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IR Presentation March 2017
I. Financial Highlights
II. Market Outlook & Performance
III. Appendix
Contents
Earnings Overview
2015 2016 1st quarter
2nd quarter
3rd quarter
4th quarter
Revenue 9,714 2,530 2,721 2,778 2,385 10,414
Operating Profit (OP Margin)
-1,502 (-15.5%)
6 (0.2%)
-284 (-10.4%)
84 (3.0%)
46 (1.9%)
-147 (-1.4%)
(KRWb)
I. Financial Highlights
- 1 -
2016 4th Quarter Earnings
- Revenue: KRW 2.4t(KRW 400b decreased vs. 3Q 2016)
∙ Slow-down of Construction to manage Sharp decrease in Order Backlogs from 2017
- Operating Profit: KRW 46b(KRW 38b decreased vs. 3Q 2016)
∙ One-off provisional loss(23b) recognized for possible LD as a result of Jack-up Rig Accident
2016 Annual Earnings
- Revenue: KRW 10.4t(KRW 702b increased from 2015)
- Operating Loss: KRW -147b(KRW 1.4t Increased from 2015)
∙ Continued loss in 2016 from the last year mainly due to Restructuring Process
* Voluntary Resignation Package cost: KRW 210b
* Liquidation Damage
Financial Status as of 2016
연결 손익계산서
(KRWb)
2016 2015 2014
Asset 17,22200 17,30200 17,12200
Cash and Cash Equivalents (a) 1,77100 2,13700 89300
Accounts Receivable 5,44500 4,64200 6,23400
Liabilities 10,94700 13,03600 11,54900
Interest Bearing Debts (b) 5,32800 5,03300 3,82700
Advance Payments 1,85500 3,92800 3,79900
Stockholders’ Equity 6,27500 4,26600 5,57300
Net Debt (b-a) 3,55700 2,89600 2,93400
Debt-to-Equity Ratio 174%00 306%00 207%00
I. Financial Highlights
- 2 -
Net Debt & Debt-to-Equity Ratio
- Net Debt level: KRW 3.5t(Increased 0.6t from 2.9t in 2015)
∙ Working Capital burden from increased portion of heavy-tail payment construction
- Debt-to-Equity Ratio: 174%(Decreased from 306% last year)
Cash-flow
연결 손익계산서
(KRWt)
2016 2017 Remarks
Cash-flows from Operation & Investments -1.7 2.0
New Share Issuance 1.1 - 231mil → 390mil shares(159↑)
Debt Financing(Repayment) 0.3 -1.7 Corp. Bond due in 2017: KRW600b
Total Interest Bearing Debts 5.3 3.6
Cash-in-hand 1.8 2.1
Net Debt 3.5 1.5
I. Financial Highlights
- 3 -
No Liquidity Issues Anymore
- Cash Deficit of KRW 1.7t in 2016
∙ Due to increased heavy-tail payment construction and limited number of New Orders in 2016
- Cash Surplus of KRW 2.0t in 2017(Estimated )
∙ The number of deliveries will be increased from 29 units last year to 54 units in 2017
∙ More advance payments to be received from potential New Orders in 2017
Self-Rescue Plan
연결 손익계산서
Self-Rescue Plan has been making Good Progress in 2016
- Sharing Burdens by Employees
∙ Job-Cut, Salary-Cut(15%~30%), and Reduction of Employee Benefits
- Rights Offering was Successfully completed by securing KRW 1.1t
- Sales of non-core Asset such as Investment Securities and Properties
∙ During 2016, SHI sold KRW 174b worth of non-core Assets by exceeding yearly Target,
and the Remaining Amount of KRW 372b is well Expected to be sold in 2017 and 2018
For the next two years in 2017 and 2018, SHI will continue to carry-out
Restructuring process to reduce Fixed Cost and Generate adequate
Operating Margin regardless of Revenue decline
I. Financial Highlights
- 4 -
I. Financial Highlights
II. Market Outlook & Performance
III. Appendix
Commercial Vessels
연결 손익계산서 LNGC, Containership and COT market Expected to Turnaround in 2017
- By 2019, the New Order Size for these 3 major products will Reach back to
2011~2015 yearly level of 20 million CGT(Entire Sector: 42 million CGT)
*Source: SHI (2011~2015 yearly average new order in 100%)
2011~2015 Average
2016 2017 2018 2019 2020
Total 100% 25% 70% 80% 99% 118%
COT 41% 63% 58% 48% 52% 55%
Containership 46% 29% 29% 40% 38% 37%
LNG carriers 13% 8% 13% 11% 9% 8%
New Order Size for the Entire Sector in 2016 recorded the lowest level during
the recent 20-year period
Market Sentiment Expected Turnaround in 2017, Especially for LNGC and FSRU
* Approximately 11 million CGT, 480 units
- 5 -
II. Market Outlook
Commercial Vessels
연결 손익계산서 "Solid" L-T Demand for LNG carriers, and LNG-FSRU continue to Expand
* Source: Gaslog, BP, etc
“Solid” LT Demand for LNG Carriers
- Yearly 30 LNGC orders are Expected from 2017
∙ Market downturn of 2016 already digested
massive incoming orders in 2014 and 2015
LNG-FSRU Demand Expanding
- In order to meet excessive demand of
electricity in Southeast Asia, South America
and Africa, more FSRU will be on demand
* LNG-FSRU can be quickly available to use and
the Construction cost is a half of Onshore Terminal
- LNG market is Dominated by Korean Big 3,
where SHI’s global Market Share is at 32%
2014 2030
LNG Trade Volume
258mtpa
500mtpa
(CAGR 5%)
Gloabal LNG Fleets
469
(1.6 unit/1mtpa)
900
(30 units/year)
New Orders Modification Total
Current Fleet 19 5 24
Under Const. 9 - 9
Total 28 5 33
SHI 9 - 9
- 6 -
II. Market Outlook
Commercial Vessels
연결 손익계산서 Environmental Regulations
- SOx Emission and BWTS Regulations will Require More LNG-fueled vessels
and Replacement of Old vessels
Types Regulations Effective Year
Energy Efficiency Design Index(EEDI) To improve fuel efficiency by improving design and structure of vessel Under progress
Nitrogen-Oxide Emission(Tier 3) To regulate and put limits on Nitrogen-Oxide Emission 2016
Ballast Water Treatment System(BWTS) To prevent transferring foreign marine specifies(microbes) to local ocean 2017
Sulfur-Oxide Emission(SOx) To regulate and put limits on Sulfur-Oxide Emission at different levels 2020
Carbon-Dioxide Emission(CO2) To regulate and put limits on Carbon-Dioxide at different levels 2020
Age Tankers Bulkers Containerships General Cargo Gas Carrier Specialized Vessel Total
Units ‘000 GT Units ‘000 GT Units ‘000 GT Units ‘000 GT Units ‘000 GT Units ‘000 GT Units ‘000 GT
21yr < 4,003 22,772 1,219 39,160 839 13,778 11,761 24,000 576 10,054 2,659 11,479 21,057 121,243
% 39% 8% 11% 9% 16% 6% 60% 38% 31% 15% 43% 17% 39% 11%
16~20yr 893 45,254 1,028 34,915 816 24,497 1,384 7,175 189 5,017 633 9,202 4,943 126,060
% 9% 15% 9% 8% 16% 11% 7% 11% 10% 8% 10% 13% 9% 11%
Total 10,135 293,754 10,870 439,968 5,167 217,345 19,610 62,493 1,875 66,773 6,205 69,311 53,862 1,149,644
*Source: Clarkson(2016) - 7 -
II. Market Outlook
Offshore Facilities
연결 손익계산서
With Oil Price Recovery and Improved BEP level for Offshore Projects,
More Opportunities can be Expected from the Market
More Projects are under Review as Oil Price Recovers above USD 50/bbl level
- Only 3 Projects were Available during 1st half of 2016 (MaddogII FPU, Coral FLNG, Eqquss FPU)
∙ MaddogII FPU has been Ordered in Jan 2017, and Coral FLNG Expected in 1st quarter of 2017
- However, New Projects such as WhiteRose P/F, Johan Castberg FPSO, Zabazaba FPSO and
Other 4~6 Potential projects are Expected to be available in the near future
IOC’s BEP level Lowered to USD 50/bbl range throughout Cost-Saving Efforts
- Value-Chain Activities in entire Oil-Service Sector improved by Collaboration, Standardization
and Technology enhancement
※ Recently, IOC Recorded BEP around 40~60/bbl for Deep-Water Development(IRR 14% basis)
- 8 -
II. Market Outlook
Offshore Facilities
연결 손익계산서 Output Declining at Aging Fields and Sharp Capital Spending Cut
- Offshore will drive Future Production Growth (Sharp CAPEX Cut in 2014~2015)
0
20
40
60
80
100
120
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Existing Production from Onshore Oil & Gas Fields
Existing Production from Offshore Oil & Gas Fields
Gross Addition Needed for Production decline and demand increase
Producing fields estimated to naturally
decline at 6.2% per year → Output decline
Huge Untapped Oil Reserve makes
Deep-water Area More Attractive
(mbbl/d)
60% 72%
40% 28%
Reserve Production
Offshore Onshore
60%
35%
40%
65%
Reserve Production
Shallow-water Deep-water
- 9 -
II. Market Outlook
Performance in 2017
연결 손익계산서
Others 1%
Tanker 8%
LNGC
12%
Offshore Facilities
51%
Containership 6%
Drilling Rigs 22%
II. Performance
Unit USDb
Containerships 11 1.7
LNGCs 16 3.4
Tankers 37 2.2
Drilling Rigs 10 5.9
Offshore Facilities 9 13.9
Others 2 0.3
Total 85 27.4
- 10 -
Good Start in 2017
- Total New Order amount is USD 1.5b in 2017
∙ One Floating Production Unit USD 1.3b and One LNG FSRU USD 0.2b
Order Backlogs as of February 28, 2017
- Delivery basis is USD 27.4b
I. Financial Highlights
II. Market Outlook & Performance
III. Appendix
Revenue & Operating Profit Trends
연결 손익계산서
(KRWt)
-15.5%
III. Appendix
8.8%
6.5%
5.3%
3.7%
0.4%
0.1%
1.7%
5.3%
6.9%
6.6%
8.0%
8.7%
8.3%
6.2%
1.4%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Revenue(Shipbuilding&Offshore)
Revenue(Others)
OP Margin
3.6 4.1 4.3 4.2
4.8
5.6
6.4
8.5
10.7
13.2 13.1
13.4 14.5
14.8
12.9
9.7
10.4
- 11 -
-1.4%
New Order Trends III. Appendix
연결 손익계산서
(USDb)
3.8
1.7
2.8
5.4
6.5
4.9
13.5
21.2
15.3
1.4
9.8
14.9
9.7
13.5
7.3
5.3
0.5 1.5
- 12 -
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Feb-17
Containership
LNG Carrier
Tankers
Drilling Rig
Production Facility
Others(WTIV etc)
Major Offshore Projects
Shell, Prelude LNG FPSO
- Exclusive L-T Partnership with Shell for FLNG Market Dominance Since 2009
Contract Details
- Contract Price: USD 3.4b(90% Received)
∙ Hull EPC + Topside Construction
- Expected Delivery: 2Q 2017(95% Completed)
- Key Specifications
∙ Size 489m(L) × 74m(W) × 110m(D)
∙ Weights: 256 thousand tons
∙ Production Capacity: 3.6m tons/year(LNG)
- Operation Field: 200Km from Australia
North West Coast
LNG FPSO vs. Onshore LNG Plant
- LNG FPSO is capable of Production,
Processing, Liquefaction, and Offloading all
on the surface of ocean(No pipe line needed)
Extract Natural Gas
Processing
Liquefaction
- 13 -
III. Appendix
Major Offshore Projects
Inpex, Ichthys CPF Total, Egina FPSO
Contract Price: USD 2.7b(89% Received)
Delivery(expected): 1Q 2017(94% Completed)
Key Specs (Ichthy Field, Australia NW)
- Weight: 112K tons [110m(L) × 110m(W) × 47m(H)]
- Production Capacity: 1,657 million ft3/day
∙ Water, Gas and Condensates are separated and,
Gas/Condensates sent to land and FPSO
Contract Price: USD 3.0b(74% Received)
Delivery(Expected): 2018(68% Completed)
Key Specs (South 150Km, Nigerian Coast)
- Weight: 144K tons[330m(L) × 61m(W) × 60m(H)]
- Production Capacity: 206k barrels/day
※ Nigerian Yard is at operation under Local Content
- 14 -
III. Appendix
Disclaimer
• This presentation has been prepared by Samsung Heavy Industries Co., Ltd. and contains
forward-looking statements that are subject to risks, uncertainties, and assumptions.
• The presentation is solely for your information, subject to change without notice, and
makes no representation or warranty, expressed or implied and no reliability should be
placed on the accuracy, fairness, or completeness of the information presented herein.
• The Company, its affiliates, or representatives accept no liability for any losses arising
from any information contained in the presentation.
• The contents of this presentation may not be reproduced, redistributed or circulated,
directly or Indirectly, to any other person or organization, or published, in whole or in
part, for any purpose.