Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — Q1 2017 Earnings Presentation
31 slides from Pacific Basin Shipping's earnings presentation, Apr 6, 2017
Slide 1: 2017 First Quarter Trading Update
2 Pacific Basin 2017 First Quarter Trading Update 6 April 2017
Slide 2: 2017 First Quarter Trading Update
2017 First Quarter Trading Update As at 31 March 2017 US$/day Handysize Supramax PB TCE per day 1 $7,460 $8,030 1Q Market Index Rate $6,300 $7,760 PB Outperformance YTD 18% 3.5% 2Q - 4Q PB Cover Rate $8,520 $10,090 % Cover for Remaining Contracted Days 37% of 29,520 days 65% of 11,210 days 1 Excludi
Slide 3: Earnings Cover in 2017
Earnings Cover in 2017 Contracted Revenue Days Handysize Supramax 41,900 Days 38,220 Days 19,500 Days 15,530 Days 2Q-4Q 2Q-4Q 29,520 11,210 FY17 days days 55% FY17 65% $7,950 37% 80% $10,090 34% 48% $8,520 $8,200 $8,990 $8,600 1Q 1Q 1Q 100% 100% 1Q 100% 100% 8,290 11,950 12,380 6,740 days days days
Slide 4: Market Freight Rates Development
Market Freight Rates Development Baltic Handysize Index (BHSI) US$/day net* $9,000 $8,080 31 Mar 2017: $8,000 $7,510 2016 $7,000 $6,000 $5,000 $3,760 2015 $4,000 $3,000 $2,000 Significant difference in development $1,000 since Sep 2016 $0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 2016 201
Slide 5: Freight Market Improves From Very Low Base
Freight Market Improves From Very Low Base Baltic Handysize Index (BHSI) and Atlantic vs Pacific Spot Rates Baltic Supramax Index (BSI) Atlantic Pacific US$/day net* $10,000 BSI: US$/day net* Supramax $8,750 14,000 $9,000 12,000 Atlantic $8,000 $8,270 10,000 $7,000 8,000 Pacific $6,000 $8,270 6,000
Slide 6: Global Dry Bulk Demand
Global Dry Bulk Demand Global Dry Bulk Seaborne Trade Growth in FY 2016 (Volume) Million Tonnes YOY Change Iron Ore 1,412 4% Coal 2016: 1,135 0% Sub major bulk total 2,547 2.0% Dry bulk volume growth: 1.2% Copper Concentrates 29 12% Dry bulk effective demand: 2.0% Sugar 62 11% Cement 109 6% Soyb
Slide 7: Secondhand Vessel Values Recovering
Secondhand Vessel Values Recovering Handysize Vessel Values US$ Million 55 50 45 40 35 31 Mar 2017: 30 Newbuilding 35,000 dwt: 25 US$20m 20 15 10 5 years old 32,000 dwt: US$14m 5 04 05 06 07 08 09 10 11 12 13 14 15 16 17 Improved freight market conditions supported increased vessel values Sale a
Slide 8: Dry Bulk Supply & Demand
Dry Bulk Supply & Demand YOY (%) Supply: 10 1Q17 net fleet growth: 1.5% Positive factors: 8 Fewer ships delivering in 2017-18 6 Higher oil prices reduces sensitivity of ship operating speeds to increasing freight rates 4 2.3% Ballast water management convention will encourage 2 scrapping o
Slide 9: Self Correcting Supply Factors
Self Correcting Supply Factors New Vessel Ordering is Down Fleet Growth Remains Moderate Total ordering vs 18% Total Dry Bulk existing fleet 16% Year-on-Year 50% 43% 14% Net Fleet Growth 40% 12% 10% 30% 8% 20% 6% 1 April 2017: 4% 3.3% 10% 2% 0.4% 2% 0% 0% 06 07 08 09 10 11 12 13 14 15 16 1Q17 03 04
Slide 10: Dry Bulk Supply
Dry Bulk Supply Handysize Orderbook 217 vessels (8.0 million dwt) Mil Dwt 6 7.0% Orderbook 1Q17 Scrapping as Average Over as % of Age 20 Years % of Existing Fleet 5 Existing as at 1 April 2017 Fleet (annualised) 4 4.2% Handysize 3 61% Shortfall (25,000-39,999 dwt) 10% 9 10% 0.5% 2.3% 2 1.6%% 3.3m 1.
Slide 11: 2016 Daily Vessel Costs – Handysize
2016 Daily Vessel Costs – Handysize Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 31 December 2016 Opex Owned Chartered Inward Charter Commitments US$/day Days & rates Blended US$7,320 (2015: US$7,930) 2016-2017 10,000 Vessel Days 8,460 7
Slide 12: 2016 Daily Vessel Costs – Supramax
2016 Daily Vessel Costs – Supramax Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 31 December 2016 Opex Owned Chartered Inward Charter Commitments US$/Day Days & Rates 10,000 Blended US$6,830 (2015: US$8,190) 2016-2017 8,490 8,590 Vessel D
Slide 13: Our Ability to Outperform
Our Ability to Outperform Our TCE Outperformance Compared to Market Our business model has been refined over many years. We are Baltic Handysize Index - net rate able to generate a TCE earnings premium over market rates PB Handysize Performance because of our high laden percentage (minimum ballast l
Slide 14: Cash Flow in 2016
Cash Flow in 2016 As at 31 December 2016 Operating cash flow US$49.5m EBITDA US$22.8m Borrowings decreased by US$94m due to: 2016CB repayment of US$106m 2018CB repayment of US$124m Net repayment of US$70m of secured borrowings Drew down US$205m of new secured borrowings 1Q17 Trading Update 1
Slide 15: Borrowings and Capex
Borrowings and Capex As at 31 December 2016 Secured borrowings (US$723.8million) Vessel capital commitments (US$119.1million) Convertible bonds (face value US$125million, book value US$115.4million, maturity July 2021) US$158m of undrawn committed borrowing including: US$140m of Japanese export
Slide 16: 2016 Balance Sheet
2016 Balance Sheet US$m 31 Dec 16 31 Dec 15 Vessels & other fixed assets 1,653 1,611 Total assets 2,107 2,146 Total borrowings 839 926 Total liabilities 1,066 1,175 Net assets 1,041 971 Net borrowings (total cash US$269m) 570 568 Net borrowings to net book value of property, plant and equipment 34%
Slide 17: Our Outlook and Strategy
www.pacificbasin.com Our Outlook and Strategy More on financial details: 2016 Annual Report Dry Bulk Outlook Pacific Basin Benefits: Demand is growing for agricultural products & construction material, our two largest cargo groups Fully Handy focused Infrastructure investment spending from China
Slide 18: We're Moving!
We’re Moving! Effective from 4 May 2017, our headquarters will be at the following new address: 31/F One Island South, 2 Heung Yip Road, Wong Chuk Hang Hong Kong All other contact details will remain unchanged 1Q17 Trading Update
Slide 19: 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,
Slide 20: 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
Slide 21: 2016 Annual Results – Highlights
Appendix: 2016 Annual Results – Highlights 2016 2015 Operating Cash Flow US$50m US$99m EBITDA US$23m US$93m Cash Position US$269m US$358m Net Gearing 34% 35% Record low dry bulk market conditions significantly undermined our results in 2016 Net loss of US$87m Our Handysize daily TCE earnings o
Slide 22: Strategic Model
Appendix: Strategic Model MARKET-LEADING COMPREHENSIVE GLOBAL CUSTOMER FOCUS & SERVICE OFFICE NETWORK Priority to build and sustain long-term Integrated international service enhanced by customer relationships experienced commercial and technical staff around the world Solution-driven approach ensur
Slide 23: Understanding Our Core Market
Appendix: Understanding Our Core Market 1Q17 Trading Update 23
Slide 24: Why Handysize? Why Minor Bulk?
Appendix: Why Handysize? Why Minor Bulk? Full Year 2016 Global Dry Bulk Trade More diverse customer, cargo and 4.9 billion tonnes (+1.2% YOY) geographical exposure enables high utilisation Pacific Basin A segment where scale and operational focuses on 38% expertise make a difference these growin
Slide 25: Pacific Basin Dry Bulk – Diversified Cargo
Appendix: Pacific Basin Dry Bulk – Diversified Cargo Our Dry Bulk Cargo Volumes (1Jan17 - 28Mar2017) Diverse range of commodities reduces product risk China and North America were our largest market 60% of business in Pacific and 40% in Atlantic 1Q17 Trading Update 25
Slide 26: 2016 Financial Highlights
Appendix: 2016 Financial Highlights US$m 2016 2015 Dry Bulk (87.6) (34.7) Towage & Others (0.1) 6.9 Underlying loss (87.7) (27.8) Unrealised derivative income 23.6 8.8 Sale of properties 1.7 - Vessel impairments (15.2) - Sale of towage assets (4.9) 2.8 Towage exchange charge (2.8) (1.5)
Slide 27: 2016 Pacific Basin Dry Bulk
Appendix: 2016 Pacific Basin Dry Bulk Handysize 2016 2015 Change Revenue days (days) 47,590 51,600 -8% TCE earnings (US$/day) 6,630 7,870 -16% Owned + chartered costs (US$/day) 7,320 7,930 +8% Handysize contribution (US$m) (37.1) (8.4) >-100% Supramax Revenue days (days) 29,590 23,300 +27% TCE earni
Slide 28: China Major and Minor Bulk Trade
Appendix: China Major and Minor Bulk Trade China Coal Trade 2017 Chinese Minor Bulk Imports Mil Tonnes Mil Tonnes 35 350 Increased 24% YOY 30 300 247 249 25 250 20 200 256 15 256 150 10 100 5 50 0 0 -6 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -9 -6 -50 06 07 08 09 10 11 12 13 14 15 16 17E 201
Slide 29: Fleet List – Mar 2017
Appendix: Fleet List – 31 Mar 2017* Pacific Basin Dry Bulk Fleet: 253 www.pacificbasin.com Average age of core fleet: 7.3 years old Customers > Our Fleet Owned Chartered Total Delivered Newbuilding Delivered* Newbuilding Handysize 78 - 72 3 153 Supramax 20 1 77 - 98 Post-Panamax 1 - 1 - 2 Total 99 1
Slide 30: Sustainability
Appendix: Sustainability Applying sustainable thinking in our decisions and the way we run our business 2016 CSR Report Creating long-term value through good corporate www.pacificbasin.com/ar2016 governance and CSR Corporate Social Responsibility (CSR) Guided by strategic objectives on (i) wor
Slide 31: 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
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