orient overseas (international) ltd · financial and operational summary •group operating profit...

Orient Overseas (International) Ltd

2014 Interim Results

11th August 2014

OOIL Group 1H 2014 Summary

• Group Turnover increased by 7% to US$3,237 million

• Group Operating Profit of US$211 million

• Profit Attributable to Equity Holders of US$181 million

• Earnings per share of US29.0 cents

• Interim Ordinary Dividend of US7.5 cents (HK$0.585)

per share

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Financial and Operational Summary

• Group Operating Profit increased to US$211 million

− Liner revenue increased by 4.3% to US$2,890 million

− Liner Yield Management and Cost Efficiency drives

improve

− Achieved 4.5% EBIT margin in container transport and

logistics segment

− Property and Investments contributed US$76 million

• Group Net Debt to Equity ratio at 24%

• Group 1H Results: Annualized ROE of 8%

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Group Results Breakdown – 1H 2014

US$M

1H14

1H13 var

Container Transportation and Logistics 111.2 (22.6) 133.8

Others

Wall Street Plaza Revaluation 9.7 (4.6) 14.3

Hui Xian Dividends and Distribution 41.4 9.1 32.3

Others 18.9 3.0 15.9

70.0 7.5 62.5

Total 181.2 (15.1) 196.3

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EBIT Breakdown – 1H 2014

US$M

2014

Interim

2013

Interim

2013

Final

Container Transportation and

Logistics - EBIT 145.3 2.8 75.1

OOIL Activities - EBIT

Wall Street Plaza Revaluation 9.7 (4.6) (6.9)

Hui Xian Dividends and Distribution 41.4 9.1 10.2

Interest and Investments 20.7 0.1 20.1

Others 3.9 3.1 9.5

75.7 7.7 32.9

OOIL GROUP - EBIT 221.0 10.5 108.0

Finance Costs (26.8) (18.6) (41.0)

Taxation (13.0) (7.0) (19.9)

OOIL Group Profit After Taxation 181.2 (15.1) 47.1

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Group Balance Sheet Highlights – June 30, 2014

US$M

2014

Interim

2013

Final

Non-current Assets 6,311 6,146

Current Assets 2,943 2,844

Total Assets 9,254 8,990

Non-current Liabilities 3,298 3,328

Current Liabilities 1,363 1,185

Total Liabilities 4,661 4,513

Shareholder‟s Funds 4,587 4,471

Non-controlling Interests 6 6

Total Equity 4,593 4,477

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Total Liquid Assets – 30 June 2014

US$M 30 Jun 2014 31 Dec 2013

Restricted Bank Balances 35 26

Cash and Bank Balances 1,955 1,912

Portfolio Investments, Equities and Bonds 465 473

Total 2,455 2,411

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Net Debt Position – 30 June 2014

US$M 30 Jun 2014 31 Dec 2013

Liquid Assets 2,455 2,411

Debt 3,565 3,534

Net Debt 1,100 1,123

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Net Debt to Equity Gross Debt to Equity Ratio Ratio

Net cash

0.06

0.12

0.25 0.24

0

0.5

1.0

2010 2011 2012 2013 1H 2014

0.48

0.63 0.64

0.79 0.78

0

0.5

1.0

2010 2011 2012 2013 1H 2014

Debt-to-Equity Ratios – 30 June 2014

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Liner 1H Highlights

• Solid EBIT Margin

- Effective yield management

- Cost efficiency gains

- Offsets market weakness

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1H Liner Performance Summary

1H 2014 1H 2013 var

Loadable Capacity (TEU‟000) 3,657 3,555 2.9%

Liftings (TEU‟000) 2,805 2,549 10.1%

Load Factor 77% 72% 5.0%

Total Revenue (US$ mil) 2,890 2,772 4.3%

Revenue Per TEU 1,030 1,088 -5.3%

EBIT Margin 4.5% 0.1% 4.4%

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OOCL Operational Update

US$M 1H 2014 1H 2013 % ▲

Total Bunker Costs (US$M) 529 572 (8%)

Average Fuel Oil Price (US$ per TON) 595 626 (5%)

Total Fuel Oil Consumption ('000 TON) 864 888 (3%)

Lifting („000 TEU) 2,805 2,549 10%

Total Bunker Consumption per TEU 0.31 0.35 (11%)

Bunker and Fuel Oil Costs – 1H 2014

13

2010 2011 2012 2013 1H2014

Net Operating Capacity

(TEU) 383,855 415,790 452,246 496,106 505,147

Lifting („000 TEU) 4,768 5,033 5,217 5,294 2,805

Total Fuel Oil Consumption

('000 TON) 1,832 1,890 1,777 1,785 864

Bunker Consumption – 5 Years

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Bunker Consumption – 5 Years

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Cost 1H 2014

1H2014 1H2013

Operating Cost (1) 2,913 2,814

Other Cost (2) 204 211

Bunker Cost (3) 529 572

Total Cost excl. Bunker (4) = (1) + (2) – (3) 2,588 2,453

Total Unit Cost excl. Bunker (4) † total lifting 923 963

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Unit Cost 1H 2014

US$ / Per Lifting 1H14 / 1H13

% ▲

Cargo cost 3%

Voyage cost -11%

Vessel cost -11%

Equipment and repositioning costs -15%

Bunker cost -16%

Total Unit Cost -6%

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2H 2013 / 2014

• Increase vessel utilization and lifting

• Rationalization of Port Calls / Alliance & Partnership • G6/I3/Intra Asia

• Operations • Marine Ops: Berth Time/Bunkering and Routing/Reefer Loading

• Landside Ops: Vendors/Free Pool/Regional Trucking Desk

• Ship Management: Slowsteam/Charter-in/Hardware/Shipboard measures (Trim/Power/Ballast Water), retrofit

• Equipment • Free use/Freight Empties

• Repositioning • IRIS-4

e.g. IA loop

30 mins X 8 ports X 15 sailings = 60 hrs = 1.2% sea time

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OOCL Revenue and Lifting – 1H 2014

Total US$2,890 mil Total 2,805,243 TEU

Unit: US$‟000

19

49%

20%

6%

12%

13%

53%

18%

5%

12%

12%

1H 2013

Total Operating Costs

1H 2014

Total operating costs - 1H 2014: US$2,913 mil; 1H 2013: US$2,814 mil

Total cost excludes B & A

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OOCL Static Slot Capacity Breakdown

As at 30 Jun 2014 No of

Vessels

Capacity

(TEU)

Average

(TEU)

% of Total

Fleet

Owned 54 403,374 7,470 80%

Long Term Chartered 7 41,216 5,888 8%

Short Term Chartered 39 124,077 3,181 25%

Charter-Out (6) (63,520) (10,587) (13%)

Total 94 505,147 5,374 100%

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OOCL Fleet for Future Deliveries

Delivery schedule of vessels:

2013 8,888 TEU x 2 & 13,000 TEU x 8

2014 13,000 TEU x 2 (Delivered 1H 2014)

2015 8,888 TEU x 4

2015 : 4 x 8,888 TEU vessels built in Hudong–Zhonghua

Shipbuilding (Group) Co. Ltd, PRC

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Property Investment

Wall Street Plaza

– Fair value gain of US$9.7 million for 1H2014

– Valuation of US$180 million as at 30 June 2014

– Performance is in line with expectations

– Vacancy rate of 7.0% as at end of 30 June 2014

Beijing Oriental Plaza

– Directly and indirectly holding approx. 4.54% of Hui Xian REIT

– Valuation of US$131 million as at 30 June 2014

– Booked US$32.3 million due to Dividend-in-Specie of 25% from Hui Xian Holdings

– Direct holding of Hui Xian REIT increased to 50%

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Market Update

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1H 2014 Market

• Volume Growth

– TP/AE/TA : Solid Growth

– IA : Moving in the right direction

– Sign of economic recovery ?

• Load Factor - Headhaul

– TP ILF : high 80s

– AE ILF : mid 90s

– OOCL recorded yoy gain

• Freight Rate

– Challenging due to supply

– In general, lower than SPLY

– Right direction

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OOCL Operational Update

Trade Volume 1H 2014

Updated 6-Aug-2014

Sources: JoC, CTS, IADA,

Trade YTD Jun2014 FY 2013 YTD Jun 2013

Transpacific EB 5.4% 3.4% 2.2%

Asia Europe WB 8.1% 4.8% 1.2%

Intra Asia (IADA) 4.8% * 5.0% 4.1%

Trans Atlantic WB 7.1% * 4.8% 3.6%

* YTD May only for IADA and TAT

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Trade Volume 2Q14

Updated 6-Aug-2014

Sources: JoC, CTS, IADA,

Trade 2Q 2014 FY 2013 2Q 2013

Transpacific EB 6.2% 2.2% 4.2%

Asia Europe WB 9.5% 4.8% 2.5%

Intra Asia (IADA) 6.7% * 5.0% 3.1%

Trans Atlantic WB 10.6% * 4.8% 5.7%

* Apr-May only for IADA and TAT

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Trade Volume 1Q14

Updated 8-Jun-2014

Sources: JoC, CTS, IADA,

Trade 1Q 2014 FY 2013 1Q 2013

Transpacific EB 4.6% 3.4% 4.4%

Asia Europe WB 6.4% 4.8% -0.1%

Intra Asia (IADA) 3.6% 5.0% 5.1%

Trans Atlantic WB 4.5% 4.8% 4.8%

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Port Throughput of China and HK

1H 2014

Updated 1-Aug-2014

Sources: 中国港口协会集装箱分会

Hong Kong Port Development Council

Region 1H 2014 FY 2013 1H 2013

China 5.7% 6.7% 8.3%

Hong Kong 3.5% -3.3% -7.6%

China + HK 5.5% 5.5% 6.2%

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Port Throughput of China and HK

2Q 2014

Updated 2-Jul-2014

Sources: 中国港口协会集装箱分会

Hong Kong Port Development Council

Region 2Q 2014 FY 2013 2Q 2013

China 5.9% 6.7% 7.2%

Hong Kong 6.1% -3.3% -7.6%

China + HK 5.9% 5.5% 5.5%

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Port Throughput of China and HK

1Q 2014

Updated 2-Jul-2014

Sources: 中国港口协会集装箱分会

Hong Kong Port Development Council

Region 1Q 2014 FY 2013 1Q 2013

China 5.5% 6.7% 8.2%

Hong Kong 0.8% -3.3% -7.5%

China + HK 5.0% 5.5% 6.2%

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2H 2014 Market

• Volume Growth Headhaul

– TP ILF : low 90s

– AE ILF : mid to high 90s

• Freight Rate

– Strong forward volume

– Positive sentiment

– New Buildings : fewer deliveries in 2H

33

Global Demand and Supply Forecasts

34 Updated 15-Jul-2014

Global Demand and Supply Forecasts

Updated 4-Nov-2013 35

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Historical Growth in Trade Volume and GDP

Updated 8-Aug-2014

Tra

de

Gro

wth

GD

P G

row

th

Sources: TP&TA – JoC

AE – FEFC/Drewry/ELAA/CTS

GDP – IMF

Valuation

37

OOIL Historical P/B Ratio

Source: JPM

Updated 6-Aug-2014

1.32 X

1.10 X

Average = 0.88 X

0.66 X

0.44 X

Post-crisis peak

1.59 X

Post-crisis trough

0.52 X

38

OOIL Historical P/B Ratio

Source: JPM

Updated 6-Aug-2014

1.43 X

1.14 X

Average = 0.84 X

0.55 X

0.25 X

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40

Industry Operating Margin

Updated 8-Aug-2014

40

Going Forward

41

2H 2014 & 2015

• Container Transport Business

– Yield Management & Cost Efficiency

initiatives continue

– Full year effect of New Buildings

– Full year effect of G6 global alliance

– Better Supply and Demand Balance from 2016

• Investing into the future

– Liner

– MHRP

– Logistics

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Financial Prudency

• Strong balance sheet / high liquidity

− Net debt to equity ratio 0.24:1

− One of the lowest in container transportation industry

− Relative competitiveness in financing

− Initiative on Capex

− Ready to deploy to achieve further growth

43

OOIL Group

Proven Track Record

Clear Direction

Shareholder Management Alignment

Forward Looking

Financial Prudency

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Disclaimer

The information provided is for reference only and includes data obtained from sources provided by the relevant information provider(s) and is subject to change without notice. Orient Overseas (International) Limited (“OOIL”) and its affiliates, and the concerned information provider(s), make no representation and accept no responsibility as to the accuracy, completeness, timeliness and fitness for a particular purpose and expressly disclaims any liability whatsoever for any loss whatsoever arising from or in reliance upon the whole or any part of the information. This information is neither a recommendation, an offer to buy, sell or trade in nor solicitation of an offer to buy, sell or trade in any investment. It is not intended to be a statement concerning investment, legal, tax, accounting financial or other professional or expert advice and should not be relied upon as such.

The information may include forward-looking statements about the operations, operatives and financial results of OOIL. Such statements are inherently subject to uncertainties arising from a variety of factors.

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