86.0) 7.0

Break-down of special items

USDm 2015 H1 2016 H1

EBITDA 65.9 (0.3)

Sale of assets 0.0 (0.0)

Depreciation and impairment losses (175.0) (31.5)

Joint ventures (14.6) (7.8)

Operating income (123.8) (39.6)

Net financial items (20.7) 9.0

Results before tax (144.5) (30.7)

Condensed income statement with special items in operating profit

• Impairment losses related to sales of two owned newbuildings for delivery to new owners ex yard (cash preserving effect)

• Use of provisions related to onerous contracts (no cash effect)

Notable items

Balance sheet at end 2016 Q2

Balance sheet

5

Key messages

• Total assets at USDm 626.0

down from USDm 858.6 at year-end 2015

• Solvency at 37.1%

up from 31.5% at year-end 2015

• NIBD/EBITDA at (2.9); reflecting negative EBITDA

• Cash including undrawn RCFs USDm 156.5

up from USDm 115.6 at year-end 2015,

• Sales of newbuildings has reduced CAPEX

commitments on owned newbuildings to nil

(down from USDm 90 at year end-2015)

• Two owned new buildings cancelled during 2016 Q1 and one

part-owned newbuilding cancelled in 2016 Q3

• A further two owned newbuildings sold during 2016 Q2 with

delivery to new owners during 2016 Q3 ex yard

• Now remaining:

One part-owned newbuilding with delivery pushed into 2018

(CAPEX USDm 0.5 in 2017 and USDm 1.5 in 2018)

Eight time-chartered newbuildings all for delivery 2017

• Off-balance commitments related to chartered fleet

was USDm 601.5 (gross), down USDm 89 or 13%

since year-end 2015Further details on slide 14

- Cash and undrawn committed facilities totaled USDm 156.5

- Net interest bearing debt USDm 173, corresponding to 44.6% of vessel market values


USDm 2015YE 2016 Q1 2016 Q2

Fixed assets

- Vessels a.o. 464.5 416.3 406.0

- Investments in joint ventures 77.3 27.4 26.3

Current assets

- Assets held for sale 36.2 48.4 51.3

- Cash 115.6 184.1 91.9

Total assets 858.6 751.9 626.0

Equity 270.4 254.1 232.6

Non-current liabilities 377.8 358.7 279.5

Current liabilities 210.4 139.1 113.9

Solvency 31.5% 33.8% 37.1%

ROE (62.0%) 28.6% (24.4%)

NIBD/EBITDA (6.9) (2.5) (2.9)

ROIC (32.6%) (0.1%) (17.4%)

Notes: * Does not include undrawn committed facilities (USDm 64.6 at end-June 2016)

*

Average fleet LTV 72.8% (70% at year-end 2015)- Vessel values down 9% in 2016 H1 (Dry bulk down 24%. Small gas carriers down 5%)

- Approx. USDm 8 to be pledged as additional cash security during 2016 Q3


Fully owned fleet - Values and debt in USDm as per end 2016 Q2

Average age in years

Total owned fleet 9.4 Dry bulk carriers 5.4 Gas carriers 11.3

- 50,0 100,0 150,0 200,0 250,0 300,0 350,0

Dry bulk

Gas carriers

0 50 100 150 200 250 300 350

Dry bulk

Gas carriers

USDm

Market Value (June 2016) Debt (commitment) Book Value

Market value

end-2015

Activity & fleet

• Total activity averaged 93 vessels in 2016 H1

• Core fleet totalled 40 at end 2016 Q2

• Five vessels sold at year-end 2015 delivered to new owners during 2016 H1 and a further two part-owned vessels sold in 2016 H1

• Pool unwound; tonnage replaced by spot chartering

• Last cape vessel redelivered to owners in July 2016

• Sale of two newbuilding orders (delivery pending) and cancellation of three newbuilding orders in 2016 H1

• Coverage in supramax and handysize increased


- 2016 H1 EBITDA down USDm (10.0) compared to 2015 H1

- Activity in 2016 H1: Average 93 vessel. Expected activity in 2016 90-100 vessels

Cover for rest of the year

Handysiz

e

Supra

max

Capesiz

e

To

tal

New

build

ings

Total 32 7 1 40 12*

Owned 10 0 0 10 2*

Part-owned 2 0 0 2 2*

B/B in 0 0 0 0 0

T/C in ** 20 7 1 28 8

Pool, etc. 0 0 0 0 0

Core fleet at end 2016 Q2*

Note: * Table include sold newbuildings not yet delivered to

new owners and one cancellation agreed in 2016 Q3.

** Not including time-charters with a duration < 12 months

Note: End-June

CoAs included in the cover with expected requirement

Activity (avg. no. of vessels)

0

20

40

60

80

100

120

0

20

40

60

80

100

120

2012 2013 2014 2015 2016 H1

Handysize Supramax

Capesize Total

45%

70%

58%

90%

0% 25% 50% 75% 100%

Handysize

Supramax

2016

2015

Dry Bulk outlook: Rest of 2016

• Overall dry bulk demand growth is expected to remain modest in 2016

• Demand for iron ore, minerals and soybeans is expected to be drivers of dry bulk demand, while decreased demand for coal, fertilizer and wheat is expected to have a negative effect on demand for tonnage

• Demand prospects for dry bulk commodities are modest in 2016. However, a small growth in demand will continue to be off-set by the oversupply of dry bulk vessels


- Dry bulk markets expected to continue suffering: Modest demand growth and oversupply of tonnage

- Much is still dependent on scrapping activity, but Q2 showed that any significant movements in rates may hinder this

Markets

Source: Own analysis based on data from Clarkson Research Services

Age profile and order book

• Scrapping activity; 8.2m DWT in 2016 Q2; down almost 60% vis-à-vis 2016 Q1. This happened concurrently with a Q2 rise in freight rates, indicating that scrapping activity is subdued as soon as rates improve

• In 2016 H1, contracting was minimal: Only one new Handysize vessel has been ordered, while no new Supramax vessels has been ordered. (Capes has been ordered though)

Main concern is if scrapping activity will fall even further in 2016 H2 by any hints of a recovery of and/or small increases in freight rates

World fleet

Spot market rates (USD/day)

Source: Clarkson Research Services

0%

20%

40%

60%

80%

100%

0%

20%

40%

60%

80%

100%

Capesize Supramax Handysize

25 years or more 16-24 years 0-15 years Orderbook %

0

5.000

10.000

15.000

20.000

2012-01 2013-01 2014-01 2015-01 2016-01

Average of the 6 T/C Routes for the Baltic Handysize Index

Average of the 6 T/C Routes for Baltic Supramax Index

- Activity decrease by 6%, as expected, causing EBITDA to come in lower than in 2015 H1 (down 7%)

- Expected activity in 2016 35 vessels

9

Cover for rest of the yearFleet at end 2016 Q2Activity (avg. no. of vessels)

Sem

i-refrig

era

ted

Eth

yle

ne

Fu

lly-p

ressuris

ed

To

tal

New

build

ings

Total 10 13 10 33 0

Owned 6 6 9 21 0

Part-owned 0 3 0 3 0

B/B in 4 0 0 4 0

T/C in 0 2 1 3 0

Pool, etc. 0 2 0 2 0

0

10

20

30

40

50

0

5

10

15

20

25

2012 2013 2014 2015 2016 H1

Semi-refrigerated Ethylene

Fully-pressurised Total (RHS)


Note: End-June

CoAs included in the cover with expected requirement

Total >>

Activity & fleet

• Controlled fleet averaged 34 vessels in 2016 H1

• Coverage increased in the fully-pressurised (F/P) and ethylene segments

58%

57%

38%

75%

53%

53%

0% 25% 50% 75% 100%

F/P

S/R

Ethylene

2016

2015

Small gas carriers: Rest of 2016

• Solid demand growth for seaborne transportation of LPG and petrochemicals anticipated

• Car sales and construction activity near-term driving factors for demand

• Supply side developing favourable: Substantial scrapping potential to absorb existing order book

• Opportunities in Iran not expected before 2017


- Economic indicators suggest continued growth in industrial production in North America and Europe- China’s industrial production is expected to grow at app 6 % pa. - Strength of JPY putting pressure on Japanese industrial activity with slightly stronger outlook for Taiwan and South Korea

Improving market balance

Source: Own analysis based on data from Clarkson Research Services. Chart excludes certain

orders on Sinopacific to reflect expected very low probability of actual delivery.

Order book of small gas carriers by delivery month and typeSpot rates (1,000 USD/month)

Note: Unadjusted for waiting time, if any.

Source: Clarkson Research Services

0

100

200

300

400

500

600

700

2012-01 2013-01 2014-01 2015-01 2016-01

F/P (3,500 cbm., trading east of Suez)

F/P (3,500 cbm., trading west of Suez)

Semi-refrigerated (6,500 cbm)

Ethylene (10,000 cbm)

0

2

4

6

8

10

12

Q32016

Q42016

Q12017

Q22017

Q32017

Q42017

Q12018

Q22018

Q32018

Q42018

Num

ber

of vessels

FP SR ETH

Financing- Bank facilities unchanged; No refinancing of bank facilities necessary until 2019

Outstanding debt in USDm, at end-of-year Repayment profile in USDm

15

34 34 2921

115 3

49

9

34

27

81

0

25

50

75

100

125

2016 H2 2017 2018 2019 2020 2021 2022 2023

Repayments

Expiry of undrawn revolving credits

Bullets (bank loans)

Bonds

171136

10269

21

30

30

30

64

62

61

60

59

10

81

0

50

100

150

200

250

300

350

400

2016 2017 2018 2019 2020 2021 2022 2023

Term loans

Revolving credits (drawn)

Revolving credits (undrawn)

Bonds

Notes: Data as per end-July 2016

• Data reflects agreement to sell newbuildings and cancel related financing commitment

• All numbers shown are forecasts and can change e.g. in case of sale of a vessel, prepayment, change in use of revolving facilities, etc.

• Bond debt at hedged value less JL’s own bond holding (JL holds nom. NOKm 46 of JLA 02).

11 2016 Q2 Interim Financial Report – Investor Update

Summary


- Guidance unchanged

Markets are highly challenging

• Dry bulk markets still hovering at historically depressed levels

• 2016 earnings and cash generation still expected to be unsatisfactory

• Payment and transfer of non-strategic assets to be completed during 2016 Q3

Guidance (unchanged) *

EBITDA for 2016 expected at levels similar to 2015 (in 2015: USDm (41))

Freight rate sensitivities

+/- USD 1000/day in Lauritzen Bulkers: 2016 FY P/L impact of +/- USDm 2.4

+/- USD 500/day in Lauritzen Kosan: 2016 FY P/L impact of +/- USDm 0.7

Negative EBITDA partly offset by special items (use of provisions)

Depreciations lower du to sale of assets and write downs; and

lower financial costs due to deleveraging and sale of financial assets.

*) In general currency and interest rate fluctuations as well as effects from sale of assets, if any,

may also impact the results

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Appendix

• Charter obligations

• Contact details

• Disclaimer


Charter obligations- Charter obligations decreased USDm 89.5 since year-end 2015

14

Operational lease liabilities (time charter and bare boat contracts) at end June 2016

Note: Above does not include income from contracts of affreightment (COAs).

Bulkers Kosan Total

USDm

No. of vessels

(full year equiv.) USDm

No. of vessels

(full year equiv.) USDm

No. of vessels

(full year equiv.)

< 1 Year 53.6 12.5 8.7 3.2 62.3 15.6

1 - 2 Year 105.7 24.3 4.1 2.3 109.8 26.7

2 - 3 Year 102.6 23.4 - - 102.6 23.4

3 - 4 Year 77.1 18.0 - - 77.1 18.0

4 - 5 Year 63.9 14.7 - - 63.9 14.7

> 5 Year 185.8 42.3 - - 185.8 42.3

Total 588.7 - 12.8 - 601.5 -


At end June 2016, JL had purchase options on 24 dry bulk carriers

Contact details

Investor relations

Jacob WinthereikFinancial Investor Relationship Manager

E-mail: [email protected]

Phone: +45 3396 8384

Web: http://www.j-l.com


Press & Media

Jens SøndergaardSenior Vice President,

Strategic Planning & Executive Communications

E-mail: [email protected]

Phone: +45 3396 8401

Web: http://www.j-l.com

mailto:[email protected]

http://www.j-l.com/

mailto:[email protected]

http://www.j-l.com/

Disclaimer

• This presentation contains forward-looking statements concerning J. Lauritzen A/S (“J. Lauritzen”, “JL” or the “Group”) and its financial condition, results of

operations and business. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking

statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown

risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements.

• Forward-looking statements include, among other things, statements concerning J. Lauritzen’s potential exposure to market risks and statements expressing

management’s expectations, beliefs, estimates, forecasts, projections and assumptions. There are numerous factors that could affect J. Lauritzen A/S’ future

operations and could cause J. Lauritzen A/S’ results to differ materially from those expressed in the forward-looking statements included in this presentation.

• All forward-looking statements contained in this presentation are expressly qualified by the cautionary statements contained or referenced to in this statement.

Undue reliance should not be placed on forward-looking statements.

• Each forward-looking statement speaks only as of the date of this presentation. J. Lauritzen does not undertake any obligation to publicly update or revise

any forward-looking statement as a result of new information or future events other than required by applicable law. In light of these risks, results could differ

materially from those stated, implied or inferred from the forward-looking statements contained in this presentation.

• Some of the statistical and graphical information contained in the presentation is supplied from the Clarkson Research Services Limited (“CRSL”) database

and other sources. CRSL has advised that (i) some information in CRSL’s database is derived from estimates or subjective judgments, (ii) the information in

the databases of other maritime data collection agencies may differ from the information in CRSL’s database, (iii) whilst CRSL has taken reasonable care in

the compilation of the statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit and validation

procedures and may accordingly contain errors, (iv) CRSL, its agents, officers and employees cannot accept liability for any loss suffered in consequence of

reliance on such information or in any other manner, and (v) the provision of such information does not obviate any need to make appropriate further

enquiries. Any use of such data and graphical information appear with reference to Clarkson Research Services Limited

• While the information in the presentation is believed to be accurate, no representation or warranty, express or implied, is or will be made in relation to the

accuracy or completeness of this presentation or any other written or oral information transmitted or made available to any person or its advisors in connection

with any investigation of the Group and no responsibility or liability is or will be accepted by the Group or any of their respective affiliates and representatives.

In particular, no representation or warranty, express or implied, is or will be given as to the achievement or reasonableness of any statements, estimates and

projections with respect to the anticipated future performance of the Group and the market for the Group’s products and services.


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