Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — H1 2016 Earnings Presentation

33 slides from Pacific Basin Shipping's earnings presentation, Jul 29, 2016

  1. Slide 1: Pacific Basin 2016 Interim Results, 29 July 2016

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  2. Slide 2: 2016 Interim Results – Highlights

    2016 Interim Results – Highlights 1H16 1H15 Net (Loss) / Profit US$(49.8)m US$5.8m Operating Cash Inflow US$7.7m US$58.8m Cash Position US$406m US$392m Net Gearing 29% 34%  Record low half-year period for dry bulk shipping leading to weak results  Net loss of US$49.8m but positive operating cash f

  3. Slide 3: Our Performance in 1H16 and Cover for 2H16

    Our Performance in 1H16 and Cover for 2H16 US$/day Handysize Supramax PB TCE per day 1H16 $6,080 $5,910 Market Index Rate $3,900 $4,570 PB Outperformance $2,180 $1,340 56% 29% PB TCE Cover Rate for 2H16 $7,670 $8,020 % of Contracted Days Covered 58% 65% 2016 Interim Results 3

  4. Slide 4: Cargo System Business Model – Outperforming Market Rates

    Cargo System Business Model – Outperforming Market Rates Cargo Contract Business Model – Outperforming Market Indices US$/day  Experienced staff & global office network 12,000 – Direct end-user interaction 10,000  Large fleet of high-quality substitutable ships $7,870  Large portfolio of cargo co

  5. Slide 5: Extreme Low Spot Rates in 1Q16

    Extreme Low Spot Rates in 1Q16 Dry Bulk Freight Market Since 1970 Baltic Handysize Index (BHSI) & Baltic Supramax Index (BSI) BDI/BFI 12,000 US$/day net* 11,000 $7,000 10,000 BSI: $6,790 8,000 $6,000 Conditions 6,000 5,500 BHSI: $5,440 are back to 1970s lows 4,000 4,000 $5,000 2,500 2,500 2,200 2,00

  6. Slide 6: Handysize Vessel Values

    Handysize Vessel Values US$ Million 55 50 45 40 35 30 Jul 2016 Newbuilding (35,000 dwt): 25 US$19.5m 20 15 All-time high gap 10 5 years (32,000 dwt): US$9.3m 5 04 05 06 07 08 09 10 11 12 13 14 15 16  All-time high gap between newbuilding and secondhand values  Discourages new ship ordering which w

  7. Slide 7: Minor Bulk Is Not So Minor

    Minor Bulk Is Not So Minor Estimated Full Year 2016 Global Dry Bulk Trade Est. 4.9 billion tonnes (+1% YOY) Pacific Basin 38% Minor Bulks & Grain is 48% focuses on these Minor Bulk of total Dry Bulk demand growing markets 2016E: +1.0% (+18mt) 10% Grain & Soybean 2016E: +3.7% (+17mt) 23% 29% Coal Iro

  8. Slide 8: Chinese Dry Bulk Imports Growth in 1H16

    Chinese Dry Bulk Imports Growth in 1H16 YOY Change 1H16 vs 1H15 YOY Growth: Mil Tonnes 7 Minor Bulks + 2 Major Bulks: +54 mt (+7%) 50  Excluding Iron Ore: +13mt (+6%) 41  Excluding Iron Ore & Coal: +5mt (+4%) 40 30 20 8 10 3 2 3 1 0 -0.2 -0.4 -3 -10 Iron ore Coal Soybean Logs Mang Ore C-Conc Ferti

  9. Slide 9: Self Correcting Supply Factors

    Self Correcting Supply Factors New Vessel Ordering is Down Fleet Growth is Reducing Per quarter annualised 18% Total Dry Bulk In % of fleet (dwt) 16% YOY Net Fleet 25% Growth (%) 14% 20% 12% No Orders 10% 15% Since April (Except VLOC) 8% 10% 6% 5% 4% Lowest fleet growth since Oct 2003 2% 0% 2012 201

  10. Slide 10: Dry Bulk Supply & Orderbook

    Dry Bulk Supply & Orderbook Handysize Orderbook 315 vessels (11.64 million dwt) m Dwt 6 6.9% Orderbook 1H16 Scrapping as Average Over as % of Age 20 Years % of Existing Fleet 5 45% Existing (annualised) Shortfall 5.6% Fleet 4 Handysize 3 (25,000-39,999 dwt) 15% 8 10% 5% 2.8% 7.0% 3.9% 2 1 Handymax (

  11. Slide 11: Dry Bulk Supply & Demand

    Dry Bulk Supply & Demand % Supply: 16.0  1H16 net fleet growth: 0.7% (Handysize: 1.4%)  New deliveries partly offset by increased scrapping 14.0 (Handysize: 3.9% new deliveries vs 2.5% scrapping) 12.0  Higher oil prices a positive factor:  Reduces the sensitivity of ship operating speeds 10.0 to

  12. Slide 12: 2016 Interim Financial Highlights

    2016 Interim Financial Highlights 1H16 1H15 US$m Dry Bulk (60.4) (15.4) Towage (0.1) 1.4 Others (1.1) (0.6) Underlying loss (61.6) (14.6)  Unrealised derivative income 13.7 16.7  Sale of towage assets (1.9) 3.7 (Loss)/Profit attributable to shareholders (49.8) 5.8  Dry bulk affected by a record l

  13. Slide 13: 1H16 Pacific Basin Dry Bulk

    1H16 Pacific Basin Dry Bulk Handysize 1H16 1H15 Change Revenue days (days) 23,070 26,620 -13% TCE earnings (US$/day) 6,080 7,940 -23% Owned + chartered costs (US$/day) 7,300 7,870 -7% Handysize contribution (US$m) (30.2) (0.6) Supramax Revenue days (days) 14,180 10,280 +38% TCE earnings (US$/day) 5,

  14. Slide 14: 1H16 Daily Vessel Costs – Handysize

    1H16 Daily Vessel Costs – Handysize Finance cost Charter-hire : Short-term (ST) / Long-term (LT) As at 30 June 2016 Depreciation Charter-hire : Index-linked Opex Inward Charter Commitments US$/day Owned Chartered Days & rates 10,000 Blended US$7,300 (2015: US$7,930) 2016 & 2017 8,460 Vessel Days 8,0

  15. Slide 15: 1H16 Daily Vessel Costs – Supramax

    1H16 Daily Vessel Costs – Supramax Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 30 June 2016 Opex Owned Chartered US$/Day Inward Charter Commitments Blended US$6,370 (2015: US$8,190) Days & Rates 10,000 8,770 2016-2017 8,490 Vessel Days

  16. Slide 16: 1H16 Balance Sheet

    1H16 Balance Sheet US$m 30 Jun 16 31 Dec 15 Vessels & other fixed assets 1,596 1,611 Total assets 2,171 2,146 Total borrowings 872 926 Total liabilities 1,104 1,175 Net assets 1,067 971 Net borrowings (total cash US$406m) 466 568 Net borrowings to net book value of property, plant and equipment 29%

  17. Slide 17: Borrowings and Capex

    Borrowings and Capex As at 30 June 2016 Bank borrowings: US$642m , undrawn committed bank facilities US$272m Convertible bonds, face value US$249m, book value US$230m Vessel capital commitments: US$237m 2016 Interim Results 17

  18. Slide 18: Cash Flow

    Cash Flow As at 30 June 2016 Operating cash flow US$7.7m EBITDA US$(8.3)m 2016 Interim Results 18

  19. Slide 19: Our Outlook and Strategy

    Our Outlook and Strategy Dry Bulk Outlook Pacific Basin Benefits:  Recent activity has supported stronger rates since February lows Now fully Handy focused  Minor bulk demand is not so minor – Growing & less dependent on China  Very negative sentiment has tempered in recent weeks, but expect a Bu

  20. Slide 20: 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,

  21. Slide 21: Appendix: Pacific Basin Overview

    Appendix: Pacific Basin Overview  A leading dry bulk owner/operator of Handysize & Supramax dry bulk ships  Cargo system business model – outperforming market rates  About 200 dry bulk ships on the water serving major industrial customers around the world  Hong Kong headquarters, 12 offices worl

  22. Slide 22: 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

  23. Slide 23: Pacific Basin Dry Bulk – Diversified Cargo

    Appendix: Pacific Basin Dry Bulk – Diversified Cargo   Diverse range of commodities reduces product risk China and North America were our largest market More than  60% of business in Pacific and 40% in Atlantic 400 customers! 2016 Interim Results 23

  24. Slide 24: Pacific Basin Dry Bulk – Earnings Cover

    Appendix: Pacific Basin Dry Bulk – Earnings Cover As at 22 July 2016 Handysize Supramax Contracted Revenue Days 46,600 23,250 Days 42,490 Days Days 36,350 17,300 Days Days 2H 2H 58% 2H 65% $8,740 58% $8,020 $7,670 2H 10,920 FY16 62% FY16 Days 81% $9,420 86% 14,180 26,620 23,070 $6,600 $6,530 days 10

  25. Slide 25: Fleet List – July 2016

    Appendix: Fleet List – 1 July 2016* Pacific Basin Dry Bulk Fleet: 229 Average age of core fleet: 7.3 years old Owned Chartered Total Delivered Newbuilding Delivered* Newbuilding Handysize 70 7 59 5 141 Supramax 16 5 65 0 86 Post-Panamax 1 0 1 0 2 Total 87 12 125 5 229 PB Towage : 7 Owned Tugs 5 Barg

  26. Slide 26: Experienced Management - Team

    Appendix: Experienced Management - Team Chairman & BOD Numbers Indicate Years in Company / Years in Shipping CEO Mats Berglund Asset Management 4/30 Morten Ingebrigtsen Finance & Accounting, CFO 27/30 Andrew Broomhead 13/13 HR P.B. Subbiah Company Secretary & Risk 13/22 Kitty Mok 20/20 CTO, Newbuild

  27. Slide 27: Sustainability

    Appendix: Sustainability  Applying sustainable thinking in our decisions and the way we run our business  Creating long-term value through good corporate governance and CSR Corporate Social Responsibility (CSR)  Guided by strategic objectives on (i) workplace practices (primarily safety), (ii) th

  28. Slide 28: Convertible Bonds Due 2018

    Appendix: Convertible Bonds Due 2018 Issue size US$123.8 million Maturity Date 22 October 2018 (6 years) Investor Put Date and Price 22 October 2016 (4 years) at par PB’s Call Option 1) Trading price for 30 consecutive days > 130% conversion price in effect 2) >90% of Bond converted / redeemed / pur

  29. Slide 29: 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

  30. Slide 30: Understanding Our Core Market

    Appendix: Understanding Our Core Market 2016 Interim Results 30

  31. Slide 31: Dry Bulk Seaborne Trade in 2015

    Appendix: Dry Bulk Seaborne Trade in 2015 (Volume) Million Tonnes YOY Change Iron Ore 1,367 Coal 1,149 -5% 2% Sub major bulk total 2,516 -1% Bauxite / Alumina 122 16% Soybean 127 9% Copper Concentrates 26 8% Steel Products 322 5% Sugar 56 4% Fertiliser 120 4% PB Focus Agribulks 162 3% Forest Product

  32. Slide 32: Estimated 2016 Global Dry Bulk Volumes

    Appendix: Estimated 2016 Global Dry Bulk Volumes Expected Global Dry Bulk Seaborne Trade Growth in FY 2016 (Volume) YOY Change Million Tonnes Iron Ore 1,402 3% Coal 1,105 2% Sub major bulk total 2,507 0.5% Copper Concentrates 29 12% Sugar 59 5% Soybean 141 9% Cement 109 6% Forest Products 350 2% Gra

  33. Slide 33: China Dry Bulk, Coal & Iron Ore Trade

    Appendix: China Dry Bulk, Coal & Iron Ore Trade Chinese Dry Bulk Trade China Coal Trade China Iron Ore Sourcing % of total dry for Steel Production Mil tonnes bulk trade Mil Tonnes Mil Tonnes 2100 32% 1,400 400 1,284 1800 26% 26% 28% 1,281 350 1,200 1,532 24% 1,516 1500 300 988 1,000 953 20% 250 120

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