j. lauritzen a/s investor update interim financial report 2015...
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J. Lauritzen A/S
Investor Update – Interim Financial Report 2015 Q2
August 2015
www.j-l.com | Oceans of know-how
AGENDA
• Key messages on 2015 Q2
• 2015 H1 financials
• Lauritzen Bulkers
• Lauritzen Kosan
• CAPEX
• Existing financing
• Outlook 2015
• Appendix
2 2015 Q2 Interim Financial Report – Investor Update
Please read the disclaimer placed as the
last slide in this presentation. Thank you.
2015 Q2 as difficult as foreseen - EBITDA as expected, however unsatisfactory low; Vessel values down 17% since 2014YE - Markets appear to have stabilised, albeit at low levels
• Markets
• Record low dry cargo markets during Q1 and into Q2
• Markets for smaller gas carriers in general performing as expected
• Asset values under pressure during 2015 H1, particular in the dry bulk segment (values down 18-34% since 2014YE)
• Business areas
• Activity (ship days, total controlled fleet) in 2015 Q2 on average down 8% on 2015 Q1
• Core fleet totalled 109 vessels at end-2015 Q2 against 113 at end-2015 Q1
• Cease of long-term employment on two owned capesize dry bulk carriers against compensation payment to JL
• Financials
• EBITDA USD (8.4)m in 2015 Q2 compared to USD (9.5)m in 2015 Q1
• 2015 FY EBITDA estimate revised to USD (55)m-(25)m – narrowing the previous guidance
• Net interest bearing debt USD 322m at end-2015 Q2 (USD 282m at end-2015 Q1)
• Cash balance USD 155m at end-2015 Q2 (USD 256m at end 2015 Q1) – JLA 01 repaid on 5 may 2015
• Financing and investments
• Commitment for refinancing of 2017-maturing bank debt secured
• Five (hereof two post-2015 Q2) dry bulk vessels sold, with three taken back on time-charters
3
Key messages
2015 Q2 Interim Financial Report – Investor Update
2015 H1 Net results of USD (144.6)m; impacted by special items
4
Income statement EBITDA per quarter in USDm
• EBITDA as expected at USD (17.9)m; down USD 45.6m
• Lauritzen Bulkers at USD (24.9)m down USD 42.2m
• Lauritzen Kosan at USD 11.2m down USD 2.9m
• Special items USD (86)m against USD 31m
• See separate breakdown on next slide
• Finance net down USD 3.3m to USD (17.4)m
• Net results down USD (173.6)m to USD (144.6)m
- Very weak dry cargo markets in H1 causing negative EBITDA in Bulkers; Spot trading as expected
- EBITDA from Kosan (LPG and petrochemicals) in line with expectations
Comments on 2015 H1 vs. 2014 H1
2015 Q2 Interim Financial Report – Investor Update
(10)
0
10
20
30
Q1 Q2 Q3 Q4 Q1 Q2
2014 2015
1st half
USDm 2014 2015
EBITDA
Lauritzen Bulkers 17.3 (24.9)
Lauritzen Kosan 14.1 11.2
Not allocated a.o. (3.8) (4.1)
EBITDA 27.7 (17.9)
Sale of assets 5.6 (0.0)
Depreciation (28.6) (23.4)
Joint ventures 0.1 0.3
Operating income (EBIT)
before special items 4.8 (41.0)
Special items 31.0 (86.0)
Net financial items (20.7) (17.4)
Results before tax 15.1 (144.4)
Tax 0.1 (0.1)
Disc. ops. incl minorities 13.8 (0.1)
Net result 29.0 (144.6)
Special items
2015 Q2 Interim Financial Report – Investor Update 5
- One-off items: Revenue from sale of claims, settlements , compensation for contract termination
- Write-downs, impairment losses and provisions
USDm 2014 H1 2015 H1
One-off revenue from sale of claims and
claim settlements, contract termination 31.0 77.2
Sale of vessels as a consequence of
counterparty defaults - -
Impairment losses on vessels and
vessels under construction - (151.6)
Provisions and use of provisions
for onerous contracts - 6.6
Impairment losses on vessels
owned by joint ventures - (14.9)
Financial items related to contract
termination - (3.3)
Special items, net 31.0 (86.0)
Break-down of special items
USDm 2014 H1 2015 H1
EBITDA 58.7 65.9
Sale of assets 5.6 0.0
Depreciation and impairment losses (28.6) (175.0)
Joint ventures 0.1 (14.6)
Operating income 35.8 (123.8)
Net financial items (20.7) (20.7)
Results before tax 15.1 (144.5)
Condensed income statement with special items in operating profit
• One-off revenue
• Compensation connected to the termination of long term employment of two owed capesize vessels
• Write-down and impairment losses
• Write-down of two owned capesize vessels to sales value
• Challenging bulk markets causing further impairment losses on small dry bulk vessels (owned and part-owned fleet)
Notable items
Balance sheet at 2015 Q2
Balance sheet
6
Key messages
• Fixed assets at USD 694m
down from USD 935m at end-2015 Q1,
hereof USD 91m reclassified as assets held for sale
• Solvency at 41.2%
down from 43.0% at end-2015 Q1
• Key figures very unsatisfactory
• ROIC of (32.5%) reflecting the impairment loss, and
• NIBD/EBITDA at (9.0) reflecting the negative EBITDA
• Cash at USD 155m
down from USD 256m at end-2015 Q1,
hereof USD 71m net repayment of JLA 01 in May 2015
• CAPEX commitment relating to
owned newbuildings USD 96m (down from USD 139m) Further details on slide 12
• Off-balance commitments related to chartered fleet
was USD 709m (gross), down USD 23m Further details on slide 17
- Cash and committed facilities totaled USD 155m
- Net interest bearing debt USD 322m corresponding to 63% of vessel market values
2015 Q2 Interim Financial Report – Investor Update
Notes: * Does not include undrawn committed facilities (was USD 99.7m at year-end 2014)
** Continuing operations only
USDm 2014YE 2015 Q1 2015 Q2
Fixed assets 952 935 694
- Vessels in operation 773 763 513
- Investments in joint ventures 89 84 73
Current assets 256 332 357
- Assets held for sale - - 91
- Cash * 184 256 155
Total assets 1,208 1,267 1,050
JL share of equity 573 545 433
Minority share 0 0 0
Non-current liabilities 424 512 421
Current liabilities 211 211 196
Solvency 47.4% 43.0% 41.2%
ROE (25.3%) (19.3%) (57.5%)
NIBD/EBITDA ** 17.5 (7.4) (9.0)
Investments (vessels only) 43 0 5
Divestments (vessels only) 602 0 3
ROIC ** (14.3%) (6.6%) (32.5%)
- 50 100 150 200 250 300 350 400 450
-
-
- 50 100 150 200 250 300 350 400 450 - 50 100 150 200 250 300 350 400 450
LB
LK
Market Value Debt Book Value
30 June 2014 31 Dec. 2014
Fleet LTV 72% on average (up from 65% at end-2014) - Y-o-Y, vessel values down 23%. Since 2014YE, down 17%
- Prudent Loan-to-Value ratio
2015 Q2 Interim Financial Report – Investor Update 7
Fully owned fleet - Values and debt in USDm as per end June 2015
Excluding
vessels held for
sale,
LTV was 68% at
end-2015 Q2
Average age in years
Total owned fleet 8.4 Dry bulk carriers 5.6 Gas carriers 10.8
Activity & fleet
• Controlled fleet (total activity) averaged 99 vessels in 2015 Q2 (100 vessel on average in 2015 Q1)
• Core fleet totalled 72 at end 2015 Q2 (2015 Q1: 75)
• Short-term chartered fleet for the spot trading activities averaged 26 vessels in 2015 Q2 (2015 Q1: 25)
• Coverage in handysize and supramax increased. Redelivery of two capes reflected in changed cover for capesize segment
• After end-2015 Q2:
• Two handysize newbuildings sold and chartered back to LB
• One handysize vessel sold and chartered back to LB
• Two owned capesize vessels sold
2015 Q2 Interim Financial Report – Investor Update 8
- Increased focus on spot trading: Generates value in fluctuating and in depressed markets
- Expected activity in 2015FY (measured by average no. of vessels) 96; slightly down on earlier expectations
Cover for rest of 2015
Handysiz
e
Supra
max
Capesiz
e
To
tal
New
build
ings
Total 58 11 3 72 19
Owned 17 0 2 19 4
Part-owned 7 0 0 7 2
B/B in 0 0 0 0 0
T/C in *) 25 11 1 37 13
Pool, etc. 9 0 0 9 0
Fleet at end 2015 Q2*
Note: * Not including time-charters with a
duration of less than 12 months
Note:
CoAs included in the cover with expected requirement
Activity (avg. no. of vessels)
15%
38%
71%
45%
70%
12%
0% 25% 50% 75%
Handysize
Supramax
Capesize
2015 Q3-Q4
end-2014
0
20
40
60
80
100
120
0
20
40
60
80
100
120
2011 2012 2013 2014 2015 Q1
2015 Q2
Handysize Supramax
Capesize Total
Dry Bulk outlook: Remainder of 2015 to be stable with rates at low levels
• Global dry bulk demand is expected to experience stable,
but at much lower growth rates than previous years
We expect the business environment to remain
challenging throughout 2015
A rebound assuming continued high scrapping pace and
slippage likely within one to two years
2015 Q2 Interim Financial Report – Investor Update 9
- Slowdown in Chinese demand growth and excess oversupply continue to hurt dry bulk markets
- Despite increase in scraping and very limited contracting currently, real improvements not likely during 2015
Markets
Source: Own analysis based on data from Clarkson Research Services
Age profile and order book
• Scrapping activity during 2015 H1 surpassed total
2014-scrapping
(19.7m dwt in 2015 H1 vs. 15.6m dwt for 2014FY)
• Post-2016, delivery volumes will tail off and forecasts
indicate record delivery slippage and cancellations
• Demand for new vessels will be very low in the coming
years
World fleet
Spot market rates
0
500
1,000
1,500
2,000
2,500
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2011-01 2012-01 2013-01 2014-01 2015-01
Average of the 6 T/C Routes for Baltic Supramax Index (LHS)
Average of the 6 T/C Routes for the Baltic Handysize Index (LHS)
Baltic Exchange Dry Index (RHS)
USD/day Index
0%
20%
40%
60%
80%
100%
0%
20%
40%
60%
80%
100%
Capesize Supramax Handysize
25 years or more 16-24 years 0-15 years Orderbook %
- Expected activity in 2015: 36 vessels on average
- Fleet employment (cover) typically renewed annually
10
Cover for rest of 2015 Fleet at end 2015 Q2 Activity (avg. no. of vessels)
Sem
i-refrig
era
ted
Eth
yle
ne
Fu
lly-p
ressuris
ed
To
tal
New
build
ings
Total 12 13 12 37 0
Owned 6 6 10 22 0
Part-owned 0 3 0 3 0
B/B in 4 0 0 4 0
T/C in *) 0 0 2 2 0
Pool, etc. 2 4 0 6 0
0
10
20
30
40
50
0
5
10
15
20
25
2011 2012 2013 2014 2015 Q1
2015 Q2
Semi-refrigerated Ethylene
Fully-pressurised Total (RHS)
54%
60%
33%
58%
57%
38%
0% 25% 50% 75%
F/P
S/R
Ethylene
2015 Q3-Q4
end-2014
2015 Q2 Interim Financial Report – Investor Update
Note:
CoAs included in the cover with expected requirement
Total >>
Activity & fleet
• Controlled fleet averaged 36 vessels in 2015 Q2 (unchanged from 2015 Q1)
• Total activity expected unchanged approx 36 vessels on average in 2015
• Coverage levels in line with levels at beginning of 2015
Small gas carriers: 2015 appear to bring the expected improvement
• Demand supported by
• Stabilisation of oil and commodity prices
• Less maintenance and outage of refining and petrochemical plants
• Supply side developing as expected
• Modest rate improvements materialising during 2015 (except for fully-pressurised carriers in Asia/East of Suez)
• Lifting of Iran-sanctions not likely to have any near term impact on market for small gas carriers (mainly ETH)
2015 Q2 Interim Financial Report – Investor Update 11
- Demand supported by positive economic growth expectations and stabilisation of energy and petrochemical prices
- Markets for smaller gas carriers developing as expected, in general
Outlook continues points to a recovery
Sources: Own analysis based on data from Fearnleys and Clarkson Research Services
Small gas carriers: Age profile and orderbook Spot rates
0
100
200
300
400
500
600
700
2011-01 2012-01 2013-01 2014-01 2015-01
(F/P) 3.500 cbm - East (F/P) 3.500 cbm - West
(S/R) 6.500 cbm (ETH) 10.000 cbm
1,000 USD/month
0%
20%
40%
60%
80%
100%
0%
20%
40%
60%
80%
100%
Age distribution FP Age distribution SR/FR
25 years or more 15-24 years 0-14 years Order book %
CAPEX, financing and deliveries - Post-delivery bank financing for owned newbuildings secured
2015 2016 2017 2018 Total
CAPEX
Remaining payments on newbuildings
Owned USD m 7 42 28 19 96
Part-owned – JL share (dry bulk) * USD m 2 1 2 - 5
Part-owned – JL share (Axis Offshore) ** USD m 5 53 - - 58
Financing (owned newbuildings)
Committed financing *** USD m - 37 20 20 77
Deliveries
Owned newbuildings
Handysize (dry bulk) # - - - - -
Supramax (dry bulk) # - 2 1 1 4
Part-owned newbuildings
Handysize (dry bulk) # - - 2 - 2
Accomodation and Support Vessels (Axis Offshore) # - 2 - - 2
Time-chartered newbuildings
Handysize (dry bulk) # 1 6 5 - 12
Supramax (dry bulk) # - 1 - - 1
Note: Totals may differ due to rounding.
* Amounts shown are the equity commitment expected to be called from JL. J/V will procure financing directly
** Timing and amounts shown are the commitment expected to be called from JL. Timing and actual amount may differ and will e.g. depend also on amount of capital raised directly
by Axis Offshore and any changes in the delivery schedule.
*** Committed amount (maximum). Actual amount may be lower and depend on market value of vessels at delivery.
12 2015 Q2 Interim Financial Report – Investor Update
Financing - Commitment for refinancing of USD 63m 2017-maturing bank debt obtained
- Remaining bank debt refinancing: USD 21m in 2016
Outstanding debt in USDm, at end-of-year Repayment profile in USDm
-37 -20 -20
21 39 28 30 26 23 17 11
76 21
63
38 60
57
82
-50
-25
0
25
50
75
100
125
150
175
200
2015 H2
2016 2017 2018 2019 2020 2021 2022 2023
Disbursements
Repayments
Prepayments
Bullets (bank loans)
Bullet (bonds)
Refinancing commitment secured. Completion of refinancing expected by 2015 Q3
154 142 99 91
64 48 35 30
43 37
31 25
19 13
7 2
142 137
116 119
88 87
28 26
82 82
0
50
100
150
200
250
300
350
400
450
2015 2016 2017 2018 2019 2020 2021 2022 2023
Term loans
Term loans ECA backed
Revolving credits (incl undrawn amounts)
Bonds unsecured
Notes: Data as per end-July 2015
• Prepayments cover repayment of debt related to assets held for sale.
• Disbursements are amounts to be drawn from committed loan facilities in connection with delivery of newbuildings.
Actual disbursements may be lower and will e.g. depend on valuations.
• All numbers shown are forecasts and can change e.g. in case of sale of a vessel, prepayment, change in use of revolving facilities, etc.
• Bond debt at hedged value less JL’s own bond holding.
13 2015 Q2 Interim Financial Report – Investor Update
Revised earnings guidance for 2015 FY - Reflecting effect from termination of certain long-term employment, asset sales, impairment losses, etc.
2015 Q2 Interim Financial Report – Investor Update 14
Guidance as per 13 August 2015
Announcement #1 #2 #3 #4
USDm Annual report
25-Feb-15 Q1
11-May-15 Cease of charter
06-Jul-15 2015H1
13-Aug-15
EBITDA (20)-30 (50)-0 (65)-(15) (55)-(25)
Result from continuing operations (70)-(20) (100)-(50) (135)-(80) (200)-(170)
JL's share of the result (70)-(20) (100)-(50) (135)-(80) (200)-(170)
Market conditions for bulk carriers in Q1 expected to continue during 2015, negatively impacting our full-year earnings
Special items down by approx. USD (15)-(20)m Notice of risk of impairment connected to 2015H1
EBITDA range narrowed Includes total impairment losses of USD (173)m, whereof approx USD (79)m relates to existing handysize vessels and new buildings
Concluding remarks
15 2015 Q2 Interim Financial Report – Investor Update
- Markets appear to have stabilised, albeit at low levels
- Protecting our cash continues to be a key focus
2015FY earnings expected to be unsatisfactory low
• Current (mid-August) upturn in dry bulk rates not to be mistaken for a solid improvement
• Markets for smaller gas carriers see moderate improvements, save for F/P in Asia
Steps taken by JL
• Monetisation of employment contracts
• Asset sales, including exiting from vessel ownership in the capesize segment
• Exchanging of CAPEX commitments into longer T/C-commitments
• Obtained commitment for refinancing of bank debt
JL’s status
• USD 155m liquidity at end-2015 Q2
• Solid 41% equity ratio at end-2015 Q2
• Robust average 68% loan to value
• Refinancing risk reduced even further
• In compliance with all financial covenants
www.j-l.com | Oceans of know-how
Appendix
• Charter obligations and committed charter income
• Other business activities
• Contact details
• Disclaimer
16 2015 Q2 Interim Financial Report – Investor Update
Charter obligations
17
Operational lease liabilities (time charter and bare boat contracts) at end 2015 Q2
Bulkers Kosan
Total
(continuing operations only)
USDm
No. of vessels
(full year equiv.) USDm
No. of vessels
(full year equiv.) USDm
No. of vessels
(full year equiv.)
2nd half 2015 72.4 16.2 6.0 3.0 78.4 19.2
1 - 2 Year 120.3 26.4 7.7 4.3 128.0 30.7
2 - 3 Year 106.6 24.1 3.7 2.1 110.2 26.2
3 - 4 Year 97.3 22.4 - - 97.3 22.4
4 - 5 Year 72.8 17.0 - - 72.8 17.0
> 5 Year 222.6 51.1 - - 222.6 51.1
Total 692.1 - 17.3 - 709.4 -
2015 Q2 Interim Financial Report – Investor Update
At end 2015 Q2 JL had purchase options on 22 dry bulk carriers
Other business activities
18
Axis Offshore (accommodation and support vessels)
2015 Q2 Interim Financial Report – Investor Update
• Joint venture with HitechVision
• JL investment commitment maximum USD 66m
• JL ownership 33.6% (50% voting rights)
Other investments
Hafnia Tankers
• Lauritzen Tankers sold its fleet
of MR tankers to Hafnia Tankers
in 2013 (delivery completed 2014 Q1)
• At end 2015 Q2, JL held 5.3% of
the shares in Hafnia Tankers Ltd.
Dry bulk
• Co-ownership in J/Vs controlling
seven handysize vessels (operated by LB) and
two supramax vessels (not operated by LB)
• Co-ownership in a J/V controlling two orders on handysize
vessel newbuildings
Gas carriers
• Co-ownership in a J/V owning 3 ETH gas carriers
employed by Lauritzen Kosan
Hafnia Tankers is an international pure-play product tanker
company. The shares are quoted on the Olso OTC-list
• “Dan Swift” on T/C to Petrobras until end 2016 Q2
• ”Axis Nova”: Agreed with yard to allow for postponed
delivery to 15 July 2016. Cancellation rights, if any, not to
be exercised prior to 30 June 2016
• ”Axis Vega”: Expected ready for operation in Spring 2016
Axis Offshore Pte. Ltd.
– key figures
2015
Q1
JL share
USDm
EBITDA 6.0
Net profit 0.8 0.3
Total assets 301.6 103.1
Equity 141.9 47.7
Above information taken from Axis Offhore’s published information
Contact details
Investor relations
Jacob Winthereik Financial Investor Relationship Manager
E-mail: [email protected]
Phone: +45 3396 8384
Web: http://www.j-l.com
19 2015 Q2 Interim Financial Report – Investor Update
Press & Media
Jens Søndergaard Senior Vice President,
Strategic Planning & Executive Communications
E-mail: [email protected]
Phone: +45 3396 8401
Web: http://www.j-l.com
Disclaimer
• This presentation contains forward-looking statements concerning J. Lauritzen A/S (“J. Lauritzen”, “JL” or the “Group”) and its financial condition, results of
operations and business. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking
statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown
risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements.
• Forward-looking statements include, among other things, statements concerning J. Lauritzen’s potential exposure to market risks and statements expressing
management’s expectations, beliefs, estimates, forecasts, projections and assumptions. There are numerous factors that could affect J. Lauritzen A/S’ future
operations and could cause J. Lauritzen A/S’ results to differ materially from those expressed in the forward-looking statements included in this presentation.
• All forward-looking statements contained in this presentation are expressly qualified by the cautionary statements contained or referenced to in this statement.
Undue reliance should not be placed on forward-looking statements.
• Each forward-looking statement speaks only as of the date of this presentation. J. Lauritzen does not undertake any obligation to publicly update or revise
any forward-looking statement as a result of new information or future events other than required by applicable law. In light of these risks, results could differ
materially from those stated, implied or inferred from the forward-looking statements contained in this presentation.
• Some of the statistical and graphical information contained in the presentation is supplied from the Clarkson Research Services Limited (“CRSL”) database
and other sources. CRSL has advised that (i) some information in CRSL’s database is derived from estimates or subjective judgments, (ii) the information in
the databases of other maritime data collection agencies may differ from the information in CRSL’s database, (iii) whilst CRSL has taken reasonable care in
the compilation of the statistical and graphical information and believes it to be accurate and correct, data compilation is subject to limited audit and validation
procedures and may accordingly contain errors, (iv) CRSL, its agents, officers and employees cannot accept liability for any loss suffered in consequence of
reliance on such information or in any other manner, and (v) the provision of such information does not obviate any need to make appropriate further
enquiries. Any use of such data and graphical information appear with reference to Clarkson Research Services Limited
• While the information in the presentation is believed to be accurate, no representation or warranty, express or implied, is or will be made in relation to the
accuracy or completeness of this presentation or any other written or oral information transmitted or made available to any person or its advisors in connection
with any investigation of the Group and no responsibility or liability is or will be accepted by the Group or any of their respective affiliates and representatives.
In particular, no representation or warranty, express or implied, is or will be given as to the achievement or reasonableness of any statements, estimates and
projections with respect to the anticipated future performance of the Group and the market for the Group’s products and services.
20 2015 Q2 Interim Financial Report – Investor Update