Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — Q3 2023 Earnings Presentation

41 slides from Pacific Basin Shipping's earnings presentation, Oct 12, 2023

  1. Slide 1: Well Positioned for the Future: 3Q23 Trading Update

    B Pacific Basin WELL POSITIONED FOR THE FUT We a em ere Do pi 3023 TRADING UPDATE 12 OCTOBER 2023

  2. Slide 2: Performance and Market Review

  3. Slide 3: Handysize and Supramax Market Spot Rates

    Handysize Market Spot Rates (BHSI) Supramax Market Spot Rates (BSI) US$/day net* 38k dwt (tonnage adjusted^) US$/day net* 58k/63k dwt 40,000 40,000 35,000 35,000 30,000 30,000 25,000 25,000 20,000 20,000 15,000 15,000 $14,670 $12,880 10,000 $10,570 10,000 5,000 5,000 - - Jan Feb Mar Apr May Jun Jul

  4. Slide 4: Dry Bulk Loadings by Commodity

    2016-2019 2020 2021 2022 2023 Mill tonnes annualised 1,800 700 1,600 2,400 650 1,500 1,700 2,200 600 1,400 1,600 2,000 550 1,300 1,500 1,800 500 1,200 1,400 1,600 450 1,400 400 1,100 1,300 1,200 350 1,000 1,200 Feb Apr Aug Sep Oct Nov Dec Jan Mar May Jun Jul Feb Apr Aug Sep Feb Oct Sep Nov Dec Aug O

  5. Slide 5: Core Business Handysize and Supramax TCE Earnings

    US$/day net* Handysize Core Business TCE  Our core business Handysize and Supramax daily TCE earnings in 3Q23 were 30,000 US$10,200 and US$11,540 net per day respectively, representing a decrease of 57% and 57% compared to the much stronger 3Q22 25,000 $23,620 20,000  We have covered 70% and 86% o

  6. Slide 6: Performance vs Index and Operating Activity

    Core Business Operating Activity Handysize Performance vs Index (BHSI)* Supramax Performance vs Index (BSI)* Operating Activity Margin US$/day net US$/day net US$/Day (net) Relative performance Scrubber contribution Relative Performance Rolling 12 Months Relative performance Rolling 12 Months Rollin

  7. Slide 7: Utilising Balance Sheet to Grow

    Delivery/ Vessel Type DWT Year Built MOA Expected Million US$ Mil Ultramax Newbuilding Price dwt 34.5 Ultramax 10 Year Old Price Delivery 35.0 6.0 33.0 Ultramax 61,181 2016 Jan 2023 Mar 2023 5.3 33.0 Ultramax 61,470 2012 Jan 2023 Mar 2023 30.5 5.0 31.0 Ultramax 61,671 2012 Jan 2023 Mar 2023 Ultramax

  8. Slide 8: Demand and Supply Outlook

  9. Slide 9: China Dry Bulk Monthly Imports YoY

    China Dry Bulk Monthly Imports YoY YoY% Change +140% +4% +120%  Reopening policies supporting dry bulk demand through +41% investments in infrastructure, manufacturing, commercial +26% +7% and industrial property construction and green transition +100% +16% initiatives +10% +14% +80%  Coal imports

  10. Slide 10: Scrapping Trend

    Scrapping Trend Million Dwt 16.0  Average age of Handysize and Supramax vessels scrapped between 14.0 2019 and 2023 is over 30 years 12.0  Handysize and Supramax fleet over 25 years old approximately 8% and 4% respectively 10.0  In 3Q23, 2.3 million dwt scrapped, contributing to a total of 4.9 mi

  11. Slide 11: Handysize and Supramax/Ultramax Orderbook Deliveries

     Dry bulk orderbook near decades low 8.1% Handysize and Supramax/Ultramax Orderbook Deliveries  In comparison to 2022, newbuild ordering of Handysize and % of Total Fleet (dwt) Supramax vessels decreased approximately 30% year-to-date and 5.0% 4.5% 64% in the third quarter of 2023 15.8m 4.5%  New

  12. Slide 12: Evolving Environmental Regulations Timeline

    EEDI & SEEMP, EU MRV, IMO DCS regulations 2013- 2019 EEXI & CII energy efficiency & carbon intensity rules Reinforced by Poseidon Principles & Sea Cargo Charter 2023 (banks, insurers & cargo customers) 2018, IMO EU Emissions Trading System (ETS) Steeper IMO CII emissions reduction publishes its Init

  13. Slide 13: New IMO Goals (since July 2023)

    New IMO Goals (since July 2023) July 2023, IMO adopted a revised and 0% more ambitious GHG Strategy IMO Total Emissions: -10% -20% 1. Net Zero by about 2050 2. Reduce CO2 intensity by 40% by 2030, compared to 2008 -20% IMO Carbon Intensity: 3. Reduce total GHG emissions by 20-30% by 2030 and by -40%

  14. Slide 14: Strategy Focus and Market Outlook

  15. Slide 15: Strategy Focus

     Maintain and grow our position as the leading minor bulk owner  Support our teams to ensure we continue to deliver a quality and operator service to our customers while maximising our earnings  Continue our long-term Supramax fleet growth and Handysize  Ensure our crews’ physical and mental wel

  16. Slide 16: Market Outlook

     Global dry bulk demand will continue to be  IMF forecast global GDP growth of 3.0% and 2.9%  Significant global infrastructure spend required to impacted by higher interest rates, inflation and in 2023 and 2024 respectively drive development and “green transition” weaker global economic activity

  17. Slide 17: Forward Looking Statements and Investor Information

     Annual and Interim Reports  Online Annual Report  Quarterly Trading Updates  Presentations and press releases on business activities  Analysts Day & Investor Perception Study  Sell-side conferences  Investor/analyst calls and enquiries  Corporate Information  CG, Risk Management and CSR 

  18. Slide 18: Appendix

  19. Slide 19: Supply Development

    Handysize / Supramax Supply Development Overall Dry Bulk Supply Development % of Total Fleet % of Total Fleet 6%  Clarksons Research estimates dry bulk net 6% fleet growth of 2.9% in 2023 and 2.3% in 5% 5% 2024, with scrapping of 0.7% in 2023 and 3.8% 1.1% in 2024 4% 4% 3.6% 3.2% 3% 3.0% 2.9% 3.0%

  20. Slide 20: Interim Results 2023 Highlights

    Interim Results 2023 P&L US$million 2023 1H 2022 1H  Generated an underlying profit of US$76.2 million, a net profit of EBITDA 189.1 566.9 US$85.3 million and EBITDA of US$189.1 million respectively Underlying profit 76.2 457.5 Net profit 85.3 465.1  Core business generated a total contribution of

  21. Slide 21: Handysize Costs

    Interim Results 2023 Opex US$/Day Depreciation 14,000 Finance Cost 12,180 12,000 11,030 10,000 8,970  Crew travel, quarantine and other pandemic-related 8,700 8,550 manning costs continued to reduce over the period 230 8,100 8,000 60 as Covid-related controls have been relaxed – 3,050 6,000 3,180 p

  22. Slide 22: Supramax Costs

    Interim Results 2023 US$/Day Opex 20,000 Depreciation 18,040 18,000 16,590 Finance Cost 16,000 14,000  Lower finance costs for Supramax and Handysize 12,000 due to reduced debt, despite higher interest rate 9,660 10,140 10,000 environment 8,570 8,630 8,000 370 160 6,000 3,370 3,620  Long-term char

  23. Slide 23: Interim Results 2023 P&L

    Interim Results 2023 US$million 1H23 1H22 Revenue 1,148.1 1,722.8 Owned vessel costs Voyage expenses (506.7) (497.3) 1H23 1H22 Opex (103.6) (112.6) Time-charter equivalent ("TCE") earnings 641.4 1,225.5 Depreciation (73.9) (71.3) Finance (2.2) (9.8) Owned vessel costs (179.7) (193.7) Chartered vesse

  24. Slide 24: Balance Sheet and Liquidity

    Interim Results 2023 US$ Million 1 2 3 4 5 US$million 1H23 FY22 900 +43 -209 PP&E 1,896.6 1,772.2 800 +150 Total assets 2,515.8 2,648.7 700 615 -174 600 Total borrowings 343.1 378.6 171 500 -38 Total liabilities 694.2 741.3 400 -1 -11 375 Total equity 1,821.6 1,907.4 300 160 444 200 Net (borrowings)

  25. Slide 25: Dry Bulk Trade Volume Forecasts 2023 and 2024

    2023F Dry Bulk Trade Volumes YOY 2024F Dry Bulk Trade Volumes YOY Million Tonnes 1,307 6.3% Million Tonnes Coal 1,294 Coal -1.0% Iron Ore 1,518 2.9% Iron Ore 1,520 0.1% Total Major Bulk (Iron Ore + Coal) 2,825 4.5% Total Major Bulk (Iron Ore + Coal) -0.4% 2,814 Soybean 165 8.6% Steel Products 379 5.

  26. Slide 26: Company Overview

     We operate one of the world’s largest fleets of interchangeable modern Handysize and Supramax vessels, equipping us for efficient trading and reliable service any time and anywhere  Cargo system business model – outperforming market rates  Our Core fleet consists of 139 Handysize and Supramax ve

  27. Slide 27: Handysize Segment Strengths

     More diverse customer, cargo and geographical exposure enables high utilisation  A segment where scale and operational expertise make a difference 44  Better daily TCE earnings driven by a high laden-to- ballast ratio  Sound long-term demand expectations and modest fleet growth

  28. Slide 28: Global Offices

    11 commercial offices 4 technical & crewing offices Our Hong Kong headquarters is home to commercial, technical, crewing and all central functions

  29. Slide 29: Cargo Mix by Commodity

    Minerals 10% Agricultural Products & Related 31% Salt 5% -1pp 10% Grains & Agricultural Products 17% +1pp Sand & Gypsum 4% - Fertiliser 11% - Soda Ash 1% - 11% 31% Sugar 3% +1pp 14% 29% Energy 14% 13% Coal 8% - Petcoke 5% +1pp Construction Materials 29% Wood Pellets 1% - 17% Cement & Cement Clinkers

  30. Slide 30: Vessels in Operation

    121 Vessels 19 LT 140 145ST 285 Total Total owned Chartered Chartered Vessels in Operation Total Average Capacity Age Long-term Short-term Owned Chartered Sub-total Chartered1 Total (million dwt) Costs Owned Owned fluctuate with Substantially fixed costs market Handysize 70 10 80 49 129 2.4 13 Supra

  31. Slide 31: Contract and Spot Cargo Business Model

     Contract and spot cargoes  Spot cargoes  Owned and long-term chartered vessels /  Short-term vessels carrying spot cargoes Short-term vessels carrying contract cargoes  Costs largely fixed and disclosed  Costs fluctuate with freight market  Key KPI = TCE per day  Key KPI = Margin per day 

  32. Slide 32: Core Business and Operating Activity

    Our “core business” is to optimally combine our owned and long-term chartered vessels with multi-shipment contract cargos and spot cargoes to achieve the highest daily TCE earnings. Our core business also uses short-term chartered vessels to carry contract cargoes to maximise the utilisation and TCE

  33. Slide 33: Earnings Sensitivity

    Core TCE1 x owned & LTC2 revenue days + Blended cost x owned & LTC cost days3 - = X Core TCE1 x owned & LTC2 revenue days + Blended cost x owned & LTC cost days3 - = X Operating margin x operating days X X - X = X Sensitivity: +/- US$1,000 daily TCE = US$35-40 million per year Adjusted for ca. 20-25

  34. Slide 34: Cargo Cover for 4Q23 and 2024

    Handysize Supramax US$/Day (net) US$/Day (net) 35,000 25,000  We have covered 70% and 86% of our Handysize and 30,000 $20,480 Supramax vessel days for the fourth quarter of 2023 at 20,000 US$11,250 and US$13,240 per day net respectively 25,000 $15,130  We have covered 22% and 25% of our 30,640 Han

  35. Slide 35: Vessel Days and Long-Term Charter Costs

    Interim Results 2023 Handysize Supramax Handysize Supramax Jan-Sep Jan-Sep Days FY2022 2023 FY2022 2023 Average cost Average cost Year Vessel days (US$) Vessel days (US$) Core business revenue days 30,310 21,570 17,340 15,080 2H2023 1,930 12,190 1,410 18,010 – Owned revenue days 26,680 19,080 14,930

  36. Slide 36: Our Focus

    Tankers for oil, gas & chemicals The dry bulk industry carries dry commodities and other non- containerised cargo. Larger vessels including Capesize and Panamax carry mainly iron ore, coal and grain. We specialise in the versatile, mid-size, geared Handysize and Supramax vessels that carry a wide ra

  37. Slide 37: Fleet Statistics by Vessel Size

    9.4% 13 14% 0.3% (10,000–40,000 dwt) (40,000–70,000 dwt) 9.2% 12 10% 0.6% (70,000–100,000 dwt) 11.0% 12 12% 0.8% (100,000+ dwt) 5.2% 10 2% 0.3% 8.1% 12 8% 0.5% Source: Clarksons Research, data as at September 2023 ^ YTD: data as at 06 October 2023

  38. Slide 38: Carbon Intensity Targets

    Carbon Intensity (EEOI) 15 Grams of CO 2 per tonne-mile PB targets -50% carbon  Targeting net zero emissions by 2050 10 intensity by 2030 on the way to net zero by 2050  We aim to reduce our EEOI carbon intensity by 50% by 2030 8.6 EEOI  We target for our fleet to comprise only zero-emission vess

  39. Slide 39: EEXI, CII and EU ETS

     From January 2023, IMO’s global EEXI and CII regulations require vessels to combine technical and operational measures to improve their carbon intensity  Shipping included in European Union Emissions Trading System (EU ETS) from January 2024  Technical design criteria  Some impact on PB vessels

  40. Slide 40: Scrubber Investment Recovered

     Fully recovered the approximately US$62 million scrubber investment made prior to the implementation of the IMO 2020 sulphur cap  As at September 2022 this investment is fully recovered considerably faster than expected through the savings achieved by using HSFO  Elevated oil prices and resultan

  41. Slide 41: Macroeconomic Outlook

    5.2% 5.0% 4.5% 4.2% 3.5% 3.5% 3.5% 3.3% 3.0% 3.0% 3.0% 2.9% 3.0% 3.0% 2.1% 2.1% 1.8% 2.1% 1.5% 1.5% 1.0% 0.9% 0.7% 1.2% 2022 2022 2023 2023 2024 2024 2022 2022 2023 2023 2024 2024 2022 2022 2023 2023 2024 2024 2022 2022 2023 2023 2024 2024 (Jul (Oct (Jul (Oct (Jul (Oct (Jul (Oct (Jul (Oct (Jul (Oct

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