Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — 1Q 2019 Earnings Presentation
34 slides from Pacific Basin Shipping's earnings presentation, Apr 11, 2019
Slide 1: 1Q19 Trading Update
LE Pacific Basin 1919 Trading Update 11 April 2019
Slide 2: Strong PB Performance Despite Market Headwinds
Strong PB Performance Despite Market Headwinds Cover as at 8 April 2019 US$/day Handysize Supramax Market (BHSI/BSI) index net rate 5,730 7,540 BHSI (Handysize) and 1Q BSI (Supramax) down PB daily TCE net rate 9,080 10,400 29% and 26% YOY respectively vs PB outperformance 58% / 3,350 38% / 2,860 PB
Slide 3: Market has Experienced a Weak Start in 2019
Market has Experienced a Weak Start in 2019 Baltic Handysize Index (BHSI) Baltic Supramax Index (BSI) Market Spot Rates in 2016-2019 Market Spot Rates in 2016-2019 US$/day net* US$/day net* 14,000 10 April 2019 12,000 10 April 2019 $7,630 12,000 10,000 $5,840 2017 2018 10,000 2017 8,000 2018 2016 8,
Slide 4: Minor Bulk Expected to Drive Demand in 2019
Minor Bulk Expected to Drive Demand in 2019 Overall Dry Bulk Tonne-miles Demand Growth Since 2010 Annual Change in Dry Bulk Tonne-miles Demand Annual ‐ change dry bulk demand 16% Iron Ore Bn tonne-miles 1,500 Coal 13.4% +4.7% 14% Grain Minor Bulk 12% 1,200 +3.2% 10% +3.0% 900 +2.4% +2.4% 8% +2.3% +1
Slide 5: Better Supply Fundamentals for Handysize / Supramax (I)
Better Supply Fundamentals for Handysize / Supramax (I) Overall Dry Bulk Supply Development Handysize / Supramax Supply Development Mil Dwt Mil Dwt Current Orderbook: Current Orderbook: 100 35 4.3% 5.1% 1.7% 3.3% 2.8% 0.7% 80 30 37% 49% 25 60 36% 42% 48% 20 37% 41% 34% 40 5.7% 19% 15 4.4% 4.1% 3.0%
Slide 6: Better Supply Fundamentals for Handysize / Supramax (II)
Better Supply Fundamentals for Handysize / Supramax (II) Scheduled Average Over Over YTD Scrapping as Orderbook Age 20 Years 15 Years % of Existing Fleet as % of as at 1 Apr 2019 Existing (annualised) Fleet Lower Handysize – 84m dwt orderbook (25,000-41,999 dwt) 5.6% 10 11% 19% 0.2% More Supramax –
Slide 7: Favourable Minor Bulk Supply and Demand Outlook
Favourable Minor Bulk Supply and Demand Outlook % YOY Total Dry Bulk Supply and Demand Minor Bulk Demand and Handysize/Supramax Supply Change 8% Tonne-mile Demand Growth (%) 6% 5.0% Net Fleet Growth (%), (deliveries net of scrapping) 5% 4.3% 6% 4% 4.7% 4.2% 3% 2.4% 4% 3.0% 2.9% 3.2% 1.9% 2% 1% 3.0%
Slide 8: Secondhand Values Remain Attractive
Secondhand Values Remain Attractive Handysize Vessel Values Supramax Vessel Values US$ Million US$ Million 60 80 50 70 60 40 50 Newbuilding (38,000 dwt): 30 US$24m 40 Newbuilding (62,000 dwt): US$26m 30 20 20 10 10 5 years (37,000 dwt): US$17m 5 years (58,000 dwt): US$17m 0 0 04 05 06 07 08 09 10 11
Slide 9: Uncertain Short-term Outlook but Long-term Fundamentals Remain Positive
Uncertain Short-term Outlook but Long-term Fundamentals Remain Positive Market is now softening as it did same time last year, and the global growth outlook has been revised downwards. Some key factors are likely to make the remaining market more volatile this year: IMF’s current 2019 GDP forecast
Slide 10: Our Business Model Continues to Outperform
Our Business Model Continues to Outperform Our business model has been refined over many TCE Outperformance Compared to Market years. We are able to generate a TCE earnings in Last 5 Years premium over market rates because of our high laden percentage (minimum ballast legs), which is US$1,910 US$1,4
Slide 11: Competitive at Every Level
AR18 Results Competitive at Every Level 1 TCE/day Outperforming indexes and most companies who report publicly Cargo focused business model with 90% plus laden percentage 2 Opex/day US$3,850*/day in 2018 Scale, focus and sister ship effects In-house management 3 G&A/day Scale benefits an
Slide 12: Our Strategic Direction and Priorities
AR18 Results Our Strategic Direction and Priorities Maintain and grow our cargo focus and scale Continue to be both a fully integrated owner and operator – Not only owned ships, not only asset light Maintain empowered local chartering and operations close to customers – With best in class cent
Slide 13: Well Positioned for the Future
Well Positioned for the Future Our TCE More Owned Efficient Cost Sensitivity toward Outperform Vessels with Structure Market Rates* Market Fixed Costs Annual Group Market Rate 106 111 92 G&A Overheads +/- 86 Average PB premium 75 80 US$75.7m US$1,000 over market indices in daily TCE US$59.8m last 5
Slide 14: 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 15: Appendix: Pacific Basin Overview
Appendix: Pacific Basin Overview World’s largest owner and operator of modern Handysize & Supramax ships Cargo system business model – consistently outperforming market rates Own 114* Handysize and Supramax vessel, with total 230+ dry bulk ships on the water serving major industrial customers
Slide 16: Appendix: Understanding Our Core Market
Appendix: Understanding Our Core Market 1Q19 Trading Update 16
Slide 17: Appendix: Pacific Basin Dry Bulk – Diversified Cargo
Appendix: Pacific Basin Dry Bulk – Diversified Cargo Our Dry Bulk Cargo Volumes in 1Q19 Diverse range of commodities reduces product risk China and North America were our largest markets About 60% of business in Pacific and 40% in Atlantic 1Q19 Trading Update 17
Slide 18: Appendix: Fleet List – 31 March 2019
Appendix: Fleet List – 31 March 2019 www.pacificbasin.com Our Fleet 112 Vessels 27 LT 95 ST 234 Total owned Chartered Chartered * Total Handysize 82 19 41 142 Supramax 29 7 54 90 Post- Panamax 1 1 0 2 Average age of core fleet: 8 years old An additional 3 vessels purchased and scheduled to deliver i
Slide 19: Appendix: Business Foundation
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 20: 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 21: Appendix: 2019 Future Cover
Appendix: 2019 Future Cover Handysize Contracted Supramax Contracted Revenue Days Revenue Days 42,630 41,400 21,580 20,000 Days Days Days Days 2Q-4Q 2Q-4Q 14,020 29,410 days FY19 days FY19 66% 58% 73% 55% $10,690 $10,550 44% $9,210 $11,490 36% $9,710 $9,360 1Q 1Q 1Q 100% 1Q 100% 12,750 100% 11,990 1
Slide 22: Appendix: Significant Improvement in 2018 Financial Results
AR18 Results Appendix: Significant Improvement in 2018 Financial Results As at 31 December 2018 US$m 2018 2017 Revenue 1,591.6 1,488.0 Owned vessel costs 2018 2017 Voyage expenses (710.5) (701.5) Opex (149.7) (139.3) Depreciation (114.5) (107.6) Time-charter equivalent ("TCE") earnings 881.1 786.5 F
Slide 23: Appendix: Improvement in Handysize and Supramax Segments
AR18 Results Appendix: Improvement in Handysize and Supramax Segments As at 31 December 2018 2018 2017 Change Handysize contribution (US$m) 85.5 31.4 +172% Revenue days (days) 50,120 53,360 -6% TCE earnings (US$/day) 10,060 8,320 +21% Owned + chartered costs (US$/day) 8,260 7,660 -8% Supramax contri
Slide 24: Appendix: Handysize – Good Control of Owned Vessel Costs
AR18 Results Appendix: Handysize – Good Control of Owned Vessel Costs As at 31 December 2018 2018 Daily Vessel Costs - Handysize Owned Chartered # US$8,260/day Blended Daily P/L Costs before G&A Overheads (2017: US$7,660) US$/day 10,000 9,440 7,850 2018 Charter Costs # 8,000 7,480 7,410 810 740 Vess
Slide 25: Appendix: Supramax – More Owned Ships with Lower Daily Cost
AR18 Results Appendix: Supramax – More Owned Ships with Lower Daily Cost As at 31 December 2018 2018 Daily Vessel Costs - Supramax Owned Chartered # US$10,740/day Blended Daily P/L Costs before G&A Overheads (2017: US$9,000) US$/day 11,950 12,000 10,000 9,240 2018 Charter Costs # 8,210 8,090 Vessel
Slide 26: Appendix: Significant Operational Leverage
AR18 Results Appendix: Significant Operational Leverage Handysize Supramax Sensitivity2 2018 Vessel Costs 2018 Vessel Costs avg. TCE Days incl. G&A1 avg. TCE Days incl. G&A1 (US$/d) (US$/d) (US$/d) (US$/d) Largely Owned 29,470 8,360 9,420 9,040 +/- US$1,000 daily TCE Fixed Cost LT Chartered US$35-40
Slide 27: Appendix: Strong Balance Sheet and Liquidity
AR18 Results Appendix: Strong Balance Sheet and Liquidity As at 31 December 2018 US$m 2018 2017 Vessels & other fixed assets 1,808 1,798 Total assets 2,366 2,232 Total borrowings 961 881 Total liabilities 1,135 1,070 Total Equity 1,231 1,161 Net borrowings (total cash US$342m) 619 636 Net borrowings
Slide 28: Appendix: Extended Repayment Profile and Reduced Cost of Funding
AR18 Results Appendix: Extended Repayment Profile and Reduced Cost of Funding As at 31 December 2018 Cash Flow in 2018 Schedule of Repayments of Borrowings Cash and deposit balance Cash inflow Cash outflow Secured borrowings (US$841m) Convertible bond (US$125m) * Excluding US$18m Capex in shares US$
Slide 29: Appendix: Inward Charter-in Commitments
AR18 Results Appendix: Inward Charter-in Commitments As at 31 December 2018 Note: Following the adoption of new accounting standard HKFRS16 Leases on 1 Jan 2019, charter-in operating leases of longer than 12 months will be accounted for on balance sheet as right-of-use assets and lease liabilities.
Slide 30: Appendix: Dry Bulk Demand in 2019 and 2020 Forecast
Appendix: Dry Bulk Demand in 2019 and 2020 Forecast 2019F Dry Bulk Trade Volumes 2020F Dry Bulk Trade Volumes Million Tonnes YOY Million Tonnes YOY 0.3% 1.4% Iron Ore 1,481 Iron Ore 1,502 Coal 1,284 1.7% 1.7% Coal 1,306 Major bulk total 2,765 1.0% 1.6% Major bulk total 2,808 Nickel ore 64 12% 9% Bau
Slide 31: Appendix: New Regulations Benefitting Stronger Companies
AR18 Results Appendix: New Regulations Benefitting Stronger Companies New Regulations Content Impact on the Industry PB actions IMO Ballast Water IMO and USCG requirement Capex for shipowners 14 PB owned vessels fitted Treatment: Increased scrapping Retrofitting 97 owned vessels Installati
Slide 32: Appendix: Dry Bulk Outlook in the Medium Term
AR18 Results Appendix: Dry Bulk Outlook in the Medium Term Possible Market Drivers in the Medium Term 1Q19 Trading Update 32
Slide 33: Appendix: Sustainability
Appendix: Sustainability Applying sustainable thinking in our decisions and the way we run our business 2018 CSR Report Creating long-term value through good corporate www.pacificbasin.com/ar2018 governance and CSR Corporate Social Responsibility (CSR) Guided by strategic objectives on (i) wor
Slide 34: 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
Pacific Basin Shipping — 1Q 2019 Earnings Presentation on 6ix