Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — FY2020 Earnings Presentation
42 slides from Pacific Basin Shipping's earnings presentation, Feb 25, 2021
Slide 1: Annual Results 2020
Ee Pacific Basin Annual Results 2020 25 Feb 2021 Our Pacific Basin Crew are our Heroes at Sea
Slide 2: Performance and Market Review
Performance and Market Review Pacific Basin 2
Slide 3: A Remarkable Recovery – Back to 2010 Levels
A Remarkable Recovery – Back to 2010 Levels 2020 was a year of lows and highs – a very weak first half with second quarter average minor bulk freight rates at a 50-year low impacted by measures to contain the pandemic, and a remarkable demand-driven recovery from May onwards driving spot rates to
Slide 4: 2020 was a Year of Two Halves
2020 was a Year of Two Halves US$million 1H20 2H20 2020 2019 EBITDA 79.2 105.5 184.7 230.7 P&L Underlying (loss) / profit (26.6) 7.2 (19.4) 20.5 Net profit (222.4) 14.2 (208.2) 25.1 US$million 1H20 2H20 31 Dec 2020 31 Dec 2019 Available liquidity 349.5 362.5 362.5 382.8 B/S Net gearing 41% 37% 37% 3
Slide 5: Continued Strong Outperformance
Continued Strong Outperformance Core Business PB Outperformance vs Index (per day) Last 5 years* 2020 (US$) (US$) Handysize 1,720 1,140 Supramax 1,490 3,360 Operating Activity Last 5 years 2020 (US$) (US$) Margin (per day) 650 1,080 * Historical data has not been restated to split ‘operating activit
Slide 6: Positive TCE Trend Continues
Positive TCE Trend Continues US$/Day (net) Handysize Core Business TCE US$/Day (net) Supramax Core Business TCE 20,000 2 20,000 19,040 19,000 19,000 18,000 18,000 17,000 17,000 2 16,000 15,450 16,000 15,000 15,000 14,000 1 14,000 13,380 13,000 13,000 12,000 12,000 11,000 1 10,150 11,000 10,000 10,00
Slide 7: Market Rates at 10-Year Highs
Market Rates at 10-Year Highs Handysize Market Spot Rates in 2017-20211 Supramax Market Spot Rates in 2017-20212 US$/day net* US$/day net* 24 Feb 2021 20,000 20,000 $19,040 18,000 24 Feb 2021 18,000 16,000 $15,450 16,000 14,000 14,000 12,000 12,000 10,000 10,000 8,000 8,000 6,000 6,000 4,000 4,000 2
Slide 8: Significant Leverage from Our Larger Owned Fleet
Significant Leverage from Our Larger Owned Fleet Well Timed Acquisitions of Four Ultramaxes in Significant Growth of Overall Fleet and Supramax US$ Million November 2020 Proportion Million dwt 22 5.0 4.8* 4.5 21 Second-hand 5-year old benchmark 4.0 (60-61,000 dwt): US$20.5m 3.5 20 3.0 2.5 19 2.0 1.5
Slide 9: All Commodity Groups were Up YoY in December
All Commodity Groups were Up YoY in December Strong Start to 2021 Million tonnes (annualised) Grains Million tonnes (annualised) Minor Bulks 600 1,600 1,550 550 Jan 2021 1,500 2021 2018 500 Jan 2019 1,450 2018 450 2020 1,400 2019 2021 1,350 2020 400 1,300 2021 350 FY 2020 +8.2% 1,250 FY2020 -2.2% 30
Slide 10: Dry Bulk Orderbook is at a Multi-Decade Low and is Set to Decline Further
Dry Bulk Orderbook is at a Multi-Decade Low and is Set to Decline Further Total Dry Bulk Orderbook 5.7% 6.7% % of Fleet 5.9% 90% 5.1% 80% 3.4% 70% 60% Handysize Supramax Panamax Capesize (25,000- (42,000- (65,000- (120,000+ 50% 41,999 dwt) 64,999 dwt) 119,999dwt) dwt) 40% 30% 8.0% 7.2% 20% 8.4% 10%
Slide 11: Supply Growth is Expected to Slow
Supply Growth is Expected to Slow Overall Dry Bulk Supply Development Handysize / Supramax Supply Development % of Total Fleet % of Total Fleet 6% 6% 5% 5% 3.9% 4% 3.9% 4% 3.2% 3% 3% 2.9% 2.6% 2% 2% 1.8% 1% 1% 0.6% 0.4% 0% 0% -1% -1% -2% -2% 2019 2020E 2021F 2022+F 2019 2020E 2021F 2022+F Supply g
Slide 12: Significantly Improving Demand / Supply Balance
Significantly Improving Demand / Supply Balance Minor Bulk Demand and Supply Major Bulk Demand and Supply % YoY Change % YoY Change 6% 6% 4.9% 5% 5% 4.3% 4.0% 3.7% 4% 4% 2.9% 3.0% 3% 3% 1.8% 2% 2% 2.9% 0.4% 0.6% 1% 1% 1.2% 0% 0% -1% -1% -1.5% -2% -2% 2016 2017 2018 2019 2020E 2021F 2022+F 2016 2017
Slide 13: Financial Review
Financial Review Pacific Basin 13
Slide 14: Weak First Half of 2020 and Fleet Impairment Negatively Impacted Our Annual Results
Weak First Half of 2020 and Fleet Impairment Negatively Impacted Our Annual Results US$m FY20 FY19 Revenue 1,470.9 1,585.9 Owned vessel costs FY20 FY19 Voyage expenses (702.6) (720.2) Opex (174.6) (167.4) Depreciation (125.3) (127.5) Time-charter equivalent ("TCE") earnings 768.3 865.7 Finance (33.4
Slide 15: Supramax Outperformed in 2020
Supramax Outperformed in 2020 1H20 2H20 FY20 Handysize contribution (US$m) (16.0) 12.3 (3.7) Core Revenue days (days) 16,980 17,140 34,120 Core TCE earnings (US$/day) 7,190 8,520 7,860 Core Owned + chartered costs (US$/day) 7,920 7,640 7,780 Supramax contribution (US$m) 5.0 20.0 25.0 Core Revenue da
Slide 16: Handysize – Costs Well Controlled
Handysize – Costs Well Controlled Opex Depreciation Costs FY19 Costs FY20 Finance Cost US$/day 12,000 10,280 10,020 10,000 8,150 7,780* 8,000 7,650 7,380 690 660 6,000 2,860 2,620 4,000 2,000 4,100 4,100 - Owned Long-Term Blended Owned Long-Term Blended Chartered Chartered No. of Ships as at 31 Dec
Slide 17: Supramax – Blended Costs Reducing as LT Charters Redeliver
Supramax – Blended Costs Reducing as LT Charters Redeliver Opex Depreciation Costs FY19 Costs FY20 Finance Cost US$/day 14,000 12,400 11,920 12,000 10,000 9,230 8,820 9,180* 8,580 8,000 990 1,070 6,000 3,580 3,590 4,000 2,000 4,010 4,160 - Owned Long-Term Blended Owned Long-Term Blended Chartered Ch
Slide 18: Cash Inflow and Outflow in 2020
Cash Inflow and Outflow in 2020 US$ Million 500 1 Operating cash inflow was US$181.5 1 2 4 million, inclusive of all long and short-term 3 charter hire payments. Despite lower TCE rates, this was higher than the same +10 period last year due to movements in 400 +181 working capital -11 2 Proceeds fr
Slide 19: Strong Balance Sheet – Headroom to Grow
Strong Balance Sheet – Headroom to Grow Balance Sheet Summary Vessels & other fixed assets reduced compared to 2019 due to the US$199.6 US$m 2020 2019 million impairments of the Handysize fleet This resulted in a slight increase in our net Vessels & other fixed assets 1,665 1,875 borrowings to n
Slide 20: Strategy and Priorities
Strategy and Priorities Pacific Basin 20
Slide 21: Our Strategic Direction and Priorities
Our Strategic Direction and Priorities • Maintain and grow our cargo focus and scale as both a fully integrated owner and operator – Both asset heavy and asset light • Empowered local chartering and operations teams close to customers – With best in class centralised support and systems • Continue o
Slide 22: We Are On Track To Meet Our Carbon Intensity Targets
We Are On Track To Meet Our Carbon Intensity Targets We are Well Placed in a Decarbonising World As the world decarbonises, Pacific Basin will continue to carry the non-fossil fuel commodities that will be the mainstay of future global seaborne trade Our Carbon Reduction Measures Customers Prefer Fr
Slide 23: We are Well Positioned for the Future
We are Well Positioned for the Future Healthy Demand Favourable Supply Pacific Basin Outlook Fundamentals Operating Leverage • Dry bulk orderbook at 5.7% • Large owned fleet Earnings • Vaccine and (lowest in modern with fixed costs economic time) including increasing sensitivity to stimulus expected
Slide 24: 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 25: Appendix: Understanding Our Core Market
Appendix: Understanding Our Core Market Pacific Basin 25
Slide 26: Pacific Basin Overview
Appendix: Pacific Basin Overview We operate the world’s largest fleet of interchangeable high-quality Handysize and Supramax ships, equipping us for efficient trading and reliable service any time and anywhere Cargo system business model – consistently outperforming market rates Own 113* Handy
Slide 27: Strategic Model
Appendix: Strategic Model Delivering TCE earnings that outperform the market Delivering long-term shareholder value with attractive returns over the shipping cycle MARKET-LEADING COMPREHENSIVE GLOBAL CUSTOMER FOCUS & SERVICE OFFICE NETWORK Priority to build and sustain long-term customer Integra
Slide 28: Our People, Our Record, Our Fleet
Appendix: Business Foundation Our People Our Record Our Fleet Trusted and Managed In-house Close to you transparent and Highly Versatile 12 local dry 24/7 Strong public Award winning Modern quality Low breakeven bulk offices support balance sheet and CSR policy and ships with the cost and track reco
Slide 29: Diversified Cargo Mix
Appendix: Diversified Cargo Mix Our Cargo Volumes in 2020 Diverse range of commodities reduces product risk China and North America are our largest markets Pacific Basin 29
Slide 30: Fleet List as at 31 January 2021
Appendix: Fleet List as at 31 January 2021 www.pacificbasin.com Our Fleet 114 Vessels 20 LT 118 ST 252 owned1,2 Chartered Chartered 3 Total Pacific Basin 30
Slide 31: Continue to Outperform on Every Level
Appendix: Continue to Outperform on Every Level Handysize Performance vs Market Supramax Performance vs Market US$1,720/day average premium US$1,490/day average premium in last 5 years in last 5 years US$/day US$/day PB Performance PB Performance $11,720 12,000 $11,140 12,000 BHSI BSI $9,630 10,000
Slide 32: Our Two Main Activities
Appendix: Our Two Main Activities Core Business Operating Activity Contract and spot cargoes Spot cargoes Owned and long-term chartered ships Short-term ships carrying spot cargoes Short-term ships carrying contract cargoes Costs largely fixed and disclosed Costs fluctuate with freight market Key KP
Slide 33: New TCE Reporting Methodology
Appendix: New TCE Reporting Methodology Our “core business” is to optimally combine our owned and long-term chartered ships with multi-shipment contract cargos and spot cargoes to achieve the highest daily TCE earnings. Our core business also uses short-term chartered ships to carry contract cargoes
Slide 34: How to Model Pacific Basin
Appendix: How to Model Pacific Basin Handysize contribution Core TCE1 x owned & LTC 2 revenue days + Blended cost x owned & LTC cost days 3 - = X Supramax contribution Core TCE1 x owned & LTC revenue days + Blended cost x owned & LTC cost days 3 - = X Operating Activity Operating margin x operating
Slide 35: Vessel Days and Long-Term Chartered Commitments
Appendix: Vessel Days and Long-Term Chartered Commitments Vessel Days Future Long-Term Chartered Costs 1Used to support our core business Pacific Basin 35
Slide 36: Forward Cargo Cover
Appendix: Forward Cargo Cover *Please note that our forward cargo cover for the rest of the year is backhaul heavy, meaning that a significant share of the covered days is made up of lower daily TCE backhaul voyages. When combined with better earning fronthaul voyages, the overall TCE is typically
Slide 37: Supply and Demand Outlook
Appendix: Supply and Demand Outlook Minor Bulk Demand and Handysize/Supramax Supply % YoY Change 6% 4.9% 5% Total Dry Bulk Supply and Demand 3.7% 4% 2.9% % YoY 3% Change 1.8% 6% 2% 1% 0.4% 5% 0% 3.9% 3.7% -1% 4% -2% -1.5% 2.8% 3% 2016 2017 2018 2019 2020E 2021F 2022+F 2.6% Net Fleet Growth Tonne-mil
Slide 38: Dry Bulk Demand in 2021 and 2022 Forecast
Appendix: Dry Bulk Demand in 2021 and 2022 Forecast 2021F Dry Bulk Trade Volumes 2022F Dry Bulk Trade Volumes Million Tonnes YoY Million Tonnes YoY Iron Ore 1,545 3% Iron Ore 1,564 1% Coal 1,223 5% Coal 1,244 2% Total Major Bulk (Iron Ore + Coal) 2,768 4% Total Major Bulk (Iron Ore + Coal) 2,808 1%
Slide 39: Better Supply Fundamentals for Handysize / Supramax
Appendix: Better Supply Fundamentals for Handysize / Supramax Scheduled Average Over 2020 Scrapping as Orderbook as Age 20 Years % of 1 January 2020 % of Existing Existing Fleet Fleet Handysize (25,000-41,999 dwt) 3.4% 11 10% 0.9% Supramax (42,000-64,999 dwt) 5.1% 11 7% 0.8% Panamax (65,000-119,999
Slide 40: Improved Rates Support Vessel Values
Appendix: Improved Rates Support Vessel Values Handysize Vessel Values Supramax Vessel Values US$ Million US$ Million 60 80 70 50 60 40 50 30 40 Newbuilding (38,000 dwt): US$23.8m Newbuilding (62,000 dwt): US$25.0m 30 20 20 10 10 Second-hand 5-year old benchmark (37,000 dwt): US$16.0m Second-hand 5-
Slide 41: Possible Market Drivers in the Medium Term
Appendix: Possible Market Drivers in the Medium Term Opportunities Threats Post-pandemic recovery in Chinese industrial Expanding or renewed COVID-19 containment production and extensive stimulus in other key measures further impacting global economic economies, driving a rebound in global econo
Slide 42: Vessel Speed Optimisation Example
Appendix: Vessel Speed Optimisation Example Higher fuel oil prices allow freight rates to increase without increasing speed and hence supply Optimal speed for typical Handysize vessel (Hakodate 32,000 dwt) Freight rate in US$/ton 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 for t
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