Great Eastern Shipping Co. Ltd. · NSE:GESHIP
Great Eastern Shipping — The Great Eastern Shipping Company — Investor Presentation (August 2003)
33 slides from Great Eastern Shipping's investor presentation, August 2003
Slide 1: The Great Eastern Shipping Company Ltd.
The Great Eastern Shipping Company Ltd. India’s premier Shipping and Offshore service provider
Slide 2: Forward looking information
Forward looking information This presentation contains certain forward looking information through statements, which are based on management’s current expectations and observations. The company does not guarantee the accuracy of these assumptions. There are a number of risks and uncertainties which
Slide 3: Business Profile
Business Profile Shipping Offshore Division Division Offshore Drilling Services Tankers Offshore Support and Logistics Services Crude Crude Product Product LPG LPG Marine Construction Projects and Services Dry Bulk Carriers Port Support and Terminal Services
Slide 4: Shipping Division Fleet profile
Shipping Division Fleet profile 23 Tankers: 5 Crude oil carriers 17 Product carriers 1 LPG Carrier 9 Dry bulk carriers: 1 Panamax 3 Handymax 3 Handysize 2 MBC On order: 4 Tankers aggregating 0.47 mn dwt 1 Aframax crude carrier 1 MR product carrier 2 Suezmax crude carriers GES fleet average age 12.6
Slide 5: Offshore division fleet profile
Offshore division fleet profile 2 exploratory drilling rigs 16 offshore support vessels ( of which 3 cater to deep water support services) 1 construction barge 11 Harbour tugs On order 3 OSVs capable of deep water support services 2 Anchor Handling Tug Supply Vessels 1 Platform Supply Vessel Only In
Slide 6: Shipping Industry
Shipping Industry
Slide 7: Earnings' Drivers: Shipping business
Earnings’ Drivers : Shipping business Demand Drivers Supply Drivers Trade Growth Trade Patterns Ordering Scrapping Wet/Dry World GDP Crude sourcing Shipbldg. Economic growth areas capacity Life Wet/Dry OPEC prodn Wet Refinery Replacement location demand Market Oil dynamics inventory levels Dry Steel
Slide 8: Freight Markets Movement
Freight Markets Movement
Slide 9: Global tanker market - spot earnings
Global tanker market - spot earnings 60,000 •Pick up in winter demand 50,000 •Prolonged Venezuelan strike • Sinking of ‘Prestige’ 40,000 •Japan’s nuclear plant shut down $/day •Iraq factor 30,000 S’max 10 yr av earnings: $20,300/day 20,000 A’max 10 yr av earning: $16,470/day Cln prod 10 yr av earnin
Slide 10: Tankers: Delivery and Scrapping
Tankers: Delivery and Scrapping On March 31, 2003 Order book: 61.2 mn dwt equals 20% of fleet 25 23.1 Total fleet: 295 mn dwt 20 Total Fleet as on July 1, 03: 17.2 301 mn dwt 15.5 15 mn dwt 10 10 5 0 2002 Jun-03 Total delivery Total scrapping Source: Clarksons’ research studies
Slide 11: Global dry bulk market - spot earnings
Global dry bulk market - spot earnings 15,000 •Increased steel production in China and Japan •Increased coal trade to Japan 13,000 •Limited tonnage growth $/day 11,000 P’max10 yr av. Earnings: $9,100/day 9,000 H’max 10 yr av. Earnings: $8,800/day 7,000 5,000 Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- D
Slide 12: Dry Bulk Carriers: Delivery and Scrapping
Dry Bulk Carriers: Delivery and Scrapping Order book at end of FY03: 33.49 mn dwt equals 11% of fleet 16 13.7 14 12 Total fleet: 10 295 mn dwt Total fleet as on July 1, 03: mn dwt 8 299 mn dwt 5.8 5.8 6 4 2 1.7 0 2002 Jun-03 Total delivery Total scrapping Source: Clarksons’ Research Studies
Slide 13: Scrapping guidelines for single hull tankers
Scrapping guidelines for single hull tankers International Maritime Org. European Union • Cut off date 2015 • Cut off date 2010 • Restrictions in carrying heavy • No trading exclusions oil (less than 25.7 API) in single hull tankers in EU waters from September 1, 2003 Impact on GE Shipping’s fleet O
Slide 14: Offshore Oil field services
Offshore Oil field services
Slide 15: Characteristics of the industry
Characteristics of the industry • Activities conducted within the EEZ of each country • Influenced by government regulations • Dependent on oil & gas prices and global E&P activities
Slide 16: Earnings' drivers: Exploration and Production
Earnings’ drivers Exploration • Geological prospects • Success ratio in the recent past • Price of oil & gas • Demand supply gap of twin hydrocarbons Production • Demand supply gap of twin hydrocarbons • Price of oil and gas • Accretion of proven reserves
Slide 17: Global developments in 2002 and 2003
Global developments in 2002 – Disconnect between rising oil and gas prices and fresh E&P investments – Thrust in developmental drilling – Deepwater exploratory drilling slowed down Global Developments in 2003 • Environment conducive for E&P activities • World economies also seem to mend • Oil majors
Slide 18: Developments in India
Developments in India Increased Government emphasis on E&P activities • Discoveries in West coast and KG basin • Redevelopment efforts in Bombay High South & North fields • ONGC finalised deepwater contracts worth $ 760 mn spread over three years commencing Q1 FY04 NELP IV (Blocks currently due for
Slide 19: Developments in the port and terminal sector: India
Developments in the port and terminal sector: India • 12 major ports handling around 360 mn metric tons • Labour intensive • Privatisation process tardy and time consuming • Government considering change in regulations • Emerging competition from private sector/ joint sector ports
Slide 20: Industry characteristics
Industry characteristics • Capital intensity - around 90% of capital employed is in fixed assets alone - each asset is “ SBU” • Earnings variability - within markets - within trades - within asset class - within operations • Asset liquidity • Global regulatory compliance
Slide 21: Great Eastern's Business Strategy
Great Eastern’s BUSINESS STRATEGY
Slide 22: Focus on
Focus on • Energy businesses – Wide array of business opportunities – Superior long term return • Fleet expansion and modernisation
Slide 23: We manage our business through:
We manage our business through: • broad based research • continuous evaluation of fleet through judicious sale/purchase activities • benchmarking with global standards • derisking – through diverse asset base – long term employment
Slide 24: Benchmarking with Global Standards
Benchmarking with Global Standards 100% 40 80% 48% 30 53% 22--24 19--22 60% 20 40% 52% 10 20% 47% 0 0% GE Shpp 03 Global 03 GE Shpp 03 Global 03 Double hull tankers Single hull tankers Crew per tanker Source: Clarksons’ database 4850 5150 5000 4000 3000 2000 1000 GE Shpp 03 Global 03 Suezmax Opex ($
Slide 25: Benchmarked with Global Standards
Benchmarked with Global Standards 0.62 0.62 0.52 0.022 0.022 0.42 0.37 0.32 0.22 0.012 0.005 0.12 0.02 0.002 GE Shpp 03 Global 03 GE Shpp Globally Permisible LTI: Rigs Jack up rigs downtime Source: IADC, ASP Source: IADC 0.2 0.18 0.17 0.14 0.12 0.11 0.08 0.05 0.02 GE Shpp Global LTI: OSV Source: ISO
Slide 26: Enhancing customer base
Enhancing customer base International Domestic 48% 52% FY 2002-03
Slide 27: Financial Highlights
Financial Highlights (year ended March 31, 2003) • EPS of Rs. 11.40 per share an increase of 29 % • Cash EPS of Rs. 20.10 per share an increase of 10 % • Equity dividend 40%, dividend payout ratio 38% • Book value of Rs. 61 per share an increase of 17 % • Return on average capital employed 12.25 % •
Slide 28: Income Statement: Quarterly Comparison
Income Statement: Quarterly Comparison (in Rs. Crores) Q1 FY04 Q1 FY03 % Change Total Income 304.10 231.33 31 EBDIT 161.54 93.34 73 Interest 10.37 9.37 10 PBT 109.66 38.22 187 Net Profit * 96.23 29.37 227 Basic and Diluted 4.9 1.3 - EPS (in Rs.) * includes prior period adjustments
Slide 29: Shipping Division's: Revenue Visibility
Shipping Division’s: Revenue Visibility for balance three quarters of FY 2003-04 Operating days coverage as represented by Period Charters Crude carriers Product carriers 37.78% 62.22% 36.63% 63.37% Rs 56.1 cr Rs 152 cr $12.14mn $ 32.90 mn Revenue of Rs. 234 crores covered LPG carrier Dry Bulk carri
Slide 30: Offshore Division's: Revenue Visibility
Offshore Division’s: Revenue Visibility for balance three quarters of FY 2003-04 Operating days coverage as per firm contracts Drilling Rigs Support Vessels Rs. 85.91 cr Rs. 53.69 cr 59% 41% 100% Revenue of Rs. 171 crores covered Construction Barge Port & Terminal Services 38% Rs. 9.20 cr Rs. 22.34
Slide 31: Investment Positives
Investment Positives • Focussed on core areas of Shipping & Offshore with diverse stack of asset portfolio • Modernisation and expansion in core business • Committed capex of Rs.880 crores • Revenue of around Rs. 405 crores covered for the balance quarters of FY 2003-04 • Strong financials backed by
Slide 32: Earnings Outlook
Earnings Outlook • Healthy tanker earnings likely to continue – global oil inventories at low levels – winter demand • Improved freight rates in the dry bulk sector – driven by Asia • Improved rigs and OSV utilisation – increased Govt.’s emphasis on E & P – increased interest/participation of operat
Slide 33: Committed to value creation
Committed to value creation Visit us at: www.greatship.com
The Great Eastern Shipping Company — Investor Presentation (August 2003) on 6ix