Singapore Exchange Ltd. · SGX:S68
Singapore Exchange — Neptune Orient Lines — FY2009 Earnings Presentation
57 slides from Singapore Exchange's earnings presentation, Feb 11, 2010
Slide 1: 2009 Full Year Performance Review
2009 Full Year Performance Review 11 February 2010
Slide 2: Forward Looking Statements
Forward Looking Statements The following presentation includes forward-looking statements, which involve known and unknown risks and uncertainties, that could cause actual results or performance to differ. Forward looking information is based on current views and assumptions of management, including
Slide 3: 1. Group Highlights
By Cheng Wai Keung Chairman 1. Group Highlights Page 2 | 11 February 2010 | 2009 Full Year Performance Review
Slide 4: Group Financial Highlights
Group Financial Highlights US$m FY09 FY08 % 4Q09 4Q08 % Revenue 6,516 9,285 (30) 2,021 2,289 (12) Core EBIT (651) 213 nm (183) (45) 307 EBIT (659) 160 nm (191) (121) 58 Net (loss) / profit (741) 83 nm (211) (149) 42 Basic EPS (US cents) (36.12) 5.11* nm (8.19) (9.12)* (10) * Restated for effects of
Slide 5: 2. 2009 Financial Highlights
By Ron Widdows Group President & CEO 2. 2009 Financial Highlights Page 4 | 11 February 2010 | 2009 Full Year Performance Review
Slide 6: FY2009 and 4Q09 Key Highlights
FY2009 and 4Q09 Key Highlights Key Highlights Group Financials Revenue (US$m) • FY09 Financial Highlights – Revenue of US$6.5 billion, a year-on- 9,285 year decline of 30% – Core EBIT loss of US$651 million 6,516 – Net loss of US$741 million 2,289 2,021 • 4Q09 Financial Highlights – Revenue of US$2.
Slide 7: Group Revenue and Core EBIT Trend
Group Revenue and Core EBIT Trend Industry experienced unprecedented losses as the fall in global demand was coupled with a drastic decline in freight rates. Revenues (US$M) EBIT/Core EBIT (US$M) 10,000 9,285 2,000 8,160 7,271 7,264 7,500 6,545 6,516 1,500 906 5,000 1,000 613 957 898 401 940 2,500 2
Slide 8: Group Financial Highlights
Group Financial Highlights US$m FY09 FY08 % 4Q09 4Q08 % Revenue 6,516 9,285 (30) 2,021 2,289 (12) Core EBIT (651) 213 nm (183) (45) 307 • Non-recurring items (8) (53) (85) (8) (76) (89) EBIT (659) 160 nm (191) (121) 58 Net (loss) / profit (741) 83 nm (211) (149) 42 Basic EPS (US cents) (36.12) 5.11*
Slide 9: Group Core EBIT Breakdown
Group Core EBIT Breakdown US$m FY09 FY08 % 4Q09 4Q08 % Container Shipping (731) 73 nm (212) (84) 152 Logistics 54 64 (16) 13 16 (19) Terminals 32 72 (56) 17 18 (6) Others (6) 4 nm (1) 5 nm Total Core EBIT (651) 213 nm (183) (45) 307 Page 8 | 11 February 2010 | 2009 Full Year Performance Review
Slide 10: FY 2009 Summary
FY 2009 Summary ¾ Industry oversupply coupled with decline in global container trade resulted in significant losses during FY2009 as freight rates declined across all trade lanes ¾ Sequential improvement in volume was experienced in the 2H 2009 as global trade stabilises ¾ Freight rates increase in
Slide 11: 3. 2009 Financial Performance
By Cedric Foo Group Deputy President & CFO 3. 2009 Financial Performance Page 10 | 11 February 2010 | 2009 Full Year Performance Review
Slide 12: Group Financial Highlights
Group Financial Highlights US$m FY09 FY08 % 4Q09 4Q08 % Revenue 6,516 9,285 (30) 2,021 2,289 (12) Core EBITDA (365) 476 nm (107) 30 nm • Depreciation & Amortisation (286) (263) 9 (76) (75) 1 Core EBIT (651) 213 nm (183) (45) 307 • Non-recurring items (8) (53) (85) (8) (76) (89) EBIT (659) 160 nm (19
Slide 13: Group Revenue Breakdown
Group Revenue Breakdown US$m FY09 FY08 % 4Q09 4Q08 % Container Shipping 5,485 7,945 (31) 1,696 1,964 (14) Logistics 976 1,324 (26) 306 328 (7) Terminals 503 577 (13) 168 148 14 Elimination/Others (448) (561) (20) (149) (151) (1) Total Revenue 6,516 9,285 (30) 2,021 2,289 (12) 7% (Terminals) 14% (Log
Slide 14: Group Core EBIT Breakdown
Group Core EBIT Breakdown US$m FY09 FY08 % 4Q09 4Q08 % Container Shipping (731) 73 nm (212) (84) 152 Logistics 54 64 (16) 13 16 (19) Terminals 32 72 (56) 17 18 (6) Others (6) 4 nm (1) 5 nm Total Core EBIT (651) 213 nm (183) (45) 307 Page 13 | 11 February 2010 | 2009 Full Year Performance Review
Slide 15: Non-Recurring Items
Non-Recurring Items US$m FY09 FY08 4Q09 4Q08 1. Gain from asset disposals 1 28 (4) 4 2. Expenses written back/(Expenses) 4 (72) 4 (72) relating to restructuring 3. Others (13) (9) (8) (8) Total (8) (53) (8) (76) Page 14 | 11 February 2010 | 2009 Full Year Performance Review
Slide 16: Balance Sheet Highlights
Balance Sheet Highlights US$m 25 Dec ’09 26 Dec ’08 Total Assets 5,340 5,445 Total Liabilities 2,500 2,940 Total Equity 2,840 2,505 Total Debt 940 1,245 Total Cash 333 429 Net Debt 607 816 Gearing (Gross) 0.33 x 0.50 x Gearing (Net) 0.21 x 0.33 x NAV per share (US$) 1.08* 1.67 (S$) 1.51* 2.42 *NAV a
Slide 17: Cash Flow Highlights
Cash Flow Highlights US$m FY09 FY08 Cash & Cash Equivalents - Beginning 429 504 Cash (Outflow)/Inflow Operating Activities (550) 500 Investing/Capex Activities (73) (843) Financing Activities 527 268 Cash & Cash Equivalents – Closing 333 429 Page 16 | 11 February 2010 | 2009 Full Year Performance Re
Slide 18: Capital Expenditure
Capital Expenditure US$m FY09 FY08 Actual Actual 1. Vessels 8 249 2. Equipment / Facilities 22 551 3. Drydock 13 23 4. IT 39 48 5. Others 11 11 Total 93 882 Page 17 | 11 February 2010 | 2009 Full Year Performance Review
Slide 19: 4. Container Shipping
By Eng Aik Meng 4. Container Shipping President, APL Page 18 | 11 February 2010 | 2009 Full Year Performance Review
Slide 20: Container Shipping FY2009 Highlights
Container Shipping FY2009 Highlights • Container shipping achieved FY2009 revenue of US$5.5 billion, a year-on-year (YoY) decrease of 31% mainly due to lower volumes transported, coupled with freight rate deterioration across all major trade lanes. ¾ Volume declined by 7% YoY due to a decline in vol
Slide 21: Container Shipping Profit & Loss Summary
Container Shipping Profit & Loss Summary US$m FY09 FY08 % 4Q09 4Q08 % Revenue 5,485 7,945 (31) 1,696 1,964 (14) Core EBITDA (482) 299 nm (145) (19) 663 • Depreciation & Amortisation (249) (226) 10 (67) (65) 3 Core EBIT (731) 73 nm (212) (84) 152 • Non-recurring items (8) (39) (79) (8) (59) (86) EBIT
Slide 22: Container Shipping Volume Growth
Container Shipping Volume Growth ‘000 FEUs FY09 FY08 % 4Q09 4Q08 % Americas 915 1,024 (11) 302 229 32 Transpacific 738 825 (11) 247 183 35 Latin America 177 199 (11) 55 46 20 Europe 477 589 (19) 138 135 2 Asia-Europe 357 442 (19) 101 100 1 Transatlantic 120 147 (18) 37 35 6 Asia/Middle East 897 852
Slide 23: Container Shipping: Volume Mix
Container Shipping : Volume Mix • Intra-Asia trade mix grows as greater demand decline occur in the other East/West trades. • Trade volume mix continues to be managed to maximise yields. 39% (Asia/Middle 35% (Asia/Middle East) East) 8% (Latin 8% (Latin America) America) 32% 33% (Transpacific) (Trans
Slide 24: Container Shipping Average Revenue/FEU
Container Shipping Average Revenue/FEU US$/FEU FY09 FY08 % 4Q09 4Q08 % Americas 3,185 3,865 (18) 2,922 4,258 (31) Europe 2,191 3,127 (30) 2,398 2,915 (18) Asia/Middle East 1,421 1,968 (28) 1,419 1,865 (24) Total 2,286 3,033 (25) 2,222 3,067 (28) Page 23 | 11 February 2010 | 2009 Full Year Performanc
Slide 25: Volume and Average Revenue/FEU Trend
Volume and Average Revenue/FEU Trend While volume has improved during the year and stabilised during 4Q09, the overall freight rate environment continue to remain at depressed levels. Average Period Volume (RHS) Average Revenue per FEU (LHS) '000 FEU/ US$/FEU week 3,200 70.0 4Q09 Average 4Q08 Averag
Slide 26: Container Shipping Network Capacity & Utilisation
Container Shipping Network Capacity & Utilisation Active capacity management coupled with improvement in trade volumes resulted in a recovery in utilisation rates in 2H 2009. Network capacity continue to be managed to optimise utilisation rates and yield. Average Capacity (weekly TEUs) Utilisation %
Slide 27: Container Shipping: Americas
Container Shipping : Americas FY09 FY08 % 4Q09 4Q08 % Total Volumes (‘000 FEUs) 915 1,024 (11) 302 229 32 • Transpacific 738 825 (11) 247 183 35 • Latin America 177 199 (11) 55 46 20 Average Revenue (US$/FEU) 3,185 3,865 (18) 2,922 4,258 (31) • Transpacific : US economic uncertainties and decline in
Slide 28: Container Shipping: Europe
Container Shipping : Europe FY09 FY08 % 4Q09 4Q08 % Total Volumes (‘000 FEUs) 477 589 (19) 138 135 2 • Asia-Europe 357 442 (19) 101 100 1 • Transatlantic 120 147 (18) 37 35 6 Average Revenue (US$/FEU) 2,191 3,127 (30) 2,398 2,915 (18) • Asia-Europe : Volumes for the year declined significantly as a
Slide 29: Container Shipping: Asia/Middle East
Container Shipping : Asia/Middle East FY09 FY08 % 4Q09 4Q08 % Total Volumes (‘000 FEUs) 897 852 5 293 210 40 Average Revenue (US$/FEU) 1,421 1,968 (28) 1,419 1,865 (24) • Asia/Middle East: Volumes for the year rose by 5% year-on-year mainly due to improvement in backhaul and short-sea trades, partic
Slide 30: Container Shipping Trade Imbalance
Container Shipping Trade Imbalance Decline in headhaul demand coupled with relative strength in backhaul routes has resulted in improved trade balance on the major East/West trades. No. of FEUs that are full backhaul for every 10 FEUs full headhaul Trade 2007 2008 2009 • Transpacific 6 7 7 • Asia-Eu
Slide 31: Container Shipping FY2009 Summary
Container Shipping FY2009 Summary • Adverse conditions continue to put pressure on container shipping earnings. • Volume has shown sequential improvement since 1Q09. • Active capacity and cost management minimised some of the losses incurred in 2009. • Industry seeing signs of freight rate recovery
Slide 32: 5. Logistics
5. Logistics By Jim McAdam President, APL Logistics Page 31 | 11 February 2010 | 2009 Full Year Performance Review
Slide 33: Logistics FY2009 Highlights
Logistics FY2009 Highlights • Logistics achieved FY2009 revenue of US$976 million, a year-on-year (YoY) decrease of 26% due to lower volumes across the various Logistics’ services, coupled with lower freight rates in the forwarding business segment. ¾ International Services achieved revenue of US$36
Slide 34: Logistics Profit & Loss Summary
Logistics Profit & Loss Summary US$m FY09 FY08 % 4Q09 4Q08 % Revenue 976 1,324 (26) 306 328 (7) Core EBITDA 65 74 (12) 16 18 (11) • Depreciation & Amortisation (11) (10) 10 (3) (2) 50 Core EBIT 54 64 (16) 13 16 (19) • Non-recurring items - (11) (100) - (10) (100) EBIT 54 53 2 13 6 117 Core EBIT Marg
Slide 35: Performance Breakdown
Performance Breakdown Business Segment (US$m) FY09 FY08 % 4Q09 4Q08 % Revenue 976 1,324 (26) 306 328 (7) • Contract Logistics 612 808 (24) 199 206 (3) • International Services 364 516 (29) 107 122 (12) Core EBIT 54 64 (16) 13 16 (19) • Contract Logistics 19 30 (37) 5 5 - • International Services 35
Slide 36: Logistics Revenue and Core EBIT Margin Trend
Logistics Revenue and Core EBIT Margin Trend Under adverse economic conditions, decisive actions on managing costs has resulted in consistent positive earnings and building the cost platform for further growth. Revenue 400 Revenue (US$m) Core EBIT Margin (%) 20% Core EBIT (US$m) 363 Margin (%) 328 3
Slide 37: Logistics' Revenue Trend – By Region
Logistics’ Revenue Trend – By Region The decline in global trade affected revenue contribution from all regions, particularly in Europe where decline in volume was compounded by decline in freight rate in the forwarding segment. 25% (Asia/Middle 24% (Asia/Middle East) East) $239 $321 65% 62% (Americ
Slide 38: Logistics' Revenue Trend – By Customer Segment
Logistics’ Revenue Trend – By Customer Segment All sectors were affected by lower volumes due to the global recession. Retail and Consumer segment showed relative strength due to the continued demand for basic necessities and replenishing of inventory. Early decline in auto segment arising from auto
Slide 39: Logistics FY2009 Summary
Logistics FY2009 Summary • In spite of depressed demand conditions during FY2009, the Logistics division was able to generate positive earnings and improved margins. • Emphasis on operating, general and administrative costs improved performance in key business segments, such as origination services.
Slide 40: 6. Terminals
6. Terminals By Steve Schollaert President, APL Terminals Page 39 | 11 February 2010 | 2009 Full Year Performance Review
Slide 41: Terminals FY2009 Highlights
Terminals FY2009 Highlights • Terminals achieved FY2009 revenue of US$503 million, a year-on-year (YoY) decrease of 13% due to lower overall volume throughput. ¾ FY2009 recorded volume throughput of approximately 1.9 million lifts, a decline of 12% YoY. ¾ Throughput in 4Q09 grew by 18% YoY in-line w
Slide 42: Terminals Profit & Loss Summary
Terminals Profit & Loss Summary US$m FY09 FY08 % 4Q09 4Q08 % Revenue 503 577 (13) 168 148 14 Core EBITDA1 53 93 (43) 23 25 (8) • Depreciation & Amortisation (21) (21) - (6) (7) (14) Core EBIT1 32 72 (56) 17 18 (6) Core EBIT Margin (%) 6.4 12.5 10.1 12.2 Volume (‘000 lifts) 1,946 2,215 (12) 641 545 1
Slide 43: Terminals: Volume Mix
Terminals : Volume Mix Continued network adjustments in the industry has resulted in greater proportion of APL volume and lower proportion of Alliance partners’ volumes. 21% (Alliance 24% (Alliance partners) partners) 9% (3rd party) 9% (3rd party) 70% (APL) 67% (APL) FY09 Volume breakdown FY08 Volum
Slide 44: 7. Current Industry Dynamics
By Ron Widdows Group President & CEO 7. Current Industry Dynamics Page 43 | 11 February 2010 | 2009 Full Year Performance Review
Slide 45: In 2009, containerized trade growth was negative for the first time in two decades
In 2009, containerized trade growth was negative for the first time in two decades. Some recovery is expected in 2010. Annual growth rate Percent Average world contain- Containerized trade Real GDP growth % erized trade growth growth over period 18 16 14 12 10 8 6 4 5 5 5 5 4 4 4 2 4 4 3 3 3 4 4 3 4
Slide 46: Freight rates fell precipitously
As a result of the demand-supply imbalance, freight rates fell precipitously Industry Head Haul Freight Rate Transpacific Asia Europe Trans Atlantic USD/F USD/F USD/F 4,400 4,500 3,800 4,300 4,200 4,100 3,600 4,000 3,900 3,400 3,800 3,700 3,500 3,200 3,600 3,300 3,400 3,000 3,100 3,200 2,900 2,800 2
Slide 47: Liners have reacted by laying up vessels
Liners have reacted by laying up vessels ‘000 TEU Laid Up Vessels as of Nov 09 1,600 1,510 1,418 1,400 1,298 1,219 1,200 1,000 845% y-o-y 800 600 550 400 200 150 0 end 3Q 08 end 4Q 08 end 1Q 09 end 2Q 09 end 3Q 09 end 4Q 09 No. of idle 70 210 485 533 524 572 vessels Over 800% increase in laid up ton
Slide 48: Slow steaming on Asia-Europe has absorbed capacity
Implementing of slow steaming to save bunker costs on Asia- Europe has absorbed some additional capacity • Extra Slow Steaming Spread of slow steaming on FE-N Europe services (defined as average sailing 25 Number of strings ‐ Far East‐North Europe speeds of ~18 knots) is now widely adopted on the As
Slide 49: Room for further slow steaming on Transpacific trades
Room for further slow steaming on Transpacific trades to reduce fuel costs, carbon emissions and the supply-demand gap • On the other long haul Spread of slow steaming on US West Coast services tradelanes, Extra Slow 40 Number of strings ‐ Far East‐US West Coast Steaming has not been applied as exte
Slide 50: Demand started to turn upon signs of economic recovery in 2H09
Additionally, demand started to turn upon signs of economic recovery in 2H09… % y-o-y Global GDP By Selected Countries 16 Forecast 14 China 12 10 8 India Indonesia 6 Vietnam S.Korea 4 US 2 Japan 0 Euroland -2 -4 -6 -8 -10 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09F 1Q 10F Note: Euroland include
Slide 51: Signs of recent freight rate improvements
Demand recovery and industry discipline has lead to signs of recent freight rate improvements Drewry reports box rate rise American Shipper – 19 January 2010 Freight rates show signs of recovery Lloyd’s List – 19 January 2010 ” Drewry said that for the first time since mid-2008, average global conta
Slide 52: Summary
Summary ¾ While demand is recovering and signs of inventory restocking is taking place, the underlying strength and duration of this recovery is still uncertain. ¾ Cost pressures that resulted in lay-ups and slow steaming has helped to improve utilisation rates, manage costs and stabilise rates. ¾ R
Slide 53: 8. Group Outlook
8. Group Outlook Page 52 | 11 February 2010 | 2009 Full Year Performance Review
Slide 54: Group Outlook
Group Outlook At our 3Q09 results announcement, NOL indicated continuing losses in the first half of 2010. In early 2010, there have been improvements in volumes and asset utilisation in NOL’s principal markets. In addition, freight rates have stabilised and trended upwards in some trades. If these
Slide 55: Appendix
Appendix Page 54 | 11 February 2010 | 2009 Full Year Performance Review
Slide 56: Group Fuel and Currency Exposures
Group Fuel and Currency Exposures Bunker • The Group continues to recover part of its fuel price increases from customers through bunker adjustment factors. • The Group also maintains a policy of hedging its bunker exposures. Foreign exchange • Major foreign currency exposures are in Euro, Chinese R
Slide 57: End of Presentation Thank You
Neptune Orient Lines Ltd 456 Alexandra Road, NOL Building End of Presentation Singapore 119962 Tel: (65) 6278 9000 Thank You Fax: (65) 6278 4900 Company registration number : 196800632D Website: www.nol.com.sg