Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — H1 2014 Earnings Presentation

33 slides from Pacific Basin Shipping's earnings presentation, Jul 31, 2014

  1. Slide 1: 2014 Interim Results

    Our Handysize ship discharging steel in Vancouver 31 July 2014

  2. Slide 2: 2014 Interim Results – Group Highlights

    2014 Interim Results – Group Highlights Underlying (Loss) /Profit EBITDA (excluding US$ Million Towage Impairments) 1H14 1H13 13.6 59.4 Net (Loss) / Profit US$(90.7)m US$0.3m 38.9 Earnings per Share HK¢(36.9) HK¢0.1 Cash Position US$320.2m US$442.3m (21.5) 1H13 1H14 1H13 1H14  Group results were ma

  3. Slide 3: Pacific Basin Dry Bulk – 1H14 Performance

    Pacific Basin Dry Bulk – 1H14 Performance Handysize – Outperformed Market by: 23% US$ million 1H14 Daily Earnings US$10,210 +10% YOY Dry Bulk net (loss) / profit (6.5)  Handysize contribution 26.2 Daily Costs US$9,120 -10% YOY  Handymax contribution (10.7)  Direct overheads (24.7) Handymax – Outp

  4. Slide 4: Pacific Basin Dry Bulk – Earnings Coverage

    Pacific Basin Dry Bulk – Earnings Coverage Coverage as at 18 July 2014 Currency: US$ Handysize Handymax PB Dry Bulk Fleet Development Average number of ships operated 48,670 Revenue Days 18,680 Revenue Days 39,800 16,420 213 211 Revenue Days 36,240 Revenue Days 2 2H Revenue Days 2H 59% 59% 63 2H 64%

  5. Slide 5: Dry Bulk Market Information

    Dry Bulk Market Information  A weak 2Q14 (7% lower Handysize rates than 2Q13) was not anticipated by the market  Fundamentally market recovery remains fragile – growing demand has not yet fully absorbed excessive supply  Weak 2Q14: fall in Atlantic rates; repositioning of more ships than usual in

  6. Slide 6: Dry Bulk Demand

    Dry Bulk Demand Dry Bulk Effective Demand Million tonnes Chinese Minor Bulk Imports % change YOY 16 30 Slow 1H Strong 2H 25 12 9.1 7.8 20 7.3 8 15 Chinese imports decreased 5.6% YOY 4 10 (ex nickel ore & bauxite: increased 21%) 5 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2014 2013 2012 2011

  7. Slide 7: Global Dry Bulk Fleet Development

    Global Dry Bulk Fleet Development net fleet growth Handysize Dry Bulk overall Dry Bulk New Ship Contracting YOY +2.5% +5.2% Per quarter annualised in % of fleet (dwt) During 1H14 +1.9% +2.7% 25% 21% 20% Dry bulk net fleet growth in 1H: 15%  Driven by 27m tonnes of new capacity 14%  Partially offse

  8. Slide 8: Dry Bulk Orderbook

    Dry Bulk Orderbook Handysize Orderbook 448 vessels (16.3m dwt) m Dwt 8 10.7%  New vessel ordering activities gradually reduced to 7 current low levels due to disappointing 2Q freight market 6 5 34% 6.4%  Current orderbook: 23% (1H13: 16%) 5.4% Shortfall 5.6% 4 3 3.6% 2 1 0 Scheduled Orderbook as A

  9. Slide 9: Pacific Basin Dry Bulk – Outlook

    Pacific Basin Dry Bulk – Outlook  China’s continued strong minor bulk demand  Ship owner optimism may return resulting in less  Increased overseas mining output and lower scrapping and increased vessel ordering commodity prices  Credit squeeze in China leading to slower  Continued OECD economic

  10. Slide 10: PB Towage – 1H14 Performance

    PB Towage – 1H14 Performance PB Towage Fleet: 47 vessels 1H14 1H13 Change (as at 30 Jun 2014) Offshore & Infrastructure projects (2.6) 15.3 -117% Harbour towage 2.4 7.0 -66% Direct overhead (9.0) (9.7) +7% Towage Net (loss) / profit (9.2) 12.6 -173% 35 Tugs (31 Owned + 4 Chartered) 10 Barges (10 Own

  11. Slide 11: PB Towage – 1H14 Performance

    PB Towage – 1H14 Performance  Increasingly competitive landscape 1H14 Harbour Towage US$ million  Increase in job numbers driven by young Newcastle activity Vessel net book value 126  Reduced volumes in other bulk ports + statics volumes in liner ports Return on net assets (13%) Offshore Towage (

  12. Slide 12: PB Towage – Outlook

    PB Towage – Outlook  Exclusive licenses in a number of bulk ports  High costs, labour market inflexibility, declining up for tender in 2015 onwards productivity, environmental concerns and global  New employment opportunities in Middle competition impacting Australian project East, where we alrea

  13. Slide 13: 2014 Interim Financial Highlights

    2014 Interim Financial Highlights US$m 1H14 1H13 Segment net result (16.1) 25.8  Treasury - (4.3)  Discontinued Operations - RoRo (0.5) (0.8)  Non direct G&A (4.9) (7.1) Underlying (loss) / profit (21.5) 13.6  Unrealised derivative income/(expenses) (0.3) (3.5)  Towage impairment and provision

  14. Slide 14: Pacific Basin Dry Bulk

    Pacific Basin Dry Bulk Dry Bulk 1H14 1H13 Change Handysize contribution (US$m) 26.2 22.4 +17% Handymax contribution (US$m) (10.7) 4.3 -349% Post Panamax contribution (US$m) 2.7 2.9 -7% Direct overhead (US$m) (24.7) (18.3) -35% Dry Bulk Net (loss) / profit (US$m) (6.5) 11.3 -158% Segment EBITDA (US$m

  15. Slide 15: Pacific Basin Dry Bulk

    Pacific Basin Dry Bulk Handysize 1H14 1H13 Change Revenue days (days) 27,200 23,740 +15% TCE earnings (US$/day) 10,210 9,290 +10% Owned + chartered costs (US$/day) 9,120 8,280 -10% Handysize contribution (US$m) 26.2 22.4 +17% Handymax Revenue days (days) 11,640 9,050 +29% TCE earnings (US$/day) 11,1

  16. Slide 16: Daily Vessel Costs – Handysize

    Daily Vessel Costs – Handysize Finance cost Charter-hire : Short-term (ST) / Long-term (LT) As at 30 June 2014 Depreciation Charter-hire : Index-linked Opex Chartered Inward Charter Commitments Owned Including finance lease vessels Days & rates Vessel Days US$/Day Blended US$9,120 (FY2013: US$8,480)

  17. Slide 17: Daily Vessel Costs – Handymax

    Daily Vessel Costs – Handymax Finance cost Charter-hire : Short-term (ST) / Long-term (LT) As at 30 June 2014 Depreciation Charter-hire : Index-linked Opex Owned Chartered Inward Charter Commitments US$/Day Days & Rates Vessel Days Blended US$11,890 (FY2013: US$10,440) 2014-2015 10,000 14,000 12,860

  18. Slide 18: Balance Sheet

    Balance Sheet PB PB Discontinued US$m Dry Bulk Towage Treasury RoRo 30 Jun 14 31 Dec 13 Vessels & other fixed assets 1,545 127 - - 1,676 1,622 Total assets 1,750 172 421 - 2,369 2,537 Total borrowings 953 22 - - 975 1,037 Total liabilities 1,087 35 15 - 1,152 1,233 Net assets 663 137 406 - 1,217 1,3

  19. Slide 19: Borrowings and Capex

    Borrowings and Capex Schedule of Repayments and Vessel Capital Commitments US$ Million 300 Investors’ Maturity Put Date Date Redeemable in Oct 2016 232 210 190 200 164 124 111 100 84 77 66 59 47 25 18 3 0 2H14 2015 2016 2017 2018 2019-2025 Bank borrowings (US$645m) Convertible bonds i) face value US

  20. Slide 20: Cash Flow

    Cash Flow – 1H14 Sources and Uses of Group Cash Flow Operating cash flow US$44.4m Cash inflow Cash outflow EBITDA US$38.9m US$ Million 2014 cash levels expected to be affected by: 600.0 +36.9  Pace of capital expansion +44.4  New loan facilities to be secured using our +486.1 unmortgaged vessels 5

  21. Slide 21: Dry Bulk Outlook & Strategy

    Dry Bulk Outlook & Strategy  Expect dry bulk market to improve in 4Q14 – albeit from a low base  A benefit of weak market = new ship ordering has substantially stopped  Our daily earnings outperformed spot market indices = effective business model  Our dry bulk EBITDA of $53 million was up year

  22. Slide 22: Disclaimer

    Disclaimer This presentation contains certain forward looking statements with respect to the financial condition, results of operations and business of Pacific Basin and certain plans and objectives of the management of Pacific Basin. Such forward looking statements involve known and unknown risks,

  23. Slide 23: Appendix: Pacific Basin Overview

    Appendix: Pacific Basin Overview  A leading dry bulk owner/operator of Handysize & Handymax dry bulk ships  Flexible Pacific Basin Dry Bulk business model  Large fleet of uniform, interchangeable, modern ships  Mix of owned and long-term, short-term chartered ships  Operating mainly on long ter

  24. Slide 24: Appendix: Strategic Model

    Appendix: Strategic Model OUR STRONG CORPORATE & OUR LARGE VERSITILE FLEET FINANCIAL PROFILE Striving for best-in-class internal and external Fleet scale and interchangeable high-quality dry reporting, transparency and corporate stewardship bulk ships facilitate service flexibility to Robust balance

  25. Slide 25: Pacific Basin Dry Bulk – Diversified Cargo

    Appendix: Pacific Basin Dry Bulk – Diversified Cargo Pacific Basin Handysize and Handymax Cargo Volume 1H14 Energy Agricultural Products Coal 3% Grains & Agriculture Products 20% Petcoke 7% 10% Fertiliser 10% Sugar 3% Metals Alumina 4% 15% 33% Ores 5% 24.9 Concentrates& Other Metals 6% Millio n Tonn

  26. Slide 26: Fleet List – June 2014

    Appendix: Fleet List – June 2014* Pacific Basin Dry Bulk Fleet: 248 average age of core fleet: 6.5 years old Owned Chartered Total Delivered Newbuilding Delivered 1 Newbuilding www.pacificbasin.com Fleet Details Handysize 63 12 83 14 172 Handymax 15 6 48 5 74 Post-Panamax 1 0 1 0 2 Total 79 18 132 1

  27. Slide 27: Appendix: Vessels Commitments

    Appendix: Vessels Commitments Total US$410m US$m 200 189.8 59.9 150 110.9 100 23.3 84.0 129.9 51.6 50 87.6 25.1 7.8 32.4 17.3 0 2H14 2015 2016 2017 Handysize x 13, US$267m Handymax x 6, US$143m  Further commitments expected in Dry Bulk 2014 Interim Results 27

  28. Slide 28: Appendix: Historical Owned and Chartered-in Cost

    Appendix: Historical Owned and Chartered-in Cost 2014 Interim Results 28

  29. Slide 29: Appendix: Convertible Bonds Due 2016

    Appendix: Convertible Bonds Due 2016 Issue size US$230 million (US$20.5m face value put back and repaid on 14 April 2014; Remaining: US$210m) Maturity Date 12 April 2016 (6 years) Investor Put Date and Price 12 April 2014 (4 years) at par Coupon 1.75% p.a. payable semi-annually in arrears on 12 Apri

  30. Slide 30: Appendix: Convertible Bonds Due 2018

    Appendix: Convertible Bonds Due 2018 Issue size US$123.8 million Maturity Date 22 October 2018 (6 years) Investor Put Date and Price 22 October 2016 (4 years) at par PB’s Call Option 1) Trading price for 30 consecutive days > 130% conversion price in effect 2) >90% of Bond converted / redeemed / pur

  31. Slide 31: Appendix: Dry Bulk Fleet Profile

    Appendix: Dry Bulk Fleet Profile Total Drybulk Year-on-Year Net Fleet Growth (%) Handysize Age Profile 18% (25,000-39,999 dwt) 17% 16% 15% 2,239 vessels (72.3mil dwt) 14% 30+ years 13% 12% 5% 11% 8% 25-29 years 10% 9% 10% 8% 7% 0-15 years 6% 16-24 years 77% 5% 4% Lowest fleet growth since September

  32. Slide 32: Appendix: China at late-Industrialisation Stage

    Appendix: China at late-Industrialisation Stage Steel Consumption Per Capita Tons per Capital 1.0  China growth matches historical trend in Japan and Korea 0.9  Suggests strong growth in dry bulk 0.8 segment to remain for medium term 0.7  Similar trend for electricity and cement 0.6 0.5 0.4 0.3 0

  33. Slide 33: Appendix: China Dry Bulk Trade, Iron Ore & Coal Demand

    Appendix: China Dry Bulk Trade, Iron Ore & Coal Demand Chinese Dry Bulk Trade Volume China is a significant net China Iron Ore Sourcing importer of coal for Steel Production % of total dry bulk Mil tonnes trade Mil Tonnes Mil Tonnes 31%31% 32% 400 1,400 1,311 1594 1500 1501 28% 350 319 320 1,200 24%

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