Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — H1 2023 Earnings Presentation

43 slides from Pacific Basin Shipping's earnings presentation, Jul 31, 2023

1. Slide 1: Well Positioned for the Future - Interim Results 2023

   B Pacific Basin WELL POSITIONED FOR THE FUT INTERIM RESULTS 2023 31 JULY 2023

2. Slide 2: Performance and Market Review

3. Slide 3: 1H 2023 Results Highlights

   P&L US$million 2023 1H 2022 1H  Generated an underlying profit of US$76.2 million, a net profit of EBITDA 189.1 566.9 US$85.3 million and EBITDA of US$189.1 million respectively Underlying profit 76.2 457.5 Net profit 85.3 465.1  Core business generated a total contribution of US$96.1 million befo

4. Slide 4: Handysize and Supramax Market Spot Rates

   Handysize Market Spot Rates (BHSI) Supramax Market Spot Rates (BSI) US$/day net* 38k dwt (tonnage adjusted^) US$/day net* 58k dwt 40,000 40,000 35,000 35,000 30,000 30,000 25,000 25,000 20,000 20,000 15,000 15,000 10,000 10,000 5,000 5,000 26 July 2023 26 July 2023 $7,750 $6,210 - - Jan Feb Mar Apr

5. Slide 5: Commodity Demand Drivers by Cargo

   2016-2019 2020 2021 2022 2023 Mill tonnes annualised 1,800 700 1,600 2,400 650 1,500 1,700 2,200 600 1,400 1,600 2,000 550 1,300 1,500 1,800 500 1,200 1,400 1,600 450 1,400 400 1,100 1,300 1,200 350 1,000 1,200 Feb Aug Sep Oct Apr May Nov Dec Jul Jan Mar Jun Feb Apr Aug Sep Oct Nov Dec Feb Apr Aug S

6. Slide 6: Core Business TCE Earnings

   Handysize Core Business TCE US$/day net* 40,000 35,000 $28,980 30,000 $23,810 $23,620 1H23  Our core business Handysize and Supramax daily TCE earnings in 1H23 were 25,000 $13,030 US$13,030 and US$13,700 net per day respectively, representing a decrease of 20,000 $17,310 51% and 60% compared to the

7. Slide 7: Operating Activity and Performance vs Index

   Core Business Operating Activity Handysize Performance vs Index (BHSI)* Supramax Performance vs Index (BSI)* Operating Activity Margin US$/day net US$/day net US$/Day (net) Relative Performance Scrubber contribution Relative Performance Rolling 12 Months Relative performance Rolling 12 Months Rollin

8. Slide 8: Handysize Daily Costs and Breakeven

   Opex US$/Day Depreciation 14,000 Finance Cost 12,180 12,000 11,030 10,000 8,970  Crew travel, quarantine and other pandemic-related 8,700 8,550 manning costs continued to reduce over the period 230 8,100 8,000 60 as Covid-related controls have been relaxed – 3,050 6,000 3,180 particularly benefitte

9. Slide 9: Supramax Daily Costs and Breakeven

   US$/Day Opex 20,000 Depreciation 18,040 18,000 16,590 Finance Cost 16,000 14,000  Lower finance costs for Supramax and Handysize 12,000 due to reduced debt, despite higher interest rate 9,660 10,140 10,000 environment 8,570 8,630 8,000 370 160 6,000 3,370 3,620  Long-term chartered vessel costs in

10. Slide 10: Vessel Purchases and Second-hand Prices

    Delivery/ US$ Mil Ultramax Newbuilding Price Vessel 34.5 DWT Year Built MOA Expected Million dwt Ultramax 10 Year Old Price Type 35.0 Delivery 33.0 6.0 33.0 Ultramax 61,181 2016 (Japan) Jan 2023 Mar 2023 5.3 31.0 30.5 5.0 Ultramax 61,470 2012 (Japan) Jan 2023 Mar 2023 29.0 Ultramax 61,671 2012 (Japa

11. Slide 11: Financial Review

12. Slide 12: Income Statement Summary

    US$million 1H23 1H22 Revenue 1,148.1 1,722.8 Owned vessel costs Voyage expenses (506.7) (497.3) 1H23 1H22 Opex (103.6) (112.6) Time-charter equivalent ("TCE") earnings 641.4 1,225.5 Depreciation (73.9) (71.3) Finance (2.2) (9.8) Owned vessel costs (179.7) (193.7) Chartered vessel costs (347.8) (532.

13. Slide 13: Cash Flow and Liquidity

    1 2 3 4 5 US$ Million 900 1 Operating cash inflow was US$150.4 million, inclusive of all +43 -209 long and short-term charter hire payments 800 +150 2 Proceeds from the sale of 3 smaller Handysize vessels and 700 1 Ultramax vessel 615 -174 600 3 Capex was US$209.5 million of which we paid US$187.

14. Slide 14: Balance Sheet and Capital Allocation

    US$million 1H23 FY22 PP&E 1,896.6 1,772.2  Significant shareholder distribution, while also investing in the purchase of second-hand vessels Total assets 2,515.8 2,648.7 and further debt repayments, resulting in net debt Total borrowings 343.1 378.6 of US$128.1 million. Total liabilities 694.2 741.

15. Slide 15: Demand & Supply Outlook

16. Slide 16: China Dry Bulk Imports and Demand

    YoY% China Dry Bulk Imports 1H 2019-2023 YoY YoY% China Dry Bulk Monthly Imports YoY Change Change +140% +140%  Reopening policies supporting dry bulk demand through investments in infrastructure, +5% +120% +120% manufacturing, domestic property construction +26% +7% +39% and green transition initi

17. Slide 17: Dry Bulk Orderbook Near Decades Low

     Dry bulk orderbook near decades low 7.4% % of fleet Dry Bulk Orderbook 90%  New vessel ordering is expected to remain restrained, discouraged by: % of fleet 80% 60.0% 70%  uncertainty over future emissions regulations 60% 52.4% 50%  uncertainty over future fuels and technology 50.0% 40% 30%  n

18. Slide 18: Newbuilding Deliveries and Ordering

    6 Historic Deliveries Scheduled Deliveries Ordered Pre-3Q22 Scheduled Deliveries Ordered 3Q22  1H 2023 newbuilding ordering down Scheduled Deliveries Ordered 4Q22 approximately 18% compared to 1H 2022 Scheduled Deliveries Ordered 1Q23 5 Scheduled Deliveries Ordered 2Q23  2022 newbuilding ordering

19. Slide 19: New IMO Goals

    New IMO Goals (since July 2023) 0% July 2023, IMO adopted a revised and more ambitious GHG Strategy IMO Total Emissions: -10% -20% 1. Net Zero by about 2050 -20% 2. Reduce CO2 intensity by 40% by 2030, compared to 2008 IMO Carbon Intensity: 3. Reduce total GHG emissions by 20-30% by 2030 and by -40%

20. Slide 20: Fleet Supply Development

    Handysize / Supramax Supply Development Overall Dry Bulk Supply Development % of Total Fleet % of Total Fleet  Clarksons Research estimates dry bulk net fleet 6% 6% growth of 2.9% in 2023 and 1.9% in 2024, with 5% scrapping of 0.6% in 2023 and 1.1% in 2024 5% 4% 4% 3.8% 3.6%  1H 2023 scrapping was

21. Slide 21: Strategic Focus

22. Slide 22: Market Outlook and Demand Fundamentals

     Global dry bulk demand will continue to be  IMF forecast global GDP growth of 3.0% and 3.0%  Significant global infrastructure spend required to impacted by higher interest rates, inflation and in 2023 and 2024 respectively drive development and “green transition” weaker global economic activity

23. Slide 23: Strategic Priorities

     Maintain and grow our position as the leading minor bulk  Support our teams to ensure we continue to deliver a quality cargo-focused, integrated owner and operator servicing our service to our customers while maximising our earnings customers’ transportation needs around the world  Ensure our cr

24. Slide 24: Forward-looking Statements and Investor Information

     Annual and Interim Reports  Online Annual Report  Quarterly Trading Updates  Presentations and press releases on business activities  Analysts Day & Investor Perception Study  Sell-side conferences  Investor/analyst calls and enquiries  Corporate Information  CG, Risk Management and CSR 

25. Slide 25: Appendix

26. Slide 26: Dry Bulk Trade Volume Forecasts 2023 and 2024

    2023F Dry Bulk Trade Volumes YOY 2024F Dry Bulk Trade Volumes YOY Million Tonnes 1,299 5.7% Million Tonnes Coal 1,299 Coal 0.0% Iron Ore 1,510 2.4% Iron Ore 1,520 0.7% Total Major Bulk (Iron Ore + Coal) 2,809 3.9% Total Major Bulk (Iron Ore + Coal) 2,819 0.4% Bauxite / Alumina 203 8.6% Agribulks 203

27. Slide 27: Pacific Basin at a Glance

     We operate one of the world’s largest fleets of interchangeable modern Handysize and Supramax vessels, equipping us for efficient trading and reliable service any time and anywhere  Cargo system business model – outperforming market rates  Own 121 Handysize and Supramax vessels, with more than 2

28. Slide 28: Why Handysize and Supramax

     More diverse customer, cargo and geographical exposure enables high utilisation  A segment where scale and operational expertise make a difference 44  Better daily TCE earnings driven by a high laden-to- ballast ratio  Sound long-term demand expectations and modest fleet growth

29. Slide 29: Global Office Network

    11 commercial offices 4 technical & crewing offices Our Hong Kong headquarters is home to commercial, technical, crewing and all central functions

30. Slide 30: Cargo Mix

    Minerals 10% Agricultural Products & Related 30% Salt 5% - 10% Grains & Agricultural Products 17% +2pp Sand & Gypsum 4% - Fertiliser 10% -2pp Soda Ash 1% -1pp 11% 30% Sugar 3% +1pp 14% 29% Energy 14% 13% Coal 8% - Petcoke 5% +1pp Construction Materials 31% Wood Pellets 1% - 16% Cement & Cement Clink

31. Slide 31: Vessels in Operation

    122 Vessels 18 LT 140 142ST 282 Total Total owned Chartered Chartered Vessels in Operation Total Average Capacity Age Long-term Short-term Owned Chartered Sub-total Chartered1 Total (million dwt) Costs Owned Owned fluctuate with Substantially fixed costs market Handysize 71 9 80 47 127 2.4 13 Supram

32. Slide 32: Core Business and Operating Activity

     Contract and spot cargoes  Spot cargoes  Owned and long-term chartered vessels /  Short-term vessels carrying spot cargoes Short-term vessels carrying contract cargoes  Costs largely fixed and disclosed  Costs fluctuate with freight market  Key KPI = TCE per day  Key KPI = Margin per day 

33. Slide 33: Core Business Explained

    Our “core business” is to optimally combine our owned and long-term chartered vessels with multi-shipment contract cargos and spot cargoes to achieve the highest daily TCE earnings. Our core business also uses short-term chartered vessels to carry contract cargoes to maximise the utilisation and TCE

34. Slide 34: Earnings Sensitivity

    Core TCE1 x owned & LTC2 revenue days + Blended cost x owned & LTC cost days3 - = X Core TCE1 x owned & LTC2 revenue days + Blended cost x owned & LTC cost days3 - = X Operating margin x operating days X X - X = X Sensitivity: +/- US$1,000 daily TCE = US$35-40 million per year Adjusted for ca. 20-25

35. Slide 35: Forward Cargo Cover

    Handysize Supramax US$/Day (net) US$/Day (net) 35,000 35,000  We have covered 82% and 92% of our Handysize and 30,000 30,000 $28,970 Supramax vessel days for the third quarter of 2023 at $26,120 US$9,800 and US$12,700 per day net respectively 25,000 $23,690 25,000 $22,610  We have covered 57% and

36. Slide 36: Vessel Days and Long-term Charter Costs

    Handysize Supramax Handysize Supramax Days FY2022 1H 2023 FY2022 1H 2023 Average cost Average cost Year Vessel days (US$) Vessel days (US$) Core business revenue days 30,310 14,380 17,340 9,810 2H2023 1,930 12,190 1,410 18,010 – Owned revenue days 26,680 12,780 14,930 8,210 2024 3,540 12,570 1,330 1

37. Slide 37: Our Focus: Handysize and Supramax Segments

    Tankers for oil, gas & chemicals The dry bulk industry carries dry commodities and other non- containerised cargo. Larger vessels including Capesize and Panamax carry mainly iron ore, coal and grain. We specialise in the versatile, mid-size, geared Handysize and Supramax vessels that carry a wide ra

38. Slide 38: Fleet Age and Orderbook by Segment

    9.3% 13 14% 0.3% (10,000–40,000 dwt) (40,000–70,000 dwt) 8.5% 12 10% 0.4% (70,000–100,000 dwt) 9.1% 12 13% 0.4% (100,000+ dwt) 5.1% 10 2% 0.2% 7.4% 12 8% 0.3% Source: Clarksons Research, data as at June 2023 ^ YTD: data as at 28 July 2023

39. Slide 39: Environmental Regulation Timeline

    EEDI & SEEMP, EU MRV, IMO DCS regulations 2013- 2019 EEXI & CII energy efficiency & carbon intensity rules Reinforced by Poseidon Principles & Sea Cargo Charter 2023 (banks, insurers & cargo customers) 2018, IMO EU Emissions Trading System (ETS) Steeper IMO CII emissions reduction publishes its Init

40. Slide 40: Decarbonisation Targets

    Carbon Intensity (EEOI) 15 Grams of CO 2 per tonne-mile PB targets -50% carbon  Targeting net zero emissions by 2050 10 intensity by 2030 on the way to net zero by 2050  We aim to reduce our EEOI carbon intensity by 50% by 2030 8.9 EEOI  We target for our fleet to comprise only zero-emission vess

41. Slide 41: EEXI, CII and EU ETS Regulations

     From January 2023, IMO’s global EEXI and CII regulations require vessels to combine technical and operational measures to improve their carbon intensity  Shipping included in European Union Emissions Trading System (EU ETS) from January 2024  Technical design criteria  Some impact on PB vessels

42. Slide 42: Scrubber Investment Recovered

     Fully recovered the approximately US$62 million scrubber investment made prior to the implementation of the IMO 2020 sulphur cap  As at September 2022 this investment is fully recovered considerably faster than expected through the savings achieved by using HSFO  Elevated oil prices and resultan

43. Slide 43: Global Economic Outlook

    5.2% 4.5% 3.5% 3.5% 3.0% 3.0% 3.0% 2.1% 1.8% 1.5% 1.0% 0.9% 2022 2023 2024 2022 2023 2024 2022 2023 2024 2022 2023 2024  Global economy decelerating due to  Policy support through infrastructure  High inflation and interest rates are  Invasion of Ukraine has exacerbated increased inflation and i

Pacific Basin Shipping — H1 2023 Earnings Presentation on 6ix