Wallenius Wilhelmsen Asa · OSL:WAWI
Wallenius Wilhelmsen Asa — Debt Investor Presentation (April 2022)
54 slides from Wallenius Wilhelmsen Asa's debt investor presentation, April 2022
Slide 1: Sustainability-Linked Bond Investor Presentation April 2022
Sustainability-Linked Bond Investor Presentation April 2022
Slide 2: Disclaimer (1/3)
Disclaimer (1/3) This presentation (the “Presentation”) has been prepared by Wallenius Wilhelmsen ASA (“Wallenius Wilhelmsen ASA” or the “Company”, and together with its subsidiaries the “Group”) with the assistance of Danske Bank, Norwegian Branch; DNB Markets, a part of DNB Bank ASA; Nordea Bank A
Slide 3: Disclaimer (2/3)
Disclaimer (2/3) The merits or suitability of investing in any securities previously issued or issued in the future by the Company for any investor’s particular situation must be independently determined by such investor. Any such determination should involve, inter alia, an assessment of the legal,
Slide 4: Disclaimer (3/3)
Disclaimer (3/3) The Bonds may be offered to and directed at specific addressees who, if in the United Kingdom, are “qualified investors” within the meaning of Article 2(e) of Regulation (EU) 2017/1129 as it forms part of UK law by virtue of the European Union (Withdrawal) Act and who are: (i) perso
Slide 5: Summary of risk factors
Summary of risk factors The following is a summary of key risks. Please see pages 48-54 for a full description of the risk factors. Risks related to the Group and the market in which it operates Risks related to the Bonds and the Bond Issue ▪ Risks related to change in production patterns ▪ The Bond
Slide 6: Investment highlights
Investment highlights Global market leader in vehicle logistic segment Long-term customer base and diversified business model Strong history of free cash flow Solid market fundamentals and results Ambitious carbon target and commitment to sustainability
Slide 7: Agenda
Agenda 1. WAWI in brief 2. Sustainability 3. Market update 4. Financial update 5. Investment highlights
Slide 8: A logistics provider built on a strong history
A logistics provider built on a strong history ~8,200 131 Employees Vessels in operation • 2017 merger of companies with >150-year across 29 (Q4-21) history countries • Listed on Oslo Stock Exchange (ticker: WAWI) with a market cap of USD 3.1bn* • Wilh. Wilhelmsen Holding ASA and Wallenius Lines AB
Slide 9: A history of innovation and adaptation
A history of innovation and adaptation Wilhelmsen Group American Roll-on Roll-off Carrier EUKOR o Merger creating Wallenius Wilhelmsen Logistics o Founded in Tønsberg, (ARC) o Formed as Wilhelmsen Group and ASA as a listed company incorporating EUKOR, Norway by Morten W. o Founded by Wilhelmsen Grou
Slide 10: Limited direct impact on our business from Russian invasion of Ukraine
Limited direct impact on our business from Russian invasion of Ukraine The invasion of Ukraine is a tragedy. Our deepest sympathy goes out to the people of Ukraine, and our thoughts are with the millions of innocent people affected. WAWI has suspended operations in Russia and Belarus until further n
Slide 11: Prospects from 2021 Annual Report
Prospects from 2021 Annual Report Released 23 March 2022 ○ In the absence of further volatility and disruptions to supply- chains, we expect to further improve financial flexibility and help drive shareholder value creation based on: ○ Shipping supply-demand balance expected to remain favourable mid
Slide 12: Premium end-to-end supply management
Premium end-to-end supply management Premium end-to-end supply management
Slide 13: Our business segments
Our business segments Shipping services Logistics services Government services Share of EBITDA* Highlights: Share of EBITDA* Highlights: Share of EBITDA* Highlights: • Worldwide deep-sea • 8 terminals • RoRo shipping cargo, transportation network • Inland distribution networks 5% breakbulk, vehicles
Slide 14: Shipping benefits from a diversified customer portfolio with long-term contracts
Shipping benefits from a diversified customer portfolio with long-term contracts AUTO HIGH & HEAVY AND BREAKBULK ▪ Majority of volumes from auto ▪ High & heavy (“H&H”) and breakbulk maximize cubic utilization ▪ Unique handling capabilities for high & heavy and breakbulk ▪ Main customers include all
Slide 15: We are the market leader and the #1 operator globally within Shipping services
We are the market leader and the #1 operator globally within Shipping services Four decades of leading the High & Heavy space CURRENT FLEET BY OPERATOR GROUP FLEET CHARACTERISTICS Average max ramp capacity, tons 300 862 250 WW Ocean Capacity, kCEU* 200 GRIMALDI 150 HAUTO K LINE EUKOR 100 MOL 50 GLOV
Slide 16: Logistics services portfolio enable us to provide end-to-end services
Logistics services portfolio enable us to provide end-to-end services VEHICLE PROCESSING HIGH & HEAVY SERVICES TERMINAL SERVICES INLAND / SUPPLY CHAIN Vehicle Processing Vehicles Processed* Equip Processing Centre Machines Processed* Marine Terminals Units Handled* Inbound Distribution Units Moved*
Slide 17: Our strategy to strengthen our competitive advantage
Our strategy to strengthen our competitive advantage End-to-end supply chain Expand to full lifecycle Drive operational Lead the journey to zero orchestration effectiveness emissions Digitalization Supreme customer Efficiency Zero emission experience 17
Slide 18: Agenda
Agenda 1. WAWI in brief 2. Sustainability 3. Market update 4. Financial update 5. Investment highlights
Slide 19: Our commitment to change is not limited to climate action
Our commitment to change is not limited to climate action Principles of Governance People Planet Prosperity Transparent, with strong Safe & inclusive workplace Decarbonize and reduce Solving the biggest ethical business conduct where human rights are our environmental impact challenges while creatin
Slide 20: We target to reduce carbon intensity by more than 50% from 2008 to 2030
We target to reduce carbon intensity by more than 50% from 2008 to 2030 We have been in the forefront of responsible recycling, maritime anti-corruption and promoting the sulphur cap We are committed to We reduced fleet CO2 reduce fleet CO2 intensity* from 2008 to intensity from 2019 2019 by: to 203
Slide 21: We are launching a Sustainability-Linked Financing Framework
We are launching a Sustainability-Linked Financing Framework The Framework is published on our website together with: • A Second Party Opinion from CICERO Shades of Green • A Verification Statement from DNV 21
Slide 22: The Framework will be used to link new financings with sustainability objectives
The Framework will be used to link new financings with sustainability objectives KPI • CO2 intensity measured by CII* as reported to IMO DCS each year, calculated on the Controlled fleet Fleet weighted average • Controlled fleet includes 125 (per Q4-21) owned and long-term carbon intensity charter v
Slide 23: Our target to reduce CO2 intensity by 27.5% from 2019-2030 is ambitious
Our target to reduce CO2 intensity by 27.5% from 2019-2030 is ambitious For the Framework, we focus on intensity rather than absolute emissions to avoid problems of comparability over the years Choice of KPI • The Shipping segment represent 99% of the group’s total CO2 emissions* • CO2 intensity all
Slide 24: Our journey towards zero takes place every day
Our journey towards zero takes place every day Day-to-day Long-term Digitalization of fleet Advanced Bio-fouling weather management Future fuels Future vessels Future tech routing techniques solutions “Energy efficiency is the unsung hero of the energy transition” Remi Eriksen, CEO DNV 24
Slide 25: Select overview of initiatives to reach the SPT
Select overview of initiatives to reach the SPT – energy efficiency is the key Technical upgrades • Energy saving solutions: hull cleaning, biofouling • Energy efficiency upgrades & retrofits, including shore power capacity Operational improvements • Optimize each port pair of the voyage • Collabora
Slide 26: Key Sustainability-Linked Bond characteristics based on Framework
Key Sustainability-Linked Bond characteristics based on Framework CO2 KPI & Applicable Interim SPT KPI: Average CO2 intensity, measured by weighted CII on the Controlled Fleet SPT: The Company’s commitment of 27.5% reduction by 2030 from 2019 baseline Applicable Interim SPT: A minimum 10.1% reductio
Slide 27: Reporting and verification under the Framework
Reporting and verification under the Framework Reporting o WalWil will provide annual Sustainability-Linked Finance Progress Reports with information including KPI performance, any recalculations if applicable, and any updates on the emission reduction strategy o Sustainability-Linked Finance Progre
Slide 28: Second Party Opinion by CICERO Shades of Green
Second Party Opinion by CICERO Shades of Green Alignment with the Sustainability Linked Loan / Bond Principles “Based on this review, this Framework is found in alignment with the principles.” KPI “The framework’s sole KPI is WalWil’s fleet average carbon intensity, using the Carbon Intensity Indica
Slide 29: Agenda
Agenda 1. WAWI in brief 2. Sustainability 3. Market update 4. Financial update 5. Investment highlights
Slide 30: High underlying demand from consumers not reflected in sales figure in Q1
High underlying demand from consumers not reflected in sales figure in Q1, for 2022FY we still expect increased sales figures despite the unrest in Eastern Europe LV SALES LV DEEPSEA LIGHT VEHICLE SALES OUTLOOK +8% +3% +2% YoY Q1-22* (unit growth) -5.4% -5.9% o We still expect increased sales figure
Slide 31: Manufacturers struggling to meet strongest H&H demand since 2012
Manufacturers struggling to meet strongest H&H demand since 2012 due to supply issues Limited direct impact on addressable machinery cargo from Russian invasion but further disruptions to supply chains CONSTRUCTION MINING AGRICULTURE OEM SALES OUTLOOK3 +25% +14% YoY Q4-211,2 (unit growth) +28% +65%
Slide 32: Tight tonnage situation - limited recycling and orderbook relatively low
Tight tonnage situation - limited recycling and orderbook relatively low New orders have a lead time of 3-4 years. Easing of current supply chain inefficiencies will add capacity GLOBAL FLEET* End Q1 (end Q4) #43 (43) #47 (39) 95% (96%) vessels built between fleet utilization rate in vessels in orde
Slide 33: Agenda
Agenda 1. WAWI in brief 2. Sustainability 3. Market update 4. Financial update 5. Investment highlights
Slide 34: Financial highlights – Q4 2021
Financial highlights – Q4 2021 RESULTS (USDm) KEY FINANCIAL METRICS Total revenue Adjusted EBITDA ROCE* (%) Q3-21 Q4-21 990 1 078 306 +7.6 10.2 Group 822 223 150 +3.8 Net profit 65 98 862 279 787 593 195 Adj. EBITDA Shipping 112 22.5% 28.4% Equity ratio (%) margin +1.7 205 184 199 28 36.0 +0.3 2
Slide 35: Leverage below pre-pandemic levels on higher EBITDA and lower net debt
Leverage below pre-pandemic levels on higher EBITDA and lower net debt Total revenue, USDm Adjusted EBITDA, USDm 4 063 3 909 3 884 837 865 706 3 027 2 958 606 536 2017 2018 2019 2020 2021 2017 2018 2019* 2020 2021 Net Debt, USDm NIBD/ Adj. EBITDA 3 646 3 427 3 418 2 968 3 100 6.4 5.1 4.2 4.4 4.0 201
Slide 36: Solid balance sheet and strong cash position
Solid balance sheet and strong cash position COMMENTS BALANCE SHEET 31.12.2021 Liquidity position 31.12.2021 USD billion USD million • Equity ratio at 36.0% Assets Equity & Liabilities • Solid cash position of USD 710m 7.8 7.8 • Net debt at USD 3.4bn 1 059 349 • No material capex commitments 2.8 • 2
Slide 37: Resilient free cash flow has largely been applied towards reducing net debt
Resilient free cash flow has largely been applied towards reducing net debt Free cash flow* Net debt repayment (debt uptake less debt repayment) USD million USD million 178 178 180 40 28 30 160 20 1 0 140 118 -20 -11 -15 120 104 -40 100 96 86 -60 80 71 76 -80 -79 -74 60 -83 -100 47 40 33 37 -120 -10
Slide 38: Agenda
Agenda 1. WAWI in brief 2. Sustainability 3. Market update 4. Financial update 5. Investment highlights
Slide 39: Investment highlights
Investment highlights Global market leader in vehicle logistic segment Long-term customer base and diversified business model Strong history of free cash flow Solid market fundamentals and results Ambitious carbon target and commitment to sustainability
Slide 40: Appendix
APPENDIX A\Y Wallenius Wilhelmsen
Slide 41: Financing and covenants primarily on business unit level
Financing and covenants primarily on business unit level Unit / segment Wallenius Wilhelmsen ASA Typical covenants within the segment Limitation on ability to pledge assets Shipping, Government Logistics Minimum liquidity Minimum liquidity Current assets / current liabilities Net debt / EBITDA Loan
Slide 42: Investors demand transparency on issuers' sustainability issues and targets
Investors demand transparency on issuers’ sustainability issues and targets Certain high yield investors have developed a list of 21 questions which we answer in the next slides ESG questionnaire: General industry Please list the industry’s three biggest sustainability (ESG) related challenges and •
Slide 43: ESG questions: Environment (1/2)
21 ESG questions: Environment (1/2) ESG questionnaire: Environment Please list the firm's three primary risks related to climate change and if any, the firm's Risks climate related opportunities • Transitioning to low emitting propulsion technologies with uncertain long-term viability. • Lock-in emi
Slide 44: ESG questions: Environment (2/2)
21 ESG questions: Environment (2/2) ESG questionnaire: Environment Transition related risks (for example changed customer preferences or legislation): Do you In addition to the identified climate risks listed on the previous page, we anticipate increased focus from investors, lenders, and anticipate
Slide 45: ESG questions: Social
21 ESG questions: Social ESG questionnaire: Social Does the firm have a history of accidents? If so, how have these been managed? Are • Wallenius Wilhelmsen track all incidents, including first aid, medical treatment, lost time injuries and quality incidents. Any fatalities, there any preventive mea
Slide 46: ESG questions: Governance (1/2)
21 ESG questions: Governance (1/2) ESG questionnaire: Governance Do all staff members receive continuing education on anti-corruption? Is there an external • At Wallenius Wilhelmsen we strive to work in an atmosphere of openness and responsible and ethical business conduct. whistle-blower function?
Slide 47: ESG questions: Governance (2/2)
21 ESG questions: Governance (2/2) ESG questionnaire: Governance Which KPIs dictate the remuneration to management (are sustainability and diversity goals Wallenius Wilhelmsen’s remuneration policy covers all employees and is developed to ensure the Company attracts and retains included)? competent
Slide 48: Risk factors (1/7)
Risk factors (1/7) Investing in bonds issued by the Company involves inherent risks. Prospective investors should carefully consider, among other things, all information in this Presentation, including the risk factors set out below, before making an investment decision. This section addresses both
Slide 49: Risk factors (2/7)
Risk factors (2/7) Risk related to change in production patterns The geographical pattern of production and sales of cars and rolling equipment may change going forward, because of, inter alia, restructuring in the industries, growing protectionism and currency concerns. A potential shift in the bal
Slide 50: Risk factors (3/7)
Risk factors (3/7) Geopolitical risk and sanctions The Group is active in a number of regions, which expose the Group to political, governmental and economic instability, which could in turn harm operations. Changes in the legislative, political, governmental and economic framework in the regions in
Slide 51: Risk factors (4/7)
Risk factors (4/7) Risks related to customer contracts There can be no assurance that the Group will be able to renew its existing customer contracts and/or establish additional customer agreements, or that any such future agreements will be on terms equally favourable to the Group as is currently t
Slide 52: Risk factors (5/7)
Risk factors (5/7) Liquidity risk Liquidity risk is the risk that the Group may not be able to meet its liabilities as they fall due. The Group’s policy on overall liquidity is to maintain a minimum liquidity to cover regular operating costs and serve as a cushion against temporary fall in revenues
Slide 53: Risk factors (6/7)
Risk factors (6/7) Interest-rate risk Interest rate risk is the risk that results from the variability of the NIBOR interest rate. The coupon payments, which depend on the NIBOR interest rate and the margin, will vary in accordance with the variability of the NIBOR interest rate. The interest rate r
Slide 54: Risk factors (7/7)
Risk factors (7/7) The Bonds are effectively subordinated to the secured debt of the Company The Bonds will be the Company’s direct senior unsecured obligations and will rank equal in right of payment (except as to claims preferred by operation of law) with all of its other existing and future senio
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