Dampskibsselskabet Norden A/s · OMXCOP:DNORD
Dampskibsselskabet Norden A/s — Norden — FY2017 Earnings Presentation
42 slides from Dampskibsselskabet Norden A/s's earnings presentation, Mar 6, 2018
Slide 1: Annual Report 2017
NORDEN RESULTS Annual Report 2017 Copenhagen, Denmark 6 March 2018 1 | Annual report 2017 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 2: Agenda
AGENDA • The NORDEN DNA • Business update • Market Review – Latest developments – Outlook • Final words “In addition to the agile management of cyclical exposure to shipping industry, NORDEN also delivers additional value through operator activities – all in a company you can trust” 2 | Annual repor
Slide 3: The NORDEN DNA
The NORDEN DNA 3 | Annual report 2017 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 4: NORDEN DNA for the long-term shipping investor
NORDEN DNA FOR THE LONG-TERM SHIPPING INVESTOR • Full scale operational setup – direct customer contact • Agile portfolio management • Midsize vessel types – where operator skills are most valuable • Strong track record of maintaining financial strength through the cycles • Healthy balance sheet, tr
Slide 5: 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 6: Business Update
Business Update 6 | Annual report 2017 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 7: Business update - overall: positive annual result, strong end to 2017
BUSINESS UPDATE - OVERALL POSITIVE ANNUAL RESULT - STRONG END TO 2017 Financial highlights Annual results • Full year Adjusted Result USD 28.4 million 100 28 – Dry Cargo USD 14 million in improving markets 0 Tankers USD 14 million in difficult market USD million – -100 -35 -61 • Q4 2017 Adjusted res
Slide 8: Business update - guidance: positive results expected to continue
BUSINESS UPDATE - GUIDANCE POSITIVE RESULTS EXPECTED TO CONTINUE Guidance – Adjusted Result Guidance • Improvement in underlying profitability expected 45 – Significantly less support in 2018 from reversal of provisions 35 • Dry Operator expected to generate USD 50 to 60 10 to 50 million in Contribu
Slide 9: Business update - Dry Operator: off to a good start
BUSINESS UPDATE – DRY OPERATOR OFF TO A GOOD START • Dry Operator initiated July 2017 • In Q4 USD 24 million was generated in contribution margin – equal to an adjusted result of USD 14 million after O&A • Q4 performance based on strong execution of logistical optimization and regional positioning •
Slide 10: Business update - Dry Owner: benefitting from improving markets
BUSINESS UPDATE – DRY OWNER BENEFITTING FROM IMPROVING MARKETS • Q4 2017 Adjusted Result of USD 11.7 million • Increased focus on the Panamax and Supramax segments – Agreed early re-delivery of Post–Panamax time charter contracts – Secured two long term Supramax charters delivering 2019 – Sale of 1
Slide 11: Business update - Tankers: increased exposure for coming years
BUSINESS UPDATE – TANKERS INCREASED EXPOSURE FOR COMING YEARS • Full year adjusted result USD 14 million in a depressed Tanker market • Q4 2017 adjusted result of USD 2 million • Strong performance and increased activity in short term TC-in market key to delivering positive results • Increased Tanke
Slide 12: Market Review
Market Review 12 | Annual report 2017 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 13: Market review - Dry cargo 2017
MARKET REVIEW – DRY CARGO 2017 CLEAR IMPROVEMENTS DRIVEN BY HIGH DEMAND GROWTH Key developments TonMile demand growth • Improvement in rates – Panamax up 50% vs 2016 – Supramax up 46% vs 2016 • Total demand growth 4.8% • Supply growth 3% • Positive macro environment supporting Source: GTT and NORDEN
Slide 14: Market review - Dry cargo outlook
MARKET REVIEW – DRY CARGO OUTLOOK MARKET EXPECTED TO CONTINUE TO STRENGTHEN • Lowest supply growth since 1999 • Strong global economic growth • Support from Chinese activity expected to be lower than in 2017 resulting in lower overall demand growth • Ordering still at manageable levels • Risk of tra
Slide 15: Market review - Tankers 2017
MARKET REVIEW – TANKERS 2017 MARKET IN 2017 CHALLENGING AS EXPECTED • Freight rates at 5 year low • Seasonal rate increase limited in Q4 • Supply overhang pressuring rates • Healthy oil demand growth of 1.6% (IEA) but inventories used instead of imports ACM MR Product Tanker earnings [usd/day] Oil D
Slide 16: Market review - Tankers outlook
MARKET REVIEW – TANKERS OUTLOOK MARKET TO GRADUALLY IMPROVE THROUGH 2018 • Very poor start to the year in January and February – but market expected to improve • Positive macro environment adding to demand upside • Oil inventories normalizing • Lack of refinery additions compared to oil demand will
Slide 17: Final words
Final words 17 | Annual report 2017 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 18: Capturing value potential of Dry Operator
FINAL WORDS CAPTURING VALUE POTENTIAL OF DRY OPERATOR • New setup from mid 2017 with 3 business units • Significant growth opportunity for the Dry Operator, 2018 focus on building a track record and enabling growth • Dry Owner well positioned for improving market • Excellent upside to improved futur
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 2018 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 | Annual report 2017 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 21: Back-up slides
Back-up slides 21 | Annual report 2017 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 22: Valuation of NORDEN
VALUATION OF NORDEN Valutation of assets Financial input for valuation Dry Operator H2 2017 Net Debt -2 Contribution Margin USD 27 million ≈ 572 USD / vessel day Securities 8 Adjusted Result USD 12 million ≈ 253 USD / vessel day Cash and equivalents 211 Vessel days 46,674 Current bank debt -26 Own v
Slide 23: Dry Operator: logistical optimisation and positions
DS NORDEN - DRY OPERATOR DRY OPERATOR: LOGISTICAL OPTIMISATION AND POSITIONS Value levers Regional exposure Overall market exposure Clip deals Employment arbitrage Vessel selection Options Vessel operation Minimising ballast Taking a view on regional Taking a view on the Securing margin on a Choosin
Slide 24: Dry Owner: cyclical exposure to dry cargo
DS NORDEN – DRY OWNER DRY OWNER: CYCLICAL EXPOSURE TO DRY CARGO Generate superior long-term returns by: • Timing and negotiating transactions of owned and long-term charter contracts • Utilising access to off-market deals through long-term relationships with shipyards and ship owners • Eenabling por
Slide 25: Tankers: cyclical exposure and operator value
DS NORDEN – TANKERS TANKERS: CYCLICAL EXPOSURE AND OPERATOR VALUE Generate superior long-term returns by: • Maximising earnings through positioning and voyage optimisation • Timing and transactions of own vessels and long-term charter contracts • Short term TC-in activity • All short term chartering
Slide 26: Connection between operator and owner
CONNECTION BETWEEN OPERATOR AND OWNER Q4 2017 (USD Million) Dry Owner Dry Operator Eliminations Dry Cargo • The Dry Owner charters Revenue – services rendered external 9 418 0 427 out most of its capacity to Revenue – services rendered internal 44 0 -44 0 Revenue 54 418 -44 427 the Dry Operator Voya
Slide 27: Development highlights
DEVELOPMENT HIGHLIGHTS 2015- 300 Strategy: Focus & Simplicity Offices in Melbourne and Santiago 275 2005 2008 Norient Financial 1871 Product Pool crisis begins 250 Mads C. Holm founds NORDEN; first vessel delivered in 1872 225 1996-2005 Offices in Singapore, Annapolis, Shanghai, 200 Rio de Janeiro a
Slide 28: The share (DNORD)
THE SHARE (DNORD) Master data Composition of shareholders Shareholder capital DKK 42,200,000 • 16,086 registered shareholders owning Number of shares and 87.4% denomination 42,200,000 shares of DKK 1 • Approx. 31% international ownership Classes of shares 1 Voting and ownership A/S Motortramp, restr
Slide 29: Provisions
PROVISIONS Effect of provisions 150 119 83* 100 50 25 21 12 -230 -64 7 3 USD million 0 -50 -100 -150 -200 -250 2014 2015 2016 2017 2018 2019 2020 2021 2022 Comment • Remaining provisions at the end of 2017 of USD 67 million • Reduced impact from provisions from 2018 29 | Annual report 2017 *25 USD m
Slide 30: Overall results
OVERALL RESULTS USDm Q1 2017 Q2 2017 Q3 2017 Q4 2017 2017 EBITDA – Dry Cargo -6.3 -2.6 5.5 29.1 25.7 EBITDA - Tankers 16.6 10.0 6.5 9.4 42.5 EBITDA - Group 10.3 7.3 12.0 38.5 68.1 Depreciation -10.6 -10.2 -10.6 -10.7 -42.2 EBIT Group 0.1 -2.8 -2.2 28.2 23.3 Result for the period 0.7 -3.3 0.1 27.1 24
Slide 31: Financial strength
FINANCIAL STRENGTH Capital structure Net commited cash (ultimo) • Cash in low-risk deposit USDm Q4 2017 Q3 2017 Q2 2017 Q1 2017 Q4 2016 accounts and securities Adjusted net interest -59 -69 -9 12 12 bearing assets* • Outstanding yard payments T/C obligations ** -1,226 -1,267 -1,229 -1,202 -1,143 (in
Slide 32: Continuously outperforming the markets
PERFORMANCE CONTINUOUSLY OUTPERFORMING THE MARKETS Tankers – 4 quarter rolling NORDEN TCE over benchmark 5,000 4,000 3,000 2,000 1,000 0 -1,000 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Handy MR Dry Cargo – 4 quarter rolling NORDEN TCE over benchmark 6,000 4,000 2,000 0 Q4 2015
Slide 33: NORDEN TCE dry cargo
NORDEN TCE DRY CARGO Q1 2017 Q2 2017 Q3 2017 Q4 2017 2017 Core days 90 91 181 Capesize TCE 10,411 12,676 11,550 Core days 359 364 368 368 1,459 Post-Panamax TCE 9,428 11,539 9,304 13,039 10,834 Core days 2,855 2,835 2,856 3,031 11,577 Panamax TCE 7,299 7,897 9,899 14,123 9,873 Core days 2,803 2,522
Slide 34: Classic TCE dry cargo
CLASSIC TCE DRY CARGO Q1 2017 Q2 2017 Q3 2017 Q4 2017 2017 Fleet days 90 91 181 Capesize TCE 10,411 12,676 11,550 Fleet days 567 386 406 368 1,727 Post-Panamax TCE 8,492 10,441 12,040 15,689 11,295 Fleet days 8,755 8,576 9,055 8,481 34,817 Panamax TCE 7,612 9,647 9,698 12,729 9,899 Fleet days 7,448
Slide 35: Dry Owner positioning
31 DECEMBER 2017 DRY OWNER POSITIONING Capacity and coverage, Dry Cargo, at 31 December 2017 2018 2019 2020 2018 2019 2020 Own vessels Ship days Panamax 1,442 1,376 1,444 Supramax 2,912 4,061 4,726 Handysize 2,165 2,172 2,161 Total 6,519 7,609 8,331 Chartered vessels Costs for T/C capacity (USD per
Slide 36: Dry Owner fleet and values
31 DECEMBER 2017 DRY OWNER FLEET AND VALUES NORDEN's Dry Cargo fleet and values at 31 December 2017 Vessel type Post-Panamax Panamax Supramax Handysize Total Vessels in operation Owned vessels 0.0 4 5.5 7 16.5 Chartered vessels 4.0 12.5 12 4 32.5 Total active fleet 4.0 16.5 17.5 11.0 49.0 Vessels to
Slide 37: Tanker positioning
31 DECEMBER 2017 TANKER POSITIONING Capacity and coverage, Tanker, at 31 December 2017 2018 2019 2020 2018 2019 2020 Own vessels Ship days LR1 0 0 0 MR 4,134 3,923 3,955 Handysize 3,586 3,591 3,593 Total 7,719 7,514 7,548 Chartered vessels Costs for T/C capacity (USD per day) LR1 726 730 397 18,655
Slide 38: Tanker fleet and values
31 DECEMBER 2017 TANKER FLEET AND VALUES NORDEN's Tanker fleet and values at 31 December 2017 Vessel type LR1 MR Handysize Total Vessels in operation Owned vessels 0 11 10 21 Chartered vessels 2 23 5 30 Total active fleet 2 34 15 51 Vessels to be delivered Owned vessels 0 0 0 0 Chartered tonnage 0 1
Slide 39: Newbuilding prices
Million USD 0 20 30 40 50 60 10 Jan-76 Jan-78 Jan-80 39 | Annual report 2017 Panamax (Dry) Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 NEWBUILDING PRICES Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Million USD 0 20 30 40 50 60 10 Jan-76 MR (Tank) Jan-78 J
Slide 40: Panamax spot rate
PANAMAX Spot rate 14,000 12,000 10,000 8,000 USD/day 6,000 4,000 2,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 2017 2018 * Source: Clarksons 40 | Annual report 2017 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 41: Supramax spot rate
SUPRAMAX Spot rate 12,000 10,000 8,000 USD/day 6,000 4,000 2,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 2017 2018 * Source: Clarksons 41 | Annual report 2017 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 42: What is time charter equivalent (TCE)?
INDUSTRY – TCE WHAT IS TIME CHARTER EQUIVALENT (TCE)? NORDEN (as owner) has contracted with a customer to move 50,000 mt of cargo at a rate of $20 per Metric Ton. 10 Days 5 Days 20 Days 5 Days Ballast Leg Loading Laden Leg Discharging Total: 40 Days Owners Cost: Owners Cost: Owners Cost: Owners Cost