Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — FY2022 Earnings Presentation

42 slides from Pacific Basin Shipping's earnings presentation, Feb 23, 2023

1. Slide 1: Annual Results 2022

   B Pacific Basin ANNUAL RESULTS 2022

2. Slide 2: Performance and Market Review

3. Slide 3: 2022 Results Highlights

    Record-breaking results in both US$million 2022 2021 underlying profit and EBITDA, with US$715 million and US$935 million EBITDA 935.1 889.9 P&L respectively Underlying profit 714.7 698.3 Net profit 701.9 844.8  Net profit of US$702 million US$million 2022 2021  38% return on equity B/S Availabl

4. Slide 4: Handysize and Supramax Market Spot Rates

   Handysize Market Spot Rates (BHSI) Supramax Market Spot Rates (BSI) 38k dwt (tonnage adjusted) 58k dwt US$/day net* US$/day net* 40,000 40,000 35,000 35,000 30,000 30,000 25,000 25,000 20,000 20,000 15,000 15,000 10,000 10,000 22 February 2023 22 February 2023 $9,110 $7,300 5,000 5,000 0 0 Jan Feb M

5. Slide 5: 2022 Year-on-Year Dry Bulk Loadings

   2022 YOY Loadings Minor Bulk Grain Increased minor bulk loadings Mill tonnes driven by increased loadings of annualised bauxite, forest products and salt 2,500 700 650 2,300 Demand moderated in 2H’ 2022 600 due to global economic 2,100 550 slowdown. Recovery in 2023 500 expected 1,900 450 Loss of Bl

6. Slide 6: Core business Handysize and Supramax daily TCE earnings

   Handysize Core Business TCE Supramax Core Business TCE US$/day net* US$/day net* FY 2022: $23,430 FY 2022: $28,120 40,000 40,000 35,000 35,000 30,000 30,000 $26,640 25,000 $23,620 25,000 $20,450 20,000 $17,310 20,000 # # 15,000 $13,460 15,000 $13,680 95% 10,000 10,000 100% of days of 5,000 5,000 day

7. Slide 7: Outperformance of Handysize and Supramax indices; operating activity

   Handysize Performance vs Index (BHSI)* Supramax Performance vs Index (BSI)* US$/day net US$/day net Relative performance Scrubber contribution Rolling 12 Months Relative performance Rolling 12 Months 7,900 7,610 6,350 4,420 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4

8. Slide 8: Handysize cost per day and breakeven

   Opex Depreciation US$/Day Finance Cost +G&A per day Owned: US$1,290 12,000 Chartered: US$730 11,030 10,180 Blended: US$990 10,000 8,700 8,970 7,520 7,880 230 8,000 530 3,050 6,000 2,360 4,000 5,420 2,000 4,630 0 Owned Long-Term Blended Owned Long-Term Blended Chartered Chartered No. of Ships 79 11 9

9. Slide 9: Supramax cost per day and breakeven

   Opex Depreciation US$/Day Finance Cost +G&A per day Owned: US$1,290 18,000 Chartered: US$730 16,590 Blended: US$990 16,000 14,000 12,000 11,450 9,660 10,000 8,910 9,140 8,570 8,000 940 370 6,000 3,460 3,370 4,000 2,000 4,510 4,830 0 Owned Long-Term Blended Owned Long-Term Blended Chartered Chartered

10. Slide 10: Financial Review

11. Slide 11: Income statement FY22 vs FY21

    US$million FY22 FY21 Owned vessel costs Revenue 3,281.6 2,972.4 FY22 FY21 Voyage expenses (1,064.9) (881.0) Opex (223.5) (195.2) Time-charter equivalent ("TCE") earnings 2,216.7 2,091.4 Depreciation (140.6) (117.8) Owned vessel costs (376.1) (341.9) Finance (12.0) (28.9) Chartered vessel costs (1,03

12. Slide 12: Cash flow and cash balance movement

    1 Operating cash inflow was US$873.6 million, inclusive of all long and short- 1 2 3 4 5 6 term charter hire payments. This US$ Million compares with US$813.1 million in 1,600 the full year 2021 +74 -716 1,400 +874 2 Proceeds from the sale of 7 smaller Handysize vessels 1,200 1,000 3 2021 Annual

13. Slide 13: Delevered balance sheet and capital allocation priorities

    US$million FY22 FY21  Despite significant shareholder distribution, we have continued to delever the balance PP&E 1,772.2 1,906.0 sheet and we are today US$65.3 million net cash positive Total assets 2,648.7 2,745.4  Capital allocation priorities Total borrowings 378.6 588.1 1. Maintain strong ava

14. Slide 14: Demand & Supply Outlook

    DEMAND & SUPPLY OUTLOOK

15. Slide 15: Demand outlook and drivers

     Dry bulk freight rates have likely bottomed  China focused on economic growth through property, infrastructure and domestic consumption  We are now in softer northern hemisphere winter and Lunar New Year period  Significant global infrastructure spend required to drive development and “green tr

16. Slide 16: Dry bulk earnings vs newbuilding contracting

     Long-established relationship between dry Dry Bulk Average TCE Earnings vs Vessel Contracting bulk earnings and newbuilding contracting has been broken US$/day net 60,000 60%  Dry bulk orderbook at record low 7.2%, despite long period of elevated earnings 50,000 50%  2022 newbuilding ordering do

17. Slide 17: Dry bulk supply development

    Handysize / Supramax Supply Development Overall Dry Bulk Supply Development % of Total Fleet % of Total Fleet 6% 6% 3.8% 5% 5% 2.9% 3.6% 4% 4% 2.9% 3.0% 2.8% 3% 3% 2% 1.8% 2% 1% 0.7% 0.6% 1% 0% 0.3% 0% -1% -2% -1% -3% -2% -4% -3% 2020 2021 2022E 2023F 2024F 2020 2021 2022E 2023F 2024F Scrapping Fore

18. Slide 18: Strategic Focus

19. Slide 19: Strategic priorities

     Maintain and grow our position as the leading minor  Supporting our teams to ensure we continue to deliver bulk cargo-focused, integrated owner and operator a quality service to our customers while maximising servicing our customers’ transportation needs around our earnings the world  Ensuring o

20. Slide 20: Accelerating growth and renewal strategy

     Accelerating our growth and renewal strategy as asset prices allow further strategic investment  Utilising balance sheet to grow – strong balance sheet allows flexibility to invest counter-cyclically  Commitment to grow our Supramax/Ultramax fleet and renew our Handysize fleet  Purchasing high-

21. Slide 21: Net zero by 2050 and carbon intensity

    15 Carbon Intensity (EEOI)  Targeting net zero emissions by 2050 Grams of CO 2 per tonne-mile  We aim to have reduced our EEOI carbon intensity by 10 50% by 2030 9.66 EEOI  We target for our fleet to comprise only zero-emission 5 Our target of vessels by 2050 – we will not order “older technology

22. Slide 22: Summary and outlook

     China reopening is supporting dry bulk commodity demand  East Coast South America grain season commencing shortly  US and EU look to avoid recession in 2023  Long-term minor bulk demand is anticipated to be driven by infrastructure investment, particularly from emerging markets and ASEAN region

23. Slide 23: Forward looking statements

    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, uncertainti

24. Slide 24: Appendix

25. Slide 25: Fleet growth and environmental regulation

    Handysize / Supramax Supply Development Overall Dry Bulk Supply Development % of Total Fleet % of Total Fleet 6% 5% 5% 4.8% 4% 3.8% 3.6% 4% 2.8% 3.2% 3% 2.2% 2.9% 2.9% 3.0% 3% 3.4% 2.0% 2% 2% 1.3% 1.8% 1% 1% 0.8% 0.3% 0.6% 0% 0.7% 0% 0.3% -1% -1% -2% -2% -1.9% -2.1% -3% -3% 2020 2021 2022E 2023F 202

26. Slide 26: Dry bulk trade volume forecasts 2023 and 2024

    2023F Dry Bulk Trade Volumes YOY 2024F Dry Bulk Trade Volumes YOY Million Tonnes Million Tonnes Coal 1,250 2.1% Coal 1,254 0.3% Iron Ore 1,483 0.1% Iron Ore 1,494 0.7% Total Major Bulk (Iron Ore + Coal) 2,733 1.0% Total Major Bulk (Iron Ore + Coal) 2,748 0.5% Soybean 161 8.1% Soybean 169 5.0% Copper

27. Slide 27: Core business vs 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 per day  Key KPI = Margin per day  Signif

28. Slide 28: Core business and operating activity explained

    Our “core business” is to optimally combine our owned and long-term chartered ships with multi-shipment contract cargos and spot cargoes to achieve the highest daily TCE earnings. Our core business also uses short-term chartered ships to carry contract cargoes to maximise the utilisation and TCE of

29. Slide 29: Underlying result calculation and sensitivity

    Handysize contribution Core TCE1 x owned & LTC2 revenue days + Blended cost x owned & LTC cost days3 - = X Supramax contribution Core TCE1 x owned & LTC2 revenue days + Blended cost x owned & LTC cost days3 - = X Operating Activity Operating margin x operating days X Post Panamax contribution X Tota

30. Slide 30: Vessel days and long-term charter costs

    Handysize Supramax Days 2021 2022 2021 2022 Core business revenue days 32,080 30,310 15,480 17,340 – Owned revenue days 27,580 26,680 14,040 14,930 This table shows an analysis of – Long-term chartered days 4,500 3,630 1,440 2,410 our vessel days in 2021 and 2022 1 Short-term core days 8,710 7,580 1

31. Slide 31: Dry bulk industry and ship types

    Tankers for oil, gas & chemicals The dry bulk industry carries dry commodities and other non-containerised cargo. Larger vessels including Capesize and Panamax carry mainly iron ore, coal and grain. We specialise in the versatile, mid-size, geared Handysize and Supramax ships that carry a wide range

32. Slide 32: Fleet size, orderbook and age by vessel segment

    7.5% 13 14% 0.2% (10,000–40,000 dwt) (40,000–70,000 dwt) 7.7% 11 10% 0.2% (70,000–100,000 dwt) 8.7% 11 13% 0.3% (100,000+ dwt) 6.0% 10 2% 0.9% 7.2% 12 8% 0.5% Source: Clarksons Research, data as at February 2023

33. Slide 33: IMO EEXI and CII regulations and EU ETS

     Effective from January 2023, IMO’s global EEXI and CII regulations require ships to combine technical and operational measures to improve their carbon intensity  Shipping included in European Union Emissions Trading System (EU ETS) from January 2024  Technical design criteria  Some impact on PB

34. Slide 34: Pacific Basin at a glance

     We operate one of the world’s largest fleets of interchangeable modern Handysize and Supramax ships, equipping us for efficient trading and reliable service any time and anywhere  Cargo system business model – outperforming market rates  Own 115 Handysize and Supramax vessels, with approximately

35. Slide 35: Diversified geography, customers and cargoes

     More diverse customer, cargo and geographical exposure enables high utilisation  A segment where scale and operational expertise make a difference  Better daily TCE earnings driven by a high laden-to-ballast ratio  Sound long-term demand expectations and modest fleet growth Our largest Diversif

36. Slide 36: Global office network and cargo geography

     11 commercial offices  4 technical & crewing offices Our Hong Kong headquarters is home to commercial, technical, crewing and all central functions Middle East & India 9% Australia & New Zealand 13% Africa 6% Europe 16% Asia 24% (China 10%) South America 15% North America 17%

37. Slide 37: Cargo mix by commodity

    Minerals 11% Agricultural Products & Related 30% Salt 6% +2pp 11% Grains & Agricultural Products 15% -1pp Sand & Gypsum 4% +1pp 9% Fertiliser 12% +2pp Soda Ash 1% -1pp 30% Sugar 3% - 13% 13% 29% Energy 13% Coal 8% -1pp Petcoke 4% +1pp Construction Materials 30% Wood Pellets 1% - 17% Cement & Cement

38. Slide 38: Vessels in operation

    116Vessels 18 LT 134 109 243 Total ST Total owned Chartered Chartered Vessels in Operation Total Average Capacity Age Long-term Short-term Owned Chartered Sub-total Chartered1 Total (million dwt) Costs Owned Owned fluctuate with Substantially fixed costs market Handysize 72 9 81 29 110 2.5 13 Supram

39. Slide 39: Forward cover and TCE for 2023

    Handysize Supramax US$/Day (net) US$/Day (net) 40,000 40,000 35,000 35,000 $30,220 30,000 30,000 $25,210 25,000 $23,050 25,000 $19,550 20,000 20,000 96% 64% 15,000 $13,460*$12,490* 15,000 $13,680*$13,310* of of 98% 48% days days 10,000 of of 10,000 95% 46% 100% 68% days days of of of of 5,000 days d

40. Slide 40: Shipyard delivery schedule and capacity

    120% Bulker Tanker Containerships Gas Other* Remaining Capacity 100% 5%  Limited yard capacity available Bulker Yards Delivery Schedule as a % of Capacity until 2025 as other segments 80% 40% (container etc.) have absorbed spare yard capacity 60% 80% 97%  Incremental mothballed Chinese capacity ha

41. Slide 41: Scrubber investment recovered

    Quarterly Average Price Spread between HSFO and LSFO Fuel  Fully recovered the approximately US$62 million US$/tonne scrubber investment made prior to the implementation 400 of the IMO 2020 sulphur cap  As at September 2022 this investment is fully recovered considerably faster than expected throu

42. Slide 42: Global economic outlook: Global, China, US, EU

    Global  Global economy slowing due to increased inflation and interest rates 3.4% 3.1% 2.9%  China post-Covid policies to help partially offset global economic slowdown through increased infrastructure spending, and a recovery in property construction and trade 2022 2023 2024  Inflation is expect

Pacific Basin Shipping — FY2022 Earnings Presentation on 6ix