Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — Q1 2022 Earnings Presentation
32 slides from Pacific Basin Shipping's earnings presentation, April 2022
Slide 1: 1Q22 Quarterly Trading Update
Pech a THRIVING IN A Pacific Basin Yea >< ae 1022 Quarterly Trading Update April 2022
Slide 2: Minor Bulks, Grains, Coal and Iron Ore market
Minor Bulks Demand driven by construction materials, US$/day net* cement and clinker and aggregates 40,000 +12% YOY 11 April 2022 35,000 $23,350 Global infrastructure spending and some 30,000 relaxation of Chinese domestic property 25,000 construction curbs will support minor bulk 20,000 demand for
Slide 3: Minor Bulk, Grain, Coal and Iron Ore loadings
Mill tonnes Mill tonnes Grain loadings -3% YOY Minor Bulk loadings +12% YOY annualised annualised 2,100 700 2,000 650 1,900 600 1,800 1,700 550 1,600 500 1,500 450 1,400 2019 2020 2021 2022 2019 2020 2021 2022 1,300 400 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug
Slide 4: Handysize and Supramax Core Business TCE
Handysize Core Business TCE Supramax Core Business TCE US$/day net* US$/day net* 45,000 45,000 40,000 40,000 35,000 35,000 1Q22 = $32,510 $31,250# 30,000 30,000 25,000 1Q22 = $23,810 $23,970# 25,000 92% of days 20,000 75% 20,000 of days 15,000 15,000 10,000 10,000 5,000 5,000 - - 1Q21 2Q21 3Q21 4Q21
Slide 5: Performance vs Index and Operating Activity Margin
Handysize Performance vs Index (BHSI)* Supramax Performance vs Index (BSI)* US$/Day net* Under/Outperformance US$/Day net* Under/Outperformance 12,140 Rolling 12 months Rolling 12 months 3,260 8,610 2,580 1,970 1,760 5,080 330 3,480 3,710 1,780 2,290 (370) (930) (1,170) (3,060) (2,950) (2,650) 1Q20
Slide 6: Handysize prices and Sales & Purchase Activity YTD 2022
Handysize Newbuilding and Second-hand Prices Sales & Purchase Activity YTD 2022 US$ Million $29.8 32 Vessel DWT Year MOA Delivery +27% 28 Type Built $23.5 $28.5 24 +93% Purchased 20 $14.8 $19.5 Ultramax 61,510 2010 Dec-2021 Jan 2022 16 +129% 12 $8.5 $12.8 Sold 8 $5.0 +155% Handysize 28,433 2004 Feb-
Slide 7: Strong freight rates have not led to increased ordering
% of fleet Dry Bulk Orderbook 90% 80% 70% 60% 50% Strong freight rates have not led to increased 40% 30% ordering in this cycle 20% Decarbonisation leads to technological 10% 6.6% uncertainty and reduced life of traditional 0% 1995 2000 2005 2010 2015 2020 propulsion system ships 35% 33.3% Zer
Slide 8: Handysize / Supramax and overall dry bulk supply development
Handysize / Supramax Supply Development Overall Dry Bulk Supply Development % of Total % of Total Fleet Fleet 6% 6% 5% 5% 3.8% 4% 4% 3.6% 2.9% 2.8% 3% 3% 2.4% 2.2% 2% 2% 1% 1% 0.4% 0% 0% -0.5% -1% -1% -2% -2% -3% -3% 2020 2021 2022F 2023F 2020 2021 2022F 2023F Scrapping Forecast Scheduled % Scrappin
Slide 9: Decarbonisation and EEXI compliance commitments
We expect approximately 73 ships in our owned fleet will be fitted with power reduction devices to comply with IMO’s EEXI energy efficiency requirements We target for our ships to achieve an AER rating of “C” or better from 2024 onwards We commit to only owning and operating zero- emission ves
Slide 10: Solid start to 2022 and outlook
Solid start to 2022: our 1Q22 average TCE earnings for Handysize and Supramax were 117% and 122% above 1Q21 respectively Overall we expect tight fleet supply and steady demand for minor bulks for the remainder of 2022 demand for minor bulks, grain and coal to remain strong, with positive ton
Slide 11: Contact IR – Peter Budd
This presentation contains certain forward looking statements with respect to the financial condition, results of operations and business of Pacific Basin and certain plans and objectives of the management of Pacific Basin. Such forward looking statements involve known and unknown risks, uncertainti
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Slide 13: Strategy and priorities
Maintain and grow our position as the leading minor Supporting our teams to ensure we continue to deliver bulk cargo-focused, integrated owner and operator a quality service to our customers while maximising servicing our customers’ transportation needs around our earnings in the current strong
Slide 14: Asset heavy core business and asset light operating activity
Contract and spot cargoes Spot cargoes Owned and long-term chartered ships Short-term ships carrying spot cargoes Short-term ships carrying contract cargoes Costs largely fixed and disclosed Costs fluctuate with freight market Key KPI = TCE per day Key KPI = Margin per day Significant leverage and p
Slide 15: Our core business and operating activity
Our “core business” is to optimally combine our owned and long-term chartered ships with multi-shipment contract cargos and spot cargoes to achieve the highest daily TCE earnings. Our core business also uses short-term chartered ships to carry contract cargoes to maximise the utilisation and TCE of
Slide 16: Earnings build-up and sensitivity
Handysize contribution Core TCE1 x owned & LTC 2 revenue days + Blended cost x owned & LTC cost days 3 - = X Supramax contribution Core TCE1 x owned & LTC revenue days + Blended cost x owned & LTC cost days 3 - = X Operating Activity Operating margin x operating days X Post Panamax contribution X To
Slide 17: Vessel days and long-term chartered costs
Handysize Supramax Handysize Supramax Days FY21 1Q22 FY21 1Q22 Year Vessel Days Average Cost Vessel Days Average Cost Core Revenue Days 32,080 7,830 15,480 4,050 2022 4,240 10,190 1,170 13,250 - Owned Revenue Days 27,580 6,900 14,040 3,700 2023 2,560 10,850 270 10,290 - LT Chartered Days 4,500 930 1
Slide 18: Appendix: Vessel days and long-term chartered commitments
Appendix: 18 VESSEL DAYS AND LONG-TERM CHARTERED COMMITMENTS Future Long-term Chartered Vessel Costs Vv ID The following table shows the average daily charter costs for our essel Days long-term chartered-in Handysize and Supramax vessels during their The following table shows an analysis of our vess
Slide 19: The dry bulk industry
The dry bulk industry carries dry commodities and other non-containerised cargo. Large Capesize and Panamax vessels carry mainly iron ore, coal and grain. We specialise in the versatile, mid-size, geared Handysize and Supramax ships that carry a wide range of minor bulks and grains which offers sign
Slide 20: Dry bulk orderbook, age and scrapping by segment
Scheduled Average Over 2021 Scrapping as Orderbook as Age 20 Years % of 1 Jan 2022 % of Existing Existing Fleet Fleet Handysize (10,000-40,000 dwt) 4.8% 13 15% 0.5% Supramax (incl. Ultramax) (40,000-70,000 dwt) 6.4% 11 11% 0.3% Panamax & Post-Panamax (70,000-100,000 dwt) 8.2% 11 13% 0.3% Capesize (1
Slide 21: EEXI, CII and EU ETS regulations
Adopted in June 2021, IMO rules will require existing ships to combine technical and operational measures to meet IMO’s 2030 GHG reduction targets In July 2021, EU announced a number of environmental regulations affecting shipping Technical design criteria Some impact on PB ships EEXI Vess
Slide 22: Company overview
We operate one of the world’s largest fleets of interchangeable modern Handysize and Supramax ships, 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 approximately
Slide 23: Diversified geography, customers and cargoes
More diverse customer, cargo and geographical exposure enables high utilization A segment where scale and operational expertise make a difference Better daily TCE earnings driven by a high laden-to-ballast ratio Sound long-term demand expectations and modest fleet growth Our largest Diversif
Slide 24: Appendix: Business Foundation
Appendix: 24 BUSINESS FOUNDATION = 10 commercial offices ——_ | Dalian | a ls 13 office locations ~ —. # 4 technical & crewing offices Hong Kong Our Hong Kong headquarters © is home to commercial, fo} technical, crewing and all central functions e io de Janeiro se] xr Ri ° Middle East Africa 6% Austr
Slide 25: Our Cargo Volumes 2021
Our Cargo Volumes 2021 ● Minerals 9% Salt 4% ● Agricultural Products & Related 29% Sand & Gypsum 3% 9% Soda Ash 2% Grains & Agricultural Products 16% 29% Fertiliser 10% ● Energy 13% 13% Sugar 3% Coal 9% 79.2 Petcoke 3% Million Tonnes Wood Pellets 1% ● Construction Materials 32% 17% ● Metals 17% Ceme
Slide 26: Vessels in operation as at 31 March 2022
122 Vessels 14 LT 136 123 259 ST Total owned1 Chartered Total Chartered Vessels in Operation Total Average Long-term Short-term Capacity Age Owned1 Chartered Sub-total Chartered1 Total (million DWT) Costs fluctuate with Owned Owned Substantially fixed costs market Handysize 79 10 89 43 132 2.7 13 Su
Slide 27: Handysize costs FY20 vs FY21
Reversal of a vessel impairment provision of US$152 million will result in additional depreciation in FY2022 and beyond, increasing blended Opex vessel costs by approximately US$500 per vessel per day or US$16 million per year Depreciation Finance Cost Costs FY20 Costs FY21 12,000 10,020 10,180 10,0
Slide 28: Supramax costs FY20 vs FY21
Opex Depreciation Costs FY20 Costs FY21 Finance Cost 11,920 12,000 11,450 10,000 8,820 9,180 9,140 8,910 8,000 1,070 940 6,000 3,590 3,460 4,000 2,000 4,160 4,510 - Owned Long-Term Blended Owned Long-Term Blended Chartered Chartered No. of Ships as at 31 Dec 2021: 41 4 45 G&A per day for 2021 was
Slide 29: Operating cash inflow in 2021
1 Operating cash inflow in 2021 was 1 2 3 4 US$813.1 million, inclusive of all long and short-term charter hire payments. US$ Million This compares with the US$181.5 million 1,200 in the full year 2020 +29 -278 +813 Proceeds from the sale of 5 smaller 2 1,000 Handysize vessels 3 Borrowings decreased
Slide 30: Balance sheet and capital allocation priorities
FY21 FY20 In light of the significantly improved dry bulk market outlook and the consequent 2020 increase in ship values, a US$152 US$m 2021 million non-cash impairment on our Handysize core fleet (originally taken in PP&E 1,906.0 1,665.2 2020) has been written back Strong operating cash flow ha
Slide 31: FY21 income statement summary
FY21 FY20 US$m Revenue 2,972.4 1,470.9 Owned vessel costs FY21 FY20 Voyage expenses (881.0) (702.6) Opex (195.2) (174.6) Depreciation (117.8) (125.3) Time-charter equivalent ("TCE") earnings 2,091.4 768.3 Finance (28.9) (33.4) Owned vessel costs (341.9) (333.3) Charter costs FY21 FY20 Charter costs
Slide 32: Supramax forward cargo cover excludes scrubber benefit
Please also note that our Supramax forward cargo cover also excludes scrubber benefit, currently at about US$1,200 per day
Pacific Basin Shipping — Q1 2022 Earnings Presentation on 6ix