Grindrod Limited · JSE:GND
Grindrod — H1 2015 Earnings Presentation
48 slides from Grindrod's earnings presentation, 2015
Slide 1: Unaudited Interim Results and Dividend Announcement, six months ended 30 June 2015
UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 30 June 2015
Slide 2: Highlights
HIGHLIGHTS
Slide 3: Financial Highlights
FINANCIAL HIGHLIGHTS an integrated business Headline earnings Total assets ▲ 2% to R327.9 million ▲ 4% to R31 697 million (H1 2014: R320.6 million) (H1 2014: R30 414 million) Net asset value Earnings per share ▲ 9% to 2 316 cents ▲ 64% to 40.3 cents (H1 2014: 2 125 cents) (H1 2014: R112.5 cents) ● N
Slide 4: Business Environment
BUSINESS ENVIRONMENT an integrated business ● China growth estimated for 2015 at approximately 6.8% ● US economy expected to grow by 2.3% ● Europe and South Africa remain weak ● Low commodity price environment ● Dry-bulk shipping markets remain at low levels ● Tanker shipping markets at good levels
Slide 5: Interim Results 2015
G INTERIM RESULTS 2015
Slide 6: Management Income Statement – H1 2015
MANAGEMENT INCOME STATEMENT – H1 2015 an integrated business H1 H1 2014 Growth R million 2015 (restated) % Comments Revenue 14 441 13 830* 4 Low growth given buy-up within the business Trading profit 943 945 Depreciation and amortisation (422) (357) 18 Increase in line with the buy-up and forex Non-
Slide 7: Headline Earnings – H1 2015
HEADLINE EARNINGS – H1 2015 an integrated business H1 H1 Growth R million 2015 2014 % Comments Profit attributable to ordinary shareholders 303 694 (56) Adjusted for: 25 (373) (107) Foreign currency translation reserve 2 (6) (133) Net profit on disposals (2) (428) (100) Prior year fair value of busi
Slide 8: Headline Earnings/Dividends per Share
HEADLINE EARNINGS/DIVIDENDS PER SHARE an integrated business HEADLINE EARNINGS PER SHARE (CENTS) DIVIDENDS PER SHARE (CENTS) 150 40 120 30 17.1 42.5 15.4 90 12.0 20.0 43.9 43.7 55.5 20 60 76.2 10 20.0 30 17.5 17.5 55.7 58.9 52.0 13.6 13.6 43.6 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 H1
Slide 9: Headline Earnings by Division
HEADLINE EARNINGS BY DIVISION an integrated business H1 2015 H1 2014 600 600 450 450 74 (45) 95 (52) 328 321 R million R million 97 300 300 43 235 202 150 150 0 0 Freight Shipping Financial Group Total Freight Shipping Financial Group Total Services Services Services Services GRINDROD LIMITED | UNAU
Slide 10: Attributable Income by Division
ATTRIBUTABLE INCOME BY DIVISION an integrated business H1 2015 H1 2014 800 800 95 (54) 694 182 600 600 116 471 R million R million 400 400 74 (46) 303 97 200 178 200 431 315 0 0 Freight Shipping Financial Group Total Freight Shipping Financial Group Total Services Services Services Services Fair val
Slide 11: Management Balance Sheet
MANAGEMENT BALANCE SHEET an integrated business 30 June 30 Dec Growth R million 2015 2014 % Comments Property, plant and equipment Freight Services 3 494 3 378 3 Intermodal facility expansions Shipping 7 042 6 913 2 Dry-bulk ship instalments and forex Financial Services 187 187 – Group 68 65 5 Intan
Slide 12: Net Debt Analysis
NET DEBT ANALYSIS an integrated business 1 500 678 (173) 1 200 (233) 900 (115) R million (530) 600 543 300 (81) 89 0 Dec 2014 Cash Interest/ Capital Investments Investments Forex Jun 2015 generated from dividends/ expenditure Financial joint ventures and other operations taxation Services GRINDROD L
Slide 13: Capital Commitments and Expenditure
CAPITAL COMMITMENTS AND EXPENDITURE an integrated business Capital expenditure Capital commitments Split as follows H1 H2 Approved Approved R million 2015 2015 2016 2017+ Total not contracted and contracted Freight Services 209 157 19 5 181 34 147 Port and Terminals 105 73 13 2 88 – 88 Rail 34 33 6
Slide 14: Markets
MARKETS
Slide 15: Dry-Bulk Seaborne Trade
DRY-BULK SEABORNE TRADE an integrated business DRY-BULK SEABORNE TRADE GROWTH Global dry-bulk seaborne trade 6 000 is likely to grow significantly CAGR 3.6% or ~170 mt per annum slower than previously expected, mainly due to the 5 000 slowdown in emerging economies, particularly China. 4 000 During
Slide 16: Shipping: Capesize Bulk Carriers
SHIPPING an integrated business CAPESIZE BULK CARRIERS (100 000+ dwt tonnes) 350 No of ships Mdwt 300 Fleet (1 Jul 2015) 1 616 306.1 Order book (1 Jul 2015) 284 55.9 250 Order book % of fleet 18 18 Number of ships % of fleet over 25 years 1 1 200 Est. % non-delivery in 2013* 43 39 Est. % non-deliver
Slide 17: Shipping: Handymax Bulk Carriers
SHIPPING an integrated business HANDYMAX BULK CARRIERS (40 – 62 999 dwt tonnes) 500 No of ships Mdwt 400 Fleet (1 Jul 2015) 3 208 172.0 Order book (1 Jul 2015) 683 41.3 Order book % of fleet 21 24 Number of ships 300 % of fleet over 25 years 4 3 Est. % non-delivery in 2013* 33 32 Est. % non-delivery
Slide 18: Shipping: Handysize Bulk Carriers
SHIPPING an integrated business HANDYSIZE BULK CARRIERS (10 – 39 999 dwt tonnes) 500 No of ships Mdwt 400 Fleet (1 Jul 2015) 3 132 89.2 Order book (1 Jul 2015) 402 14.3 Order book % of fleet 13 16 Number of ships 300 % of fleet over 25 years 12 11 Est. % non-delivery in 2013* 34 32 Est. % non-delive
Slide 19: Oil Product Tankers
OIL PRODUCT TANKERS an integrated business 15 12 9 % change 6 3 0 -3 2009 2010 2011 2012 2013 2014 2015e MR demand MR fleet Global oil products consumption Source: Affinity (Shipping) Ltd, August 2015 GRINDROD LIMITED | UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT – JUNE 2015
Slide 20: Shipping: Medium-Range Products Tankers
SHIPPING an integrated business MEDIUM-RANGE PRODUCTS TANKERS (25 – 54 999 dwt tonnes) 250 No of ships Mdwt 200 Fleet (1 Jul 2015) 1 750 78.1 Order book (1 Jul 2015) 203 9.7 Order book % of fleet 12 12 Number of ships 150 % of fleet over 25 years 4 3 Est. % non-delivery in 2013* 36 34 Est. % non-del
Slide 21: Shipping: Small Chemical and Products Tankers
SHIPPING an integrated business SMALL CHEMICAL AND PRODUCTS TANKERS (15 – 19 999 dwt tonnes) 90 No of ships Mdwt 75 Fleet (1 Jul 2015) 571 10.3 Order book (1 Jul 2015) 63 1.2 60 Order book % of fleet 11 11 Number of ships % of fleet over 25 years 7 7 Est. % non-delivery in 2013* 56 54 45 Est. % over
Slide 22: Freight Services Operational Overview
OPERATIONAL OVERVIEW FREIGHT SERVICES
Slide 23: Operational Highlights – Port and Terminals
OPERATIONAL HIGHLIGHTS – PORT AND TERMINALS an integrated business ● Maputo port revenue is up on increased own volumes despite the fall in concession volumes ● Matola terminal throughput increased 10% to 1.9 million tonnes, (H1 2014: 1.7 million tonnes) increased magnetite offsetting reduced coal v
Slide 24: Operational Highlights – Rail
OPERATIONAL HIGHLIGHTS – RAIL an integrated business ● Rail earnings decreased due to: › delays in rail infrastructure project spend › temporary suspension of business in Sierra Leone › delays/suspension of some large mining projects ● Sierra Leone business has been renegotiated for an extended peri
Slide 25: Operational Highlights – Logistics
OPERATIONAL HIGHLIGHTS – LOGISTICS an integrated business ● Turnaround in the Carrier businesses achieved with focused cost-saving efficiency measures ● Integrated Logistics businesses performed well, with some good new contracts although Intermodal suffered from lower activity levels on minerals an
Slide 26: Strategy and Outlook
STRATEGY AND OUTLOOK an integrated business STRATEGY Terminal expansion: dry bulk and liquid bulk Expansion in rail businesses Diversification in the African continent Commodity diversification to promote terminal sustainability OUTLOOK Magnetite and coal volumes under pressure despite imp
Slide 27: Shipping Operational Overview
OPERATIONAL OVERVIEW SHIPPING
Slide 28: Operational Highlights
OPERATIONAL HIGHLIGHTS an integrated business ● Rates in the tanker sector strongest since H1 2008 ● Rates in dry bulk remain well below profitable levels ● Solid performance in ship-operating businesses ● Delivery of two next-generation eco fuel-efficient bulk carriers ● Delivery of a further two h
Slide 29: Strategy and Outlook
STRATEGY AND OUTLOOK an integrated business STRATEGY ● Careful management of owned fleet to maximise the market ● Expand fleet under commercial management OUTLOOK ● Tanker rates holding up at profitable levels despite large order book ● Despite the improved rates, the dry-bulk fleet is not covering
Slide 30: Financial Services Operational Overview
OPERATIONAL OVERVIEW FINANCIAL SERVICES
Slide 31: Operational Highlights
OPERATIONAL HIGHLIGHTS an integrated business ● Growth across all businesses but particular outperformance at the net interest level ● Good growth in fees from Asset Management and Stockbroking ● Decision not to submit a bid as part of the revised SASSA tender ● Positive results from asset managemen
Slide 32: Strategy and Outlook
STRATEGY AND OUTLOOK an integrated business STRATEGY ● Drive and incrementally execute focused business growth ● Pursue growth in assets under management ● Appropriate investment banking opportunities ● Focus on well-secured loans with low risk of default OUTLOOK ● Steady growth expected ● SASSA dec
Slide 33: Key Capital Projects Update
G KEY CAPITAL PROJECTS UPDATE
Slide 34: Richards Bay Terminal
RICHARDS BAY TERMINAL an integrated business OPPORTUNITIES ● Immediate phase 1 expansion from 3.2 million Total capex (Phase 1) Est. R125 million to 4.5 million tonnes per year capacity Timeline Quarter 1, 2016 ● Potential future phases up to 20 million tonnes per year capacity Grindrod shareholding
Slide 35: Ngqura Liquid-Bulk Terminal Storage
NGQURA LIQUID-BULK TERMINAL STORAGE an integrated business OPPORTUNITIES ● Phase 1 of the development 230 000 m³ storage capacity Total capex Est. R2.9 billion ● Availability of land for further development of up to 720 000 m³ storage capacity Timeline Complete Quarter 1, 2019 ● Can be used for stor
Slide 36: Saldanha Crude Oil Terminal
SALDANHA CRUDE OIL TERMINAL an integrated business OPPORTUNITIES ● OTGC¹ in joint venture with MOGS² Total capex Est. R3.1 billion ● Development of 12 x 1.1 million barrel crude tanks in three phases Timeline Phase1 end 2017, ● Crude oil blending capability full terminal end 2018 ● Crude bulk buildi
Slide 37: Maputo Port Development – Port Dredge
MAPUTO PORT DEVELOPMENT – PORT DREDGE an integrated business OPPORTUNITIES ● Dredge caters for fully laden Panamax vessels draft Total capex (TBC through tender) Est. US$100 million of 14.2 metres resulting in increased competitiveness Returns Under evaluation CHALLENGES Timeline Complete October 20
Slide 38: Matola Terminal
MATOLA TERMINAL an integrated business OPPORTUNITIES ● Terminal expansion in line with volume commitment: Total capex (Phase 4A) Est. US$186 million › Phase 4A – increase capacity to 12 mtpa Returns 18.4% (over life of concession – 2043) › Phase 4B – Concept stage – increase capacity to 20 mtpa To c
Slide 39: North West Rail Limited
NORTH WEST RAIL LIMITED an integrated business OPPORTUNITIES ● First major new rail infrastructure project in Total capex TBC sub-Saharan Africa Timeline (Based on concession finalisation and ● Phase 1: 341 km from Chingola to Kalumbila customer volume agreements) ● Phase 2: potential to connect Wes
Slide 40: North South Corridor
NORTH SOUTH CORRIDOR an integrated business OPPORTUNITIES ● 3 000 km rail corridor with increasing operational competence ● Conversion of road traffic to rail ● Copper south-bound and industrial and commercial goods north-bound = 4 000 tpa of potential cargo ● Joint Corridor Masterplan Study being f
Slide 41: Group Strategy and Outlook
G GROUP STRATEGY AND OUTLOOK
Slide 42: Group Strategy and Outlook
GROUP STRATEGY AND OUTLOOK an integrated business STRATEGY ● To purposefully grow the business organically, by acquisitions and seeking synergies within the group, with specific focus on Africa, to become a respected fully integrated freight and logistics service provider OUTLOOK ● Continued increas
Slide 43: Annexures
G ANNEXURES
Slide 44: Terminal Capacity – Utilisation as at June 2015
TERMINAL CAPACITY – UTILISATION AS AT 30 JUNE 2015 an integrated business Utilisation Annual Annual plus Change capacity capacity under Terminals H1 2015 H1 2014 % 2014 construction Dry bulk (tonnes) 4 040 561 5 933 194 (31.9) 18 650 000 18 650 000 Matola coal terminal1 1 904 854 1 724 307 10.5 7 30
Slide 45: 2014/15 Shipping and Commodity Price Performance
2014/15 SHIPPING AND COMMODITY PRICE PERFORMANCE an integrated business Fall in prices for the period 2014 – 2015 160 Open Close % BDI Index 2 277 1 200 47.3 Decrease Iron ore 135 55 59.0 Decrease Thermal coal 83.4 57.50 31.0 Decrease 120 Copper 334.8 234.6 29.9 Decrease Index (Jan 14 = 100) 80 40 0
Slide 46: Dry-Bulk Daily Spot Rates (Baltic Indices)
DRY-BULK DAILY SPOT RATES (BALTIC INDICES) an integrated business 50 000 3 500 3 000 40 000 2 500 Index points US$ per day 30 000 2 000 1 500 20 000 1 000 10 000 500 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 2012 2013 2014 2015 Baltic capesize Index ave TC Balti
Slide 47: Scrapping
SCRAPPING an integrated business Handy* Handy* Handysize Handymax Panamax Capesize products chemical All other Total dwt 000 bulker bulker bulker bulker tanker tanker Total types scrapping 2010 2 700 400 700 2 700 3 200 1 400 11 100 16 900 28 000 2011 5 300 2 200 5 200 10 500 1 400 700 25 300 17 400
Slide 48: Disclaimer
DISCLAIMER an integrated business Statements contained throughout this presentation regarding the prospects of the group have not been reviewed or reported on by the group's external auditors. The information supplied herewith is believed to be correct but the accuracy thereof is not guaranteed and