Dampskibsselskabet Norden A/s · OMXCOP:DNORD
Dampskibsselskabet Norden A/s — Q2 2019 Earnings Presentation
34 slides from Dampskibsselskabet Norden A/s's earnings presentation, Aug 14, 2019
Slide 1: Q2 results presentation
PRESENTATION Q2 results Copenhagen, Denmark 14 August 2019 NORDEN Singapore office entrance 1 | Q2 REPORT 2019 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 2: Agenda
AGENDA • Business update • Dry Operator – Q2 2019 update • Dry Owner – Q2 2019 update – Market outlook • Tankers – Q2 2019 update – Market outlook “In addition to the agile • Final words management of cyclical exposure to shipping industry, NORDEN also delivers additional value through operator acti
Slide 3: Business update
Business update 3 | Q2 REPORT 2019 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 4: Business update - overall
BUSINESS UPDATE - OVERALL SEASONALLY WEAK TANKER MARKET – CHALLENGING TRADING ENVIRONMENT FOR DRY OPERATOR Financial highlights Quarterly results • Q2 2019 Adjusted Result USD -12 million 25 – Dry Operator USD -6 million due to challenging trading environment 20 – Dry Owner USD -2 million – Tankers
Slide 5: Guidance maintained – business units adjusted
BUSINESS UPDATE - GUIDANCE GUIDANCE MAINTAINED – BUSINESS UNITS ADJUSTED Guidance – Adjusted result Guidance 70 Dry Operator adjusted to 0 to 10 million (previously 15 to 25 million) 60 • Expectations for the full year result remain 50 positive despite a disappointing first half year result 40 25 to
Slide 6: Significant value beyond asset values
BUSINESS UPDATE – VALUATION OF NORDEN SIGNIFICANT VALUE BEYOND ASSET VALUES Owned Assets NAV Value of TC/cover portfolio Value of Dry Operator Dry Cargo Vessels (ex CP) 331 Dry Owner (+/-1,000USD* = USD 15 mill.) Adjusted Result last 4 quarters (USD million) 9 16,000 Capacity Cover Tanker Vessels (e
Slide 7: Dry Operator
Dry Operator 7 | Q2 REPORT 2019 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 8: Challenging trading environment
BUSINESS UPDATE – Q2 2019 DRY OPERATOR CHALLENGING TRADING ENVIRONMENT • Disappointing result in Q2 2019 with Adjusted Result of USD -6 million • Entered Q2 with a short position - market more resilient than expected – Swift adjustment of position securing positive trading margins • Maintain expecta
Slide 9: Dry Owner
Dry Owner 9 | Q2 REPORT 2019 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 10: Owned fleet reduced to tradeable position
BUSINESS UPDATE – Q2 2019 DRY OWNER OWNED FLEET REDUCED TO TRADEABLE POSITION • Q2 2019 Adjusted Result of USD -2 million – high coverage protected against weak rates – negatively impacted by one-time increase in financial expenses • Optimizing portfolio through further vessel sale and attractive pr
Slide 11: Market stabilised in Q2
MARKET REVIEW – DRY CARGO Q2 2019 MARKET STABILISED IN Q2 Key developments Panamax and Supramax rates • Stable rate levels throughout the quarter 20,000 15,000 – Panamax average earnings down 10% compared 10,000 to Q2 2018 5,000 – Supramax average earnings down 26% compared - to Q2 2018 Jan-17 Mar-1
Slide 12: IMO2020 impacts available tonnage
MARKET REVIEW – DRY CARGO OUTLOOK IMO2020 IMPACTS AVAILABLE TONNAGE • Weakening of the global economy combined with high coal stocks may weigh down market • Reduced fleet supply from scrubber and ballast water treatment system installations • Temporary rate spikes in the larger segments a possibilit
Slide 13: Tankers
Tankers 13 | Q2 REPORT 2019 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 14: Market expectations on the rise
BUSINESS UPDATE – Q1 2019 TANKERS MARKET EXPECTATIONS ON THE RISE • Q1 2019 Adjusted Result of USD -3 million due to seasonally weak tanker market • Expanding time-chartered capacity through 2 scrubber fitted MR tankers delivering Q1 2020 • Increase in forward rates and asset values during the quart
Slide 15: Seasonally weak market in Q2
MARKET REVIEW – TANKERS Q2 2019 SEASONALLY WEAK MARKET IN Q2 • Product tanker rates at weak levels through the quarter – Demand growth for refined oil products slumped to below 1% year over year – Increased stock draws • Rates were higher than in Q2 2018 – Increased sailing distances – Smaller share
Slide 16: Improvements still expected
MARKET REVIEW – TANKERS OUTLOOK IMPROVEMENTS STILL EXPECTED • NORDEN expects the market to strengthen during H2 – From around the end of Q3 refineries are expected to increase refinery runs to produce the necessary IMO 2020 compliant fuel – Refinery runs and Increased off-hire from scrubber installa
Slide 17: Final words
Final words 17 | Q2 REPORT 2019 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 18: So much more than just owned vessels
FINAL WORDS SO MUCH MORE THAN JUST OWNED VESSELS • True value of NORDEN is more than the market value of owned vessels • Increasing asset light business and less dependent on long term market cycles • Attractive long-term coverage in Tankers with a significant near-term open position • Dry Owner fle
Slide 19: Forward looking statements
DISCLAIMER FORWARD LOOKING STATEMENTS This presentation contains certain forward-looking statements reflecting the management’s present judgment of future events and financial results. Statements relating to the remainder of 2019 and subsequent years are subject to uncertainty, and NORDEN’s actual r
Slide 20: Thank you for your attention
THANK YOU FOR YOUR ATTENTION Dampskibsselskabet NORDEN A/S 52, Strandvejen DK-2900 Hellerup Denmark Phone: +45 3315 0451 www.ds-norden.com dampskibsselskabetnorden ds-norden ds_norden dsnorden ds_norden 20 | Q2 REPORT 2019 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 21: Back-up slides
Back-up slides 21 | Q2 REPORT 2019 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 22: Enabling smarter global trade
THE NORDEN DNA ENABLING SMARTER GLOBAL TRADE Characteristics Connecting the world • Active in Dry Cargo and Product Tankers – Cyclical exposure to market developments (~100 vessels) – Large scale independent operator activities (~300 vessels) • Agile portfolio management • Strong track record of mai
Slide 23: NORDEN's business units
NORDEN DNA NORDEN’S 3 BUSINESS UNITS Dry Operator Dry Owner Product Tankers Transport services and cyclical Global transport solutions to dry Cyclical market exposure to dry market exposure in product cargo customers cargo market tanker market Generate a margin by: Generate superior long-term return
Slide 24: Dry Owner portfolio
NORDEN DNA DRY OWNER PORTFOLIO Owned Fleet Dry Owner at a glance Owned Vessels Owned NB • Primarily Supramax and Panamax vessels 2 • Large portfolio of long-term charters from Japan with significant optionality incl. purchase options 9.5 • Cover portfolio based on cargo contracts with major 2 2 comm
Slide 25: Tankers portfolio
NORDEN DNA TANKERS PORTFOLIO Owned Fleet Tankers at a glance • MR and Handysize vessels • Primarily own technical management 15 • Portfolio of 41 chartered in vessels 9 • All short-term chartering-out conducted via Norient Product Pool (NPP) of which NORDEN owns 100% MR Handysize • Long track record
Slide 26: Q2 2019 income statement
Q2 2019 INCOME STATEMENT USD million Q2 2019 Dry Operator Dry Owner Tankers Eliminations Total Revenue - services rendered, external 508.4 13.5 102.2 0.0 624.1 Revenue, services rendered, internal 6.5 37.0 12.4 -55.9 0.0 Revenue - sublease financial income 0.0 0.5 0.0 0.0 0.5 Voyage costs -233.2 -0.
Slide 27: Cash flows during the second quarter
CASH FLOWS DURING THE SECOND QUARTER 27 | Q2 REPORT 2019 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 28: Strong balance and liquidity position
STRONG BALANCE AND LIQUIDITY POSITION CAPEX and liquidity ASSETS (USD MILLION) 400 Current assets 350 300 166 354 Cash and cash equivalents 187.6 USD million 250 Other current assets 361.5 200 150 188 Non-current assets 100 Dockings, scrubbers 54 and BWT Systems Vessels (incl. newbuildings) 775.8 50
Slide 29: Scrubber economics remain attractive
SCRUBBER ECONOMICS REMAIN ATTRACTIVE • Scrubbers expected to yield significant cost savings from 2020 – Daily TCE earnings of approximately USD 2,500 – 5-year return of more than 25 % – Payback period of less than 2.5 years Rotterdam VLSFO – HSFO forward spread* Supramax average TCE from scrubber* 3
Slide 30: Scrubber installation schedule
SCRUBBER INSTALLATION SCHEDULE Owned vessel scrubber installation schedule • 36 scrubbers secured – A mix of Panamax, Supramax and MR 3 • 22 scrubber installation on own 6 vessels 3 1 1 2 1 1 1 1 – Capex of approximately USD 44 million Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
Slide 31: Dry Owner positioning
30 JUNE 2019 At 30 June 2019 DRY OWNER POSITIONING Q3 2019 Q4 2019 2020 Q3 2019 Q4 2019 2020 Own vessels Ship days Panamax 170 184 732 Supramax 837 874 3,725 Handysize 184 184 732 Total 1,191 1,242 5,189 Chartered vessels Cash costs for T/C capacity (USD per day) Panamax 1,334 1,301 5,860 12,835 13,
Slide 32: Tanker positioning
30 JUNE 2019 TANKER POSITIONING *Including cash running costs of owned vessels. Costs are excluding O/A. Projected Dry docking days are not included in own vessels. For off-hire days see slide 33 The table presents the cash costs and revenue of Tanker capacity and coverage and accounting effects fro
Slide 33: Supplementary slides
SUPPLEMENTARY SLIDES Employment and rates, Dry Owner, Q2 2019 Vessel type Panamax Supramax Handysize Dry Owner days 1,640 2,000 614 NORDEN TCE (USD per day) 13,782 11,108 10,841 Scheduled Off-hire days on own vessels Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Total Panamax 30 0 0 0 0 0
Slide 34: The share (DNORD)
THE SHARE (DNORD) Master data Composition of shareholders Shareholder capital DKK 42,200,000 • 15.835 registered shareholders owning Number of shares and 91.8% denomination 42,200,000 shares of DKK 1 • Approx. 25.7% international ownership Classes of shares 1 Voting and ownership A/S Motortramp, 8.2
Dampskibsselskabet NORDEN — Q2 2019 Earnings Presentation on 6ix