Second Quarter 2015 Results27 August 2015
2
Agenda
• Highlights
• Financials
• Operational review
• Project Felix
• Market update and prospects
• Q&A
3
Highlights
• Best quarterly operational performance since 3Q 2008, net result of USD 7 mill.
• Chemical Tankers EBITDA was USD 42 mill compared with USD 26 mill in first
quarter. EBITDA includes negative effects from bunker derivatives of USD 12 mill.
• Odfjell chemical freight index (ODFIX) result up 5% compared with the previous
quarter.
Highlights
0
50
100
150
200
10 11 12 13 14 15
Inde
x 19
90=1
00
ODFIX
¹ Proportional consolidation method according to actual historical ownership share
-50
0
50
100
150
200
250
300
350
06 07 08 09 10 11 12 13 14 15
USD
mill
Annualised EBITDA¹
Chemical tankers Tank terminals LPG/Ethylene
4
Highlights
• Impairment of USD 10 mill related to sale of vessels.
• The cost-cutting and efficiency programme is progressing as planned.
• Continued improved results from Odfjell Terminals, EBITDA of USD 18 mill first
half 2015 compared with negative USD 10 mill same period last year.
Highlights
5hallo
Income statement¹ - Second quarter 2015
Financials
¹ Proportional consolidation method
USD mill 2Q15 1Q15Gross revenue 279 260
Voyage expenses (104) (106)
TC expenses (45) (40)
Operating expenses (50) (53)
General and administrative expenses (27) (26)
Operating result before depr. (EBITDA) 53 35
Depreciation (31) (30)
Impairment (10) -
Operating result (EBIT) 12 5
Net finance (5) (37)
Taxes (0) (0)
Net result 7 (32)
6
Quarterly figures¹
0
50
100
150
200
250
300
350
2013 2014 2015
US
D m
ill
Gross Revenue
0
10
20
30
40
50
60
2013 2014 2015
USD
mill
EBITDA
EBITDA adjusted for one-off items:
4Q14: USD 28 million (USD 34 million unadjusted)
1Q15: USD 37 million (USD 35 million unadjusted)
2Q15: USD 55 million (USD 53 million unadjusted)
EBITDA adjusted for one-off items:
4Q14: USD 28 million (USD 34 million unadjusted)
1Q15: USD 37 million (USD 35 million unadjusted)
2Q15: USD 55 million (USD 53 million unadjusted)
Financials
¹ Proportional consolidation method
7
Quarterly figures
‐6‐15
58
‐15
1223
5
‐99
5
-120
-100
-80
-60
-40
-20
0
20
40
2013 2014 2015
US
D m
ill
Operating Result (EBIT)¹ • EBIT 2Q includes: Impairment of USD 10 million related to
sale of vessels. Negative effect of bunkers hedging of USD
12.1 million.• Unrealized value on derivatives USD 11.3 million
posted other financial items in 2Q, compared with negative USD 21.2 million in 1Q.
• EBIT 2Q includes: Impairment of USD 10 million related to
sale of vessels. Negative effect of bunkers hedging of USD
12.1 million.• Unrealized value on derivatives USD 11.3 million
posted other financial items in 2Q, compared with negative USD 21.2 million in 1Q.
‐9 ‐7 ‐7 ‐9 ‐9 ‐9 ‐9 ‐11 ‐10 ‐12
7
‐1
‐15‐6
1
‐5
0
‐10‐20
9
-30-25
-20-15-10-5
05
10
15
USD
mill
Net Finance²
Net interest Other financial/currency
2013 2014 2015
Financials
¹ Proportional consolidation method² Equity method
haallooooooooooooo
‐13‐22
‐32
‐2
‐26
79
‐9
‐102
‐17
-110
-90
-70
-50
-30
-10
10
30
2013 2014 2015
USD
mill
Net Result
8
Results per segment¹
2Q15 1Q15
USD millChemical tankers
Tank terminals
LPG/Ethylene
Chemical tankers
Tank terminals
LPG/Ethylene
Gross revenue 247 28 5 229 27 4EBITDA 42 10 1 26 9 1EBIT 10 2 1 4 1 1
0%10%20%30%40%50%60%70%80%90%
100%
Gross revenue EBITDA Assets
2Q15
Chemical tankers Tank terminals LPG/Ethylene
Financials
¹ Proportional consolidation method
-50
0
50
100
150
200
250
300
350
06 07 08 09 10 11 12 13 14 15
USD
mill
Annualised EBITDA¹
Chemical tankers Tank terminals LPG/Ethylene
9
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Income statement¹ – 2Q15 chemical tankersUSD mill 2Q15 1Q15
Gross revenue 247 229
Voyage expenses (102) (104)
TC expenses (44) (38)
Operating expenses (36) (39)
General and administrative expenses 2 (23) (22)
Operating result before depr. (EBITDA) 42 26
Depreciation (23) (22)
Impairment (10) -
Operating result (EBIT) 10 4
Financials
• Stable, but slightly improved gross revenue.
• Bunker adjustment clauses impacted the gross revenue negatively by USD 7 million
(USD 10 million in 1Q).
• EBITDA includes negative effects from bunker hedging derivatives of USD 12.1 million
(USD 15 million in 1Q).
• G&A includes one -offs of USD 1.9 million.
• Stable, but slightly improved gross revenue.
• Bunker adjustment clauses impacted the gross revenue negatively by USD 7 million
(USD 10 million in 1Q).
• EBITDA includes negative effects from bunker hedging derivatives of USD 12.1 million
(USD 15 million in 1Q).
• G&A includes one -offs of USD 1.9 million. ¹ Proportional consolidation method 2 Including corporate functions
10
Vessel operating expenses – chemical tankers
0
2,000
4,000
6,000
8,000
10,000
12,000
06 07 08 09 10 11 12 13 14 YTD15
Development USD / day per year
Total Crew
Financials
0
2,000
4,000
6,000
8,000
10,000
12,000
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Quarterly USD / day
Total Crew
• Project Felix initiatives give significant positive results.
• Operating expenses (USD / day) reduced by 16% YTD compared to FY2014
• Expect stabilizing opex at competitive levels.
• Project Felix initiatives give significant positive results.
• Operating expenses (USD / day) reduced by 16% YTD compared to FY2014
• Expect stabilizing opex at competitive levels.
11
Bunker development
65.9 66.4
52.3 39.9 38.9
(3.9) (3.2)
2.7 10.0 6.9
(0.7) (0.2)
16.6 14.7
12.1
61.3 63.071.6
64.557.9
(20)
(10)
-
10
20
30
40
50
60
70
80
2Q14 3Q14 4Q14 1Q15 2Q15
US
D m
illNet Bunker Cost
Bunker purchase Bunker clauses Bunker hedging Net bunker cost
0100200300400500600700800
10 11 12 13 14 15
USD
/mt
Platts 3.5% FOB Rotterdam
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• Net bunker cost in 2Q15 was USD 436 per tonne
before hedging vs. USD 475 last quarter.
• About 50% of the remaining 2015 exposure is
hedged at an average of USD 527 per tonne.
• No bunker hedging in place beyond 2015.
• Bunker clauses in CoAs cover about 50% of the
exposure.
• Net bunker cost in 2Q15 was USD 436 per tonne
before hedging vs. USD 475 last quarter.
• About 50% of the remaining 2015 exposure is
hedged at an average of USD 527 per tonne.
• No bunker hedging in place beyond 2015.
• Bunker clauses in CoAs cover about 50% of the
exposure.
Financials
12
Income statement¹ – 2Q15 tank terminals
USD mill 2Q15 1Q15
Gross revenue 28 27
Operating expenses (14) (14)
General and administrative expenses (5) (4)
Operating result before depr. (EBITDA) 10 9
Depreciation (8) (8)
Operating result (EBIT) 2 1
Financials
¹ Proportional consolidation method
• The tank terminal segment continue the improvements and delivers a positive operating result.
• The occupancy rate improved to 92% versus 91% last quarter .
• The tank terminal segment continue the improvements and delivers a positive operating result.
• The occupancy rate improved to 92% versus 91% last quarter .
13
Tank terminals EBITDA – by geographical segment
‐3
10
8
3
-4
-2
0
2
4
6
8
10
12
Europe NorthAmerica
Asia Middle East
US
D m
illYTD 2015
EBITDA Tank Terminals by geographical segment 2Q15 1Q15
Europe (1) (2)North America 5 5Asia 4 4Middle East 2 2Total EBITDA 10 9
• Stable results in all areas.• Stable results in all areas.
Financials
14
Balance sheet¹ – 30.06.2015
USD mill - AssetsShips and newbuilding contracts 1 254
Other non-current assets/receivables 67
Investment in associates and JV’s 380
Total non-current assets 1 701
Available-for-sale investments and cash 108
Other current assets 133.
Total current assets 241
Assets held for sale 16
Total assets 1 958
Equity and liabilitiesTotal equity 636
Non-current liabilities and derivatives 43
Non-current interest bearing debt 876
Total non-current liabilities 919
Current portion of interest bearing debt 276
Other current liabilities and derivatives 127
Total current liabilities 403
Liabilities held for sale -
Total equity and liabilities 1 958
• Cash balance of USD 108 million - excluding JV’s cash.
• Net investment in tank terminals JV’s USD 317 million.
• Unrealised negative value on hedging derivatives with negative equity effect of USD 28.6 million end June, compared to USD 49.3 million end March.
• Equity ratio 32.5% (30.5% end March).
• Cash balance of USD 108 million - excluding JV’s cash.
• Net investment in tank terminals JV’s USD 317 million.
• Unrealised negative value on hedging derivatives with negative equity effect of USD 28.6 million end June, compared to USD 49.3 million end March.
• Equity ratio 32.5% (30.5% end March).
Financials
¹ Equity method
15
Debt development – 30.06.2015
• About to secure firm commitments for all scheduled vessel refinancing in 2015
with expected completion shortly.
• Restructured financial leases for three vessels, giving new liquidity of
USD 15 million.
• In total the 2015 refinancing will secure USD 65 million in new liquidity.
• NOK 600 million bond matures in December 2015.
0
200
400
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1,000
1,200
1,400
2Q15 2015 2016 2017 2018 2019
USD
mill
Debt Portfolio
Ending balance Repayment
Financials
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350
2015 2016 2017 2018 2019
US
D m
ill
Debt Repayments
Secured loans Balloon LeasingNOK bond 12/15 NOK bond 12/17 NOK Bond 12/18
16
Capital expenditure programme
In USD mill – per 30.06.2015 Remaining 2015 2016 2017 2018 2019
Chemical Tankers, Odfjell share
Docking 10 18 17 17 17
Other investments (vessel retrofitting) 5 7 5
Odfjell Gas, 100%1)
Sinopacific, 4 x 17,000 cbm 18 131
Sinopacific, 4 x 22,000 cbm 5 30 144
Tank Terminals, 100%
Planned capex 45 58 34 10 8
Financials
1) Odfjell SE (50% owner) is committed to inject up to USD 50 million in equity in 2015 - 2017. Due to delays at the yard the capital injections will most likely be pushed to later.
17
Terminal projects and expansionsOperational review
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• In Houston, the new 17,150 cbm tank pit (Bay 10) is under construction with an
expected completion date in the fourth quarter 2015 .
• Our terminal in Tianjin, located in a new industrial development area, was not directly
affected by the explosion in the Tianjin old harbour earlier this month.
• The event will most likely delay action on permits and we now expect that the
operations will commence in October..
18
Tank terminal capacity
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800
1,000
1,200
1,400
1,600
1,800
Cubic Metres`00
0
Mineral oil storage Chemical storage Ongoing expansions
Current capacity 5,431,790
Ongoing expansions 467,542
Current capacity 5,431,790
Ongoing expansions 467,542
Total capacity in CBM (incl. related parties):
Operational review
* Odfjell’s ownership share in the respective tank terminals is shown in percentage
19
Odfjell Terminals (Rotterdam) – current status
Operational review
• EBITDA negative USD 1.6 million in
2Q15 (Odfjell share), compared to
negative USD 2 million last quarter.
• Distillation (PID) business and re-
organization strategy implemented last
year has improved the results further. ‐80,000
‐60,000
‐40,000
‐20,000
0
20,000
40,000
60,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Annualised EBITDA OTR (100%)EUR 1,000
• Per end of 2Q15 the commercially available occupancy was at 93%, last quarter it
was at 87%.
• The distillation columns are fully operational.
• Total commercial capacity end June 860,000 cbm, compared to 820,000 cbm end
March.
• With the current market we expect to bring in additional capacity during second
half of 2015.
20
Odfjell Gas Carriers
Gross revenue up in 2Q15 from previous quarter.
Positive contribution from continued long-haul activity.
The construction of 4 x 17,000 cbm and 4 x 22,000 cbm is delayed.
We are in dicussions with the yard on new delivery dates.
Operational review
USD mill 2Q15 1Q15Gross revenue 5 4
EBITDA 1 1
EBIT 1 1
21
hhhhhhhh
Fleet development - last 12 months
Operational review
Fleet additions DWT Built Tanks Transaction
May 2015 Horin Trader 19 856 2015 Stainless Medium-term TC
April 2015 Marex Noa 12 478 2015 Stainless Long-term TC
March 2015 Gion Trader 19 883 2015 Stainless Medium-term TC
January 2015 Bow Triumph 49 600 2015 Coated Owned
October 2014 Bow Trident 46 600 2014 Coated Owned
August 2014 Kristin Knutsen 19 152 1998 Stainless Short-term TC
Short-term: Up to one yearMedium-term: 1-3 years
Fleet disposals, owned DWT Built Tanks Transaction
August 2015 Bow Bracaria 5 846 1997 Stainless Sale
July 2015 Bow Brasilia 5 800 1997 Stainless Sale
July 2015 Bow Balearia 5 846 1998 Stainless Sale
Odfjell has no further chemical tankers on order, but has medium term time-charter contracts for
newbuildings on order by third parties
Odfjell has no further chemical tankers on order, but has medium term time-charter contracts for
newbuildings on order by third parties
22
Project Felix: Reducing cost and improving efficiency
• End June, run-rate was at 67% which is in line with target.
• FTE reductions are on track for all improvement areas. 63% of redundant
employees (excluding early retirment) have new employment or confirmed future
plans.
• Cost reduction initiatives are on schedule. Target still to improve net result on a
yearly basis with USD 100 million when fully implemented.
• 3 vessels sold in 2Q as part of the programme, which includes exiting from
unprofitable trades.
• Focus for next two quarters will be on profitability improvement initiatives and
energy efficiency projects.
Project Felix
23
Felix initiative - retrofitting
Project Felix
Bow Clipper – 19.08.2015
• First vessel to have propeller, rudder and gear retrofitted/modified.
• Alfa propeller blades for best possible propulsive efficiency.
• Rudder bulb system to reduce energy loss caused by the turbulence behind the propeller.
• Mewis duct straightens and accelerates the hull wake into the propeller (a pre-Felix project).
• A greener profile to gain the lowest possible energy efficiency design index(EEDI).
• Efficiency testing to be concludedduring September.
24
hhhhhhh
67 % of Felix improvements are implementedIn line with plan
0
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70
80
90
100
62%
38% 38%47%
53%
Jun.
67%
MayApr.
57%
Jan. Mar. Jul.
71%76%
Dec.Oct.
77%
84%
77%
Sep.
77%
Dec. 2016
Aug.
100%% of total
32%
58%
52%
Dec 2014
Feb.
41%
67%
Nov.
ActualPlanned
Total profit improvement potential (%, “run rate”, June 2015)
2015
Project Felix
25
Market update – chemical tankers
• Positive sentiment in the market in second quarter.
• A strong clean petroleum market (CPP market).
• No material disruption to the operation of our vessels in the period.
• Contracts renewed at roll-over terms.
Market update and prospects
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Inde
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ODFIX
26
hhhhhhhhhhhhh
Core Chemical Deep-sea Fleet 2004-2018Orderbook and estimated demolition per 13 August, 2015
* Outphasing 30 years (Europe built) and 25 years (Asian built)Source: Odfjell FLEETBASE
Market update and prospects
Average annual net growth:2004-2014: 7.2%2015-2018: 6.6%
27
Prospects
• US household consumption is expected to support economic growth in the
second half of the year.
• The pace of the Euro area’s recovery remains moderate and gradual.
• Continued uncertainty about China.
• Increasing benefits from lower bunker price.
• We expect third quarter to be similar to second quarter for the Chemical Tankers
segment.
• We expect stable to increased earnings at the Odfjell Terminals due to capacity
expansions and continued positive development at Odfjell Terminals
(Rotterdam).
Market update and prospects
28
Executive Management - priorities during 2nd half 2015
• Key focus is to build strength.
• Familiarization with the global Odfjell organization and other key stakeholders.
• Keep momentum in project Felix – also beyond initial targets.
• Bond refinance.
• Review operational and financial strategies in all segments.
Market update and prospects
29
Company representatives
Terje Iversen – CFO, Odfjell SE
Email: [email protected]
Phone: +47 932 40 359
IR – contact:
Tom A. Haugen – VP Finance, Odfjell SE
Email: [email protected]
Phone: +47 905 96 944
Kristian V. Mørch – CEO, Odfjell SE
Email: [email protected]
Phone: +47 55 27 00 00
Thank you
For more information please visit our webpage at www.odfjell.com