Pacific Basin Shipping Limited · HKEX:2343

Pacific Basin Shipping — Q3 2014 Earnings Presentation

34 slides from Pacific Basin Shipping's earnings presentation, Oct 14, 2014

  1. Slide 1: 3Q14 Trading Update

    Our Handysize ship “Maipo River” discharging steel in Vancouver 14 Oct 2014

  2. Slide 2: 2014 Third Quarter Highlights

    2014 Third Quarter Highlights  Dry bulk market weakened further in 3Q with Handysize freight rates in July falling to very low levels last seen in Feb 2009  Our 3Q average daily earnings (net): Handysize: US$8,650/day on 14,310 revenue days Handymax: US$9,840/day on 5,260 revenue days  We outperf

  3. Slide 3: Pacific Basin Dry Bulk – Earnings Cover

    Pacific Basin Dry Bulk – Earnings Cover Cover as at 10 Oct 2014 Currency: US$ PB Dry Bulk Fleet Development 1Q-3Q Completed Covered Uncovered Average number of ships operated Handysize Handymax 250 20,630 53,090 Revenue Days 19,010 Revenue Days 213 213 47,620 Revenue Days 2 Revenue Days 71% 200 76%

  4. Slide 4: Dry Bulk Market Information

    Dry Bulk Market Information  Despite reduced global dry bulk net fleet growth, freight market weakness was primary driven by:  On-going tonnage supply overhang  Protracted Indonesian bauxite and nickel ore export ban  Falling Chinese coal imports  Due mainly to record high Chinese hydro-electri

  5. Slide 5: Dry Bulk Demand

    Dry Bulk Demand Dry Bulk Effective Demand Chinese Minor Bulk Imports % change YOY 16.0 Million tonnes Chinese imports decreased 8% YOY 14.0 (ex nickel ore & bauxite: increase 17%) 30 12.0 10.0 9.1 25 8.0 6.0 20 6.0 15 4.0 2.0 10 0.0 5 -2.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -4.0 2014 20

  6. Slide 6: Global Dry Bulk Fleet Development

    Global Dry Bulk Fleet Development Dry Bulk New Ship Contracting net fleet growth YOY Handysize Dry Bulk overall 3Q +0.6% +0.9% Per quarter annualised in % of fleet (dwt) 23% Jan – Sep14 +2.6% +3.7% 25% 20% Dry bulk net fleet growth YTD: 16% 15%  38m tonnes of new capacity  Partially offset by 12m

  7. Slide 7: Dry Bulk Orderbook

    Dry Bulk Orderbook Handysize Orderbook 453 vessels (16.6m dwt) m Dwt 9 11.4% 8  New vessel ordering activity gradually reduced to current 7 26% 8.0% low levels due to weak freight market 6 7.3% Shortfall 5 5.4%  Current orderbook: 24% (3Q13: 18%) 4 3 5.3m 3.3% 2 3.9m 1 0 Scheduled Actual 2014 2015

  8. Slide 8: Daily Vessel Costs – Handysize

    Daily Vessel Costs – Handysize Finance cost Charter-hire : Short-term (ST) / Long-term (LT) As at 30 June 2014 Depreciation Charter-hire : Index-linked Opex Chartered Inward Charter Commitments Owned Including finance lease vessels Days & rates Vessel Days US$/Day Blended US$9,120 (FY2013: US$8,480)

  9. Slide 9: Daily Vessel Costs – Handymax

    Daily Vessel Costs – Handymax Finance cost Charter-hire : Short-term (ST) / Long-term (LT) As at 30 June 2014 Depreciation Charter-hire : Index-linked Opex Owned Chartered Inward Charter Commitments US$/Day Days & Rates Vessel Days Blended US$11,890 (FY2013: US$10,440) 2014-2015 10,000 14,000 12,860

  10. Slide 10: Pacific Basin Dry Bulk – Outlook

    Pacific Basin Dry Bulk – Outlook 2014 Interim  China’s continued strong minor bulk demand  Slower economic and industrial growth and  Increased overseas mining output and lower slower growth in dry bulk imports commodity prices  Increased national protectionism (e.g. China coal  Continued OECD

  11. Slide 11: PB Towage - Update

    PB Towage - Update  Increased competition for fewer oil & gas and construction opportunities PB Towage Fleet: 44 vessels (Oct 2014)  Reducing port volumes Harbour Towage:  Two new exclusive port licenses in Australia Offshore Towage:  Repositioning some of our underutilised tugs to Middle East,

  12. Slide 12: PB Towage – Outlook

    PB Towage – Outlook 2014 Interim  Exclusive licenses in a number of bulk ports  High costs, labour market inflexibility, declining up for tender in 2015 onwards productivity, environmental concerns and global  New employment opportunities in Middle competition impacting Australian project East ec

  13. Slide 13: Balance Sheet – 30 June 2014

    Balance Sheet – 30 June 2014 PB PB Discontinued US$m Dry Bulk Towage Treasury RoRo 30 Jun 14 31 Dec 13 Vessels & other fixed assets 1,545 127 - - 1,676 1,622 Total assets 1,750 172 421 - 2,369 2,537 Total borrowings 953 22 - - 975 1,037 Total liabilities 1,087 35 15 - 1,152 1,233 Net assets 663 137

  14. Slide 14: Borrowings and Capex

    Borrowings and Capex Schedule of Repayments and Vessel Capital Commitments As at 30 June 2014 US$ Million 300 Investors’ Maturity Put Date Date Redeemable in Oct 2016 232 210 190 200 164 124 111 100 84 77 66 59 47 25 18 3 0 2H14 2015 2016 2017 2018 2019-2025 Bank borrowings (US$645m) Convertible bon

  15. Slide 15: Cash Flow

    Cash Flow – 1H14 Sources and Uses of Group Cash Flow As at 30 June 2014 Operating cash flow US$44.4m Cash inflow Cash outflow EBITDA US$38.9m US$ Million 2014 cash levels expected to be affected by: 600.0 +36.9  Pace of capital expansion +44.4  New loan facilities to be secured using our +486.1 un

  16. Slide 16: Dry Bulk Outlook & Strategy

    Dry Bulk Outlook & Strategy  Very satisfied with our 51 ship acquisitions in 2012/2013 = doubled our owned fleet  18 owned Japanese newbuildings still to deliver in next 3 years  Fully-funded capital commitments of US$410 million  Positioned well:  doubled our owned fleet over 2012/2013 at hist

  17. Slide 17: Disclaimer

    Disclaimer 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,

  18. Slide 18: Appendix: Pacific Basin Overview

    Appendix: Pacific Basin Overview  A leading dry bulk owner/operator of Handysize & Handymax dry bulk ships  Strong Pacific Basin business model  Large fleet of uniform, interchangeable, modern ships  Mix of owned and long-term, short-term chartered ships  Operating mainly on long term cargo con

  19. Slide 19: Strategic Model

    Appendix: Strategic Model OUR STRONG CORPORATE & OUR LARGE VERSITILE FLEET FINANCIAL PROFILE Striving for best-in-class internal and external Fleet scale and interchangeable high-quality dry reporting, transparency and corporate stewardship bulk ships facilitate service flexibility to Robust balance

  20. Slide 20: 2014 Interim Results – Group Highlights

    Appendix: 2014 Interim Results – Group Highlights Underlying (Loss) /Profit EBITDA (excluding US$ Million Towage Impairments) 1H14 1H13 13.6 59.4 Net (Loss) / Profit US$(90.7)m US$0.3m 38.9 Earnings per Share HK¢(36.9) HK¢0.1 Cash Position US$320.2m US$442.3m (21.5) 1H13 1H14 1H13 1H14  Group resul

  21. Slide 21: Pacific Basin Dry Bulk – Diversified Cargo

    Appendix: Pacific Basin Dry Bulk – Diversified Cargo Pacific Basin Handysize and Handymax Cargo Volume Jan – Sep 14 Energy Agricultural Products Coal 4% Petcoke 6% 10% Grains & AgricultureProducts 20 % Fertiliser 11% Sugar 3% Metals 14% 34% Alumina 3% Ores 6% 37.6 Concentrates& Other Metals 5% Milli

  22. Slide 22: Fleet List – Oct 2014

    Appendix: Fleet List – Oct 2014* Pacific Basin Dry Bulk Fleet: 247 average age of core fleet: 6.2 years old Owned Chartered Total Delivered Newbuilding Delivered 1 Newbuilding www.pacificbasin.com Fleet Details Handysize 64 12 92 13 181 Handymax 15 6 40 3 64 Post-Panamax 1 0 1 0 2 Total 80 18 133 16

  23. Slide 23: Pacific Basin Dry Bulk – 1H14 Performance

    Appendix: Pacific Basin Dry Bulk – 1H14 Performance Handysize – Outperformed Market by: 23% US$ million 1H14 Daily Earnings US$10,210 +10% YOY Dry Bulk net (loss) / profit (6.5)  Handysize contribution 26.2 Daily Costs US$9,120 -10% YOY  Handymax contribution (10.7)  Direct overheads (24.7) Handy

  24. Slide 24: 2014 Interim Financial Highlights

    Appendix: 2014 Interim Financial Highlights US$m 1H14 1H13 Segment net result (16.1) 25.8  Treasury - (4.3)  Discontinued Operations - RoRo (0.5) (0.8)  Non direct G&A (4.9) (7.1) Underlying (loss) / profit (21.5) 13.6  Unrealised derivative income/(expenses) (0.3) (3.5)  Towage impairment and

  25. Slide 25: Pacific Basin Dry Bulk

    Appendix: Pacific Basin Dry Bulk Dry Bulk 1H14 1H13 Change Handysize contribution (US$m) 26.2 22.4 +17% Handymax contribution (US$m) (10.7) 4.3 -349% Post Panamax contribution (US$m) 2.7 2.9 -7% Direct overhead (US$m) (24.7) (18.3) -35% Dry Bulk Net (loss) / profit (US$m) (6.5) 11.3 -158% Segment EB

  26. Slide 26: Pacific Basin Dry Bulk

    Appendix: Pacific Basin Dry Bulk Handysize 1H14 1H13 Change Revenue days (days) 27,200 23,740 +15% TCE earnings (US$/day) 10,210 9,290 +10% Owned + chartered costs (US$/day) 9,120 8,280 -10% Handysize contribution (US$m) 26.2 22.4 +17% Handymax Revenue days (days) 11,640 9,050 +29% TCE earnings (US$

  27. Slide 27: PB Towage – 1H14 Performance

    Appendix: PB Towage – 1H14 Performance  Increasingly competitive landscape 1H14 Harbour Towage US$ million  Increase in job numbers driven by young Newcastle activity Vessel net book value 126  Reduced volumes in other bulk ports + statics volumes in liner ports Return on net assets (13%) Offshor

  28. Slide 28: Vessels Commitments

    Appendix: Vessels Commitments As at 30 June 2014 Total US$410m US$m 200 189.8 59.9 150 110.9 100 23.3 84.0 129.9 51.6 50 87.6 25.1 7.8 32.4 17.3 0 2H14 2015 2016 2017 Handysize x 13, US$267m Handymax x 6, US$143m  Further commitments expected in Dry Bulk 3Q14 Trading Update 28

  29. Slide 29: Historical Owned and Chartered-in Cost

    Appendix: Historical Owned and Chartered-in Cost 3Q14 Trading Update 29

  30. Slide 30: Convertible Bonds Due 2016

    Appendix: Convertible Bonds Due 2016 Issue size US$230 million (US$20.5m face value put back and repaid on 14 April 2014; Remaining: US$210m) Maturity Date 12 April 2016 (6 years) Investor Put Date and Price 12 April 2014 (4 years) at par Coupon 1.75% p.a. payable semi-annually in arrears on 12 Apri

  31. Slide 31: Convertible Bonds Due 2018

    Appendix: Convertible Bonds Due 2018 Issue size US$123.8 million Maturity Date 22 October 2018 (6 years) Investor Put Date and Price 22 October 2016 (4 years) at par PB’s Call Option 1) Trading price for 30 consecutive days > 130% conversion price in effect 2) >90% of Bond converted / redeemed / pur

  32. Slide 32: Dry Bulk Fleet Profile

    Appendix: Dry Bulk Fleet Profile Handysize Age Profile (25,000-39,999 dwt) 18% 17% 16% Total Drybulk Year - 2,251 vessels (72.8mil dwt) 15% on-Year Net Fleet 14% 30+ years Growth (%) 13% 11% 12% 25-29 years 13% 13% 11% 0-15 years 10% 6% 9% 6% 8% 7% 11% 6% 5% 4% 77% 3% Lowest fleet growth since Septe

  33. Slide 33: China at late-Industrialisation Stage

    Appendix: China at late-Industrialisation Stage Steel Consumption Per Capita Tons per Capital 1.0  China growth matches historical trend in Japan and Korea 0.9  Suggests strong growth in dry bulk 0.8 segment to remain for medium term 0.7  Similar trend for electricity and cement 0.6 0.5 0.4 0.3 0

  34. Slide 34: China Dry Bulk Trade, Iron Ore & Coal Demand

    Appendix: China Dry Bulk Trade, Iron Ore & Coal Demand Chinese Dry Bulk Trade Volume China is a significant net China Iron Ore Sourcing importer of coal for Steel Production % of total dry bulk trade Million Tonnes Mil tonnes Mil Tonnes 1,400 1,312 31%31% 32% 1594 350 1,200 1500 1501 28% 319 303 300

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