Pacific Basin Shipping Limited · HKEX:2343
Pacific Basin Shipping — HSBC 5th Annual Shipping Conference 2011
40 slides from Pacific Basin Shipping's conference presentation, Mar 17, 2011
Slide 1: Will Scrapping Shelter Industry from Excess Supply?
Will Scrapping Shelter Industry from Excess Supply? Pacific Basin HSBC 5th Annual Shipping Conference Hong Kong 17 March 2011 1
Slide 2: Pacific Basin Overview
Pacific Basin Overview One of the world’s leading dry bulk owners & operators of modern handysize and handymax vessels Flexible Pacific Basin dry bulk business model Large scale fleet of uniform, interchangeable modern vessels Mix of owned, long-term and short-term chartered ships Diversif
Slide 3: Dry Bulk Orderbook
Dry Bulk Orderbook Orderbook as % Average Over Age 25 Years Handysize Age Profile of Existing Fleet (25,000-39,999 Dwt) * Total Dry Bulk >10,000 dwt 50% 1,979 vessels (62.7m dwt) Handysize (25,000-39,999 dwt) 39% 16 41% 30+ years Handymax 13% (40,000-64,999 dwt) 40% 12 19% Panamax 0-15 years 65% 10
Slide 4: Factors affecting scrapping
Factors affecting scrapping Dry Bulk Scrapping versus BDI US$ / lwt Scrap Price 700 m dwt 2011 BDI Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 YTD 0.0 4,500 600 0.62 0.61 0.39 0.56 0.68 4,000 Indian 1.0 sub-Continent 476.667 3,500 500 2.0 3,000 3307 443.333 3027 400 2,500 3.0 2353 2364 2,000 300 4.
Slide 5: Fleet Deliveries & Scrapping
Fleet Deliveries & Scrapping 2011 Fleet delivery & scrapping versus 2010 Global Dry Bulk Fleet Development m dwt Scrapping Delivery Net Fleet Growth YOY 100 20% m dwt m dwt Conversions 16.7% 0 100 80 Yard Deliveries 4.1 16% Scrapping -1 90 9.9% 60 12% -2 80 6.5% 9.0 40 7.0% 6.8% 6.5% 79 8% -3 Scrapp
Slide 6: Scrapping Shelter industry from excess supply
Scrapping Shelter industry from excess supply Scrapping benefit to handysize sector? Handysize Age Profile 30+ years 13% Orderbook 0-15 years 49% 25-29 years -ve fleet growth 28% 16-24 years 10% Scrapping benefit to Pacific Basin? Smaller bulk carrier segment benefits from: Fleet Modern, large scal
Slide 7: Dry Bulk Outlook
Dry Bulk Outlook Positive Factors Negative Factors China’s continued dependence on Continued excessive newbuilding imported minor bulks from further afield deliveries Strong growth in developing countries Dry bulk demand stifled by shortfall increased steel & raw materials demand in mining c
Slide 8: Disclaimer
Disclaimer This presentation contains certain forward looking statements with respect to the financial condition, results of operations and business of Pacific Basin and certain plans and objectives of the management of Pacific Basin. Such forward looking statements involve known and unknown risks,
Slide 9: Pacific Basin Overview
Pacific Basin Overview One of the world’s leading dry bulk owners & operators of modern handysize and handymax vessels Flexible Pacific Basin dry bulk business model Large scale fleet of uniform, interchangeable modern vessels Mix of owned, long-term and short-term chartered ships Diversif
Slide 10: Differentiated from BDI & Traditional Ship Owning
Differentiated from BDI & Traditional Ship Owning Fleet Smaller bulk carrier segment Modern, large scale & interchangeable ships benefits from: Ability to change market exposure through charter activity Handysize orderbook Higher utilisation and earnings ability through smaller than ship capaci
Slide 11: Dry Bulk Market Information
Dry Bulk Market Information Sector Earnings Performance in 2010 versus Average 2009 200% Handysize has been the 180% best performer in 2010 160% 140% 120% Handysize (BHSI) 100% Handymax (BSI) 80% Panamax (BPI) 60% 40% Capesize (BCI) 20% Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Baltic Dry Index US$m
Slide 12: 2010 Dry Bulk Market
2010 Dry Bulk Market 1H 2010 2H 2010 Buoyancy early in the year: Weakness in the second half 2010: Strong growth in minor bulk Seasonally reduced activity mid year commodity demand from China Chinese government policy on and other emerging economies energy consumption reduced Restocking
Slide 13: Dry Bulk Orderbook
Dry Bulk Orderbook Handysize Scheduled Orderbook 738 vessels (24.8m dwt) - 39% 137 m dwt* of new dry bulk capacity scheduled to m dwt 18 23% deliver this year (2010: 126m) 15 21% We expect 30-40% of slippage in 2011, net 12 13% deliveries before scrapping in 2011 will be 15-18% 12% 9 Minor bul
Slide 14: Chinese Dry Bulk Trade
Chinese Dry Bulk Trade Chinese Dry Bulk Trade Volume Utilisation of the dry bulk fleet m tonnes m tonnes Ratio 1200 3,295 28% 3,500 8.5 26% 2,965 900 3,000 8.0 2,500 600 7.5 14% 1018 2,000 11% 957 1,500 7.0 300 8% 8% 1,000 6.8 6.5 500 6.7 0 0 6.0 -129 -159 01 02 03 04 05 06 07 08 09 10 -300 2005 200
Slide 15: Strong Minor Bulk & Coal Demand from China
Strong Minor Bulk & Coal Demand from China China Soya Bean Import China Imports of Forest Products China Imports of Copper Concentrates m tonnes m tonnes m tonnes 60 +29% 54.8 30 +19% 28.2 23.7 3.5 3.2 -6% 50 42.6 25 3.0 3.0 40 20 2.5 30 15 2.0 20 10 1.5 1.0 10 5 0.5 0 0 0 2006 2007 2008 2009 2010 2
Slide 16: Pacific Basin Dry Bulk Earnings Coverage
Pacific Basin Dry Bulk Earnings Coverage as at 17 Feb 2011 2011 Total Combined Cover: 56% Handysize Handymax Revenue Days Solid coverage: our cargo (US$/day) Unfixed contracts performed as 29,070 days 26,100 days Fixed expected in 2010 with no 22,950days counterparty defaults 4% of Handysize rev
Slide 17: Dry Bulk Outlook
Dry Bulk Outlook Positive Factors Negative Factors China’s continued dependence on Continued excessive newbuilding imported minor bulks from further afield deliveries Strong growth in developing countries Dry bulk demand stifled by shortfall increased steel & raw materials demand in mining c
Slide 18: PB Energy & Infrastructure Services
PB Energy & Infrastructure Services US$m Towage Fleet: 42 vessels Offshore/project supply & harbour towage services (“Towage”) 1.0 (as at 25 Feb 2011) PacMarine Services 1.0 2 Chartered Tugs Fujairah Bulk Shipping (“FBSL”) 2.9 7 Barges Segment net profit in 2010 (2009: US$8.2m) 4.9 32 Owned Tugs 1 B
Slide 19: Energy & Infrastructure – Outlook
Energy & Infrastructure – Outlook Positive Factors Negative Factors Increasing oil and energy prices are Slow resumption of infrastructure and leading to more offshore projects and offshore projects in the Middle East related infrastructure development Some further delays to new project activi
Slide 20: PB RoRo
PB RoRo Net loss in 2010: -US$1.1m (2009: Profit US$0.1m) World RoRo Fleet 438 Vessels Slow export-led recovery in European (862,453 Lane Metres) economy remains fragile Charter demand for RoRo vessels is still very weak and well below what we had expected a 30+ Year 29% year ago 0-14 Year 44%
Slide 21: RoRo – Outlook
RoRo – Outlook Positive Factors Negative Factors Global and especially European economic Significant number of large RoRo recovery expected to support modest newbuilding scheduled to deliver in 2011 growth in trailer volumes and short-sea Excess capacity and reluctant to charter RoRo trades ne
Slide 22: 2010 Financial Highlights
2010 Financial Highlights As at 31 December 2010 2010 2009 Segment net profit 146.3 141.9 Treasury (18.5) (13.8) Non direct G&A (8.0) (12.3) Underlying profit 119.8 115.8 Unrealised derivative expenses (12.4) (4.5) Impairment of Fujairah Bulk Shipping (19.1) - Gain from partial sale of shares in Gre
Slide 23: Daily Vessel Costs - Handysize
Daily Vessel Costs - Handysize Year ended 31 Dec 2010 Owned Chartered US$/day Blended US$11,970 (2009: US$9,690) Opex Charter-hire days & rates Depreciation 2011-2013 Finance cost 14,700 US$11,650 US$11,570 Direct overhead 500 Charter-hire US$11,480 10,380 8,770 480 5,390 days 8,690 14,200 1,040 4,0
Slide 24: Balance Sheet
Balance Sheet As at 31 Dec 2010 PB PB PB US$m Dry Bulk EIS RoRo Treasury 31 Dec 10 31 Dec 09 Vessels & other fixed assets 829 224 429 - 1,519 998 Total assets 979 291 444 680 2,555 2,470 Long term borrowings 185 45 55 575 860 877 Total liabilities 288 62 59 576 1,011 1,014 Net assets 691 229 385 104
Slide 25: Borrowings and Capex
Borrowings and Capex As at 31 Dec 2010 + Funded from US$703m cash, Authorised commitments new borrowings, and US$m future operating cashflows 250 230 Redeemable in Apr 2014 200 159 150 120 125 105 111 100 61 69 50 44 43 44 37 21 26 16 17 18 20 20 10 8 0 2011 2012 2013 2014 2015 2016 2017 2018-2021 V
Slide 26: Capex and Combined Value by Vessel Types
Capex and Combined Value by Vessel Types As at 31 Dec 2010 + Authorised commitments Vessels Commitments A Combined View of (including authorised commitments) Vessel Carrying Values and Commitments US$m Total US$411m US$m Total US$1,925m 180 159 1,226 150 364 120 120 87 111 25 122 90 3 78 60 476 22 4
Slide 27: Cashflow
Cashflow Year ended 31 Dec 2010 US$m 2010 2009 Operating cash inflows 199 145 Investing cash out / inflows (462) (178) - Vessels & other fixed assets related payments (541) (298) - Sales of vessels - 105 - Jointly controlled entities related payments and receipts (10) 45 - Disposal of part of our ho
Slide 28: Outlook
Outlook We anticipate the dry bulk market will be weaker than 2010 Recovery from regional export disruptions and increased scrapping will be ultimately eclipsed by continued excessive newbuilding deliveries during the year Prospects for minor bulk segments in long term remain positive Busine
Slide 29: 2010 Group Highlights
Appendix: 2010 Group Highlights Net Profit: US$104m (2009: US$110m) Net Profit, Underlying Profit US$m & Cash Flow Underlying Profit: US$120m (2009: US$116m) Cash flow Basic EPS: HK$0.42 (2009: HK$0.46) Underlying Profit Net Profit 199 ROE: 7% (2009: 9%) 145 Operating cash flow: US$199m (2
Slide 30: Pacific Basin-Dry Bulk Performance
Appendix: Pacific Basin-Dry Bulk Performance Pacific Basin Dry Bulk Fleet: 136 Dry bulk net profit: US$145m (↑17% vs 2009) as at 25 Feb 2011 Average age: 6.4 years Handysize: US$136m (↑10%) Owned + Handymax: US$9m (↓35%) 92 Committed 31.7m tonnes of cargoes were carried in 2010 (↑9.4%) Chart
Slide 31: Pacific Basin Dry Bulk - Diversified Cargo
Appendix: Pacific Basin Dry Bulk - Diversified Cargo Pacific Basin Dry Bulk Cargo Volume 2010 Alumina 6% (0%) Coal / Coke 7% (-2%) Concentrates 10% (+2%) 31.7 Other Bulks 5% (0%) Million Fertilisers 8% (+1%) Cement & Tonnes Cement Clinker 6% (-2%) Logs & Forest +9.4% 12% (+3%) Products Grains & Agri
Slide 32: Dry Bulk Demand
Appendix: Dry Bulk Demand Dry Bulk Fleet Effective Demand % change YOY % Change 24.2 YOY 25 18 20 13.4 14.4 14.0 15 13.0 15 9.4 10.7 5.6 12 10 7.9 6.7 9 5 6 0 3 6.1 4.3 -5 -0.3 3.8 0 -10 0.2 -5.9 -3 -8.3 -15 -10.5 2005 2006 2007 2008 2009 2010E Q1 Q2 Q3 Q4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2008 2009 2010E Chi
Slide 33: Dry Bulk Fleet Changes
Appendix: Dry Bulk Fleet Changes 79m tonnes of new dry bulk capacity delivered in 2010, growth 16.7% net YOY Handysize fleet 2010 growth 11% net YOY 38% delivery shortfall in 2010 against scheduled orderbook 41% of handysize fleet is over 25 years old High scrapping price supports scrapping act
Slide 34: China at late-Industrialisation Stage
Appendix: China at late-Industrialisation Stage Steel Consumption Per Capita China (from 1990) China growth matches Tons per Capita Japan (from 1950) 1.0 Korea (from 1970) historical trend in India (from 2005) 0.9 Japan and Korea 0.8 Suggests strong 0.7 growth in dry bulk 0.6 0.5 segment to rema
Slide 35: Chinese Iron Ore Demand
Appendix: Chinese Iron Ore Demand m tonnes China Iron Ore Sourcing for Steel Production 11% 1,100 2004-2010 CAGR for Iron ore import: 17% 1,002 900 906 700 628 619 -1% Slow down of Chinese iron ore 500 import mainly due to the Chinese 383 300 278 energy conservation policy 100 2004 2005 2006 2007 20
Slide 36: Pacific Basin Dry Bulk – Handysize
Appendix: Pacific Basin Dry Bulk – Handysize As at 31 December 2010 1H10 2H10 2010 2009 Change Revenue days (days) 13,940 15,130 29,070 26,100 +11% TCE earnings (US$/day) 16,840 16,670 16,750 14,500 +16% Owned + chartered cost (US$/day) 11,750 12,170 11,970 9,690 +24% Segment net profits (US$m) 69.7
Slide 37: Pacific Basin Dry Bulk – Handymax
Appendix: Pacific Basin Dry Bulk – Handymax As at 31 December 2010 1H10 2H10 2010 2009 Change Revenue days (days) 5,570 5,880 11,450 10,640 +8% TCE earnings (US$/day) 23,680 21,520 22,570 19,490 +16% Owned + chartered cost (US$/day) 22,050 21,350 21,690 18,120 +20% Segment net profits (US$m) 8.8 - 8
Slide 38: PB Energy & Infrastructure Services, PB RoRo
Appendix: PB Energy & Infrastructure Services PB RoRo As at 31 Dec 2010 2010 2009 PB Energy & Infrastructure Services Offshore and project supply and harbour towage services (“Towage”) 1.0 1.0 PacMarine Services 1.0 0.9 Fujairah Bulk Shipping (“FBSL”) 2.9 6.3 Segment net profit 4.9 8.2 PB RoRo segme
Slide 39: Impact of Financial Instruments
Appendix: Impact of Financial Instruments US$m Realised Unrealised 2010 2009 Net Gains / (Losses) Forward freight agreements (3.4) (3.4) (6.8) (25.7) Bunker swap contracts 6.0 (8.2) (2.2) 45.7 Interest rate swap contracts (5.5) (0.8) (6.3) 1.2 (2.9) (12.4) (15.3) 18.8 Cash settlement of contracts
Slide 40: Convertible Bonds Due 2016
Appendix: Convertible Bonds Due 2016 Issue size US$230 million Maturity Date 12 April 2016 (6 years) Investor Put Date and Price 12 April 2014 (4 years) at par Coupon 1.75% p.a. payable semi-annually in arrears on 12 April and 12 October Redemption Price 100% Initial Conversion Price HK$7.79 (with e
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