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SEB Nordic Seminar 2017
11 January 2017
Our story
2
• 100+ years of experience
• A market leader in the chemical tanker industry
• Integrated shipping and storage with a world wide presence
We are unique
• Our core business is handling hazardous liquids – safely and more efficiently
than anyone else in the industry Our Mission
• Competitive cost base (Project Felix)
• Competitive asset utilization (Project Moneyball) We are competitive
• USD 190m EBITDA 3Q16 YTD
• Strong COA portfolio supports earnings in weak markets We are profitable
• 35% equity ratio as of 3Q16
• Solid cash position
We are gaining
strength
• 2015 and 2016 were good years for chemical tankers
• Fundamental balance in supply/demand over the next two years
Favourable market
fundamentals
Agenda
3
• Company overview
• Efficiency programs
• Key financials
• Going forward
• Q&A
4
• We are a leading company in the global market for
transportation and storage of bulk liquid chemicals,
acids, edible oils and other special products
• Operate within the three business segments:
− Chemical Tankers
− Tank Terminals
− Odfjell Gas
• CEO: Kristian Mørch and CFO: Terje Iversen
• Employees: ~3,000
• Headquarter in Bergen, Norway
• Extensive international network with offices in 20
countries
• Odfjell SE is listed on Oslo Stock Exchange (ODF
and ODF)
• Laurence W. Odfjell (Chairman) controls 34% of the
shares3
Background Share price development last 12 months
1. 3Q16 EBITDA
2. Nominee account
3. Adjusted for treasury shares
Odfjell Group - at a glance
Shareholder A-shares B-shares % votes % shares
Norchem (Odfjell family) 26.0 3.5 43.4 % 34.0 %
Odfjell SE (Treasury) 5.9 2.3 0.0 % 9.5 %
Svenska Handelsbanken2 2.5 2.2 4.2 % 5.5 %
Morgan Stanley & Co Intl2 3.3 0.2 5.5 % 4.1 %
Rederiet Odfjell AS 3.5 0.0 5.8 % 4.0 %
Top 5 shareholders 41.2 8.3 59.0 % 57.0 %
Other shareholders 24.5 12.8 41.0 % 43.0 %
Total shareholders 65.7 21.1 100.0 % 100.0 %
Shareholder overview
10
15
20
25
30
35
Jan-16 Apr-16 Jul-16 Oct-16 Jan-17ODF (A-share) ODFB (B-share)
NOK per share
• Net result 3Q16 of USD 16 mill (same as
2Q16), and EBITDA of USD 60 mill (2Q16
of USD 61 mill)
• Continued softer chemical tanker spot
market, however, our utilization remained
high due to contract nominations
• Balance sheet continues to strengthen
• Stable results from Odfjell Terminals
• Signed agreement to sell our share in
Oman tank terminal, with a gain of USD 46
mill
• Signed final agreement for construction of
4+2+2 stainless steel chemical tankers, the
largest and most efficient stainless steel
chemical tankers ever built
0
350
300
250
200
150
100
50
2015 2016 2014 2013 2012 2011 2010 2009 2008 2007
Chemical tankers
Tank terminals
LPG/Ethylene
1. Proportional consolidation method according to actual historical ownership share
Annualised EBITDA1, USD mill
Odfix quarterly average Index, 1990=100
5
60
70
80
90
100
110
120
130
140
150
160
170
180
-5%
-3%
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007
Odfix index
Odfix average 2007-2015
Chemical tanker spot earnings index (midcycle = 100)
Source: Clarkson Platou
% change 3Q
vs. 2Q
Odfjell Group - 3Q16 highlights
Odfjell Group - Our business segments1
6
• Operates a fleet of ~80 owned and time-
charter/bareboat vessels
– 44 owned and 35 time-charter/bareboat
• Focus on the deep sea market and large
stainless steel vessels
• One of the world’s largest chemical tanker
companies
• We ship 600+ products with 600+ customers
every year
• Recently signed final agreement for 4+2+2
49,000 dwt stainless steel newbuildings
• Joint-venture between Odfjell SE (51%) and
Lindsay Goldberg (49%)
• Total capacity of ~ 4.8m cbm
• A global network through strategic partnerships
• 9 operational tank terminals located in key ports
around the world
• Focus on key hubs for petroleum and chemical
products in addition to synergies with chemical
tankers
• Further projects under development and being
explored
Chemical Tankers Tank Terminals
100% 51%
1. On-going exit from Odfjell Gas
2. Share of Odfjell SE 3Q16 EBITDA
3. Share of Odfjell SE 3Q16 total assets
EBITDA: 19%2 Assets: 16%3 EBITDA: 80%2 Assets: 82%3
Agenda
7
• Company overview
• Efficiency programs
• Key financials
• Going forward
• Q&A
• Reduction of 100+ FTEs – Across Tankers, Ship Management and Administration
• Other G&A initiatives – Revised pension agreement, divestment of HQ building etc.
A
B
C
D
General and administrative
expenses
Vessel operating
expenses
Odfjell Tankers
profitability
Bunker costs
• Reduction of non-crew OPEX by >25% for internally
managed ships – Technical accounts, provision and stores, ship general expenses
• Exit from unprofitable Intra-EU trade – Divestment of four vessels (Bracaria, Balearia, Brasilia and Pilot)
• Improved competitiveness in USG – Far East trade lane
through increased frequency
• Real time monitoring of fleet consumption figures
• Retrofitting projects to improve energy efficiency
for core tonnage
Example initiatives Project Felix work streams
Project Felix: Consisted of more than 400 work streams,
which covered all aspects of our business
8
Project Felix: USD 109 million improvement ambition
successfully achieved by end of 2015
9
Bunker costs OT Profitability OPEX G&A Pre-Felix
expected result
Post-Felix
result
Full-scale implementation kicked off January 2015, and effect realization
completed by December 2015
A B C D
Significant cost
reduction
Reduction of
crew- and
technical cost
Exit unprofitable
trades and core
optimization
Reduced
consumption
Improvement ambition for Project Felix
Indicative only
∑ = USD 100 million
“It's unbelievable how much you don't know about
the game you've been playing all your life.”
-Mickey Mantle
• To leverage the positive momentum in our organization, “Project Moneyball” was launched in January
2015, targeting operational excellence
• In Project Moneyball we combine our internal expertise with external data sources in order for Odfjell to
conquer some of the largest challenges facing our industry today
• Port time for chemical tanker operators has increased significantly over the last decade due to port
infrastructure not being able to keep up with a growing global fleet
• We want to find solutions that are unique to Odfjell to reduce port time for our vessels
and in general improve our operational efficiency
• “Project Moneyball” is based on wide implementation of business intelligence tools and has
sparked a data driven and fact based way of running our business
Project Felix is substituted by Project Moneyball, which is
focused on process excellence and efficiency gains
10
Project Moneyball: Working with several initiatives to
reduce port time
Project Moneyball Type of initiatives
• Use KPIs and statistics as a means to
improve vessels operational performance
• Overall ambition: reduce port time to
increase Odfjell’s fleet utilization
• Main areas of improvement:
− Commercial and cargo program
− Operational efficiency
− Leverage possibilities from
increased data availability
• Involving several external stakeholders
such as customers, terminals, port
authorities and brokers
• Consolidate cargo programs to reduce number
of berth calls
• Improved execution through better planning
processes and new tools
• Strategic partnerships
• Automate certain administrative tasks to free
up capacity
11
Implementation of Project
Moneyball is 71% completed
Port efficiency is 8% better than benchmark
and 5% better than 2016 target
97%100%92%
YTD actual
-8%
Historic
benchmark
2016 target
Project Moneyball: Successful project implementation
and significant port efficiency improvement in 2016
12
100%
71%
Full
implementation
YTD status
Project Moneyball status, YTD November 2016
Project implementation progress Odfjell port efficiency index
Agenda
13
• Company overview
• Efficiency programs
• Key financials
• Going forward
• Q&A
Odfjell Group – Quarterly figures1
Quarterly Gross Revenue, EBITDA and net result, USD millions
240241249253276279260276292
Q2 2016 Q1 2016 Q4 2015 Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q3 2016
606169
455753
353431
Q4 2015 Q1 2016 Q3 2016 Q2 2016 Q1 2015 Q4 2014 Q3 2015 Q3 2014 Q2 2015
Gross
Revenue
EBITDA
1. Proportional consolidation method 14
1616
-17
77
-32
-17-9
Q2 2016 Q1 2016
24
Q4 2015 Q3 2015 Q2 2015 Q1 2015 Q4 2014 Q3 2014 Q3 2016
Net
Result
Odfjell Group – Balance sheet as of 30.09.2016¹
Assets, USD millions
Ships and newbuilding contracts 1 204
Other non-current assets/receivables 38
Investment in associates and JV’s 359
Total non-current assets 1 602
Cash and cash equivalent 191
Other current assets 121
Total current assets 311
Assets held for sale 16
Total assets 1 928
Equity and liabilities, USD millions
Total equity 683
Non-current liabilities and derivatives 31
Non-current interest bearing debt 936
Total non-current liabilities 967
Current portion of interest bearing debt 197
Other current liabilities and derivatives 83
Total current liabilities 279
Liabilities held for sale -
Total equity and liabilities 1 928
1. Equity method
15
• Cash balance of USD 191 mill - excluding JV’s cash
• Net investment in tank terminals JV’s USD 310 mill
• Equity ratio 35.4% (34.6% end 2Q)
• Asset held for sale consist of planned vessel
USD millions Remaining
2016 2017 2018 2019 2020
Chemical Tankers
Newbuildings 4 x 49,000 dwt¹ 24 6 24 144 42
Docking 4 12 12 12 12
Other investments * 2 8 7 7 7
Odfjell Gas, 100%2
Sinopacific, 1 x 17,000 cbm TBD
Sinopacific, 4 x 22,000 cbm TBD TBD
Tank Terminals, 100%
Planned capex 27 60 40 9 8
Odfjell Group – Capital expenditure programme as of
30.09.2016
1 Construction cost USD 60 mill per vessel, payment terms 3 x 10 +70, delivery June 2019 - 2020
2 The construction of gas newbuildings is substantially delayed
* Includes propeller upgrade and Ballast Water Treatment
16
Financial ratios reflecting the turnaround of Odfjell
17
2016 YTD
annualised2
5.6x
2015
8.5x
2014
17.6x
2013
27.7x
2012
20.9x
Gross interest bearing debt / EBITDA
35%33%31%37%
43%
2013 2012 2014 2015 2016 YTD
annualised2
Equity ratio
Return on capital employed (ROCE)1 Return on equity (ROE)
7%
2%
-1%
-3%-3%
2013 2012 2014 2015 2016 YTD
annualised2
11%
-6%
-12%-14%
-12%
2013 2012 2014 2015 2016 YTD
annualised2
Note figures are by the equity method and not adjusted for extraordinary items
1. EBIT divided by end of period total equity plus net interest bearing debt
2. Figures annualised based on YTD as of 3Q 2016
Agenda
18
• Company overview
• Efficiency programs
• Key financials
• Going forward
• Q&A
2015 & 2016 have been good years in the chemical tanker
industry, mainly due to limited growth in supply
19
Chemical tanker supply1, demand and TC rate development
-2%
0%
2%
4%
6%
8%
10%
12%
14% 25
5
0
20
10
15
5%
1%
4%
9%
2015
3%
2013
1%
6%
2011
4%
2009
10
%
8%
2010 2006
6%
10
%
13
%
2%
2008
0%
2007 2014 2016
5%
5%
Year-on-year
percentage growth
5%
9%
USD k / day
4%
2%
1%
2012
Supply growth (dwt)
Demand growth (tonne-miles)
Steensland J19 TCE
Source: Clarksons, Steensland
1) Chemical tankers are defined as tankers that are suitable for chemical trades, including chemical parcel and chemical bulk tankers. Chemical tanker fleet includes IMO I
tankers, IMO III tankers excluding those classed as product tankers, tankers of an unknown IMO grade below 25k dwt and stainless steel tankers not designated as
specialised tankers
• 2015 and 2016 have been the two best years for chemical tankers since 2008
− Stable demand growth in the period (with the exception of 2014)
− More modest fleet growth in the period 2012 - 2015
The market consensus is a balanced market over the next
two years – which also is our view
20
Consensus1 chemical tanker supply and demand forecast, 2016-2018E
Source: Consensus based on an average of Swedbank, Clarksons, Steensland (only fleet growth), IMF (Demand growth) and Odfjell (only fleet growth)
Note: There are differences between fleet definitions
0%
1%
2%
3%
4%
5%
6%
7%
4.6%
6.7%
2018E
4.8%
2017E
2.4%
5.1%
4.4%
2016E
Demand
Supply CAGR 16-18E:
Demand: 4.6%
Supply: 4.6%
• We expect the market to be well balanced over
the next two years
− Slowing fleet growth after 2016 and limited
downside risk in the current orderbook (new
orders delivered earliest 2019)
− Ramp-up of petrochemical exports in the US
Gulf and Middle East driving long haul trades
− Higher global economic growth
− Chinese economy shifting to consumer
driven
− De-consolidation is reversing
• We are currently experiencing a softer spot
market mainly driven by:
− Weaker CPP market
− Higher competition due to vessel deliveries
and product tanker swinging into the market
• Our COA portfolio provides a limits the impact of
a volatile and softer market
Year-on-year percentage growth
Where are we today?
21
• A leaner and more fit organisation
• ~USD 100m in Felix effect is realized Leaner
• In-house competencies and systems representing 100+ years of experience
• We have implemented new data driven and analytical decision tools Smarter
• Stronger balance sheet
• Have the financial capability to act quickly as opportunities may arise Stronger
• On-going exit from Odfjell Gas
• Focusing investment and growth around our core fleet More focused
• Amongst the few operator and owners of large sophisticated chemical
tankers + integrated logistics via Odfjell Terminals
Sophisticated
tonnage
Key focus areas going forward
22
Growth
• Tonnage renewal / fleet growth
• Take part in consolidation
High quality service
• Safety, predictability and reliability
Operational excellence
• Tankers: OPEX + SG&A
• Terminals: implementing operational excellence project
Financial strength
• Further improve balance sheet to be able to act quickly as
opportunities may arise
• Cost of capital
Terminals – back to meaningful profitability levels
• Implementation of the «value creation program»
Agenda
23
• Company overview
• Efficiency programs
• Key financials
• Going forward
• Q&A
OD FJELL SE
Conrad Mohrs veg 29,
P.O. Box 6101 Postterminalen
5892 Bergen, Norway
Tel: +47 5527 0000
Fax: +47 55284741
E-mail: ir@odfjell.com
Org. no: 930 192 503
www.odfjell.com
Investor Relation and Media contact
Tom A. Haugen
Phone: + 47 55 2746 69
Mobile: + 47 90 59 69 44
tom.haugen@odfjell.com
24
20
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