Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — Investor Presentation (May 2020)
28 slides from Cmb.tech Nv's investor presentation, May 2020
Slide 1: Euronav Investor Presentation May 2020
EURONAV INVESTOR PRESENTATION MAY 2020
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events
Slide 3: Euronav – Who We Are
EURONAV EURONAV – WHO – WHO WE ARE WE ARE The world’s largest, independent quoted crude tanker platform 46 VLCC incl. 4 N/B 25 Suezmax* 2% International company – internationally connected 16% 24% 23% Av Age 45% Av Age 15% Headquarters in Antwerp 7.3 Yrs 11.1 Yrs 29% 46% Euronav offices 0-5 yrs 6-10
Slide 4: Euronav Strategy – Shareholder Focus
EURONAV STRATEGY – SHAREHOLDER FOCUS Shareholder returns since 2014 Repayment schedule and RCF reductions USD 3.77 DPS Leverage: 445 since 2015 600 • 39.5% book value Millions • 42% post dividend 347 $1.035bn dividend payments for 2h 345 paid since 2004 500 2019 & Q1 2020 $m net Income, Dividend & B
Slide 5: Euronav Strategy – Liquidity Focus
EURONAV STRATEGY – LIQUIDITY FOCUS +$270m 4x VLCC DELIVERY Q4 20 Q1 21 5
Slide 6: Operational Leverage with Contractual Income Support
EURONAV OPERATIONAL LEVERAGE WITH CONTRACTUAL INCOME SUPPORT Each $5,000 uplift in both VLCC and Suezmax rates improves net revenue and EBITDA by $108mm $1,188 $540 $324 $108 BASE +$5,000 +$15,000 +$25,000 +$55,000 per day per day per day per day VLCC TCE rates $25,000 $30,000 $40,000 $50,000 $80,00
Slide 7: Highlights Q1 2020
HIGHLIGHTS Q1 2020 80000 VLCC 70000 • Strong underlying tanker dynamics drive record quarter 60000 Q1 • Robust freight market improved by record contango price structure & 20 storage 50000 • Very strong start to Q2 USD/day 40000 • Q1 2020 and Final 2019 dividends to be paid in June Dividends to tota
Slide 8: Financial Highlights – Income
FINANCIAL HIGHLIGHTS – INCOME (in $ million) Revenue First quarter 2020 416.7 First quarter 2019 232.6 1 KEY KPIs Other operating income 3.3 2.0 • Revenues : 417 M$ • EBITDA : 316 M$ Voyage expenses and commissions (32.7) (37.6) • Net income : 225 M$ Vessel operating expenses (53.9) (54.4) Charter h
Slide 9: Financial Highlights – Balance Sheet
FINANCIAL HIGHLIGHTS – BALANCE SHEET BALANCE SHEET HIGHLIGHTS (in $ million) Mar-20 Dec-19 1 Leverage Cash 312.2 297.0 39.5% leverage to book value Restricted cash 0.0 0.0 Other current assets 499.8 505.3 Long term 42% leverage to book value assets: after dividend payment Newbuildings 100.5 0.0 Vess
Slide 10: Capital Allocation at Euronav
CAPITAL ALLOCATION AT EURONAV Debt Repayment Dividends Buy Backs Fleet Equity & Bonds Growth/Renewal Mandatory FY 2019 0.29c Bonds $100m paid debt repayment Q1 2020 0.81c $1m Euronav toward 4x VLCC Q1 2020 Total: $1.10c 7.5% bond resale purchases = $28m* Payable June 20 repurchased at 85 Reduction o
Slide 11: Fleet Deployment
FLEET DEPLOYMENT ACTIVE FLEET MANAGEMENT Sale of 2x Suezmaxes & 1x VLCC Purchase of 4x VLCC resales above market price below market price TI Hellas 108 MOA $38.3m Finesse 45 106 22 $21.8m 40 Value of 17 & 19 year old Suezmaxes $m 104 20 Value of VLCC resale $m 35 102 18 30 100 16 Cap 98 Diamant 25 4
Slide 12: Fleet Deployment - 2020
FLEET DEPLOYMENT - 2020 Management have “locked” in Split between some longer time charters Spot & Fixed whilst retaining large spot exposure 20 18 19% % of Euronav fleet fixed in time charter 16 14 12 10 8 6 4 81% 2 0 Q4 19 Q1 20 Q2-Q4 20 Fixed days Q1 2020 to end 2020 12
Slide 13: IMO 2020 & Fuel Strategy
IMO 2020 & FUEL STRATEGY Fuel benefit $17.5m 600 • Marked-to-market of 500 inventory onboard OCEANIA is -$56m Compliant 0.5% bunker fuel per ton (end of quarter) 400 • No write-down necessary as we have 300 not used the fuel. Situation will be assessed quarter 200 after quarter • Fuel Oil project be
Slide 14: Current Market Highlights
CURRENT MARKET HIGHLIGHTS Storage has further capacity for substantial impact 1800 105 1600 100 IEA oil demand & production m bbls 1400 Cumulative inventory build m bbls 95 1200 EIA estimate onshore storage capacity 1000 90 800 85 600 80 400 75 200 0 70 Cumulative inventory build IEA Oil Production
Slide 15: Onshore Storage
ONSHORE STORAGE LIMITED TO 1BN BARRELS AND OECD LOCATION FOCUSED Likely already approaching full onshore capacity given recent moves to tankers Source: HIS Markit, EIA, Livemnint, Reuters, various 15
Slide 16: Not All Floating Storage Is Created Equal
NOT ALL FLOATING STORAGE IS CREATED EQUAL Storage has ONLY just begun with: • 129 VLCCs are currently being used as storage of which : • 69 VLCCs taken for market storage in April • 38 Iranian • 22 infrastructure VLCC in storage before crisis 250 16% …and now up to 73 14% Suezmax now in 200 market s
Slide 17: Future Market Developments
FUTURE MARKET DEVELOPMENTS Short term Mid term Long term Storage phase Storage Draw Global Fleet Re-sizing Storage demand is 2 Scenarios Freight rate pressure compensating more than decrease of trading demand – 1. Quick draw rates to remain underpinned Contango persist and demand Fleet oversupplied
Slide 18: Large Tanker Fleet Ripe for Re-sizing
LARGE TANKER FLEET RIPE FOR RE-SIZING NEWBUILDING CONTRACTS RISING BARRIERS ORDER BOOK CURRENTLY 23 YR LOW 60 FINANCING 50 BANKS & CAPITAL MARKETS Orderbook as % of fleet 40 REGULATION IMO 2030, BASEL IV 30 20 TECHNOLOGY IN FUEL PROPULSION 10 LONG TERM 0 CRUDE DEMAND VLCC Orderbook % Fleet Suezmax O
Slide 19: Recycling Reflects Pressure on Owners
RECYCLING REFLECTS PRESSURE ON OWNERS STEEL PRICE AND REGULATORY PRESSURE Older tonnage comes under increasing pressure Owners dilemma Increased opex from Older vessels = IMO2020 heavy consumers Volatile steel scrap price Lower cash earnings for older vessels Ballast water capex $1.5m from Sept 19 S
Slide 20: Large Tanker Fleet Ripe for Re-sizing
LARGE TANKER FLEET RIPE FOR RE-SIZING FLEET AGE RISING – 26% VLCC FLEET >15 YEARS (@ 1 JANUARY 21) EACH QUARTER TO END 2021 - 27 VLCC EQUIVALENTS MUST UNDERTAKE A SPECIAL SURVEY 40 0.5 3 35 4.5 5 4.5 30 9.5 3.5 No of VLCC equivalents 0.5 11 8 25 8 6.5 3.5 3 20 3 2.5 16 11 3.5 9 10.5 15 8.5 14 9 10 6
Slide 21: What Is Priced In?
WHAT IS PRICED IN? HIGHER EARNINGS THAN LAST CYCLE BUT NOT IN RATING 21
Slide 22: Demand for Oil - Transport Heavy
DEMAND FOR OIL - TRANSPORT HEAVY 45 40 35 Oil demand m bpd by sector 2018 30 25 20 15 10 5 0 Road transport Aviation & Shipping Industry & Petrochemicals Buildings & Power Other sectors Source: Kepler Cheuvreux, WEO 2019 22
Slide 23: Crude Demand
CRUDE DEMAND WHAT HAPPENED IN 2008/9 FINANCIAL CRISIS Recovery took time globally Source: IEA 23
Slide 24: Scrapping
SCRAPPING VLCC RATES GO BELOW P&L BREAK EVEN = 5% FLEET DEPARTS VLCC fleet 804 @ start of year = 40 VLCC or 53 VLCC equivalents 9% 30,000 8% 25,000 7% % of VLCC fleet scrapped 6% 20,000 VLCC rates 5% 15,000 4% 3% 10,000 2% 5,000 1% 0% 0 1994 2018 1992 2017 2011 2013 1993 2012 1999 1995 2002 1996 200
Slide 25: Financing of Shipping
FINANCING OF SHIPPING UNDER GROWING PRESSURE Bank lending to shipping down 33% Capital markets 50% below average 2019 25 475 $bn raised in shipping IPO, follow ons & Bond issuance 20 $ billion bank lending to shipping 425 15 375 10 325 5 275 0 Bank lending to Shipping Average Capital market shipping
Slide 26: We Live in Extreme Times
WE LIVE IN EXTREME TIMES 2020 oil price fall the fastest and most significant in past 35 years 120 100 Brent Oil Price Index = 100 80 60 40 20 0 1 50 100 150 200 1985/6 1998/9 2008/9 2014/15 2020- Source: Bloomberg 26
Slide 27: With Aggressive Oil Price Sell Offs Comes Contango
WITH AGGRESSIVE OIL PRICE SELL OFFS COMES CONTANGO 4 of last 5 oil price falls had persistent contango price structure for next 12 months Source: Bloomberg 27
Slide 28: Contango & VLCC Storage
CONTANGO & VLCC STORAGE NOT JUST ABOUT MATHEMATICAL FORMULA 35 Storage impact on VLCC 16 persisted after contango 14 30 moved to backwardation 12 6 month Contango spread $ per barrel No of VLCC in MARKET storage 25 10 8 20 6 4 15 2 10 0 -2 5 -4 0 -6 Market storage VLCC Contango break even 6m contang