Cmb.tech Nv · EURONEXT:CMBT
Cmb.tech Nv — Euronav — Debt Investor Presentation (May 2017)
39 slides from Cmb.tech Nv's debt investor presentation, May 2017
Slide 1: Euronav – Company presentation
Euronav – Company presentation May 2017 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: Agenda
Agenda I Introduction to Euronav II Financials III Industry and Market Overview IV Supplementary slides 3
Slide 4: Key credit highlights
Key credit highlights • High quality fleet of Very Large Crude Carriers (“VLCCs”) and Suezmax tankers, 1 Largest publicly listed in addition to two 50% owned FSOs on long-term contracts tanker company in the world • Best-in class operations with a fully integrated operating platform • Value adjusted
Slide 5: Introduction to Euronav
EURO The ocean is our environment fo ye 5 pei Introduction to Euronav
Slide 6: Euronav is the largest tanker company in the world
Euronav is the largest tanker company in the world INTRODUCTION FINANCIAL SUMMARY (USDm) (1) • Leading provider of transportation and storage of Net interest bearing debt Adj. EBITDA crude oil 1,235 • The largest listed tanker ship owner in the world with a fleet of modern high quality tankers1 921
Slide 7: 28 years of tanker history
28 years of tanker history Euronav Luxembourg January 2014 October 2016 created as a JV Acquisition of 15 VLCCs Acquisition of 2 Lists on Euronext Brussels from Maersk between CNN and CMB Suezmaxes March 2005 Acquisition of 16 Suezmaxes and 2 TI Asia and TI Africa Aframaxes from conversion into FSO
Slide 8: Fleet managed in pool structure provides benefits
Fleet managed in pool structure provides benefits VLCC POOL SUEZMAX POOL SUEZMAX CHARTERING 58 37 36 18 (+4 NB) 13 12 12 Other VLCC Tanker Pools (Ships on the Water) Main Tanker Clients Heidmar Navig8 China VLCC – VLCC Seawolf – VL8 13 37 32 Source: Company reports 17 February 2017 Size is critical
Slide 9: Actively managed high quality fleet
Actively managed high quality fleet EMPLOYMENT PER VESSEL HIGH QUALITY SHIPYARDS Euronav employs its fleet based on assessment of where it can create the most value Service Contract Storage Korea 2 1 1 3 Time Charter 6 Japan 4 11 TI Pool 4 China 23 Fleet of 51 vessels 17 • including 4 TBD 16 • exclu
Slide 10: Euronav focused on prudent consolidation…
Euronav focused on prudent consolidation… Value Adjusted Equity ratio* (%) DYNAMICS IN THE SHIPPING INDUSTRY FRAGMENTED VLCC MARKET OPEN FOR CONSOLIDATION • Crude tanker business slowly industrialising Differentiate spot players vs industrial players • Low rate environment enables market consolidati
Slide 11: …achieved with a strategy of strong capital allocation
…achieved with a strategy of strong capital allocation Leverage STRONG BALANCE SHEET HEDGE TOWARDS CYLICALITY LIQUIDITY END MARCH 2017 (USDm) • Tanker business is cyclical, towards which the only 620 cure is to have a strong balance sheet and liquidity 60 pool • Euronav currently has a very strong l
Slide 12: Highly experienced management
Highly experienced management Patrick Rodgers - CEO Hugo De Stoop - CFO • Chief Executive Officer since 2000 • CFO since 2008 • Chief Financial Officer between 1998 and 2000 • Joined Euronav in September 2004 and appointed Deputy CFO and Head of Investor Relations • Board of Directors since June 200
Slide 13: Professional and Experienced Board of Directors
Professional and Experienced Board of Directors INDEPENDENT DIRECTORS SHAREHOLDERS Name Age Background Shareholder Shares % Carl Steen Strong background in finance, shipping, 65 Saverco - Marc Saverys 17,026,896 10.70% (Chairman) offshore and oil services (Nordea) Alice Strong background in shipping
Slide 14: Clean structure with most assets held directly at Euronav NV
Clean structure with most assets held directly at Euronav NV Euronav NV SERVICE Belgium 47 Vessels* HOLDING 100% 100% 100% 100% 100% 100% Euronav Euronav SAS Euronav UK Ltd Euronav Euronav Euronav Ship Management SAS France Shipping NV Tankers NV Hong Kong Ltd France United Kingdom Belgium Belgium H
Slide 15: Financials
EURO The ocean is our environment “at ‘ . . See Financials
Slide 16: Strong credit profile
Strong credit profile VALUE ADJUSTED EQUITY RATIO(1) (%) LIQUIDITY (USDm) 63% 62% 64% 597 620 48% 423 37% 264 97 2013 2014 2015 2016 Q1-17 2013 2014 2015 2016 Q1-17 NET DEBT (USDm) EBITDA FROM FIXED RATE CONTRACTS(2) (USDm) 1,212 155 155 144 1,059 136 921 122 879 909 2013 2014 2015 2016 Q1-17 2013 2
Slide 17: Strong financial profile offsets cyclicality and seasonality
Strong financial profile offsets cyclicality and seasonality 1 YEAR TC VLCC COMMENTS 1 Year TC VLCC Cash breakeven • Low opex and cheap financing lower $100 000 breakeven rates $90 000 • P&L breakeven (including 2017 expected; interest, reduction and $80 000 repayment of debt facilities)(1): $70 000
Slide 18: Long-term bank financing on attractive terms
Long-term bank financing on attractive terms REPAYMENT SCHEDULE AND RCF REDUCTIONS HIGHLIGHTS 500 Leverage 450 Reductions Repayments Balloon • Credit margins between 1.225% and 2.25% 400 • Most of the secured bank debt is 350 revolving 300 • Strong relationships with the leading 250 international sh
Slide 19: Financial Highlights – Profit & Loss
Financial Highlights – Profit & Loss PROFIT AND LOSS COMMENTS • Fixed income strengthened: (In millions of USD) 2015 2016 – Long-term seven year charters secured with Valero Energy Inc. for four Suezmax vessels starting in 2018 Revenue 846.5 684.3 which will be served by four Ice-class new buildings
Slide 20: Financial Highlights – Balance Sheet
Financial Highlights – Balance Sheet BALANCE SHEET HIGHLIGHTS (In millions of USD) 2015 2016 Leverage 1 remains within company Cash 131.5 206.6 imposed limits at 45% loan Restricted cash 0.1 0.1 to value Other current assets 243.4 166.7 Long term assets: Liquidity position Newbuildings 93.9 86.1 2 s
Slide 21: Financial Highlights – Cash Flow
Financial Highlights – Cash Flow CASH FLOW COMMENTS • Asset investments mainly in secondary market as part of (In millions of USD) 2015 2016 active fleet management Net Income 350.3 204.1 • Debt facilities are revolving with no fixed cash Depreciation and amortization 210.4 227.8 amortizations, only
Slide 22: Industry and Market Overview
Industry and Market Overview 22 5
Slide 23: Oil Tankers – five key medium term drivers
Oil Tankers – five key medium term drivers 1 2 3 4 5 Demand for oil Supply of oil Shipping demand Shipping Supply Financing & Ton miles Vessel supply regulation ROBUST BALANCED S/T HEADWINDS NEW BARRIER CHANGEABLE L/T MANAGEABLE IF OWNERS ARE TO ENTRY DISCIPLINED Historical OPEC Impact vs US Shale •
Slide 24: Demand for oil – robust and steady
1 Demand for oil – robust and steady Y/Y CHANGE IN GLOBAL DEMAND FOR OIL THE IEA ESTIMATES FOR OIL Average 1.1 million barrels per day Demand growth (million bpd) 3,5 Million barrels per day 3,1 3,1 1,8 3 2,5 1,6 2,0 1,9 1,8 1,6 2 1,7 1,6 1,6 1,5 1,5 1,5 1,4 1,5 1,3 1,0 1,0 1,0 1,1 1,4 1,4 1,4 1 0,8
Slide 25: Supply of oil – driven by shale & new supplier dynamics
2 Supply of oil – driven by shale & new supplier dynamics SHALE OIL SPEED TO PRODUCTION IS KEY MOST SHALE PRODUCTION KICKS IN AGAIN @ USD 50 Average field development (approval to start up) time by resource 90 USD [years, selected areas] 80 70 5,7 60 5,0 4,4 4,6 50 3,5 40 3,0 3,1 3,3 30 2,5 20 10 0,
Slide 26: Ton miles increasing
3 Ton miles increasing DEMAND GROWTH ALL FROM FAR EAST – FOR TANKERS IMPORTANT WHERE SUPPLY IS SOURCED FROM LatAm / Carbs - Asia Pacific route Middle East - Asia Pacific route Average oil demand growth 1990-2015 =1.1 mbpd Arabian Gulf to China 5,500 miles 21 days 1.4 mbpd x 365 days = 511m barrels 1
Slide 27: Vessel Supply – Current order book ratio expected to drop significantly
4 Vessel Supply – Current order book ratio expected to drop significantly over the next 12 months SMALL PORTION OF ORDERS ARE SPECULATIVE ORDERBOOK AS % OF FLEET IMPROVING PICTURE Speculative % 10 60 VLCC Orderbook % Fleet VLCC order book Captive fleet ratio falls to 5.9% Suezmax Orderbook % Fleet 1
Slide 28: Vessel Supply – Scrapping decision-making process
4 Vessel Supply – Scrapping decision-making process TANKER SHIPPING – A HIGHLY REGULATED INDUSTRY SCRAPPING MOTIVATION USD 4.0m Lower earnings potential USD 3.5m Decreasing utilisation (vettings) 100% utilisation Lower market freight rates USD 2.5m Increased costs due to vessel age USD 2.0m Dry-dock
Slide 29: Large tanker market – moving towards equilibrium
4 Large tanker market – moving towards equilibrium DEMAND AND SUPPLY INTERACTION ON VLCC EQUIVALENTS 2016-2019 2016 2017 2018 2019 VLCC Equivalents to be delivered* Demand based on IEA forecast Cumulative Surplus/(Deficit) Total VLCC to be delivered 45 51 50 17 100 Total Suezmax equivalent to be 12
Slide 30: Vessel Supply: Current order book
4 Vessel Supply: Current order book VLCC ORDER BOOK 80 60 40 19 54 62 49 47 50 20 30 32 24 23 17 0 -11 -1 -2 -1 -13 -22 -11 -25 -27 -20 -35 -48 -40 Additions Must be scrapped (over 22.5 years old) -18 Forecast Additions Could be scrapped (≥ 20 years old) -24 -35 -60 Scrapped -80 2010 2011 2012 2013
Slide 31: Financing – becoming more restrictive
5 Financing – becoming more restrictive 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 100bn CAPACITY • Banks lending • Other shipping withdrawn from shipping flexibili
Slide 32: Summary
Summary 1 Largest tanker company in the world 2 Strong financial position 3 Mix of spot and fixed rate charters 4 Long-term positive tanker market fundamentals 5 Strong and Reputable Platform 32
Slide 33: Supplementary slides
EURO The ocean is our environment F: Supplementary slides
Slide 34: Introduction to the tanker market
Introduction to the tanker market DEMAND DRIVING FACTORS • Large tankers play a vital link Macro-economics Energy sources Oil market in the global energy supply • Economic growth • Refinery utilisation chain • Industrial production • Oil and locations • Trade, Energy and • Coal • Regional imbalances
Slide 35: Targeting an optimal mix of employment for revenue generation
Targeting an optimal mix of employment for revenue generation VLCC CHARTERING LTD. (TANKER POOL) TIME CHARTERS 2 All commercial decisions are handled by the Pool’s independent agent(2) Charterer Pays all voyage related costs Responsible for the 3 Vessels Charterer payment of all vessel chartered, op
Slide 36: Complex factors have impact on the tanker business
Complex factors have impact on the tanker business BEAR CASE BULL CASE • Tankers a highly cyclical sector – • Agencies continue to upgrade always repeats past mistakes demand forecasts CYCLICAL • Large vessel supply to drive freight • 2016 now seen as 1.6m bpd 2017 rates lower DEMAND 1.4m bpd growth
Slide 37: Vessel Supply - Reduction in contracting run rate
Vessel Supply - Reduction in contracting run rate SHIPYARDS FAR EAST FOLLOWING NATURAL LIFE CYCLE UK Western-Europe Japan Korea China Pre-1945 Cost leadership Restructuring and cost reduction Technology, specialization and domestic markets 1945-1950s Gvt. subsidies and downsizing Nationalization Clo
Slide 38: Corporate Governance matters
Corporate Governance matters Shipping Corporate Governance Scorecard Rankings 1 Merits of corporate ASC 1 SDLP 22 governance are important to EURN 2 NAP 23 Euronav NVGS 3 NMM 24 KEX 4 CAI 25 AVANCE 5 FRO 26 Quartile 1 Quartile 3 DHT 6 GNRT 27 OSG 7 NNA 28 2 GLNG 8 CMRE 29 The reason it is important
Slide 39: wll eee
wll eee