Great Eastern Shipping Co. Ltd. · NSE:GESHIP
Great Eastern Shipping — The Great Eastern Shipping Company — FY2001 Earnings Presentation
43 slides from Great Eastern Shipping's earnings presentation, May 8, 2001
Slide 1: The Great Eastern Shipping Company Limited Corporate Presentation & Financial Announcement FY 2001
The Great Eastern Shipping Company Limited Corporate Presentation & Financial Announcement FY 2001 8 May 2001
Slide 2: Corporate mission
Corporate mission “To be a leading service provider of marine logistics involving shipping and offshore services with a focus on the energy sector.” 2
Slide 3: Corporate profile
Corporate profile Largest Indian private • Crude & products transportation sector shipping co. • Dry bulk transportation Largest Indian private • Oil field services sector offshore • Port services service provider Knowledge driven • Techno-commercial expertise organisation • Opportunities & Risk ass
Slide 4: Professional management structure
Professional management structure Board of Directors Managing Director Managing Director Pooling Overall mgt. Consensus experience responsibilit on important & y decisions resources Core operating committees Head - Shipping Head - Offshore President–Corp CFO CIO & Head-HR & Co. Sec. 4
Slide 5: Corporate objectives
Corporate objectives Preferred service Stability & visibility Long-term growth provider of earnings •Focus on •Diversified •Asset expansion: customer portfolio supporting growth and quality of of related opportunities service businesses •Stronger operating •Constant •Exposure to model modernisation
Slide 6: Business segments
Business segments G.E. Shipping SHIPPING OFFSHORE Crude Product Dry bulk Gas Offshore Port support / services Terminal services • Suezmax • Handymax • Aframax • Harbour / • Handysize terminal • Medium range Offshore support tugs Drilling • General / logistics services purpose • Drilling rigs • Ancho
Slide 7: Shipping Business
Shipping Business 7
Slide 8: Global overview
Global overview Earnings drivers Demand drivers Supply drivers Trade growth Trade patterns Ordering Scrapping World GDP OPEC Inventory Steel Shipyard Replacement New building growth prodn levels prodn capacity demand prices Wet/ Wet/ Wet/ Wet/ Wet Wet Dry dry dry dry dry Crude Refinery Regional sour
Slide 9: Techno-commercial Capabilities
Techno-commercial Capabilities Fleet age 25 19.3 20 No.of years 12.8 14.3 15 15 12.5 10 4.9 5 0 Dry Bulk Product Crude GES World • Ability to participate in premium international trades • CAP rating initiative: 4 product tankers certified • All oil major approvals on 3 crude oil carriers • All oil m
Slide 10: Redefining asset allocation
Redefining asset allocation Details No. Aggr. DWT Avg age (yrs) 2001 1997 2001 1997 2001 1997 Crude oil tankers 3 1 355,000 150,000 5 5 Product tankers-GP 6 9 173,000 259,000 15 14 Product tankers-MR 7 6 335,000 280,000 15 14 Gas carrier 1 1 28,400 28,400 23 19 Bulk carriers 15* 17 410,000 610,000 1
Slide 11: Global customer acceptability
Global customer acceptability FY97 FY01 Others N America Intl. India 3% 14% 5% (Pub) 27% Europe 20% Asia- India Pacific India (Pvt) 18% 18% 95% 11
Slide 12: Risk Management: optimising opportunities
Risk Management: optimising opportunities RISK MANAGEMENT • Multiple sector exposure Market • Cross geo asset deployment • Period cover • Favourable value asset acquisition • Quality assets – intl. certifications Environment • Stringent safety practices • Global oil pollution response contract Techn
Slide 13: Operating highlights
Operating highlights Q4 FY01 Q4 FY00 FY2001 FY2000 Crude tankers – Suezmax Operating days 90 58 380 335 Operating capacity 13.0 8.4 55.2 48.6 TCY [$ / day] 18,876 15,373 19,005 15,108 Crude tankers –Aframax Operating days 179 195 732 735 Operating capacity 18.8 20.5 76.9 77.2 TCY [$ / day] 41,041 13
Slide 14: Operating highlights
Operating highlights Q4 FY01 Q4 FY00 FY2001 FY2000 Bulk carriers – Handymax Operating days 827 940 3485 3398 Operating capacity 32.2 36.2 137.9 130.8 TCY [$ / day] 7,678 6,596 8,095 6,569 Bulk carriers – Handysize Operating days 258 245 1044 1221 Operating capacity 7.0 6.6 28.4 33.0 TCY [$ / day] 5,
Slide 15: Freight rates: current perspective
Freight rates: current perspective 60,000 52,000 45,000 40,000 US$ per day 30,000 30,00 25,000 0 25,00 20,000 0 19,00 13,000 15,000 14,00 9,400 0 0 9,000 10,700 10,100 6,000 8,700 7,000 6,000 5,700 0 Suez Afra MR GP H-max H-Size 10 year H / L High Low Current 15
Slide 16: Future outlook
Future outlook TANKERS Freight rates off • OPEC supply cut Q4 peaks • Slowdown in U.S. economy • IEA estimated oil demand increase Positive outlook by 1.8% through • Marginal fleet accretion – 4% of FY 2002 current fleet to be delivered in 2001 DRY BULK • Aggressive fleet additions: 12% of existing
Slide 17: Revenue visibility
Revenue visibility FY02 operating capacity covered Crude Product Dry Bulk Covered 39% Covered Covered 35% 6% Open Open Open 65% 94% 61% Rs 674 million Rs 1057 million Rs 93 million covered covered covered • 35% of FY 2001 revenues already covered • Targeting enhanced crude coverage • Limited risk ma
Slide 18: Future direction
Future direction Enhanced focus on tankers Dry bulk expansion linked with Creation of a attractive market sustainable brand opportunities Modernisation of Enhanced asset base: customer focus greater intl. exposure De-risking strategies 18
Slide 19: Offshore Business
Offshore Business 19
Slide 20: Offshore business matrix
Offshore business matrix Drilling service s Marine logistics Marine construction Port services Air logistics 20
Slide 21: Global sector outlook
Global sector outlook Trend of range-bound • Brent crude: FY2001 oil prices US$ 22-28 / barrel Buoyant gas prices • Indications of US exploring gas production indigenously Enhanced exploration • Increased demand for offshore activity services Offshore industry in • Emergence of limited number of con
Slide 22: Domestic sector outlook
Domestic sector outlook Drilling activity at core • Marine support services revolve of the sector around drilling GoI policy allows • 25 of identified 48 blocks awarded private & foreign under NELP-I investment in oil •23 bids under scrutiny for 25 exploration exploration blocks under NELP-2 ONGC ex
Slide 23: Company position
Company position Initial investment focused on ONGC operations Developed long Poised to experience & capitalise on productive emerging relationships opportunities Leading Increasing service E&P provider within operations the sector Improving profitability 23
Slide 24: Offshore fleet profile
Offshore fleet profile Details No. Avg age (yrs) 2001 1997 2001 1997 Oil drilling rigs 2 2 27 23 Offshore support vessels 14 10 16 15 Harbour tugs 10 2 6 11 Construction barge 1 1 23 19 Capital employed 2817 3000 2068 Rs mln 2000 1000 0 Offshore 1997 2001 24
Slide 25: Offshore Support Vessels
Offshore Support Vessels Leading service provider in the sector Foray into Servicing all specialised E&P operators services: deep in India water drilling Further demand from NELP and E&P Main competition expansion from foreign programmes contractors 25
Slide 26: Port services
Port services Servicing public & private sector port trusts Further demand Focused on from upcoming market led LNG / chemical growth terminals Corporatisation of Competition from major ports / devlpt port authority-owned of minor open infrastructure & greater opportunities further acquisition 26
Slide 27: Safety, quality and training
Safety, quality and training •Driven by high operational standards System required in the sector •Control systems to regulate Safety, Quality & Implementation Environmental Protection •Safety & knowledge enhancement training Compliance programmes: increase awareness, efficiency Monitoring •Regular i
Slide 28: Operating highlights
Operating highlights Q4 FY01 Q4 FY00 FY2001 FY2000 Drilling rigs Operating days 102 138 652 607 Operating rate [$ / day] 22,674 27,474 22,179 30,306 Support vessels Operating days 1072 1186 3,790 3,621 Operating rate [$ / day] 4,581 4,018 4,271 4,130 Harbour tugs Operating days 922 721 3,272 2,449 O
Slide 29: Revenue visibility
Revenue visibility FY02 operating capacity covered OSV Harbour Tugs Covered Covered 56% 41% Open Open 44% 59% Rs.500 million covered Rs.198 million covered Rigs Construction barges Open 39% Covered 10% Covered Open 61% 90% Rs.543 million covered Rs.10 million covered • 57% of FY2001 revenues covered
Slide 30: Revenue visibility
Revenue visibility OSVs / Tugs FY97-98 FY00-01 Others Others ONGC Ports 17% 9% 18% 16% ONGC 30% Ports Enron Cairn 33% Hardy 18% 8% Hardy Enron Cairn 6% 14% 15% 16% Rig / Construction FY97-98 FY00-01 ONGC 45% Others Others 11% 17% ONGC L&T 79% Mosbach 4% or L&T Hardy 20% 5% 19% 30
Slide 31: The Future
The Future • Commitment to deepwater drilling services - enhanced business prospects – Acquisition of Malaviya Ten (US$20 m) – 2 PSVs ordered - US$26 m - delivery 2002 • Future expansion linked to E&P activity in India – Mumbai High redevelopment programme – Ravva Phase II - KG basin – Lakshmi Field
Slide 32: Financial performance
Financial performance 32
Slide 33: Financial overview
Financial overview • Market capitalisation: Rs. 7,178 million* • Cash generation of Rs. 3,782 million in FY2001 • Net Worth Rs. 10,910 million • Capital employed Rs. 20,124 million - Debt:Equity 0.84:1 • Book Value per share: Rs. 50 per share • NAV of Assets: Rs.67 per share* • AAA rating by CRISIL
Slide 34: Financial performance
Financial performance 12000 10 10813 9641 9808 9945 10000 8781 8 7.5 8000 Total income 5.71 Rs mln EBITDA Rs 6000 4.74 5 4.39 4740 PAT 4206 4.1 3836 3685 EPS 4000 3530 2.5 1642 1774 2000 1364 1264 1068 0 0 1996-97 1997-98 1998-99 1999-00 2000-01 34
Slide 35: Capital employed
Capital employed 25000 21,457 21,335 19,944 20,307 20,124 20000 8317 9348 10054 8358 9214 15000 Debt Rs mln Equity 10000 11586 11990 12109 11281 10910 5000 0 1996-97 1997-98 1998-99 1999-00 2000-01 35
Slide 36: Operating highlights
Operating highlights Q4 FY01 Q4 FY00 FY2001 FY2000 TCE Income 2783 2040 9167 8115 Operating profit 1335 1035 4740 3684 Cash profit 1037 818 3782 2916 PAT 546 323 1774 1067 EPS (Rs.) 2.3 1.2 8.0 4.1 3000 2783 2500 2228 2155 2002 2000 Rs mln TCE Income 1500 PAT 1000 485 546 328 415 500 0 36 Q1 FY2001
Slide 37: Business distribution
Business distribution 2000-01 Composition of Composition of Operating Profit capital employed Shipping 76% (PBDIT) 64% 14% Offshore 20% Rs.20,124 mn Rs.4,740 mn* 22% Others 4% * - incl.profit on sale 37
Slide 38: Financial analysis
Financial analysis FY01 FY00 OPM 42% 32% NPM 16% 11% RONW 16% 9.5% EPS 8.00 4.10 CEPS 17.2 11.3 Debt/Equity 0.84 0.89 Interest cover 6.6 6.1 38
Slide 39: Value initiatives
Value initiatives •Buyback of equity shares Optimisation of •Prepayment of high cost debt Capital structure •Appointed Accenture to advise Cost Reduction •Cost savings in FY 2001: Rs.195 million initiatives •Expected savings in FY 2002: Rs.250 million Reduced non- •Aggressive divestment of propertie
Slide 40: Buyback objectives
Buyback objectives Strong cash generation expected • Positive operating outlook • Sale of non-core assets Adequate fund availability for near-term capital expenditure • To be funded from internal accruals and higher leveraging Value enhancement • Book Value per share: Rs.50 • NAV per share: Rs.67 •
Slide 41: Concerns: pro-active redressal
Concerns: pro-active redressal Equities trading •No investments, liquidating existing portfolio •Current exposure: Rs. 20 million Commodities •Reduced substantially over last 3 years trading •Close positions by FY 2002 •Demerged property division Property exposure •Pro-active liquidation of assets F
Slide 42: Sector leadership: position Sector
Sector leadership: Sector position global focus Global acceptability Enhancing De-risking stakeholder business value Modernising Focusing on infrastructure Returns Creation of brand identity 42
Slide 43: Visit us at www.greatship.com
Visit us at www.greatship.com 43
The Great Eastern Shipping Company — FY2001 Earnings Presentation on 6ix