Fourth Quarter / Preliminary Full Year 2014 Results · Fourth Quarter / Preliminary Full Year 2014...
Transcript of Fourth Quarter / Preliminary Full Year 2014 Results · Fourth Quarter / Preliminary Full Year 2014...
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Fourth Quarter / Preliminary Full Year 2014 ResultsOslo – 12 February 2015
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Agenda
• Highlights
• Financials
• Operational review
• Project Felix
• Market update and prospects
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Highlights
• Chemical Tankers EBITDA of USD 30 million, compared with USD 26 million in third
quarter
• Odfjell chemical freight index (ODFIX) up more than 10% compared with last
quarter
• Time-charter result down 6% due to bunker hedging
Highlights
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¹ Proportional consolidation method according to actual historical ownership share
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EBITDA¹
Chemical tankers Tank terminals LPG/Ethylene
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Highlights
• Odfjell Terminals EBITDA of USD 2 million compared with USD 4 million in third
quarter
• Initiated cost-cutting and efficiency programme estimated to improve the net result
by in excess of USD 100 million on a yearly basis when fully implemented within
the end of 2016
Highlights
Delivery of Bow Triumph in January, the last of four coated chemical tankers from the Hyundai Mipo yard in South Korea
5hallo
Income statement¹ - Fourth quarter 2014
USD mill 4Q14 3Q14Gross revenue 245 267
Voyage expenses (116) (123)
TC expenses (41) (47)
Operating expenses (40) (44)
Share of net result from associates and JV (5) (8)
General and administrative expenses (18) (24)
Operating result before depr. (EBITDA) 25 19
Depreciation (20) (24)
Impairment (4) -
Capital gain/loss on fixed assets (0) 7
Operating result (EBIT) 0 1
Net finance (22) (9)
Taxes 3 (1)
Net result (18) (9)
Financials
¹ Equity method
6hallo
Income statement¹ - Preliminary full year 2014
USD mill 2014 2013Gross revenue 1 053 1 027
Voyage expenses (496) (489)
TC expenses (191) (164)
Operating expenses (175) (189)
Share of net result from associates and JV (32) (52)
General and administrative expenses (93) (93)
Operating result before depr. (EBITDA) 66 41
Depreciation (90) (89)
Impairment (4) -
Capital gain/loss on fixed assets 7 (9)
Operating result (EBIT) (22) (57)
Net finance (53) (46)
Taxes 0 (5)
Net result (75) (108)
Financials
¹ Equity method
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Quarterly figures¹USD mill
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2012 2013 2014
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Gross Revenue
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1015202530354045
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EBITDA
• Stable gross revenue
• EBITDA improvement continues, USD 34 million in 4Q14 compared to
USD 31 million in 3Q14
• Stable gross revenue
• EBITDA improvement continues, USD 34 million in 4Q14 compared to
USD 31 million in 3Q14
Financials
¹ Proportional consolidation method
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Quarterly figuresUSD mill
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Operating Result (EBIT)¹
• Other financial items negative USD 10 million
related to unrealized loss on derivatives not treated
as hedge accounting
• Net interest includes prior periods adjustments of
USD 1 million
• Other financial items negative USD 10 million
related to unrealized loss on derivatives not treated
as hedge accounting
• Net interest includes prior periods adjustments of
USD 1 million
‐8 ‐9 ‐9 ‐9 ‐9 ‐7 ‐7 ‐9 ‐9 ‐9 ‐9 ‐11
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Net Finance²
Net interest Other financial/currency2012 2013 2014
Financials
¹ Proportional consolidation method² Equity method
haallooooooooooooo
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Net Result
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Results per segment¹
4Q14 3Q14
USD millChemical tankers
Tank terminals
LPG/Ethylene
Chemical tankers
Tank terminals
LPG/Ethylene
Gross revenue 247 24 4 263 23 7EBITDA 30 2 1 26 4 1EBIT 5 (1) 1 3 (5) 7
0%10%20%30%40%50%60%70%80%90%
100%
Gross revenue EBITDA Assets
4Q14
Chemical tankers Tank terminals LPG/Ethylene
Financials
¹ Proportional consolidation method
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Chemical tankers Tank terminals LPG/Ethylene
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Income statement¹ – 4Q14 chemical tankers
USD mill 4Q14 3Q14
Gross revenue 247 263
Voyage expenses (117) (122)
TC expenses (41) (45)
Operating expenses (40) (44)
General and administrative expenses 2 (18) (25)
Operating result before depr. (EBITDA) 30 26
Depreciation (21) (24)
Impairment (4) -
Operating result (EBIT) 5 3
Financials
¹ Proportional consolidation method 2 Including corporate functions
• Impairment of USD 4 million related to Bow Pilot sold in January 2015
• Change of pension schemes resulting in an income of USD 10.9 million
• Provisions for severance payments of USD 5.1 million
• Realized bunkers hedging derivatives impacted the results negatively by USD 16.6 million
• Impairment of USD 4 million related to Bow Pilot sold in January 2015
• Change of pension schemes resulting in an income of USD 10.9 million
• Provisions for severance payments of USD 5.1 million
• Realized bunkers hedging derivatives impacted the results negatively by USD 16.6 million
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Vessel operating expenses - chemical tankers
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Financials
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Bunker development
71.1 72.3 65.9 66.4
52.3
(4.7) (4.2) (3.9) (3.2)
2.7
(1.1) (0.4) (0.7) (0.2)
16.665.3 67.7
61.3 63.071.6
(30)(20)(10)
- 10 20 30 40 50 60 70 80
4Q13 1Q14 2Q14 3Q14 4Q14
US
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Bunker purchase Bunker clauses Bunker hedging Net bunker cost
0100200300400500600700800
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USD
/mt
Platts 3.5% FOB Rotterdam
hallooooooooooooooooooo
• Net bunker cost in 4Q14 was USD 565 per tonne
before hedging
• About 50% of the 2015 exposure is hedged at
an average of USD 525 per tonne
• Bunker clauses in CoAs cover about 50% of the
exposure
• Net bunker cost in 4Q14 was USD 565 per tonne
before hedging
• About 50% of the 2015 exposure is hedged at
an average of USD 525 per tonne
• Bunker clauses in CoAs cover about 50% of the
exposure
Financials
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Income statement¹ – 4Q14 tank terminals
USD mill 4Q14 3Q14
Gross revenue 24 23
Operating expenses (17) (14)
General and administrative expenses (5) (5)
Operating result before depr. (EBITDA) 2 4
Depreciation (9) (8)
Impairment (reversal) 5 -
Capital gain/(loss) 0 (1)
Operating result (EBIT) (1) (5)
Financials
¹ Proportional consolidation method
Partial reversal of impairment of USD 5 million related to Odfjell Terminal (Rotterdam)Partial reversal of impairment of USD 5 million related to Odfjell Terminal (Rotterdam)
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Tank terminals EBITDA – by geographical segment
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Asia Middle East
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EBITDA Tank Terminals by geographical segment 4Q14 3Q14
Europe (7) (6)North America 3 3Asia 3 4Middle East 2 2Total EBITDA 2 4
• The tank terminal group delivered an EBITDA of USD
2 million in 4Q14
• The results were in line with previous quarter
• The tank terminal group delivered an EBITDA of USD
2 million in 4Q14
• The results were in line with previous quarter
Financials
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Balance sheet¹ – 31.12.2014
USD mill - AssetsShips and newbuilding contracts 1 284
Other non-current assets/receivables 84
Investment in associates and JV’s 393
Total non-current assets 1 761
Available-for-sale investments and cash 105
Other current assets 159.
Total current assets 265
Assets held for sale 7
Total assets 2 032
Equity and liabilitiesTotal equity 638
Non-current liabilities and derivatives 40
Non-current interest bearing debt 839
Total non-current liabilities 880
Current portion of interest bearing debt 326
Other current liabilities and derivatives 188
Total current liabilities 514
Liabilities held for sale -
Total equity and liabilities 2 032
• Cash balance of USD 105 million - excluding JV’s cash
• Net investment in tank terminals JV’s USD 331 million
• Unrealized loss on hedging derivatives with negative equity effect of USD 62.5 million
• Entered into a total return swap in December 2014 with expiry 19 March 2015
• Equity ratio 31.4%
• Cash balance of USD 105 million - excluding JV’s cash
• Net investment in tank terminals JV’s USD 331 million
• Unrealized loss on hedging derivatives with negative equity effect of USD 62.5 million
• Entered into a total return swap in December 2014 with expiry 19 March 2015
• Equity ratio 31.4%
Financials
¹ Equity method
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Debt development – 31.12.2014
• Debt repayments due in 2015 will be refinanced and will contribute poitively to
our cash holdings
• A significant portion of the balloon repayment maturing late 2015 will be
refinanced during first half of 2015
• NOK 600 million bond matures in December 2015
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Debt Portfolio
Ending balance Repayment
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Secured loans Balloon LeasingNOK bond 12/15 NOK bond 12/17 NOK Bond 12/18
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Capital expenditure programme
In USD mill – per 31.12.2014 2015 2016 2017 2018 2019Chemical Tankers, Odfjell share
Hyundai Mipo, 2 x 46,000 dwt1) 28
Docking 20 18 17 17 17
Odfjell Gas, 100 % share2)
Sinopacific, 4 x 17,000 cbm 90 63
Sinopacific, 4 x 22,000 cbm 25 84 70
Tank Terminals, 100% share
Planned capex 73 54 32 7 5
Financials
1) Bow Triumph was delivered in January 20152) Odfjell (50%) is committed to inject up to USD 50 million in equity in 2015 - 2017
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Terminal projects and expansionsOperational review
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• Odfjell Terminals (Charleston) will be at full occupancy in 1Q15, including a ship/store
solution for one major customer
• The new tank pit in Houston (Bay 10) is under construction with expected completion in
4Q 2015, adding 17,170 cbm of tank capacity, increasing total capacity to 362,134 cbm
• The construction of the new Tianjin Terminal in China is progressing with mechanical
completion scheduled in 1Q15, with jetties already receiving all operating permit from
the authorities
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Tank terminal capacity
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Mineral oil storage Chemical storage Ongoing expansions
Current capacity 5,419,722
Ongoing expansions 479,570
Current capacity 5,419,722
Ongoing expansions 479,570
Total capacity in CBM (incl. related parties):
Operational review
* Odfjell’s ownership share in the respective tank terminals is shown in percentage
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Odfjell Terminals (Rotterdam) – current status
Operational review
• EBITDA negative USD 7 million in 4Q14, Odfjell share
• Re-organisation and subsequent staff reduction have improved the cost base
• Commercial occupancy is 90% at the beginning of 2015
• Storage tanks supporting the PID distillation units re-commissioned as extended
ECA requirements in effect from 2015 will provide new contract opportunities
• Renewed product storage opportunities on contango pricing
• Gradually increase in commercial availble capacity from 550,000 cbm to 900,000
cbm during 2015
• The terminal received ISO certification in January; an important milestone on the
road to recovery
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Odfjell Gas Carriers
Stronger results from underlying operation in 4Q
Positive contribution from continued long-haul activity
Satisfactory utilisation
Operational review
USD mill 4Q14 3Q14Gross revenue 4 7
EBITDA 1 1
EBIT 1 7
• Ownership share in 4Q14 is 50% compared to100% in 3Q14
• EBIT in 3Q14 includes a capital gain in excess of USD 6 million related the JV transaction
• Ownership share in 4Q14 is 50% compared to100% in 3Q14
• EBIT in 3Q14 includes a capital gain in excess of USD 6 million related the JV transaction
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Fleet development - last 12 months
Operational review
Fleet additions DWT Built Tanks Transaction
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
June 2014 Bow Tribute 46 000 2014 Coated Bareboat
May 2014 UACC Mansouria 45 352 2013 Coated Short-term TC
April 2014 Bow Trajectory 46 000 2014 Coated Bareboat
April 2014 Bow Harmony 33 619 2008 Stainless Purchase
March 2014 SG Friendship 19 773 2003 Stainless Medium-term TC
Short-term: Up to one yearMedium-term: 1-3 years
Fleet disposals, owned DWT Built Tanks Transaction
January 2015 Bow Pilot 6 008 1989 Stainless Sale
Odfjell has no further chemical tankers on order, but has medium term time-charter contract s
for future newbuildings on order by third parties
Odfjell has no further chemical tankers on order, but has medium term time-charter contract s
for future newbuildings on order by third parties
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Reducing cost and improving efficiency
• Announced 8 May 2014 a review of the business model in order to improve the
financial result through a more competitive cost structure
• In November 2014 we announced that immediate initiatives expected to effect
the bottom line by USD 50 million when fully implemented
• In January 9 the Board approved a complete restructuring plan
• When fully implemented end of 2016 it is estimated to improve the net results by
USD 100 million on a yearly basis
• Majority of the initiatives will be implemented throughout 2015
Project Felix
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Reducing cost and improving efficiency
• The cost savings initiatives are related to operating expenses, general and
administrative expenses, trade optimisation and bunker consumption
• Operating expenses and general and administrative expenses are expected to
account for in excess of 50% of the improved result
• Reduction of 86 positions at the office in Bergen – there will also be
organisational changes at offices abroad
• Severance payments are currently estimated to a total of USD 12 million of
which provisions of USD 5.1 million have been made in fourth quarter
• Change in pension schemes, USD 10.9 million recognized in 4Q14 results
Project Felix
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G&ANet result 2014F
OT profitabilityO
Opex Bunker cost Potential net result after
improvements
Implications: • Bunker cost improvement
A B C D
Sustainable profitability in today's market implies a required profit improvement in excess of 100 MUSDSufficient for fleet renewal and dividend capacity
• Significant cost reduction (25-30%)
• Cost reductions within both general OPEX and crew
• Exit from unprofitable trades
• Optimization of coretrades
Project Felix
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hhhh
Project Felix implementation timelineAiming at realizing 88% of targeted improvements by end 2015
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Targeted improvements “run rate” (% of total)
2015
Project Felix
Through these changes we will initiate a route back to reach our goal of also being a profitable
global provider of transportation of liquid chemicals
Through these changes we will initiate a route back to reach our goal of also being a profitable
global provider of transportation of liquid chemicals
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Market update – chemical tankers
• Activity and nominations under CoAs were stable in most areas
• ODFIX index up by more than 10%
• Time-charter result down 6% due to bunker hedging
• Spot trading in general was slow
• A strong clean market has removed some swing tonnage from the chemical space, it
also facilitates good back-hauls for our vessels
• Product flow related to industrial production (system cargos) remain strong, both
CoA and spot
Market update and prospects
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hhhhhhhhhhhhh
Core Chemical Deep-sea Fleet 2004-2018Orderbook and estimated demolition per 31 January, 2015
* Outphasing 30 years (Europe built) and 25 years (Asian built)Source: Odfjell FLEETBASE
Market update and prospects
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Deliveries OrderbookActually demolished Estim. vessel outphasingNet fleet growth
% of year-start fleetAverage annual net growth:2004-2014: 7.1%2015-2018: 4.8%
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Prospects
• Modest growth in world GDP expected in 2015, one of the main factors affecting
overall chemical tanker demand
• The demand for chemical tanker services is firming going forward, with contracts of
affreightment being renewed at somewhat improved terms
• Although ordering of new chemical tankers has reduced drastically last quarter, the
orderbook for stainless steel vessels is still close to 30% of current fleet. As a
consequence thereof, we expect the supply/demand imbalance to persist, at least
through 2015
• Odfjell will have limited benefits by lower bunker prices in 2015
• First quarter in 2015 is expected to improve from the last quarter in 2014 for the
chemical tankers
• We expect improved results at Odfjell Terminals (Rotterdam) and continued stable
results from the other terminals for the next quarter
Market update and prospects
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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
Tore Jakobsen – CEO, Odfjell SE
Email: [email protected]
Phone: +47 908 49 190
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Thank you
For more information please visit our webpage at www.odfjell.com