Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — H1 2006 Earnings Presentation
39 slides from Pacific Basin Shipping's earnings presentation, Aug 22, 2006
Slide 1: Interim Results
Pacific Basin = = S| — Interim Results For the six months ended 30th June 2006
Slide 2: 1st Half 2006 Results Highlights
1st Half 2006 Results Highlights Profits – US$36.4 million (1H05: US$85.5million) EPS HK cents 21.95 (1H05: HK cents 52.30) Average handysize TCE rate achieved of US$14,400/day (1H05: 18,600/day) ROE 25% (1H05: 59%); Net Profit Margin 26% (1H05: 61%) Market now looks to be entering a cyclica
Slide 3: Outlook
Outlook Handysize physical revenue days and contract cover now stand at: Days Cover $/day 1H06 7,570 100% $14,400 A 2H06 8,620 77% $14,500*E 2006 16,190 88% $14,400*E 2007 18,550 23% $14,000*E Handymax physical revenue days and contract cover now stand at: Days Cover $/day 1H06 1,680 100% $14,16
Slide 4: Market Review
Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market Review Market
Slide 5: The Baltic Dry Index
The Baltic Dry Index 7,000 6,208 5,681 6,000 5,000 4,000 3,755 3,000 2,622 2,000 1,747 1,000 0 Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 5 www.pacbasin.com Source: Bloomberg 2343.HK
Slide 6: Dry Bulk – 1 year Time-Charter Rate
Dry Bulk – 1 year Time-Charter Rate $US/day Handysize Super Handymax Panamax Capesize 70,000 60,000 50,000 50,000 40,000 30,000 27,500 24,750 20,000 16,250 10,000 0 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 6 www.pacbasin.com Source: Clarksons 2343.HK
Slide 7: Demand – China's Iron Ore Imports
Demand – China’s Iron Ore Imports Mil Tons/ Month 2006 : average 26.9 30 2005 average :22.9 26.9 26.9 25.4 25 22.7 22.6 21.1 2004 average :17.3 20 19.0 16.9 17.8 2003 average :12.4 15.7 15 2002 average : 9.3 12.8 12.7 12.5 11.4 10.7 9.1 9.5 10 7.9 5 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 8: Demand – China's Cement Exports
Demand – China’s Cement Exports Mil Tons/ Month 2006 YTD average : 3.0 3.5 3.3 3.0 2005 average :1.9 2.6 2.4 2.4 2.5 2.0 1.7 2004 average :0.6 1.5 2003 average :0.5 2002 average : 0.4 0.9 1.0 0.7 0.7 0.6 0.5 0.4 0.4 0.4 0.4 0.5 0.5 0.4 0.3 0.5 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 9: Demand – China's Steel Exports
Demand – China’s Steel Exports Mil Tons/ Month 4.0 2006 YTD average : 2.9 3.5 3.5 3.0 2005 average : 1.7 2.5 2.2 2004 average : 1.2 2.1 2.0 1.9 1.7 1.6 1.5 2003 average : 0.6 1.4 1.4 2002 average : 0.5 1.0 1.0 0.7 0.6 0.6 0.6 0.5 0.5 0.5 0.4 0.5 0.3 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 10: World Fleet & Orderbook
World Fleet & Orderbook Existing Orderbook % of Existing Fleet 358 114 Tanker Aug 06 Aug 05 337 90 32% Dry Bulk Aug 06 357 67 Aug 05 335 68 19% Container Aug 06 120 57 Aug 05 105 56 48% Other types Aug 06 104 27 26% Aug 05 101 19 0 100 200 300 400 500 Mil dwt 10 www.pacbasin.com Source: Clarksons 23
Slide 11: Drybulk Fleet & Orderbook
Drybulk Fleet & Orderbook Orderbook Average Existing 2005 2006 2007 2008+ Fleet (%) Age Panamax Capesize Jul Aug 116 5 6 16 06 4 23% 11.0 Aug Jul 05 107 8 15 Jul Aug 06 98 5 8 6 19% 11.5 3 Aug Jul 05 91 9 10 Handymax Jul Aug 69 3 4 5 06 3 17% 11.4 Aug Jul 64 6 6 05 1 1 Handysize Jul Aug 35 2 11% 17.
Slide 12: Dry Bulk Scrapping
Dry Bulk Scrapping Orderbook Fleet > 20 years Dwt million 50 875% 45 40 35 30 27.5 25 114% 67% 537% 18.7 20 119% 15 12.7 10 5.2 3.5 5 0 Capesize Panamax Handymax Handysize Handysize 100K+ 60-100K 40-60K (10-40K) (25-35K) 12 www.pacbasin.com Source: Clarksons 2343.HK
Slide 13: Supply: Age Profile of Global Handysize Fleet
Supply: Age Profile of Global Handysize Fleet (within 25-35K segment) >15 years old: >25 years old: 717 Vessels (62%) 100 404 Vessels (32%) 90 80 No. of Vessel 70 Our Fleet 60 Age Order Book: 9% 6 Years 50 40 30 20 10 0 <7676 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01
Slide 14: Dry Bulk Carrier Sale & Purchase Market
Dry Bulk Carrier Sale & Purchase Market 250 225 Rebased price index (Jan 00 = 100) 200 175 150 125 100 75 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 14 www.pacbasin.com Source: Clarksons 2343.HK
Slide 15: Summary
Summary Unseasonal summer upturn following weaker period from Feb to May Oversupply concerns for 1H have proved unfounded Expect rates for 2H06 and 2007 to improve Rapidly increased cargo demand has absorbed supply of new vessels, driven by Chinese iron ore imports and cement exports Commo
Slide 16: Business Review
Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Review Business Rev
Slide 17: Fleet
Fleet Number of vessels Handymax Handysize 80 Owned Chartered 71 70 Managed 2 Newbuilding 3 12 60 Operating Lease 50 32 50 45 4 17 10 Finance 4 40 Operating Lease 7 Lease 27 30 17 9 Finance Lease 31 20 22 33 10 17 4 2 6 0 1 2 31 Dec 2004 31 Dec 2005 20 Aug 2006 17 www.pacbasin.com Delivered Delivere
Slide 18: Cargoes Carried
Cargoes Carried Log & Forest Fertilisers Products 10% Other Bulks 13% 4% Fertilisers Grains Ore 7% 9% 10% Agricultural Steel & Products Scrap Grains 8% 6% 22% 7.3mt Petcoke Other 1.2mt 5% Bulks* 27% Cement Coal/Coke Steel & 12% 8% Scrap 3% Salt Alumina 4% 10% Cement Concentrates Petcoke Coal/Coke Ce
Slide 19: Load Areas (IHC)
Load Areas (IHC) Asia Pacific Atlantic/Others '000 MT 1H 2006 - 80% (5.9mil mt) 1H 2006 - 20% (1.4mil mt) 1H 2005 - 74% (4.5mil mt) 1H 2005 - 26% (1.6mil mt) 2500 1H 2006 2000 1H 2005 1500 1000 500 0 Australia US West China New S.E. Asia Japan Korea South Europe Indian US East Africa Coast Zealand A
Slide 20: Discharge Areas (IHC)
Discharge Areas (IHC) '000 MT Asia Pacific Atlantic/Others 1H 2006 - 83% (5.6 mil mt) 1H 2006 - 17% (1.2mil mt) 1H 2005 - 84% (4.6 mil mt) 1H 2005 - 16% (0.9mil mt) 1200 1H 1H 2006 2005 1000 Front-hauls Back-hauls 800 600 400 200 0 US West Australia S.E. Asia New Japan China Korea Indian South Afric
Slide 21: Handymax
Handymax Handymax operation began in earnest during 1H06 Customer-driven response to demand for larger vessels to transport certain cargo consignments Leveraging off existing IHC customer base 1.2m tonnes of cargo carried during 1H06 Total of 6 “core” vessels including 2 second hand purcha
Slide 22: Handymax & FFAs
Handymax & FFAs …FFAs are paper contracts used to hedge a future physical ship or cargo Value of paper contracts must be “marked to market” at each accounting period end without regard for the value of the corresponding physical ship or cargo “Cost” of US$3.5m in first half 2006 is hedge for p
Slide 23: Other Business
Other Business Pacific Basin is actively developing its business model towards integrated supply chain management… Middle East China Record high energy prices fuelling Expanding relationship with economic growth largest domestic power producer JV with Govt of Fujairah for Potential acquisi
Slide 24: Financial Review
Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial Review Financial R
Slide 25: Results - Highlights
Results - Highlights 1H 2006 1H 2005 TCE Earnings (US$mil) 140.4 140.9 Reported net profit 36.4 85.5 Less: Vessel disposals net (gain) - (12.2) Unrealised MTM net losses / (gains) 2.9 (5.8) Profit before disposal gains and derivatives MTM 39.3 67.5 Basic earnings per share (US cents) 2.83 6.75 Divid
Slide 26: Results – Freight & Charter-hire Analysis
Results – Freight & Charter-hire Analysis Drivers of results 1H06 1H05 % Change Handysize Revenue days 7,570 6,750 +12% TCE earnings (US$/day) 14,400 18,600 -22% Owned + chartered cost (US$ / day) 8,540 7,680 +11% Handymax Revenue days 1,680 350 +380% TCE earnings (US$/day) 14,150 8,460 +67% Charter
Slide 27: Results - Derivatives under HKAS39
Results - Derivatives under HKAS39 Effect of HKAS39 : Shifts financial performance of future contracts into current period US$mil Realised Unrealised 1H06 1H05 (Cash) + (Non Cash) = Net Gains / (Losses) - Interest rate swap contracts 0.1 (0.4) (0.3) (0.3) - Bunker swap and forward contracts 2.5 1.0
Slide 28: Daily Vessel Costs - Handysize
Daily Vessel Costs - Handysize US$/day Opex Depreciation Finance cost Direct Overhead Charter -hire 10,000 9,050 8,850 9,000 500 420 8,370 660 8,000 7,640 950 7,000 970 2,000 1,970 6,000 1,500 5,000 2,510 8,630 4,000 8,190 2,420 3,000 2,000 2,750 2,940 1,000 0 FY05 1H06 FY05 1H06 Owned Chartered -in
Slide 29: Balance Sheet - Highlights
Balance Sheet - Highlights 30 Jun 06 31 Dec 05 (US$mil) Net book value of fixed assets * 590.2 504.3 Gross borrowings 380.3 316.9 Cash 42.6 83.7 Net borrowings 337.7 233.2 Shareholder's equity 289.6 309.3 (%) Net borrowings / Fixed assets 57% 46% Net borrowings / Shareholder's equity 117% 75% •34 De
Slide 30: Cashflow - Highlights
Cashflow - Highlights US$mil 1H06 1H05 Operating cash inflows 57.3 90.4 Investing cash in/(out) flows (91.4) 23.2 - Payments for vessels (97.5) (77.6) - Sales of vessels - 103.1 - Others 6.1 (2.3) Financing cash (out)/inflows (5.5) (126.7) - Net drawdown / (repayment) of bank loans 71.0 (76.2) - Rep
Slide 31: Dividends
Dividends Payout policy of not less than 50% of attributable profits Actual payout ratio has consistently exceeded the minimum Maintain March 2006 statement of at least HK cents 40 per share in aggregate for FY2006 (per share) Year Dividend US$mil HK Cents Payout Ratio 2005 (A) Interim 49.5 30
Slide 32: Capital Commitments & Purchase Options
Capital Commitments & Purchase Options At 30 June 2006 Capital Commitments 2006 2007-2010 > 2010 Total US$mil 12 Handysize * 62.0 167.7 - 229.7 2 Handymax 53.4 - - 53.4 Total commitments 115.4 167.7 - 283.1 Purchase Options Avg age Avg option Number of vessels Earliest year in which of exercise opti
Slide 33: Lease Commitments
Lease Commitments At 30 June 2006 2H06 2007-2010 > 2010 Total US$ mil PB Handysize 21.7 137.2 40.1 199.0 PB Handymax 38.6 35.3 - 73.9 IHC Pool 7.3 - - 7.3 Total 67.6 172.5 40.1 280.2 Days PB Handysize 2,210 14,910 4,600 21,720 (79%) PB Handymax 2,260 3,040 - 5,300 (19%) IHC Pool 520 - - 520 (2%) Tot
Slide 34: Investment Capacity
Investment Capacity Net = US$180.5m Potential vessel expenditures US$170 mil Investment Interim US$ m 453 capacity dividend -33.2 500 450 Potential bank borrowings 400 Potential 350 272 Capital borrowings on 171.1 300 commitments existing fleet 250 200 Cash at 30 Jun 06 42.6 150 283 Cash 100 181 50
Slide 35: Vessel Activity Summary
Vessel Activity Summary Estimated 1H06 Days Actual 2H06 2006 2007 25000 22,350 21,560 20000 2,494 Cargo 15000 12,650 15,460 Uncovered 9,700 2,494 10000 89% 5000 Covered A 0 + = 5,000 Ships 10,000 Coverage = A/B 100% 9,700 B 15,000 12,650 20,000 25,000 Handysize Handymax FFAs 21,560 22,350 35 www.pac
Slide 36: Outlook & Prospects
Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects Outlook & Prospects
Slide 37: Earnings Coverage - Handysize
Earnings Coverage - Handysize 20,000 Unfixed 18,550 days Fixed 18,000 16,190 days 16,000 77% 14,200 days 12% Vessel Revenue Days 14,000 12,000 10,000 88% 8,000 6,000 4,000 23% 2,000 Average Average Average daily rate daily rate daily rate 0 US$17,100 US$14,400* US$14,000* 2005 2006 2007 *Includes US
Slide 38: Summary
Summary Group profits for the period were US$36.4 million Weakest first quarter in the dry bulk markets for three years Absence of disposal gains Strengthening dry bulk market signals solid cargo demand China, Japan, and Korea continue to drive up commodity import and export volumes The
Slide 39: 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,
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