Gaztransport & Technigaz Sa · EURONEXT:GTT
Gaztransport & Technigaz Sa — FY2018 Earnings Presentation
59 slides from Gaztransport & Technigaz Sa's earnings presentation, Feb 27, 2019
Slide 1: Investor Presentation FY 2018 Results
Investor Presentation FY 2018 Results 27 February 2019
Slide 2: Disclaimer
Disclaimer This document contains information resulting from testing, experience and know-how of GTT, which are protected under the legal regime of undisclosed information and trade secret (notably TRIPS Art. 39) and under Copyright law. This document is strictly confidential and the exclusive prope
Slide 3: Disclaimer
Disclaimer This presentation does not contain or constitute an offer of securities for sale or an invitation or inducement to invest in securities in France, the United States or any other jurisdiction. It includes only summary information and does not purport to be comprehensive. No representation,
Slide 4: Agenda
Agenda 1. Company overview & key highlights 2. Core business: Market & Activity update 3. New businesses: LNG Fuel developments 4. Service activity 5. Stategic roadmap 6. Financials 7. Outlook Appendices 4
Slide 5: Company overview & Key highlights
1 Company overview & Key highlights 5
Slide 6: GTT, a French technology and engineering company specialised in liquefied gas containment systems
GTT, a French technology and engineering company, specialised in liquefied gas containment systems Consolidated key figures Profile Technology and engineering in € million 2017 (1) 2018 company Expert in liquefied gas containment Total Revenues 241 246 systems Royalties (newbuild) 228 232 Services 1
Slide 7: Key Highlights
Key Highlights FY 2018 Consolidated Revenues: €246 million (+6.2%) Record level of new orders CORE BUSINESS Order book: 97 units FY 2018 movements in the order book 83 LNGC* 2 FLNG New orders: 51 (48 LNGC, 2 FSRU, 1 Onshore storage) 9 FSRU 3 Onshore storage Deliveries: 42 (36 LNGC, 5 FSRU, 1 barge)
Slide 8: Core business: Market & activity update
2 Core business: Market & activity update 8
Slide 9: Overall long term outlook bright for gas and LNG
Overall long term outlook bright for gas and LNG Gas share in the energy mix LNG share in total gas trade Gas is the only fossil energy to increase share in Gas is increasingly exported thanks to the energy mix LNG Gas is expected to exceed coal by 2025, and could LNG to overpass pipeline trade by b
Slide 10: LNG strong demand outlook
LNG strong demand outlook 2035 LNG demand outlook 700 600 500 400 Mtpa 300 200 100 Q1 2019 for Shell, BP Q4 18 forecast for WM Q2 18 for IHS 0 2015 2020 2025 2030 2035 LNG demand expected to double between 2018 and 2035 Growth mainly coming from Asia Continuous growth expected 10
Slide 11: LNG demand forecasts keep rising
LNG demand forecasts keep rising Evolution of LNG demand forecasts between 2016 and 2018 700 +80 Mtpa 600 +80 Mtpa +35 Mtpa 500 +30 Mtpa 400 Mtpa 300 200 100 - 2020 2025 2030 2035 Q4-2016 forecast Q4 2017 forecast Q4 2018 forecast Source: Wood Mackenzie Since 2016, LNG demand outlooks have kept incr
Slide 12: Asian LNG imports growing in 2018 vs. 2017
Asian LNG imports growing in 2018 vs. 2017 Top LNG importers demand comparison 2018 vs. 2017 2017 trends confirmed 250 50% Demand of top 5 LNG importers +44%/y increased by +12% in 2017 and 200 40% in 2018 Main drivers 150 30% Coal to Gas switch, especially in China due to environmental mtpa 100 20%
Slide 13: LNG Supply & Demand: new capacity needed
LNG Supply & Demand: new capacity needed LNG Supply & Demand balance forecast 600 500 250 Mtpa 400 Mtpa 300 200 100 0 2007 2021 2026 2000 2001 2002 2003 2004 2005 2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2022 2023 2024 2025 2027 2028 2029 2030 2031 2032 2033 2034 2035 Su
Slide 14: Liquefaction projects: more FIDs expected
Liquefaction projects: more FIDs expected Volume Project Country Operator (Mtpa) Comment Corpus Christi T3 US Cheniere 4.5 Production expected in 2022/2023 FID taken LNG Canada Canada Shell 14 Production expected in 2025 in 2018- 2019 Tortue FLNG Senegal/Mauritania BP 2.4 Golar FLNG under conversion
Slide 15: Volatility in charter rates leads to a healthier LNG shipping market
Volatility in charter rates leads to a healthier LNG shipping market Spot Charter rates have soared in Q3 2018, reaching up to $200k/d before returning to more acceptable levels for ship-owners 1 year charter rates have also soared in 2018 Many companies have seen the risk of a tighter shipping mark
Slide 16: Ageing LNGCs represent an additional market potential for GTT
Ageing LNGCs represent an additional market potential for GTT LNGC fleet by date of delivery 700 1. Future Orders associated 600 to new LNG projects 500 Nb of sips 400 300 200 100 2. Future Orders associated to replacement of old vessels 0 Source : Clarksons 1970 1980 1990 2000 2010 2020 Vessels >30
Slide 17: Core business: upgrade of long term estimates
Core business: upgrade of long term estimates GTT 2018 Sales GTT order estimates over 2019-2028 Services LNGC: between 280 and 310 units Other FLNG 2% 6% 1% FSRU FSRU: between 30 and 40 units 10% FLNG: Up to 5 units LNGC Onshore and GBS tanks: between 10 and 81% 15 units Courtesy of Shell Courtesy o
Slide 18: New businesses: LNG Fuel developments
3.2 3 New businesses: LNG Fuel developments 18
Slide 19: IMO 2020: LNG is the only solution allowing comprehensive environmental compliance
IMO 2020: LNG is the only solution allowing comprehensive environmental compliance Comparison of emissions by fuel type 1 0,75 HFO Base 1 0,5 HFO+ Scrubber LSHFO LNG 0,25 0 SOX NOX CO2 Particulates Source : DNV LNG is the only solution directly compliant with all environmental regulations; also “fut
Slide 20: Open loop scrubbers banned in more areas
Open loop scrubbers banned in more areas Map of open loop scrubbers ban areas Norway Ireland Lithuania, Latvia Belgium California Connecticut China UAE India Singapore Source : GTT, Lloyd’s list NB: Not exhaustive list - Other ports in Ireland and the US ban open loop scrubbers 3 major announcements
Slide 21: LNG as fuel: Bunkering network expands
LNG as fuel: Bunkering network expands Numerous LNG bunker vessels orders in 2018, improving the availability of LNG as fuel ENN for China Eesti Gas for Estonia MOL for Europe (GTT) GazpromNeft for Russia Baltic Central LNG for Japan FueLNG for Singapore Many more under discussion and expected for 2
Slide 22: LNG Fuel focus: entry into 2 new market segments
LNG Fuel focus: entry into 2 new market segments July 2018 January 2018 Ponant ice-breaker with LNG propulsion 1 bunker ship Contract with the Norwegian shipyard VARD in charge 18,600 cbm capacity of the vessel’s construction Mark III Flex technology Vessel’s delivery planned in 2021 Owned by MOL, c
Slide 23: LNG Fuel market potential for GTT
LNG Fuel market potential for GTT Relevant Market Segments Historical 10y Shipping Markets Fleet at end 2018 for GTT annual orders MAIN TARGETS Container Ships 3-20+ kTEU Bulkers 100+ kdwt ~260 ~5,400 Oil Tankers 125+ kdwt Cruise Ships All size ~40 ~1,200 Car & Truck Carriers TOTAL SHIPPING MARKET A
Slide 24: Service activity
3.3 4 Service activity 24
Slide 25: Services to make LNG easy
Services to make LNG easy CONSULTING TRAINING LNG OPERATIONS EMERGENCY DIGITAL MAINTENANCE TESTS Extensive range of services to provide assistance all along the vessel life Originally developed for LNG Shipping, adapted and enhanced for LNG fuel 25
Slide 26: Strategic roadmap
5 Strategic roadmap 26
Slide 27: GTT's strategic roadmap
GTT’s strategic roadmap Gas handling technologies Growth, Technology, Transformation Fuel Gas handling system for vessels Superior LNG gas handling systems Advanced decision support systems Enlargement New Advisory and applications LNG as fuel Transfer operations optimisation services Framework serv
Slide 28: 2019: GTT is investing to prepare the future
2019: GTT is investing to prepare the future GTT is bringing major improvements to its technologies : To improve thermal and mechanical performances in order to provide more flexibility in operation To adapt and optimise insulation systems for new markets LNG as a fuel HD Foam LPG Applications GBS W
Slide 29: GTT innovation for optimised BOR
GTT innovation for optimised BOR Thermal performance of GTT technologies developed since 2010 0,16% 0,14% 0,12% 0,15% 0,10% 0,15% 0,08% 0,06% 0,13% 0,110% 0,085% 0,10% 0,07% 0,04% 0,07% 0,02% 0,00% A significant added-value for operators Design BOR for a 174,000m3 vessel Optimized HFC 245-fa foams e
Slide 30: Why develop a digital strategy?
Why develop a digital strategy? Monitoring and optimization software developed by GTT since 2013 has set the ground for the development of its digital roadmap Advanced digital solutions (automation, optimisation) can make the transition to LNG as a fuel easy for many clients Accurate data management
Slide 31: Developing synergies between GTT and Ascenz
Developing synergies between GTT and Ascenz Ascenz is an experienced Maritime Digitalization company with a global presence With LNG as a fuel, GTT technologies are installed in new type of vessels. Ascenz has experience equipping these vessels with sensors and softwares The combination of both comp
Slide 32: Financials
6 Financials 32
Slide 33: Order book overview (core business) – IFRS 15
Order book overview (core business) – IFRS 15 Order book in units Order book by year of delivery (units per year) In units In units 47 40 120 30 30 (1) 89 97 90 20 20 13 60 5 0 30 2019 2020 2021 As at Dec 31, 2017 As at Dec 31, 2018 As at Dec 31, 2017 As at Dec 31, 2018 Order book in value Revenues
Slide 34: FY 2018 financial performance
FY 2018 financial performance Summary consolidated accounts Key highlights In € M Proforma 2018 Change Increase in revenues 2017 Revenues newbuilds (royalties): +1.7% Total Revenues 240.8 246.0 +2.2% +9.6% increase in Service revenue, mainly due EBITDA(1) 151.3 168.7 +11.5% to the integration of Asc
Slide 35: FY 2018 Cost base
FY 2018 Cost base GTT consolidated operational costs Key highlights Proforma in € M 2017 2018 Change (%) External costs: +11% Goods purchased (1.8) (3.0) +63.8% Subcontractors +18% (but -17% vs 2016) % sales -1% -1% Travel costs -7% Other external costs +22% Subcontracted Test and (12.6) (14.9) +18.
Slide 36: Dividend
Dividend 2017 2018 Net income available for distribution €114.1 M €144.4 M (French GAAP) Total dividend Dividend per share €2.66 €3.12 Total amount paid €98.6 M €115.6 M Pay out ratio 86% 80% Dividend amount 3.12 +17% €3.00 3,0 2.66 Balance dividend of €1.79 - Record date: 1.79 €2.00 2,0 May 27, 201
Slide 37: Outlook
7 Outlook 37
Slide 38: 2019 Outlook
2019 Outlook GTT revenue(1) 2019 consolidated revenue estimated in a range of €255 M to €270 M EBITDA 2019 consolidated EBITDA estimated in a range of €150 M to €160 M Dividend 2019 and 2020 payout of at least 80% Payment(2) (1) In the absence of any significant delays or cancellations in orders. Va
Slide 39: Thank you for your attention
Thank you for your attention Image courtesy of STX, Engie, Excelerate, SCF Group, Shell, CMA CGM, Matthieu Pesquet, Conrad 39
Slide 40: Appendix
GIT Appendix
Slide 41: A streamlined group and organisation
A streamlined group and organisation GTT Group Philippe Berterottière* Chairman and Chief Executive Officer GTT SA organisation Lélia Ghilini* General Counsel Frédérique Marc Haestier* Isabelle Delattre* Julien Bec David Colson* Karim Chapot* Coeuille* Finance & Human LNG as fuel Commercial Technica
Slide 42: GTT exposure to the liquefied gas shipping and storage value chain
GTT exposure to the liquefied gas shipping and storage value chain Exploration Off Take / Liquefaction Shipping Regasification & Production Consumption Liquefied Natural Gas LNG fuelled Offshore Carrier ship clients: (LNGC) shipyards Platform / Gas-to-wire Installation Floating LNG Production, Float
Slide 43: GTT ecosystem
GTT ecosystem Oil & Gas Companies Shipowners End clients and End clients and prescribers prescribers provides services provides services and maintenance Classification Societies Regulatory oversight of the industry Shipyards Direct clients receives new technology certification and licences its membr
Slide 44: GTT membrane technologies
GTT membrane technologies Primary General principle: membrane Two membranes Primary insulation Two layers of insulations Secondary membrane Containment system Secondary insulation anchored to the inner hull Hull Mark III system NO96 system 44
Slide 45: NO96 Flex: a low boil-off system at a reasonable incremental cost
NO96 Flex: a low boil-off system at a reasonable incremental cost September 2018: AiP from Bureau Veritas for the development of NO96 Flex This new version benefits from the NO96 proven technology as well as the use of an efficient foam panel insulation Guaranted boil-off rate at 0.07%V per day 45
Slide 46: Focus on China set to become #1 in 2022
Focus on China set to become #1 in 2022 China LNG demand outlook by 2035 120 China expected to become #1 LNG 100 consumer around 2022 Over 100 Mtpa expected by 2035 80 Mtpa 60 China future LNG demand is robust 40 Strong coal to gas policy 20 Numerous plans to improve air quality 0 2005 2010 2015 202
Slide 47: US LNG is competitive in Asia
US LNG is competitive in Asia US LNG vs. Asian LNG price depending on Henry Hub and Oil prices Asian oil indexed LNG competitive Asian LNG 11 US LNG competitive 10 LNG price ($/Mmbtu) 9 Spread 8 HH : $3,5/Mmbtu US LNG HH : $3/Mmbtu 7 2017 avg. 2018 avg. HH : $2,5/Mmbtu 2016 avg. 6 Main sources: 5 GT
Slide 48: Ageing vessels with charter contract ending by 2022
55 ageing vessels with charter contract ending by 2022 LNGCs carriers* with charter contract ending by 2022 80 LNGC chart contract to end by 2022 30 Of which 55 equipped with steam turbine propulsion; also smaller vessels (<140k 25 cbm) => expensive to charter! 20 Charterers and shipowners to prepar
Slide 49: LNGCs – Our main business
LNGCs – Our main business Vessels equipped for transporting LNG Existing GTT fleet: 370 units1 In order: 83 units1 24 construction shipyards under license1 Our strengths Technological leadership, boil-off divided by 2 in the last 5 years Long term industrial partnerships with major shipyards A uniqu
Slide 50: FSRUs – The game changer for new importing countries
FSRUs – The game changer for new importing countries Major competitive advantage vs. land-based terminals: Quick to build/deploy & mobile Better local acceptability & easier permitting Affordable / no upfront CapEx Adapted to more volatile LNG prices Quality controlled construction in shipyards with
Slide 51: FLNGs – the new frontier of the LNG world
FLNGs – the new frontier of the LNG world Floating units which ensure treatment of gas, liquefy and store it Existing GTT fleet: 2 units1 In order: 2 units1 Courtesy of Shell Main drivers GTT key advantages Monetisation of stranded Extended amortization offshore gas reserves perspectives Better acce
Slide 52: LNG Fuel focus – order of a bunker ship to supply the 9 CMA CGM ULCSs
LNG Fuel focus – order of a bunker ship to supply the 9CMA CGM ULCSs December 2017 9 Ultra Large Container Ships LNG integrated membrane tanks of 18,600 cbm each Space optimization Designed for one bunkering operation per round trip (once every 4 to 5 months) Mark III technology for the fuel storage
Slide 53: Current LNG Fuel tank market situation
Current LNG Fuel tank market situation Total LNG fuel tank by ship type (in service & on order) 20 000 Max Total LNG tanks capacity Avg. 15 000 Min cbm 10 000 5 000 Market avg ~1,500 cbm 0 Notes: Data available for ~80% of the 305 vessels in service and Source: DNV GL on order Recent market that sta
Slide 54: GTT's LNG Fuel solutions offering
GTT’s LNG Fuel solutions offering GTT has developed solutions for the main applications of LNG Fuel Solutions for Container Vessels new build and retrofit Cruise Ship – optimizing the space for additional passengers Lean bunker barge to Cost effective solution for bulk carriers standardize the marke
Slide 55: Wide network of partnerships
Wide network of partnerships Shipyards Industrial and commercial partnerships Outfitters Ship owners 55
Slide 56: Focus on GTT's competitive advantages
Focus on GTT’s competitive advantages GTT’s technology positioning (1) GTT Moss SPB KC-1 Technology ▶ Membrane ▶ Spherical tank ▶ Tank ▶ Membrane ▶ Requires less steel and Construction ▶ Slightly higher costs aluminum than tanks for ▶ Higher costs ▶ Higher costs costs than GTT a given LNG capacity ▶
Slide 57: An attractive business model supporting high cash generation
An attractive business model supporting high cash generation Invoicing and revenue recognition Business model supports high cash generation % of contract (1) c. 9 to12 months c. 18 months Delivery Revenue is recognized pro-rata 10000 studies royalties temporis between construction milestones 8000 Sh
Slide 58: Appendix: track record of high margin and strong backlog
Appendix: track record of high margin and strong backlog 2008 2011 Economic crisis Fukushima US shale gas boom 120 112 66 30 18 52 77 99 114 118 96 89 94 47 2 44 37 34 35 Evolution of new 26 21 19 GTT orders (1)(2) 7 4 5 1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LNGC/VLEC FS
Slide 59: Contact: information-financiere@gtt.fr
Contact: information-financiere@gtt.fr / +33 1 30 23 20 87
GTT (Gaztransport & Technigaz) — FY2018 Earnings Presentation on 6ix