Great Eastern Shipping Co. Ltd. · NSE:GESHIP
Great Eastern Shipping — The Great Eastern Shipping — Q1 FY2021 Earnings Presentation
43 slides from Great Eastern Shipping's earnings presentation, Jul 31, 2020
Slide 1: Slide 1
Slide 2: Quarterly Results Updates – Q1FY21
QUARTERLY RESULTS UPDATES – Q1FY21 31 July 2020
Slide 3: Company’s
Except for historical information, the statements made in this presentation constitute forward looking statements. These include statements regarding the intent, belief or current expectations of GE Shipping and its management regarding the Company’s operations, strategic directions, prospects and f
Slide 4: Financial Results Q1 FY 2020-21
FINANCIAL RESULTS Q1 FY 2020-21 4
Slide 5: Reported Financial Highlights
REPORTED FINANCIAL HIGHLIGHTS GE Shipping Q1FY21 consolidated Net Profit at Rs. 468 Crores Standalone Key Figures Consolidated Q1FY21 Q1FY20 (Amount in Rs. Crs) Q1FY21 Q1FY20 Income Statement 1,025 569 Revenue (including other income) 1,197 773 637 165 EBITDA (including other income) 717 261 465 (50
Slide 6: Normalized Financial Notes
NORMALIZED FINANCIAL NOTES 1) The impact of the exchange rate on foreign currency loans and current assets and liabilities, including cash and bank balances, has been removed 2) NCD & Currency Swap: • Funds raised through NCDs have been swapped into USD using INR-FCY swaps, thus creating synthetic f
Slide 7: Normalized Financial Highlights
NORMALIZED FINANCIAL HIGHLIGHTS GE Shipping Q1FY21 consolidated Normalized Net Profit at Rs. 423 Crores Standalone Key Figures Consolidated Q1FY21 Q1FY20 (Amount in Rs. Crs) Q1FY21 Q1FY20 Income Statement 957 631 Revenue (including other income) 1,128 833 593 232 EBITDA (including other income) 672
Slide 8: Normalized Financial Highlights
NORMALIZED FINANCIAL HIGHLIGHTS Standalone Key Figures Consolidated Q1FY21 Q1FY20 Q1FY21 Q1FY20 Key financial figures 31.93% 1.36% *Return on Equity (ROE) (%) 24.12% 0.69% 19.58% 2.60% *Return on Capital Employed (ROCE) (%) 15.03% 3.26% 0.76 0.94 Gross Debt/Equity (x) 0.80 0.97 0.24 0.45 Net Debt/Eq
Slide 9: Performance Review
PERFORMANCE REVIEW Break up of Revenue days (Shipping) Revenue Days Q1 FY21 Q1 FY20 Owned Tonnage 4,018 4,142 Inchartered Tonnage - 35 Total Revenue Days 4,018 4,177 Total Owned Tonnage (mn.dwt) 3.70 3.85 Break up of Revenue days (Offshore) Revenue Days Q1 FY21 Q1 FY20 Offshore Logistics 1,626 1,470
Slide 10: Revenue Visibility & Coverage
REVENUE VISIBILITY & COVERAGE Category-wise coverage of operating days (Shipping) --- FY21 Extent of coverage of fleet’s Category Revenue Visibility operating days Crude Carriers 27% Product Carriers 16% LPG Carriers 79% Rs 513 Cr Dry Bulk 23% Category-wise coverage of operating days (Offshore) ---
Slide 11: Fleet Profile
FLEET PROFILE SHIPPING Fleet DWT Number of Ships Average Age (Yrs.) Crude Carriers 1,461,591 11 14.33 Product Carriers 987,207 17 12.77 Gas Carriers 224,113 5 18.89 Dry Bulk Carriers 1,026,462 13 7.78 Total 3,699,373 46 12.37 OFFSHORE Fleet Number of Units Average Age (Yrs.) Jack Up Rigs 4 8.81 Plat
Slide 12: GESCO Standalone Debt Repayment Schedule
GESCO STANDALONE DEBT REPAYMENT SCHEDULE (NEXT 5 YEARS) GESCO - Standalone (USD mn) 100 553 600 78 500 80 71 74 60 400 USD Million 60 USD Million 41 300 40 200 20 100 0 0 Jun-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Repayments Loan O/s (RHS) GESCO: We have effective all-in USD cost of debt of less than
Slide 13: Shipping Market
SHIPPING MARKET
Slide 14: Impact of COVID-19
IMPACT OF COVID-19
Slide 15: Impact of COVID-19 on Shipping
IMPACT OF COVID-19 ON SHIPPING Operational Disruptions due to COVID-19 • Drydocking • Crew Changes • S&P transactions 15
Slide 16: Supply Side - Shipping
SUPPLY SIDE - SHIPPING 16
Slide 17: Lowest Orderbook in 20 Years
LOWEST ORDERBOOK IN 20 YEARS 50% 80% 40% 60% Historical 30% Average: 21% Historical 40% Average: 24% 20% 20% 6.4% 10% 8.2% 0% 0% Crude tankers Orderbook (% of Total fleet) Product tankers Orderbook (% of Total fleet) Average Historical Orderbook Average Historical Orderbook 100% 50% 80% 40% Historic
Slide 18: Scrapping
SCRAPPING Fleet Vessel (mn Dwt) Scrapping (% of beginning world fleet) Category 15 Jul 20 H1CY20 2019 2018 2017 2016 2015 2014 Crude 423 0.17% 0.61% 4.62% 2.35% 0.35% 0.23% 1.60% Product 162 0.23% 0.43% 1.64% 1.42% 0.62% 0.61% 1.19% Dry Bulk 900 0.87% 0.92% 0.54% 1.77% 3.67% 4.03% 2.25% Scrapping wa
Slide 19: Scrapping Potential Asset Class Wise
SCRAPPING POTENTIAL ASSET CLASS WISE Assets above 15 years as % of total fleet 25% 20% 15% 10% 5% 0% Crude Tankers Product Tankers Dry Bulk Age: 16-20 Years (% of Total Fleet) Age: >20 years (% of Total Fleet) 19 Source – Industry Reports
Slide 20: Oil Contango & Floating Storage
OIL CONTANGO & FLOATING STORAGE 20
Slide 21: Brent Oil Price & Oil Contango
BRENT OIL PRICE & OIL CONTANGO 65.2 58.89 In March, OPEC+ 40 failed to reach an agreement on production cuts 20 During March-April’20, Oil Contango was above the floating storage cost economics therefore increased in floating storage demand. While currently, Oil Contango narrowed, hence floating sto
Slide 22: Oil Contango vs. Floating Storage of Oil
OIL CONTANGO Vs. FLOATING STORAGE OF OIL Crude Tankers 10k+ dwt (storage as % of fleet) Product Tankers 10k+ dwt (storage as % of fleet) 12.0% Peaked on 10.0% Peaked on 8-May-20 9.0% 8-May-20 10.0% 9.9% 8.8% 8.0% 8.0% 7.0% 6.0% 6.0% 5.0% 4.0% 4.0% 3.0% 2.0% 2.0% 1.0% 0.0% 0.0% Jan-18 May-18 Jan-19 M
Slide 23: Demand Side - Shipping
DEMAND SIDE - SHIPPING 23
Slide 24: Tanker Market
TANKER MARKET
Slide 25: Crude Oil Demand & Supply Impact
CRUDE OIL DEMAND & SUPPLY IMPACT Crude Oil Demand Y/Y Change (kbpd) Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 (1,025) (4,146) (4,251) (11,875) (12,520) (13,412) Crude Oil Supply Y/Y Change (kbpd) Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 927 1,215 (23) (369) (8,838) (10,696) kbpd: Thousand Barrels P
Slide 26: Decline in Core Products Demand During Jan-Jun 2020
DECLINE IN CORE PRODUCTS DEMAND DURING JAN-JUN 2020 Product-wise fall in demand y/y (%) Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 10% 3% 0% -1% -10% -5% -7% -5% -6% -5% -5% -4% -7% -5% -3% -6% -12% -12% -13% -20% -15% -17% -19% -30% -29% -32% -40% -50% -60% -57% -63% -65% -70% Gasoline Gasoil Jet Na
Slide 27: Dry Bulk Market
DRY BULK MARKET
Slide 28: Dry Bulk Markets
Major Exporters - Iron ore/Coal/Grains (MMT,%) DRY BULK EuropeUK/Med 4% Others 5% Canada+US, Colombia 2% MARKETS 9% Argentina/S .America,… Australia 38% Commodity wise Break up of Brazil 14% Global DB demand (%) Indonesia 14% Minor Bulks Coal 28% S.Africa/Other Africa 5% 39% Russia 6% Major Importer
Slide 29: China & World Steel Production
CHINA & WORLD STEEL PRODUCTION World Steel China Steel % Growth World % Growth China 2000 12% 1800 10% Steel Production (in Million tonnes) China Steel Production 1600 increased marginally by 8% 3% in H1CY2020 Y-O-Y. 1400 Whereas, World Steel Production growth was 6% 1200 negative 4%. 4% 1000 2% 800
Slide 30: Brazil Iron Ore Exports
BRAZIL IRON ORE EXPORTS Total BR IO exports 41 37 35 36 36 36 35 34 34 34 33 33 33 30 30 30 31 30 31 29 29 28 27 26 27 25 26 24 24 22 22 22 21 21 19 16 11 6 1 Total BR Exports (Mt) 30 Source – Industry Reports
Slide 31: Greatship (India) Limited
Greatship (India) Limited (a 100% subsidiary)
Slide 32: Offshore Business Fleet Profile
OFFSHORE BUSINESS FLEET PROFILE Fleet Utilization Extent of coverage of fleet's operating days Current Owned Fleet Type Fleet Count (FY21) Jack Up Rigs (350ft) 4 94% Anchor Handling Tug cum Supply Vessels 8 72% (AHTSV) Multipurpose Platform Supply and Support 2 68% Vessels (MPSSV) Platform Supply Ve
Slide 33: Offshore E&P Spending
OFFSHORE E&P SPENDING The E&P spending after declining marginally in 2018 was flattish in 2019. Spending in 2020 is expected to see a sharp fall of about 20-30%. 33 Source – Industry Reports
Slide 34: Key Points on E&P Markets Q2CY2020
KEY POINTS ON E&P MARKETS Q2CY2020 • The steep fall in oil price and Covid-19 impact on the world economy has stalled the recovery. Day Rates • Some regions have witnessed early terminations & renegotiations. As a result charter rates have again come under pressure. • Rigs: Competitive fleet has rem
Slide 35: Global Fleet Supply Offshore
GLOBAL FLEET SUPPLY OFFSHORE Fleet Profile Number Jackup Rigs PSVs + AHTSVs Current Fleet 526 3591 Orderbook 47 178 O/B to current fleet 8.9% 5% Scrapping over last 5 years (as %age of fleet) 3.64% 1.9% No. of Vessels/Rigs more than 20/30 years old 39% 19% (as %age of fleet) Fleet composition is exp
Slide 36: GIL Standalone Debt Repayment Schedule
GIL STANDALONE DEBT REPAYMENT SCHEDULE (NEXT 5 YEARS) GIL (USD mn) 120 250 218 97 100 200 USD Million 80 USD Million 150 60 43 100 40 32 23 23 20 50 0 0 Jun-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Repayments Loan O/s (RHS) 36
Slide 37: Last 5 Years: Snapshot Offshore
LAST 5 YEARS: SNAPSHOT OFFSHORE • Most challenging years for the offshore sector since the late 80s. • Utilization levels across asset classes dropped to historic lows, charter rates came down to levels that barely generated any +ve EBIDTA. • Large part of the industry went through financial restruc
Slide 38: Key Valuations Considerations
KEY VALUATIONS CONSIDERATIONS 38
Slide 39: Net Debt/Equity & Market Value of Fleet - Standalone
NET DEBT/EQUITY & MARKET VALUE OF FLEET - STANDALONE USD Mn Net Debt/Equity & Market Value of Fleet 400 60% Fleet Net Debt 350 Expansion Reduction 50% 300 Phase Phase 40% 250 200 30% 150 20% 100 10% 50 - 0% FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 Q1FY2021 Net Debt (LHS) Net Debt to Market V
Slide 40: Share Price to Consolidated Net Asset Value
SHARE PRICE TO CONSOLIDATED NET ASSET VALUE 600 1 0.9 500 0.8 0.7 400 INR/Share 0.6 300 0.5 0.4 200 0.3 0.2 100 0.1 0 0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Q1FY21 Consolidated NAV Share Price/Consol. NAV (RHS) 40
Slide 41: Market Capitalization vs Consolidated Cash & Cash Equivalent
MARKET CAPITALIZATION VS CONSOLIDATED CASH & CASH EQUIVALENT INR Crores 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 Q1FY21 Market Cap Consolidated Cash & Cash Equivalent 41
Slide 42: Summary – Shipping & Offshore
SUMMARY – SHIPPING & OFFSHORE Market Positives (Shipping): • Historically low orderbook • Potential Scrapping • Demand/Supply – Finely balanced Market Negatives (Shipping): • Commodity demand uncertainities Market Negatives (Offshore): • E&P spends reduced significantly Company Positives: • Delevera
Slide 43: Thank You
THANK YOU visit us at www.greatship.com 43
The Great Eastern Shipping — Q1 FY2021 Earnings Presentation on 6ix