Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — Investor Presentation (August 2020)
61 slides from Cmb.tech Nv's investor presentation, August 2020
Slide 1: Investor Presentation August 2020
INVESTOR PRESENTATION AUGUST 2020 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events
Slide 3: Euronav – Who We Are
EURONAV EURONAV – WHO – WHO WE ARE WE ARE The world’s largest, independent quoted crude tanker platform 45 VLCC incl. 4 N/B 25 Suezmax* International company – internationally connected Av Age Av Age Headquarters in Antwerp 7.4 Yrs 11.1 Yrs Euronav offices Partnerships 2 FSO* 2 ULCC Mix of time char
Slide 4: Capital Allocation at Euronav
CAPITAL ALLOCATION AT EURONAV Debt Dividends Buy Backs Fleet Repayment Equity & Bonds Growth/Renewal Mandatory debt Trailing 1-year Equity Outstanding repayment/ Div. Yield 16%* $75m or 36c per capex Reduction of RCF share buyback during June/July $270m of which FY 2020 Past 12involuntary months or
Slide 5: Who We Are - Returns in Action
WHO WE ARE - RETURNS IN ACTION Structure of Returns Q2 2020 returns mix Split Dividend/Share BB 20% Net Income $50m retained 15% = retained cash FY 2018 Cash Dividend 85% $96m or 47c per share 80% Net Income 29% Distributed to FY Shareholders 2019 71% Share Buyback $100m* 27% 2020 Includes fixed 12c
Slide 6: Who We Are – Liquidity Focus
WHO WE ARE – LIQUIDITY FOCUS Repayment schedule and RCF reductions Balance sheet liquidity June 2020 $1086m 600 1200 806 Millions 1000 500 800 + $270 m outstanding 1086 capex $m 400 600 400 280 300 200 0 200 Cash Undrawn Secured Total Revolver 100 Strong balance sheet =hedge against cyclicality 0 o
Slide 7: Who We Are – Operational Leverage
FSO 7 years +5 years WHO WE ARE OPERATIONAL LEVERAGE $1,188 Each $5,000 uplift in Long-term 20 years both VLCC and Suezmax rates improves net niche market revenue and EBITDA by $108mm $540 $324 $108 BASE +$5,000 +$15,000 +$25,000 +$55,000 per day per day per day per day VLCC TCE rates $25,000 $30,00
Slide 8: Who We Are – Well Supported $200M Bond Listed in Oslo
WHO WE ARE WELL SUPPORTED $200M BOND LISTED IN OSLO 8
Slide 9: Tanker Market Structure
TANKER MARKET STRUCTURE Seasonal Few customers, lots of suppliers Source: Clarksons 48 Quarterly average Thousands 46 VLCC rate 1990-2019 Traders 44 42 40 38 36 34 32 Oil Refiners 30 Companies Q1 Q2 Q3 Q4 Cyclical Ship Source: Clarksons Broker 100,000 90,000 Quarterly average 1 Year 80,000 TCE rate
Slide 10: Tanker Markets – Still Seasonal
TANKER MARKETS – STILL SEASONAL 60,000 55,000 50,000 Average VLCC spot rate since 1990 45,000 40,000 35,000 30,000 25,000 20,000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Clarksons 10
Slide 11: Tanker Market Basics
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Slide 12: Demand for Oil
DEMAND FOR OIL BEEN ROBUST AND STEADY…UNTIL 2020 Y/Y Change in global demand for oil – pedestrian until Covid-19 impact 6 5.3 4 2 IEA oil demand m bpd 0 -2 -4 Average 1.1 million barrels per day 1990-2019 -6 -8 -7.9 Source IEA 12
Slide 13: Demand for Oil - Transport Heavy
DEMAND FOR OIL - TRANSPORT HEAVY 45 40 35 Oil demand m bpd by sector 2018 30 25 20 15 10 5 0 Road transport Shipping Aviation Industry & Buildings & Power Other sectors Petrochemicals Source: Kepler Cheuvreux, WEO 2019 13
Slide 14: Crude Demand
CRUDE DEMAND WHAT HAPPENED IN 2008/9 FINANCIAL CRISIS Recovery took time globally Source: IEA 14
Slide 15: Demand Forecasts by Agencies
DEMAND FORECASTS BY AGENCIES PRICE IN RECOVERY BUT LIKELY LOWER FLEET SIZE REQUIRED Demand trajectory for crude Trading VLCC fleet already at #665 102 100 Oil demand forecast m bpd 98 96 94 92 90 88 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun IEA EIA Source: IEA, EIA, Clarksons Source: IEA, EIA,
Slide 16: Tankers – The Original Playbook
TANKERS – THE ORIGINAL PLAYBOOK Demand growth Far East driven – key for tankers is where supply is sourced from Atlantic Basin – Far East route Middle East - Asia Pacific route 1 mbpd x 365 days = 365m barrels 1m bpd x 365 days = 365m barrels Annual VLCC 365m barrels / 2m capacity per VLCC = 183 car
Slide 17: Tankers – The New Playbook
TANKERS – THE “NEW” PLAYBOOK Demand growth for tankers will still be driven by supply from East (Atlantic) to Far East Source Euronav, Morgan Stanley, Fearnley China Middle East West Africa US/LatAm / Caribs 20 40 VLCCs VLCCs per per 1m 1m bpd bpd Supply growth to 2022 coming from Atlantic/AG OPEC P
Slide 18: Ton Miles
TON MILES US CRUDE EXPORTS LIKELY TO FALL BUT LIMITED SHIPPING IMPACT Total shipped barrels key for tankers 8.0 22 22 US seaborne crude exports and imports m bpd 7.0 21 6.0 US crude consumption m bpd 21 5.0 20 4.0 20 3.0 19 2.0 19 1.0 18 0.0 18 2015 2016 2017 2018 2019 US crude exports US seaborne i
Slide 19: Financing of Shipping
FINANCING OF SHIPPING TRADITIONAL SOURCES UNDER PRESSURE IMPLYING CAPITAL MARKETS WILL HAVE GREATER ROLE TO PLAY Bank lending to shipping down 33% Capital markets 50% below average 2019 25 $bn raised in shipping IPO, follow ons & Bond 475 20 $ billion bank lending to shipping 425 15 issuance 375 10
Slide 20: Vessel Supply
VESSEL SUPPLY BALANCE & OUTLOOK STRUCTURALLY IMPROVING Increasingly restricted financing CONTRACTING NEW + new technology to meet VESSELS environmental targets cap orders ORDER BOOK VLCC /Fleet = 8% Suezmax /Fleet = 10% ORDER BOOK c. 20-year lows 168 VLCCs/21% of fleet needs OPERATIONAL FLEET specia
Slide 21: Little Contracting and Order Book at Year Low
LITTLE CONTRACTING AND ORDER BOOK AT 20 YEAR LOW 140,000 60 # of VLCC ordered & Orderbook as % of fleet 120,000 50 100,000 40 VLCC rates 80,000 30 60,000 20 40,000 10 20,000 0 0 Orderbook as % of fleet No of VLCC ordered VLCC earnings Source: Clarksons 21
Slide 22: Newbuilding Orders Constrained
NEWBUILDING ORDERS CONSTRAINED NEWBUILDING CONTRACTS RISING BARRIERS ORDER BOOK CURRENTLY 23 YR LOW 60 FINANCING BANKS & CAPITAL 50 MARKETS 40 REGULATION IMO 2030, BASEL IV 30 20 TECHNOLOGY IN FUEL PROPULSION 10 LONG TERM 0 CRUDE DEMAND VLCC Orderbook % Fleet % Suezmax Orderbook % Fleet % Source: Cl
Slide 23: VLCC Fleet Structure
25-21 yrs 3% 20-16 yrs 18% VLCC FLEET STRUCTURE 15-11 yrs 10-6 yrs 21% 28% 5-0 yrs 30% Orderbook 8% Current fleet 80 18% survey pool Under construction 70 60 50 # of VLCCs 40 65 68 30 59 19 51 49 47 50 20 39 39 34 36 26 29 31 29 30 28 24 21 10 20 18 20 8 11 7 0 2 3 Year of Build 23
Slide 24: Suezmax Fleet Structure
29-21 yrs 8% 20-16 yrs 19% SUEZMAX FLEET STRUCTURE 15-11 yrs 10-6 yrs 25% 23% 5-0 yrs 25% Orderbook 10% 60 Current fleet 18% survey pool Under construction 50 40 # of VLCCs 30 50 44 43 44 20 37 28 26 14 23 25 24 10 21 20 20 22 18 18 16 13 13 12 8 8 9 5 6 0 2 1 1 2 2 1 Year of Build Source: Clarksons
Slide 25: Key Supply Issue
KEY SUPPLY ISSUE POTENTIAL CATALYSTS FROM 186 SURVEYS NEXT 2 YEARS Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Total % of fleet Over 20 years 7 5 8 17 9 11 4 18 79 10% Over 17.5 years 14 20 13 29 14 17 7 28 142 18% Over 15 years 18 28 18 36 15 26 8 37 186 24% 40 35 No of VLCC to
Slide 26: VLCC Delivery Schedule
VLCC DELIVERY SCHEDULE Fearnley forecast 2020 – 12 Not yet under 2021 – 23 construction 2020 – 11 80 60 40 68 19 47 50 20 39 28 20 21 11 0 -2 -2 -4 -13 -22 -31 -34 -20 -62 -40 -60 -80 2015 2016 2017 2018 2019 2020 2021 2022 Deliveries To be Delivered Scrapped Vessels over 20 years year end Source: C
Slide 27: Suezmax Delivery Schedule
SUEZMAX DELIVERY SCHEDULE Fearnley forecast 2020 – 6 Not yet under 2021 – 16 construction 80 2020 – 12 60 40 57 20 14 32 27 26 22 10 11 12 0 -1 -1 -14 -18 -23 -23 -20 -53 -40 -60 2015 2016 2017 2018 2019 2020 2021 2022 Deliveries To be Delivered Scrapped Vessels over 20 years year end Source: Clarks
Slide 28: Large Tanker Shipping – Regulated
LARGE TANKER SHIPPING – REGULATED 6 5 1.5 100% utilisation $m cost of special surveys 4 1.5 1.5 3 1.5 1.5 2 4 3.25 2.5 1 2 1.5 0 Year 5 - Spec Survey#1 Year 10 - Spec Survey#2 Year 15 - Spec Survey#3 Year 17.5 - Intermediate Year 20 - Spec Survey#5 survey 5 year survey cycle 30 month survey cycle Ba
Slide 29: When to Scrap?
WHEN TO SCRAP? 2/3 of scrapping has occurred when quarterly freight rates below $20k per day 25 100% 90% 20 80% 70% 15 60% 50% 10 40% 30% 5 20% 10% 0 0% Rates below $20k VLCC scrapping Suezmax scrapping Source: Clarksons 29
Slide 30: Scrapping
SCRAPPING VLCC RATES GO BELOW P&L BREAK EVEN = 5% FLEET DEPARTS VLCC fleet 804 @ start of year = 40 VLCC or 53 VLCC equivalents 9% 30,000 8% 25,000 7% % of VLCC fleet scrapped 6% 20,000 VLCC rates 5% 15,000 4% 3% 10,000 Average age 2% 20.0 19.2 20.0 22.0 21.3 18.2 19.9 20.4 24.2 20.8 25.9 22.1 20.4
Slide 31: Oil Supply
OIL SUPPLY OPEC+ CUTS BIGGEST WORLD HAS SEEN ALBEIT COMPLIANCE ISSUES 2020 2021 2022 May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 0 -2 OPEC+ production cuts m bpd -4 -6 -8 -10 -12 OPEC+ cuts Actual output cuts Source: OPEC, Bloomberg 31
Slide 32: US Production
US PRODUCTION CLOSELY LINKED TO WTI PRICING 1000 80 US production for 2021 900 70 800 60 $50 WTI +1.3m bpd to 700 12.3m bpd Baker Hughes Rig Count 50 600 WTI oil price 500 40 $40 WTI +0.2m bpd to 400 30 11.2m bpd 300 20 200 100 10 -0.7m bpd to $30 WTI 10.5m bpd 0 0 2015 2016 2017 2018 2019 2020 2021
Slide 33: VLCC – Disruption (=Positive)
VLCC – DISRUPTION (=POSITIVE) HEAVY Temporary disruption Semi permanent disruption Permanent feature 33
Slide 34: Inventory, Contango & Storage
INVENTORY, CONTANGO & STORAGE 34
Slide 35: Inventory Matters
INVENTORY MATTERS BUILDS GOOD; DRAWS BAD 180,000 500 160,000 400 140,000 300 120,000 200 100,000 100 80,000 0 60,000 -100 40,000 20,000 -200 0 -300 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 VLCC rates OECD inventory change mb Source: Clarksons 35
Slide 36: Contango
CONTANGO RECENT SQUEEZE VERY HIGH… Recent squeeze very high… …in fact highest ever Signs of life? Source: Bloomberg Source: Bloomberg 36
Slide 37: Contango Price Structures
CONTANGO PRICE STRUCTURES TEND TO PERSIST FOR A PERIOD HOWEVER 1997 2020 2015 2008 Source: Bloomberg 37
Slide 38: Contango & Freight Rate Correlation
CONTANGO & FREIGHT RATE CORRELATION 250,000 15 200,000 10 6 month contango 150,000 5 VLCC rates 100,000 0 50,000 -5 0 -10 VLCC rates 6 month contango Contango/Backwardation Source: Clarksons 38
Slide 39: Floating Storage Unwind
FLOATING STORAGE UNWIND ISSUE FOR SUEZMAX LESS SO VLCC 16% 14% 13.9% 12% % of fleet in "market storage" 10% 8.2 % 8% 6% 6.0% 4% 4.4% 2% 0% Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 VLCC Suezmax Aframax Source: Clarksons 39
Slide 40: What Is on Market Storage on VLCC Fleet
WHAT IS ON “MARKET STORAGE” ON VLCC FLEET A SNAPSHOT “100” VLCC in storage according to Clarksons database @ 20 July 2020 Dedicated Long Term storage 29 Waiting to discharge 18 "Market Storage" 16 Iranian VLCC 15 Not returning to fleet In ballast to next load 15 Converted to FSO - not in trading fle
Slide 41: Current Themes
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Slide 42: Venezuela & Tanker Sanctions
VENEZUELA & TANKER SANCTIONS POTENTIAL IMPACT VLCC loadings from 2019 in Vz (43 individual VLCC) 12 10 10 10 No of VLCC loadings per 10 9 9 9 9 8 8 7 7 7 7 month in Vz 6 6 5 4 4 3 3 2 2 0 Potential impact from sanctions Vz to China Vz to India Vz to RoW Total mbpd exported 0.35 0.3 0.15 0.8 Source E
Slide 43: LSFO vs HSFO Spreads
LSFO VS HSFO SPREADS FLAT DESPITE RISING OIL PRICE Source: Bloomberg 43
Slide 44: Share Price Has Followed
SHARE PRICE HAS FOLLOWED VOLATILE FREIGHT RATES DURING 2020 Source: Bloomberg 44
Slide 45: Since Contango 2020
SINCE CONTANGO 2020 TANKER STOCK PRICES BEEN USED AS OIL PRICE HEDGE Euronav share price & inverted crude oil price Source: Bloomberg 45
Slide 46: Q2 Update
Q2 UPDATE FLOATING OPPORTUNITY - DID NOT MATERIALISE Source: Clarksons 46
Slide 47: Uplift in Chinese Crude Procurement
UPLIFT IN CHINESE CRUDE PROCUREMENT . 70 11.5 60 11.0 PRC put in place a 50 support mechanism China crude imports m bpd 10.5 for refinery sector 40 that guarantees a Oil price 10.0 margin on products as 30 if crude is priced at 9.5 $40 usd/bbl by 20 fixing the rack price and the consumer 9.0 10 reta
Slide 48: China Crude Buying
CHINA CRUDE BUYING ALWAYS BEEN REACTIVE AROUND OIL PRICE TREND Increase buying on falling or low oil price 120 12 Reduce buying on rising or high oil price 100 10 China crude oil imports m bpd 80 8 Oil Price per barrel $ 60 6 40 4 20 2 0 0 Oil price China crude imports m bpd Linear (China crude impo
Slide 49: Large Tanker Re-sizing
LARGE TANKER RE-SIZING WHAT DOES THAT MEAN? State of play end 2019 Global IEA Seaborne Required Required IEA Crude VLCC Trading Seaborne Demand Trade VLCC Resizing Demand Fleet = Crude m bpd m bpd fleet # vessels 99.9m bpd #742 40m bpd 98 39.6 703 -60 97.4 39.2 685 -78 IEA demand forecast for 2021 9
Slide 50: Seaborne Crude Trade and Oil Demand
SEABORNE CRUDE TRADE AND OIL DEMAND STRONG BUT NOT UNIFORM CORRELATION IEA & Seaborne crude y/y change IEA & Seaborne demand correlation 4.0 105 45 IEA oil demand and clarksons crude seaborne globally 100 3.0 40 95 2.0 Seaborne crude m bpd 90 IEA Demand m bpd 35 1.0 85 (m bpd) 0.0 80 30 75 -1.0 70 S
Slide 51: ESG & Euronav
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Slide 52: ESG – It's in Our DNA at Euronav
ESG – IT’S IN OUR DNA AT EURONAV Supervisory Board 6 members 3 Male 3 Female Oversee all strategic actions 5 independents - No executive Management Board ESG & Climate Change Ctte 7 members 5 members 5 Male 2 Female 4 Male 1 Female Take the day to day Only shipping or tanker responsibility of compan
Slide 53: Environmental in Action
ENVIRONMENTAL IN ACTION Euronav committed to reducing C02 under IMO 2030 and PP Trajectory of AER under Poseidon Principles 3.5 3 AER Annual Efficiency Ratio 2.5 2 Source: Poseidon Principles 1.5 1 0.5 0 2020 2021 2022 2023 2024 2025 Suezmax (max) VLCC (max) The Annual Efficiency Ratio (AER), which
Slide 54: Shipping: In Strong Relative Position
SHIPPING: IN STRONG RELATIVE POSITION AND HAS A ROADMAP TO ZERO EMISSIONS – BUT REQUIRES TECHNOLOGICAL CHANGE Shipping – Best in class lowest Road map for zero carbon emissions in shipping footprint transport goods Airplane Reduce tonne-mile growth to 1.5% pa Truck 8% reduction in speed post 2020 to
Slide 55: Q2 2020 Results
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Slide 56: Highlights Q2 2020
HIGHLIGHTS Q2 2020 90000 VLCC 80000 70000 Q2 • Elevated cargo supply and contango oil price structure drives 60000 20 record quarter 50000 • Sector now in transition phase driven by oil inventory levels USD/day • Return 80% of quarterly net income to shareholders: USD 100 40000 million via share buy
Slide 57: Financial Highlights – Income
FINANCIAL HIGHLIGHTS – INCOME The most important key figures (unaudited) are: KEY KPI’s Q2 2020 First Second First First (in thousands of USD) Quarter quarter semester semester 2020 2020 2020 2019 • Revenues : 435M$ Revenue 416,668 434,691 851,359 401,936 • EBITDA : 355M$ Other operating income 3,27
Slide 58: Financial Highlights – Balance Sheet
FINANCIAL HIGHLIGHTS – BALANCE SHEET HIGHLIGHTS (in $ million) Jun-20 Dec-19 Cash Restricted cash 280.3 0.0 297.0 0.0 1 Leverage Other current assets 568.5 505.3 38.3% leverage to book Long term assets: value Newbuildings 119.9 0.0 Vessels 2,992.3 3,177.3 Other long term assets Total assets 171.0 4,
Slide 59: Fleet Ageing
FLEET AGEING 20% OF VLCC FLEET >15 YEARS FACING SURVEY IN NEXT 7 QUARTERS Large tanker average age 147 VLCC aged over 15 yrs require special @ 10 years of age – last seen in 2002 survey by end Q1 2022 10.5 40 25% 35 10.0 20% 30 Average Age of Global Fleet 9.5 % of VLCC fleet 25 15% # of VLCC 9.0 20
Slide 60: Large Tanker Market – No Storage Bonanza
LARGE TANKER MARKET – NO STORAGE BONANZA INVENTORY & DEMAND UNCERTAINTY 105 3700 255 229 206 228 100 3500 M bpd Oil demand & supply (EIA) 95 3300 Oil inventory m barrels 90 3100 54 85 2900 80 2700 75 2500 Inventory Floating storage Demand Supply 5 year inventory average Source: EIA, Vortex, Clarkson
Slide 61: Outlook
OUTLOOK TANKER MARKET IN TRANSITION PHASE Demand for Supply Vessel Euronav Oil Ton miles Balance of Oil Supply sheet Q4 19 Rating Restrictions lower OPEC+ driving US export growth Orderbook to fleet Liquidity of $1bn Q2 demand but supply cuts but oil to ameliorate but ratios at + share buyback recov