q1 presentation - wallenius wilhelmsen logistics...2017 q1 2016 q4 2016 q1 fy 2016 operating income...
TRANSCRIPT
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
A new and more efficient structure in place…
7
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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 %
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
• 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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
• 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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
• 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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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%
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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
Business Update Financial Performance Market and Business Outlook Summary and Q&A
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.»
Business Update Financial Performance Market and Business Outlook Summary and Q&A
26
Q&A
by Craig Jasienski and Rebekka Glasser Herlofsen
27
Thank you!