Dampskibsselskabet Norden A/s · OMXCOP:DNORD
Dampskibsselskabet Norden A/s — Norden — Q1 2018 Earnings Presentation
39 slides from Dampskibsselskabet Norden A/s's earnings presentation, May 2, 2018
Slide 1: NORDEN Results Q1 report
NORDEN RESULTS Q1 report Copenhagen, Denmark 2 May 2018 1 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 2: Agenda
AGENDA • Business update • Market review – Latest developments – Outlook • Final words “In addition to the agile management of cyclical exposure to shipping industry, NORDEN also delivers additional value through operator activities – all in a company you can trust” 2 | Q1 REPORT 2018 CUSTODIANS OF
Slide 3: Business update
Business update 3 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 4: Good start to the year
BUSINESS UPDATE - OVERALL GOOD START TO THE YEAR Financial highlights Quarterly results • Q1 2018 Adjusted result USD 9 million 30 28 – Dry Operator USD 3 million after investment in positioning voyages 25 – Dry Owner USD 5 million in improved markets – Tankers USD 0 million in disappointing winter
Slide 5: Full-year expectations maintained
BUSINESS UPDATE - GUIDANCE FULL-YEAR EXPECTATIONS MAINTAINED Guidance – Adjusted result Guidance • 2018 has started in line with expectations 45 • Dry Operator expected to generate USD 50 to 60 million in Contribution margin 35 • Dry cargo market expected to continue to 10 to 50 improve in 2018 25 1
Slide 6: Investment in positioning voyages
BUSINESS UPDATE – DRY OPERATOR INVESTMENT IN POSITIONING VOYAGES • Q1 2018 Adjusted result of USD 3.1 million • Investment in positioning of vessels expected to pay off in Q2 2018 • New office in Vancouver opened and off to a good start • Total of 24,442 vessels days – 5% increase compared to averag
Slide 7: Optimising the position
BUSINESS UPDATE – DRY OWNER OPTIMISING THE POSITION • Q1 2018 Adjusted result of USD 5 million • Increased focus on optimising the position of Dry Owner – Delivery of 3 newbuildings of which 1 Panamax vessel was already sold and delivered directly to new owners – Secured 5 T/C contracts with a durat
Slide 8: Break-even in unusually weak winter market
BUSINESS UPDATE – TANKERS BREAK-EVEN IN UNUSUALLY WEAK WINTER MARKET • Q1 2018 Adjusted Result of USD 0 million • Outperformed the market by 7% - corresponds to extra earnings of USD 828 per day • Continued gradual build-up of short-term capacity • A total of 1,965 days added in forward capacity in
Slide 9: Market review
Market review 9 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 10: Coal and minor bulk driving demand growth
MARKET REVIEW – DRY CARGO Q1 2018 COAL AND MINOR BULK DRIVING DEMAND GROWTH Key developments China import growth vs. Q1 2017 • Improvement in rates – Panamax up 31% vs Q1 2017 – Supramax up 28% vs Q1 2017 • Stronger global economic activity and with lower fleet growth Source: GTT and NORDEN • Coal t
Slide 11: Low fleet growth enables market improvements
MARKET REVIEW – DRY CARGO OUTLOOK LOW FLEET GROWTH ENABLES MARKET IMPROVEMENTS • Solid global growth, but increased uncertainty due to increased risk of a trade tensions • Expected lower demand support from Chinese activity and potentially increased coal production • Order books at manageable levels
Slide 12: Market in Q1-18 still challenging
MARKET REVIEW – TANKERS Q1 2018 MARKET IN Q1-18 STILL CHALLENGING • Freight rates at 5-year low • Healthy oil demand growth in Q1-18 of YoY 1.5% (IEA) - but inventories used instead of imports • High refinery maintenance resulting in less exports • Supply overhang pressuring rates • Tanker scrapping
Slide 13: Market to gradually improve through 2018
MARKET REVIEW – TANKERS OUTLOOK MARKET TO GRADUALLY IMPROVE THROUGH 2018 • Very poor start to the year in Q1 – but market expected to improve from here • Positive macro environment adding to demand upside • Oil inventories normalising • Higher refining utilisation expected to increase movement of oi
Slide 14: Final words
Final words 14 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 15: Capturing value potential of Dry Operator
FINAL WORDS CAPTURING VALUE POTENTIAL OF DRY OPERATOR • Dry Operator of to a good start since initiation in 2017 and well positioned for Q2 • Significant growth opportunity for Dry Operator, 2018 focus on building a track record and enabling growth • Dry Owner well positioned for improving market •
Slide 16: Forward looking statements
DISCLAIMER FORWARD LOOKING STATEMENTS This presentation contains certain forward-looking statements reflecting the management’s present judgment of future events and financial results. Statements relating to the remainder of 2018 and subsequent years are subject to uncertainty, and NORDEN’s actual r
Slide 17: Thank you for your attention
THANK YOU FOR YOUR ATTENTION Dampskibsselskabet NORDEN A/S 52, Strandvejen DK-2900 Hellerup Denmark Phone: +45 3315 0451 www.ds-norden.com dampskibsselskabetnorden ds-norden ds_norden dsnorden ds_norden 17 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 18: Back-up slides
Back-up slides 18 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 19: For the long-term shipping investor
NORDEN DNA FOR THE LONG-TERM SHIPPING INVESTOR • Full scale operational setup – direct customer contact • Agile portfolio management • Midsize vessel types – where operator skills are most valuable • Strong track record of maintaining financial strength through the cycles • Healthy balance sheet, tr
Slide 20: NORDEN's business units
NORDEN DNA NORDEN’S 3 BUSINESS UNITS Dry Operator Dry Owner Product Tankers Transport services and cyclical Global transport solutions to dry Cyclical market exposure to dry market exposure in product cargo customers cargo market tanker market Generate a margin by: Generate superior long-term return
Slide 21: Dry Operator: logistical optimisation and positions
DS NORDEN - DRY OPERATOR DRY OPERATOR: LOGISTICAL OPTIMISATION AND POSITIONS Value levers Regional exposure Overall market exposure Clip deals Employment arbitrage Vessel selection Options Vessel operation Minimising ballast Taking a view on regional Taking a view on the Securing margin on a Choosin
Slide 22: Dry Owner: cyclical exposure to dry cargo
DS NORDEN – DRY OWNER DRY OWNER: CYCLICAL EXPOSURE TO DRY CARGO Generate superior long-term returns by: • Timing and negotiating transactions of owned and long-term charter contracts • Utilising access to off-market deals through long-term relationships with shipyards and shipowners • Enabling portf
Slide 23: Tankers: cyclical exposure and operator value
DS NORDEN – TANKERS TANKERS: CYCLICAL EXPOSURE AND OPERATOR VALUE Generate superior long-term returns by: • Maximising earnings through positioning and voyage optimisation • Timing and transactions of own vessels and long-term charter contracts • Short-term T/C-in activity • All short-term charterin
Slide 24: Connection between Operator and Owner
CONNECTION BETWEEN OPERATOR AND OWNER Q4 2017 (USD Million) Dry Owner Dry Operator Eliminations Dry Cargo • Dry Owner charters out Revenue – services rendered external 9 481 0 490 most of its capacity to Dry Revenue – services rendered internal 39 0 39 0 Revenue 48 481 39 490 Operator Voyage costs 0
Slide 25: Overall results
OVERALL RESULTS USDm Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 EBITDA – Dry Cargo -6.3 -2.6 EBITDA – Dry Operator -4.6 14.1 4.1 EBITDA – Dry Owner 10.1 14.8 5.5 EBITDA - Tankers 16.6 10.0 6.5 9.4 7.5 EBITDA - Group 10.3 7.3 12.0 38.5 17.1 Depreciation -10.6 -10.2 -10.6 -10.7 -10.5 EBIT Group 0.1 -2.8
Slide 26: Financial strength
FINANCIAL STRENGTH Capital structure Net committed cash (ultimo) • Cash in low-risk deposit USDm Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017 accounts and securities Adjusted net interest -69 -59 -69 -9 12 bearing assets* • Outstanding yard payments T/C obligations ** -1,314 -1,226 -1,267 -1,229 -1,202 (
Slide 27: Valuation of NORDEN
VALUATION OF NORDEN Valuation of assets Financial input for valuation Dry Operator (last 9M) Net debt (USD million) -37 Contribution margin USD 40 million ≈ 557 USD / vessel day Securities 5 Adjusted result USD 15 million ≈ 210 USD / vessel day Cash and equivalents 203 Vessel days 71,116 Current ban
Slide 28: Dry Owner TCE
DRY OWNER TCE Vessel type Days TCE (USD / day) Post-Panamax 272 8,852 Panamax 1,823 12,104 Supramax 1,865 10,517 Handysize 895 10,101 28 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 29: Provisions
PROVISIONS Effect of provisions 150 119 83* 100 50 25 21 12 -230 -64 7 3 USD million 0 -50 -100 -150 -200 -250 2014 2015 2016 2017 2018 2019 2020 2021 2022 Comments • Remaining provisions at the end of 2018 of USD 15 million • Reduced impact from provisions from 2018 29 | Q1 REPORT 2018 *25 USD mill
Slide 30: Continuously outperforming the markets
PERFORMANCE CONTINUOUSLY OUTPERFORMING THE MARKETS Tankers – 4 quarter rolling NORDEN TCE over benchmark 2,500 2,000 1,500 USD/day 1,000 500 0 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Handy MR 30 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 31: Dry Owner positioning
31 MARTS 2018 DRY OWNER POSITIONING 31 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 32: Dry Owner fleet and values
31 MARTS 2018 DRY OWNER FLEET AND VALUES NORDEN’s Dry Owner fleet NORDEN’s Dry Owner fleet values (USD million) 32 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 33: Tanker positioning
31 MARTS 2018 TANKER POSITIONING 33 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 34: Tanker fleet and values
31 MARTS 2018 TANKER FLEET AND VALUES NORDEN’s Tanker fleet NORDEN’s Tanker fleet values (USD million) 34 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 35: Newbuilding prices
Million USD 0 10 20 30 40 50 60 Jan-76 Jan-78 35 | Q1 REPORT 2018 Jan-80 Panamax (Dry) Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 NEWBUILDING PRICES Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Million USD 0 10 20 30 40 50 60 Jan-76 MR (Tank) Jan-78 Jan-8
Slide 36: Panamax spot rate
PANAMAX Spot rate 14,000 12,000 10,000 8,000 USD/day 6,000 4,000 2,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 2017 2018 * Source: Clarksons 36 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 37: Supramax spot rate
SUPRAMAX Spot rate 12,000 10,000 8,000 USD/day 6,000 4,000 2,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2016 2017 2018 * Source: Clarksons 37 | Q1 REPORT 2018 CUSTODIANS OF SMARTER GLOBAL TRADE
Slide 38: What is time charter equivalent (TCE)?
INDUSTRY – TCE WHAT IS TIME CHARTER EQUIVALENT (TCE)? NORDEN (as owner) has contracted with a customer to move 50,000 mt of cargo at a rate of $20 per Metric Ton. 10 Days 5 Days 20 Days 5 Days Ballast Leg Loading Laden Leg Discharging Total: 40 Days Owner’s cost: Owner’s cost: Owner’s cost: Owner’s
Slide 39: The share (DNORD)
THE SHARE (DNORD) Master data Composition of shareholders Shareholder capital DKK 42,200,000 • 16,086 registered shareholders owning Number of shares and 87.4% denomination 42,200,000 shares of DKK 1 • Approx. 31% international ownership Classes of shares 1 Voting and ownership A/S Motortramp, restr