Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — 1H 2024 Earnings Presentation
42 slides from Pacific Basin Shipping's earnings presentation, Aug 8, 2024
Slide 1: Interim Results 8 August 2024
202. INTERIM RESULTS “=< 8 AUGUST 2024
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Slide 3: 1H 2024 results highlights
P&L US$million 1H 2024 1H 2023 ▪ Generated an EBITDA of US$157.9 million, underlying profit EBITDA 157.9 189.1 of US$43.9 million and a net profit of US$57.6 million Underlying profit 43.9 76.2 respectively Net profit 57.6 85.3 Core Business Contribution ▪ Net borrowings of US$32.2 million, with net
Slide 4: Cash distributions to shareholders
US$m Cash Distributions to Shareholders 1,400 ▪ Since 2021, we have generated profits of US$1.7bn, we +53.0 paid and declared US$1.1bn in dividends to shareholders, 1,200 +25.4 or 65% of net profits +52.8 +27.6 +217.9 +14.6 +38.2 ▪ In addition, we announced the launch of a share buyback 1,000 progra
Slide 5: Handysize and Supramax market spot rates
Handysize Market Spot Rates (BHSI) Supramax Market Spot Rates (BSI) 38k dwt (tonnage adjusted^) 58k dwt US$/day net* US$/day net* 35,000 35,000 30,000 30,000 25,000 25,000 20,000 20,000 $14,120 FFA Average* 15,000 15,000 FFA Average* $14,530 $12,030 $12,510 10,000 10,000 5,000 5,000 - - Jan Feb Mar
Slide 6: Core business TCE and cargo cover
Handysize Core Business TCE US$/day 20,000 Reversal of Handysize freight tax provision of US$11.6 million resulted in TCE 1H24 +US$1,690/day in 4Q23 $11,810 15,000 $13,550 $13,750 # $12,530 $12,770 $12,570 $12,670 # Daily TCE earnings in 1H 2024: $11,050 $10,200 10,000 ▪ Handysize: US$11,810, down 9
Slide 7: Core business and operating activity performance
Core Business Operating Activity Handysize Performance vs Index (BHSI)* Supramax Performance vs Index (BSI)* Operating Activity Margin US$/day US$/day US$/day Scrubber contribution Scrubber contribution Margin Relative performance Relative performance 1,300 1,130 510 580 540 (480) 1Q 2Q 3Q 4Q 1Q 2Q
Slide 8: Handysize indicative cash breakeven
FY23 1H24 Indicative Owned Fleet Cash Breakeven before G&A Finance Cost US$/Day Depreciation Finance Cost Opex Cost US$4,620/day 20,000 Opex Cost US$120 US$4,500 18,000 16,000 14,000 12,510 ▪ Positive impact from normalisation of crew costs 12,150 after pandemic – particularly benefitted our 12,000
Slide 9: Supramax indicative cash breakeven
FY23 1H24 Indicative Owned Fleet Cash Breakeven before G&A Finance Cost US$/Day Depreciation Finance Cost Opex Cost US$5,120/day 20,000 Opex Cost US$210 US$4,910 18,150 18,000 17,370 16,000 14,000 ▪ Anticipate additional decreases in long-term 12,000 chartered vessel costs as higher-cost long-term 1
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Slide 11: Income statement summary
US$million 1H24 1H23 Revenue 1,281.5 1,148.1 Owned vessel costs Voyage expenses (564.3) (506.7) 1H24 1H23 Opex (97.3) (103.6) Time-charter equivalent ("TCE") earnings 717.2 641.4 Depreciation (76.8) (73.9) Finance (3.3) (2.2) Owned vessel costs (177.4) (179.7) Chartered vessel costs (454.4) (347.8)
Slide 12: Cash flow and liquidity movement
US$ Million 1 2 3 4 5 6 700 1▪ Operating cash inflow was US$103.3 million, inclusive of all +103 +8 long and short-term charter hire payments 600 -48 2▪ Proceeds from the sale of one Handysize vessel 549 537 -38 -14 -4 -1 -6 500 -12 ▪ US$47.8 million of which we paid US$25.2 million for the 3 remain
Slide 13: Balance sheet and capital allocation priorities
US$million 30 Jun 2024 31 Dec 2023 ▪ Debt repayments reduced net borrowings to US$32.2 million PP&E 1,755.8 1,796.7 ▪ As at 30 June 2024, we had 61 unmortgaged vessels Total assets 2,410.3 2,432.5 ▪ We prioritise the allocation of capital in the following order to maximise shareholder value; Total b
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Slide 15: Dry bulk cargo loadings
2016-2020 2021 2022 2023 2024 Mill tonnes 160 55 130 Millions Millions Millions 180 Millions 150 50 120 160 140 45 110 140 130 40 100 120 120 90 35 110 100 30 80 100 Apr Apr Aug Sep Oct Aug Sep Oct Mar Nov Dec May Mar Nov Dec May Jan Jun Jul Jan Jun Jul Feb Feb Aug Sep Oct Apr Nov Dec Mar Jan May Ju
Slide 16: 2024 dry bulk trade volume forecast
2024F Dry Bulk Trade Volumes YOY Million Tonnes Coal 1,323 0.5% ▪ 2024 minor bulk seaborne trade forecast to rise by 3.0%, driven by Iron Ore 1,591 3.1% bauxite growth due to Guinea's capacity expansion, increased Chinese demand for forest products and more Chinese steel loadings Total (Iron Ore + C
Slide 17: Panama and Suez Canal transits
Bulkcarrier Panama Canal Transits (7-Day Moving Average) Suez Canal Transits (7-Day Moving Average) DWT m DWT m 0.7 2.5 14 Dec – near-miss incident involving a vessel resulting in pause of their vessels through Red Sea 0.6 2.0 0.5 1.5 Last 7 days vs 0.4 1st Week of Dec 23 59% 0.3 1.0 0.2 0.5 Last 7
Slide 18: Dry bulk orderbook and fleet age
Dwt m 14.2% of Handysize fleet is over 20YO 33% of existing ▪ Dry bulk orderbook approximately 9.7% 12 fleet delivered 14% of the fleet is 20 years or older 10 9.2% of ▪ In comparison to 2024, newbuild ordering of Handysize and 8 the fleet is Supramax vessels decreased 13% in the first half of 2024
Slide 19: Dry bulk supply development
Handysize / Supramax Supply Development Overall Dry Bulk Supply Development % of Total Fleet % of Total Fleet ▪ Estimated dry bulk net fleet growth of 3.1% in 2024 5% 5% and 2.6% in 2025 4.2% 4% 4% ▪ Forecast scrapping of 0.4% and 0.6% for total dry 3.9% 3.6% bulk fleet, and 0.5% and 0.5% for Handys
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Slide 21: Fleet renewal and vessel values
▪ Replace our older and less-efficient Handysize vessels with younger, larger and more efficient second-hand vessels Ultramax and Handysize Newbuild and 10-Year-Old Secondhand Vessel Values ▪ During the period, we sold two of our older Handysize US$m vessels 40.00 Ultramax Newbuild (61-64.5K) Ultram
Slide 22: Growth and renewal
No. of 40K dwt Handysize No. of 40K dwt Handysize No. of 64K dwt Ultramax Delivered Newbuilding (no scrubber) Newbuilding (50% scrubber) Newbuilding Growth and Renewal: ▪ Long-term inward charter of both Handysize and Supramax/Ultramax vessels – with options to extend the charter agreement period at
Slide 23: Long-term demand drivers
▪ IMF forecast global GDP growth of 3.2% and 3.3% in 2024 and 2025 ▪ Significant global infrastructure spend required to drive development respectively and “green transition” ▪ China remains as key support to dry bulk demand maintaining ▪ Global population growth to increase demand for food and econ
Slide 24: Investor relations and disclaimer
▪ Annual and Interim Reports ▪ 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 ▪ ESG and Risk Management ▪ Fleet Profile and Download
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Slide 26: Company overview
▪ We operate one of the world’s largest fleets of interchangeable modern Handysize and Supramax vessels, equipping us for efficient trading and y, 460+ aph oes reliable service any time and anywhere ogr arg c us e dc to er g n ▪ Cargo system business model – outperforming market rates om ied a m s e
Slide 27: Our focus
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
Slide 28: Vessels in operation
115 Vessels 17 LT 132 154ST 286 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 64 12 76 60 136 2.2 13 Supra
Slide 29: Global offices and trade routes
11 commercial offices 4 technical & crewing offices Our Hong Kong headquarters is home to executive management, commercial, technical, crewing and all central functions “Fronthaul” refers to shipping routes where there is high demand for vessels to transport commodities to areas where those commodit
Slide 30: Cargo mix
Minerals 10% Agricultural Products & Related 30% Salt 4% -1pp 10% Grains & Agricultural Products 17% - Sand & Gypsum 5% +1pp Fertiliser 11% +1pp 10% Soda Ash 1% - 30% Sugar 2% -1pp 15% 30% Energy 15% 14% Coal 10% +2pp Petcoke 5% - Construction Materials 29% Wood Pellets 0% -1pp 15% Cement & Cement C
Slide 31: China dry bulk imports
Growth in China Dry Bulk Quarterly Seaborne Imports YoY ▪ Ongoing Chinese government policy support expected to increase YoY% Change dry bulk demand in 2024 through investments in infrastructure, +90% industrial construction, energy and utilities construction and green transition initiatives +80% +7
Slide 32: Global economic outlook
2023 2024 5.2% 5.2% 2025 4.6% 5.0% 4.5% 2023 2024 2025 4.1% 2023 2024 2025 2023 2024 2025 3.2% 3.3% 3.2% 3.2% 3.2%3.3% 2.5% 2.5% 2.7% 2.6% 1.9% 1.9% 1.5% 1.5% 0.8% 0.9% 0.4% 0.5% Apr Jul Apr Jul Apr Jul Apr Jul Apr Jul Apr Jul Apr Jul Apr Jul Apr Jul Apr Jul Apr Jul Apr Jul 24 24 24 24 24 24 24 24 2
Slide 33: Fleet orderbook by size
9.2% 14 14% 0.2% (10,000–40,000 dwt) (40,000–70,000 dwt) 11.4% 12 11% 0.2% (70,000–100,000 dwt) 12.2% 12 13% 0.4% (100,000+ dwt) 7.2% 11 4% 0.1% 9.7% 12 9% 0.2% Source: Clarksons Research, data as at August 2024 ^ Data as at 02 August 2024
Slide 34: Carbon intensity and net zero targets
Carbon Intensity (EEOI) 15 14.1 Grams CO2 per tonne-mile ▪ We target net zero emissions by 2050 PB targets -50% carbon intensity by 2030 on the ▪ We aim to reduce our EEOI carbon intensity by 50% by 2030 10 way to net zero by 2050 ▪ We target for our fleet to comprise only low-emission vessels by 20
Slide 35: New IMO goals
New IMO Goals (since July 2023) IMO adopted a revised and more ambitious GHG Strategy 0% IMO Total Emissions: 1. Net Zero by about 2050 -10% -20% 2. Reduce CO2 intensity by 40% by 2030, compared to 2008 3. Reduce total GHG emissions by 20-30% by 2030 and by -20% 70-80% by 2040 IMO Carbon Intensity:
Slide 36: Decarbonisation regulations
Speed reduction Supply inefficiency Accelerate scrapping of older, less efficient vessels ▪ Technical design criteria ▪ First year of ratings ▪ Vessels maximum engine power has be ▪ 70% for 2025 capped ▪ First survey after 2023 (completed by 2Q24) ▪ Shipping companies required to buy ▪ Set to enter
Slide 37: 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 ▪
Slide 38: 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
Slide 39: 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$35-40 million per year Adjusted for ca. 20-25
Slide 40: Cargo cover and contracted rates
Handysize Supramax ▪ We have covered 87% and 98% of our Handysize and US$/Day US$/Day Supramax vessel days for the third quarter of 2024 at $13,750* 14,000 $13,440* US$13,750 and US$13,440 per day respectively 14,000 $12,700 $12,770 $12,670* $12,640* 12,000 12,000 ▪ Year on year we have increased 3Q
Slide 41: Vessel days and chartered costs
Handysize Supramax Handysize Supramax Days FY2023 1H 2024 FY2023 1H 2024 Year Vessel days Average cost (US$) Vessel days Average cost (US$) Core business revenue days 28,420 13,570 20,230 10,030 2H2024 2,230 12,130 430 13,940 – Owned revenue days 24,960 11,560 17,070 8,830 2025 3,370 12,680 610 14,8
Slide 42: Scrubber investment recovery
▪ 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
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