third quarter 2015 results · debt development– 30.09.2015 • all scheduled vessel refinancing...
TRANSCRIPT
Third Quarter 2015 Results12 November 2015
2
Agenda
• Highlights
• Financials
• Operational review
• Project Felix
• Market update and prospects
• Q&A
3
Highlights
• Continued improved operational performance, net result of USD 7 mill
• Chemical Tankers EBITDA was USD 46 mill compared with USD 42 mill in 2Q15.
EBITDA includes negative effects from bunker derivatives of USD 17 mill
• Odfjell chemical freight index (ODFIX) result up 1% compared with previous quarter
Highlights
¹ Proportional consolidation method according to actual historical ownership share
-50
0
50
100
150
200
250
300
350
06 07 08 09 10 11 12 13 14 15
US
D m
ill
Annualised EBITDA¹
Chemical tankers Tank terminals LPG/Ethylene
80
100
120
140
160
180
200
06 07 08 09 10 11 12 13 14 15In
de
x 1
99
0=
10
0
ODFIX
Quartely average 2006-2015
4
Highlights
• Cost-cutting and efficiency programme is on
schedule
• Stable and slightly improved results from
Odfjell Terminals
• Harald Fotland appointed new Head of Odfjell
Tankers
Highlights
First Poland vessel Bow Summer during upgrading with new propulsion concept
5hallo
Income statement¹ - Third quarter 2015 Odfjell Group
Financials
¹ Proportional consolidation method
USD mill 3Q15 2Q15Gross revenue 276 279
Voyage expenses (106) (104)
TC expenses (42) (45)
Operating expenses (48) (50)
General and administrative expenses (23) (27)
Operating result before depr. (EBITDA) 57 53
Depreciation (30) (31)
Impairment (0) (10)
Operating result (EBIT) 26 12
Net finance (18) (5)
Taxes (1) (0)
Net result 7 7
6
52.6
(3.4) (1.7)
2.82.1
4.3 56.7
0
10
20
30
40
50
60USD mill.
Financials
EBITDA variance¹ - Odfjell Group
3Q14 vs 3Q15:
EBITDA increased by 81%
OPEX down 19%
G&A down 22%
3Q14 vs 3Q15:
EBITDA increased by 81%
OPEX down 19%
G&A down 22%
2Q15 vs 3Q15:
EBITDA increased by 8%
OPEX down 4%
G&A down 16%
2Q15 vs 3Q15:
EBITDA increased by 8%
OPEX down 4%
G&A down 16%
31.2
(16.4)
18.95.2
11.3
6.5 56.7
0
10
20
30
40
50
60USD mill.
¹ Proportional consolidation method
7
Quarterly figures¹ - Odfjell Group
0
50
100
150
200
250
300
350
2013 2014 2015
US
D m
ill
Gross Revenue
0
10
20
30
40
50
60
2013 2014 2015
USD
mill
EBITDA
• Increased EBITDA in five consecutive quarters
• EBITDA has increased by 81% compared with 3Q14
• Increased EBITDA in five consecutive quarters
• EBITDA has increased by 81% compared with 3Q14
Financials
¹ Proportional consolidation method
8
Quarterly figures
-6-15
58
-15
1223
5
26
-99
5
-120
-100
-80
-60
-40
-20
0
20
40
2013 2014 2015
US
D m
ill
Operating Result (EBIT)¹
• EBIT 3Q includes negative effect of bunkers hedging USD 17.0 mill
• Unrealized value on derivatives negative USD 3.8 mill in 3Q, compared with gain USD 11.3 mill in 2Q
• Restructruring of financial lease gave USD 4.2 mill in interest income in 3Q
• EBIT 3Q includes negative effect of bunkers hedging USD 17.0 mill
• Unrealized value on derivatives negative USD 3.8 mill in 3Q, compared with gain USD 11.3 mill in 2Q
• Restructruring of financial lease gave USD 4.2 mill in interest income in 3Q
-9 -7 -7 -9 -9 -9 -9 -11 -10 -12-7
7
-15-6
1
-5
0
-10-20
9
-7
-30-25-20-15-10-505
1015
USD
mill
Net Finance²
Net interest Other financial/currency
2013 2014 2015
Financials
¹ Proportional consolidation method² Equity method
haallooooooooooooo
-13-22
-32
-2
-26
79
-9
7
-102
-17
-110
-90
-70
-50
-30
-10
10
30
2013 2014 2015
US
D m
ill
Net Result
9
Results per segment¹
3Q15 2Q15
USD millChemical tankers
Tank terminals
LPG/Ethylene
Chemical tankers
Tank terminals
LPG/Ethylene
Gross revenue 244 28 4 247 28 5EBITDA 46 10 1 42 10 1EBIT 24 2 0 10 2 1
0%10%20%30%40%50%60%70%80%90%
100%
Gross revenue EBITDA Assets
3Q15
Chemical tankers Tank terminals LPG/Ethylene
Financials
¹ Proportional consolidation method
-50
0
50
100
150
200
250
300
350
06 07 08 09 10 11 12 13 14 15
USD
mill
Annualised EBITDA¹
Chemical tankers Tank terminals LPG/Ethylene
10
hhhhhhhhhhhhhh
Income statement¹ – 3Q15 chemical tankersUSD mill 3Q15 2Q15
Gross revenue 244 247
Voyage expenses (104) (102)
TC expenses (41) (44)
Operating expenses (34) (36)
General and administrative expenses 2 (19) (23)
Operating result before depr. (EBITDA) 46 42
Depreciation (22) (23)
Impairment (0) (10)
Operating result (EBIT) 24 10
Financials
• Bunker adjustment clauses impacted the gross revenue negatively USD 9.9 mill
(USD 6.9 mill in 2Q)
• EBITDA includes negative effects from bunker hedging derivatives USD 17.0 mill
(USD 12.1 mill in 2Q)
• Bunker adjustment clauses impacted the gross revenue negatively USD 9.9 mill
(USD 6.9 mill in 2Q)
• EBITDA includes negative effects from bunker hedging derivatives USD 17.0 mill
(USD 12.1 mill in 2Q)
¹ Proportional consolidation method 2 Including corporate functions
11
41.9
(3.0)
0.3
(5.0)
3.02.8
1.94.1 46.0
0
10
20
30
40
50USD mill.
Financials
EBITDA variance – chemical tankers
3Q14 vs 3Q15:
EBITDA increased by 74%
3Q14 vs 3Q15:
EBITDA increased by 74%
2Q15 vs 3Q15:
EBITDA increased by 10%
2Q15 vs 3Q15:
EBITDA increased by 10%
26.4
(13.1)(5.6)
(17.2)
35.54.1
9.56.4 46.0
-10
0
10
20
30
40
50USD mill.
12
Vessel operating expenses – chemical tankers
0
2,000
4,000
6,000
8,000
10,000
12,000
06 07 08 09 10 11 12 13 14 YTD15
Development USD / day per year
Total Crew
Financials
0
2,000
4,000
6,000
8,000
10,000
12,000
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
Quarterly USD / day
Total Crew
• Project Felix initiatives give significant positive results
• Operating expenses (USD / day) reduced by 18% YTD compared to FY2014
• Expect stabilizing opex at competitive levels
• Project Felix initiatives give significant positive results
• Operating expenses (USD / day) reduced by 18% YTD compared to FY2014
• Expect stabilizing opex at competitive levels
13
Bunker development
66.4 52.3 39.9 38.9 36.8
(3.2)
2.7
10.0 6.9 9.9
(0.2)
16.614.7
12.1 17.0
63.071.6
64.5
57.963.7
(20)
(10)
-
10
20
30
40
50
60
70
80
3Q14 4Q14 1Q15 2Q15 3Q15
US
D m
illNet Bunker Cost
Bunker purchase Bunker clauses Bunker hedging Net bunker cost
0100200300400500600700800
10 11 12 13 14 15
USD
/mt
Platts 3.5% FOB Rotterdam
hallooooooooooooooooooo
• Net bunker cost in 3Q USD 445 per tonne before hedging vs. USD 436 in 2Q
• 50% of the remaining 2015 exposure is hedged at average USD 527 per tonne
• Bunker clauses in CoAs cover about 50% of the exposure
• 7% of 2016 exposure is hedged at average USD 255 per tonne
• Net bunker cost in 3Q USD 445 per tonne before hedging vs. USD 436 in 2Q
• 50% of the remaining 2015 exposure is hedged at average USD 527 per tonne
• Bunker clauses in CoAs cover about 50% of the exposure
• 7% of 2016 exposure is hedged at average USD 255 per tonne
Financials
14
Income statement¹ – 3Q15 tank terminals
USD mill 3Q15 2Q15
Gross revenue 28 28
Operating expenses (13) (14)
General and administrative expenses (5) (5)
Operating result before depr. (EBITDA) 10 10
Depreciation (8) (8)
Operating result (EBIT) 2 2
Financials
¹ Proportional consolidation method
• The tank terminal result is stable but at unsatisfactory levels
• The occupancy rate at 94%
• The tank terminal result is stable but at unsatisfactory levels
• The occupancy rate at 94%
15
Tank terminals EBITDA – by geographical segment
‐4
15
11
6
-5
0
5
10
15
20
Europe NorthAmerica
Asia Middle East
US
D m
illYTD 2015
EBITDA Tank Terminals by geographical segment 3Q15 2Q15
Europe (0) (1)North America 5 5Asia 3 4Middle East 2 2Total EBITDA 10 10
• Stable results in all areas
• Slightly positive EBITDA at OTR in September
• Additional available capacity contributed to a
slight increase in the EBITDA at our terminals in
North America
• Stable results in all areas
• Slightly positive EBITDA at OTR in September
• Additional available capacity contributed to a
slight increase in the EBITDA at our terminals in
North America
Financials
16
Balance sheet¹ – 30.09.2015
USD mill - AssetsShips and newbuilding contracts 1 299
Other non-current assets/receivables 61
Investment in associates and JV’s 377
Total non-current assets 1 737
Cash and available-for-sale investments 177
Other current assets 125.
Total current assets 302
Total assets 2 040
Equity and liabilitiesTotal equity 647
Non-current liabilities and derivatives 49
Non-current interest bearing debt 1 042
Total non-current liabilities 1 091
Current portion of interest bearing debt 181
Other current liabilities and derivatives 121
Total current liabilities 302
Total equity and liabilities 2 040
• Cash balance of USD 177 mill - excluding JV’s cash (USD 108 mill end June)
• Net investment in tank terminals JV’s USD 314 mill
• Unrealised negative value on hedging derivatives USD 23.0 mill end September, compared to negative USD 28.6 mill end June
• Equity ratio 31.7% (32.5% end June)
• Cash balance of USD 177 mill - excluding JV’s cash (USD 108 mill end June)
• Net investment in tank terminals JV’s USD 314 mill
• Unrealised negative value on hedging derivatives USD 23.0 mill end September, compared to negative USD 28.6 mill end June
• Equity ratio 31.7% (32.5% end June)
Financials
¹ Equity method
17
Debt development – 30.09.2015
• All scheduled vessel refinancing for 2015 completed
• In total the 2015 refinancing has secured USD 72 mill in new liquidity
• The NOK 600 mill bond maturing in December 2015 will be redeemed by
drawing on cash balance
• Further initiatives will improve cash positions with USD 40 – 50 mill in 4Q
0
200
400
600
800
1,000
1,200
1,400
3Q15 2015 2016 2017 2018 2019
USD
mill
Debt Portfolio
Ending balance Repayment
Financials
0
50
100
150
200
250
300
350
2015 2016 2017 2018 2019
US
D m
ill
Debt Repayments
Secured loans Balloon LeasingNOK bond 12/15 NOK bond 12/17 NOK Bond 12/18
18
Capital expenditure programme
In USD mill – per 30.09.2015 Remaining 2015 2016 2017 2018 2019
Chemical Tankers, Odfjell share
Docking 4 14 14 14 14
Other investments (vessel retrofitting) 3 7 5
Odfjell Gas, 100%1)
Sinopacific, 4 x 17,000 cbm 18 131
Sinopacific, 4 x 22,000 cbm 5 30 144
Tank Terminals, 100%
Planned capex 40 58 34 10 8
Financials
1) Odfjell SE (50% owner) is committed to inject up to USD 50 mill in equity in 2015 - 2017. Due to delays at the yard the capital injections will most likely be pushed to later
19
Terminal projects and expansionsOperational review
• In Houston, the new 17,142 cbm tank pit (Bay 10) has now been completed
• Our new terminal in Tianjin is ready for operation, but the explosion in the Tianjin old
harbour in July will most likely further delay the process of obtaining the necessary
operational permits
• Expansions in Rotterdam are on track
20
Tank terminal capacity and commercial occupancy
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Cub
ic M
etre
s`00
0
Mineral oil storage Chemical storage Ongoing expansions
Current capacity 5,448,932 cbm
Ongoing expansions 450,400 cbm
Available capacity in Rotterdam at 60% of gross capacity
Current capacity 5,448,932 cbm
Ongoing expansions 450,400 cbm
Available capacity in Rotterdam at 60% of gross capacity
* Odfjell’s ownership share in the respective tank terminals is shown in percentage
Operational review
89%
97% 96% 94%89%
84% 86% 86%91% 91% 92% 94%
50%55%60%65%70%75%80%85%90%95%
100%
4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
The occupancy rate was at 94% in
3Q15.
The occupancy rate was at 94% in
3Q15.
21
Odfjell Terminals (Rotterdam) – current status
• EBITDA negative USD 0.8 mill in
3Q15 (Odfjell share), compared to
negative USD 1.6 mill last quarter
• Per end of 3Q15 the commercially
available occupancy was at 95.5%,
last quarter it was at 93%‐80,000
‐60,000
‐40,000
‐20,000
0
20,000
40,000
60,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Annualised EBITDA OTR (100%)EUR 1,000
• Total commercial capacity end September 939,000 cbm, compared to 860,000
cbm end June
• With the current market activity we expect to add further capacity by year end
• The terminal delivered a slightly positive EBITDA in September, with all four
distillation columns fully operational since the end of 2Q
• The largest distillation column will go offline in 4Q15 to increase the capacity of
the unit. This will negatively affect the OTR results in 4Q15
Operational review
22
Odfjell Gas Carriers
Third quarter affected by idle time for the pool vessels
Activity in all the main markets slowed down more than expected
Improvements are expected for the fourth quarter, in line with the results for 1st half of the year
The construction of 4 x 17,000 cbm and 4 x 22,000 cbm is significantly delayed, and we are in discussions with the yard
USD mill 3Q15 2Q15Gross revenue 4 5
EBITDA 1 1
EBIT 0 1
Operational review
23
hhhhhhhh
Fleet development - last 12 months
Fleet additions DWT Built Tanks Transaction
May 2015 Horin Trader 19 856 2015 Stainless Medium-term TC
April 2015 Marex Noa 12 478 2015 Stainless Long-term TC
March 2015 Gion Trader 19 883 2015 Stainless Medium-term TC
January 2015 Bow Triumph 49 600 2015 Coated Owned
October 2014 Bow Trident 46 600 2014 Coated Owned
Short-term: Up to one yearMedium-term: 1-3 years
Fleet disposals, owned DWT Built Tanks Transaction
November 2015 Bow Victor 33 000 1986 Stainless Recycling
August 2015 Bow Bracaria 5 846 1997 Stainless Sale
July 2015 Bow Brasilia 5 800 1997 Stainless Sale
July 2015 Bow Balearia 5 846 1998 Stainless Sale
Bow Victor is sold for recycling at RL Kalthia Shipbreaking Pvt. Ltd yard in India. The vessel has
Green Passport and the yard is certified for ISO 9001, ISO 14991, OSHAS 18001, ISO 30000 and
are also certified as Hong Kong Convention compliant. The yard is certified by the vetting agency
Class NK.
Bow Victor is sold for recycling at RL Kalthia Shipbreaking Pvt. Ltd yard in India. The vessel has
Green Passport and the yard is certified for ISO 9001, ISO 14991, OSHAS 18001, ISO 30000 and
are also certified as Hong Kong Convention compliant. The yard is certified by the vetting agency
Class NK.
Operational review
24
Total profit improvement potential(% of total, “run rate”, Sept. 2015)
Project Felix, status update
0
10
20
30
40
50
60
70
80
90
100
74%
Dec’16
OSA DN
72%
J
64%
% of total
38%
M J
67%53%
A
38%
J
47%
FDec’14
62%
M
TargetActual
• End September, run-rate was at 72% which is on target
• Retrofitting of the first Kvaerner class vessel with new propeller was successfully executed in September with a 20% reduction in fuel consumption
• Retrofitting of the first Poland class vessel takes place in November 2015
• All our Kvaerner and Poland class vessels will be retrofitted within end 2017
• Cost reduction initiatives are on schedule. Target is still to improve net result with USD 100 mill on a yearly basis when the project is fully implemented
• Focus for the following quarters will be on profitability improvement initiatives
• Process started to evaluate further potential efficiency improvements beyond project Felix
Project Felix
Project Felix: Reducing cost and improving efficiency72% of improvements are implemented
9%
26%31%
43%47%
49%59%
65%71% 73% 74%
76%
85%
100%
• A parallell project for the Poland class of 8 vessels• First sea trial for the first vessel in the Poland class expected early 2016• 23 vessel with A+ energy rating in the Odfjell fleet when the project is concluded
20% fuel saving with new propulsion concept
• Sea trial of Bow Clipper after upgrading concludes with decreased fuel consumption of 20%
• Model test indicated 15% reduction• Same upgrading on 10 Kvaerner class vessels
within 2017
Project Felix
Odfjell will manage one of the most eco-friendly and energy efficient fleet within the chemical tanker market
26
50
75
100
125
150
175
200
05 06 07 08 09 10 11 12 13 14 15
Odf ix Quartely av erage 2005-2015
Odfix Index
1Q 2010 = 100
Chemical tanker spot earnings indexSource: Clarkson Platou Securities
Market update – chemical tankers
• Market in third quarter in line with second quarter
• CPP market remained firm, but softened towards the end of the quarter
• Port congestion continues to be a challenge
• No material disruption to the operation of our vessels during the period
Market update and prospects
27
Chemical tanker market Chemical tanker year-on-year net fleet growth
0
3
6
9
12
15
18
06 07 08 09 10 11 12 13 14 15 16 17
Odfjell Core FleetInge SteenslandClarksonsSwedbank
Y-o-y growth (%)
Forecasts
• Differences between sources due to different fleet definitions– Odfjell: IMO 2 tonnage 13,000 dwt, predominantly trading in chemicals. Assuming current orderbook and
outphasing at 30 years (Europe built) or 25 years (Asia built).
• Stricter definition and thus, more limited fleet basis larger relative orderbook
Market update and prospects
Annual compound growth rate 2015-17:Odfjell core fleet: 8.3%Average other sources, full fleet: 4.8%
28
Chemical tanker market Chemical tanker supply/demand development
100
105
110
115
120
125
130
2014 2015 2016 2017
Indexed (2014 = 100)
SupplyAverage forecastannual compound: 5.7%
Odfjell Core fleet
Averageforecast
Clarkson
Inge Steensland
Swed-bank
2014 2015 2016 2017
Clarkson
World GDP *1.5 Averageforecast
DemandAverage forecastannual compound: 5.2%
Inge Steensland
Market update and prospects
29
Prospects
• Global growth remains modest
• Continued fall in bunker prices reduce our voyage expenses, however bunker
hedging contracts are still offsetting this positive effect
• We expect 4Q to be weaker than 3Q for the Chemical Tankers segment
• We expect Odfjell Terminals 4Q results to be in line with 3Q
Market update and prospects
30
Executive Management - priorities during 2nd half 2015
• Key focus is to build strength
– We continue to improve on our profitability
– Our cash and balance sheet is improving
• Familiarization with the global Odfjell organization and other key stakeholders
– CEO familiarization on track
• Keep momentum in project Felix – also beyond initial targets
– We are still confident we will meet or exceed Felix target. Working on new and additional
initiatives
• Bond refinance
– Odfjell 2015 bond will be redeemed at maturity in December
• Ongoing review of operational and financial strategies in all segments
– New head of Odfjell Tankers in place
Market update and prospects
31
Company representatives
Terje Iversen – CFO, Odfjell SE
Email: [email protected]
Phone: +47 932 40 359
IR – contact:
Tom A. Haugen – VP Finance, Odfjell SE
Email: [email protected]
Phone: +47 905 96 944
Kristian V. Mørch – CEO, Odfjell SE
Email: [email protected]
Phone: +47 55 27 00 00
Thank you
For more information please visit our webpage at www.odfjell.com