Orient Overseas (international) Limited · HKEX:316
Orient Overseas (international) — FY2018 Earnings Presentation
30 slides from Orient Overseas (international)'s earnings presentation, 2019
Slide 1: Orient Overseas (International) Limited Annual Results 2018
Orient Overseas (International) Limited Annual Results 2018
Slide 2: Disclaimer
Disclaimer • The information provided is for reference only and includes data obtained from sources provided by the relevant information provider(s) and is subject to change without notice. Orient Overseas (International) Limited (“OOIL”) and its affiliates, and the concerned information provider(s)
Slide 3: OOIL highlights
OOIL highlights Revenue (US$b) Op. Profit (US$m) Container Transport & Cash Generation* Logistics EBIT Margin (US$m) 6.6 263 (%) 590 550 Financial 3.2 6 238 1.9 10% 11% 7% 2018 2017 2018 2017 2018 2017 2018 2017 Synergy Savings Good progress already made in: - Network optimisation - Joint procuremen
Slide 4: Group result breakdown
Group result breakdown Restated US$M 31-Dec-2018 31-Dec-2017 Container Transportation and Logistics – EBIT 210.3 111.4 EBIT margin 3.21% 1.87% Property and Investments - EBIT Wall Street Plaza 48.2 56.2 Hui Xian 13.4 32.3 Interest, Investments and Others 5.4 57.4 67.0 145.9 OOIL GROUP - EBIT 277.3 2
Slide 5: Group balance sheet highlights
Group balance sheet highlights US$M 31-Dec-2018 31-Dec-2017 Non-current Assets 6,807 7,104 Current Assets 2,774 2,965 Assets held for sale 473 - Total Assets 10,054 10,069 Non-current Liabilities 3,806 4,007 Current Liabilities 1,372 1,379 Liabilities directly associated with assets 141 - classified
Slide 6: Balance sheet
Balance sheet Long term borrowings and short-term borrowings reduced US$234.2 million and US$122.2 million dollars respectively US$45.8 million increased finance costs due to increase in interest rates, increased proportion of fixed rate funding, and full year effect of financing newbuildings in 201
Slide 7: Operating cash flow
Operating cash flow Strong cash generation through the cycles US$ millions 700 600 500 400 300 200 100 0 2015 2016 2017 2018 *Operating profit before working capital changes 7
Slide 8: Total liquid assets
Total liquid assets US$M 31-Dec-2018 31-Dec-2017 Cash and Bank Balances 1,646 2,005 Portfolio Investments, Equities and Bonds 601 529 Total 2,247 2,534 8
Slide 9: Net debt position
Net debt position US$M 31-Dec-2018 31-Dec-2017 Liquid Assets 2,247 2,534 Debt 4,198 4,554 Net Debt 1,951 2,020 9
Slide 10: Container transportation (excl. logistics)
Container transportation (excl. logistics) 2018 / 2017 2018 2017 %▲ Liftings ('000 TEU) 6,697 6,299 6% Revenue (US$M) 6,003 5,466 10% Revenue Per TEU (US$) 896 868 3% Net Operating Capacity (TEU) 701,463 698,401 0% Load Factor (%) 82.9 83.7 0.8% pt Note: Results presented above include the discontin
Slide 11: Market situation
Market situation Stronger peak season volumes and Shanghai Container Freight Index rates US$ 1,350 SCFI spot rates performed better through fourth quarter seasonality 1,150 Benefit of larger spot market exposure on TransPacific 1,074 950 827 833 Some increase volume may be driven by front-loading 72
Slide 12: Shanghai Container Freight Index
Shanghai Container Freight Index US$ $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- Jan 2017 v 2018 Dec USWC (2018) USEC (2018) Europe (2018) USWC (2017) USEC (2017) Europe (2017) TransPacific vs AsiaEurope divergence is obvious 12
Slide 13: U.S. Consumer Confidence
U.S. Consumer Confidence 160 140 120 100 80 60 40 20 0 May-10 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 U.S. consumer confidence Rebounded in February, f
Slide 14: U.S. Wholesale Inventories
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% -0.5% -1.5% -1.0% Jan-10 May-10 Sep-10 Jan-11 Source: Trading Economics May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 U.S. wholesale inventories May-14 Sep-14 Jan-15 May-15 U.S. Wholesale Inventories Sep-15 Jan-16 May-16 Sep-16 Average 1992 - 2018 Jan-1
Slide 15: Improving market fundamentals
Improving market fundamentals 2018 high supply side growth GDP Growth Limited new build ordering in 2018 gives certainty on future supply side risk 2016 2017 2018F 2019F 2020F 2021F 2022F 2023F Major economies continue World 3.3% 3.7% 3.7% 3.7% 3.7% 3.6% 3.6% 3.6% positive GDP growth albeit China 6.
Slide 16: Industry trade volume
Industry trade volume FY FY FY Trade 2018 vs 2017 2017 vs 2016 2016 v 2015 Trans Pacific EB 7.7% 6.2% 4.7% Asia Europe WB 2.0% 4.4% 3.0% Intra Asia 5.3% 3.9% N/A Trans Atlantic 4.4% 7.1% (1.4%) WB Sources: Datamyne and CTS 16
Slide 17: Gross new building deliveries
Gross new building deliveries million TEU 9.2% < 7,499 TEU ships 1.8 1.73 7,500 -14,500NPX 8.5% > 13,300 TEU ships 1.6 1.47 6.2% 1.4 5.9% 0.81 1.30 4.7% 4.9% 1.19 1.2 1.13 0.60 4.6% 1.09 1.0 0.94 0.59 0.66 0.51 0.50 0.8 2.2% 0.48 0.6 0.57 0.55 0.70 0.05 0.51 0.4 0.36 0.39 0.36 0.37 0.34 0.2 0.32 0.2
Slide 18: Capacity vs Rates: TransPacific
Capacity vs Rates TEU US$ 490,000 $4,000 480,000 $3,500 470,000 460,000 $3,000 450,000 $2,500 Weekly Capacity 440,000 $2,000 430,000 420,000 $1,500 410,000 $1,000 400,000 $500 390,000 380,000 $- June June June June April April September October May September October February February March March May
Slide 19: Capacity vs Rates: Asia-Europe
Weekly Capacity TEU 350,000 360,000 370,000 380,000 390,000 400,000 410,000 420,000 430,000 January January Jan February March March April May June Source: Alphaliner Monthly (March 2019) June July August August September October Capacity vs Rates November December December January February February
Slide 20: Diversified revenue base
Diversified revenue base US$m Revenue Growth Liftings Growth ‘000 TEU 3,000 3,500 2,437 2,9192,995 2,500 3,000 2,067 2,500 2,000 1,7611,825 1,974 2,000 1,812 1,500 1,1021,187 1,500 1,302 1,138 1,000 1,000 495 514 430 426 500 500 0 0 Trans-Pacific Asia-Europe Intra-Asia/Australasia Trans-Atlantic Tra
Slide 21: Operating costs 2018
Operating costs 2018 2018 2018 Per Lifting / 2017 Proportion %▲ Total cost 1% 100% Cargo cost 2% 54% Equipment and Repo costs 4% 14% Vessel and Voyage cost 1% 18% Bunker cost 21% 14% Note: Results presented above include liner and the discontinued operation Long Beach Container Terminal. 21
Slide 22: Bunker price - Sing 380c St (M)
Bunker price - Sing 380c St (M) Higher average bunker prices throughout 2018 Fourth quarter bunker price fall to benefit P&L in 1Q19 due to lag effect US$/t 700 600 562 500 400 431 327 300 288 200 233 100 - Mar-18 Mar-14 May-14 Mar-15 Mar-16 Mar-17 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Nov-14 Nov-15 No
Slide 23: Bunker
Bunker Bunker consumption reduced in absolute terms Total bunker cost increased due mainly to higher prices Fuel savings program include optimal routing, continuous speed optimisation, efficient use of shaft generator, maintaining optimal trim, and using minimal ballast water for fuel efficiency. US
Slide 24: COSCO / OOIL synergies
COSCO / OOIL synergies Group synergy savings more than US$400 million Multiple working groups identifying synergies Network optimisation Joint procurement Information Technology Equipment utilisation COSCO Shipping Holdings (1919.HK) will ensure the identification and maximisation of synergy benefit
Slide 25: Logistics
Logistics Strong revenue and contribution growth Further improvements in our sea-freight NVOCC Warehouse and Distribution Air-freight forwarding business Customs House Brokerage experienced strong growth in 2018 25
Slide 26: Information Technology
Information Technology Single IT standard - data centers - global infrastructure - cyber security Container inventory management - repositioning - cost - buffer stock Analytics Systems development Artificial Technology Integrated hosting service 26
Slide 27: US-China trade discussions
US-China trade discussions Impossible to predict impact Positive steps towards a trade deal being negotiated Entirely appropriate to be cautious Some front-loading, but also strong corporate and consumer demand Goods shipped in containers often lower value Financial impact of tariffs small in US$ te
Slide 28: Implementation of IFRS 16
Implementation of IFRS 16 IFRS16 implemented from January 2019 Capitalise all leases as at 1 January 2019 except for lease term of 12 months or less and with low value Recategorise operating leases to being on balance sheet Leases impacted: - Smaller vessels - >1 year charters, but still short term
Slide 29: Conclusion
Conclusion Recovery in freight rates helping to boost profitability Growth continuing in most major economies, cautious outlook Trade discussions continue to hamper sentiment Supply side risk reducing Synergy savings will continue to benefit P&L COSCO/OOIL look to enhance synergy savings to benefit
Slide 30: Orient Overseas (International) Limited
eo Orient Overseas (International) Limited
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