Clarkson Plc · LSE:CKN
Clarkson — FY2020 Earnings Presentation
41 slides from Clarkson's earnings presentation, Mar 8, 2021
Slide 1: Results Presentation 31 December 2020
Results Presentation 31 December 2020 Andi Case and Jeff Woyda 8 March 2021
Slide 2: Agenda
Agenda 1 Financial results 2 Markets 3 Outlook 2 Results Presentation | 31 December 2020 Andi Case and Jeff Woyda | 8 March 2021
Slide 3: Highlights
Highlights • Robust financial performance ahead of market expectations • Strong performance in broking more than offset weakness in financial services • Continued strong free cash flow generation • 18th consecutive year of dividend growth • One-off, non-cash impairment charge of £60.6m • Forward ord
Slide 4: Financial results
Financial results Jeff Woyda Chief Financial Officer and Chief Operating Officer 4 Results Presentation | 31 December 2020 Andi Case and Jeff Woyda | 8 March 2021
Slide 5: Results summary to 31 December
Results summary to 31 December 2020 2019 £m £m Revenue 358.2 363.0 -1.3% Underlying profit before taxation 44.7 49.3 -9.3% (Before exceptional items and acquisition related costs) Underlying earnings per share 106.0p 118.8p -10.8% (Before exceptional items and acquisition related costs) 5 Results Pr
Slide 6: Results summary to 31 December
Results summary to 31 December 2020 2019 £m £m Revenue 358.2 363.0 -1.3% Underlying profit before taxation 44.7 49.3 -9.3% (Before exceptional items and acquisition related costs) Exceptional items* (60.6) (47.5) Acquisition related costs (0.5) (1.6) (Loss)/profit before taxation (16.4) 0.2 (After e
Slide 7: Segmental performance
Segmental performance Revenue, profit and margin Revenue Revenue Profit Profit Margin Margin 2020 2019 2020 2019 2020 2019 £m £m £m £m Broking 282.6 283.0 55.4 55.5 19.6% 19.6% Financial 33.9 35.5 2.5 3.3 7.4% 9.3% Support 24.9 27.7 1.7 3.1 6.8% 11.2% Research 16.8 16.8 5.6 5.4 33.3% 32.1% 7 Results
Slide 8: Balance sheet at 31 December
Balance sheet at 31 December 2017 2018 2019 2020 £m £m £m £m Tangible fixed assets 33.3 29.3 28.9 28.6 Intangible fixed assets (software only) 1.5 5.4 9.9 15.6 Investments (relating to convertible bonds) - 6.7 6.7 5.5 Investments (other) 4.9 4.8 4.8 2.9 39.7 46.2 50.3 52.6 Working capital 8.8 18.9 1
Slide 9: Trade debtors at 31 December
Trade debtors at 31 December 2020 2019 Increase/ £m £m (decrease) 0-3 months 51.5 52.9 (1.4) 3-12 months 8.7 9.4 (0.7) 60.2 62.3 (2.1) 9 Results Presentation | 31 December 2020 Andi Case and Jeff Woyda | 8 March 2021
Slide 10: Net available funds and free cash resources
Net available funds and free cash resources 31 December 31 December 2020 2019 £m £m Cash and cash equivalents 173.4 175.7 Interest-bearing loans and borrowings (0.1) (1.2) Current investment deposits 22.8 2.4 Net cash equivalents 196.1 176.9 Reserved for bonus (full cost) (100.7) (92.2) Net availabl
Slide 11: Movement in free cash resources
Movement in free cash resources 3.7 (10.7) 13.7 46.4 (11.0) (7.6) (1.8) (6.3) (3.5) 1.7 81.1 3.1 0.8 (16.1) 68.7 52.6 Free cash Deferred 2019 Free cash Operating profit Depreciation Other working Taxation Lease Interim Dividends paid Capitalised Capex Other Net purchase Movement in Free cash resourc
Slide 12: Sea/ related IT costs to 31 December
Sea/ related IT costs to 31 December 2020 2019 £m £m Items taken to income statement Non capitalised items (Sea/ only) (5.4) (4.3) Amortisation (0.5) (0.3) 2020 2019 £m £m Software-related intangible asset as at 1 January 9.8 5.4 Additions 6.3 4.7 Amortisation (0.5) (0.3) Software-related intangible
Slide 13: Technology Key advances
Technology Capital Markets Day to showcase the Key advances Sea/ platform on 21st April, 2021 Client benefits include execution, risk mitigation, improved efficiency, workflow digitisation, cost reduction, better control, focussed communication, smarter decisions Modules Brokers Dec 20 v Dec 19 +51.
Slide 14: Forward Order Book (FOB) for invoicing in the following year
Forward Order Book (FOB) for invoicing in the following year 2020 2019 for 2021 for 2020 US$m US$m Directors’ best estimate of deliverable FOB 116 113 14 Results Presentation | 31 December 2020 Andi Case and Jeff Woyda | 8 March 2021
Slide 15: Dividend history
Dividend history 18 years of progressive dividend 90 78 79 80 75 73 54 53 51 70 65 50 62 60 43 60 56 40 39 50 51 37 50 47 43 32 33 42 40 30 40 36 26 27 32 26 24 30 25 22 18 16 24 25 25 20 15 22 22 23 21 11 18 18 19 16 16 17 10 9 14 12 9 10 6 7 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Slide 16: Markets
Markets Andi Case Chief Executive Officer 16 Results Presentation | 31 December 2020 Andi Case and Jeff Woyda | 8 March 2021
Slide 17: Economic Impacts
Economic Impacts… …deep economic impact; strong recovery in shipping’s biggest market China; regional recovery and complexities… Annual Global GDP, % y-o-y Industrial Production Trends, % y-o-y Purchasing Managers’ Indices 6% 25% 70 Global Basket 5% China 65 20% 4% 60 15% 3% 55 10% 2% 50 5% 1% 45 0%
Slide 18: Seaborne Trade Trends
Seaborne Trade Trends… …seaborne trade less impacted than 2008; near term data shows recovering volumes; complexities across commodities; uncertainties remain… Global seaborne trade, bn tonnes Monthly Seaborne Trade ‘Basket’^ Deep Sea Cargo Vessel~ Port Calls 1.8 Dry Bulk 13 Thousands Oil 8% % Y-o-Y
Slide 19: Fleet & Orderbook Development
Fleet & Orderbook Development… …Fleet growth “manageable”; orderbook “shorter” at 7.5% of fleet versus >50% in 2008… Development of World Fleet, million GT Orderbook as % of fleet, End Year – lowest for 30 years 1,600 Fleet growth peaked 10% 80% Fleet, end year at c. 9% in 2010 Fleet Growth % 9% 70%
Slide 20: Where are we in the cycle?
Where are we in the cycle? Timeline of each cycle not defined and varies Weakening market Strong market Containers Offshore renewables (wind) LNG Recovering market Weak market LPG Dry Bulk Offshore Chemical/Specialised Tankers Crude & Products Tankers 20 Results Presentation | March 2021 Andi Case a
Slide 21: Covid-19 Spread vs Stimulus Measures
Covid-19 Spread vs Stimulus Measures… …Regional variations and multiple “waves”; $14tn stimulus globally… Total Number Of Covid-19 Cases (millions) Selected Key Economic Stimulus Measures 120 28th Jan: 100 million Fiscal Liquidity Total Millions Expenditure Support Stimulus Key Measures 100 5th Nove
Slide 22: Shipyards & Contracting
Shipyards & Contracting…. …newbuild ordering fell 30% in 2020, but remained above 2016 levels; shipyard capacity reduced and consolidated… No. Of Active Yards No. Of Global Newbuilding Orders 350 3,500 Rest of World 2009: 322 yards China - Japan - Korea 2,927 300 3,000 250 2,500 200 Feb 2021: 2,000
Slide 23: ClarkSea Index
ClarkSea Index… …Cross segment Index down only 2% in 2020; ‘disruption upside’ in ‘volume’ sectors, good start to 2021: container and dry strong, tankers weak … 2020 still 2nd Best Year Since 2010… Improving Markets Since 2016… Covid-19 Volatility… 35 $000/day 35 $000/day 35 $000/day 30 30 30 25 25
Slide 24: Increased Volatility
Increased Volatility… …two recent tanker “super” spikes; record LNG rates; LPG winter spikes… Avg. Spot VLCC Earnings, $000/day Avg. Spot 160k LNG Earnings, $000/day VLGC Earnings, AG-East, $000/day Oct-19 spike: underlying market improvements ‘turbocharged’ by US sanctions and off-hire time for Dec
Slide 25: Increased Volatility (Continued)
Increased Volatility (Continued)… …Strong Chinese volumes and congestion in dry; record container freight… Capesize & Panamax Earnings, $000/day Container Freight & Charter Rates 6,500 ceu Car Carrier 1yr TC Rate, $000/day Jun/Jul-20: after a challenging 1H 2020, an 35 uplift in Brazilian iron ore e
Slide 26: Shipping Segment Complexities
Shipping Segment Complexities… …Floating storage unwinding; idle boxships well below peak; bulker congestion rising… Tanker Storage, % Dwt Containership Idle Fleet, % TEU Capesize Port Congestion, % of Vessels 12% 12% 16% 10% 10% 14% 8% 8% 12% 6% 6% 10% 4% 4% 8% 2% 2% 6% 0% 0% 4% Apr-19 Apr-20 Apr-1
Slide 27: Supply-Side Activity Indicators
Supply-Side Activity Indicators …shipyards managed disruption well; ordering and S&P picking up in recent months… Deliveries (No. Vessels, 4wma) Newbuild Contracts (No. Vessels, 4wma) Secondhand Sales (No. Vessels, 4wma) 50 50 50 40 40 40 30 30 30 20 20 20 10 10 10 0 0 0 Jul-20 Jan-20 Jun-20 Nov-20
Slide 28: Environmental Pressures building
Environmental Pressures building… …IMO targets 50% CO2 reduction by 2050; regulatory timeline accelerating & policy decisions ramping up; technology uncertain; Green Transition key industry focus … Lower EEDI Ratification of Ballast BWMC Lower EEDI 50% GHG Baltic Sea 1.0% ECA 3.5% Global reference l
Slide 29: Shipping's Carbon Footprint
Shipping’s Carbon Footprint… …Shipping accounts for 2.4% of global CO2 emissions, but remains the most carbon efficient mode of transport… Average CO2 intensity for different modes of freight transport Carbon footprint per annum of VLCCs, Tankers and Shipping as a share (tonnes CO2 per million tonne
Slide 30: Major Regulations Leading To Zero Emissions
Major Regulations Leading To Zero Emissions LNG as a ‘bridging fuel’ solution? ‘Zero-Carbon’ fuels required in the longer-term… 2050 2023 2030 Zero-Emissions 2022 2023 Energy Efficiency Index Firm Reduction Targets EU Carbon ETS EU Taxonomy Half of the world’s GDP is EEXI is an IMO directive The EU
Slide 31: Reductions in CO2
Reductions in CO2… …Despite moving 35% more cargo since the financial crisis; driven by speed reductions and uptake of ‘eco’ vessels; speed a potential “lever” going forward… Est. World Shipping Fleet CO2 Output, m. tonnes Average Vessel Speed Indices 2008-2020: down ~17% Crude tanker speed Boxship
Slide 32: Fleet Renewal & Fuelling Transition
Fleet Renewal & Fuelling Transition… …Fleet renewal needed but timing may be “uneven”; demolition, slower speeds and retrofitting of Energy Saving Technologies may also be a response to IMO 2030 / EEXI… World Fleet by Year of Delivery 120 1. 12% of fleet tonnage built between 2000 and 2005, 12% i.e.
Slide 33: LNG Fuel gaining traction
LNG Fuel gaining traction… …But no clear winner as the “solution” fuel; LPG as a fuel also gaining traction; long term potential in other options … Existing Vessels (2,000+ GT) already burning Alternative Fuels Orderbook (2,000+ GT) to be burning Alternative Fuels 29% of orderbook tonnage 3%4% of of
Slide 34: Offshore Wind Industry Growth Accelerating
Offshore Wind Industry Growth Accelerating… …10 year growth in MW capacity averages 24% as Energy Transition develops; record start ups and FIDs in 2020... The Offshore Wind Industry Is Entering A Growth Phase …And Investment Is Increasing GW Number of Farms $bn 140 500 90 Others Active Offshore Win
Slide 35: Offshore Wind Industry Is Globalising
Offshore Wind Industry Is Globalising… …The number of countries with active offshore wind expected to double during the 2020s… Internationalisation Of The Offshore Wind Industry Number of Countries With Active Capacity No. Farms 0 20 40 60 80 100 120 140 160 180 200 Number of Countries 40 China P.R.
Slide 36: And Will Require A New Generation Of Vessels
And Will Require A New Generation Of Vessels … …Growth in the fleet of WTIVs and SOVs expected to help install turbines as big as 15MW... Number of Turbine Start-Ups Turbine Start-Ups: Avg Size Turbine Start-Ups: Avg Rotor Diameter Turbines MW Metres 3,000 10 200 9 180 2,500 8 160 7 140 2,000 6 120
Slide 37: Financing requirements
Financing requirements… …Significant changes in financial landscape and now “Green Transition” and ESG focus for the next phase of Fleet Renewal; massive Renewables financing needed… Est. Portfolio Size 2020, $bn Value of The World Fleet & Orderbook Capital Raised on NY & Oslo Exchanges, $bn China E
Slide 38: Outlook
Outlook Results Presentation | 31 December 2020 39 Andi Case and Jeff Woyda | 8 March 2021
Slide 39: Tailwinds vs Headwinds
Outlook Tailwinds vs Headwinds Headwinds…? Exchange Black Swan Sentiment rate Strength of Uncertainty COVID-19 sterling how long will it last? Tailwinds Markets Company Supply side Regulation Renewables Forward Cash Progressive challenged & Client order book generative dividend • Lack of GHG Focus a
Slide 40: Thank You
Thank You Clarksons Commodity Quay St. Katharine Docks London United Kingdom E1W 1BF www.clarksons.com
Slide 41: Disclaimer
Disclaimer Clarkson PLC The material and the information (including, without limitation, any future rates and/or forward looking predictions) contained herein (together, the "Information") are provided by Clarkson PLC (Clarksons) for general guide. The Information is provided on ‘as is’ and ‘as avai