Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — Investor Presentation (November 2021)
49 slides from Cmb.tech Nv's investor presentation, November 2021
Slide 1: Market & Company Update November 2021
MARKET & COMPANY UPDATE NOVEMBER 2021
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events
Slide 3: 1. Our Company
1. OUR COMPANY © euRONay.
Slide 4: World's Largest Publicly Listed Tanker Platform
WORLD’S LARGEST PUBLICLY LISTED TANKER PLATFORM Euronav at a glance Diversified and attractive fleet ▪ Diversified fleet of 48 VLCCs1, 30 Type # of vessels Avg. age Built life suezmaxes1, 2 FSOs3 and 2 ULCCs VLCC 48 6.6 yr. 25 yr. ▪ Listed on NYSE and Euronext Brussels with a current market cap of $
Slide 5: Euronav Platform
EURONAV PLATFORM INTEGRATED, ROBUST WITH CLEAR FOCUS, LOW COSTS & HIGH OPERATIONAL LEVERAGE • Fully integrated tanker platform Best in class operational Structure • Low cash breakevens VLCC $11.1k for 2021 • Core VLCC fleet 6.7 years old World’s largest VLCC & Suezmax fleet • 45x VLCC & 22x Suez 100
Slide 6: Leverage Which Translates to Strong Returns in Upcycle
LEVERAGE WHICH TRANSLATES TO STRONG RETURNS IN UPCYCLE Free cashflow yields @ 1 November 2021 Euronav FCF p/share $1.69 $3.31 $5.74 60% 54,4% 50% 40% 31,4% 30% 20% 16,0% 10% 0% VLCC 34k/Suez 24k VLCC 50k/Suez 44k VLCC 75k/Suez 48k Euronav Tanker Co A Tanker Co B Tanker Co C Source: Clarksons Researc
Slide 7: FSOs Operating on Long-Term Contract for QP & Total Energies to 2032
FSO’S OPERATING ON LONG-TERM CONTRACT FOR QP & TOTAL ENERGIES TO 2032 Background Contract structure and economics • TI Africa and TI Asia are ULCCs originally built in • Vessels have been on contract since 2010 with 2002, and converted to FSOs between 2008-2010 100% uptime • Sophisticated oil proces
Slide 8: Role of Tankers International Pool
ROLE OF TANKERS INTERNATIONAL POOL Independent entity created to offer owners and customers the advantages of a large-scale operation • Tankers International Pools provide a physical hedge for owners by ensuring stable and regular cash flow during volatile market conditions whilst still being able t
Slide 9: ~50% of VLCC Fleet Controlled by Top Owners
~50% OF VLCC FLEET CONTROLLED BY TOP 15 OWNERS STILL ROOM FOR CONSOLIDATION Top 10 independent tanker platforms globally Fragmented market # of UL/VLCC tankers (including newbuilds) UL/VLCC market share 50 50% of the Angelicoussis Group 40 fleet controlled by top 15 Others ~50%1 ~50% Top 15 DHT Hold
Slide 10: 2. Financials
2. FINANCIALS | @euronav.
Slide 11: Attractive Cash Break-Evens and Strong Financial Profile Offsets Cyclicality
ATTRACTIVE CASH BREAK-EVENS AND STRONG FINANCIAL PROFILE OFFSETS CYCLICALITY Weekly 1-yr VLCC TC vs Euronav breakeven rates Seasonality – avg. qtr. VLCC rate 1990-2020 $k/day $k/day 100 46 45 90 44 80 70 42 41 60 40 50 38 40 30 36 35 20 34 10 32 32 0 2002 2005 2008 2011 2014 2017 2020 30 1Y TC VLCC
Slide 12: Strong Access to Financing at Attractive Terms
STRONG ACCESS TO FINANCING AT ATTRACTIVE TERMS Repayment schedule and RCF reductions $m Highlights 300 • Credit margins between 1.50% and 2.35% • Most of the bank debt is revolving, and secured 250 within comfortable LTV levels 200 • Strong relationships with the leading international 150 shipping b
Slide 13: Strategy to Increase Sustainability-Linked Financing
STRATEGY TO INCREASE SUSTAINABILITY-LINKED FINANCING Ship financing – The future Emission targets All banks to > IMO agree • Early adoption of sustainability-linked loans – one of the first in the industry with $713m sustainability-linked loan announced in September 2020 • AER (annual efficiency rat
Slide 14: Capex Overview
CAPEX OVERVIEW Capex schedule ($m) and newbuild deliveries Comments Suezmax VLCC 8x eco-vessels on order with the latest available design 234 LNG and ammonia readiness for potential retrofit – 66 additional pipework and deck strengthening Advanced financing discussions with banks on the earliest del
Slide 15: 3. Sustainability
6 3. SUSTAINABILITY | @eurawav 15
Slide 16: Sustainability Matters at Euronav
SUSTAINABILITY MATTERS AT EURONAV Tanker sector leading ESG foundations established Key Alignments ACCOMPLISHMENTS UN SDGs Environmental Social Governance Consistent survey top Emissions data since 10 ‘17 2021: 2nd position “Good steward” of capital Independent board + $713m sustainability loan & hi
Slide 17: Sustainability Matters at Euronav
SUSTAINABILITY MATTERS AT EURONAV Solid Sustainability Platform Established Ambition to deliver more Sustainability Committee est ‘19 Emission targets for 2022 + Dedicated Sustainability Manager Deliver on supply chain goals 1/3 funding ESG linked Sustainability funding leadership 2/54 in Shipping f
Slide 18: Shipping's Positioning on Emissions
SHIPPING’S POSITIONING ON EMISSIONS IN STRONG RELATIVE POSITION SHIPPING – LOW RELATIVE EMISSIONS Air 425 Road 80 2.7% of global CO2 emissions Rail 35 Shipping 5 0 100 200 300 400 500 gCO2/ton-km(1,2,3) Source: IMO GHG study 2009. Notes: 1) Energy-efficient transport is much dependent on the load fa
Slide 19: Investing in Latest Technology Today for Tomorrow's World
EURONAV - INVESTING IN LATEST TECHNOLOGY TODAY FOR TOMORROW’S WORLD Regulatory & commercial landscape demands investment now Transition Long Term Solution Transition fuels available now with gains in 100% emissions reductions 93% 93% 90% Well to Propeller emission reductions 84% 80% However Hydrogen
Slide 20: Emissions Regulations in Place
EMISSIONS REGULATIONS IN PLACE WITH TOUGHER TRAJECTORY SET Shipping decarbonisation needs to accelerate Regulations will continue to get tougher to 2030 2008 CO2 output 1050 1% cut 2% cut 5-6% 1000 6,5 A y-o-y B y-o-y C cut y/y? -18% or 185mt 6,3 versus 2008 950 6,1 900 5,9 2021 Shipping is 2.7% of
Slide 21: 4. Current Market Outlook Fundamentals
4. CURRENT MARKET OUTLOOK FUNDAMENTALS 21
Slide 22: Strong Supply Dynamics - Low Orderbook, Ageing Fleet & Limited Yard Capacity
STRONG SUPPLY DYNAMICS - LOW ORDERBOOK, AGEING FLEET & LIMITED YARD CAPACITY Orderbook/fleet ratio Age profile Yard lead times (VLCC) Orderbook % of fleet Avg. age (years) Years 55 11,0 4 Fleet age at 20-year Yard lead times 50 high – 25%+ of fleet 10,5 at 12-year high 10,5 older than 15 years 45 3,
Slide 23: Recycling Candidates for Next 5 Years About 2.8x of Current Orderbook
RECYCLING CANDIDATES FOR NEXT 5 YEARS ABOUT 2.8X OF CURRENT ORDERBOOK 25% VLCC fleet > 15 years Average fleet age = 10 years Orderbook 9% Back to level not seen since 2002 80 11 70 10 10 60 Average age of VLCC fleet 9 50 Few >20 year old trading No of VLCC & sanction effected 9 40 8 30 8 Yards sold
Slide 24: Market Recovery in Asset Prices
MARKET RECOVERY IN ASSET PRICES Asset prices rising on expectation of soon Asset prices tend to be a lead indicator for market recovery time charter rates 120 +25% +12% +18% +27% 80.000 110 108 70.000 100 105 85 60.000 80 75 100 70 63 50.000 60 56 95 48 40.000 43 40 90 30.000 20 85 20.000 0 10.000 8
Slide 25: Steel Price Driving Asset Prices with Yard Availability
1000 0 100 200 300 400 500 600 700 800 900 Dec-2011 Mar-2012 Jun-2012 Sep-2012 Dec-2012 Mar-2013 Jun-2013 Sep-2013 Dec-2013 Mar-2014 AVAILABILITY Jun-2014 Sep-2014 Dec-2014 Mar-2015 Jun-2015 Sep-2015 Dec-2015 Mar-2016 Jun-2016 Sep-2016 Dec-2016 Mar-2017 Bloomberg compositie steel price USD Jun-2017
Slide 26: Contracting Both Green and Lean
CONTRACTING BOTH GREEN AND LEAN New tonnage has alternative fuels Ordering at lowest level since 1995 18 6 16 5 14 12 4 10 3 8 6 2 4 1 2 0 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 0 April May June July August September October VLCC delivery date VLCC Alt fuel capability VLCC Suezmax 26
Slide 27: Delivery Schedule
DELIVERY SCHEDULE VLCC Delivery Schedule Suezmax Delivery Schedule 80 70 60 60 50 40 40 68 30 57 50 48 20 39 37 20 27 24 32 30 30 26 10 22 0 -4 -4 8 -13 -13 0 -2 1 -20 -6 -8 -25 -13 -31 -10 -22 -20 -20 -25 -25 -20 -40 -30 2017 2018 2019 2020 2021 2022 2023 2017 2018 2019 2020 2021 2022 2023 2024 Rec
Slide 28: Tanker Sector Is Highly Regulated
TANKER SECTOR IS HIGHLY REGULATED Older tonnage comes under increasing pressure Owners’ dilemma Increased opex from Older vessels = IMO2020 heavy consumers Volatile steel/scrap price Lower cash earnings for older vessels Ballast water capex $1.5m from Sept 19 Source Euronav 28
Slide 29: Vessel Utilisation Reduces Quickly Post Years Age
VESSEL UTILISATION REDUCES QUICKLY POST 15 YEARS AGE 5yr 5yr 5yr 2.5yr 2.5yr 2.5yr 2.5yr 10.000 4.500 SS SS SS SS SS SS SS Average VLCC tonne miles per vessel by age 5 yr average 9.000 4.000 Average Suezmax tonne miles per vessel by age 8.000 3.500 7.000 3.000 6.000 2.500 (million) 5.000 2.000 4.000
Slide 30: Recycling Has Started at Highest Level in 3.5 Years
10 12 14 0 2 4 6 8 Jan-2015 Mar-2015 May-2015 Jul-2015 Sep-2015 Nov-2015 Jan-2016 Mar-2016 May-2016 Jul-2016 Sep-2016 Nov-2016 Jan-2017 Mar-2017 May-2017 Jul-2017 Sep-2017 LEVEL IN 3.5 YEARS Nov-2017 VLCC Demolition Jan-2018 Mar-2018 May-2018 Jul-2018 Sep-2018 Nov-2018 Jan-2019 Mar-2019 May-2019 Sue
Slide 31: Unusual Pattern of Recycling During This Cycle
UNUSUAL PATTERN OF RECYCLING DURING THIS CYCLE IN PAST LOW RATES & HIGHER PRICES PROMPTED RECYCLING History: Rates below Breakeven = 5% of fleet recycles History: Higher prices acted as catalyst for recycling 30 10 9% 30.000 8% 8% 8% 9 8% 25 7% 25.000 8 % of VLCC fleet recycled during year 7% 7 VLCC
Slide 32: Ton Miles – Key Driver of Tanker Markets
TON MILES – KEY DRIVER OF TANKER MARKETS Demand growth all from Far East – key for tankers is where supply is sourced from Atlantic Basin – Far East route Middle East - Asia Pacific route 1.4 mbpd x 365 days = 511m barrels 1.4 mbpd x 365 days = 511m barrels Annual VLCC 511m barrels / 2m capacity per
Slide 33: Inventory Matters
INVENTORY MATTERS Global oil inventory well below 5 yr average Inventory builds good for tanker market 3300 100.000 3300 3200 90.000 3200 EIA global crude inventory m bbls 3100 80.000 3100 70.000 3000 3000 60.000 VLCC rates 2900 50.000 2900 2800 40.000 2800 2700 30.000 2700 2600 20.000 2500 2600 10.
Slide 34: Consolidation in Large Tanker Market
CONSOLIDATION IN LARGE TANKER MARKET – MORE IMPACTFUL IF FROM BOTTOM UP NOT TOP DOWN Tanker Sector Highly Fragmented Herfindahl Hirschmann Index A market with an HHI of less than 1,500 VLCCs in Listed Hands 1-3x VLCCs per owner is considered a competitive marketplace, 90 85 an HHI of 1,500 to 2,500
Slide 35: Global VLCC Fleet Ripe for Downsizing
GLOBAL VLCC FLEET RIPE FOR DOWNSIZING 42% OF FLEET >15 YRS BY 2025* Global fleet age highest since 2002 - Most aggressive oil demand scenario can be managed by fleet size adjustment Million bpd oil consumption * Includes all new buildings scheduled or under construction 35
Slide 36: 5. Current Market Outlook Catalysts
5. CURRENT MARKET OUTLOOK CATALYSTS 36
Slide 37: Short Term Catalysts Gaining Traction
SHORT TERM CATALYSTS GAINING TRACTION Recycling 15x VLCCs recycled in 2021 - 4 in Sept High fuel prices to trigger 500k-1m bpd Fuel switching switch to crude this winter Output converting to exports Persian Gulf export 550k bpd Sept 2021 Post-COVID demand recovery IEA forecast 3.3m bpd growth in 202
Slide 38: Improving Demand & Supply Dynamics
IMPROVING DEMAND & SUPPLY DYNAMICS SUPPORTED BY SHORT TERM CATALYSTS 102 45 100 40 OPEC+ production mbpd 98 IEA Demand m bpd 35 96 30 94 25 92 90 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 OPEC+ production mbpd IEA Demand mbpd 38 Source: Bloomberg, IEA, JP Morgan
Slide 39: Floating Storage - In Rear View Mirror
FLOATING STORAGE- IN REAR VIEW MIRROR 250 350 300 200 250 m bbls crude floating storage No of vessels in storage 150 200 150 100 100 50 50 0 0 Suezmax Aframax VLCC M bbls storage 39
Slide 40: Short Term Surplus Tonnage Improving
SHORT TERM SURPLUS TONNAGE IMPROVING - NOW AT LEVELS LAST SEEN 15 MONTHS AGO 1 year time charter rate 100,000 40
Slide 41: Switch to Oil from Other Fossil Sources Could Be Around 0.75M bpd
SWITCH TO OIL FROM OTHER FOSSIL SOURCES FOR ENERGY COULD BE AROUND 0.75M BPD Fuel price surges = crude relatively cheap Estimated boost of 750k bpd over winter Equiv USD per bbl expressed in Crude Coal Rotterdam Region Fuel Switch to Volume kbd Natural gas US EU Resid Fuel Oil Crude 80 LNG Japan/Kor
Slide 42: Iran – Wild Card for Tankers?
IRAN – WILD CARD FOR TANKERS? Illicit trade 8% VLCC & 5% Suexmax fleet Older tonnage – illicit trade not recycled 70 9 38 40 No of illegitimate vessels 8 % of respective fleet 60 35 2019 2020 7 30 50 30 28 6 25 40 25 23 54 5 30 4 20 15 3 15 20 20 10 2 10 7 8 10 1 12 9 5 0 0 0 VLCC Suezmax VLCC Suezm
Slide 43: Iran – Structural and Operational Implications for Tanker Market
IRAN – STRUCTURAL AND OPERATIONAL IMPLICATIONS FOR TANKER MARKET Structural – Older tonnage under exit pressure Operational – c. 1m bpd to return to commercial 30 8% 1600 7% 1400 25 No of vessels engaged in illicit trade 6% 1200 % of fleet in illicit trade 20 5% 1000 15 4% 800 3% 600 10 2% 400 5 1%
Slide 44: Refinery Margins Returning to Pre-Pandemic Levels
REFINERY MARGINS RETURNING TO PRE-PANDEMIC LEVELS US Refinery margin – rebounded to 2019 levels incentivising refiners to import crude Source: Bloomberg 44
Slide 45: Sustained Production Growth Leads to Improved Tanker Rates Historically
SUSTAINED PRODUCTION GROWTH LEADS TO IMPROVED TANKER RATES HISTORICALLY 120.000 Year 2013 = Q2 13 to Q4 15 +4.5m bpd growth Year 2018 = Q3 17 to Q4 18 +3.8m bpd growth Year 2021 = Q2 21 to Q4 22 +7.5m bpd growth 100.000 80.000 60.000 40.000 20.000 0 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qt
Slide 46: Crude Exports – Beginning to Rise
CRUDE EXPORTS – BEGINNING TO RISE Exports now translating from production rises US crude exports – linked to domestic production 14.000 5.000 2500 4.500 13.000 4.000 2000 US crude production k bpd kbpd oil production & export 3.500 US crude exports k bpd 12.000 3.000 1500 11.000 2.500 2.000 1000 10.
Slide 47: Conclusion
EURONAV CONCLUSION | @euronavy.
Slide 48: Outlook Through the Market Trough
OUTLOOK THROUGH THE MARKET TROUGH Demand for Supply Ton miles Vessel Supply Euronav Oil of Oil Balance sheet Continued Post OPEC+ production Feature anticipated Medium term metrics Leverage remains Covid recovery tapering finally to drive markets very constructive but below target gaining traction &
Slide 49: Thank You
T H A N K Y 0 U EURONAV.