Dampskibsselskabet Norden A/s · OMXCOP:DNORD
Dampskibsselskabet Norden A/s — Q3 2018 Earnings Presentation
37 slides from Dampskibsselskabet Norden A/s's earnings presentation, Nov 7, 2018
Slide 1: Q3 results
PRESENTATION Q3 results Copenhagen, Denmark 7 November 2018 1 | Q3 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 2: Agenda
AGENDA • Business update • Dry Cargo – Q3 update – Market outlook • Tankers – Q3 update – Market 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
Slide 3: Business update
Business update 3 | Q3 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 4: Business update - overall: weak tanker market and healthy dry cargo market
BUSINESS UPDATE - OVERALL WEAK TANKER MARKET AND HEALTHY DRY CARGO MARKET Financial highlights Quarterly results • Q3 2018 Adjusted result USD -12 million 30 27.1 – Dry Operator USD 2 million and expectations of a strong Q4 25 – Dry Owner USD 4 million in improving markets 20 – Tankers USD -18 milli
Slide 5: 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) 417 Dry Cargo (+/-1,000USD* = USD 7 mill.) Adjusted Result last 4 quarters (USD million) 27 16,000 Capacity Cover Tanker Vessels (e
Slide 6: Dry Cargo
Dry Cargo 6 | Q3 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 7: Q3 Dry Operator: focus on profitability
BUSINESS UPDATE – Q3 DRY OPERATOR FOCUS ON PROFITABILITY • Q3 2018 Adjusted result of USD 2 million • Significantly higher result expected in Q4 • Total of 23,833 vessels days – 3% increase compared to average Q3 2017 • On average 264 vessels operated in Q3 2018 • Temporary reduced the number of cha
Slide 8: Q3 Dry Owner: increasing cover in healthy market
BUSINESS UPDATE – Q3 DRY OWNER INCREASING COVER IN HEALTHY MARKET • Q3 2018 Adjusted result of USD 4 million • Continues to optimize the dry owner fleet in efforts to concentrate ownership on Supramax and Panamax – – 2 Handysize vessels delivered to their new owner (sold in Q2) – Agreement with Japa
Slide 9: Market review - Dry Cargo Q3 2018
MARKET REVIEW – DRY CARGO Q3 2018 GRADUAL IMPROVEMENTS HAVE CONTINUED Key developments Panamax spot rates 16,000 • Rates continued to improve over 14,000 2017 levels 12,000 10,000 USD/day 8,000 – Panamax up 20% vs Q3 2017 6,000 4,000 – Supramax up 25% vs Q3 2017 2,000 - Jan Feb Mar Apr May Jun Jul A
Slide 10: Healthy dry cargo market expected in 2019
MARKET REVIEW – DRY CARGO OUTLOOK HEALTHY DRY CARGO MARKET EXPECTED IN 2019 • With continued low fleet growth, rates in 2019 is expected to resemble the rate environment seen in 2018 – Global macro-economic conditions will likely be slightly weaker than in 2018 – Fleet growth continues at manageable
Slide 11: Tankers
Tankers 11 | Q3 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 12: Q3 Tankers: weak third quarter market
BUSINESS UPDATE – Q3 TANKERS WEAK THIRD QUARTER MARKET • Q3 2018 Adjusted Result of USD -18 million in a historically weak market • Period rates not aligned with spot rates, so NORDEN utilized the gap to cover exposure for the next 6 months while not taking in new short-term capacity • No downward p
Slide 13: Market review - Tankers Q3 2018
MARKET REVIEW – TANKERS Q3 2018 ONE OF THE MOST CHALLENGING MARKETS IN A DECADE • Severe headwinds with the lowest spot rates seen in a decade • Declining product imports in Asia, South America and Middle East • Additional pressure on the clean tanker market as crude tankers switched markets • Tanke
Slide 14: Improvement expected in Q4
MARKET REVIEW – TANKERS OUTLOOK IMPROVEMENT EXPECTED IN Q4 • Rates are expected to improve in Q4 due to supply growth slowing and normal seasonality • Improving product tanker rates in 2019 are expected as – Refinery capacity will increase during the year – Fleet growth will be markedly lower than t
Slide 15: Final words
Final words 15 | Q3 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 16: Capturing value potential of Dry Operator
FINAL WORDS CAPTURING VALUE POTENTIAL OF DRY OPERATOR • Dry Operator building a track record and well positioned for further growth • Dry Owner is well positioned and NORDEN constantly working to optimize portfolio • Currently challenging Tanker market, but improvements expected in 2019. Large upsid
Slide 17: 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 18: 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 18 | Q3 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 19: Back-up slides
Back-up slides 19 | Q3 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 20: 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 21: 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 22: The Dry Operator is independent from Dry Owner
NORDEN DNA THE DRY OPERATOR IS INDEPENDENT FROM DRY OWNER • Separate P&L • Separate organisations ~100,000 vessel days last 12 months - • Separate KPIs and reward structures Contribution Margin of around 275 vessels • The value of the Dry Operator is not 679 USD per driven by an overall exposure to
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 portfolio
NORDEN DNA DRY OWNER PORTFOLIO Owned Fleet Charateristics 16 Current To be delivered • Portfolio primarily consists of Supramax and Panamax vessels 12 • Large portfolio of long-term charters from Japan with 5 significant optionality incl. purchase options 8 • Cover portfolio based on cargo contracts
Slide 25: Tankers portfolio
NORDEN DNA TANKERS PORTFOLIO Owned Fleet Charateristics • MR and Handysize vessels 14 12 • Primarily own technical management 10 • Portfolio of ~13 short-term (up to 14 months) time charters in 8 6 13 • All short-term chartering-out conducted via Norient Product 4 9 Pool (NPP) of which NORDEN owns 5
Slide 26: Overall results
OVERALL RESULTS USDm Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 EBITDA – Dry Operator -4.6 14.1 4.1 9.1 2.7 EBITDA – Dry Owner 10.1 14.8 5.5 9.5 8.7 EBITDA - Tankers 6.5 9.4 7.5 2.4 -8.8 EBITDA - Group 12.0 38.5 17.1 21.0 2.6 Depreciation -10.6 -10.7 -10.5 -10.9 -11.6 EBIT Group -2.2 28.2 18.4 7.5 -6.5
Slide 27: Capital structure – 53% equity share
CAPITAL STRUCTURE – 53% EQUITY SHARE Capital structure Net committed cash (ultimo) • Cash in low-risk deposit USDm Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 accounts and securities Adjusted net interest bearing -99 -101 -69 -59 -69 assets* • Outstanding yard payments Payments for newbuilding less -94
Slide 28: NORDEN scrubber overview
NORDEN SCRUBBER OVERVIEW Estimated time of installation Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 KAMSARMAX 82K I (5y TC) X NORDEN has secured 26 Panamax KAMSARMAX 82K II (5y TC) X scrubbers with installation Nord Summit X Nord Manatee X during 2019 and 2020 NORD COPPER X – The
Slide 29: Provisions
PROVISIONS Effect of provisions 150 119 108 100 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 Comments • Remaining provisions for third quarter of 2018 at USD 5 million • Reduced impact from provisions from 2018 29 | Q3 REPORT 2018 *Of w
Slide 30: Dry Owner positioning
30 SEPTEMBER 2018 DRY OWNER POSITIONING Q4 2018 2019 2020 Q4 2018 2019 2020 Own vessels Ship days Panamax 368 1,376 1,444 Supramax 746 3,694 4,028 Handysize 368 1,448 1,452 Total 1,482 6,518 6,924 Chartered vessels Cash costs for T/C capacity (USD per day) Panamax 1,504 5,996 6,405 12,554 13,415 13,
Slide 31: Dry Owner fleet and values
30 SEPTEMBER 2018 DRY OWNER FLEET AND VALUES NORDEN’s Dry Owner fleet NORDEN’s Dry Owner fleet values (USD million) Vessel type Panamax Supramax Handysize Total Vessel type Panamax Supramax Handysize Total Average age of owned vessels 12.0 4.7 6.3 7.0 Vessels in operation Owned vessels 4.0 7.5 4.0 1
Slide 32: Tanker positioning
30 SEPTEMBER 2018 TANKER POSITIONING Q4 2018 2019 2020 Q4 2018 2019 2020 Own vessels Ship days MR 1,196 4,544 4,683 Handysize 828 3,204 3,267 Total 2,024 7,748 7,950 Chartered vessels Cash costs for T/C capacity (USD per day) LR1 184 730 397 18,655 18,655 18,655 MR 2,382 5,591 4,234 13,866 14,470 14
Slide 33: Tanker fleet and values
30 SEPTEMBER 2018 TANKER FLEET AND VALUES NORDEN’s Tanker fleet NORDEN’s Tanker fleet values (USD million) Vessel type LR1 MR Handysize Total Vessel type LR1 MR Handysize Total Vessels in operation Average age of owned vessels N/A 6.4 9.1 7.5 Owned vessels 0.0 13.0 9.0 22.0 Chartered vessels 2.0 28.
Slide 34: Newbuilding prices
Million USD 0 10 20 30 40 50 60 Jan-76 Jan-78 34 | Q3 REPORT 2018 Jan-80 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 10 20 30 40 50 60 Jan-76 MR (Tank) Jan-78 Jan-8
Slide 35: Working capital
WORKING CAPITAL Working capital assets 316.2 Inventories 69.9 Freight Receivables 140.9 Receivables from joint ventures - Other receivables 26.4 Prepayments 79.0 Working capital liabilities 176.7 Trade payables 92.8 Other payables 36.8 Deferred income 45.3 Other 1.8 Net Working Capital 139.5 35 | Q3
Slide 36: Full-year expectations maintained
BUSINESS UPDATE - GUIDANCE FULL-YEAR EXPECTATIONS MAINTAINED Guidance – Adjusted result Guidance 40 • NORDEN maintains the expectations for the adjusted Result for the year at USD 0-30 million 30 20 to 30 • Expectations for Tankers are maintained – 20 although in the lower part of the guidance range
Slide 37: 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
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