Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — Investor Presentation (May 2016)
29 slides from Cmb.tech Nv's investor presentation, May 2016
Slide 1: Investor Presentation
Investor Presentation May 2016 1
Slide 2: Forward Looking Statements
Forward Looking Statements Matters discussed in this presentation may constitute forward-looking statements under U.S. federal securities laws, including the Private Securities Litigation Reform Act of 1995. Forward-looking statements reflect the Company’s current views with respect to future events
Slide 3: Euronav at a Glance
Section 1 Euronav at a Glance 2
Slide 4: Euronav – Largest Tanker Company in the World
Euronav – Largest Tanker Company in the World 4 CURRENT FLEET – TOTAL 55 VESSELS – 13.1 MM DWT WHO WE ARE 1 V – PLUS 2 FSO 22 SUEZMAX 30 VLCC Over 441,000 DWT 380k barrels Leading pure-play tanker company 150,000 – 165,000 DWT with best-in-class operating platform Up to 330,000 DWT Only 2 in world f
Slide 5: Euronav – Exposed to Structural Growth in Demand for Oil
Euronav – Exposed to Structural Growth in Demand for Oil 5 INCREMENTAL VLCC DEMAND FOR 1.2 MBPD ADDITIONAL EXPORTS = 36 – 49 VLCC PER YEAR 1.2 mbpd x 365 days = 440m barrels 440m barrels / 2m capacity per VLCC = 220 cargoes 220 cargoes / 4.5 annual journeys for VLCC (1) = 49 VLCCs Europe Russia Asia
Slide 6: Euronav - Most Liquid Big Tanker Player
Euronav - Most Liquid Big Tanker Player 6 LIQUIDITY GIVES SHAREHOLDERS OPTIONALITY More Trading Hours Euronext Brussels: 9 a.m. – 5. 30 p.m. (CET) Ticker Symbol: EURN NYSE: 9.30 a.m. – 4 p.m. (EST) TOTAL TRADED VALUE OF EURONAV US AND BB SHARES (SAME SHARE) - EURN US EQUITY & EURN BB EQUITY 100% 90%
Slide 7: Industry Dynamics
Section 2 Industry Dynamics 5
Slide 8: Oil Tankers – Five Key Drivers
Oil Tankers – Five Key Drivers 8 Demand for Oil Supply of Oil Ton Miles Supply of Vessels Financing ROBUST EXCESS BALANCED MANAGEABLE NEW BARRIER TO ENTRY • Trade lines established • Natural replacement • New regulations • Oil demand growing • Market share strategy from production in West cycle of 5
Slide 9: Oil Price – Impact on Demand
Oil Price – Impact on Demand 1 Demand for Oil 9 OIL PRICE OUTLOOK (ILLUSTRATION) 110 Lack of disruption/market share game Iran and other supply remain high Demand Destructive 100 Shale - as swing producer increases 2009 - 2014 proved in this oil output price range that demand was 90 destroyed 80 70
Slide 10: Demand – steady and robust outlook
Demand – steady and robust outlook 1 Demand for Oil 10 GLOBAL OIL DEMAND 1990-2015 (MB/D) AND AVERAGE OIL PRICE Average oil demand growth 1990-2015 =1.1 mbpd 3.5 95.5 80 3.1 3.1 2015 oil 3 demand growth 2.5 = 1.8 mbpd 2 Million barrels per day 1.9 95 70 2 1.8 1.7 1.6 1.5 1.5 1.4 1.5 1.3 1.1 1 1 1 Oi
Slide 11: China, Oil Demand & Oil Tankers
China, Oil Demand & Oil Tankers 1 Demand for Oil CHINA OIL DEMAND – VERY STEADY (UNLIKE GDP GROWTH) CHINA CRUDE OIL IMPORT DIVERSIFICATION CONTINUES 11 35 14 Source Bloomberg GDP growth (%) Imports (mbpd) Other 20% Russia 14% 30 13 12 25 11 Libya 1% Saudi Arabia 20 14% Kzakhstan 10 1% Brazil 3% 15 9
Slide 12: China & Oil Tankers – Four Reasons for Confidence
China & Oil Tankers – Four Reasons for Confidence 1 Demand for Oil 12 • BASE EFFECT – China consumes 11.8m (source: IEA) bpd so small % change means large no of barrels OPERATIONAL ECONOMY • 500m people joined middle-class in past decade 1 (source: McQuilling) • Oil demand underpinned by consumer –
Slide 13: Oil Supply = High but Production Cuts Unlikely
Oil Supply = High but Production Cuts Unlikely 2 Supply of Oil WHO IS GOING TO MATERIALLY CUT? NEED CO-ORDINATION 13 OIL SUPPLY – SHALE PROVING TO BE VERY RESILIENT BETWEEN THE TOP 10 PRODUCERS = 60% WORLD SUPPLY 1800 4000 FSU ex Kuwait 2.8 million barrels per day 3500 Russia 2.9 Thousands of barrel
Slide 14: Ton Miles – a Key Driver
Ton Miles – a Key Driver 3 Ton Miles 14 INCREMENTAL VLCC DEMAND FOR EACH 1.2 MBPD ADDITIONAL EXPORTS 1.2m bpd x 365 days = 440m barrels 440m barrels / 2m capacity per VLCC = 220 cargoes 220 cargoes / 4.5 annual journeys for VLCC (1) = 49 VLCCs Europe Russia Asia Pacific U.S. 22 – 24 VLCCs China 24 –
Slide 15: Order Book Dynamics – Structure - VLCC
Order Book Dynamics – Structure - VLCC 4 Supply of Vessels 15 VLCC – ADDITIONS, SCRAPPING, REMOVALS IMPLIED BUFFER 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1=10 Q1=12 Q2=9 Q2=4 Q3=7 Q3=4 Q1=10 60 Q4=19 Q4=25 Q2=5 Q3=5 Q4=10 45 45 40 30 62 54 49 20 30 24 23 0 -1 -5 -8 -7 -13 -11 -25 -22 -8 -10
Slide 16: Order Book Dynamics – Structure - Suezmax
Order Book Dynamics – Structure - Suezmax 4 Supply of Vessels SUEZMAX – ADDITIONS, SCRAPPING, REMOVALS IMPLIED BUFFER 16 2010 2011 2012 2013 2014 2015 2016 2017 2018 55 Q1=16 Q2=10 45 45 Q3=4 Q4=15 Q1=1 Q1=3 35 Q2=4 Q2=4 27 Q1=3 Q3=2 Q3=10 Q2=4 Q4=1 Q4=12 Q3=2 25 45 Q4=1 43 38 15 10 27 5 8 10 -3 -
Slide 17: Order Book – Logical Fleet Renewal – VLCC
Order Book – Logical Fleet Renewal – VLCC 4 Supply of Vessels ORDERS FROM INDUSTRIAL SHIPPING ARE DIFFERENT THAN ORDERS FROM SPECULATIVE SHIPPING 17 National Oil Companies Traditional Ship Owners Chinese Ship Owners 2016 2017 2018 2019 Number of vessels delivered 20 15 10 19 16 14 14 12 5 9 5 4 0 1
Slide 18: Increasing Barriers to Entry
Financing Increasing Barriers to Entry 5 18 HUGE REDUCTION REGULATIONS PRIVATE SHIP OWNERS SHIPYARD IN SHIPPING FORCE EQUITY IN UNDER PRESSURE TO BANK LEVERAGE RETREAT PRESSURE RESTRUCTURE EXPOSURE DOWN & REDUCE Around USD 70bn CAPACITY • Other shipping withdrawn from shipping • Banks lending • PE e
Slide 19: Bull Case, Bear Case
BULL CASE BEAR CASE 19 • Tankers a highly cyclical sector – • Agencies forecast steady growth to always repeats past mistakes 2020 CYCLICAL • Large vessel supply to drive freight • Incremental expansion from Asia rates lower DEMAND Pacific region • China oil demand by very diverse • Asset values fal
Slide 20: Our Strategy
EURO The ocean is our environment aye . Section 3 eee Our Strategy
Slide 21: Maximizing Value Through Information
Maximizing Value Through Information 21 BARRIER TO ENTRY – INFORMATION SIZE IS CRITICAL TO IMPROVE MARKET KNOWLEDGE Differentiate spot players vs industrial players 53 1 Ship Owner, 37 Vessels 2 Ship Owner, 52 NIOC, 37 Bhari, 36 China Merchants Gp, 35 3 Ship Owner, 27 37 16 COSCO Group, 32 Top 10 Ow
Slide 22: Capital allocation strategy
Capital allocation strategy 22 CAPITAL ALLOCATION Strong balance sheet Leverage 1 • Maintain strong balance sheet • Target 30% to 50% leverage through cycle according to where we are in the cycle Capex Liquidity reserve 2 • Approximately USD 20 million • Retain minimum of TWO years of maintenance ca
Slide 23: Euronav Positioned for Powerful Cash Generation
Euronav Positioned for Powerful Cash Generation 23 WELL POSITIONED FOR STRONG CASH FLOW PRO FORMA FLEET EARNINGS CAPABILITY GENERATION (EBITDA, $MM) (1) Next 12 Months Spot Days Exposure = 14,341 Days ($MM) 1,500 1,092 1 Breakeven (including debt service): 650 ~ USD 27,300 / day for VLCC – OpEx / da
Slide 24: Supplemental Materials
Section 5 Supplemental Materials 22
Slide 25: Appendix - Ton mile dynamic – still more to deliver
Appendix - Ton mile dynamic – still more to deliver 3 Ton Miles • TRADE ROUTES NOW SET FROM ATLANTIC BASIN TO FAR EAST 25 • REPEAL USA EXPORT BAN OPENS NEW MARKET TO TANKER SHIPPING • IRAN – POTENTIAL SHORT TERM BENEFIT FOR COMMERCIAL FLEET AS IRAN RE-ENTERS GLOBAL MARKETS Source Morgan Stanley Euro
Slide 26: Appendix – Supply Manageable
Appendix – Supply Manageable 4 Supply of Vessels MOST TANKER OWNERS HEAVILY EXPOSED TO OTHER SHIPPING ORDER BOOK AS % OF FLEET – MANAGEABLE 26 Source Clarksons 60 1000 900 50 VLCC Suezmax 800 700 40 0-5 VLCCs owned (120) 600 5-9 VLCCs owned (11) 30 500 10-14 VLCCs owned (9) 400 15-19 VLCCs owned (3)
Slide 27: Appendix – Cost of Dry-Dock by Age Profile
Appendix – Cost of Dry-Dock by Age Profile 4 Supply of Vessels 27 TANKER SHIPPING – A HIGHLY REGULATED INDUSTRY Costs of surveys increase during tanker life leading to scrapping decision million USD Special Survey #1 Special Survey #2 Special Survey #3 IS Dry #4 SS #5 Average cumulative cost $1.5m
Slide 28: Appendix - Order Book – Logical Fleet Renewal
Appendix - Order Book – Logical Fleet Renewal 4 Supply of Vessels Suezmax ORDERS FROM INDUSTRIAL SHIPPING ARE DIFFERENT THAN ORDERS FROM SPECULATIVE SHIPPING 28 National Oil Companies Traditional Ship Owners Chinese Ship Owners 2017 2018 2019 2016 Number of vessels delivered 35 30 25 20 15 31 10 5 1
Slide 29: VLCC Earnings 2009-2016
29 120,000 VLCC Earnings 2009-2016 100,000 80,000 $ USD / Day 60,000 40,000 20,000 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Minimum 2009-2014 Maximum 2009-2014 2015 2016