Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — FY2015 Earnings Presentation
33 slides from Pacific Basin Shipping's earnings presentation, Feb 29, 2016
Slide 1: Navigating with resilience – 2015 Annual Results
Navigating with resilience E Pacific Basin 3 Se 2015 Annual Results Exceptional fleet 29 Feb 2016
Slide 2: 2015 Annual Results – Highlights
2015 Annual Results – Highlights 2015 2014 EBITDA US$88m US$82m Operating Cash Flow US$99m US$94m Underlying Loss -US$28m -US$56m Net Loss -US$18.5m -US$285m Reduced losses in one of the weakest dry bulk markets on record Positive turnaround of Supramax by focusing trades, growing parcelling bus
Slide 3: Our Performance in 2015 and Cover for 2016
Our Performance in 2015 and Cover for 2016 US$/day Handysize Supramax PB TCE per day 2015 $7,870 $9,170 Market Index Rate $5,110 $6,620 2015 PB Outperformance $2,760 $2,550 54% 39% PB TCE per day 2016 $7,800 $7,330 2016 % of Contracted Days Covered 44% 59% 2015 Annual Results 3
Slide 4: Our Ability to Outperform
Our Ability to Outperform Our TCE Outperformance Compared to Market Our business model has been built up and refined over many Baltic Handysize Index - net rate years. Through a combination of the following factors, we are able PB Handysize Performance to generate a premium over market rates due to
Slide 5: Balance Sheet & Liquidity
Balance Sheet & Liquidity 31 December 2015 US$m 2015 2014 Cash Position 358 363 Committed but undrawn loan facilities 375 Remaining Newbuilding Capital Commitments 274 Net Borrowings 568 Vessels & Other Fixed Assets 1,611 Net Gearing 35% 40% New US$125million convertible bonds in 1H15, maturity 20
Slide 6: Dry Bulk Spot Market at 30 Year Lows
Dry Bulk Spot Market at 30 Year Lows Baltic Handysize Index (BHSI) & Baltic Supramax Index (BSI) US$ /day (net)* $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 25 Feb 2016: $4,000 BSI: $3,260 $2,000 BHSI: $2,950 $0 2012 2013 2014 2015 2016 BDI fell 38% in 2015 and registered its weakest average sin
Slide 7: Handysize Vessel Values
Handysize Vessel Values US$ Million 55 50 45 40 35 30 19 Feb 2016 Newbuilding (35,000 dwt): 25 US$20.5m 20 15 10 5 years (32,000 dwt): US$9.5m 5 04 05 06 07 08 09 10 11 12 13 14 15 16 All time high spread between newbuilding and secondhand values Leading to very few new orders Increasingly dif
Slide 8: Dry Bulk Seaborne Trade in 2015
Dry Bulk Seaborne Trade in 2015 Million Tonnes YOY Change Iron Ore 1,367 Coal 1,149 -5% 2% Sub major bulk total 2,516 -1% Bauxite / Alumina 122 16% Soybean 127 9% Copper Concentrates 26 8% Steel Products 322 5% Sugar 56 4% Fertiliser 120 4% PB Focus Agribulks 162 3% Forest Products 343 0% 314 -0.3%
Slide 9: Chinese Seaborne Dry Bulk Imports 2015
Chinese Seaborne Dry Bulk Imports 2015 Million Tonnes YOY Change Iron Ore 940 3% Coal 188 -30% Sub Major Bulk Total 1128 -5% Other Coarse Grains 22 91% Maize 5 84% Fertiliser 21 19% PB Focus Soybeans 81 14% Agribulks 15 12% Metals 142 7% Wheat 3 5% Minerals 34 -8% Forest Products 51 -7% Steel Produc
Slide 10: Self Correcting Supply Factors
Self Correcting Supply Factors New Vessel Ordering is Down Per quarter annualised in % of fleet (dwt) Number of Delivery 25% 24% Chinese yards Slippage delivering 20% Handy bulk 15% vessels decreased Orderbook from 54 in 2012 Cancellations & 10% 11% to 23 in 2015 Conversions 5% 3.2% 0.7% Fleet Growt
Slide 11: Dry Bulk Supply & Demand
Dry Bulk Supply & Demand % Supply: 16.0 2015 net fleet growth: 2.4% 14.0 (smallest growth since 2003) 12.0 New deliveries partly offset by increased scrapping 10.0 (Handysize: 8.5% new deliveries vs 6% scrapping) 8.0 Low fuel prices ↑ increasing ship operating speeds in 3Q 6.0 ↑ increasing e
Slide 12: 2015 Financial Highlights
2015 Financial Highlights US$m 2015 2014 Pacific Basin Dry Bulk (33.8) (39.4) PB Towage 6.2 (15.1) Others (0.2) (1.0) Underlying loss (27.8) (55.5) Unrealised derivative income/(expense) 8.8 (28.9) Sale of towage assets 2.8 (7.6) RoRo and towage exchange loss (1.5) (17.7) Provision for onero
Slide 13: 2015 Pacific Basin Dry Bulk
2015 Pacific Basin Dry Bulk Handysize 2015 2014 Change Revenue days (days) 51,600 56,210 -8% TCE earnings (US$/day) 7,870 9,340 -16% Owned + chartered costs (US$/day) 7,930 8,750 +9% Handysize contribution (US$m) (8.4) 28.5 >-100% Supramax Revenue days (days) 23,300 22,410 +4% TCE earnings (US$/day)
Slide 14: 2015 Daily Vessel Costs – Handysize
2015 Daily Vessel Costs – Handysize Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 31 December 2015 Opex Inward Charter Commitments Owned Chartered Days & rates US$/day Blended US$7,930 (2014: US$8,750) 2015-2016 Vessel 10,000 8,930 Days 8
Slide 15: 2015 Daily Vessel Costs – Supramax
2015 Daily Vessel Costs – Supramax Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 31 December 2015 Opex US$/Day Owned Chartered Inward Charter Commitments 14,000 Blended US$8,190 (2014: US$11,050) Days & Rates 2015-2016 18,000 11,810 1,240
Slide 16: 2015 Balance Sheet
2015 Balance Sheet PB US$m Dry Bulk 31 Dec 15 31 Dec 14 Vessels & other fixed assets 1,578 1,611 1,585 Total assets 1,740 2,146 2,308 Total borrowings 926 926 1,000 Total liabilities 1,118 1,175 1,306 Net assets 622 971 1,002 Net borrowings (total cash US$358m) 568 636 Net borrowings to net book val
Slide 17: Borrowings and Capex
Borrowings and Capex As at 31 December 2015 US$ Million Investors’ put option Maturity Investors’ put option Maturity Oct 2016 Date July 2019 Date 200 180 171 160 140 124 125 120 106 103 107 100 74 79 74 73 75 80 61 60 50 40 20 0 2016 2017 2018 2019 2020 2021 2022 2023-2027 Vessel capital commitment
Slide 18: Cash Flow in 2015
Cash Flow in 2015 As at 31 December 2015 Operating cash flow US$99m EBITDA US$88m 2015 Annual Results 18
Slide 19: Our Outlook and Strategy
Our Outlook and Strategy Dry Bulk Outlook Minor bulk demand is growing and less dependent on China than iron ore and Pacific Basin Benefits: coal. Reduced commodity prices is also stimulating demand. The shipping market has a track record of over-reacting in both directions - Now fully Handy foc
Slide 20: 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,
Slide 21: Appendix: Pacific Basin Overview
Appendix: Pacific Basin Overview A leading dry bulk owner/operator of Handysize & Supramax dry bulk ships Cargo system business model – outperforming market rates About 200 dry bulk ships on the water serving major industrial customers around the world Hong Kong headquarters, 12 offices worl
Slide 22: Appendix: Strategic Model
Appendix: Strategic Model MARKET-LEADING COMPREHENSIVE GLOBAL CUSTOMER FOCUS & SERVICE OFFICE NETWORK Priority to build and sustain long-term Integrated international service enhanced by customer relationships experienced commercial and technical staff around the world Solution-driven approach ensur
Slide 23: Appendix: Earnings Cover for 2016
Appendix: Earnings Cover for 2016 Handysize Supramax Contracted Revenue Days 51,600 days 23,300 days 37,080 days 13,120 days 100% 100% $7,870 44% $9,170 59% $7,800 $7,330 2015 2016 2015 2016 Covered Uncovered Currency: US$ 2015 Annual Results 23
Slide 24: Pacific Basin Dry Bulk – Diversified Cargo
Appendix: Pacific Basin Dry Bulk – Diversified Cargo Diverse range of commodities reduces product risk China and North America were our largest market More than 60% of business in Pacific and 40% in Atlantic 400 customers! 2015 Annual Results 24
Slide 25: Fleet List – 31 Jan 2016
Appendix: Fleet List – 31 Jan 2016* Pacific Basin Dry Bulk Fleet: 225 Average age of core fleet: 6.5 years old Owned Chartered Total Delivered Newbuilding Delivered* Newbuilding Handysize 69 8 66 5 148 Supramax 16 5 53 1 75 Post-Panamax 1 0 1 0 2 Total 86 13 120 6 225 PB Towage : 12 Owned Tugs 10 ww
Slide 26: Appendix: Experienced Management - Team
Appendix: Experienced Management - Team Chairman & BOD Numbers Indicate Years in Company / Years in Shipping CEO Mats Berglund Asset Management 4/30 Morten Ingebrigtsen Finance & Accounting, CFO 27/30 Andrew Broomhead 13/13 HR P.B. Subbiah Company Secretary & Risk 13/22 Kitty Mok 20/20 CTO, Newbuild
Slide 27: Appendix: Sustainability
Appendix: Sustainability Applying sustainable thinking in our decisions and the way we run our business Creating long-term value through good corporate governance and CSR Corporate Social Responsibility (CSR) Guided by strategic objectives on (i) workplace practices (primarily safety), (ii) th
Slide 28: 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; Current size as at 31 Dec 15: US$106m) 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
Slide 29: 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
Slide 30: Appendix: Convertible Bonds Due 2021
Appendix: Convertible Bonds Due 2021 Issue size US$125 million Maturity Date 3 July 2021 (approx. 6 years) Investor Put Date and Price 3 July 2019 (approx. 4 years) at par Coupon 3.25% p.a. payable semi-annually in arrears on 3 January and 3 July Redemption Price 100% Initial Conversion Price HK$4.0
Slide 31: Appendix: Understanding Our Core Market
Appendix: Understanding Our Core Market 2015 Annual Results 31
Slide 32: Appendix: Dry Bulk Supply
Appendix: Dry Bulk Supply Handysize Orderbook 348 vessels (12.9 million dwt) m Dwt 12.6% 10 Orderbook Average Over 2015 Scrapping as 9 33% as % of Age 20 Years % of Existing Fleet shortfall 10.4% Existing as at 1Jan16 8 Fleet 7 8.4% 6 Handysize 5 (25,000-39,999 dwt) 17% 9 12% 6% 4 4.3% 3 9.4m 2 2.3%
Slide 33: Appendix: China Dry Bulk, Coal & Iron Ore Trade
Appendix: China Dry Bulk, Coal & Iron Ore Trade Chinese Dry Bulk Trade China Coal Trade China Iron Ore Sourcing Mil Tonnes for Steel Production % of total dry Mil Tonnes Mil tonnes Bulk trade 1,400 1,301 2100 32% 400 1,280 27% 28% 350 1,200 1800 27% 1542 1517 24% 300 292 1,000 1500 933 953 20% 250 8
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