Wallenius Wilhelmsen Asa · OSL:WAWI
Wallenius Wilhelmsen Asa — Debt Investor Presentation (August 2023)
56 slides from Wallenius Wilhelmsen Asa's debt investor presentation, August 2023
Slide 1: Sustainability-Linked Bond Investor Presentation August 2023
Sustainability-Linked Bond Investor Presentation August 2023
Slide 2: Disclaimer (1/5)
Disclaimer (1/5) This presentation (the “Presentation”) has been prepared by Wallenius Wilhelmsen ASA (“Wallenius Wilhelmsen ASA” or the “Company”, and together with its subsidiaries the “Group”) with the assistance of Danske Bank, Norwegian Branch; DNB Markets, a part of DNB Bank ASA; Nordea Bank A
Slide 3: Disclaimer (2/5)
Disclaimer (2/5) The information included in this Presentation may contain certain forward-looking statements relating to the business, financial performance and results of the Group and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and oth
Slide 4: Disclaimer (3/5)
Disclaimer (3/5) Neither this Presentation nor any copy of it nor the information contained herein is being issued, and nor may this Presentation nor any copy of it nor the information contained herein be distributed directly or indirectly to or into Australia, Hong Kong, Japan or the United States
Slide 5: Disclaimer (4/5)
Disclaimer (4/5) The Bonds may be offered to and directed at specific addressees who, if in the United Kingdom, are “qualified investors” within the meaning of Article 2(e) of Regulation (EU) 2017/1129 as it forms part of UK law by virtue of the European Union (Withdrawal) Act and who are: (i) perso
Slide 6: Disclaimer (5/5)
Disclaimer (5/5) The Managers and/or their employees may hold shares, bonds, options or other securities of the Company and may, as principal or agent, buy or sell such securities. The Managers may have other financial interests in transactions involving the Company or such securities. This Presenta
Slide 7: Summary of risk factors
Summary of risk factors The following is a summary of key risks. Please see pages 48-56 for a full description of the risk factors. Risks related to the Group and the market in which it operates Risks related to the Bonds and the Bond Issue ▪ Risks related to change in production patterns ▪ The Bond
Slide 8: Investment highlights
Investment highlights Global market leader in vehicle logistic segment Long-term customer base and diversified business model High share of contracted volumes Strong history of free cash flow Solid market fundamentals and results Ambitious carbon target and commitment to sustainability
Slide 9: Agenda
Agenda 1. WAWI in brief 2. Sustainability 3. Market update 4. Financial update 5. Investment highlights
Slide 10: A logistics provider built on a strong history
A logistics provider built on a strong history ~8,875 125 • 2017 merger of companies with >150-year history Employees Vessels in across 29 operation countries • Listed on Oslo Stock Exchange (ticker: WAWI) with a market cap of USD 3.0bn* • Wilh. Wilhelmsen Holding ASA and Wallenius Lines AB largest
Slide 11: A history of innovation and adaptation
A history of innovation and adaptation Wilhelmsen Group American Roll-on Roll-off EUKOR • Merger creating Wallenius Wilhelmsen Logistics • Founded in Tønsberg, Carrier (ARC) • Formed as Wilhelmsen Group and ASA as a listed company incorporating EUKOR, Norway by Morten W. • Founded by Wilhelmsen Wall
Slide 12: Our strategy
Our strategy Ambition Enablers We will lead the way in transforming Ensure safety and shipping and logistics compliance leadership Goals Work as one Become the leading Be our Grow with customers supply chain and customers’ first and partners sharing mobility orchestrator choice in our journey shippi
Slide 13: Our overarching goal is to be the preferred partner in end-to-end vehicle logistics
Our overarching goal is to be the preferred partner in end-to-end vehicle logistics 13
Slide 14: We deliver services through three business segments
We deliver services through three business segments Shipping services Logistics services Government services Share of EBITDA* Highlights: Share of EBITDA* Highlights: Share of EBITDA* Highlights: • Worldwide deep-sea • Terminals: 8 controlled + • RoRo shipping cargo, transportation network 3 with sh
Slide 15: Shipping benefits from a diversified customer portfolio with long-term contracts
Shipping benefits from a diversified customer portfolio with long-term contracts AUTO HIGH & HEAVY AND BREAKBULK • Majority of volumes from auto • High & heavy (“H&H”) and breakbulk maximize utilization • Unique handling capabilities for H&H and breakbulk • Main customers include all major global OE
Slide 16: We are the market leader and the #1 operator globally within Shipping services
We are the market leader and the #1 operator globally within Shipping services Four decades of leading the High & Heavy space CURRENT FLEET BY OPERATOR GROUP FLEET CHARACTERISTICS Average max ramp capacity, tons 300 862 250 WW Ocean Capacity, kCEU* 200 GRIMALDI 150 HAUTO K LINE EUKOR 100 MOL 50 GLOV
Slide 17: Logistics services portfolio enable us to provide end-to-end services
Logistics services portfolio enable us to provide end-to-end services Vehicle processing High & Heavy processing Terminals Inland transportation* Vehicle processing centre Equipment processing centre Marine terminals Inbound distribution 39 sites 27 sites 8 sites 152 assets * Including freight forwa
Slide 18: Agenda
Agenda 1. WAWI in brief 2. Sustainability 3. Market update 4. Financial update 5. Investment highlights
Slide 19: Our commitment to change is not limited to climate action
Our commitment to change is not limited to climate action Principles of Governance People Planet Prosperity Transparent, with strong Safe & inclusive workplace Decarbonize and reduce our Solving the biggest ethical business conduct where human rights are environmental impact challenges while creatin
Slide 20: Decarbonization is a central part of our business strategy
Decarbonization is a central part of our business strategy Ambition Enablers We will lead the way in transforming Ensure safety and shipping and logistics compliance leadership Goals Work as one Become the leading Be our Grow with customers supply chain and customers’ first and partners sharing mobi
Slide 21: Our sustainability-linked financing framework
Our sustainability-linked financing framework 21
Slide 22: The Framework is used to link new financings with sustainability objectives
The Framework is used to link new financings with sustainability objectives KPI • CO2 intensity measured by CII* as reported to IMO DCS each year, Fleet weighted average calculated on the Controlled fleet carbon intensity • Controlled fleet includes owned and long-term charter vessels SPT • Reduce C
Slide 23: We remain committed to our target to reduce CO2 intensity by 27.5% in 2030
We remain committed to our target to reduce CO2 intensity by 27.5% in 2030 • High market activity coupled with global supply 10,00 chain disruptions and port congestions, resulted 9,30 9,00 in us not meeting our projected CO2 intensity in CgDISt (gram CO2/GT*nm) 8,00 8,71 2022. 7,00 6,56 5,89 7,34 6
Slide 24: We are working to reach our target through technical upgrades, operational improvements and asset replacement
We are working to reach our target through technical upgrades, operational improvements and asset replacement Initiatives to reach our target Technical Operational Asset • A priority in 2022 was to achieve a granular understanding of how our fleet can be developed to contribute to our carbon upgrade
Slide 25: In 2023 we established the Orcelle Accelerator
In 2023 we established the Orcelle Accelerator a dedicated cross-functional task force reporting to the CEO Mandate Accelerate Wallenius Wilhelmsen’s efforts to the energy transition and meet our strategic ambitions by: Securing new energy sources Engaging our customers Utilizing new technologies
Slide 26: Starting fleet renewal through the delivery of new vessels
Starting fleet renewal through the delivery of new vessels supporting our ambitions to deliver net zero transportation solutions Fleet strategy – new vessels • Signed a letter of intent for delivery of four 9,350 CEU methanol-capable and ammonia-ready vessels and individual options for an additional
Slide 27: Agenda
Agenda 1. WAWI in brief 2. Sustainability 3. Market update 4. Financial update 5. Investment highlights
Slide 28: Light vehicle sales remain below historical levels and expected to increase in 2023 and 2024
Light vehicle sales remain below historical levels and expected to increase in 2023 and 2024 LV deep sea LV sales Light vehicle sales outlook Million units Domestic Deep sea 94 94 90 88 84 77 80 79 QoQ Q2-23 (unit growth) +5.6% +5.1% 80 79 75 65 66 66 70 72 15 15 15 13 14 13 14 16 • LV deep sea expo
Slide 29: BEV sales and China exports contribute to deep sea volume growth
BEV sales and China exports contribute to deep sea volume growth Global battery electric vehicle sales outlook Export from China drives LV deep-sea volume growth Million units Finished new vehicles, 1,000 units exported deep sea from China per quarter 38 745 35 +24.5% 30 25 490 20 15 11 8 128 5 77 2
Slide 30: High & Heavy exports solid in Q2, but order activity softening
High & Heavy exports solid in Q2, but order activity softening Construction Mining Agriculture Equipment producer sales outlook2 Billion USD 242 249 224 202 186 184 YoY Q2-23 +19.0% 1 +25.2% 1 +3.7% 1 163 (unit growth) • Residential construction • Metal prices remain well • Food prices down YoY in Q
Slide 31: Recent ordering activity brings fleet growth back on long term trend
Recent ordering activity brings fleet growth back on long term trend Orderbook by delivery year Global RoRo fleet # of vessels & percentage share of current fleet Million CEU Percentage of current fleet OB Current OB 25-29 years x% CAGR <25 years >30 years Global fleet* 60 58 12% 6 50 11% 50 10% 5 3
Slide 32: Agenda
Agenda 1. WAWI in brief 2. Sustainability 3. Market update 4. Financial update 5. Investment highlights
Slide 33: Financial highlights Q2 2023
Financial highlights Q2 2023 (USDm, unless noted) Revenue Adj. EBITDA Q1-23 Q2-23 Financial targets 2 1 190 1 255 1 302 477 398 305 ROCE > 8% Group Net profit 173 332 +7.5 16.5% +2.0 968 956 987 402 341 280 Shipping Adj. EBITDA margin (%) 31.7% 36.6% Equity ratio > 35% 277 283 47 37 +5.5 208 43.
Slide 34: Leverage below pre-pandemic levels on higher EBITDA and lower net debt
Leverage below pre-pandemic levels on higher EBITDA and lower net debt Total revenue, USDm Adjusted EBITDA, USDm 5 045 1 528 4 063 3 909 3 884 3 027 2 958 837 865 875 2 557 706 606 536 2017 2018 2019 2020 2021 2022 YTD 2017 2018 20191 2020 2021 2022 YTD Net Debt, USDm NIBD/ LTM adj. EBITDA3 3 646 3
Slide 35: Robust balance sheet and strong liquidity position
Robust balance sheet and strong liquidity position Comments Balance Sheet per end Q2-23 Debt Maturity Profile USD million USD million • Equity ratio at 43% Assets Equity & Liabilities • Net debt declines to USD 2.46bn 8 376 8 376 1 025 on debt repayments 185 • No bond maturities until 3 602 Septembe
Slide 36: Resilient free cash flow has largely been applied towards reducing net debt
Resilient free cash flow has largely been applied towards reducing net debt Free cash flow* Net debt repayment (debt uptake less debt repayment) USD million USD million 450 440 388 50 28 30 17 400 1 7 0 350 -15 314 -50 300 -74 262 -100 -83 -79 -109 -145 -132 250 -150 209 200 -200 -172 178 -250 150 1
Slide 37: Prospects from Q2 report
Prospects from Q2 report Released 15 August 2023 • On the back of a strong H1, we remain confident of similar high volumes and a tight market balance throughout 2023. Short-term market demand remains robust despite tightening financial conditions. As vehicle inventories are returning to pre-pandemic
Slide 38: Agenda
Agenda 1. WAWI in brief 2. Sustainability 3. Market update 4. Financial update 5. Investment highlights
Slide 39: Investment highlights
Investment highlights Global market leader in vehicle logistic segment Long-term customer base and diversified business model High share of contracted volumes Strong history of free cash flow Solid market fundamentals and results Ambitious carbon target and commitment to sustainability
Slide 40: Appendix
APPENDIX A\Y Wallenius Wilhelmsen
Slide 41: Financial covenants
Financial covenants • Limitations on providing security 100% owned 80% owned 100% owned 100% owned Bank and leasing debt, mainly Bank and leasing debt, mainly Bank and lease debt, guaranteed Bank debt, secured by vessels secured by vessels secured by vessels by material subsidiaries and Parent compa
Slide 42: Investors demand transparency on issuers' sustainability issues and targets
Investors demand transparency on issuers’ sustainability issues and targets Certain high yield investors have developed a list of 21 questions which we answer in the next slides ESG questionnaire: General industry Please list the industry’s three biggest sustainability (ESG) related challenges and •
Slide 43: ESG questions: Environment (1/2)
21 ESG questions: Environment (1/2) ESG questionnaire: Environment Please list the firm's three primary risks related to climate change and if any, the firm's Risks climate related opportunities • Transitioning to low emitting propulsion technologies with uncertain long-term viability. • Lock-in emi
Slide 44: ESG questions: Environment (2/2)
21 ESG questions: Environment (2/2) ESG questionnaire: Environment Transition related risks (for example changed customer preferences or legislation): Do you In addition to the identified climate risks listed on the previous page, we anticipate increased focus from investors, lenders, and anticipate
Slide 45: ESG questions: Social
21 ESG questions: Social ESG questionnaire: Social Does the firm have a history of accidents? If so, how have these been managed? Are • Wallenius Wilhelmsen track all incidents, including first aid, medical treatment, lost time injuries and quality incidents. Any fatalities, there any preventive mea
Slide 46: ESG questions: Governance (1/2)
21 ESG questions: Governance (1/2) ESG questionnaire: Governance Do all staff members receive continuing education on anti-corruption? Is there an external • At Wallenius Wilhelmsen we strive to work in an atmosphere of openness and responsible and ethical business conduct. whistle-blower function?
Slide 47: ESG questions: Governance (2/2)
21 ESG questions: Governance (2/2) ESG questionnaire: Governance Which KPIs dictate the remuneration to management (are sustainability and diversity goals Wallenius Wilhelmsen’s remuneration policy covers all employees and is developed to ensure the Company attracts and retains included)? competent
Slide 48: Risk factors (1/9)
Risk factors (1/9) Investing in bonds issued by the Company involves inherent risks. Prospective investors should carefully consider, among other things, all information in this Presentation, including the risk factors set out below, before making an investment decision. This section addresses both
Slide 49: Risk factors (2/9)
Risk factors (2/9) The Group has experienced significant negative impact on the demand for both ocean transportation and landbased services during the pandemic. For instance, plant closures in Asia caused parts shortages, disrupting the inbound supply chain to vehicle production leading to lower out
Slide 50: Risk factors (3/9)
Risk factors (3/9) Risk related to competition The shipping and logistics industries in which the Group operates are highly competitive. The Group obtains employment for its vessels in competitive markets, where it encounters competition from owners and operators of roll-on roll-off vessels, large c
Slide 51: Risk factors (4/9)
Risk factors (4/9) Environmental risk The activities of the Group are subject to environmental regulation pursuant to a variety of international conventions and state and municipal laws and regulations. Changes in regulations concerning emission of greenhouse gases is one such risk factor for the Co
Slide 52: Risk factors (5/9)
Risk factors (5/9) Financial risks related to the Group Currency risk The reporting currency for the Group is USD. The Group is exposed to currency risk on revenues and expenses incurred (transaction risk) and balance sheet items (translation risk) in currencies other than USD, including CNY, EUR, G
Slide 53: Risk factors (6/9)
Risk factors (6/9) Credit risk The Group routinely executes a large volume of transactions involving daily settlement of substantial amounts, many of which expose the Group to the risk of contractual default by a counterparty. Due to the current difficult market conditions and the Covid-19 pandemic,
Slide 54: Risk factors (7/9)
Risk factors (7/9) Interest-rate risk Interest rate risk is the risk that results from the variability of the NIBOR interest rate. The coupon payments, which depend on the NIBOR interest rate and the margin, will vary in accordance with the variability of the NIBOR interest rate. The interest rate r
Slide 55: Risk factors (8/9)
Risk factors (8/9) The future financial performance of the Group will be affected by a range of economic, competitive, governmental, operating and other business factors, many of which cannot be controlled, such as general economic and financial conditions in the business or the economy at large. A
Slide 56: Risk factors (9/9)
Risk factors (9/9) The trading price of the Bonds may be volatile Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the Bonds. Any such disruptions could adversely affect the prices at
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