Odfjell Se Class A · OSL:ODF
Odfjell Se Class A — Investor Day (May 2024)
55 slides from Odfjell Se Class A's investor day presentation, May 13, 2024
Slide 1: Capital Markets Day 2024
Capital Markets Day 2024 13 May 2024
Slide 2: Agenda
Agenda Odfjell SE, Capital Markets Day 2024 Time Topic Presenter Welcome: 10:00 – 10:20 Harald Fotland CEO External impact on our business 10:20 – 10:40 Finance update Terje Iversen CFO The Market: 10:40 – 10:55 Nils Jørgen Selvik VP Finance & IR Today, key trends, and outlook 10:55 – 11:10 Coffee b
Slide 3: Welcome: External impact on our business
Welcome: Harald Fotland CEO External impact on our business
Slide 4: Market fundamentals are beneficial
Market fundamentals are beneficial The demand outlook slowly recovers, and the orderbook remains moderate and with Odfjell controlling one fifth Global volume of chemical cargoes Deliveries per year, core chemical tankers DWT mill. Mill. mt. 300 +12% 2.0 Orderbook 250 Delivered 20% of orderbook 1.5
Slide 5: Safety remains Odfjell's number 1 priority through shifting trade patterns
Safety remains Odfjell’s number 1 priority through shifting trade patterns, sanctions, and geopolitical unrest Russia/Black Sea Under US, G7, and EU sanctions, and elevated war risk in the area Bay of Aden and the Taiwan Strait Iran Elevated war risk Southern Red Sea Under US sanctions, threat of be
Slide 6: The Odfjell decarbonization journey
The Odfjell decarbonization journey Our decarbonization efforts have yielded results – now, our focus will turn to innovative technologies Odfjell has invested more than USD 35 mill. in retrofitting energy saving While the ESD program continues, our focus is turned devices (ESD), including more than
Slide 7: We operate within a complex and evolving regulatory environment
We operate within a complex and evolving regulatory environment Odfjell must adhere to a range of requirements and regulations This environment is ever-changing and increasingly demanding 2013 Regulatory bodies EEDI: Ship design requirements 2019 DCS SEEMP II: Fuel/CO2 reporting 2023 2024 EU Taxonom
Slide 8: Odfjell keeps a steady course, and we continue to capture the near term
Odfjell keeps a steady course, and we continue to capture the near term and build robustness for the long-term Our organization has captured the upside of the beneficial market fundamentals, leading to record strong results and dividends We build resilience for the future through strengthening of ou
Slide 9: Finance
Terje Iversen Finance CFO
Slide 10: Capturing the current strong chemical tanker market and strengthening our financial position
Capturing the current strong chemical tanker market and strengthening our financial position Thanks to improved earnings and capital discipline our financial position has improved substantially 480 EBITDA Chemical Tankers Odfjell SE, 4Q18 report presentation: 38 EBITDA Tank terminals “The demand sto
Slide 11: De-risking the long-term by repaying debt, and returning funds to shareholders
De-risking the long-term by repaying debt, and returning funds to shareholders Total debt has been reduced by USD 448m since our latest newbuild delivery, and we have paid USD 171m in dividends since the turn of the market Interest-bearing debt development and refinancing transactions Dividend payme
Slide 12: Solid access to capital at competitive terms
Solid access to capital at competitive terms Odfjell capital structure 1Q24. Repricing of Odfjell as a credit- and investment case % of cap. 2018 % cap. Cost per Competitive Size $m structure structure day pricing ▪ Focus area last few years Competitive pricing ✓ ▪ Bank debt 494 25 21 8 035 ▪ Solid
Slide 13: Odfjell has a leading position within sustainable finance
Odfjell has a leading position within sustainable finance Introducing transition finance into our sustainable finance portfolio ▪ Sustainability-Linked Framework dated 2020. KPI performance instrument linked to Odfjell’s fleet AER. Targeting a reduction of 50% of absolute intensity by 2030 compared
Slide 14: Building investment capacity for future growth
Building investment capacity for future growth Estimated balance sheet effect from planned and potential future investments Investment Assumptions Liquidity impact Equity impact ▪ Five 25 ‘dwt vessels delivered in 2022, 2023 and 2024 ~6% Planned growth and ▪ Three 25 ‘dwt to be delivered in 2024 ~$1
Slide 15: We can fund new acquisitions and remain within financial targets
We can fund new acquisitions and remain within financial targets Impact from new investments is time dependent, but we can simulate pro forma effect from various growth initiatives Odfjell SE equity (%) simulated impact from various growth initiatives 45 Planned growth and new investments Potential
Slide 16: Reducing break-even on chemical tankers is still a key goal
Reducing break-even on chemical tankers is still a key goal On-track with most financing initiatives, but facing headwind from higher benchmark rates, general cost inflation and fewer trading days 23 552 21 991 ▪ Break-even has increased by approximately USD 1,500 per day from 2019 to 2023 OPEX ▪ In
Slide 17: We are adjusting our near-term target range to reflect 'new norm' market rates
We are adjusting our near-term target range to reflect ‘new norm’ market rates Continued debt reductions and refinancing initiatives can reduce break-even by approximately USD 3,000 per day 3 891 23 551 600 200 750 1 400 550 900 21 951 3 148 Target range Financing initiatives: 5 433 TC USD 600 p/d l
Slide 18: Strong free cash flow from current cost base
Strong free cash flow from current cost base FCF to equity potential and EBITDA less interest expenses at various points in the cycle Super cycle 411 388 LTM FCF to equity 364 High cycle 340 LTM EBITDA less int. 316 292 298 268 274 244 250 Mid cycle 220 227 196 203 172 179 148 155 124 131 100 107 Lo
Slide 19: ODF share price is leading among peers
ODF share price is leading among peers Volume has picked up, but improving share liquidity is still a focus area ODF A vs. Oslo Børs Shipping Index Volume1 and Price/Book ratio 550 200 000 1,6 ODF (A) Index ODF (A) P/B 1,5 500 OBSHX Index ODF (A+B) vol 1,4 450 1,3 400 150 000 1,2 1,1 350 1,0 300 0,9
Slide 20: Delivering on our finance strategy
Summary Delivering on our finance strategy We are using today’s strong market to strengthen our balance sheet and return funds to shareholders Strong capital discipline, excess funds are earmarked dividends and debt repayments We have been successful in optimizing our debt structure avoiding high-co
Slide 21: The market: Today, key trends, and outlook
The market: Nils Jørgen Selvik VP Finance and IR Today, key trends, and outlook
Slide 22: Chemical tanker spot rates
Chemical tanker spot rates Volatility in rates, albeit around historical high levels Comments ▪ During first half of 2023 spot rates decreased ~25% from 2022 peak, yet remained ~20% above 10-year average Market rates ▪ In 3Q23 rates started to turn up again, and the trend 200 was then accelerated wi
Slide 23: New supply disruptions contributed to further firming of spot markets
New supply disruptions contributed to further firming of spot markets YTD24 highlights West of Suez YTD24 highlights East of Suez ▪ Most trade lanes west of Suez saw spot rates stabilize throughout the ▪ The picture was varied east of Suez, but spot rates increased throughout first four months of th
Slide 24: Our market
Our market While linked to the broader tanker markets, the chemical tanker market is differentiated Ultimate drivers Vessel supply dynamics End-user demand Feedstocks for the products we ship are primarily Interchangeable fleets lead to correlation Most people are in daily contact with products deri
Slide 25: Odfjell's product mix: global volumes set to grow
CPP Other ODFJELL´S PRODUCT MIX 5% Global volumes set to grow, adding further Vegoils 11% Organics 4% demand for chemical tankers Inorganics 15% 65% Global volume of chemical cargoes Global demand for chemical tankers • Positive GDP growth set to drive Mill. mt. +12% Mill. DWT. +13% demand for chemi
Slide 26: Product drivers and outlook
Product drivers and outlook The cargoes we ship are diverse, linked to varying end markets from cooking to construction Product Downstream uses and drivers Development Seaborne trade (mt. mill.) Outlook Methanol Automotive, fuels, pharma, construction/manufacturing, electronics • Methanol increasing
Slide 27: Global chemical production forecast
Global chemical production forecast • Global production forecasted to grow by ~16 % from 939 MnT to 1087 Mnt over the next five years • Global consumption forecasted to grow by ~9% from 993 MnT to 1085 MnT during the same period +19% Chemical production by region (2023 vs. 2028) Chemical consumption
Slide 28: Chinese petchem industry has grown at a massive scale
Chinese petchem industry has grown at a massive scale Moving upstream on the path towards self-sufficiency – dependence on feedstock will remain MnT Growth in regional petrochemicals capacity, 2019-2024: 16 China North America • 90% of China´s increased oil demand from 2021-24 came from chemical fee
Slide 29: Both seaborne chemical trade and tonne-mile forecasted to grow
Both seaborne chemical trade and tonne-mile forecasted to grow Increased sailing distance has been a driver of higher tonne-mile demand the last decade • A key driver in added tonne-mile the last Growth in seaborne chemical trade and tonne-mile (y/y) Annual change decade relates to the emergence of
Slide 30: The core chemical tanker orderbook is at low levels
The core chemical tanker orderbook is at low levels Especially within the segment of large, stainless vessels, ordering is limited, and delivery times are long Fleet and orderbook Deliveries per year (deep-sea) DWT mill. DWT mill. 32 2.0 30 Orderbook Orderbook 28 26 Fleet Delivered 20% of orderbook
Slide 31: The chemical tanker market remains tight
The chemical tanker market remains tight Seaborne chemical volumes are stable, and swing tonnage keep preferring CPP cargoes Seaborne chemical volume lifted on core chemical tankers and product tankers Mill. tons Percent of product seaborne chem/veg tankers lifting chem/veg 40 12% 11% 35 10% 30 9% 8
Slide 32: Long-term supply/demand fundamentals remains favorable
Long-term supply/demand fundamentals remains favorable We expect a strong chemical tanker market in the coming years, despite some macroeconomic headwinds Chemical tanker tonne-mile demand Chemical tanker net fleet growth Bill. tonne-miles Demand growth (y/y) Mill. dwt Net fleet growth (y/y) +3% Bil
Slide 33: Agenda
Agenda Odfjell SE, Capital Markets Day 2024 Time Topic Presenter Welcome: 10:00 – 10:20 Harald Fotland CEO External impact on our business 10:20 – 10:40 Finance update Terje Iversen CFO The Market: 10:40 – 10:55 Nils Jørgen Selvik VP Finance & IR Today, key trends, and outlook 10:55 – 11:10 Coffee b
Slide 34: Odfjell Tankers
Bjørn Hammer Odfjell Tankers CCO
Slide 35: The Odfjell Trade Volumes
Mill. mt COA Spot COA share The Odfjell Trade 5 80% 70% 4 60% Volumes 3 50% Legend 40% 2 30% 20% 1 Chemicals 10% 0 0% 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 Vegoils CPP Fronthaul Backhaul • Presence in all major deep sea chemical trade routes with a versatile fleet • Extensive market knowledge
Slide 36: We are diversified despite the specialized nature of our market
We are diversified despite the specialized nature of our market Our business is well diversified (full-year 2023 figures) Rate increase for renewed COAs 200+ customers Volume lifted per trade lane 32% 20% Flumar Quarterly increase 2019-2021 average 40% 26% CPP RTW 40% 18% Top 10 Next 50 Remaining 15
Slide 37: The COA process
The COA process Annually, we renew or renegotiate approximately 100 contracts, 9 million tons and 2 000+ contract obligations Simplified contract negotiation process* Year 1 Year 2 Year 3 Contract duration Full renegotiation of contract Initial contract without options Full renegotiation of contract
Slide 38: Our strategy yields strong results
Our strategy yields strong results TCE development Comments USD/day 34,000 33,005 ▪ Since the start of the market upswing, Odfjell’s TCE per day has TCE/day 32,000 Cash break-even/day strengthened by ~70% (12m rolling avg.) 30,000 ▪ Odfjell TCE/day at record levels, significantly above cash break ev
Slide 39: We operate a streamlined fleet focusing on the deep-sea trade
We operate a streamlined fleet focusing on the deep-sea trade Fleet profile focusing around deep-sea super-segregators Fleet composition Fleet composition by ownership type Fleet age profile Number of vessels by size, DWT thousands Number of vessels Number of vessels by age 2015 2024 X # of segregat
Slide 40: We account for 40% of global super-segregator capacity
We account for 40% of global super-segregator capacity Specialized niche serving the logistic needs for specialty chemical producers around the globe Our fleet of 32 super-segregators… …account for 40% of the global supply capacity within this specialized segment Global fleet of super-segregators Kv
Slide 41: Life-extension program for in-house managed core tonnage
Life-extension program for in-house managed core tonnage Backed by Transition Finance Framework Bow Cardinal Built: 1997 (age 27 years) DWT: 37 446 Tanks: 52 Lifetime Extension Project considers the technical and environmental aspects of trading a 25-30 years-old chemical tanker for five additional
Slide 42: Tonnage replacement secured through attractive charters
Tonnage replacement secured through attractive charters Fixed-rate charter agreements with purchase options to increase our flexibility* Yard 2022 2023 2024 2025 2026 2027 Illustrative charter economics 25 000 DWT Asakawa 2 2 4 2 26 segregations +14-18% 26 000 DWT Fukuoka 2 2 26 segregations 25 000
Slide 43: ~20% of global orderbook linked to Odfjell Tankers
~20% of global orderbook linked to Odfjell Tankers Limited further yard availability over the next few years ~20% of current orderbook tied to Odfjell Tankers Recent fleet renewal made at a good point in the cycle Chemical Tanker Orderbook (Core, deep-sea) Clarksons Newbuilding Index # of vessels 45
Slide 44: We are constantly exploring further tonnage opportunities
We are constantly exploring further tonnage opportunities Newbuildings • Concept for future newbuilds developed • We remain patient, and prioritize timing Long-term charter agreements • Continuously active in market for long-term charters • Several recent deals struck for long-term TCs with purchase
Slide 45: Odfjell Tankers captures the near term and derisk the long-term
Odfjell Tankers captures the near term and derisk the long-term Optimized fleet for our deep-sea trade strategy, maximizing our TCE performance in a strong market Renewing and expanding our fleet through Japanese tonnage providers, giving us flexibility long-term A repriced and improved COA portfoli
Slide 46: Odfjell Terminals
Adrian Lenning Odfjell Terminals MD, Terminals
Slide 47: A healthy Terminal platform centered around "local leaders" in strategic locations
A healthy Terminal platform centered around “local leaders” in strategic locations Expansion 4 Number of terminals 0.5 potential (CBM, million) ✓ High quality assets ✓ Global presence 1.2 Storage capacity (CBM, million) 38.3 EBITDA* (USD, million) ✓ Local leaders in key hubs ✓ Combines yield capacit
Slide 48: Odfjell Terminals is in essence an infrastructure business
Odfjell Terminals is in essence an infrastructure business, powered by the full Odfjell machinery Ticks all the boxes of prime infrastructure assets… ...with a differentiated value proposition ▪ Integrated and essential part of customers’ supply chains ▪ Industry track record and unparalleled market
Slide 49: Investment and asset management philosophy with strong emphasis on value creation
Investment and asset management philosophy with strong emphasis on value creation Odfjell Terminals Operating Model ✓ Active, well-informed and disciplined owner ✓ Asset & portfolio management ✓ Ensure high-quality and empowered local management teams Role of HQ Principles ✓ Provide strategic guidan
Slide 50: Driving performance improvement in partnership with our local management teams
Driving performance improvement in partnership with our local management teams Commercial optimization Setting clear strategic priorities ▪ OTH: increased revenue/cbm by 27% from 2018 to ▪ Project Renaissance (OTUS) 2023 through optimized tank/product mix, effective ▪ Terminal Masterplan (NNOAT) ind
Slide 51: …and a track record of delivering accretive expansions
…and a track record of delivering accretive expansions Terminal expansions All our terminal assets have land available for further expansion NNOAT ▪ Since 2018, Odfjell has completed six new Tankpit N&O 32 700 13 Completed Aug 2018 cbm tanks tank pits, totaling Terminal platform Expansion potential
Slide 52: We look to scale this model further through disciplined growth
We look to scale this model further through disciplined growth Disciplined and driven by value Improving environment for strategic creation growth ▪ Expansions within existing assets #1 priority ▪ Cost of capital gap is closing ▪ Selective and disciplined approach to M&A ▪ Operational value creation
Slide 53: Key take-aways
Key take-aways Global footprint centred around “local leaders” in key chemical hubs Resilient portfolio combining yield generation capacity and growth potential Characteristics of prime infrastructure assets, leveraging the strengths of the broader group Investment and asset management philosophy wi
Slide 54: Concluding remarks and Q&A
Concluding remarks Harald Fotland CEO and Q&A
Slide 55: Contact
Contact Investor Relations Nils Jørgen Selvik | Tel: +47 920 39 718 | E-mail: nils.jorgen.selvik@odfjell.com Media Anngun Dybsland | Tel: +47 415 48 854 | E-mail: media@odfjell.com