Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — KBC Bolero Webinar (November 2021)
56 slides from Cmb.tech Nv's conference presentation, November 2021
Slide 1: KBC Bolero Webinar
KBC BOLERO WEBINAR NOVEMBER 2021
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events
Slide 3: Presenting Team
PRESENTING TEAM Hugo De Stoop Brian Gallagher CEO Head of IR 3
Slide 4: Agenda
AGENDA 1. Euronav – our company 2. The large crude tanker business 3. Financials 4. Current market outlook - Fundamentals 5. Current market outlook - short term catalysts 6. Conclusion 7. Sustainability @ Euronav 4
Slide 5: 1. Our Company
1. OUR COMPANY © euRONay.
Slide 6: Euronav - World's Largest Publicly Listed Tanker Platform
EURONAV - WORLD’S LARGEST PUBLICLY LISTED TANKER PLATFORM Euronav at a glance Diversified and attractive fleet Diversified fleet of 48 VLCCs1, 30 Type # of vessels Avg. age Built life suezmaxes1, 2 FSOs3 and 2 ULCCs VLCC 48 6.6 yr. 25 yr. Listed on NYSE and Euronext Brussels with a current market ca
Slide 7: History – Based in Belgium & Nearly 20 Years of Fleet Expansion
HISTORY – BASED IN BELGIUM & NEARLY 20 YEARS OF FLEET EXPANSION December 2020 Lists on Euronext January 2014 CDP1 “B” Rating Brussels Acquisition of 15 VLCCs & 10 Year FSO Euronav becomes extension tanker division of CMB January 2015 Euronav IPO on NYSE December 2017 Q1 2021 Luxembourg FSO Conversio
Slide 8: Integrated Platform - Clear Focus, Low Costs & High Operational Leverage
INTEGRATED PLATFORM - CLEAR FOCUS, LOW COSTS & HIGH OPERATIONAL LEVERAGE • Fully integrated tanker platform Best in class operational Structure • Low cash breakevens VLCC $11.1k for 2021 • Core VLCC fleet 6.7 years old World’s largest VLCC & Suezmax fleet • 45x VLCC & 22x Suez 100% Japan/Korea • FSO
Slide 9: Leverage Which Translates to Strong Returns in Upcycle
LEVERAGE WHICH TRANSLATES TO STRONG RETURNS IN UPCYCLE Free cashflow yields @ 1 November 2021 Euronav FCF p/share $1.69 $3.31 $5.74 60% 54.4% 50% 40% 31.4% 30% 20% 16.0% 10% 0% VLCC 34k/Suez 24k VLCC 50k/Suez 44k VLCC 75k/Suez 48k Euronav Tanker Co A Tanker Co B Tanker Co C Source: Clarksons Researc
Slide 10: Cumulative Recycle Value of Euronav – Steel Value of Over $8 per Share
CUMULATIVE RECYCLE VALUE OF EURONAV – STEEL VALUE OF OVER $8 PER SHARE $bn Scrap value = $605/ldt 1.8 1.6 1.6 1.4 1.2 1.2 Fleet weight = 17.3 m DWT 1 0.8 0.6 Total Value = $1.63bn 0.4 0.2 0 EURN share = $8.06 per share Recycle value of EURN Net debt EURN @30 Sept fleet @31 Oct 10
Slide 11: Euronav Proven Record in Returns to Shareholders
EURONAV PROVEN RECORD IN RETURNS TO SHAREHOLDERS $976m or 42% of current market cap returned since US listing in 2015 Shareholder returns in DNA 250 1200 $1229 million returned in cash 1000 dividends since USD million Dividend & Buy Back Return 200 2004 Euronext listing Cumulative USD million return
Slide 12: 2. The Crude Tanker Business
2. THE CRUDE TANKER BUSINESS 12
Slide 13: Basics of the Tanker Value Chain
BASICS OF THE TANKER VALUE CHAIN https://www.euronav.com/en/investors/company-news-reports/special-reports/basics-of-the- tanker-shipping-market/ 13
Slide 14: Who We Are / What We Do
WHAT –WEWHO WE ARE DO - LONG HAUL TRANSPORTATION IN COMMODITISED MARKET The world’s largest, independent quoted crude tanker operator 14
Slide 15: Tanker Markets - Highly Cyclical, Fragmented and Seasonal
TANKER MARKETS - HIGHLY CYCLICAL, FRAGMENTED AND SEASONAL Seasonal industry Cyclical industry $k/day $/day 45 Quarterly average 100,000 VLCC rate 1990-2020 80,000 41 60,000 35 40,000 32 20,000 0 1990 2000 2010 2020 Q1 Q2 Q3 Q4 Few customers, lots of suppliers Freight cost small as % of cargo value 3
Slide 16: Vessel Utilisation - Reduces Quickly Post 15 Years Age
VESSEL UTILISATION - REDUCES QUICKLY POST 15 YEARS AGE 5yr 5yr 5yr 2.5yr 2.5yr 2.5yr 2.5yr 10,000 4,500 SS SS SS SS SS SS SS Average VLCC tonne miles per vessel by age 5 yr average 9,000 4,000 Average Suezmax tonne miles per vessel by age 8,000 3,500 7,000 3,000 6,000 2,500 (million) 5,000 2,000 4,0
Slide 17: Highly Regulated Shipping Sector, Assets Useful Life 15-20 Years Only
HIGHLY REGULATED SHIPPING SECTOR ASSETS USEFUL LIFE 15-20 YEARS ONLY Older tonnage comes under increasing pressure Owners dilemma Older vessels = Increased opex from heavy consumers IMO 2020 regs Volatile steel/scrap price Lower cash earnings for older vessels Ballast water capex $1.5m from Sept 19
Slide 18: ~50% of VLCC Fleet Controlled by Top 15 Owners
~50% OF VLCC FLEET CONTROLLED BY TOP 15 OWNERS STILL ROOM FOR CONSOLIDATION Top 10 independent tanker platforms globally Fragmented market # of UL/VLCC tankers (including newbuilds) UL/VLCC market share 50 50% of the Angelicoussis Group 40 fleet controlled by top 15 Others ~50%1 ~50% Top 15 DHT Hold
Slide 19: Time Charter – Limited Liquidity & Opportunity
TIME CHARTER – LIMITED LIQUIDITY & OPPORTUNITY % fleet TC 0.7% 0.6% 6.8% 5.1% 3.7% 60 80,000 70,000 50 Number of TC & Average duration (months) 60,000 VLCC TC & breakeven rates 40 50,000 30 40,000 30,000 20 20,000 10 10,000 0 0 2019 2020a 2020b 2020c 2021 # of TC 6m or more Average Duration P&L brea
Slide 20: 3. Financials
3. FINANCIALS | @euronav. 20
Slide 21: Bank Lending to Shipping – In Structural Decline
BANK LENDING TO SHIPPING – IN STRUCTURAL DECLINE Global banks lending to shipping fallen by $150bn in last decade 500 450 Banks Total 400 -36% USD million bank lending to shipping 350 300 250 200 EU 150 Banks -55% 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Europe USA Asia Source
Slide 22: Strong Access to Financing at Attractive Terms
STRONG ACCESS TO FINANCING AT ATTRACTIVE TERMS Repayment schedule and RCF reductions $m Highlights 400 • Credit margins between 1.50% and 2.35% 350 • Most of the bank debt is revolving, and secured 300 within comfortable LTV levels 250 • Strong relationships with the leading international $ million
Slide 23: Strategy to Increase Sustainability-Linked Financing
STRATEGY TO INCREASE SUSTAINABILITY-LINKED FINANCING Ship financing – The future Emission targets All banks to > IMO agree • Early adoption of sustainability-linked loans – one of the first in the industry with $713m sustainability-linked loan announced in September 2020 • AER (annual efficiency rat
Slide 24: 4. Current Market Outlook Fundamentals
4. CURRENT MARKET OUTLOOK FUNDAMENTALS 24
Slide 25: Strong Supply Dynamics - Low Orderbook, Ageing Fleet & Limited Yard Capacity
STRONG SUPPLY DYNAMICS - LOW ORDERBOOK, AGEING FLEET & LIMITED YARD CAPACITY Orderbook/fleet ratio Age profile Yard lead times (VLCC) Orderbook % of fleet Avg. age (years) Years 55 11.0 4 Fleet age at 20-year Yard lead times 50 high – 25%+ of fleet 10.5 at 12-year high 10.5 older than 15 years 45 3.
Slide 26: Recycling Candidates for Next 5 Years About 2.8x of Current Orderbook
RECYCLING CANDIDATES FOR NEXT 5 YEARS ABOUT 2.8X OF CURRENT ORDERBOOK 25% VLCC fleet > 15 years Average fleet age = 10 years Orderbook 9% Back to level not seen since 2002 80 11 70 10 10 60 Average age of VLCC fleet 9 50 Few >20 year old trading No of VLCC & sanction effected 9 40 8 30 8 Yards sold
Slide 27: Ton Miles – Key Driver of Tanker Markets
TON MILES – KEY DRIVER OF TANKER MARKETS Demand growth all from Far East – key for tankers is where supply is sourced from Atlantic Basin – Far East route Middle East - Asia Pacific route 1 mbpd x 365 days = 365m barrels 1 mbpd x 365 days = 365m barrels Annual VLCC 365m barrels / 2m capacity per VLC
Slide 28: Asset Prices – Pricing in Recovery
ASSET PRICES – PRICING IN RECOVERY Asset prices rising on expectation of soon Asset prices tend to be a lead indicator for market recovery time charter rates 120 +25% +12% +18% +27% 80,000 110 108 70,000 100 105 85 60,000 80 75 100 70 63 50,000 60 56 95 48 40,000 43 40 90 30,000 20 85 20,000 0 10,00
Slide 29: Contracting of New Vessels - Both Green and Lean
CONTRACTING OF NEW VESSELS - BOTH GREEN AND LEAN New tonnage has alternative fuels Ordering at lowest level since 1995 18 6 16 5 14 12 4 10 3 8 6 2 4 1 2 0 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 0 April May June July August September October VLCC delivery date VLCC Alt fuel capability VLCC
Slide 30: Delivery Schedule – Limited Post 22
DELIVERY SCHEDULE – LIMITED POST 22 VLCC Delivery Schedule Suezmax Delivery Schedule 80 70 60 60 50 40 40 68 30 57 50 48 20 39 37 20 27 24 32 30 30 26 10 22 0 -4 -4 8 -13 -13 0 -2 1 -20 -6 -8 -25 -13 -31 -10 -22 -20 -20 -25 -25 -20 -40 -30 2017 2018 2019 2020 2021 2022 2023 2017 2018 2019 2020 2021
Slide 31: Recycling Has Started – At Highest Level in 3.5 Years
10 12 14 0 2 6 8 4 Jan-2015 Source: Clarksons Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Jan-2016 Mar-2016 May-2016 Jul-2016 Sep-2016 Nov-2016 Jan-2017 Mar-2017 May-2017 LEVEL IN 3.5 YEARS Jul-2017 Sep-2017 Nov-2017 VLCC Demolition Jan-2018 Mar-2018 May-2018 Jul-2018 Sep-2018 Nov-2018 Jan-2019 Mar
Slide 32: Recycling – Unusual Pattern This Cycle
RECYCLING – UNUSUAL PATTERN THIS CYCLE History: Rates below Breakeven = 5% of fleet recycles History: Higher prices acted as catalyst for recycling 9% 30,000 30 10 8% 8% 8% 8% 9 7% 25,000 25 % of VLCC fleet recycled during year 7% 8 VLCC freight rate for Year 6% 6% 20,000 7 VLCC recycle price $m 20
Slide 33: Inventory Matters – And Will Start to Rebuild in 2022
INVENTORY MATTERS – AND WILL START TO REBUILD IN 2022 Global oil inventory well below 5 yr average Inventory builds good for tanker market 3300 100,000 3300 3200 90,000 3200 EIA global crude inventory m bbls 3100 80,000 3100 70,000 3000 3000 60,000 VLCC rates 2900 50,000 2900 2800 40,000 2800 2700 3
Slide 34: Consolidation in Large Tanker Market
CONSOLIDATION IN LARGE TANKER MARKET – MORE IMPACTFUL IF FROM BOTTOM UP NOT TOP DOWN Tanker Sector Highly Fragmented Herfindahl Hirschmann Index A market with an HHI of less than 1,500 VLCCs in Listed Hands 1-3x VLCCs per owner is considered a competitive marketplace, 90 85 an HHI of 1,500 to 2,500
Slide 35: 5. Current Market Outlook Catalysts
5. CURRENT MARKET OUTLOOK CATALYSTS 35
Slide 36: Short Term Catalysts Gaining Traction
SHORT TERM CATALYSTS GAINING TRACTION Recycling 15x VLCCs recycled in 2021 - 4 in Sept High fuel prices to trigger 500k-1m bpd Fuel switching switch to crude this winter Output converting to exports Persian Gulf export 550k bpd Sept 2021 Post-COVID demand recovery IEA forecast 3.3m bpd growth in 202
Slide 37: Improving Demand & Supply Dynamics Supported by Short Term Catalysts
IMPROVING DEMAND & SUPPLY DYNAMICS SUPPORTED BY SHORT TERM CATALYSTS 102 45 100 40 OPEC+ production mbpd 98 IEA Demand m bpd 35 96 30 94 25 92 90 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 OPEC+ production mbpd IEA Demand mbpd 37 Source: Bloomberg, IEA, JP Morgan
Slide 38: Short Term Surplus Tonnage Improving - But Sporadic Still
SHORT TERM SURPLUS TONNAGE IMPROVING - BUT SPORADIC STILL 1 year time charter rate 100,000 Source: Bloomberg, Braemar, SSY 38
Slide 39: Switch to Oil from Other Fossil Sources Could Be Around 0.75m bpd
SWITCH TO OIL FROM OTHER FOSSIL SOURCES FOR ENERGY COULD BE AROUND 0.75M BPD Fuel price surges = crude relatively cheap Estimated boost of 750k bpd over winter Equiv USD per bbl expressed in Crude Coal Rotterdam Region Fuel Switch to Volume kbd Natural gas US EU Resid Fuel Oil Crude 80 LNG Japan/Kor
Slide 40: Iran – Wild Card for Tankers?
IRAN – WILD CARD FOR TANKERS? Illicit trade 8% VLCC & 5% Suexmax fleet Older tonnage – illicit trade not recycled 70 9 38 40 No of illegitimate vessels 8 % of respective fleet 60 35 2019 2020 7 30 50 30 28 6 25 40 25 23 54 5 30 4 20 15 3 15 20 20 10 2 10 7 8 10 1 12 9 5 0 0 0 VLCC Suezmax VLCC Suezm
Slide 41: Iran – Structural and Operational Implications for Tanker Market
IRAN – STRUCTURAL AND OPERATIONAL IMPLICATIONS FOR TANKER MARKET Structural – Older tonnage under exit pressure Operational – c. 1m bpd to return to commercial 30 8% 1600 7% 1400 25 No of vessels engaged in illicit trade 6% 1200 % of fleet in illicit trade 20 5% 1000 15 4% 800 3% 600 10 2% 400 5 1%
Slide 42: Sustained Production Growth Leads to Improved Tanker Rates Historically
SUSTAINED PRODUCTION GROWTH LEADS TO IMPROVED TANKER RATES HISTORICALLY 120,000 Year 2013 = Q2 13 to Q4 15 +4.5m bpd growth Year 2018 = Q3 17 to Q4 18 +3.8m bpd growth Year 2021 = Q2 21 to Q4 22 +7.5m bpd growth 100,000 80,000 60,000 40,000 20,000 0 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qt
Slide 43: 6. Conclusion
EURONAV 6. CONCLUSION | @euranavy.
Slide 44: Outlook Through the Market Trough
OUTLOOK THROUGH THE MARKET TROUGH Demand for Supply Ton miles Vessel Supply Euronav Oil of Oil Balance sheet Continued Post OPEC+ production Feature anticipated Medium term metrics Leverage remains Covid recovery tapering finally to drive markets very constructive but below target gaining traction &
Slide 45: 7. Sustainability
a6) 7. SUSTAINABILITY | @euronav. 45
Slide 46: Shipping's Positioning on Emissions in Strong Relative Position
SHIPPING’S POSITIONING ON EMISSIONS IN STRONG RELATIVE POSITION SHIPPING – LOW RELATIVE EMISSIONS Air 425 Road 80 2.7% of global CO2 emissions Rail 35 Shipping 5 0 100 200 300 400 500 gCO2/ton-km(1,2,3) Source: IMO GHG study 2009. Notes: 1) Energy-efficient transport is much dependent on the load fa
Slide 47: Sustainability Matters at Euronav
SUSTAINABILITY MATTERS AT EURONAV Solid Sustainability Platform Established Ambition to deliver more Sustainability Committee est ‘19 Emission targets for 2022 + Dedicated Sustainability Manager Deliver on supply chain goals 1/3 funding ESG linked Sustainability funding leadership 2/54 in Shipping f
Slide 48: Euronav - Investing in Latest Technology Today for Tomorrow's World
EURONAV - INVESTING IN LATEST TECHNOLOGY TODAY FOR TOMORROW’S WORLD Regulatory & commercial landscape demands investment now Transition Long Term Solution Transition fuels available now with gains in 100% emissions reductions 93% 93% 90% Well to Propeller emission reductions 84% 80% However Hydrogen
Slide 49: Emissions Regulations in Place with Tougher Trajectory Set
EMISSIONS REGULATIONS IN PLACE WITH TOUGHER TRAJECTORY SET Shipping decarbonisation needs to accelerate Regulations will continue to get tougher to 2030 2008 CO2 output 1050 1% cut 2% cut 5-6% 1000 6.5 A y-o-y B y-o-y C cut y/y? -18% or 185mt 6.3 versus 2008 950 6.1 900 5.9 2021 Shipping is 2.7% of
Slide 50: Thank You
TH A N K Y 0 U EURONAV.
Slide 51: Appendix
APPENDIX | @euRonav. 51
Slide 52: FSOs Operating on Long-Term Contract for QP & TotalEnergies to 2032
FSO’S OPERATING ON LONG-TERM CONTRACT FOR QP & TOTAL ENERGIES TO 2032 Background Contract structure and economics • TI Africa and TI Asia are ULCCs originally built in • Vessels have been on contract since 2010 with 2002, and converted to FSOs between 2008-2010 100% uptime • Sophisticated oil proces
Slide 53: Role of Tankers International Pool
ROLE OF TANKERS INTERNATIONAL POOL Independent entity created to offer owners and customers the advantages of a large-scale operation • Tankers International Pools provide a physical hedge for owners by ensuring stable and regular cash flow during volatile market conditions whilst still being able t
Slide 54: Robust Platform with High Operational Leverage
ROBUST PLATFORM WITH HIGH OPERATIONAL LEVERAGE Fleet Renewal with 3x VLCC due for 5x Suezmax due Eco-ships delivery 2023 2022/3/4 Optionality 2x ULCC 40yr life Suez 2x TC-in 1xJV Forward Sold 8x VLCC 90% spot exposure 37x Japan/Korea new built VLCC 18x Japan/Korean built Suezmax Core Average Age Fle
Slide 55: Global VLCC Fleet Ripe for Downsizing
GLOBAL VLCC FLEET RIPE FOR DOWNSIZING 42% OF FLEET >15 YRS BY 2025* Global fleet age highest since 2002 - Most aggressive oil demand scenario can be managed by fleet size adjustment Million bpd oil consumption * Includes all new buildings scheduled or under construction 55
Slide 56: Peak Oil Demand – Key Scenarios (BP)
PEAK OIL DEMAND – KEY SCENARIOS (BP) 56