Orient Overseas (international) Limited · HKEX:316
Orient Overseas (international) — H1 2016 Earnings Presentation
51 slides from Orient Overseas (international)'s earnings presentation, Aug 8, 2016
Slide 1: Orient Overseas (International) Ltd Interim Results Presentation 2016
Orient Overseas (International) Ltd Interim Results Presentation 2016 August 8th 2016 1
Slide 2: Key Financial and Operational Highlights
Key Financial and Operational Highlights Revenue (2016 1H): US$ 2.6 billion Loss after tax (2016 1H): (US$ 57 million) Debt (2016 Jun 30): US$ 4.0 billion Liquid Assets (2016 Jun 30): US$ 2.3 billion Net Debt / Equity (2016 Jun 30): 36% OOCL Lifting (2016 1H): 2.9 million TEU Fleet Size (Jun 2016):
Slide 3: 2016 1H Group Highlights
2016 1H Group Highlights • Poor Market Environment – Disappointment in Demand – NB Deliveries + slow vessel withdrawal – Most Trades under pressure • Ocean Alliance • New Long Beach Terminal Phase 1 • Forward Growth 3
Slide 4: OOIL 1H 2016 Group Results
OOIL 1H 2016 Group Results 4
Slide 5: Group Results Breakdown
Group Results Breakdown 2016 2015 Var Interim Interim US$M Container Transportation and Logistics (109.1) 183.6 (292.7) Property and Investments Wall Street Plaza 8.7 7.8 0.9 Hui Xian 23.4 27.4 (4.0) Interest, Investments and Others 20.3 19.8 0.5 52.4 55.0 (2.6) Total (56.7) 238.6 (295.3) 5
Slide 6: Analysis of Earnings
Analysis of Earnings 2016 2015 Interim Interim US$M Container Transportation and Logistics EBITDA 134.7 380.0 EBIT (65.5) 222.4 Property and Investments EBIT Wall Street Plaza 13.9 13.3 Hui Xian 23.4 27.4 Interest, Investments and Others 20.3 19.8 57.6 60.5 OOIL GROUP EBITDA 192.3 440.5 EBIT (7.9) 2
Slide 7: Group Balance Sheet Highlights
Group Balance Sheet Highlights US$M 30-Jun-2016 31-Dec-2015 Non-current Assets 6,728 6,815 Current Assets 2,691 2,917 Total Assets 9,419 9,732 Non-current Liabilities 3,502 3,725 Current Liabilities 1,229 1,209 Total Liabilities 4,731 4,934 Shareholders’ Funds and Total Equity 4,688 4,798 7
Slide 8: Total Liquid Assets
Total Liquid Assets US$M 30-Jun-2016 31-Dec-2015 Cash and Bank Balances 1,757 2,016 Portfolio Investments, Equities and 544 532 Bonds Restricted Bank Balances 2 1 Total 2,303 2,549 8
Slide 9: Net Debt Position
Net Debt Position US$M 30-Jun-2016 31-Dec-2015 Liquid Assets 2,303 2,549 Debt 3,998 4,102 Net Debt 1,695 1,553 9
Slide 10: Debt-to-Equity Ratios
Debt-to-Equity Ratios Gross Debt to Equity Net Debt to Equity Ratio Ratio 1.0 1.0 0.86 0.85 0.85 0.63 0.48 0.5 0.5 0.36 0.32 0.28 0.06 0.12 0 0 2012 2013 2014 2015 1H2016 2012 2013 2014 2015 1H2016 10
Slide 11: Industry Environment 2016
Industry Environment 2016
Slide 12: Industry Environment – 2016 I
Industry Environment – 2016 I Negative Positive • Containerised global trade • Consolidation activities good growth vs GDP Growth for industry o M & A Activities including • Global GDP growth CMA + NOL, COSCO + uninspiring CSCL, HL + UASC o 4 Alliances become 3 • Muted demand growth • Scrapping at r
Slide 13: Global Container Trade Growth is Slowing
Global Container Trade Growth is Slowing World GDP growth Container Demand growth GDP multiplier Growth 20% 2002-2008 average 1992-2001 average container growth 10.8% 15% container growth 8.5% 10% 2010-2016F average container growth 5.1% 5% 0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2
Slide 14: Global Demand and Supply Forecasts
Global Demand and Supply Forecasts Global 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F Demand: Alphaliner demand Jun16 5.9% -8.4% 14.2% 8.4% 4.8% 3.5% 5.3% 1.2% 1.3% 2.0% Citi Bank Dec15 3.8% 5.3% 1.1% 1.7% Clarkson demand May16(#2Q2016) 4.1% -9.2% 13.7% 7.8% 3.1% 5.1% 5.4% 2.3% 3.8% 4.2% CLS
Slide 15: Trade Volume – YTD Jun 2016
Trade Volume – YTD Jun 2016 Trade YTD Jun 2016 FY 2015 v 2014 FY 2014 v 2013 Transpacific EB 3.7% 3.6% 6.0% Asia Europe WB 1.2% -3.2% 7.4% Intra Asia (IADA) -1.6% 0.2% 1.9% Trans Atlantic 2.9% 4.7% 8.9% WB Sources: JoC, CTS, IADA 7/21/2016 15
Slide 16: Industry Environment – 2016 II
Industry Environment – 2016 II Negative Positive • Capacity Overhang • Capacity adjustment by persists carriers extending 3Q 2016 • Carriers slow to withdraw • Shipyards 10kt+ limited tonnage in 1H orders • Freight Rate Under • Net supply growth dropping Pressure • Idle fleet at 4.6% • Sector expect
Slide 17: New Building Deliveries - Static Slots
New Building Deliveries - Static Slots Source: Alphaliner Jul-2016 17
Slide 18: Market Capacity Growth - Upsizing
Market W Capacity Growth - Upsizing Market Weekly Service Capacity Source: Alphaliner, IADA Updated Jul 2016 18
Slide 19: Market Freight Rate Tracker – SCFI
Market Freight Rate Tracker – SCFI Lowest Freight Rates Since 2009 19
Slide 20: Vessel Count
Vessel Count Idle containership (units idle breakdown by size range) 600 ste esweseentosessessnseve B idle Capacity Tracker Vessel Size (TEU) 500- 1,000- 2,000- 3,000- 999 1,999 2,999 _5,099 As at Date 500 seseeegfl |S acccecsecsessesrseesseseesersersessessessesnesssnensesuessesseveeseesassesnesease
Slide 21: 450,000 estimate
450,000 estimate 2.25% 6-20-2016 21
Slide 22: OOCL 1H 2016
OOCL 1H 2016 22
Slide 23: OOCL Revenue – 1H 2016
OOCL Revenue – 1H 2016 Total US$2,250 mil 23
Slide 24: OOCL 1H 2016
OOCL 1H 2016 • Poor market drives down Revenue per TEU • Continuous Yield Management • Cost Performance • Continued focus but offset by freight revenue drop 24
Slide 25: Container Transportation Performance
Container Transportation Performance US$ / TEU 1H 2016 1H 2015 Revenue (US$M) 2,250 2,706 Revenue Per TEU (US$) 778 987 25
Slide 26: Container Transportation Performance
Container Transportation Performance US$ / TEU 1H 2016 1H 2015 %▲ Net Operating Capacity (TEU) 594,065 589,772 0.7% Liftings ('000 TEU) 2,890 2,741 5.4% Load Factor round trip (%) 84.5% 83.8% 0.7% 26
Slide 27: Total Operating Costs – 1H2016
Total Operating Costs – 1H2016 1H 2016 1H 2015 14% 14% 13% 13% 55% 59% 6% 6% 8% 12% Note: The cost of OOCL Logistics is included in Cargo Cost 27
Slide 28: Unit Operating Cost Saving 1H 2016
Unit Operating Cost Saving 1H 2016 1H2016 / 1H2016 Per Lifting 1H2015 Proportion %▲ Total cost -12% 100% Cargo cost -7% 59% Equipment and repo costs -8% 14% Vessel Voyage cost -10% 19% Bunker cost -45% 8% 28
Slide 29: Cost Saving Ex Bunker 1H 2016
Cost Saving Ex Bunker 1H 2016 2016 1H 2015 1H Operating Cost (1) 2,404 2,606 (include Logistics) Other Cost (2) 225 220 Bunker Cost (3) 191 326 Total Cost excl. Bunker (4) = (1) + (2) – (3) 2,438 2,500 Total Unit Cost excl. Bunker (4) ÷ total lifting 844 912 29
Slide 30: Major Events
Major Events • OCEAN Alliance – OOCL / CMA / COSCO Shipping / Evergreen • Larger platform (Largest TP and AE) • Likeminded partners / growth aspiration • Alliance with Largest Mega Vessel Fleet • Leverage effect : Pairing Up with #3/4/5 • A3 Consortium services Asia to and from Australia • Long Beac
Slide 31: Ocean Alliance capacity comparison
Ocean Alliance capacity comparison Superior capacity sharing across both major trade routes Source: Alphaliner July 2016 31
Slide 32: Industry Environment 2H 2016
Industry Environment 2H 2016
Slide 33: 2H 2016 Industry Environment
2H 2016 Industry Environment • Over Capacity Persists • Recent volume and rate improvement • Volatility persists • Supply balance in 2017/18 is looking better 33
Slide 34: New Building Deliveries - Static Slots
New Building Deliveries - Static Slots Source: Alphaliner Jul-2016 34
Slide 35: OOCL 2H 2016 and 2017
OOCL 2H 2016 and 2017 35
Slide 36: 2H 2016 and 2017
2H 2016 and 2017 • Continuous Cost Improvement • Network Deployment Review • Long Beach Container Terminal • Continuous IT Development • Fleet Development 36
Slide 37: Net Operating Capacity Breakdown
Net Operating Capacity Breakdown No of Capacity Average % of Total As at June 30, 2016 Vessels (TEU) (TEU) Fleet Owned 55 415,157 7,548 70% Long Term Chartered 7 41,216 5,888 7% Short Term Chartered 44 150,900 3,430 25% Charter-Out (1) (13,208) (13,208) (2%) Total 105 594,065 100% 37
Slide 38: OOCL Fleet for Future Deliveries
OOCL Fleet for Future Deliveries 2017 20,000 TEU Class X 6 38
Slide 39: Average vessel size (Total operating fleet)
*OOCL incl. return of 13,208 TEU ships from NYK to OOCL, For current fleet number, CMA incl. APL; COSCO incl. CSCL Average Vessel Size Average vessel size (Total operating fleet) Current fleet (Jul 1, 2016) Current fleet + NB (till 2019) 1 UASC 9,663 1 HMM 7,297 2 HMM 7,249 2 MOL 7,125 3 HJN 6,212 3
Slide 40: Average vessel size (If only owned fleet is counted)
*OOCL incl. return of 13,208 TEU ships from NYK to OOCL, For current fleet number, CMA incl. APL; COSCO incl. CSCL Average Vessel Size Data source: Alphaliner Jul 1, 2016 Average vessel size (If only “owned fleet” is counted) 40
Slide 41: OOCL Charter Flexibility
OOCL Charter Flexibility No. Ships TEU 40 120,000 35 105,068 100,000 30 Number of Ships 80,000 25 TEU 65,405 20 60,000 35 15 40,000 10 21,643 20,000 5 10 6 0 0 0 - 6 Months 6 - 12 Months 12 Months+ 41
Slide 42: Long Beach Container Terminal
Long Beach Container Terminal A significant investment in the future 8-6-2015 42
Slide 43: LBCT
TraPac SSAT Matson (MOL) (MTN) 2016: 0.5 x 13,000 Pier A 2016: Nil 2020: 1 X 13,000 (MSC) 2020: Nil Automation 2016: Nil 2020: 1 x 13,000 WBCT (YMN) LBCT 2016: 0.5 x 13,000 2016: 1 X 13,000 2020: 1 X 13,000 YTI TTI 2020: 3 x 13,000 (NYK) (HJN) WBCT 2016: Nil (CSCL) 2016: 2 x 13,000 2020: 1 x 13,000
Slide 44: Project Completion 2020
TERMINAL AREA SUMMARY: MIDDLE HARBOR CONTAINER TERMINAL 300.62 ACRES NORTH OF OCEAN BLVD. 24.62 ACRES PIER D AREA, 4.24 ACRES OIL SET-ASIDE AREAS. 4.56 ACRES LAY BERTH 4AS ACRES TOTAL PIERE TERMINAL _ 335.19 ACRES
Slide 45: LBCT Operating Status July 2016
LBCT Operating Status July 2016 Automated Pre-Automation Truck Turn Time 48 minutes 85 minutes Per Crane Move 21 mph 25 mph Unloaded Time: 8800 TEU 4 days 6 days vessel with 7800 moves 45
Slide 46: OOCL
OOCL • Yield Management / EBIT Focused • Balancing Unit Revenue / Utilisation • Maximising Contribution / Making rational decisions • IT • Organisation & Culture • Cost Efficiency • Alliance • Hardware • IT • Execution • Organisation & Culture • Investing into the future 46
Slide 47: Property Investment
Beijing Oriental Plaza, Beijing Property Investment Wall Street Plaza, New York 47
Slide 48: Property Investment
Property Investment Wall Street Plaza – Fair value gain of US$9.7 million for 1H2016 – Valuation of US$210 million as at 30 June 2016 – Performance is in line with expectations – Vacancy rate of 2.2% as at end of 30 June 2016 Beijing Oriental Plaza – Directly and indirectly holding approx. 4.4% of H
Slide 49: Beijing Oriental Plaza – 30 Jun 2016
Beijing Oriental Plaza – 30 Jun 2016 OOIL 31-Dec-2015 : 37.5% 31-Dec-2015 : 62.5% Dividend in Specie 12.5% 30-Jun-2016 : 25% 30-Jun-2016 : 75% Hui Xian Holdings 4.4% Hui Xian REIT Properties 49
Slide 50: Disclaimer
Disclaimer The information provided is for reference only and includes data obtained from sources provided by the relevant information provider(s) and is subject to change without notice. Orient Overseas (International) Limited (“OOIL”) and its affiliates, and the concerned information provider(s),
Slide 51: OOIL GROUP
OOIL GROUP Proven Track Record Clear Direction Shareholder Management Alignment Forward Looking Financial Prudence 51
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