fourth quarter presentation 2017 · fourth quarter presentation 2017. 15 february 2018. agenda •...
TRANSCRIPT
Fourth Quarter Presentation
2017
15 February 2018
Agenda
• Highlights
• Financials
• Operational review/Strategy
• Prospects and Market update
Highlights
• The chemical tanker market remained challenging in 4Q, despite someseasonal improvements. The market for terminals was slightly improvedcompared to 3Q
• EBITDA of USD 41 mill, compared with USD 37 mill previous quarter 2017
• Net results of USD 96 mill compared to -USD 11 mill previous quarter 2017
• Net results included capital gain of USD 136 mill and impairments ofnegative USD 43 mill
• We concluded the sale of our Singapore terminal which contributed withUSD 150 mill in cash, of which USD 117 mill of cash proceeds have beentransferred to Odfjell SE
• We signed a framework agreement with Sinochem for the establishment ofa pool of sophisticated chemical tankers, managed by Odfjell SE
• The Board proposes a dividend of NOK 1.50 per share for 2017 to reflectthe gain on the sale of our Singapore terminal
Key figures, USD mill¹
«Our markets have remained challenging in 4Q, but Odfjell continues to make good progress. We have recently achieved our growth ambitions by renewing our fleet and participating in the consolidation in a capital efficient way, and we have at
the same time strengthened our balance sheet through disposal of non-core assets.»
Kristian Mørch, CEO Odfjell SE
1. Proportional consolidation method according to actual historical ownership share
3
(USD mill, unaudited) 1Q17 2Q17 3Q17 4Q17 4Q16 FY17 FY16
Odfjell Tankers 212.8 208.9 207.6 213.2 204.2 842.5 832.4Odfjell Terminals 27.8 27.5 27.0 27.8 30.7 110.1 122.7Revenues* 243.0 238.5 236.7 242.9 237.6 961.1 967.2Odfjell Tankers 36.0 30.5 28.0 30.6 36.3 125.0 187.7Odfjell Terminals 9.5 10.3 8.7 9.8 10.8 38.3 46.5EBITDA* 46.2 41.4 37.3 40.7 48.0 165.7 237.6EBIT 17.7 14.2 3.6 98.5 45.3 134.0 144.6Net profit 1.5 (4.7) (10.5) 96.4 43.5 82.7 100.0EPS** 0.02 (0.06) (0.13) 1.23 0.55 1.05 1.27ROE*** 0.6% (1.2%) (7.0%) 11.8% 4.1% 10.8% 14.6%ROCE*** 3.8% 3.1% 0.5% 7.9% 4.2% 7.4% 7.9%*Includes figures from Odfjell Gas** Based on 78.6 million outstanding shares*** Ratios are annualised
Highlights
Agenda
• Highlights
• Financials
• Operational review/Strategy
• Prospects and Market update
USD mill Tankers Terminals Total*
3Q17 4Q17 3Q17 4Q17 3Q17 4Q17Gross revenue 207.6 213.2 27.0 27.8 236.7 242.9
Voyage expenses (78.0) (82.0) - - (79.0) (82.8)
TC expenses (48.3) (48.9) - - (48.3) (48.9)
Opex (36.0) (35.2) (13.4) (12.4) (49.9) (48.2)
G&A (17.3) (16.5) (4.9) (5.6) (22.2) (22.2)EBITDA 28.0 30.6 8.7 9.8 37.3 40.7Depreciation (23.9) (27.1) (8.7) (8.8) (32.9) (36.2)Impairment - (21.9) - (20.7) - (42.6)Capital gain/loss (0.5) 0.2 (0.3) 136.3 (0.8) 136.5EBIT 3.6 (18.3) (0.3) 116.7 3.6 98.5Net finance (11.1) (10.3) (2.2) (0.6) (13.4) (11.3)Taxes (1.0) 0.1 0.5 8.9 (0.5) 9.0Net result (8.5) (28.5) (2.0) 125.0 (10.5) 96.4
EPS (0.11) (0.36) (0.03) 1.59 (0.13) 1.23
1. Proportional consolidation method 5
• 4Q EBITDA slighthly improved driven by improvingrevenues in Odfjell Tankers and Odfjell Terminals
• OPEX and G&A slightly lower in 4Q compared to 3Q
• Depreciations in Tankers increased, but this included aone-off depreciation on divested equipment. Going forward,depreciations will reflect last quarters levels (plus newvessels)
• Sale of our Singapore terminal contributed with USD 136.3mill in gains during the quarter
• 4Q results was impacted by several non-recurring items(See next slide)
• Underlying results improved compared to previous quarteralso when adjusting for these items
Key quarterly deviations:
* Total includes contribution from Gas Carriers now classified as held for sale
Financials
Income statement1 – Odfjell Group by division
USD mill Tankers Terminals Total*
3Q17 4Q17 3Q17 4Q17 3Q17 4Q17Gross revenue 207.6 213.2 27.0 27.8 236.7 242.9
Voyage expenses (78.0) (82.0) - - (79.0) (82.8)
TC expenses (48.3) (48.9) - - (48.3) (48.9)
Opex (36.0) (35.2) (13.4) (12.4) (49.9) (48.2)
G&A (17.3) (16.5) (4.9) (5.6) (22.2) (22.2)EBITDA 28.0 30.6 8.7 9.8 37.3 40.7Depreciation (23.9) (27.1) (8.7) (8.8) (32.9) (36.2)Impairment - (21.9) - (20.7) - (42.6)Capital gain/loss (0.5) 0.2 (0.3) 136.3 (0.8) 136.5EBIT 3.6 (18.3) (0.3) 116.7 3.6 98.5Net finance (11.1) (10.3) (2.2) (0.6) (13.4) (11.3)Taxes (1.0) 0.1 0.5 8.9 (0.5) 9.0Net result (8.5) (28.5) (2.0) 125.0 (10.5) 96.4
EPS (0.11) (0.36) (0.03) 1.59 (0.13) 1.23
1. Proportional consolidation method 6
1. Odfjell Tankers impairment relates to our Regional fleetoperating in Asia
• The fleet was ordered at peak in 2008• Our regional fleet is now considered as a CGU and is
seperated from our remaining fleet under IFRS rules• Remainder of the fleet has good value support
compared to book values
1. Odfjell Terminal impairment related to our Charleston Terminalin the US
• Revenue development at the terminal has been lowerthan expected
1. Capital Gain related to Sale of Singapore terminal• Odfjell share of cash at the Singapore terminal was
USD150 mill resulting in a book gain of USD 136 mill
1. Tax gain related to our terminal operations in the US• Reduced deferred tax liability
4Q results adjusted for non-recurring items:• Adjusted EBIT: USD 7.5 mill• Adjusted Net profit: -USD 3.7 mill• Adjusted EPS: -USD 0.05
* Total includes contribution from Gas Carriers now classified as held for sale
Financials
Income statement1 – 4Q non-recurring items
1 2
3
4
1
2
3
4
Bunker development
• Net bunker cost in 4Q USD 400 per tonne before hedging vs. USD 382 in 3Q• Bunker clauses in CoAs cover about 64% of the exposure• No financial bunker hedging entered into for 2018
28.0
35.8 34.3 34.138.0
6.2
3.33.3 4.2
-0.6-0.4-0.3-0.5-0.1
34.1
4Q16
38.6
2Q171Q17
37.3 37.8
3Q17
39.1
4Q17
1.7
Platts 3.5% FOB RotterdamJanuary 2013 - December 2017
USD
per
met
ric to
nne
7
Bunker hedging Bunker clausesincl. in revenue
Bunker purchase
0
100
200
300
400
500
600
700
01.201601.2014 01.2015 01.201701.2013
Financials
Quarterly net bunker costUSD mill 4Q 2016 - 4Q 2017
1. Equity method
8
• Sale of Singapore terminal increased cash position and book value of equity• Current portion of interest bearing debt increasing by USD 110 mill mainly relates to USD 84 mill of bond debt
reclassified from non-current interest bearing debt
Assets, USD mill 3Q 17 4Q 17
Ships and newbuilding contracts 1 329.0 1 293.5
Investment in associates and JVs 339.9 349.5Other non-current assets/receivables 20.7 23.7
Total non-current assets 1 689.7 1 666.6
Cash and cash equivalent 111.7 206.6
Other current assets 122.0 119.1
Total current assets 233.8 325.6
Total assets 1 923.4 1 992.2
Equity and liabilities, USD mill 3Q 17 4Q 17
Total equity 711.7 808.1
Non-current liabilities and derivatives 19.8 9.6
Non-current interest bearing debt 995.3 845.3
Total non-current liabilities 1 015.1 855.0
Current portion of interest bearing debt 129.1 238.5
Other current liabilities and derivatives 67.6 90.6
Total current liabilities 196.6 329.2
Total equity and liabilities 1 923.4 1 992.2
* New leasing standard (IFRS 16) to be implemented from January 2019. We have done a simulation on how this will effect figures of Odfjell SE in note 1 of our quarterly report
Financials
Balance sheet 31.12.2017 – Odfjell Group
Cash flow, USD mill 1Q 17 2Q 17 3Q 17 4Q 17 FY 17
Net profit 1.8 (5.3) (9.9) 97.2 83.8
Adjustments 18.7 3.0 32.1 46.4 100.2
Changes in working capital (3.4) 4.4 (14.6) 19.3 5.7
Other (10.6) 5.1 8.1 (138.4) (135.7)
Cash flow from operating activities 6.5 7.2 15.7 24.5 54.0Sale of non-current assets - - 4.0 0.0 4.0
Investments in non-current assets (3.0) (56.2) (101.7) (12.3) (173.2)
Dividend/other from investments in Associates and JV’s - - - 117.1 117.1
Other (0.7) 13.8 1.0 12.4 26.5
Cash flow from investing activities (3.7) (42.4) (96.7) 117.2 (25.6)
New interest bearing debt 83.7 187.4 72.0 - 343.1
Repayment of interest bearing debt (48.7) (161.2) (69.7) (30.8) (310.4)
Dividends - (13.9) - - (13.9)
Other - - - (5.7) (5.7)
Cash flow from financing activities 35.0 12.3 2.3 (36.5) 13.1Net cash flow* 37.8 (22.9) (78.1) 105.3 41.2
1. Equity method2. * After FX effects 9
• USD125 mill in net book value gains in Odfjell Terminals the main adjustment in our operating cash flow• USD 117.1 mill relates to cash dividend from Odfjell Terminals related to sale of Singapore terminal
Financials
Cash flow – 31.12.2017 – Odfjell Group1
10
4.4x4.8x8.5x
17.6x
27.7x
20172016201520142013
Gross interest bearing debt / EBITDA
41%38%33%31%
37%
20172015 201620142013
Equity ratio
Return on capital employed (ROCE)1 Return on equity (ROE)
7%
2%
-1%
-3%
8%
2013 2014 201720162015
11%15%
-6%
-12%-14%
2015 20162013 2014 2017Note figures are by the equity method, year-end (or annualised) and not adjusted for extraordinary items such as impairments, capital gains, etc.1. EBIT divided by end of period total equity plus net interest-bearing debt
Equity method
Financials
Financial ratios – Odfjell Group
Debt Repayments, USD mill
0
50
100
150
200
250
300
2018 2022202120202019
Planned vessel financingNOK Bond 12/18NOK Bond 16/19
NOK Bond 17/21NOK Bond 17/22
Secured loansBalloon
Leasing
11
1 000
0-200
1 200
1 6001 400
200
600800
400
-4002020201920182017
Ending balance
RepaymentPlanned vessel financing
• NOK bond maturing in December 2018 of USD 84 mill• Strong appetite from lenders to participate in refinancing of loans maturing in 2018• Debt levels by 2019/20 expected to decline on existing fleet while newbuilding financing will
lift gross debt levels from 2020
Financials
Debt development– Corporate and chemical tankers
Debt portfolio, USD mill
12
Financials
Capital expenditure programme – 31.12.2017
USD mill 2018 2019 2020 2021 2022
Chemical Tanker newbuildings
Hudong 4 x 49,000 dwt (USD 60 mill) 24 144 42 - -
Hudong 2 x 38,000 dwt (USD 58 mill) 6 12 87 - -
AVIC 3 x 25,000 dwt (USD 40 mill) 108 - - - -
Total 138 156 129 - -
Instalment structure – Newbuildings
Debt instalment 126 144 130 - -
Equity instalment 12 12 - - -
Tank Terminals, (Odfjell share)
Planned capex 34 19 17 13 -
• We have secured financing for all chemical tanker newbuildings have secured and remaining equity instalmentsare limited to USD 24 mill
• Other chemical tanker investments for the next three years amounts to about USD 33 million, mainly related toinstallation of ballast water treatment systems.
• We expect the average annual docking capitalization to be on average USD 15 million in the years ahead.
Agenda
• Highlights
• Financials
• Operational review/Strategy
• Prospects and Market update
Market update
14
3,0
0,0
6,0
1Q17 4Q17
Milli
on to
nnes
3Q17
3,02,8 2,92,8
2Q17
2,9
1Q16 2Q16 3Q16
2,8 2,8
4Q16
3,1
Volumes carried
60
70
80
90
100
110
120
130
140
150
2012 20172013 20142011 2015 2016
+0.8%
-5.3%
2009 20102008
Chemical tanker spot earnings index (midcycle = 100)Source: Clarkson Platou
Odfix indexOdfix average 2008-2017
Odfjell Tankers: Voyage days development
Odfjell Tankers: ODFIX versus chemical tanker spot rates*
5 800
5 600
5 400
6 400
6 200
6 000
7 000
6 800
6 6006 593
3Q17
6 788
2Q17 4Q17
6 961
1Q17
6 1726 310
3Q16
6 363
4Q161Q16 2Q16
6 234
6 511
Voyage days
Odfjell Tankers: Volume development
Odfjell Tankers: COA coverage
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
3Q17 4Q172Q173Q152Q15 2Q161Q164Q15 1Q174Q163Q16
COA coverageAverage
Tankers: Harvey impact was felt into 4Q. Our COA portfolio together with increased revenue days mitigates the challenging overall market
Market update
15
Odfjell Terminals: Commercial available capacity
Odfjell Terminals: OTR Tank storage & PID revenuesOdfjell Terminals: Utilisation development
Terminals: Restored volumes in Houston and continuous strong performance by our PID softens impact from weak oil mineral storage
Util
isat
ion
88%
80%
92%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
4Q173Q172Q171Q174Q163Q162Q161Q16
Chemical storageOil mineral storage (Rotterdam)Odfjell Terminals total
6,05,55,04,54,03,53,02,52,01,51,00,50,0
Milli
on C
BM
4Q17
2,9
3Q17
2,8
2Q17
2,9
1Q17
2,9
4Q16
4,1
3Q16
4,0
2Q16
4,0
1Q16
4,0
0123456789
10
USD
m
7,1
Q3-2017
8,0
6,6
Q2-2017
6,3
8,9
Q1-2017
6,3
9,1
Q4-2016
8,78,5
Q3-2016
7,08,0
Q2-2016
6,7
8,6
Q1-2016
6,1
8,4
Q4-2015
5,7
7,5
Q3-2015
4,8
6,9
Q2-2015
3,8
6,5
Q1-2015
Q4-2017
7,2
4,64,0
Tank leasePID
• PID revenues continues to support results at OTR which isexposed to a weaker tank lease market due to contango
• Commercial available capacity improved in 4Q as a result oftanks at OTR returning to service after functionalimprovements and maintenance
• Utilisation improved and stabilised in 4Q compared toprevious quarter which was impacted by Hurricane Harvey
Comments
16
Growth• Tonnage renewal / fleet growth The “100 vessel” target reached• Take part in consolidation Acquired CTG and Sinochem
High quality service• Safety, predictability and reliability Successful efficiency programmes
Operational excellence• Tankers: OPEX + SG&A Reduced by USD 8 mill• Terminals: implementing operational excellence project Being implemented
Financial strength• Further improve balance sheet to be able to act quickly as opportunities may arise Equity Ratio and cash improved• Cost of capital Ongoing process
Terminals – back to meaningful profitability levels• Implementation of the «value creation program» Ongoing process
Strategy update: 2017 marks a year where we continued to make great progress as a company despite challenging markets
17
• Odfjell announced a framework agreement withSinochem Shipping in November. Final completionexpected in 1Q 18
• Odfjell will bareboat 4 vessels (super segregators) fromSinochem and form a pool with Sinochem’s 4 vessels
• The pool will be exclusively managed by Odfjell and actsas a capital efficient way of growing/renewing our fleetand at the same time consolidate our core markets
• With all our tonnage initiatives in 2017 we have reachedour growth and renewal ambitions and have made goodstrategic progress
• Consolidation in the chemical tanker segment remainshigh on the agenda
• Odfjell/Sinochem (Q4 17)• Odfjell/CTG (Q2 17)• Jo Tankers/Stolt-Nielsen (Q4 16)• Crystal Nordic/Essberger Tankers (Q4 17)
* Not accounting for scrapping, except Stolt Vestland and Stolt Vinland and 3 NCC Kværner vessels
Operational review/strategy
Tankers: Sinochem transaction represented another milestone in renewing and growing our core super segregator fleet Large super-segregator fleet (2021)*
20
16
12
8
4
00 10 20 30 40 50 60 70
Odfjell (2021 incl. Sinochem)
Sinochem (fleet today)Goldwin
Large super-segregator fleet (Current operated fleet and order book), # of vessels
Average fleet age, Years
MOL
Stolt Nielsen (2021)
Odfjell (2021)
MOL
Stolt Nielsen (Today)
Odfjell (Today)
Size: Fleet size, DWT
Source: Odfjell fleet overview
Agenda
• Highlights
• Financials
• Operational review/Strategy
• Prospects and Market update
We expect seaborne trade of chemical products to grow by around 4% p.a. towards 2020, before tonne-miles are adjusted for
19
Historic development in seaborne trade, MT millions
Tanker products trade Chemical products trade
1 728 1 744 1 845
851 898993
212 2222322 816
2012
+2%
2016
3 099
2014
2 890
ChemicalsCPP Lube OilsCrude Oil
100 105 108 109 112 113 118 124 127
29 27 28 29 31 32 33 33 3469 70 73 80 74 79 83 85 86
2018E
+4%260
2020E2019E
+3%266
251
2017
240232
20152012 2013 2014 2016
233222216212
OtherVegetable OilsInorganic ChemicalsOrganic Chemicals
Source: ICIS, Clarksons Platou, Odfjell
New capacity for Organics mainly come in US and Middle East which will have a significant impact on tonne-mile demand
20
United States Middle East
Trade direction
Source: ICIS, Drewry, Odfjell
New US and Middle East capacity of organic chemicals, MT millions cumulative
10.300 miles
2019
87
20202018
3
Other MethanolXylenesEthylene Glycol
2020
10
2019
109
2018
5.600 miles
5.100 miles
6.000 miles
1. Total market 2017: 901 billion tonne-miles including organic, inorganic and vegoil products
A
C
B
3.800 miles
X
Y
6.600 milesZ
High +3%+4% Tonne
demand
Case Assumptions Demand impact
Base +2%+4% Tonne
Demand
Low +1%+4% Tonne
Demand
Impact on chemical tanker tonne-miles demandTotal tonne-mile growth 20171-2020
Majority of volumes on longest routes
Equal export split based on length of routes
Export split favouring shorter routes
Deep-sea fleet development, DWT mill. Forecast
The market has gone through a period with high fleet growth, but we expect modest growth going forward
21
2017
74
2020E2019E
77
17
94
2018E
76
92
1616
89
59
12
2015
56
12
2014
72
54
12
2013
68
53
11
2012
66
51
10
2011
64
47
10
2010
61
41
9
2009
57
2008
50
75
62
13
2016
81
68
13
88
15
72
Core fleetSwing/other fleet
+6%p.a.
+2%p.a.
Source: Odfjell
YoYgrowth
+7% +3%+8% +7% +3% +4% +4% +3% +4% +13% +3% +5%
+1% +3%+7%+8%+6%+5%+4%+2%+5%+7%+15% +1%
CAGR:
+3.6%
+1.9%
Degree of Chinese self-sufficiency could impact this picture in both directions
Potential downside from CPP markets(swing tonnage)
We expect fundamental demand growth to outpace supply growth towards 2020 and tonne-miles could fuel further upside to seaborne traded demand
22
The market has gone t hrough a period wit h high f leet growt h, but we expect more rat ional growt h t owards 2020
12
Deep-sea fleet development, DWT mill.
72
62
928994
66
1681
5968
11
88
68
54
1213
17
74
75
77
15
76
1613
53
20092008 20142011
9
2010
47
2012 2018E 2020E2013
51
2017
50
2019E
5710
2015
5672
2016
41
126110
1264
Core fleetSwing/other fleet
+6%p.a.
+2%p.a.
ce: Odfjell
Yowth +14% +1%+7% +5% +2% +4% +5% +5% +8% +8% +2% +3%
+2%p.a.
We expect volumes to grow by 4% p.a. primarily driven by organic chemicals…
…while supply growth is reduced to 2% p.a. following a period of rapid growth
+4%p.a. + tonne-mile effect Core fleet +3.6% p.a
Source: Odfjell
23
Prospects
• We continue to believe that chemical tanker markets will
improve towards the end of 2018 as tonne-mile demand is
expected to outgrow net fleet growth. Any significant
improvement is not expected until 2019
• We expect storage demand for oil minerals to remain
challenging while we expect stable demand and results for
chemical storage
• We expect 1Q 2018 timecharter results to be marginally better
than 4Q17
24
Capital Markets day 2018
Odfjell SE would like to welcome you to our
annual capital markets day 5 June 2018.
Theme this year will be Odfjell Group and the
fundamental drivers for the chemical tanker
industry with special focus on demand.
The CMD will be in Oslo with separate invitation
to follow.
ODFJELL SE - Conrad Mohrs veg 29, P.O. Box 6101 Postterminalen - 5892 Bergen, Norway Tel: +47 55 27 00 00 - Fax: +47 55 28 47 41 - E-mail: [email protected] - Org. no: 930 192 503
Odfjell.com
Company representatives:
Kristian Mørch, CEO | Tel: +47 55 27 00 00 | E-mail: [email protected]
Terje Iversen, CFO | Tel: +47 55 27 00 00 | Mobile: +47 93 24 03 59 | E-mail: [email protected]
IR Contact: Bjørn Kristian Røed, Research & IR | Tel: +47 55 27 47 33 | Mobile: +47 40 91 98 68 | E-mail: [email protected]
Media Contact: Anngun Dybsland, Communications Manager | Mobile: + 47 41 54 88 54 |E-mail: [email protected]