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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
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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
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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
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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
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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
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Going Forward
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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
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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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