powerpoint presentation · 2 highlights first quarter 2018 underlying positive volume development,...
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2
Highlights first quarter 2018
Underlying positive volume development, especially for high & heavy
Seasonally weak results with EBITDA adjusted of USD 128 million
New Corporate Visual Identity and name; Wallenius Wilhelmsen ASA
About USD 85 million in synergies confirmed
Ocean results impacted by rate reductions, reduced HMG volumes, increased bunker cost and currency movements
Landbased results down due to increased SG&A cost allocations
5
Underlying positive volume development offset by reduced contracted Hyundai Motor Group (HMG) volumes
0
5
10
15
20
25
30
35
0
10
5
20
15
%
20,4%
Q3’15
25,3%
Q2’15
27,9%
Q3’17Q2’17
26,1%
Q1’17
26,1%
Q4’17
26,0%25,2%
18,417,7
16,716,2
18,2
16,216,8
25,4%
22,6%
Q2’16
25,7%
Q4’16Q3’16
24,2%24,9%
Q4’15 Q1’16
-12%+2%
Q1’18
Million CBM
25,1%
Q1’15
24,0%
Q4’14
22,6%
Q3’14
18,719,419,5
15,5
18,2
15,2 15,9
18,0
Total prorated volumes Cargo mix
1) Prorated volume
2) Calculated based on unprorated volumes. Updated figures based on aligned cargo type definition and reporting across all Ocean units
• Underlying positive volume development offset by
reduced contracted HMG volumes (up 2% y-o-y)
• Increased volumes in all foundation trades excluding
AS-NA (especially USWC) where EUKOR had the
largest reduction in contracted HMG volumes
• Adjusted for reduced contracted HMG volumes (0.5
million CBM) volumes were up about 5% y-o-y
• Volumes down 12% q-o-q, driven by seasonality and
contracted reduction in HMG volumes
• Continued positive development for cargo mix with a
high & heavy share of 27.9% in the first quarter, up
from 26.1% in the previous quarter and 24.2% in
same period last year
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Volume and cargo mix development1
Million CBM and %Comments
6
Seasonal reduction in volumes across most foundation trades
WWL trade routes
EUKOR trade routes
ARC trade routes
Atlantic Shuttle
Q1 ’18
+18% -1%
3.42.9
Q4 ’17Q1 ’17
3.4
EU/NA – Oceania1)
1.7
+3%
2.0
-10%
Q1 ’18Q1 ’17 Q4 ’17
1.8
EU - ASIA
+6%
Q1 ’18Q4 ’17
-14%
3.42.92.8
Q1 ’17
Asia - EU
3.3
Q1 ’17
-13%
2.9
Q4 ’17
2.7
Q1 ’18
+7%
Asia - NA
3.3
Q4 ’17 Q1 ’18
-26%
2.4
Q1 ’17
3.3
-26%
Asia - SAWC
Q1 ’17 Q4 ’17
1.21.2
Q1 ’18
+1%+22%
1.0
Note: Prorated volumes on operational trade basis in CBM
1) Including Cape sailings (South Africa)
Business Update Financial Performance Market and Business Outlook Summary and Q&A
7
Positive development in net freight/CBM despite rate reductions due to changes in trade and cargo mix
80
85
90
95
100
105
Q2’14 Q3’17Q2’17Q1’16Q1’15 Q3’16Q4’15Q2’15Q4’14Q3’14 Q4’17Q2’16 Q1’17Q3’15 Q1’18Q4’16
-4% +1%
Note: Unprorated volumes excluding US flag operations
1) Net freight = Revenues adjusted for surcharge elements such as BAF, SRC, THC etc
• Net freight / CBM increased by about 1% in the first
quarter compared with the previous quarter due to
changes in trade and cargo mix
• The largest volume reduction in the quarter was seen
in EU-AS and AS-USWC which are trades with
relatively low net freight / CBM
• Furthermore, the increased high & heavy share also
had a positive impact on net freight / CBM
• On the other side, rate reductions from contract
renewals in 2017 impacted the net freight index
negatively with about USD 5 million compared to
last quarter and about USD 15 million compared to
the same period last year
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Net freight / CBM development1)
Indexed to 100 per Q2 2014Comments
8
133 vessels operated at the end of the first quarter
128 127 126 126 124132 134 130 127
-6
966128
5125
Q1’17 Q3’17
-5
132
-2
Q3’16
125
Q2’16
128
Q2’17Q4’16
132
Q1’16
128
-4
Q4’17
132
Q1’18
133
Short Term T/C In/OutGroup Fleet
• Wallenius Wilhelmsen operated a core fleet of 124
vessels (851K CEU), representing around 20% of the
global fleet in the first quarter
• In addition, the group continued to leverage the short-
term market and controlled a fleet of 133 vessels at the
end of the first quarter, but with less capacity deployed
during the seasonally slow January & February months
• The group retains flexibility to redeliver two vessels and
up to 19 vessels by 2022 (excl. short term time charters)
• Four Post-Panamax vessels are expected to enter
service in 2018 and 2019, with remaining installments
of about USD 160 million
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Fleet development
# of vesselsComments
9
USD 86 million of the USD 120 million synergy target confirmed
000
86
Q4 2017 Q1 2018
120
Q3 2018 Q4 2018Q2 2018
76
Q3 2017
55
Q2 2017
65
Ship Management
Fleet Optimization
SG&A savings
Procurement Realized savings (annualized)
• At the end of the first quarter USD 86 million of the
USD 120 million synergy target was confirmed
• During the quarter about USD 10 million was added
to confirmed synergies, through a combination of
fleet optimization, procurement and SG&A savings
• The annualized run rate for synergies were about
USD 80 million, up from about USD 65 million in the
previous quarter
• The remaining part of the confirmed synergies will
gradually come into effect over the next 3-6 months
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Confirmed and realized synergy development
USD millionComments
10
Several key developments for landbased in the first quarter
• VSA results negatively impacted by high auto inventoriescausing congestion and reduced operational efficiencies
• Melbourne terminal fully operational from January 2018
• Keen Transport being integrated into WW Solutions
• WW Solutions credit facility to be increased with USD 150million to allow for further non-organic growth
• Investment and M&A pipeline remains interesting
Business Update Financial Performance Market and Business Outlook Summary and Q&A
Key highlights for landbased
11
New Corporate Visual Identity and name; Wallenius Wilhelmsen ASA
Business Update Financial Performance Market and Business Outlook Summary and Q&A
13
Consolidated results – first quarter 2018
Q1 2018 Q4 2017ProformaQ1 20171)
Total income 968 1 036 890
Operating expenses (843) (859) (747)
EBITDA 125 177 143
EBITDA adjusted 128 182 143
Depreciation (84) (84) (74)
EBIT 41 93 60
Net financial items (5) (32) n/a
Profit before tax 35 61 n/a
Tax income/(expense) (25) 27 n/a
Profit for the period 10 86 n/a
EPS 0.02 0.20 n/a
• Seasonally weak results with EBITDA adjusted of
USD 128 million, down 10% y-o-y and 30% q-o-q
primarily driven by the ocean segment
• Extraordinary costs of USD 3 million related to the
restructuring and realization of synergies
• Net financial items in the first quarter were
positively impacted by USD 30 million in unrealized
interest rate derivatives and USD 3 million related to
movements in currency
• Tax expense of USD 25 million in the first quarter,
primarily related to changes in deferred tax of USD
12 million and provision for withholding tax on
dividends from EUKOR of USD 7 million
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
1) Comparable numbers are pro forma numbers as if the transaction had taken place back in time
Comments
14
Increased bunker prices and unfavourable currency movements continue to impact the results negatively
409
372
329320
335
240
260
280
300
320
340
360
380
400
420
Q3’17Q2’17 Q4’17 Q1 ’18Q1’17
• BAF in customer contracts are the main mechanism to manage risk
• The business is exposed to changes in the bunker price since BAF iscalculated based on the average price over a historical period, and thenfixed during an application period, creating a “3 month” lag effect (negativeif prices move up and positive if prices move down)
• Bunker prices continue to move upwards, and results in the first quarterwere negatively impacted with more than USD 10 million
91
9494
98100
80
85
90
95
100
Q1 2018Q3’17 Q4’17Q1’17 Q2’17
• Main currency for both revenues and costs in the operating entities areUSD with the majority of revenues in USD while 20% of the operatingcosts in non-USD currencies (mainly EUR, KRW, JPY, SEK and CNY)
• The USD has weakened lately causing a negative currency effect of aboutUSD 15 million y-o-y and about USD 5 million q-o-q
• As a main principle, financial instruments are not used to hedge currencyrisk in the operating entities (assessment done when USD is historicallystrong vs. other currencies)
Bunker price development
USD / ton HFO
Currency development1
Basket of currencies Indexed to 100 per Q1 2017
1) Value weighted basket of currencies consisting of USD/EUR, USD/KRW, USD/JPY, USD/CNY and USD/SEK
USD / Basket of currencies
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
15
750
832775798
719748
Q1 ’18Q4 ’17Q3 ’17
+4% -10%
Q2 ’17Q4’16 Q1’17
1) Adjusted for extraordinary items; 2) Comparable numbers are pro forma numbers as if the transaction had taken place back in time
145 162157
17
109
123135
Q4’16
170
Q1’17 Q2’17
38
162
Q3 ’17
111
-10%
Q4 ’17
160
-31%
Q1 ’18
2
Extraordinary items
Total income • Total income was USD 750 million, up 4% y-o-y due to
increased volumes and fuel compensation
• EBITDA adjusted of USD 111 million, down 10% y-o-y driven by
• Reduced contracted HMG volumes
• Strike at HMG production facilities
• Unfavourable currency movements (USD 15 million)
• Net bunker price increase (USD 10 million)
• Rate reductions (USD 15 million)
• Armacup stink bug challenges (USD 3 million)
• The negative impact from above factors was partly offset by
underlying strong volume development, increased high & heavy
share and realization of synergies
• EBITDA in the first quarter was down 31% compared to the previous
quarter driven by the same factors as described above as well as
seasonally lower volumes
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
Total income and EBITDA ocean segment1, 2
USD millionComments
EBITDA
Ocean segment – first quarter 2018
16
• Total income was USD 232, up 25% y-o-y primarily
driven by Keen Transport and the Melbourne terminal
• EBITDA was USD 20 million, down 10% y-o-y
• Increased SG&A allocations of USD 3 million
• Congestions and reduced operational efficiencies
at certain locations in North America (VSA) due
to high inventories
• The negative impact of above factors was partly offset
by improved contribution from the terminals
(Melbourne terminal fully operational from Jan 2018)
and Keen transport (acquired 7 December 2017)
Landbased segment – first quarter 2018
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
221
232
203
192186184
Q3 ’17
-5
Q1’17Q4’16
199
+6%+25%
Q2 ’17
219
-2
Q4 ’17 Q1 ’18
26 2923
-5
202221
1
27
Q2 ’17 Q3 ’17
24
1
Q4’16
-16%
Q4 ’17
24
-10%
Q1’17 Q1 ’18
Extraordinary items
1) Adjusted for extraordinary items; 2) Comparable numbers are pro forma numbers as if the transaction had taken place back in time
Total income
Total income and EBITDA landbased segment1, 2
USD millionComments
EBITDA
17
Cash flow and liquidity development – first quarter 2018
649
5125
796
Liquidity Q4 2017
Other Liquidity Q1 2018
Net financing
Taxes paid
Interest and
financial derivatives
EBITDA CAPEX Dividend to non
controlling interests
Proceeds from sale of assets
-17-42 -6
-148
-50
-14
• CAPEX of USD 50 million includes
• Purchase option for leased vessel (USD 26 million)
• Instalments for new buildings (USD 8 million)
• Dry docking costs (USD 9 million)
• Net financing of USD 148 million includes
• Regular instalments of USD ~100 million
• Early down payment of ship loans USD ~90 million
(refinanced in early April 2018)
• Drawdown on credit facilities (USD 37 million)
• EUKOR distributed USD 70 million in dividend in the
first quarter with USD 14 million to non controlling
interest
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
CommentsCash flow and liquidity development
USD million
18
Balance sheet review – first quarter 2018
Non current assets
1.4
7.7
Current assets
6.3
1.6
Equity
Non current liabilities 3.3
Current liabilities
2.8
7.7
• Total assets of USD 7.7 billion with equity ratio of
36.3%, up from 35.8% last quarter
• Net interest bearing debt of USD 2.98 billion,
stable compared with last quarter
• Continued high cash and liquidity position with
USD 649 million in cash and about USD 250
million in undrawn credit facilities
• Early repayment of vessel loans of about USD 90
million during the quarter (refinanced in early
April)
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
Assets
Unaudited Balance Sheet 31.03.2018
USD billionComments
Equity & Liabilities
19
The legal and financial restructuring project finalized on time
New legal and funding structure
• Legal and funding structure consistent with
business unit structure in place
• New USD 445 million term loan and credit facility
to refinance vessel loans maturing in 2018 and
2019 and a revolving credit facility in WW Ocean
• Other loan agreements in WW Ocean have been
harmonized with the new facility agreement
• Main covenants for WW Ocean following the
refinancing process is minimum cash, positive
working capital and loan to value clauses
Comments
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
20
Debt maturity profile following financial and legal restructuring project
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
Debt maturity profile after refinancing (per 4 April 2018)
USD million
2021->
2.035
2020
657
2019
644
2018
383
Credit facilities (drawn) Bonds Installments (bank loans and financial leases)Balloons (bank loans and financial leases)
22
Auto sales in the first quarter were up 2.6% y-o-y
Global light vehicle (LV) sales per quarter Global LV sales per main sales region1)
Source: IHS Markit1) Size of circle indicates auto sales in Q1 2018
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
-2% -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17%
South America
Oceania
West Europe
CAGR ’17-22
Q1’18 vs Q1’17
Middle East/Africa
Indian Subcontinent
Central Europe
Japan/Korea
Greater China
East Europe
North America
ASEAN
EUR AMME AFAPAC
Q1 2016
22.822.3
Q2 2016
Q4 2017
23.6
Q2 2018
Q1 2018
23.9
Q3 2017
23.022.924.8
23.322.4
Q1 2017
Q3 2016
25.0
Q2 2017
Q4 2016
22.7
-4.0%
Q4 2018
+2.6%
25.6
Q3 2018
• Sales in North America developed sideways y-o-y, but down 8.1% q-o-q (seasonality)
• Sales in Western Europe down 0.8% y-o-y, but was up about 16.8% q-o-q (seasonality)
• The Chinese market started the year with sales up 4.6% y-o-y (down 16% q-o-q) which
was considered positive given that the temporarily tax cut ended in December 2017
• Continued positive development for the Russian and Brazilian markets
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
23
Auto exports in the first quarter were up 4.6% y-o-y
Global LV export per quarter Global LV export per main sales region1)
Source: IHS Markit1) Size of circle indicates auto export in Q1 2018
-18% -16% -14% -12% -10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16%
3%
25%
-2%
26%
6%
5%
4%
1%
-1%
2%
7%
0%
Middle East/Africa
South America
Greater China
Europe
CAGR ’17-22
North America
South Asia
Japan
Q1’18 vs Q1’17
South Korea
AMEUR APAC ME AF
Q3 2018
3.9
Q2 2018
3.84.0
Q1 2018
3.7
Q1 2017
3.6
Q3 2017
3.7
Q4 2016
3.8
Q4 2017
3.8
Q2 2017
+4.6%
Q4 2018
-0.2%
3.7
Q2 2016
Q3 2016
Q1 2016
3.73.5 3.7
• Exports from NA increased 6.8% y-o-y and 4.2% q-o-q driven by Mexico
• European exports were up 6.7% y-o-y and 0.6% q-o-q.
• Japanese exports in the first quarter were up 6.5% y-o-y and down 2.4% q-o-q.
• Exports out of South Korea were up 0.9% y-o-y and 1.9% q-o-q.
• Chinese exports were up 34.6% y-o-y due to new export facilities, but flat q-o-q.
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
24
Construction machinery markets remain very solid globally
Global construction and rolling mining equipment exports1
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%60k
30k
50k
40k
01/1807/1407/13 07/1507/12 01/13 01/14 01/1501/12 07/16 07/17
Machinery exports(Quantity avg. L12M)
01/16 01/17
Machinery exports(Growth L3M y-o-y %)
Machinery export growth (L3M)Machinery exports (L12M)
Source: 1 IHS Markit | Global construction and rolling mining equipment exports (equipment valued >20 kUSD ) (Avg. units L12M (last 12 months) and L3M (last 3 months) y-o-y %). Data cut-off: 01.2018 2 Caterpillar Inc., Volvo AB, Komatsu Ltd., US Bureau of the Census, AIA, Dodge Data & Analytics, Eurostat, IHS Markit, CECE, AiGroup, NAB
Comments
• Global construction trade continues to strengthen, with imports
to North America and Oceania accelerating in the first quarter
• OEM majors continued to report broad-based geographical
demand in the first quarter, with strong order development
across regions
• US construction spending edged up from the previous quarter,
leading non-residential indicators continued to signal expansion,
and housing starts and permits increased again
• EU construction output declined in the period, but the Eurozone
construction PMI expanded and construction confidence
strengthened in the quarter
• Australian construction activity continued expanding at multi-
year highs, with robust growth in the commercial and
engineering sectors
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
25
Global non-rolling mining machinery exports1 Mining machinery sales2
• Key commodity prices softened in the first quarter, but have since strengthened
• OEMs concluded another quarter of strong y-o-y sales growth in their mining divisions
with broad-based geographical demand, and order development remains positive.
+2%
3 6333 392
4 291
Q317
4 208
Q118Q116
2 957
+26%
Q217Q416Q316 Q417
2 655 2 722
Q117Q216
3 688
3 180
0
400
800
1 200
1 600
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
01/14 07/1607/13 07/15 01/1707/1401/1307/1201/12 01/1801/16
Machinery exports(Quantity avg. L12M)
07/1701/15
Machinery exports(Growth L3M y-o-y %)
Machinery export growth (L3M)Machinery exports (L12M)
Atlas Copco AB Caterpillar Inc.Sandvik AB
Mining equipment demand continues to recover on replacement needs
Source: 1 IHS Markit | Global non-rolling mining equipment exports (equipment valued >20 kUSD ) (Avg. units L12M (last 12 months) and L3M (last 3 months) y-o-y %). Data cut-off: 01.2018 2 Caterpillar Inc., Sandvik AB, Atlas Copco AB | Revenue, mining equipment divisions (MUSD (fixed rate) and growth y-o-y/q-o-q %)
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
26
Signs of a tightening supply-demand balance. However market rates remain distressed reflecting poorer earnings
Car Carrier Fleet Orderbook1
# vessels equal or above 4000 CEU
Open Vessels and Time Charter Rates2
# of vessels and USD/day
Sources: 1Clarksons Platou, Sea-web, 2Clarksons Platou, 3Vessels equal or above 4000 CEU
10
12
2 1
29
4
14
Orderbook 20212018 2019 2020
Deliveries Confirmed Orders
• The current orderbook stands at 25 vessels3 with the delivery of five car carriers
• Current market rates do not justify new ordering activity
• Time charter rates continue to rise and no open 6000+ CEU vessels reported
• Still some overcapacity in the market, although somewhat improved
0
5
10
15
20
25
30
35
40
45
50
0
5 000
10 000
15 000
20 000
25 000
Number of vessels
6/1
7
2/1
7
10
/16
9/1
6
12
/16
5/1
6
8/1
6
4/1
6
4/1
7
3/1
6
5/1
7
3/1
7
8/1
7
6/1
6
10
/17
11
/17
1/1
7
12
/17
7/1
6
9/1
7
11
/16
7/1
7
1/1
8
7/1
5
3/1
5
8/1
5
1/1
61
2/1
5
6/1
5
2/1
6
11
/15
10
/15
9/1
5
5/1
54
/15
3/1
8
TC Rate, $/day
2/1
8
5000 CEU6500 CEU 2000-5999 CEU 6000+ CEU
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
28
Outlook
Tonnage supply/demand balance continues to improve
Positive volume development, especially for high & heavy
Lower HMG volumes will continue to impact results
However, market rates remain at a depressed level
Financial Performance Market and Business Outlook Summary and Q&ABusiness update
Increased realization of synergies will positively impact results