Dampskibsselskabet Norden A/s · OMXCOP:DNORD
Dampskibsselskabet Norden A/s — Norden — Q2 2016 Earnings Presentation
37 slides from Dampskibsselskabet Norden A/s's earnings presentation, Aug 17, 2016
Slide 1: NORDEN Results: Second quarter and first half-year of 2016
NORDEN RESULTS Second quarter and first half-year of 2016 Hellerup, Denmark 17 August 2016 NORDEN – SECOND QUARTER AND FIRST HALF OF 2016 RESULTS | 1 Our business is global tramp shipping
Slide 2: Agenda
AGENDA Group highlights Financials Dry Cargo Tankers Strategy 2016 expectations Q&A NORDEN – SECOND QUARTER AND FIRST HALF OF 2016 RESULTS | 2 Our business is global tramp shipping
Slide 3: Q2 Highlights
Q2 HIGHLIGHTS Adjusted result Key messages 40 29 Adjusted result for Q2 USD -4 mill. 30 20 18 Improvements in Dry Cargo in Q2 but 10 still at low levels USD million 3 -5 -4 0 A continued decline in the Tanker -10 -20 Q4: -337 (incl. write market -30 downs and provisions) -40 -50 Executing st
Slide 4: Financials: Weakness in tanker market offsetting improvement in dry
FINANCIALS WEAKNESS IN TANKER MARKET OFFSETTING IMPROVEMENT IN DRY Adjusted result – Dry Cargo Adjusted result - Tankers 10 35 4 30 32 0 -11 25 -10 -14 25 USD million USD million -20 20 -20 15 18 -30 15 Q4: - 355 (incl. write 10 downs and provisions) -40 5 7 -50 0 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2
Slide 5: Performance: Continuously outperforming the markets
PERFORMANCE CONTINUOUSLY OUTPERFORMING THE MARKETS Tankers - 4 quarter rolling NORDEN TCE over benchmark 6,000 5,000 4,000 USD/day 3,000 2,904 2,000 1,505 1,000 0 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Handy MR Dry Cargo - 4 quarter rolling NORDEN TCE over benchmark 6,000 5,000 4,00
Slide 6: Financials: Balanced capital structure
FINANCIALS BALANCED CAPITAL STRUCTURE USD -16 million in cash flow from operations Net commitments lowered by USD 66 million during Q2 2016 Combined undrawn credit facilities, cash and securities at USD 630 million versus USD 229 million in outstanding yard payments Payments for newbuildings
Slide 7: Asset values: A slight increase in Dry Cargo values
ASSET VALUES A SLIGHT INCREASE IN DRY CARGO VALUES Asset values for Dry Cargo reached an all time low at the beginning of Q2, but has started to increase as rates have improved A steady decline in in Tanker values during the quarter – back to 2014 levels Value of owned fleet is 50/50 between D
Slide 8: Dry Cargo: Improvements in Q2 - but still at low levels
DRY CARGO IMPROVEMENTS IN Q2 - BUT STILL AT LOW LEVELS Poor market conditions remained in Q2 Structural oversupply of ships continues to have a negative influence Increased exports to China contributed with demand growth Idled vessels re-entered the market in Q2 and constrained the upward mo
Slide 9: Dry Cargo: Higher Chinese imports offset by lower trade in rest of the world
DRY CARGO HIGHER CHINESE IMPORTS OFFSET BY LOWER TRADE IN REST OF THE WORLD Global trade increased by 1% in volumes in the first half of 2016 Exports to China has increased by 5 % in Q2 2016 compared to Q2 2015 Iron ore leading the way with an increase by 9% Coal exports to China increased w
Slide 10: Dry Cargo: Continuous decline in supply growth
DRY CARGO CONTINUOUS DECLINE IN SUPPLY GROWTH Improved outlook for 2016 demand growth Chinese governmental stimulus continues to support economic activity Meanwhile, the Chinese government continues to cut back the coal production capacity 2016 fleet growth expected to be ≈2% Year-to-date
Slide 11: Tankers: Q2 brought lower rate levels
TANKERS Q2 BROUGHT LOWER RATE LEVELS The market conditions for product tankers have softened with spot rates now on par with the pre 2015 levels Disappointing summer demand for gasoline transportation Production of gasoline increased, especially in importing regions Many new tankers entered
Slide 12: Tankers: Summer gasoline season disappointed
TANKERS SUMMER GASOLINE SEASON DISAPPOINTED High stocks and lower margins in Q2 resulted in no growth in crude runs (Year-on-year) Gasoline production yields have been increased instead of higher crude runs High Diesel stocks are limiting demand for tankers but stocks have started to decline G
Slide 13: Tankers: Lack of ordering is leading to lower supply growth
TANKERS LACK OF ORDERING IS LEADING TO LOWER SUPPLY GROWTH Oil demand still expected to show descent growth albeit at a lower level than 2015 High stock levels continues to challenge refinery economics and growth in product trades High fleet growth in product tankers still expected for 2016 (≈
Slide 14: Strategy
STRATEGY “Focus & Simplicity” Focus on the segments where we can best utilize our organization and strong customer relationships with the aim to increase operator activities Converting Dry Cargo core fleet to Supramax and Panamax Capesize vessels sold - final exit from Capesize segment durin
Slide 15: 2016 Full Year Guidance
2016 FULL YEAR GUIDANCE Outlook Comments USDm Dry Cargo Tankers Total Guidance adjusted Adjusted results for -65 to -45 5 to 25 -60 to -20 the year Market developed as expected in Dry Cargo but has disappointed in Tankers Adjusted net result USD -60 to -20 million Open days for the rest of 2
Slide 16: 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 2016 and subsequent years are subject to uncertainty, and NORDEN’s actual results may therefore differ from the p
Slide 17: Thank you for your attention
Thank you for your attention http://www.linkedin.com/company/ds-norden/ http://twitter.com/DS_NORDEN http://www.facebook.com/shippingtrainee.com http://www.facebook.com/dampskibsselskabetnorden Dampskibsselskabet NORDEN A/S 52, Strandvejen DK-2900 Hellerup Denmark Phone: +45 3315 0451 www.ds-norden.
Slide 18: Back up slides
FORWARD BACK UP SLIDES LOOKING STATEMENTS NORDEN – SECOND QUARTER AND FIRST HALF OF 2016 RESULTS | 18 Our business is global tramp shipping
Slide 19: What makes NORDEN different?
WHAT MAKES NORDEN DIFFERENT? 2 Segments - focus on vessel types where we can make a difference Dry Cargo Tankers Full scale operational setup - Direct customer contact Portfolio of Time charter-in contracts and earnings coverage Long track record of overperformance in Dry Cargo and Tanke
Slide 20: A leading global tramp operator
A LEADING GLOBAL TRAMP OPERATOR 225 DRY CARGO VESSELS PANAMAX (86) SUPRAMAX (90) CAPESIZE (1) POST-PANAMAX (9) HANDYSIZE (34) Modern fleet Global network of offices and port captains Pools in Dry cargo (Handysize & Post-Panamax) and Tankers (MR & Handysize) Tankers MR (27) HANDYSIZE (13) 40 TA
Slide 21: Development highlights
DEVELOPMENT HIGHLIGHTS 2015- Strategy: Focus & Simplicity Offices in Melbourne and Santiago 300 2005 2008 275 1871 Financial Norient Mads C. Holm founds NORDEN; first vessel delivered in crisis Product 1872 begins 250 Pool 225 1996-2005 Offices in Singapore, Number of active vessels 1875-76 200 Anna
Slide 22: Asset light business model
ASSET LIGHT BUSINESS MODEL… Active fleet can quickly be adjusted to demand and market conditions Fleet employment based on portfolio view Flexible fleet Coverage and customer focus Capacity Employment CORE FLEET Sale and purchase Customer relations Contracts of Technical competencies in- O
Slide 23: Enabling value creation based on the cycle and throughout the cycle
…ENABLING VALUE CREATION BASED ON THE CYCLE AND THROUGHOUT THE CYCLE Exploiting the cycle Creating value throughout the cycle Taking a view on the fundamental market and adjusting our Creating value above industry level irrespective of market exposure conditions Levers: Levers: Commercial operations
Slide 24: Overall results
OVERALL RESULTS USD million Q2 2015 Q1 2016 Q2 2016 EBITDA - Dry Cargo 17.3 -12.5 -4.5 EBITDA - Tankers 34.4 23.9 16.7 EBITDA - Group 51.7 11.4 12.2 Depreciation -17.0 -13.3 -13.8 EBIT Group 35.8 -1.3 -34 Result for the period 43.3 4.6 -24 Adjusted Result for the period 28.9 -5.3 -3.5 Cash flow from
Slide 25: Impairment and provision announced Jan. 2016
IMPAIRMENT AND PROVISION ANNOUNCED JAN. 2016 - EQUITY ALIGNED WITH ”VALUE IN USE” Impairment of book values of owned vessels: USD 180 million Provision on onerous TC-in contracts: USD 160 million Valuations of owned vessels and TC-in fleet based on ”value-in-use” calculation FFA rates for 2
Slide 26: Tankers: Long term market - MR rates
TANKERS LONG TERM MARKET – MR RATES 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1993 2010 1990 1991 1992 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2011 2012 2013 2014 2015 2016 Source: Clarksons NORDEN – SECOND QUARTER AND FIRST HALF OF 2016 RESULTS | 26 O
Slide 27: Value creation: New measure for earnings (TCE)
VALUE CREATION NEW MEASURE FOR EARNINGS (TCE) NORDENs dry cargo business is a mixture of core fleet and operation activities Operator activities Focus on the margin created when cargoes and vessels are combined New NORDEN TCE = Total TCE earnings from the core fleet + the contribution margin
Slide 28: New building prices
USD million 0 10 20 40 50 60 30 1976 1977 Source: Clarksons 1979 1981 1983 Panamax (Dry) 1984 1986 1988 1990 1991 1993 1995 1997 1998 2000 NEW BUILDING PRICES NORDEN – SECOND QUARTER AND FIRST HALF OF 2016 RESULTS | 28 2002 2004 2005 2007 2009 2011 2012 2014 2016 USD million 0 20 30 40 50 60 1976 10
Slide 29: Value creation: NORDEN TCE vs classic TCE
VALUE CREATION NORDEN TCE VS CLASSIC TCE NORDEN TCE Employment and rates, Dry Cargo, Q2 2016 Vessel type Capesize Post- Panamax Supramax Handysize Total Panamax NORDEN core fleet days 91 727 2,459 2,136 2,086 7,500 New NORDEN TCE (USD per day) 3,106 5,552 7,873 7,392 6,537 7,082 Benchmark* 5,947 5
Slide 30: Financial strength
FINANCIAL STRENGTH Capital structure Net committed cash (ultimo) Strong focus on cash flow generation USDm Q2 2016 Q1 2016 Q4 2015 Q3 2015 Cash in low-risk deposit accounts and Adjusted net interest -24 18 -6 32 securities bearing assets* Outstanding yard payments (incl. joint T/C obligations*
Slide 31: Fleet values
FLEET VALUES Fleet values at 30 June 2016 USD ’000 Broker estimated value of owned Broker estimated value of Added Number Average dwt. Carrying amount/cost vessels* charter party value Dry Cargo Post-Panamax 4.0 114,000 45 45 0 0 Panamax 6.0 79,000 127 87 30 -10 Supramax 12.5 65,000 257 214 0 -44 Ha
Slide 32: Dry Cargo fleet overview
DRY CARGO FLEET OVERVIEW NORDEN’s Dry Cargo fleet and values at 30 June 2016 Vessel type Capesize Post-Panamax Panamax Supramax Handysize Total Vessels in operation Owned vessels 0.0 4.0 4.0 5.5 12.0 25.5 Chartered vessels with a duration of more than 13 months 1.0 4.0 22.0 19.0 11.0 57.0 Total acti
Slide 33: Product tanker fleet overview
PRODUCT TANKER FLEET OVERVIEW NORDEN’s Tanker fleet and values at 31 March 2016 Vessel type LR1 MR Handysize Total Vessels in operation Owned vessels 0 9 13 22 Chartered vessels with a duration of more than 13 months 0 16 0 16 Total active core fleet 0 25 13 38 Chartered vessels with a duration of l
Slide 34: Dry Cargo capacity
DRY CARGO CAPACITY Capacity, Dry Cargo, at 30 June 2016 Q3 2016 Q4 2016 2017 2018 Q3 2016 Q4 2016 2017 2018 Owned vessels Ship days Capesize - - - - Post-Panamax 351 88 - - Panamax 368 367 1,498 1,811 Supramax 506 483 1,983 2,893 Handysize 1,058 761 2,838 2,879 Total 2,283 1,699 6,319 7,583 Chartere
Slide 35: Dry Cargo coverage
DRY CARGO COVERAGE Coverage, Dry Cargo, at 30 June 2016 Q3 2016 Q4 2016 2017 2018 Q3 2016 Q4 2016 2017 2018 Coverage Revenue from coverage (USD per day) Capesize 21 - - - 4,473 - - - Post-Panamax 245 20 - - 4,933 5,742 - - Panamax 5,068 2,238 3,758 2,879 8,081 9,530 12,644 14,822 Supramax 4,293 1,75
Slide 36: Product tankers: Capacity and coverage
PRODUCT TANKERS Capacity and coverage, Tankers, at 30 June 2016 Q3 2016 Q4 2016 2017 2018 Q3 2016 Q4 2016 2017 2018 Owned vessels Ship days LR1 - - - - MR 828 824 3,237 3,229 Handysize 1,196 1,192 4,674 4,671 Total 2,024 2,016 7,911 7,900 Chartered vessels Costs for T/C capacity (USD per day) LR1 -
Slide 37: The share (DNORD)
THE SHARE (DNORD) Master data Composition of shareholders 15,895 registered shareholders owning Shareholder capital DKK 42,200,000 88.3% Number of shares and Approx. 30.5% international ownership denomination 42,200,000 shares of DKK 1 Classes of shares 1 Voting and ownership restrictions None A