Dampskibsselskabet Norden A/s · OMXCOP:DNORD
Dampskibsselskabet Norden A/s — Norden — Q3 2016 Earnings Presentation
35 slides from Dampskibsselskabet Norden A/s's earnings presentation, Nov 9, 2016
Slide 1: NORDEN Results Third quarter of 2016
NORDEN RESULTS Third quarter of 2016 Hellerup, Denmark 9 November 2016 NORDEN – THIRD QUARTER OF 2016 RESULTS | 1 Our business is global tramp shipping
Slide 2: Agenda
AGENDA Group highlights Financials Dry Cargo Tankers 2016 expectations Q&A NORDEN – THIRD QUARTER OF 2016 RESULTS | 2 Our business is global tramp shipping
Slide 3: Q3 Highlights
Q3 HIGHLIGHTS Key messages Adjusted result for Q3 USD -12 mill. Improvements in Dry Cargo in Q3 but still at low levels A continued decline in the Tanker market Net commitments lowered by USD 156 million Significant increase in operator activities in Dry Cargo over the coming years Guida
Slide 4: Weakness in tanker market offsetting improvement in dry
FINANCIALS WEAKNESS IN TANKER MARKET OFFSETTING IMPROVEMENT IN DRY Adjusted result – Dry Cargo Adjusted result – Tankers 0 35 -5 -8 30 32 -10 -14 25 -15 -20 -20 20 USD million USD million -20 15 18 -25 10 15 15 -30 Q4: - 355 (incl. write 5 -35 downs and 0 -40 provisions) -4 -45 -5 -50 -10 Q3 2015 Q4
Slide 5: Continuously outperforming the markets
PERFORMANCE CONTINUOUSLY OUTPERFORMING THE MARKETS Tankers - 4 quarter rolling NORDEN TCE over benchmark 6,000 5,000 4,000 USD/day 3,000 2,000 1,509 1,000 169 0 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Handy MR Dry Cargo - 4 quarter rolling NORDEN TCE over benchmark 6,000 5,000 4,000
Slide 6: Continued reduction of net commitments
FINANCIALS CONTINUED REDUCTION OF NET COMMITMENTS Net commitments lowered by USD 505 million since end of 2014 Reduction by USD 156 million during Q3 2016 New COAs drive USD ~100 million in reduction Combined undrawn credit facilities, cash and securities at USD 579 million versus USD 227 mi
Slide 7: A stabilization in dry cargo values
ASSET VALUES A STABILIZATION IN DRY CARGO VALUES After an increase in during the last quarter, Asset values for Dry Cargo in Q3 have remained stable Asset values have ‘leveled off‘ and tanker values are back to 2012 levels Value of owned fleet is 50/50 between Dry Cargo and Tankers 5-year seco
Slide 8: Dry Cargo: improvements in Q3 but still at low levels
DRY CARGO IMPROVEMENTS IN Q3 - BUT STILL AT LOW LEVELS Freight rates has shown a modest increase during Q3 and have surpassed the rates from 2015 Structural oversupply of ships continues to have a negative influence Increased Chinese imports contributed with demand growth Panamax – spot rate S
Slide 9: Dry Cargo: higher Chinese imports
DRY CARGO HIGHER CHINESE IMPORTS Exports to China has increased by 7 % in Q3 2016 compared to Q3 2015 Iron ore leading the way with an increase by 9% Coal exports to China increased with 21% Increasing coal imports driven by Chinese curtailment of domestic production China imports Q3 2016 vs
Slide 10: Dry Cargo: continuous decline in supply growth
DRY CARGO CONTINUOUS DECLINE IN SUPPLY GROWTH 2017 demand outlook highly dependent on political influence Chinese governmental stimulus continues to support economic activity However, the Chinese governmental influence could reverse coal import trend No new orders being placed 2017 fleet g
Slide 11: Q3 tanker rates continued the decline
TANKERS Q3 TANKER RATES CONTINUED THE DECLINE The tanker market worsened in Q3 with rates in September being below the 5 year average for both MR and Handysize The global tanker fleet continued to expand with steady deliveries and only few scrappings Rates have declined 4 quarters in a row Spo
Slide 12: Overall demand fundamentals did not support Q3 trade
TANKERS OVERALL DEMAND FUNDAMENTALS DID NOT SUPPORT Q3 TRADE Q3 showed disappointing oil demand with lowest YoY growth in 2 years Especially Chinese and European demand showed slower than expected growth Demand stimuli from past price decreases is not as distinct today as it was last year Ex
Slide 13: The tanker fleet continued to expand in Q3
TANKERS THE TANKER FLEET CONTINUED TO EXPAND IN Q3 Q3 followed the pattern seen in H1 with many deliveries and limited scrapping Lower fleet growth can be expected from 2017 as the limited contracting becomes apparent Net growth for 2017 expected drop to 2-3% in product tankers and around 5% i
Slide 14: 2016 Full Year Guidance
2016 FULL YEAR GUIDANCE Outlook Comments USDm Dry Cargo Tankers Total Overall guidance maintained Adjusted results for -60 to -40 0 to 20 -60 to -20 the year Market developed as expected in Dry Cargo but has disappointed in Tankers Dry cargo adjusted to USD -60 to -40 million (previous -65 to
Slide 15: Forward looking statements
This presentation contains certain forward-looking statements reflecting the management’s present judgment of future events and financial results. Statements relating to the remainder of 2016 and subsequent years are subject to uncertainty, and NORDEN’s actual results may therefore differ from the p
Slide 16: Thank you for your attention
Thank you for your attention http://www.linkedin.com/company/ds-norden/ http://twitter.com/DS_NORDEN http://www.facebook.com/shippingtrainee.com http://www.facebook.com/dampskibsselskabetnorden Dampskibsselskabet NORDEN A/S 52, Strandvejen DK-2900 Hellerup Denmark Phone: +45 3315 0451 www.ds-norden.
Slide 17: Back up slides
FORWARD BACK UP SLIDES LOOKING STATEMENTS NORDEN – THIRD QUARTER OF 2016 RESULTS | 17 Our business is global tramp shipping
Slide 18: What makes NORDEN different?
WHAT MAKES NORDEN DIFFERENT? 2 Segments - focus on vessel types where we can make a difference Dry Cargo Tankers Full scale operational setup - Direct customer contact Portfolio of Time charter-in contracts and earnings coverage Long track record of overperformance in Dry Cargo and Tanke
Slide 19: A leading global tramp operator
A LEADING GLOBAL TRAMP OPERATOR 79.5 DRY CARGO VESSELS (CORE FLEET) PANAMAX (25.5) SUPRAMAX (28) CAPESIZE (1) POST-PANAMAX (6) HANDYSIZE (19) Modern fleet Global network of offices and port captains Pools in Dry cargo (Handysize & Post-Panamax) and Tankers (MR & Handysize) Tankers MR (26) HAND
Slide 20: Development highlights
DEVELOPMENT HIGHLIGHTS 2015- Strategy: Focus & Simplicity Offices in Melbourne and Santiago 300 2005 2008 275 1871 Financial Norient Mads C. Holm founds NORDEN; first vessel delivered in crisis Product 1872 begins 250 Pool 225 1996-2005 Offices in Singapore, Number of active vessels 1875-76 200 Anna
Slide 21: Asset light business model
ASSET LIGHT BUSINESS MODEL… Active fleet can quickly be adjusted to demand and market conditions Fleet employment based on portfolio view Flexible fleet Coverage and customer focus Capacity Employment CORE FLEET Sale and purchase Customer relations Contracts of Technical competencies in- O
Slide 22: Enabling value creation throughout the cycle
…ENABLING VALUE CREATION BASED ON THE CYCLE AND THROUGHOUT THE CYCLE Exploiting the cycle Creating value throughout the cycle Taking a view on the fundamental market and adjusting our Creating value above industry level irrespective of market exposure conditions Levers: Levers: Commercial operations
Slide 23: Overall results
OVERALL RESULTS USD million Q3 2015 Q1 2016 Q2 2016 Q3 2016 EBITDA - Dry Cargo -0.4 -12.5 -4.5 -1.9 EBITDA - Tankers 41.9 23.9 16.7 6.0 EBITDA - Group 41.5 11.4 12.2 4.1 Depreciation -17.0 -13.3 -13.8 -11.6 EBIT Group 20.9 -1.3 -34 -12.9 Result for the period 10.1 4.6 -24 -14.1 Adjusted Result for t
Slide 24: Long term market – MR rates
TANKERS LONG TERM MARKET – MR RATES 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1993 2010 1990 1991 1992 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2011 2012 2013 2014 2015 2016 Source: Clarksons NORDEN – THIRD QUARTER OF 2016 RESULTS | 24 Our business is g
Slide 25: Value creation: new measure for earnings (TCE)
VALUE CREATION NEW MEASURE FOR EARNINGS (TCE) NORDENs dry cargo business is a mixture of core fleet and operation activities Operator activities Focus on the margin created when cargoes and vessels are combined New NORDEN TCE = Total TCE earnings from the core fleet + the contribution margin
Slide 26: New building prices
0 10 20 40 50 60 30 1976 1977 1979 Source: Clarksons 1981 1983 Panamax (Dry) 1984 1986 1988 1990 1991 1993 NORDEN – THIRD QUARTER OF 2016 RESULTS | 26 1995 1997 1998 2000 NEW BUILDING PRICES 2002 2004 2005 2007 2009 2011 2012 2014 2016 0 20 30 40 50 60 10 1976 1977 1979 MR (Tank) 1981 1983 1984 1986
Slide 27: Value creation: NORDEN TCE vs classic TCE
VALUE CREATION NORDEN TCE VS CLASSIC TCE NORDEN TCE Employment and rates, Dry Cargo, Q3 2016 Vessel type Capesize Post- Panamax Supramax Handysize Total Panamax NORDEN core fleet days 92 658 2,515 2,458 1,899 7,622 New NORDEN TCE (USD per day) 6,774 8,446 7,602 7,214 7,493 7,513 Benchmark* 7,429 5
Slide 28: Financial strength
FINANCIAL STRENGTH Capital structure Net committed cash (ultimo) Cash in low-risk deposit accounts and USDm Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015 securities Adjusted net interest 6 -24 18 -6 32 Outstanding yard payments (incl. joint bearing assets* ventures (50%)) T/C obligations** -1,201 -1,2
Slide 29: Fleet values
FLEET VALUES Fleet values at 30 September 2016 USD ’000 Broker estimated value of owned Broker estimated value of Added Number Average dwt. Carrying amount/cost vessels* charter party value Dry Cargo Post-Panamax 2.0 114,000 23 23 0 0 Panamax 6.0 79,000 127 90 24 -14 Supramax 12.5 60,000 256 227 0 -
Slide 30: Dry Cargo fleet overview
DRY CARGO FLEET OVERVIEW NORDEN’s Dry Cargo fleet and values at 30 September 2016 Vessel type Capesize Post-Panamax Panamax Supramax Handysize Total Vessels in operation Owned vessels 0.0 2.0 4.0 5.5 8.0 19.5 Chartered vessels with a duration of more than 13 months 1.0 4.0 21.5 22.5 11.0 60.0 Total
Slide 31: Product tanker fleet overview
PRODUCT TANKER FLEET OVERVIEW NORDEN’s Tanker fleet and values at 30 September 2016 Vessel type LR1 MR Handysize Total Vessels in operation Owned vessels 0 9 12 21 Chartered vessels with a duration of more than 13 months 0 15 0 15 Total active core fleet 0 24 12 36 Chartered vessels with a duration
Slide 32: Dry Cargo capacity
DRY CARGO CAPACITY Capacity and coverage, Dry Cargo, at 30 September 2016 Q4 2016 2017 2018 Q4 2016 2017 2018 Own Vessels Ship days Capesize - - - Post-Panamax 60 - - Panamax 368 1,498 1,811 Supramax 506 1,983 2,893 Handysize 766 2,838 2,879 Total 1,700 6,319 7,583 Chartered vessels (core fleet) Cos
Slide 33: Dry Cargo coverage
DRY CARGO COVERAGE Coverage, Dry Cargo, at 30 September 2016 Q4 2016 2017 2018 Q4 2016 2017 2018 Coverage Revenue from coverage (USD per day) - - - - - - Capesize 106 - - 6,980 - - Post-Panamax 5,010 5,595 2,879 8,265 10,237 14,801 Panamax 3,280 3,339 1,702 7,639 9,349 12,728 Supramax 1,088 1,612 1,
Slide 34: Product tankers
PRODUCT TANKERS Capacity and coverage, Tank, at 30 September 2016 Q4 2016 2017 2018 Q4 2016 2017 2018 Ship days Own vessels LR1 - - - MR 828 3,237 3,229 Handysize 1,014 3,950 3,947 Total 1,842 7,187 7,176 Chartered vessels Costs for T/C capacity (USD per day) - 18,600 18,600 LR1 - 489 730 15,423 15,
Slide 35: The share (DNORD)
THE SHARE (DNORD) Master data Composition of shareholders 15,895 registered shareholders owning Shareholder capital DKK 42,200,000 88.3% Number of shares and Approx. 30.5% international ownership denomination 42,200,000 shares of DKK 1 Classes of shares 1 Voting and ownership restrictions None A