Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — Credit Suisse 18th Asian Investment Conference 2015

46 slides from Pacific Basin Shipping's conference presentation, Mar 23, 2015

  1. Slide 1: Credit Suisse 18th Asian Investment Conference

    Credit Suisse 18th Asian Investment Conference 23 March 2015, HK Pacific Logger departing Tauranga past Mount Maunganui 19 March 2015

  2. Slide 2: World’s Largest Handysize Bulker Owner/Operator

    World’s Largest Handysize Bulker Owner/Operator  Listed in Hong Kong  Long term assets and newbuilding commitments of US$2 billion and book equity of US$1 billion  Fully focused on Handysize & Handymax bulkers  Global geographically  Diversified cargo & 400 customers  Substantially completed e

  3. Slide 3: Understanding Our Core Market

    Understanding Our Core Market Our Focus 3

  4. Slide 4: Strategic Model

    Strategic Model OUR STRONG CORPORATE & OUR LARGE VERSITILE FLEET FINANCIAL PROFILE Striving for best-in-class internal and external Fleet scale and interchangeable high-quality dry reporting, transparency and corporate stewardship bulk ships facilitate service flexibility to Robust balance sheet thr

  5. Slide 5: Pacific Basin Dry Bulk – Diversified Cargo

    Pacific Basin Dry Bulk – Diversified Cargo Pacific Basin Cargo Volume 2014 Energy Agricultural Products and Related Coal 5% Petcoke 6% 12% Grains & Agriculture Products 20% Fertiliser 11% Wood Pellets 1% Sugar 3% Metals 34% 14% Alumina 3% Ores 5% Concentrates & Other Metals 6% 52.4 Million Tonnes 9%

  6. Slide 6: Pacific Basin Values – With You for the Long Haul

    Pacific Basin Values – With You for the Long Haul We are determined to find and deliver the right solutions to problems and We believe in the importance challenges faced by our customers. We strongly believe in the value of human interaction and the of long term relationships over personal touch. sh

  7. Slide 7: Cargo Contract Business Model – Outperforming Market Rates

    Cargo Contract Business Model – Outperforming Market Rates  Large portfolio of cargo contracts – No outward time-charters  Large fleet of high-quality substitutable ships  High laden percentage $10,460  Model allows for both/either owning or chartering in ships  Average premium last 5 years = U

  8. Slide 8: Why Handysize?

    Why Handysize?  Modest Handysize fleet growth  Older age profile – higher scrapping  Driven by minor bulk demand  A segment in which scale & operations make a difference Source: Clarksons,, 1 Jan 2015 8

  9. Slide 9: Pro-active Asset Management

    Pro-active Asset Management  More volatility in second hand ships – less capital & higher return – if managed correctly  Well designed secondhand Japanese ships remain operationally competitive  Lower bunker price but fleet still slow-steaming  Our newbuidlings are primarily 38,000dwt vessels no

  10. Slide 10: Taking Advantage of Strong Balance Sheet & Historically Low Prices

    Taking Advantage of Strong Balance Sheet & Historically Low Prices  Owned fleet of bulkers grow from 37 to 80 Pacific Basin Dry Bulk Owned Fleet on the Water  Ships acquired are Japanese built 98  Balance sheet remains strong with net gearing of 40% and cash of US$363 mil by 18 80 NBs the end of

  11. Slide 11: Dry Bulk Market Situation

    Dry Bulk Market Situation Optimism Turned into Pessimism The Market is Weak US$/day net Handysize Secondhand Values $16,000 BSI and BHSI US$m 55 $14,000 50 $12,000 45 $10,000 BSI: $6,070 40 $8,000 35 30 $6,000 Feb 15: 25 US$14.5m $4,000 20 $2,000 BHSI: $5,140 15 $0 10 Jan-12 Jul-12 Jan-13 Jul-13 Jan

  12. Slide 12: Demand Development

    Demand Development Dry Bulk Supply & Demand Forecast Chinese Imports 7 Minor Bulks – Down Due to Indonesian Export Ban % change YOY 18% Effective Demand 16% Supply 14% 12% 10% 9% 8% 7% 6% 4% 4% 4% 2% 0% 03 04 05 06 07 08 09 10 11 12 13 14 15E* 16E*  Remaining overcapacity from 2010-2012  Lower imp

  13. Slide 13: Capital & Management Now Fully Focused on Our World Leading Handy Dry Bulk Business

    Capital & Management Now Fully Focused on Our World Leading Handy Dry Bulk Business Start 2012 2015 Four business units Fully Dry Bulk Focused US$1.6 billion of long term assets US$2 billion of long term assets Including NB commitments ME Towage 18 Newbuildings Terminal, etc Towage Minor player No c

  14. Slide 14: Well positioned in a Cyclical Business

    Well positioned in a Cyclical Business  58% cover for 2015 & continued outperformance  Better equipped than arguably any other Dry Bulk company  Out of non core – now well structured  Times will not be bad forever 14

  15. Slide 15: Disclaimer

    Disclaimer This presentation contains certain forward looking statements with respect to the financial condition, results of operations and business of Pacific Basin and certain plans and objectives of the management of Pacific Basin. Such forward looking statements involve known and unknown risks,

  16. Slide 16: 2014 Annual Results – Group Highlights

    2014 Annual Results – Group Highlights Underlying Profit EBITDA 2014 2013 US$m US$m 15.6 118.2 Net (Loss) / Profit US$(285.0)m US$1.5m Cash Position US$363m US$486m 82.2 Net Gearing 40% 34% Dividend per Share HK¢5 (proposed) HK¢5 (55.5) 2013 2014 2013 2014  In a very difficult market, our results w

  17. Slide 17: Pacific Basin Dry Bulk – 2014 Performance

    Pacific Basin Dry Bulk – 2014 Performance Handysize Outperformed Market by: 28% US$ million 2014 Daily Earnings US$9,340 ↓2% YOY Dry Bulk net loss (30.0)  Handysize contribution 28.5 Daily Costs US$8,750 ↑3% YOY  Handymax contribution (14.8)  Direct overheads (49.2) Handymax Outperformed Market b

  18. Slide 18: Pacific Basin Dry Bulk – Earnings Coverage

    Pacific Basin Dry Bulk – Earnings Coverage As at 23 Feb 2015 PB Dry Bulk Fleet Development Covered Uncovered Average number of vessels operated Handysize Handymax 2015: proportionally more owned ships: • better stability • lower cash breakeven Revenue Days • better service 218 213 2 56,210 days 22,4

  19. Slide 19: Dry Bulk Market Information

    Dry Bulk Market Information  Freight market trended sharply down in 2014 – 63% fall in BDI over the year  Continued global oversupply of vessels  Regional demand-side weaknesses, less coal imports to China  Collapse in Atlantic rates in 2Q resulting from ships repositioning for S. American grain

  20. Slide 20: Dry Bulk Demand

    Dry Bulk Demand Dry Bulk Effective Demand Chinese Minor Bulk Imports % change YOY 16 Million tonnes 30 12 25 9.2 20 8 6.7 15 4.1 4 Chinese imports decreased 12% YOY 10 (Increased 14% excl. nickel ore & bauxite) 0 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -0.8 2014 2013 2012 2011 -4 These 7 c

  21. Slide 21: Global Dry Bulk Fleet Development

    Global Dry Bulk Fleet Development net fleet growth Handysize Dry Bulk overall Dry Bulk New Ship Ordering 1H14 +1.9% +2.7% Per quarter annualised In % of fleet (dwt) 2H14 +0.7% +1.7% 30% 24% 2014 +2.7% +4.4% 25% Dry bulk net fleet growth: 20% 17% 15%  Driven by 48m tonnes of new capacity 10% 9%  Pa

  22. Slide 22: Dry Bulk Orderbook

    Dry Bulk Orderbook Handysize Orderbook 456 vessels (16.8m dwt) m Dwt 10 12.5%  Current orderbook: 21% (Handysize: 23%) 9 8 31%  Deliveries expected to fall short of schedule 7 Shortfall 6 7.8%  Cancellations, delays, conversions will have larger effect on 2016 7.1m 5  New ship ordering lowest si

  23. Slide 23: Pacific Basin Dry Bulk – Outlook

    Pacific Basin Dry Bulk – Outlook Opportunities Threats  Growth in Chinese imports of minor bulks on re-  Low fuel prices causing a general increase in vessel stocking or economic stimulus operating speeds  increasing supply  Solid US economic growth stimulates global economy  Further reduction

  24. Slide 24: PB Towage

    PB Towage  Group results affected by: 2014 US$ million  US$70.5m non-cash impairments / provisions (incl. US$64m in 1H14) Towage net loss (15.1)  US$7.6m business disposal loss and related US$12.7m exchange loss (sale of harbour towage and our OMSA JV interest) EBITDA (6.0) US$million Net book lo

  25. Slide 25: 2014 Annual Financial Highlights

    2014 Annual Financial Highlights US$m 2014 2013 Segment net (loss)/profit (45.9) 36.0  Treasury - (4.4)  Discontinued Operations - RoRo (0.2) (0.5)  Non direct G&A (9.4) (15.5) Underlying (loss)/profit (55.5) 15.6  Sale of Harbour Towage and OMSA JV (7.6) -  Towage Exchange (loss)/gain Towage r

  26. Slide 26: Pacific Basin Dry Bulk

    Pacific Basin Dry Bulk Dry Bulk 1H14 2H14 2014 2013 Change Handysize contribution (US$m) 26.2 2.3 28.5 51.9 -45% Handymax contribution (US$m) (10.7) (4.1) (14.8) 8.5 -274% Post-Panamax contribution (US$m) 2.7 2.8 5.5 5.7 -5% Segment operating performance (US$m) 18.2 1.0 19.2 66.1 -71% before overhea

  27. Slide 27: Pacific Basin Dry Bulk

    Pacific Basin Dry Bulk Handysize 1H14 2H14 2014 2013 Change Revenue days (days) 27,200 29,010 56,210 52,550 +7% TCE earnings (US$/day) 10,210 8,520 9,340 9,520 -2% Owned + chartered costs (US$/day) 9,120 8,400 8,750 8,480 -3% Handysize contribution (US$m) 26.2 2.3 28.5 51.9 -45% Handymax Revenue day

  28. Slide 28: Daily Vessel Costs – Handysize

    Daily Vessel Costs – Handysize Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 31 December 2014 Opex Inward Charter Commitments Owned Chartered Days & rates Including finance lease vessels US$/day 2014-2015 Blended US$8,750 (2013: US$8,480)

  29. Slide 29: Daily Vessel Costs – Handymax

    Daily Vessel Costs – Handymax Finance cost Charter-hire : Short-term (ST) / Long-term (LT) Depreciation Charter-hire : Index-linked As at 31 December 2014 Opex Owned Chartered Inward Charter Commitments US$/Day Days & Rates Blended US$11,050 (2013: US$10,440) 14,000 2014-2015 11,810 12,000 18,000 10

  30. Slide 30: Balance Sheet

    Balance Sheet PB PB US$m Dry Bulk Towage Treasury 31 Dec 14 31 Dec 13 Vessels & other fixed assets 1,539 42 - 1,585 1,622 Total assets 1,754 119 425 2,308 2,537 Total borrowings 1,000 - - 1,000 1,037 Total liabilities 1,237 13 9 1,306 1,233 Net assets 517 106 416 1,002 1,304 Net borrowings after tot

  31. Slide 31: Borrowings and Capex

    Borrowings and Capex US$m 300 Investors’ Put Option Maturity Oct 2016 Date 210 200 190 179 124 109 96 100 86 84 79 68 62 62 56 - 2015 2016 2017 2018 2019 2020 2021 2022-2028 Bank borrowings (US$668 million) & finance lease liabilities (US$18 million due 2015) Convertible bonds i) face value US$210 m

  32. Slide 32: Cash Flow – 2014 Sources and Uses of Group Cash Flow

    Cash Flow – 2014 Sources and Uses of Group Cash Flow Operating cash flow US$94m Cash inflow Cash outflow EBITDA US$82m US$m 700 +13 2015 & 2016 cash flows +70 US$179m Funded by: 600 +94 borrowings • US$122m new bank borrowings due during 2015 drawn in late 2014 • US$60m RoRo sale proceeds +486 expec

  33. Slide 33: Our Outlook and Strategy

    Our Outlook and Strategy Dry Bulk Outlook  Poor start to 2015 - BDI fell to lowest since 1986, dysfunctional freight market in some regions  Expect weak market to continue in 2015 – taking a cautious view on freight earnings outlook  Reduced net fleet growth, but excessive dry bulk supply not yet

  34. Slide 34: Appendix: Pacific Basin Overview

    Appendix: Pacific Basin Overview  A leading dry bulk owner/operator of Handysize & Handymax dry bulk ships  Flexible Pacific Basin Dry Bulk business model  Large fleet of uniform, interchangeable, modern ships  Mix of owned and long-term, short-term chartered ships  Operating mainly on long ter

  35. Slide 35: Appendix: Sustainability

    Appendix: Sustainability  Applying sustainable thinking in our decisions and the way we run our business  Creating long-term value through good corporate governance and CSR Corporate Social Responsibility (CSR)  Guided by strategic objectives on (i) workplace practices (primarily safety), (ii) th

  36. Slide 36: Fleet List – Jan 2015

    Appendix: Fleet List – Jan 2015* Pacific Basin Dry Bulk Fleet: 250 average age of core fleet: 7.3 years old Owned Chartered Total Delivered Newbuilding Delivered¹ Newbuilding www.pacificbasin.com Fleet Details Handysize 64 12 93 12 181 Handymax 15 6 44 2 67 Post-Panamax 1 0 1 0 2 Total 80 18 138 14

  37. Slide 37: Appendix: Vessels Commitments

    Appendix: Vessels Commitments Total US$385m To be largely funded by US$m US$350m committed 200 190 Japanese export credit facility 60 150 109 100 23 86 130 52 50 7785 35 0 2015 2016 2017 Handysize x 12, US$250m Handymax x 6, US$135m 37

  38. Slide 38: Appendix: Vessel Operating Lease Commitments

    Appendix: Vessel Operating Lease Commitments As at 31 December 2014 77 38

  39. Slide 39: Appendix: Vessel Operating Lease Commitments

    Appendix: Vessel Operating Lease Commitments As at 31 December 2014 77 39

  40. Slide 40: Appendix: Historical Owned and Chartered-in Cost

    Appendix: Historical Owned and Chartered-in Cost 40

  41. Slide 41: Appendix: Historical earnings

    Appendix: Historical earnings www.pacificbasin.com Annual Report – Key Performance Indicators 41

  42. Slide 42: Appendix: Convertible Bonds Due 2016

    Appendix: Convertible Bonds Due 2016 Issue size US$230 million (US$20.5m face value put back and repaid on 14 April 2014; Remaining: US$210m) Maturity Date 12 April 2016 (6 years) Investor Put Date and Price 12 April 2014 (4 years) at par Coupon 1.75% p.a. payable semi-annually in arrears on 12 Apri

  43. Slide 43: Appendix: Convertible Bonds Due 2018

    Appendix: Convertible Bonds Due 2018 Issue size US$123.8 million Maturity Date 22 October 2018 (6 years) Investor Put Date and Price 22 October 2016 (4 years) at par PB’s Call Option 1) Trading price for 30 consecutive days > 130% conversion price in effect 2) >90% of Bond converted / redeemed / pur

  44. Slide 44: Appendix: Dry Bulk Fleet Profile

    Appendix: Dry Bulk Fleet Profile Age Profile of Handysize Vessel (25,000-39,999 Dwt) 2,256 vessels (73.4mil dwt) 11% 30+ years 25-29 years 13% 13% 0-15 years 7.2% 16-24 years 4.6% 11.2% 77.0% Source: Clarksons, as at 1 Feb 2015 44

  45. Slide 45: Appendix: China at late-Industrialisation Stage

    Appendix: China at late-Industrialisation Stage Steel Consumption Per Capita Tons per Capital 1.0  China growth matches historical trend in Japan and Korea 0.9  Suggests strong growth in dry bulk 0.8 segment to remain for medium term 0.7  Similar trend for electricity and cement 0.6 0.5 0.4 0.3 0

  46. Slide 46: Appendix: China Dry Bulk Trade, Iron Ore & Coal Demand

    Appendix: China Dry Bulk Trade, Iron Ore & Coal Demand Chinese Dry Bulk Trade Volume China is a significant China Iron Ore Sourcing net importer of coal for Steel Production % of total dry Mil Tonnes Mil Tonnes Mil tonnes Bulk trade 1,400 2100 1,301 30% 400 1,200 1800 28% 350 327 300 292 1,000 933 1

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