Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — Mercator Lines (Singapore) — Q1 FY2010 Earnings Presentation
33 slides from Singapore Exchange's earnings presentation, August 2009
Slide 1: Q1FY2010 Results
Mercator Lines (Singapore) Limited Stock Code : EE6 Q1FY2010 RESULTS QUARTER ENDED JUNE 30, 2009
Slide 2: Disclaimer
DISCLAIMER This document contains forward-looking statements which are statements that are not historical facts, including statements about our beliefs and expectations. Forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,” “will,” “could,”
Slide 3: Presentation Outline
PRESENTATION OUTLINE Corporate Highlights Financial Highlights Market Review Outlook 3
Slide 4: Corporate Highlights
TOR DOR A“ C LIC) WINE UENCE Lo a ‘CHTC RRRNPR EEA > ae leet
Slide 5: About Mercator
ABOUT MERCATOR MERCATOR GROUP Largest fleet owner of geared Panamaxes amongst Indian-Owned Shipping Companies Mercator Lines Limited (India) 100% Mercator International Pte. Blue Chip customer base including Ltd. iron ore major Vale, Tata Power, Arcelor Mittal Group, Cosco, Cargill, Glencore Gro
Slide 6: Our Strategy
OUR STRATEGY Trading Routes Deploy substantial portion of fleet capacity on long term contracts to ensure revenue visibility and also to insulate against freight volatility. China South Korea India Iron Ore Continue to capitalize on dry bulk opportunities from markets such as India and China. Iron O
Slide 7: Risk Management Strategy
RISKMANAGEMENT RISK MANAGEMENT STRATEGY STRATEGY Freight Bunker/ Fuel Currency Risks Accident Risk Volatility costs Deploy a substantial Natural hedge , Pass on increase portion of fleet Income, Insure all in bunker fuel capacity on long expenses and vessels term contracts costs for all long report
Slide 8: Awards & Recognitions
AWARDS & RECOGNITIONS Received recognition of Singapore 1000 Company – 2009 , listing Mercator among Singapore`s top 1000 performing companies Recipient of two of the reputed awards under Singapore Corporate Awards 2009 1. Best Annual Report Award (Bronze) for 2008 in the "$300 million to less t
Slide 9: Owned Vessels
OWNED VESSELS WITH AVERAGE AGE OF ABOUT 6 YEARS ON OUR PANAMAX VESSELS Book Capacity Age Value Sl. No Owned Vessels Type (DWT) (in years) Shipyard (US$M) 1 Prem Veena Gearless Kamsarmax 82,459 2 Tsuneishi Corp, Japan 58.7 2 Garima Prem Gearless Panamax 74,456 2 Hudong, China 56.3 3 Garv Prem Gearles
Slide 10: Chartered-in Vessels
CHARTERED-IN VESSELS Sl Chartered Type Capacity Age Country Charter Daily No. Vessels (DWT) (in Constructed Period charter cost years) (US$) 1 YK Sentosa Geared 73,625 9 Japan 2005 to Jun 2010 16,543 Panamax Sl To Be Type Capacit Age Country Expected Charter Daily No. Delivered y Constru- Delivery P
Slide 11: Strong Relations with Reputed Customers
STRONG RELATIONS WITH REPUTED CUSTOMERS Steel Authority of India Ltd. NCS Our strong relations with reputed end user customer base helps in reinforcing our position in the industry. 11
Slide 12: Our Long Term Contracts
OUR LONG TERM CONTRACTS Customers Type Contract Description Logistic services Consecutive Transportation of iron ore from Brazil to China Voyage Period: 14 years from May 2009 – March 2023 Contract Contract Value: US $209 million approximately Vessel: Prem Putli (VLOC) COA Transportation of
Slide 13: Staggered Contract Durations
STAGGERED CONTRACT DURATIONS CV/COAs Tata Power US$320m (Geared Panamaxes) June 08 - May 12 May 09 – March 2023 Vale USD 209 million(VLOC) Jan 08 June „10 Feb„14 Mar 2023 COSCO (US$39,500/ day) From 4Q2009 for 3 years To be named Time Charter Arcelor Mittal (US$60,000/day) Sept 08 - August‟10 Garima
Slide 14: Financial Highlights
WV MERCATOR FINANCIAL HIGHLIGHTS
Slide 15: Financial Highlights
FINANCIAL HIGHLIGHTS 23.2 Revenue (US $ Million ) EBIDTA (US $ Million) -57% (US $ Million) Net Profit 10.0 31.4 51.7 -31% -35% Q1FY2009 Q1FY2010 20.3 35.5 1,097 Operating Days 10% 999 Q1FY2009 Q1FY2010 Q1FY2009 Q1FY2010 Q1FY2009 Q1FY2010 Decline in spot market day rates and renewal of long term c
Slide 16: Performance Highlights
PERFORMANCE HIGHLIGHTS Revenue by Customer Revenue by Contract Days Others , 22% Short Term TATA, 31% Contracts 33% TMT Bulk Corp, 3% Cargill, 3% Q1FY2010 Vale, 6% North China Global Shipping, 12 Chartering( % Arcelor Long Term Mittal), 23% Contracts 67% Q1FY2010 Diversified and reputed end custom
Slide 17: Growth Highlights
GROWTH HIGHLIGHTS Revenue (US$’000) Net Profit (US$’000) 186,138 75,842 146,234 52,208 85,146 51,720 35,471 12,946 4,318 10,022 FY 06 FY 07 FY 08 FY 09 Q1FY2010 FY 06 FY 07 FY 08 FY 09 Q1FY2010 Sound business strategy and proactive business decisions steered consistent growth. 17
Slide 18: Balance Sheet Highlights
BALANCE SHEET HIGHLIGHTS (in US$ `000) 30th June 2009 30th June 2008 Cash & Cash Equivalents 12,649 109,937* ASSETS Trade Receivables 11,558 19,065 Vessel, Property & Equipment 592,478 437,992 Debt 260,517 279,258 LIABILITIES Trade Payables 6,011 10,620 Shareholders Equity 349,609 280,967 Debt Equit
Slide 19: Debt Repayment Commitments
DEBT REPAYMENT COMMITMENTS Our debt repayment commitments are structured to ensure cash flow flexibility 30.7 25.7 24.3 23.6 US$124 22.5 In USD FY 2010 @ FY 2011 FY 2012 FY 2013 FY2014 millions @ Repayments due during the period July 2009-March 2009 * Repayment schedule is towards principal payments
Slide 20: Operating Data
OPERATING DATA Q1FY2010 Q1FY2009 Number of vessels 11 8 OWNED Operating days 898 657 Fleet utilization % 99.9% 99.8% CHARTERED - Number of vessels 4 5 Operating days 198 342 IN Fleet utilization % 95.4% 98.3% Number of vessels 13 12 TOTAL FLEET Operating days 1,097 999 Fleet utilization % 99.1% 99.3
Slide 21: Market Review
MARKET REVIEW
Slide 22: Baltic Exchange Indices
BALTIC EXCHANGE INDICES Baltic Dry Index (BDI) Baltic Dry Index (Jan 09- June 09) 14000 5000 BDI during Q1FY2010 BDI during Jan 09 – Jun 09 12000 High - 4,291 Points 4500 High - 4,291 Points Low - 1,463 Points Low - 772 Points 4000 10000 3500 8000 3000 2500 6000 2000 4000 1500 1000 2000 500 0 0 Apr-
Slide 23: China's Iron Ore Imports
(In MT 0 5 10 15 20 25 tonnes) Million Jan/04 Mar/04 May/04 Jul/04 Sep/04 Nov/04 Jan/05 Brazil Mar/05 May/05 Jul/05 Sep/05 Nov/05 Australia Jan/06 Mar/06 May/06 Jul/06 India Sep/06 Nov/06 Jan/07 CHINA`s IRON ORE IMPORTS Mar/07 May/07 Jul/07 Sep/07 Nov/07 Jan/08 Mar/08 May/08 Jul/08 Sep/08 Nov/08 Jan
Slide 24: Dry Bulk Market - Overview
DRY BULK MARKET - OVERVIEW DEMAND SIDE SUPPLY SIDE Global financial turmoil, low trade activity High order book Low capacity utilization NEGATIVE High Stock piles in China FACTORS Moderate recovery observed since Jan 2009 POSITIVE FACTORS Stimulus packages from Governments Increase in de
Slide 25: Long Term Underlying Demand
LONG TERM UNDERLYING DEMAND DRY BULK SEABORNE TRADE (MILLION TONNES) 3500 3000 2500 1435.5 1383.1 1421.7 1474.6 1322.4 2000 1260.8 1500 578.8 586.7 581.1 588.6 529.2 468 1000 246.4 253.4 245.4 207 239.3 242.5 500 811.8 888.5 817.5 715.4 758.8 779.4 0 2005 2006 2007 2008 2009 2010 Iron Ore Coking Coa
Slide 26: Panamax Vessel Supply
PANAMAX VESSEL SUPPLY PANAMAX DELIVERIES & DEMOLITIONS 30 25 20 15 10 5 In Nos. 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Source: Drewry ; 4Q2008 forecaster Deliveries Demolitions Increased number of demolitions, cancellations of new buildings, delays in vessel deliveries *Panamax denotes panamax a
Slide 27: India – Strong Growth Prospects
INDIA – STRONG GROWTH PROSPECTS Forecasted new coal power generation capacity – India (GW) (Cumulative) 251 128 70 2007 2015 2030 Source: Drewry, Ministry of Power, GOI & World Energy Outlook, 2006 Announced Indian imported coal-fired based power projects Capacity Capacity Project State Agency Year
Slide 28: Outlook
WS MERCATOR OUTLOOK
Slide 29: Year Ahead
YEAR AHEAD Earnings Coverage for Q2 FY 2010 Un - Contracted 25% (276 Days) TCE Per day of US$ 27,500 per day Contracted 75% (828 Days)* Q2FY2010 (July 2009 – September 2009) Earnings coverage for Q1FY2010 maintained at 75% despite a challenging market No capital commitments at end of June 2009 T
Slide 30: Challenges and Strategy
CHALLENGES AND STRATEGY Market Challenges MLS Strategy Leverage its positioning in Indian market and the customized logistic solutions offered to Indian customers Drop in trade and freight rates Strong cash flows from our current long term contracts to discharge our financial commitments . Flexibili
Slide 31: Mercator's Coverage
MERCATOR’S COVERAGE REASEARCH HOUSE ANALYSTS SIAS Research Raveen Kuhadas raveen@siasresearch.com Ph: (65) 6227 2107 Kim Eng Rohan Suppiah rohan@kimeng.com Ph (65) 6432 1455 DBS Vickers Securities Wee Lee Chong weelee@dbsvickers.com Ph: (65) 6398 7971 31
Slide 32: Glossary
GLOSSARY •Under a COA, the ship owner provides capacity to transport a certain amount of cargo within a specified period from one place to a Contract of destination designated by the customer. Typically all of the ship`s Affreightment (COA) operating, voyage**and capital expenses are borne by the sh
Slide 33: Thank You
THANK YOU Investor Relations Contact: Ms. Cindy Tel: +65 6220 9320 E.Mail : ir@mllsg.com
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