Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — FY2021 Earnings Presentation
37 slides from Pacific Basin Shipping's earnings presentation, Feb 24, 2022
Slide 1: Annual Results 2021
Pech a THRIVING IN A Pacific Basin ~ is =I 5 | Annual Results 2021 24 Feb 2022
Slide 2: _2ND_DECK
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Slide 3: 2021 Results Highlights
US$million 2021 2020 Underlying profit of US$698.3 million, the best result in our EBITDA 889.9 184.7 P&L 34-year history Underlying profit 698.3 (19.4) 4Q21 underlying profit Net profit 844.8 (208.2) US$294.8 million Reversal of 2020 impairment of US$million 2021 2020 B/S US$152 million resul
Slide 4: Handysize and Supramax Market Spot Rates
Handysize Market Spot Rates Minor Bulks Demand driven by construction US$/day net* materials, steel, aggregates and forest 40,000 +15% YOY products Marginal benefit from spillover of 30,000 containerised commodities into geared 22 February 2022 $20,480 bulkers 20,000 Grains Slowdown in grain activit
Slide 5: We have grown our owned fleet in recent years
We currently own 121 Handysize and Supramax Vessel Acquired DWT Year Built Delivery ships and, including chartered ships, we currently Ultramax 61,115 2015 Feb 2021 have approximately 250 ships on the water Ultramax 61,593 2015 Mar 2021 We have grown our owned fleet in recent years – Ultramax 61
Slide 6: Handysize and Supramax performance vs index
Handysize Performance vs Index (BHSI)* Supramax Performance vs Index (BSI)* US$/Day net* US$/Day net* Under/Outperformance 12,140 Under/Outperformance Rolling 12 months Rolling 12 months 2,580 1,970 1,760 5,080 330 3,480 3,710 1,780 2,290 (370) (930) (1,170) (3,060) (2,950) (2,650) 1Q20 2Q20 3Q20 4Q
Slide 7: Handysize costs
Reversal of a vessel impairment provision of US$152 million will result in additional depreciation in FY2022 and beyond, increasing blended Opex vessel costs by approximately US$500 per vessel per day or US$16 million per year Depreciation Finance Cost Costs FY20 Costs FY21 12,000 10,020 10,180 10,0
Slide 8: Supramax costs
Opex Depreciation Costs FY20 Costs FY21 Finance Cost 11,920 12,000 11,450 10,000 8,820 9,180 9,140 8,910 8,000 1,070 940 6,000 3,590 3,460 4,000 2,000 4,160 4,510 - Owned Long-Term Blended Owned Long-Term Blended Chartered Chartered No. of Ships as at 31 Dec 2021: 41 4 45 G&A per day for 2021 was
Slide 9: 3RD DECK
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Slide 10: Income statement summary FY21 vs FY20
FY21 FY20 US$m Revenue 2,972.4 1,470.9 Owned vessel costs FY21 FY20 Voyage expenses (881.0) (702.6) Opex (195.2) (174.6) Depreciation (117.8) (125.3) Time-charter equivalent ("TCE") earnings 2,091.4 768.3 Finance (28.9) (33.4) Owned vessel costs (341.9) (333.3) Charter costs FY21 FY20 Charter costs
Slide 11: Operating cash inflow in 2021 was US$813.1 million
1 Operating cash inflow in 2021 was 1 2 3 4 US$813.1 million, inclusive of all long and short-term charter hire payments. US$ Million This compares with the US$181.5 million 1,200 in the full year 2020 +29 -278 +813 Proceeds from the sale of 5 smaller 2 1,000 Handysize vessels 3 Borrowings decreased
Slide 12: Balance sheet and capital allocation priorities
FY21 FY20 In light of the significantly improved dry bulk market outlook and the consequent 2020 increase in ship values, a US$152 US$m 2021 million non-cash impairment on our Handysize core fleet (originally taken in PP&E 1,906.0 1,665.2 2020) has been written back Strong operating cash flow ha
Slide 13: AOOILNOG
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Slide 14: Dry bulk trade volumes 2021F and 2022F
2021F Dry Bulk Trade Volumes YOY 2022F Dry Bulk Trade Volumes YOY Million Tonnes Coal 1231 5.7% Million Tonnes Coal 1253 1.8% Iron Ore 1517 1.0% Iron Ore 1530 0.9% Total Major Bulk (Iron Ore + Coal) 2748 3.0% Total Major Bulk (Iron Ore + Coal) 2783 1.3% Nickel Ore 56 14.3% Soybean 166 5.7% Steel Pro
Slide 15: Strong freight rates have not led to increased ordering
% of fleet Dry Bulk Orderbook 90% 80% 70% 60% 50% Strong freight rates have not led to increased 40% ordering in this cycle 30% Decarbonisation leads to technological 20% uncertainty and reduced life of older- 10% 6.8% technology ships 0% 1995 2000 2005 2010 2015 2020 35% Zero-emission ships w
Slide 16: Handysize and Supramax core business TCE and forward cover
Handysize Core Business TCE Supramax Core Business TCE US$/day net* US$/day net* 48,000 48,000 44,000 44,000 40,000 40,000 36,000 36,000 32,000 30,220 32,000 28,000 28,000 25,210 23,050 96% 24,000 24,000 of 19,550 days 20,000 98% 20,000 of 64% 16,000 days 16,000 of 12,000 12,000 days 48% 8,000 of 8,
Slide 17: 3RD DECK
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Slide 18: Strategy and priorities
Maintain and grow our position as the leading minor Supporting our teams to ensure we continue to deliver bulk cargo-focused, integrated owner and operator a quality service to our customers while maximising servicing our customers’ transportation needs around our earnings in the current strong
Slide 19: Net zero emissions by 2050 target
Carbon Intensity (EEOI) 15 Grams of CO 2 per tonne-mile In July 2021 we set a new target of net zero emissions by 2050 10 10.1 Our previous Majority of our vessels are AER rated C or higher. If EEOI IMO-aligned target ships rate lower, it is often for operational, not 5 Our new target of technic
Slide 20: Outlook for 2022
IMF forecasts global growth of 4.4% in 2022 Clarksons estimates total dry bulk demand to grow 2.2% in 2022 of which minor bulk demand growing 2.7% Dry bulk orderbook at 6.8% (lowest in modern times) Clarksons forecast Handysize / Supramax net supply growth 2.5% in 2022 IMO GHG emissions re
Slide 21: Contact IR – Peter Budd
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, uncertainti
Slide 22: Fir
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Slide 23: Core business and 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 KPI = TCE per day Key KPI = Margin per day Significant leverage and p
Slide 24: Our core business and operating activity
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 to maximise the utilisation and TCE of
Slide 25: Earnings contribution and sensitivity
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 days X Post Panamax contribution X To
Slide 26: Appendix: Vessel days and long-term chartered commitments
Appendix: 26 VESSEL DAYS AND LONG-TERM CHARTERED COMMITMENTS Vessel Days The following table shows an analysis of our vessel days in 2021 and Future Long-term Chartered Vessel Costs The following table shows the average daily charter costs for our long-term chartered-in Handysize and Supramax vessel
Slide 27: _ LL < OO < = ~ —| —_ m > O QO LL)
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Slide 28: The dry bulk industry
The dry bulk industry carries dry commodities and other non-containerised cargo. Large Capesize and Panamax vessels carry mainly iron ore, coal and grain. We specialise in the versatile, mid-size, geared Handysize and Supramax ships that carry a wide range of minor bulks and grains which offers sign
Slide 29: Orderbook, fleet age and scrapping by vessel segment
Scheduled Average Over 2021 Scrapping as Orderbook as Age 20 Years % of 1 Jan 2021 % of Existing Existing Fleet Fleet Handysize (10,000-40,000 dwt) 4.7% 12 13% 0.5% Supramax (incl. Ultramax) (40,000-70,000 dwt) 6.0% 11 9% 0.3% Panamax & Post-Panamax (70,000-100,000 dwt) 8.1% 11 12% 0.3% Capesize (10
Slide 30: EEXI, CII and EU ETS regulations
Adopted in June 2021, IMO rules will require existing ships to combine technical and operational measures to meet IMO’s 2030 GHG reduction targets In July 2021, EU announced a number of environmental regulations affecting shipping Technical design criteria Some impact on PB ships EEXI Vess
Slide 31: a) 7) Lu = on =) mm oe =) oO
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Slide 32: We operate one of the world's largest fleets of Handysize and Supramax
We operate one of the world’s largest fleets of interchangeable modern Handysize and Supramax ships, equipping us for efficient trading and reliable service any time and anywhere Cargo system business model – outperforming market rates Own 121 Handysize and Supramax vessels, with approximately
Slide 33: Diversified geography, customers and cargoes
More diverse customer, cargo and geographical exposure enables high utilization A segment where scale and operational expertise make a difference Better daily TCE earnings driven by a high laden-to-ballast ratio Sound long-term demand expectations and modest fleet growth Our largest Diversif
Slide 34: Appendix: Business foundation
Appendix: 34 BUSINESS FOUNDATION 4 = | London | ndon 18 office locations = 10 commercial offices — — = 4 technical & crewing offices Our Hong Kong headquarters is home to commercial, technical, crewing and all central functions Rio de Janeiro Durban Melbourne Africa 5% Australia & Middle East 7 dind
Slide 35: Our Cargo Volumes 2021
Our Cargo Volumes 2021 ● Minerals 9% Salt 4% ● Agricultural Products & Related 29% Sand & Gypsum 3% 9% Soda Ash 2% Grains & Agricultural Products 16% 29% Fertiliser 10% ● Energy 13% 13% Sugar 3% Coal 9% 79.2 Petcoke 3% Million Tonnes Wood Pellets 1% ● Construction Materials 32% 17% ● Metals 17% Ceme
Slide 36: Vessels in operation
122 Vessels 15 LT 137 112 249 ST Total owned1 Chartered Total Chartered Vessels in Operation1 Total Average Long-term Short-term Capacity Age Owned1 Chartered Sub-total Chartered2 Total (million DWT) Costs fluctuate with Owned Owned Substantially fixed costs market Handysize 79 11 90 33 123 2.7 13 S
Slide 37: Supramax forward cargo cover excludes scrubber benefit
Please also note that our Supramax forward cargo cover also excludes scrubber benefit, currently at about US$1,200 per day
Pacific Basin Shipping — FY2021 Earnings Presentation on 6ix