Clarkson Plc · LSE:CKN
Clarkson — H1 2020 Earnings Presentation
40 slides from Clarkson's earnings presentation, Aug 10, 2020
Slide 1: Interim Results Presentation 30 June 2020
Interim Results Presentation 30 June 2020 Andi Case and Jeff Woyda 10 August 2020
Slide 2: Agenda
Agenda 1 Financial results 2 Markets 3 Outlook 2 Interim Results Presentation | 30 June 2020 Andi Case and Jeff Woyda | 10 August 2020
Slide 3: Financial results
Financial results Jeff Woyda Chief Financial Officer & Chief Operating Officer 3 Interim Results Presentation | 30 June 2020 Andi Case and Jeff Woyda | 10 August 2020
Slide 4: Results summary to 30 June
Results summary to 30 June 2020 2019 £m £m Revenue 180.4 167.8 +7.5% Underlying profit before taxation 21.1 20.1 +5.0% (Before acquisition related costs) Underlying earnings per share 51.4p 48.5p +6.0% (Before acquisition related costs) 4 Interim Results Presentation | 30 June 2020 Andi Case and Jef
Slide 5: Results summary to 30 June
Results summary to 30 June 2020 2019 £m £m Revenue 180.4 167.8 +7.5% Underlying profit before taxation 21.1 20.1 +5.0% (Before acquisition related costs) Acquisition related costs (0.2) (0.9) Profit before taxation 20.9 19.2 +8.9% (After acquisition related costs) Underlying earnings per share 51.4p
Slide 6: Segmental performance
Segmental performance Revenue, profit and margin to 30 June Revenue Revenue Profit Profit 2020 2019 2020 2019 Margin Margin £m £m £m £m 2020 2019 Broking 147.1 130.1 29.4 21.8 20.0% 16.8% Financial 13.3 16.1 (1.6) 1.1 n/a 6.8% Support 11.5 13.3 0.2 1.3 1.7% 9.8% Research 8.5 8.3 3.1 2.8 36.5% 33.7%
Slide 7: Acquisition related costs
Acquisition related costs to 30 June 2020 2019 £m £m Cash and share-based payment charges 0.2 0.4 Amortisation – Platou - 0.5 Total 0.2 0.9 7 Interim Results Presentation | 30 June 2020 Andi Case and Jeff Woyda | 10 August 2020
Slide 8: Balance sheet
Balance sheet Dec 2016 Dec 2017 Dec 2018 Dec 2019 June 2020 £m £m £m £m £m Tangible fixed assets 33.0 33.3 29.3 28.9 28.7 Intangible fixed assets (software only) – 1.5 5.4 9.9 12.7 Investments (relating to convertible bonds) – – 6.7 6.7 9.8 Investments (other) 4.1 4.9 4.8 4.8 4.7 37.1 39.7 46.2 50.3
Slide 9: Sea/ related IT costs
Sea/ related IT costs 30 June 30 June 2020 2019 £m £m Items taken to Income Statement Non capitalised items (Sea/ only) (3.8) (3.0) Amortisation (0.2) (0.1) 30 June 31 Dec 2020 2019 £m £m Software related Intangible Asset b/d 1 January 9.8 5.4 Additions 3.1 4.7 Amortisation (0.2) (0.3) Software rela
Slide 10: Net available funds and free cash resources
Net available funds and free cash resources 30 June 31 Dec 30 June 2020 2019 2019 £m £m £m Cash and cash equivalents 158.9 175.7 109.1 Interest-bearing loans and borrowings (3.4) (1.2) (6.0) Current investment deposits 1.8 2.4 1.7 Net cash equivalents 157.3 176.9 104.8 Reserved for bonus (full cost)
Slide 11: Movement in free cash resources
Movement in free cash resources 3.6 (5.3) 7.1 (5.6) 23.0 (1.7) (3.1) 0.7 (1.8) 2.4 68.7 (0.0) 68.7 88.0 Free cash Final Dividend Free cash Operating profit Depreciation Other Working Taxation Lease payments Dividends paid to Capitalised Capex Other Sale of Free cash resources resources after capital
Slide 12: Trade Debtors
Trade Debtors 30 Jun 31 Dec Increase/ 2020 2019 (Decrease) £m £m 0-3 months 50.8 52.9 (2.1) 3-12 months 12.3 9.4 2.9 Over 12 months - - - 63.1 62.3 0.8 12 Interim Results Presentation | 30 June 2020 Andi Case and Jeff Woyda | 10 August 2020
Slide 13: Dividend history
Dividend history 90 78 80 75 73 53 51 70 65 50 62 60 43 60 56 40 39 50 51 37 50 47 43 32 33 42 40 30 40 36 26 27 32 26 24 30 25 22 18 16 24 25 25 20 15 22 22 23 21 11 18 18 19 16 16 17 10 9 14 12 9 10 6 7 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 202
Slide 14: Markets
Markets Andi Case Chief Executive Officer 14 Interim Results Presentation | 30 June 2020 Andi Case and Jeff Woyda | 10 August 2020
Slide 15: Economic Impact
Economic Impact… …deep economic & trade impact; shipping’s biggest market China with signs of recovery… Global 2020 GDP Forecasts Now At –c.5% China 2020 GDP Forecasts Mainly Positive Global Monthly Seaborne Trade Basket^ 8% 8% 8% % Y-o-Y 6% % Y-o-Y, 3mma Pre-coronavirus average 6% 6% 4% 4% 4% Lates
Slide 16: Seaborne Trade Trends
…Seaborne Trade Trends… ….sharpest trade decline for 30 years; regional and commodity complexities … Global seaborne trade, bn tonnes Global Port Calls – Deep Sea Cargo Vessels* (No. Calls, 7dma) 1,400 1.8 13 2019 Thousands Dry Bulk 2020 Oil 12 1,300 1.6 Containers Gas 11 1,200 1.4 Others Trade per
Slide 17: Shipping vs Other Transportation Sectors
Shipping vs Other Transportation Sectors …shipping’s disruption impact compared to other transportation sectors… ‘Peak’ Activity Impact by Industry, % y-o-y Varying ‘Shape’ of Recovery, % y-o-y 10% -10% Deep Sea Port Calls (Global) - May 0% -32% Air Cargo (Global) - May -10% -38% HGV (UK) - April -2
Slide 18: ClarkSea Index
ClarkSea Index… …strongest 1H ClarkSea for ten years driven by tanker floating storage, complexities around individual segments as disruption impacts… Improving Markets Since 2016… Covid-19 Disruption… Events in 2008/09… 40 $000/day 40 Period Avg $/day Trend 40 $000/day 1H 2019 11,760 Up 8% y-o-y Pe
Slide 19: Tanker Market Developments
Tanker Market Developments VLCC Spot Market Earnings (Middle East – China) 350,000 2019 2020 • Generally very strong and volatile tanker freight market in 1st half 2020. 300,000 • Freight rates expected to trade in a 250,000 narrower range in 2nd half, however potential for further volatility remain
Slide 20: Shipping Segment Complexities
…Shipping Segment Complexities… …floating storage peaks at 11% of fleet; containers idle peaks in May; congestion… Tanker Storage, % Dwt Containership Idle Fleet, % TEU Capesize Port Congestion, % of Vessels 12% 12% 14% 10% 10% 12% 8% 8% 10% 6% 6% 8% 4% 4% 6% 2% 2% 0% 0% 4% Mar-19 Apr-19 May-19 Jul-
Slide 21: Covid-19 Spread vs Stimulus Measures
Covid-19 Spread vs Stimulus Measures… …regional variation and second “wave” risk; >$11tn stimulus globally… Total Number Of Covid-19 Cases (millions) Selected Key Economic Stimulus Measures 18 26th June: 16 million Country/Region Stimulus Measures Millions 16 29th June: 10 million 14 th 17 June: 8 m
Slide 22: Pace of U.S. LPG Growth to Asia on the increase again
Pace of U.S. LPG Growth to Asia on the increase again Tonne - miles supported by U.S-East volumes as Middle Eastern cuts take effect 2013–2020 YTD liftings As US LPG exports continue to grow, more volumes are finding a home in the East where LPG import demand is healthy 80% 67% 68% Import demand sup
Slide 23: China Steel Demand Fundamentals
China Steel Demand Fundamentals Strong underlying demand supports iron ore price and imports Fixed Asset Investment Growth China Steel Use in 2019 Iron Ore Prices and 10 day Steel Production 800 60% 1100 140 25 0.56 700 1050 120 50% TSI 62$ Iron Ore Price ($/tonne) 15 1000 %Share to Total Consumptio
Slide 24: Iron Ore Seaborne Trade: Ramping up since June
Iron Ore Seaborne Trade: Ramping up since June Prolonged weather and pandemic affected seaborne shipments during first half Quarterly Iron Ore Seaborne Trade 410 400 390 380 Million Tonnes 370 360 350 340 330 320 310 Q1 Q2 Q3* Q4* 2020 3-yr Average 2019 Source: GTIS, IHS 24 Results Presentation | 31
Slide 25: Asian Economies - PMI
Asian Economies - PMI Manufacturing PMIs, construction sector came under sharp pressure but now turning around • SE Asian economies emerge from restrictive measures with Selected Asia Manufacturing PMIs construction restarting. PMIs improve in May / June. 65 • Share of imported steel demand in const
Slide 26: Containership Supply Remains Manageable
Containership Supply Remains Manageable Capacity growth limited; idle capacity used to manage supply, now easing Containership Fleet Capacity Growth Boxship Orderbook % Of Fleet, TEU Idle Containership Capacity, % Fleet TEU 10% 70% 12% 9% 60% 10% 8% 7% 50% 8% 6% 40% 5% 6% 30% 4% 4% 3% 20% 2% 2% 10%
Slide 27: Fleet & Orderbook Development
…Fleet & Orderbook Development… … fleet growth “manageable”: orderbook “shorter” at just 9% of fleet versus >50% in 2008; S&P and demolition activity picking up from April low … Development of World Fleet, million GT Orderbook as % of fleet – lowest for 20 years 1,600 Fleet growth peaked 10% 80% Fle
Slide 28: Shipyards & Contracting
Shipyards & Contracting…. ….newbuild ordering return to historic lows; shipyard capacity continues to consolidate… No. Of Active Yards No. Of Global Newbuilding Orders 350 3,500 Rest of World 2009: 322 yards China - Japan - Korea 2,927 300 3,000 250 2,500 July 2020: 2,000 200 119 yards 150 1,500 100
Slide 29: Environmental Pressures building
Environmental Pressures building… …IMO targets 50% CO2 reduction by 2050; regulatory timeline accelerating; technology uncertain; Green Transition still … Lower EEDI Ratification of Ballast BWMC Lower EEDI Baltic Sea 1.0% ECA 3.5% Global reference line Water Management implementation for ref. line E
Slide 30: Shipping's Carbon Footprint
Shipping’s Carbon Footprint… …shipping 2.4% of global CO2, but still the most carbon efficient mode of transport Average CO2 intensity for different modes of freight transport Carbon footprint per annum of VLCCs, Tankers and Shipping as a share (tonnes CO2 per million tonne-miles) of global CO2 emis
Slide 31: Reductions in CO2
Reductions in CO2… …despite moving 35% more cargo and driven by speed reductions Est. World Shipping Fleet CO2 Output, m. tonnes Average Vessel Speed Indices 2008-2019: down ~17% 1,200 100 1,100 CO2 Output down 14% 2008-2019 2019 Speed Trends: while moving ~35% more cargo; 95 Bulkers -0.9% 1,000 Con
Slide 32: Fleet Renewal & Fuel Transition
Fleet Renewal & Fuel Transition… …demolition ages reducing and retrofit potential… World Fleet by Year of Delivery 120 1. 13% of fleet tonnage built between 1999 and 2004, 12% i.e. 15-20 years old. 100 2. 32% of fleet tonnage built 2009-13. Retrofit potential 10% – Energy Saving Technologies / Fuel
Slide 33: LNG Fuel gaining traction
…LNG Fuel gaining traction… …but no clear winner as the “solution” fuel… Existing Vessels (2,000+ GT) already burning Alternative Fuels Orderbook (2,000+ GT) to be burning Alternative Fuels 23% of orderbook tonnage 3% of fleet tonnage alternative fuel alternative fuel Source: Clarksons Research, Dat
Slide 34: Offshore Wind Industry Growth Accelerating
…Offshore Wind Industry Growth Accelerating… …10 year growth in MW capacity averages 24% as Energy Transition develops... Internationalisation Of The Offshore Wind Industry Deeper And Further From Shore No. Farms Distance to Shore (km) 0 20 40 60 80 100 120 140 160 180 0 50 100 150 200 250 0 China P
Slide 35: Financing requirements
…Financing requirements… …significant changes in financial landscape and now “Green Transition” focus… Est. Portfolio Size at end 2019, $bn Value of The World Fleet & Orderbook Capital Raised on NY & Oslo Exchanges, $bn BNP Paribas 12 Offshore China Exim Offshore $259bn Shipping Bank of China KfW IP
Slide 36: Technology
Technology… Trends to amplifying post Covid-19 • Sea/contracts now reached critical mass in Dry Cargo, Tankers, Containers and Sale & Purchase • Sea/net proving itself as the leading AIS provider for vessel, port, cargo and commodity data • Sea/chat handling significantly increased volumes of messag
Slide 37: Outlook
Outlook Interim Results Presentation | 30 June 2020 37 Andi Case and Jeff Woyda | 10 August 2020
Slide 38: Financial Outlook: Tailwinds vs Headwinds
Financial Outlook Tailwinds vs Headwinds Headwinds…? Sentiment Volumes Exchange rate Uncertainty Covid - 19 volatility Brexit ,US Election & ? second wave Tailwinds Markets Company Supply side Regulation Volumes Green Cash The best challenged transition generative Team across • Lack of • IMO 2020 Re
Slide 39: Thank you
Thank you 39 Interim Results Presentation | 30 June 2020 Andi Case and Jeff Woyda | 10 August 2020
Slide 40: Disclaimer
Disclaimer The material and the information (including, without limitation, any future rates and/or forward looking predictions) contained herein (together, the "Information") are provided by Clarkson PLC ("Clarksons") for general guidance and not by way of recommendation. The Information is provide