Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — H1 2020 Earnings Presentation
37 slides from Pacific Basin Shipping's earnings presentation, Jul 30, 2020
Slide 1: 30 July 2020
30 July 2020
Slide 2: Performance and Market Review
Performance and Market Review 2020 Interim Results 2
Slide 3: 1H20 Summary – Solid Performance in Weak but Improving Market
1H20 Summary – Solid Performance in Weak but Improving Market In a challenging half-year dominated by Covid-19, we delivered a positive EBITDA of US$79 million and outperformed Handysize and Supramax market rates by US$2,270 and US$4,250 per day respectively Spot market rates have more than doub
Slide 4: 2020 Interim Results Highlights
2020 Interim Results Highlights US$m 1H20 1H19 Change EBITDA 79.2 101.1 -21.9 Underlying (loss) / profit (26.6) (0.6) -26.0 P&L Net profit (222.4) 8.2 -230.6 Dividends - - US$m 30 June 20 31 Dec 19 Change Available liquidity 349.5 382.8 -33.3 B/S Net gearing 41% 35% Our net profit was impacted by
Slide 5: Cover Rates At or Above P&L Breakeven
Cover Rates At or Above P&L Breakeven Cover as at 27 July 2020 Handysize Core Fleet TCE Supramax Core Fleet TCE US$/day (net) 2019 2020 US$/day (net) 2019 2020 12,000 12,000 $10,860 $10,790 $10,810 $9,980 $9,170 $9,050 10,000 10,000 $8,420 3,070 $7,190 8,000 8,000 4,250 3,420 6,000 2,270 6,000 4,000
Slide 6: Continued Strong Outperformance
Continued Strong Outperformance Core Business 1H20 Last 12 months (US$) (US$) Handysize outperformance vs index per day 2,270 2,290 Supramax outperformance vs index per day 4,250 2,550 Operating Activity 1H20 Last 12 months Operating Margin per day 1,790 1,400 Strong outperformance particularly in
Slide 7: Market Rates have Improved Significantly since May
Market Rates have Improved Significantly since May Baltic Handysize Index (BHSI) 1 Baltic Supramax Index (BSI) 2 Market Spot Rates in 2016-2020 Market Spot Rates in 2016-2020 US$/day net* US$/day net* 15,000 27 Jul 2020 10,000 2017 12,000 $9,470 2018 8,000 2018 2017 9,000 6,000 2019 2016 2019 6,000
Slide 8: Total Dry Bulk Cargo Loadings Hit All-Time High in June
Total Dry Bulk Cargo Loadings Hit All-Time High in June Million tonnes (annualised) 5,200 5,000 2020 2019 4,800 4,600 2018 4,400 1H 2020 overall is down 39Mt YOY (-1.7%) 4,200 4,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Global dry cargo loadings increased significantly in June, led by (1
Slide 9: 1H 2020 Cargo Loadings by Main Cargo Sector
1H 2020 Cargo Loadings by Main Cargo Sector Grains Million tonnes (annualised) Minor Bulks Million tonnes (annualised) 1,700 1H 2020 down 23Mt YOY (-3%) 600 1H 2020 up 26Mt YOY (+12%) 1,650 1,600 2020 550 2020 1,550 500 2019 1,500 2019 1,450 450 1,400 1,350 2018 400 2018 1,300 1,250 350 1,200 Jan Fe
Slide 10: Supply Growth Has Been High But is Expected to Slow
Supply Growth Has Been High But is Expected to Slow Overall Dry Bulk Supply Development Handysize / Supramax Supply Development % of Total % of Total Fleet Fleet 7% 7% 6% 3.9% 6% 5% 5% 3.1% 4% 3.0% 4% 3% 2.4% 3% 2% 1.0% 2% 1.2% 1% 1% 0% 0% -1% -1% -2% -2% -3% -3% 2019 2020E 2021F 2022+F 2019 2020E 2
Slide 11: Financial Review
Financial Review 2020 Interim Results 11
Slide 12: Financial Results
Financial Results US$m 1H20 1H19 Revenue 681.5 767.1 Owned vessel costs 1H20 1H19 Voyage expenses (351.6) (360.5) Opex (83.2) (80.1) Depreciation (66.7) (60.1) Time-charter equivalent ("TCE") earnings 329.9 406.6 Finance (16.4) (16.5) Owned vessel costs (166.3) (156.7) Charter costs (160.0) (219.2)
Slide 13: Handysize and Supramax Contribution
Handysize and Supramax Contribution Handysize contribution (US$m) (16.0) Core Revenue days (days) 16,980 Core TCE earnings (US$/day) 7,190 Core Owned + chartered costs (US$/day) 7,920 Supramax contribution (US$m) 5.0 Core Revenue days (days) 6,950 Core TCE earnings (US$/day) 9,980 Core Owned + chart
Slide 14: Handysize – Core Business Vessel Costs Before G&A
Handysize – Core Business Vessel Costs Before G&A Cover as at 27 July 2020 US$/day (net) Costs FY19 Costs 1H20 Revenue 2020 Opex 12,000 Depreciation Finance Cost 10,280 10,090 10,000 8,420 8,150 7,920 8,000 7,650 7,530 7,190 690 670 6,000 2,860 2,920 4,000 2,000 4,100 3,940 - Owned Long-Term Blended
Slide 15: Supramax – Core Business Vessel Costs Before G&A
Supramax – Core Business Vessel Costs Before G&A Cover as at 27 July 2020 US$/day (net) Opex Costs FY19 Costs 1H20 Revenue 2020 Depreciation 14,000 Finance Cost 12,400 11,940 12,000 10,810 9,980 10,000 9,230 8,960 8,580 8,540 8,000 990 1,000 6,000 3,580 3,590 4,000 2,000 4,010 3,950 - Owned Long-Ter
Slide 16: How to Model Pacific Basin
How to Model Pacific Basin Handysize contribution Core TCE1 x owned & LTC 2 revenue days + Blended cost x owned & LTC cost days 3 - = X Supramax contribution Core TCE1 x owned & LTC revenue days + Blended cost x owned & LTC cost days 3 - = X Operating Activity Operating margin x operating days X Pos
Slide 17: Cash Flow Analysis
Cash Flow Analysis US$m 1 2 3 4 Operating cash inflow was US$77.5 500 1 million, inclusive of all long and short-term +3 charterhire payments. Despite lower TCE +154 rates, this was higher than the same period last year due to a reduction in 400 working capital 2 Borrowings increased due to drawing
Slide 18: Significant Committed Liquidity
Significant Committed Liquidity Balance Sheet Summary US$349.5 million of committed liquidity as at 30 June 2020 US$m 30 Jun 20 31 Dec 19 Regular expected cash outgoings during 2H20: ~US$20 million in capital expenditure Vessels & other fixed assets 1,722 1,875 (mainly scheduled dry dockings a
Slide 19: Strategy and Priorities
Strategy and Priorities 2020 Interim Results 19
Slide 20: Our Strategic Direction and Priorities
Our Strategic Direction and Priorities • Maintain and grow our cargo focus and scale as both a fully integrated owner and operator – Both asset heavy and asset light • Empowered local chartering and operations teams close to customers – With best in class centralised support and systems • Continue o
Slide 21: Well Positioned for the Future
Well Positioned for the Future Our TCE More Owned Efficient Cost Sensitivity toward Outperform Vessels with Structure Market Rates* Market Fixed Costs Annual Group 3 117 G&A Overheads Market Rate 111 106 US$75.7m Average PB premium 92 +/- 86 over market indices in 75 80 US$60.0m US$1,000 last 5 year
Slide 22: 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 23: Appendix: Vessel Days and Long-Term Chartered Commitments
Appendix: Vessel Days and Long-Term Chartered Commitments 2020 Interim Results 23
Slide 24: New TCE Reporting Methodology
Appendix: New TCE Reporting Methodology Our “core business” is to optimally combine our owned and long-term chartered ships with spot cargoes and multi- shipment contract cargos to achieve the highest daily TCE earnings. Our core business also uses short-term chartered ships to carry contract cargoe
Slide 25: Our Two Main Activities
Our Two Main Activities Core Business Operating Activity Contract and spot cargoes Spot cargoes Owned and long-term chartered ships Short-term ships carrying spot cargoes Short-term ships carrying contract cargoes Costs largely fixed and disclosed Costs fluctuate with freight market Key KPI = TCE pe
Slide 26: Pacific Basin Overview
Appendix: Pacific Basin Overview World’s largest owner and operator of modern Handysize & Supramax ships Cargo system business model – consistently outperforming market rates Own 116* Handysize and Supramax vessels, with over 200 owned and chartered ships on the water serving major industrial
Slide 27: Understanding Our Core Market
Appendix: Understanding Our Core Market 2020 Interim Results 27 From Annual Report 2019
Slide 28: Pacific Basin Dry Bulk – Diversified Cargo
Appendix: Pacific Basin Dry Bulk – Diversified Cargo Our Cargo Volumes in 1H 2020 Diverse range of commodities reduces product risk China and North America were our largest markets 2020 Interim Results 28
Slide 29: Fleet List – 30 June 2020
Appendix: Fleet List – 30 June 2020 www.pacificbasin.com Our Fleet 117Vessels 20LT 98ST 235 Total owned Chartered * Chartered * Total Handysize 81 15 42 138 Supramax 35 4 56 95 Post- Panamax 1 1 0 2 Average age of core fleet: 9.6 years old * Average number of long-term, short-term (including index-l
Slide 30: 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 31: Our People Our Record Our Fleet
Appendix: Business Foundation Our People Our Record Our Fleet Trusted and Managed In-house Close to you transparent and Highly Versatile 12 local dry 24/7 Strong public Award winning Modern quality Low breakeven bulk offices support balance sheet and CSR policy and ships with the cost and track reco
Slide 32: Pacific Basin Continues to Outperform on Every Level
Pacific Basin Continues to Outperform on Every Level Handysize Performance vs Market Supramax Performance vs Market US$/day US$1,920/day average premium US$/day US$1,530/day average premium 14,000 in last 5 years 14,000 in last 5 years PB Performance $11,720 12,000 12,000 BSI $9,630 $9,980 10,000 10
Slide 33: Possible Market Drivers in the Medium Term
Appendix: Possible Market Drivers in the Medium Term Opportunities Threats Post-pandemic recovery in Chinese industrial Expanding or renewed COVID-19 containment production and extensive stimulus in other key measures further impacting global economic economies, driving a rebound in economic act
Slide 34: Clarksons Research Dry Bulk Demand in 2020 and 2021 Forecast
Appendix: Clarksons Research Dry Bulk Demand in 2020 and 2021 Forecast 2020E Dry Bulk Trade Volumes 2021F Dry Bulk Trade Volumes Million Tonnes YOY Million Tonnes YOY Iron Ore 1,452 0% Iron Ore 1,467 1.0% Coal 1,188 -8% Coal 1,245 4.8% Major bulk total 2,640 -4% Major bulk total 2,712 2.7% Soybean 1
Slide 35: Better Supply Fundamentals for Handysize / Supramax
Appendix: Better Supply Fundamentals for Handysize / Supramax Scheduled Average Over Over 1H2020 Scrapping as Orderbook Age 20 Years 15 Years % of 1 Jul 2020 as % of Existing Fleet Existing Fleet Lower Handysize – 86m dwt orderbook (25,000-41,999 dwt) 4.2% 11 11% 19% 0.6% More Supramax – 210m dwt ol
Slide 36: Clarksons Research Supply and Demand Outlook
Appendix: Clarksons Research Supply and Demand Outlook Minor Bulk Demand and Handysize/Supramax Supply % YOY Change 10% 8.2% Total Dry Bulk Supply and Demand 8% 6% 3.1% % YOY Change 4% 2.4% 1.2% 5.3% 2% 6% 1.5% 3.9% 0% 4% -2% -4% 2% 3.0% -6% -8% -7.3% 0.4% 1.0% 0% -10% 2015 2016 2017 2018 2019 2020E
Slide 37: Vessel Speed Optimisation Example
Appendix: Vessel Speed Optimisation Example Higher fuel oil prices allow freight rates to increase without increasing speed and hence supply Optimal speed for typical Handysize vessel (Hakodate 32,000 dwt) Freight rate in US$/ton 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 for t
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