7 th Annual Invest in International Shipping Forum

Transcription

1 7 th Annual Invest in International Shipping Forum March 21, 13 Ole B. Hjertaker, CEO 1

2 FORWARD LOOKING STATEMENTS This presentation contains forward looking statements. These statements are based upon various assumptions, many of which are based, in turn, upon further assumptions, including Ship Finance management's examination of historical operating trends, data contained in the Company s records and other data available from third parties. Although Ship Finance believes that these assumptions were reasonable when made, because assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond its control, Ship Finance cannot give assurance that it will achieve or accomplish these expectations, beliefs or intentions. Important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies, fluctuations in currencies and interest rates, general market conditions including fluctuations in charter hire rates and vessel values, changes in demand in the markets in which we operate, changes in demand resulting from changes in OPEC's petroleum production levels and world wide oil consumption and storage, developments regarding the technologies relating to oil exploration, changes in market demand in countries which import commodities and finished goods and changes in the amount and location of the production of those commodities and finished goods, increased inspection procedures and more restrictive import and export controls, changes in our operating expenses, including bunker prices, dry-docking and insurance costs, performance of our charterers and other counterparties with whom we deal, timely delivery of vessels under construction within the contracted price, changes in governmental rules and regulations or actions taken by regulatory authorities, potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, and other important factors described from time to time in the reports filed by the Company with the Securities and Exchange Commission. 2

3 SFL - Overview OFFSHORE Vessels / Rigs: 1 1 Newbuildings: TANKERS Vessels in service: Newbuildings: DRY BULK Vessels in service: Newbuildings: LINERS 17 Vessels in service: 13 Newbuildings: 4 EBITDA (1) LTM 61% 21% 13% 4% NYSE listed: Mkt.cap ~$1.4bn (2) and Enterprise value ~$4.4bn (2) 9% dividend yield (3) Strong support from Fredriksen group (%) >6, shareholders Premium access to capital/bank markets: >$1 bn raised last 6 months 1) EBITDA is a non- GAAP measure and includes assets in 1% owned subsidiaries classified as 'Investment in associates'. For more details please see 4Q-12 press release 2) SFL share price of $16.69 as of Feb 27, 13 3) Latest announced dividend, annualized / SFL shareprice 3

4 $5.2 billion charter backlog (1) Charterers by Mkt. Cap Remaining Charter Term (1) > $5bn 44% < $5bn 39% > 1 yrs 64% 5 1 yrs 33% 5 yrs 3% Private 17% 1) Fixed charter backlog as of December 31, 12, adjusted for subsequent acquisitions and sales, excluding future cash sweep/profit share, net of any seller s credit and assuming certain call options are not exercised 4

5 Contributions from projects last 12 months (1) Large performing fleet with significant cash flow» $585m EBITDA-equivalent last twelve months» $136m net cash-flow from projects after interest and debt amortization $ mill $585m EBITDA 319 Fixed-rate revenues (2) Cash sweep OPEX + G&A Net interest Loan amort. (3) 136 Net contribution 1) Not as accounted per US GAAP used as an internal guideline to assess the Company s core business. 2) Fixed charter revenues and return on financial investments 3) Ordinary installments relating to the Company s projects. Excluding prepayments when vessels are sold 5

6 Frontline vessels and financial exposure Vessels on charter to FRO 47 vessels initially in 4 The fleet has been reduced to 22 vessels by selling the oldest tonnage Only double-hull VLCCs and Suezmaxes remaining Financial leverage on FRO vessels Significant reduction in leverage last 4 years From $1,25m to ~$47m (2) = 6% reduction in loan amount Loan amortization continues (>$7m/year) Next refinancing: ~$2m in 15 Number of vessels to FRO Single Hull/OBO Suezmax VLCC. 1) Source: Clarkson Research Services 2) Gross available amount per 4Q 12, adjusted for subsequent prepayments due to vessels sales. Financing relating to FRO vessels $1m $1m $1m $8m $6m $m $m $m $4/ldt (1) Loan 6

7 Fleet utilization in percent Shipping Cycles Fleet Utilization 13e average fleet capacity utilization for various shipping segments 1 % 98 % 96 % 94 % 92 % 9 % LNG, 95 % 88 % Chemical, 88 % 86 % 84 % 82 % 8 % 78 % Container operator, 83 % Car Carrier, 82 % Dry bulk, 81 % Container lease, 8 % Crude tank, 8 % Fleet utilization Mid-cycle Deal structuring closely linked to our view of where we are in the cycle 1) Source: RS Platou Economic Research, RS Platou markets 7

8 Supply growth > demand = Low charter rates Tankers Bulkers Most of the vessels ordered in the 3-8 super-cycle are now in service Shipbuilding capacity is down 3-% from 8 peak levels 1) Sourse: R.S Platou Market Research 8

9 Interesting dynamics on the supply side New orders and building capacity Replacement cost VLCCs (estimate) mill CGT $15m $11m $97m Japan $75/t Korea $65/ton China $58/t Tank Bulk Container LNG Others Est build cap Steel Engine Equipment Labour Fixed cost Replacement cost at 1-year low levels shipyards are loosing money Price measured in USD but input factors mainly in local currencies (Source: RS Platou Economic Research, RS Platou Markets., June 12 9

10 Historically attractive secondhand prices Downward pressure on asset values in most shipping segments last 18 months» Banks slowly increasing pressure on weaker owners to sell assets» Significant deliveries had a negative impact on supply/demand ratio in most segments» Few ship-owners have access to capital for new investments Focus on efficient vessel designs» Potential for significant fuel savings compared to older tonnage» Increasing value gap between newbuildings and secondhand vessels Tanker (1) Drybulk (1) Container (1) NB VLCC 5yr VLCC NB Capesize 5yr Capesize NB 3,5teu 5yr 3,6teu 1) Source: Clarkson Research Services 1

11 2H 2 1H 3 2H 3 1H 4 2H 4 1H 5 2H 5 1H 6 2H 6 1H 7 2H 7 1H 8 2H 8 1H 9 2H 9 1H 1 2H 1 1H 11 2H 11 1H 12 USD Bn. Funding of Shipping Assets Cost of capital is crucial in asset heavy industries European banks have historically dominated the shipping segment If access to cheap bank financing is changing who will replace the capital? A fundamental change in funding mix may have a long-term effect on asset values Banks are the largest shipping investors Unfunded orderbook of ~$1bn The bank market: Active but selective Delivered fleet $841bn value Orderbook ~$27bn commitments New bank loans (including refinancing) Bank debt 51 % Private equity 19 % Public equity 18 % Unfunded 52 % Private equity 16 % Public equity 1 % Governme nt 5 % DCM 7 % Governme nt 5 % Bank debt 17 % Source: SEB Enskilda, clarksons, Tufton Oceanic, Nord LB, Dealogic 11

12 Our bond portfolio Senior Unsecured Bond Loans NOK 437m (1) ($74m) April 14 USD interest rate: 5.32% (NIBOR+bp, swapped) NOK 6m ($15m) October 17 USD interest rate: 6.6% (NIBOR+5bp, swapped) ISIN: NO ISIN: NO Senior Unsecured Convertible Notes $125 million February 16 Interest rate: 3.75% Conv. price: $21.73 (2) $35 million February 18 Interest rate: 3.25% Conv. price: $ ISIN: NO ISIN: US G8175AE63 1) Original amount NOK 5m 2) After conversion price adjustment on Dec. 18, 12 12

13 SFL - Summary OFFSHORE Vessels / Rigs: 1 1 Newbuildings: TANKERS Vessels in service: Newbuildings: DRY BULK Vessels in service: Newbuildings: LINERS 17 Vessels in service: 13 Newbuildings: 4»»» Diversified fleet and customer base Long-term charter coverage and earnings visibility Premium access to capital» Focus on dealflow and distribution capacity 13