Gaztransport & Technigaz Sa · EURONEXT:GTT
Gaztransport & Technigaz Sa — H1 2018 Earnings Presentation
53 slides from Gaztransport & Technigaz Sa's earnings presentation, Jul 27, 2018
Slide 1: Investor Presentation H1 2018 Results
Investor Presentation H1 2018 Results 27 July 2018
Slide 2: Disclaimer
Disclaimer This document contains information resulting from testing, experience and know-how of GTT, which are protected under the legal regime of undisclosed information and trade secret (notably TRIPS Art. 39) and under Copyright law. This document is strictly confidential and the exclusive prope
Slide 3: Disclaimer
Disclaimer This presentation does not contain or constitute an offer of securities for sale or an invitation or inducement to invest in securities in France, the United States or any other jurisdiction. It includes only summary information and does not purport to be comprehensive. No representation,
Slide 4: Agenda
Agenda 1. Company overview & key highlights 2. Core business: Market & Activity update 3. New businesses: LNG Fuel developments 4. Service activity 5. Financials 6. Outlook Appendices 4
Slide 5: Company overview & Key highlights
1 Company overview & Key highlights 5
Slide 6: GTT, a French engineering company, global leader in liquefied gas containment systems
GTT, a French engineering company, global leader in liquefied gas containment systems Consolidated key figures Profile Leading engineering company in € million H12017 H1 2018 Expert in liquefied gas containment Total Revenues 114 127 systems Royalties (newbuild) 108 120 More than 50-year track recor
Slide 7: H1 2018 Key Highlights
H1 2018 Key Highlights H1 2018 Revenues: €127 million (+12%) / EBITDA: €84 million Strong level of orders CORE BUSINESS Order book: 84 units H1 2018 movements in the order book 66 LNGC 2 FLNG New orders: 20 (18 LNGC, 2 FSRU) 13 FSRU 2 Onshore storage Deliveries: 25 (24 LNGC, 1 FSRU) 1 Barge 3 additi
Slide 8: Core business: Market & activity update
2 Core business: Market & activity update 8
Slide 9: Strong demand outlook
Strong demand outlook LNG Demand forecast 600 500 CAGR 2015-2030: +5.2% 400 Mtpa Other 300 Europe Asia Pacific 200 100 0 2001 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Wood Mackenzie M
Slide 10: Asian LNG imports growing in 2018 vs. 2017
Asian LNG imports growing in 2018 vs. 2017 (Jan. / May) Top LNG importers demand comparison 2017 trends confirmed Demand of top 5 LNG importers 95 65% increased by +14% so far in 2018 85 vs +11% in 2017 55% 55% 75 65 45% Main drivers Coal to Gas switch, especially in 55 China due to environmental 35
Slide 11: New importing countries contribute to demand growth
New importing countries contribute to demand growth Incremental LNG demand from new markets 25 +23,2 Mtpa +21 Mtpa Colombia* Malta Israel* Colombia* Lithuania* Jamaica Malta Philippines 20 + 17,9 Mtpa Israel* Lithuania* Jamaica Bangladesh* Panama New comers Colombia* Malaysia Malaysia Israel* Malta
Slide 12: US LNG is competitive in Asia
US LNG is competitive in Asia US LNG vs. Asian LNG price depending on Henry Hub and Oil prices 11 Asian oil indexed LNG competitive Asian LNG 10 US LNG competitive LNG price ($/Mmbtu) 9 Spread HH : $4/Mmbtu 8 HH : $3,5/Mmbtu US LNG 7 2016 avg. 2017 avg. HH : $3/Mmbtu 2018 avg. HH : $2,5/Mmbtu 6 HH :
Slide 13: LNG Shipping: c.30 LNGC orders expected from under construction projects
LNG Shipping : c.30 LNGC orders expected from under construction projects LNGC requirements for under construction liquefaction projects Already 18 LNGCs ordered in H1 2018 Contracted Project Location Forecasted Start-Up Capacity LNGCs requirement confirming market needs (Mtpa) Ichthys Australia Q3-
Slide 14: Liquefaction projects: additional FIDs expected
Liquefaction projects: additional FIDs expected Total Environmental & Key Onshore / Nominal Industrial Name Country Type Regulatory stakeholders FLNG Capacity milestone milestone (mtpa) Calcasieu Pass US East Venture Global Greenfield Onshore 10,0 EPC contractor Driftwood US East Tellurian Greenfiel
Slide 15: LNG Supply & Demand: new capacity needed
LNG Supply & Demand: new capacity needed LNG Supply & Demand balance forecast 600 500 165 Mtpa 400 Mtpa Under Construction 300 Operational 200 Demand 100 0 2009 2026 2000 2001 2002 2003 2004 2005 2006 2007 2008 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2027 2028
Slide 16: Ageing LNGCs represent an additional market potential for GTT
Ageing LNGCs represent an additional market potential for GTT Existing LNGC fleet by date of delivery 700 1. Future Orders associated 600 to new LNG projects 500 Nb of sips 400 300 200 100 0 1970 1980 1990 2000 2010 2020 Source : GTT, Clarksons Vessels >30kcbm 2. Future Orders associated to replacem
Slide 17: 55 ageing vessels with charter contract ending by 2022
55 ageing vessels with charter contract ending by 2022 LNGCs carriers* with charter contract ending by 2022 80 LNGC chart contract to end by 2022 30 Of which 55 equipped with steam turbine propulsion; also smaller vessels (<140k 25 cbm) => expensive to charter! 20 Charterers and shipowners to prepar
Slide 18: Core business
Core business GTT H1 2018 Sales GTT order estimates over 2018-2027 LNGC: 225-240 units(1) Services 12 orders in 2017, 18 orders in H1 2018 FLNG 5% 1% FSRU 11% FSRU: between 30 and 40 units 8 orders in 2017, 2 orders in H1 2018 FLNG: between 5 and 10 units 1 order in 2017 LNGC 83% Onshore tanks: betw
Slide 19: New businesses: LNG Fuel developments
3.2 3 New businesses: LNG Fuel developments 19
Slide 20: LNG Fuel focus - LNG tanks dedicated to the PONANT Icebreaker
LNG Fuel focus - LNG tanks dedicated to the PONANT Icebreaker Contract with the Norwegian shipyard VARD In charge of the vessel’s construction The vessel Will be operated by PONANT Will be the first cruise ice-breaker with LNG propulsion Delivery planned in 2021 Tanks will be equipped with GTT’s Mar
Slide 21: LNG Fuel focus - order of a bunker ship to supply the CMA CGM ULCSs
LNG Fuel focus – order of a bunker ship to supply the 9CMA CGM ULCSs December 2017 January 2018 9 Ultra Large Container Ships 1 bunker ship LNG integrated membrane tanks of 18,600 cbm 18,600 cbm capacity each Space optimization Mark III Flex technology Designed for one bunkering operation per round
Slide 22: The shipping industry: simple facts
The shipping industry: simple facts 90,000 merchant vessels 3,000 newbuilds per year 90% of worldwide transportations 3.1 % of worldwide emissions* The less polluting transportation method…. … But still the equivalent of twice the yearly French emissions x2 * Source Third IMO GHG Study 2014 22
Slide 23: Different approaches to reduce the emissions, among them LNG
Different approaches to reduce the emissions, among them LNG Sox: -100% Compliant with existing Nox: - 85% and upcoming norms Particulates: -98% CO2: -20 to -25% New infrastructure under development Improving availability International O&G companies new offer Around 248 LNG fueled ships in operation
Slide 24: GTT's LNG Fuel solutions offering
GTT’s LNG Fuel solutions offering GTT has developed solutions for the main applications of LNG Fuel Solutions for Container Vessels new build and retrofit Cruise Ship – optimizing the space for additional passengers Lean bunker barge to Cost effective solution for bulk carriers standardize the marke
Slide 25: Wide network of partnerships
Wide network of partnerships Shipyards Industrial and commercial partnerships Outfitters Ship owners 25
Slide 26: Service activity
3.3 4 Service activity 26
Slide 27: Innovative services offer: supporting GTT's strategy
Innovative services offer: supporting GTT’s strategy on core LNG activities and on LNG as fuel © Excelerate Energy DESIGN CONSTRUCTION OPERATIONS MAINTENANCE UPGRADE Feasibility studies Materials Training courses Inspections, Engineering FEED certification and customised maintenance support for retr
Slide 28: GTT's strategic roadmap
GTT’s strategic roadmap Gas handling technologies Growth, Technology, Transformation Fuel Gas handling system for vessels Superior LNG gas handling systems Advanced decision support systems Enlargement New Advisory and applications LNG as fuel Transfer operations optimisation services Framework serv
Slide 29: Financials
5 Financials 29
Slide 30: Order book overview (core business) – IFRS 15
Order book overview (core business) – IFRS 15 Order book in units Order book by year of delivery (units per year) In units In units (1) 41 40 40 120 30 32 30 89 84 25 (4) 90 20 13 60 15 5 6 1 0 30 2018 2019 2020 2021 2022 As at Dec 31, 2017 As at June 30, 2018 As at Dec 31, 2017 As at June 30, 2018
Slide 31: H1 2018 financial performance
H1 2018 financial performance Summary consolidated accounts Key highlights In € M Proforma H1 2018 Change Increase in revenues H1 2017 Revenues derived from royalties: +12.2% Total Revenues 113.7 127.2 +11.9% +7.1% increase in Service revenue, mainly EBITDA(1) 77.3 84.2 +8.8% thanks to good performa
Slide 32: H1 2018 Cost base
H1 2018 Cost base GTT consolidated operational costs Key highlights Proforma Change in € M H1 2017 H1 2018 (%) Increase in Cost of sales due to change in Cost of sales (0.7) (1.3) +78% perimeter % sales -1% -1% External costs: +2% Subcontractors: +4% Subcontracted Test Travel costs -11% (6.0) (6.3)
Slide 33: Outlook
6 Outlook 33
Slide 34: 2018 Outlook confirmed
2018 Outlook confirmed GTT revenue(1) 2018 consolidated revenue estimated in a range of €235 M to €250 M EBITDA 2018 consolidated EBITDA estimated in a range of €145 M to €155 M Dividend 2018 dividend amount at least equivalent to 2015 - 2017 Payment(2) 2019 payout of at least 80% (1) In the absence
Slide 35: Thank you for your attention
Thank you for your attention Image courtesy of STX, Engie, Excelerate, SCF Group, Shell, CMA CGM, Matthieu Pesquet, Conrad 35
Slide 36: Appendix
GIT Appendix
Slide 37: A proactive sustainable development policy
A proactive sustainable development policy Environmental responsibility Social responsibility Stakeholders CSR responsibilities form an Core business integral part of GTT project Performance of GTT systems Employment Safety of installations and crew Compensation New business Training Development of
Slide 38: GTT SA organisation
A streamlined group and organisation GTT Group Philippe Berterottière* Chairman and Chief Executive Officer GTT SA organisation Lélia Ghilini* General Counsel Frédérique Marc Haestier* Isabelle Delattre* Julien Bec David Colson* Karim Chapot* Coeuille* Finance & Human LNG as fuel Commercial Technica
Slide 39: GTT exposure to the liquefied gas shipping and storage value chain
GTT exposure to the liquefied gas shipping and storage value chain Exploration Off Take / Liquefaction Shipping Regasification & Production Consumption Liquefied Natural Gas LNG fuelled Offshore Carrier ship clients: (LNGC) shipyards Platform / Gas-to-wire Installation Floating LNG Production, Float
Slide 40: GTT ecosystem
GTT ecosystem Oil & Gas Companies Shipowners End clients and End clients and prescribers prescribers provides services provides services and maintenance Classification Societies Regulatory oversight of the industry Shipyards Direct clients receives new technology certification and licences its membr
Slide 41: GTT membrane technologies
GTT membrane technologies Primary General principle: membrane Two membranes Primary insulation Two layers of insulations Secondary membrane Containment system Secondary insulation anchored to the inner hull Hull Mark III system NO96 system 41
Slide 42: LNGCs – Our main business
LNGCs – Our main business Vessels equipped for transporting LNG Existing GTT fleet: 355 units1 In order: 66 units1 24 construction shipyards under license1 Our strengths Technological leadership, boil-off divided by 2 in the last 5 years Long term industrial partnerships with major shipyards A uniqu
Slide 43: LNG Shipping: spot market
LNG Shipping: spot market Spot chart rates evolution since 2014 Spot Charter rates have soared in Q2 2018, reaching $80k/d for a 165k cbm DFDE Asia/Europe spread has created arbitrage opportunities This has resulted in European reloading towards Asia, creating a shortage of vessels. 1 year charter r
Slide 44: FSRUs – The game changer for new importing countries
FSRUs – The game changer for new importing countries Major competitive advantage vs. land-based terminals: Quick to build/deploy & mobile Better local acceptability & easier permitting Affordable / no upfront CapEx Adapted to more volatile LNG prices Quality controlled construction in shipyards with
Slide 45: FLNGs – the new frontier of the LNG world
FLNGs – the new frontier of the LNG world Floating units which ensure treatment of gas, liquefy and store it Existing GTT fleet: 2 units1 In order: 2 units1 Courtesy of Shell Main drivers GTT key advantages Monetisation of stranded Extended amortization offshore gas reserves perspectives Better acce
Slide 46: LNG is the only solution allowing comprehensive environmental compliance
LNG is the only solution allowing comprehensive environmental compliance LS HFO ULS HFO MGO / HFO Scrubber Pollutant Level (Low Sulfur (Ultra Low Sulfur MDO1 LNG (Heavy Fuel Oil) HFO) HFO) (Marine +HFO Gasoil/Diesel Oil) 3,5% SOx 0,5% (Sulfur Oxides) 0,1% Tier II NOx2 (Nitrogen Oxides) Except for Ti
Slide 47: LNG Fuel market potential: to be driven by newbuilds
LNG Fuel market potential: to be driven by newbuilds Shipping markets newbuild potential 20 000 Container ships • 3,000+ avg. annual orders (ULCS) • Fleet of 90’000+ vessels in 2017 Bulkers 15 000 (VLOC) Oil Tankers LNG fuel tanks capacity - cbm (VLCC) 10 000 PCTC Cruise ships 5 000 LPG Carriers Dre
Slide 48: Current LNG Fuel tank market situation
Current LNG Fuel tank market situation Total LNG fuel tank by ship type (in service & on order) 20 000 Max Total LNG tanks capacity Avg. 15 000 Min cbm 10 000 5 000 Market avg ~1,500 cbm 0 Notes: Data available for ~80% of the 248 vessels in service and Source: DNV GL on order Recent market that sta
Slide 49: LNG Fuel market potential for GTT
LNG Fuel market potential for GTT Relevant Market Segments Historical avg. Shipping Markets Fleet at end 2017 for GTT annual orders Tier 1 Container Ships Bulkers Large to Ultra Large ~320 ~4,700 Oil Tankers Cruise Ships > 2,000 passengers 13 ~400 Car & Truck Carriers > 6,000 CEU 23 ~400 Tier 2 Cont
Slide 50: Focus on GTT's competitive advantages
Focus on GTT’s competitive advantages GTT’s technology positioning (1) GTT Moss SPB KC-1 Technology ▶ Membrane ▶ Spherical tank ▶ Tank ▶ Membrane ▶ Requires less steel and Construction ▶ Slightly higher costs aluminum than tanks for ▶ Higher costs ▶ Higher costs costs than GTT a given LNG capacity ▶
Slide 51: An attractive business model supporting high cash generation
An attractive business model supporting high cash generation Invoicing and revenue recognition Business model supports high cash generation % of contract (1) c. 18 months c. 18 months Delivery Revenue is recognized pro-rata 10000 studies royalties temporis between construction milestones 8000 Ship l
Slide 52: Track record of high margin and strong increase in backlog since 2010
Appendix: track record of high margin and strong increase in backlog since 2010 2008 2011 Economic crisis Fukushima US shale gas boom 120 112 66 30 18 52 77 99 114 118 96 89 47 44 37 35 34 26 Evolution of new 21 19 GTT orders (1)(2) 4 7 5 1 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 53: Contact
Contact: [email protected] / +33 1 30 23 20 87
GTT (Gaztransport & Technigaz) — H1 2018 Earnings Presentation on 6ix