3q 2012 performance revie · •shipped +3% volume while reducing capacity •core ebit of us$74m...
TRANSCRIPT
3Q 2012 Performance Review25 October 2012
Forward Looking Statements
The following presentation includes forward-looking statements, which involve known and
unknown risks and uncertainties, that could cause actual results or performance to differ.
Forward looking information is based on current views and assumptions of
management, including, but not limited to, prevailing economic and market conditions.
Such statements are not, and should not be interpreted as a forecast or projection of
future performance.
1. 3Q 2012 Results Highlights
Page 4 | 25 October 2012 | 3Q 2012 Performance Review
Group achieves US$50 million net profit from
cost efficiencies, stable rates & volume growth
Efficiency program on track:•US$135m savings in 3Q 2012
•US$360m savings YTD 2012
Profitable Logistics growth:•Revenue +10% in 3Q12
•Acquiring APLL-Zhiqin to expand China growth platform
Slot cost improvement:•7 new, more cost efficient vessels received
•Shipped +3% volume while reducing capacity
• Core EBIT of US$74m for 3Q 2012
• Net profit of US$50m for 3Q 2012
• Improved results across Liner & Logistics
Page 5 | 25 October 2012 | 3Q 2012 Performance Review
Note: 1Q and 4Q are normalised to 12-week periods
Third improved quarter turns Group to net
profit
2,302
50
74
(300)
(200)
(100)
-
100
200
300
400
-
500
1,000
1,500
2,000
2,500
3,000
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Revenue (LHS) Net profit (RHS) Core EBIT (RHS)
US$m US$m
Page 6 | 25 October 2012 | 3Q 2012 Performance Review
Liner cost & efficiency focus improves results
764 692 699
824 791 720 707
-8
-53
-88
-297
-246
755
-350
150
-500
0
500
1,000
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Volume (FEU) (LHS) Liner Core EBIT (US$m) (RHS)
Volume('000s FEU)
Core EBIT(US$m)
Fleet Renewal is Lowering Slot Cost
+70,000 TEU
7 newbuild vessels
-113,000 TEU
24 vesselsVolume
+3%
8% less
fuel used
Cost & Efficiency Progress
Page 7 | 25 October 2012 | 3Q 2012 Performance Review
ELP & Organizational streamlining going to plan
Efficiency Leadership Program (ELP) delivers results:
•US$135m cost savings in 3Q12
•US$360m cost savings YTD12
•On track for US$500m full year target
3Q12 ELP Categories
Organizational streamlining
improving Group’s competitiveness
•3Q12 G&A costs down
US$18m, mainly due to ELP and
Organizational streamlining
Bunker-related44%
Others21%
Terminals-related
13%
Network-related22%
Page 8 | 25 October 2012 | 3Q 2012 Performance Review
1,015
1,120
700
800
900
1,000
1,100
1,200
US$m
YTD11 YTD12
333
365
200
300
400
US$m
3Q11 3Q12
Logistics sustains organic growth, expands China
footprint
Double digit revenue growth, Core EBIT of US$19m in 3Q 2012
Acquisition of APLL-Zhiqin will expand nationwide network to
nearly 80 locations to grow domestic logistics business
+10%
3Q Logistics Revenue YTD Logistics Revenue
+10%
2. 3Q 2012 Financial Performance
Page 10 | 25 October 2012 | 3Q 2012 Performance Review
US$m YTD12 YTD11 % ▲ 3Q12 3Q11 % ▲
Revenue 7,013 6,808 3 2,302 2,213 4
Core EBITDA 86 111 (23) 146 (5) n.m.
• Depreciation & Amortisation (229) (211) 8 (72) (67) 7
Core EBIT (before non-
recurring items)
(143) (100) 43 74 (72) n.m.
Non-recurring items (111) (1) 11,000 - - -
EBIT (254) (101) 151 74 (72) n.m.
Net profit / (loss) to equity
holders
(321) (158) 104 50 (91) n.m.
Net profit / (loss) to equity
holders (before non-recurring
items)
(210) (157) 34 50 (91) n.m.
Group Financial Highlights
Core EBIT US$74 million, Net profit US$50m in 3Q12
Page 11 | 25 October 2012 | 3Q 2012 Performance Review
Financial Highlights by Business Segment
Revenue (US$m) YTD12 YTD11 % ▲ 3Q12 3Q11 % ▲
Liner 5,965 5,868 2 1,961 1,904 3
Logistics 1,120 1,015 10 365 333 10
Elimination (72) (75) (4) (24) (24) -
Total Revenue 7,013 6,808 3 2,302 2,213 4
Core EBIT (US$m) YTD12 YTD11 % ▲ 3Q12 3Q11 % ▲
Liner (184) (149) 23 55 (88) n.m.
Logistics 41 49 (16) 19 16 19
Total Core EBIT (143) (100) 43 74 (72) n.m.
Improved Liner performance from cost & efficiency focus,
Logistics maintains profitable growth
Page 12 | 25 October 2012 | 3Q 2012 Performance Review
Group Financial Profile
Shareholders’ funds of US$2.4 billion
Net current assets of US$330 million
The Group also has sizeable committed long term credit facilities from
large reputable financial institutions to meet its commitments as well
as to repay any debts as and when they fall due
Fully financed newbuild vessel program, by bonds and committed ship
financing
Unlocking capital for strategic investment from ongoing sale of vessels
and NOL building
Resilient financial position
Page 13 | 25 October 2012 | 3Q 2012 Performance Review
Group Balance Sheet Highlights
US$m 21 Sep’ 12 30 Dec’ 11
Total Assets 7,922 6,962
Total Liabilities 5,552 4,310
Total Equity 2,370 2,652
Total Debt 3,530 2,354
Total Cash 709 228
Net Debt 2,821 2,126
Gearing (Gross) 1.49x 0.89x
Gearing (Net) 1.19x 0.80x
NAV per share (US$) 0.90 1.01
(S$) 1.10 1.31
Page 14 | 25 October 2012 | 3Q 2012 Performance Review
US$m YTD12 YTD11
Cash & Cash Equivalents - Beginning @ 1Q 228 977
Cash (Outflow)/Inflow
Operating Activities (92) 22
Investing/Capex Activities (562) (1,222)
Financing Activities 1,135 588
Cash & Cash Equivalents – Closing @ 3Q 709 365
Group Cash Flow Highlights
Page 15 | 25 October 2012 | 3Q 2012 Performance Review
US$m YTD12 YTD11
1. Vessels 550 992
2. Equipment / Facilities 65 112
3. Drydock 18 42
4. IT 22 42
5. Others 6 4
Total 661 1,192
Group Capital Expenditure
3. Liner
Page 17 | 25 October 2012 | 3Q 2012 Performance Review
Liner Results Highlights
Sustained efficiency & cost gains in YTD12:•Volume up 3%, fleet capacity down 7% and fuel consumption down 8%
Improving slot cost:•Cost of sales/FEU down 3% (excluding bunker price rise)
Managing capacity & network:•Received 7 new 10,000 TEU ships, returned charter ships - net fleet
reduction of 43,000 TEU
•Volume growth while network planning & deploying smaller fleet
• Core EBIT profit of US$55m in 3Q12
• Core EBIT loss of US$184m in YTD12
• Continued gains in efficiency & cost savings
• Stable freight rates & higher volume in 3Q12
Page 18 | 25 October 2012 | 3Q 2012 Performance Review
Liner Results Summary
US$m YTD12 YTD11 % ▲ 3Q12 3Q11 % ▲
Revenue 5,965 5,868 2 1,961 1,904 3
Core EBITDA 37 55 (33) 124 (23) n.m.
Core EBIT (184) (149) 23 55 (88) n.m.
EBIT (293) (149) 97 56 (88) n.m.
Core EBIT margin (%) (3.1) (2.5) 2.8 (4.6)
Liner achieved YTD12 revenue of US$6 billion, a year-on-year (YoY) increase of 2% mainly
due to higher volumes transported, partly offset by lower freight rates.
Average revenue per FEU was US$2,541 or 1% lower YoY mainly due to lower
freight rates in the Transpacific and the Transatlantic trade.
Volume rose by 3% YoY mainly due to higher volumes across most trades.
Cost of sales per FEU was relatively unchanged, however bunker price rose 13%
YoY to US$674/MT. Excluding the bunker price rise, Cost of sales per FEU was 3%
lower due to stricter fuel consumption, operational cost efficiencies and slow
steaming.
Page 19 | 25 October 2012 | 3Q 2012 Performance Review
Volume and Average Revenue/FEU Trend
Note: Average Period volumes are normalised based on number of weeks in the period
3Q11 Average Revenue/FEU
US$2,539
3Q12 Average Revenue/FEU
US$2,601
3Q12 Average Revenue/FEU up 2% year-on-year
-
10
20
30
40
50
60
70
1,200
1,600
2,000
2,400
2,800
3,200
3,600
P1
P2
P3
P4
P5
P6
P7
P8
P9
P1
0
P1
1
P1
2
P1
P2
P3
P4
P5
P6
P7
P8
P9
P1
0
P1
1
P1
2
P1
P2
P3
P4
P5
P6
P7
P8
P9
P1
0
P1
1
P1
2
P1
P2
P3
P4
P5
P6
P7
P8
P9
2009 2010 2011 2012
Average Period Volume (RHS) Average Revenue per FEU (LHS)
'000 FEU/ weekUS$/FEU
Period
Page 20 | 25 October 2012 | 3Q 2012 Performance Review
Operational Update
Note: Based on point of sailing and inclusive of headhaul and backhaul trade.
Volume (‘000 FEUs) YTD12 YTD11 % ▲ 3Q12 3Q11 % ▲
Transpacific 624 623 - 207 203 2
Latin America 153 135 13 50 44 14
Asia-Europe 354 360 (2) 112 116 (3)
Transatlantic 122 101 21 41 30 37
Intra-Asia 965 936 3 297 306 (3)
Total 2,218 2,155 3 707 699 1
Average Revenue/FEU (US$) YTD12 YTD11 % ▲ 3Q12 3Q11 % ▲
Transpacific 3,748 3,912 (4) 3,763 3,944 (5)
Latin America 3,520 3,420 3 3,568 3,373 6
Asia-Europe 2,493 2,471 1 2,646 2,317 14
Transatlantic 2,855 3,293 (13) 2,780 3,434 (19)
Intra-Asia 1,583 1,491 6 1,591 1,478 8
Total 2,541 2,560 (1) 2,601 2,539 2
Volume and Revenue/FEU growth in 3Q12 despite weak market
Page 21 | 25 October 2012 | 3Q 2012 Performance Review
Improved utilization and trade balance drives empty
repositioning YTD12 costs down 5%
92%91%
94%
92%
93%
94% 94%
87%86%
85%
91%
95%
91%
89%
80%
85%
90%
95%
100%
Q1 Q2 Q3 Q4 Q1 Q2 Q3
2011 2012
Headhaul utilization Backhaul utilization
Maintained improved trade balance despite seasonal dip in 3Q
backhaul
Page 22 | 25 October 2012 | 3Q 2012 Performance Review
Fleet Renewal
Note: 5 out of the 10 x 14,000 TEU vessels for delivery between 2013 and 2014 will be chartered out to MOL
Building a modern and cost-competitive fleet, seven 10,000 TEU
vessels already delivered in 2012
0
50,000
100,000
150,000
200,000
250,000
2012 2013 2014
8,100 TEU 9,000 TEU 10,000 TEU 14,000 TEU
10
21
3
TEUs
7 x 10,000 TEU vesselsdelivered
10 x 14,000 TEU
9 x 9,000 TEU
3 x 10,000 TEU
3 x 9,000 TEU2 x 8,100 TEU
Total vessels
Page 23 | 25 October 2012 | 3Q 2012 Performance Review
Fleet Renewal
APL Fleet
Start YTD 2012
149 vessels
640,000 TEUs
Average size
4,300 TEU
APL Fleet
End 3Q 2012
132 vessels
597,000 TEUs
Average size
4,500 TEU
Improving slot costs with more efficient newbuild ships
Charters
expiring
4Q 2012 to
2014
29 vessels
171,600 TEUs
Current
Net capacity
change-43,000 TEU
+7 newbuild ships
-24 charter/own ships
Future
1 Jan 2012 21 Sep 2012
4. Logistics
Page 25 | 25 October 2012 | 3Q 2012 Performance Review
Logistics Results Highlights
Continued business growth:•10% revenue growth in 3Q 2012, 10% in YTD 2012
•Strong demand for rail and land-based logistics services
Expanding growth platform in China:•Acquiring remaining shares in APLL-Zhiqin
•Expands nationwide network to nearly 80 offices and hub locations
•Tap demand from international customers within China’s fast-growing
consumption markets
• Core EBIT profit of US$19m in 3Q12
• Core EBIT profit of US$41m in YTD12
Page 26 | 25 October 2012 | 3Q 2012 Performance Review
Logistics Results Highlights
US$m YTD12 YTD11 % ▲ 3Q12 3Q11 % ▲
Revenue 1,120 1,015 10 365 333 10
Core EBITDA 49 56 (13) 22 18 22
Core EBIT 41 49 (16) 19 16 19
EBIT 39 48 (19) 18 16 13
Core EBIT margin (%) 3.7 4.8 5.2 4.8
Logistics achieved YTD12 revenue of US$1.1 billion, growing 10% year-on-year (YoY)
while facing softer economic conditions in developed markets.
Contract Logistics achieved revenue of US$740 million, a 16% YoY increase due to
strong demand for rail and land-based logistics services.
International Services achieved revenue of US$380 million, a 1% increase YoY
amidst a softer retail and apparel environment.
Core EBIT of US$41 million for YTD12, a 16% decrease YoY mainly due to increased
investments to improve our technology products and commercial infrastructure, and
lower contribution from associated company.
Page 27 | 25 October 2012 | 3Q 2012 Performance Review
Performance Breakdown
US$m YTD12 YTD11 % ▲ 3Q12 3Q11 % ▲
Revenue 1,120 1,015 10 365 333 10
• Contract Logistics 740 639 16 232 206 13
• International Services 380 376 1 133 127 5
Core EBIT 41 49 (16) 19 16 19
• Contract Logistics 21 20 5 9 6 50
• International Services 20 29 (31) 10 10 -
Core EBIT Margin (%) 3.7 4.8 5.2 4.8
• Contract Logistics 2.8 3.1 3.9 2.9
• International Services 5.3 7.7 7.5 7.9
Growth across both business segments
Page 28 | 25 October 2012 | 3Q 2012 Performance Review
Revenue and Core EBIT Margin Trend
Record weekly revenue growth, 3Q12 margin recovery mainly from
stronger demand and improved cost management
5.1%
4.3%
6.0%5.3%
5.7%
3.8%
4.8%5.1%
3.3%
2.5%
5.2%
0.0%
5.0%
10.0%
15.0%
10
15
20
25
30
35
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Weekly Revenue (US$m) (LHS) Core EBIT Margin (%) (RHS)
Weekly Revenue(US$m)
Core EBITMargin (%)
Page 29 | 25 October 2012 | 3Q 2012 Performance Review
Expanding APL Logistics China growth platform
• Acquire remaining shares in APLL-Zhiqin, turning it into wholly-owned
subsidiary
• Expands nationwide network to nearly 80 offices & hub locations
• Positioned to better serve international customers seeking to penetrate
China’s fast-growing consumption markets
Page 30 | 25 October 2012 | 3Q 2012 Performance Review
YTD12 Revenue Breakdown – by Region (US$m)
Revenue Trend by Region
YTD11 Revenue Breakdown – by Region (US$m)
24% (Asia/Middle
East)
66% (Americas)
10% (Europe)
$741$106
$273
26% (Asia/Middle
East)
62%
(Americas)
12% (Europe)
$631$120
$264
Revenue growth led by Americas which benefited from expansion
into US intermodal and strong demand from automotive sector
5. Group Outlook
Page 32 | 25 October 2012 | 3Q 2012 Performance Review
Group Outlook
The Group turned in an improved third quarter result due mainly to cost savings
and improved business efficiencies. However, the macro-economic outlook
remains weak and the container shipping industry continues to face
overcapacity and high fuel prices. The Group posted weak first quarter results.
While the Group will continue to extract further operational efficiencies and
strengthen its competitive position, it expects to post a full year loss.
Appendix
Page 34 | 25 October 2012 | 3Q 2012 Performance Review
YTD11 Revenue Breakdown – by Customer Segment
3% (Electronics/Hi tech)
10% (Others)
41% (Auto/Industrial)
34% (Retail)
12% (Consumer)
YTD12 Revenue Breakdown – by Customer Segment
9% (Others)
53% (Auto/Industrial)
23% (Retail)
12% (Consumer)
Logistics - Revenue Trend by Customer Segment
Greater demand for our auto-related logistics services increases Auto/Industrial segment
share.
3% (Electronics/Hi tech)
Page 35 | 25 October 2012 | 3Q 2012 Performance Review
Group Fuel and Currency Exposures
Bunker
The Group continues to recover part of its fuel price increases from customers through
bunker adjustment factors.
The Group also maintains a policy of hedging its bunker exposures.
Foreign exchange
Major foreign currency exposures are in Euro, Singapore Dollar, Canadian
Dollar, Japanese Yen and Chinese Renminbi.
The Group maintains a policy of hedging its foreign exchange exposures.
End of Presentation
Thank You
Neptune Orient Lines Ltd
456 Alexandra Road,
NOL Building
Singapore 119962
Tel: (65) 6278 9000
Fax: (65) 6278 4900
Company registration
number : 196800632D
Website: www.nol.com.sg