WWL ASA. Company presentation. February 2018

Transcription

1 WWL ASA Company presentation February

2 Agenda WWL ASA in brief Q4 Business and financial update Q4 Market outlook Summary and Outlook 2

3 WWL ASA in brief 3

4 WWL ASA Among the largest listed shipping / logistics companies 5 th largest listed shipping / logistics company globally (Market cap USD billion) A.P. Moller Maersk Glovis Mitsui OSK Lines Nippon Yusen K.K. WWL DFDS Golar LNG Kawasaki Kisen Kaisha GasLog Teekay LNG Ocean Yield Euronav Golden Ocean Group Scorpio Tankers Stolt-Nielsen Navigator Gas Frontline BW LPG Höegh LNG 1) 0,7 0,7 0,7 0,7 0,6 0,6 1,3 1,3 1,2 1,5 1,5 2,3 2,9 3,2 3,2 3,7 3,6 4, Free float market cap of more than 0.8USDbn Source: Factset as at 14-Feb ) APMM adjusted to reflect transport and logistics share of market cap 4

5 Shipping industry pioneers adapting to changing market conditions Wilhelmsen Group founded in Tønsberg, Norway by Morten W. Wilhelmsen Wallenius Lines founded in Stockholm, Sweden by Olof Wallenius 1934 American Roll-on Rolloff Carrier founded by Wilhelmsen Group and Wallenius Shipping jointly 1990 Merger between Wilhelmsen group and Wallenius Shipping to form Wallenius Wilhelmsen Lines 1999 EUKOR formed as Wilhelmsen Group and Wallenius Shipping acquires the car carrier unit Hyundai Merchant Marine 2002 Wallenius Wilhelmsen changes its name from Lines to Logistics, signaling the shift towards fully integrated logistics services from factory to dealer 2006 Merger to create Wallenius Wilhelmsen Logistics ASA as a listed company incl. EUKOR, WWL, American Roll-on Roll-off Carrier (ARC), as well as Wilhelmsen and Wallenius vessels

6 WWL ASA is the undisputed market leader for vehicle logistics globally KEY FACTS & FIGURES OUR PRODUCTS & SERVICES 1) vessels servicing >15 trade routes to six continents 2 MARINE TERMINAL SERVICES 1 OCEAN 1 Revenues (2017) 3 ~3.1bn USD >18M ~4.5M units for Ocean ~13.5M units in Landbased 7,500 ~1,500 Office workers ~6,000 Production workers PLANT -BASED TECHNICAL SERVICES 3 DISTRIBUTION TO PORT 4 OCEAN TRANSPORTATION 1 MARINE TERMINAL SERVICES 2 PORT-BASED TECHNICAL SERVICES 4 DISTRIBUTION TO DEALER EBITDA (2017) ~615 MUSD 2 LANDBASED 3 4 Revenues (2017) ~800 MUSD EBITDA (2017) ~100 MUSD 1) Not including Holding segment of negative about USD 10 million 6

7 Capacity, kceu 3 WWL ASA is a clear market leader and the #1 operator globally, both in terms of CEU 1 capacity and number of vessels #1 player in the RoRo 2 industry Current fleet by operator group Well positioned for H&H 3 and Breakbulk cargo Fleet characteristics Total capacity, CEU 1 Average max ramp capacity WWL MOL GRIMALDI K LINE EUKOR HAL GLOVIS NYK 0 WWL ASA NYK MOL K LINE GLOVIS HAL GRIMALDI SIEM OTHER ) Car equivalent units, a standardized capacity measurement unit 2) Roll on - roll off shipping 3) High and heavy cargo (e.g. buses, trucks, agriculture, construction or mining machines) Average # of hoistable decks 7

8 WWL ASA has a combined fleet of 132 vessels Three distinct brands and a combined fleet of 132 vessels Average age ~11 years 132 Owned Long T/C Medium T/C Short T/C Group Total 1) No further CAPEX planned past four newbuildings with expected delivery in 2018/ 2019 (installments of USD ~170 millions remaining) Additional capacity need will be acquired in the charter market WWL ASA strives to have fleet flexibility through combination of owned and chartered tonnage 1) Note: Per Long T/C >5 years, medium T/C 1-5 years and short T/C <1 year Note: ARC retains a separate and independent management structure 8

9 WWL ASA has an unrivalled global RoRo network and unique agility to meet changing demand 132 vessels with more than 1,300 sailings and 9,000 port calls per year Overview of key trade routes WWL trade routes EUKOR trade routes ARC trade routes 9

10 Diversified customer portfolio with long term contracts Size of cargo segments Main AUTO customers include HIGH all main & HEAVY OEMs globally BREAKBULK Main customers include all major OEMs 2 globally Auto Main customers include all main OEMs globally ~75% of CBM 1 ~25% of CBM 1 High & Heavy Majority of volume from Auto High & Heavy and Breakbulk maximize cubic utilization Unique handling capabilities of High & Heavy and Breakbulk cargo Breakbulk 1) Cubic meters, unit of measurement used in rate calculations 2) Original equipment manufacturer 10

11 The landbased services network is also global In-plant vehicle processing centres In-plant equipment processing centres Terminals Vehicle processing centres Equipment processing centres Inland distribution networks 11

12 Our Landbased services portfolio Landbased services portfolio Main customers Main customers include all Marine Terminals Technical Services Inland Distribution Auto main OEMs globally EBITDA share: EBITDA share: EBITDA share: High & Heavy Stevedoring Custom clearance Receive and delivery Cargo handling Accessory fitting Pre delivery inspections Repairs and rectifications Storage management Primarily procurement model Breakbulk 12

13 Q4 Business and Financial update 13

14 Negative trend in financial performance turned in 2017 driven by higher volumes, improved cargo mix and cost reductions Consolidated results - Total income and EBITDA1, 2, 3 USD million Total income EBITDA ILLUSTRATIVE HISTORICAL PERFORMANCE ILLUSTRATIVE HISTORICAL PERFORMANCE Extraordinary items +19% +8% ) Adjusted for extraordinary items; Merger accounting loss of USD 62m and organizational restructuring cost of USD 20m in Q and USD 14m in Q ) Comparable numbers for FY2016, 2016YTD and Q are pro forma numbers as if the transaction had taken place back in time, and adjusted for anti-trust 3) Historical performance adjusted for discontinued business 14

15 Landbased segment continues the positive development Total income and EBITDA Landbased segment 1, 2 USD million Total income EBITDA Extraordinary items ) Adjusted for non recurring items 2) Comparable numbers for FY2016, 2016YTD and Q are pro forma numbers as if the transaction had taken place back in time 15

16 Highlights fourth quarter 2017 EBITDA adjusted for non-recurring items of USD 182 million Results negatively impacted by increased bunker prices Strong volume growth, but less favorable trade and cargo mix Acquisition of Keen Transport Inc for USD 64 million Synergy target increased to USD 120 million Antitrust provision increased with USD 140 million 16

17 Consolidated results fourth quarter 2017 Comments Q Q Proforma Q ) Total income Operating expenses 859 (774) (769) EBITDA EBITDA adjusted Depreciation (84) (84) (82) EBIT Financial income/(expense) (32) (21) n/a Profit/(loss) before tax n/a Tax income/(expense) 27 (28) n/a Profit/(loss) for the period EPS n/a Adjusted EBITDA was USD 182 million in the fourth quarter, down 5% q-o-q Extraordinary items include USD ~5 million for write down of capitalized IT costs USD ~2 million in restructuring costs USD ~2 million in gain on sale of fixed asset Net financial expenses in the fourth quarter was positively impacted by USD 12 million in unrealized gains from interest rate hedges and negatively impacted by USD 4 million related to movements in currency Tax income of USD 27 million for the fourth quarter due to significant reduction in WWL group s deferred tax liability caused by the reduction of the federal tax rate in the US from 35% to 21% 1) Comparable numbers are pro forma numbers as if the transaction had taken place back in time 17

18 Ocean segment Fourth quarter 2017 Total income and EBITDA ocean segment 1, 2 USD million Total income EBITDA Extraordinary items % +7% % % Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q3 16 Q4 16 Q Q Q Q4 17 1) Adjusted for extraordinary items; 2) Comparable numbers are pro forma numbers as if the transaction had taken place back in time 18

19 Strong volume development in Q4, but slight fall back in cargo mix Volume 1) and cargo mix 2) development Million CBM and % Total prorated volumes Cargo mix Million CBM 20 18, ,2% 19,5 22,6% 18,2 25,3% 19,4 24,4% 18,0 25,6% 18,2 15,5 24,5% 16,8 25,6% 15,2 25,5% 16,2 22,6% 15,9 24,2% +14% 17,7 26,0% 16,7 26,4% +11% 18,4 25,8% % ,4% Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q ) Prorated volume 2) Calculated based on unprorated volumes. Updated figures based on aligned cargo type definition and reporting across all Ocean units 19

20 Seasonal increase in volumes across all trades, both q-o-q and y-o-y Atlantic Shuttle +10% +14% EU - ASIA +17% +17% Asia - EU +14% +15% Q4 16 Q3 17 Q4 17 Q4 16 Q3 17 Q4 17 Q4 16 Q3 17 Q4 17 EU/NA Oceania 1) Asia - NA +13% +3% % % 2.0 Asia - SAWC % +4% Q4 16 Q3 17 Q Q4 16 Q3 17 Q4 17 WWL trade routes EUKOR trade routes ARC trade routes Q4 16 Q3 17 Q4 17 Note: Prorated volumes on operational trade basis in CBM 1) Including Cape sailings (South Africa) 20

21 Negative development in net freight/cbm due to weaker cargo mix Net freight / CBM development 1) Indexed to 100 per Q Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Note: Unprorated volumes excluding US flag operations 1) Net freight = Revenues adjusted for surcharge elements such as BAF, SRC, THC etc 21

22 132 vessels operated in the quarter, increased space charter activity Fleet development Number of vessels Group Fleet Short Term T/C In/Out Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q

23 Synergy target of USD 120 million of which USD ~75 million confirmed Confirmed and realized synergy development USD million Q Q Q Q Q Q Q Q IT Fleet Optimization Ship Management Procurement SG&A savings Realized savings (annualized) 23

24 Landbased segment Fourth quarter 2017 Total income and EBITDA landbased segment 1,2) USD million Total income EBITDA +19% +10% Extraordinary items % % Q3 16 Q4 16 Q Q2 17 Q3 17 Q4 17 Q Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 1) Adjusted for extraordinary items; 2) Comparable numbers are pro forma numbers as if the transaction had taken place back in time 24

25 Acquisition of Keen Transport closed December 7 th 2017 Acquisition Summary The transaction closed December 7th, with total acquisition price of USD 64 million on a cash- and debtfree basis, financed through existing facilities Keen operates 14 High & Heavy Equipment Processing Centers (EPC's) and a specialty trucking entity in the US. The company delivered income of USD 82 million and earnings (EBITDA) of USD 10 million in 2016 The acquisition is a strong fit strategically and operationally, yielding some synergies Opportunity to capitalize on the improving fundamentals of the mining and construction sector, both in the US and abroad 25

26 Several other network development initiatives also concluded Part of investment consortium to develop a logistics park in Pyoengtaek, South Korea WWL group has committed to purchase 66ha of land when construction is completed in 2023 (USD ~30 million investment) Land will be used to develop a Vehicle Processing Center and inland port extension of WWL groups PIRT terminal Expansion of Zeebrugge Terminal Expansion of footprint in Zeebrugge with 49ha to cater for increased volumes and growth Investment of about USD 20 million during the next 2-3 years New VPC in Tacoma, US New Vehicle Processing Center (VPC) on the back of long term customer commitments Investment of about USD 12 million in buildings and infrastructure during

27 Balance sheet review Fourth quarter 2017 Unaudited Balance Sheet USD billion Comments ASSETS 7.8 Non current assets 6.3 EQUITY & LIABILITIES 7.8 Equity 2.8 Non current liabilities 3.6 Total assets of USD 7.7 billion with equity ratio of 35.8% (up from 35.5% in the third quarter) Net interest bearing debt of USD 3.0 billion, stable compared with the third quarter Strong cash and liquidity position with USD 796 million in cash and USD 275 million in credit facilities The preliminary purchase price allocation has been updated to reflect the increased antitrust provision The Board decided not to recommend a dividend for Current assets 1.5 Current liabilities at this time as they would like to see a further strengthening of the solidity of the group 27

28 Cash flow and liquidity development fourth quarter 2017 Cash flow and liquidity development USD million Comments CAPEX includes the acquisition of Keen Transport («Keen») for USD 64 million Net financing includes Debt uptake for financing of Keen Down payment ship loans (USD ~100 mill) Repayment of credit facilities (USD ~100 mill) Net proceeds new bond issue (USD ~100 mill) Interest and financial derivates includes negative about USD 15 million for realization of financial derivates (mainly USD/NOK options) Liquidity Q EBITDA Sale of tangible assets CAPEX Net Interest financing and financial derivatives Taxes paid Other 1 Liquidity Q ) Mainly relates to changes in working capital 28

29 Market and Business Outlook Q4 29

30 The market fundamentals started to improve in 2017 Auto steady growth H&H turning point Market balance firmer Modest growth in auto trade volumes, up around 1.5% with increased momentum towards year end Recovery in global H&H markets with double digit growth for 2017 Overcapacity reduced from around 10% to less than 5% with current orderbook at historical low 30

31 Auto sales and exports developed positively in the fourth quarter Auto sales increased ~9% in the fourth quarter q-o-q Auto exports increased ~3% in the fourth quarter q-o-q CAGR % APAC EUR ME AF AM CAGR % EUR APAC ME AF AM 9% 8% Indian Subcontinent East Europe 8% 7% North America Greater China 7% 6% 5% South America Middle East/Africa ASEAN 6% 5% 4% 3% Middle East/Africa Europe 4% 2% South America 3% 2% 1% 0% North America Oceania Central Europe Greater China 1% 0% -1% -2% -3% -4% Japan South Korea South Asia -1% West Europe Japan/Korea -2% -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% 30% -5% -6% -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 28% Q4 17 vs Q3 17 Q4 17 vs Q3 17 Source: IHS Markit 1) Size of circle indicates auto sales Q ) Greater China China & Taiwan 31

32 Construction momentum still solid Global construction and mining equipment imports 1, 2 Comments Quantity (Avg. L12M) 60k 50k Quantity Growth Growth (L3M y/y %) 30% 20% 10% 0% Global trade volumes continue to grow strongly into all regions except for Africa. The locally supplied Chinese equipment market is still the global growth engine, but also solid growth in other areas In North America, the strong housing market lifted construction spending and equipment demand European construction equipment demand is growing in the key markets of Germany, UK and France 40k -10% Australian construction activity keeps expanding at three-year highs, and a recovery in engineering construction is expected to lift output following three years of decline in project work 30k -20% 01/12 07/12 01/13 07/13 01/14 07/14 01/15 07/15 01/16 07/16 01/17 07/17 1) Source: IHS GTA Global construction and rolling mining equipment import (Value >20 kusd ) (Units avg. L12M and L3M y/y %). Data cut-off: ) Sources: TMA, KBA, Axema, ANFAVEA, AEA, Seaport Registrations: UK (+50Hp), Germany (+70 kw), France (Standard tractors). Sales: Australia (+100Hp), Brazil (All tractors), US (+100Hp, 4WD) (Units y/y %) 32

33 Agriculture equipment markets are still mixed Tractor sales and registrations 2 Comments Growth (y/y %) 160% 50% 40% 30% 20% 10% 0% Q17 The US market is finally showing signs of bottoming out with increased sales in the fourth quarter and a healthier inventory situation support modest replacement driven demand growth Big European tractor markets developed strong in the fourth quarter, although mainly driven by a January 1, 2018 EU registration deadline. The market sentiment in Europe remains at a 5-year high, and the market stabilisation from 2017 is expected to continue The Australian tractor sales continued to develop positively in the fourth quarter -10% The Brazilian tractor market posted another quarter of strong -20% decline, but compared to a high base of comparison Australia UK Germany France Brazil US 1) Source: IHS GTA Global construction and rolling mining equipment import (Value >20 kusd ) (Units avg. L12M and L3M y/y %). Data cut-off: ) Sources: TMA, KBA, Axema, ANFAVEA, AEA, Seaport Registrations: UK (+50Hp), Germany (+70 kw), France (Standard tractors). Sales: Australia (+100Hp), Brazil (All tractors), US (+100Hp, 4WD) (Units y/y %) 33

34 Mining equipment volumes continue to recover Continued gains for commodity prices and machinery Global mining equipment deliveries 1 and iron ore price 2, Value (Indexed) Equipment value Iron ore price Iron ore price (+3Q) Average price (USD/t) Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 0 1) Source: The Parker Bay Company Surface Mining Equipment Index (Indexed value of large surface mining equipment deliveries, 2007 = 100) 2) Source: MarketIndex, IMF Average quarterly iron ore price (USD/t) 34

35 But mining equipment exports to key markets are still at a low level Solid equipment growth to all regions since the bottom....but still nowhere near peak levels in most regions Deliveries mining equipment, Growth 4Q17 vs 4Q16 and 4Q17 vs. 4Q161 Deliveries mining equipment, 2017 vs 2012 (peak)2 4Q17 vs 4Q16 200% Africa Europe North America Asia Latin America 150% 77% 34% 51% 100% Asia Africa Oceania Latin America 50% WORLD 37% Europe Oceania 22% 0% North America 37% -50% -20% -10% 0% 10% 20% 30% 40% 15% 50% 4Q17 vs 3Q17 1) 2) Source: The Parker Bay Company Deliveries of large surface mining equipment (Value (MUSD) q/q %) Source: The Parker Bay Company Deliveries of large surface mining equipment (Value (MUSD) 2017/2012 %). Diameter of circle indicates 2012 value of market (Not applicable to World) 35

36 Thousand CEU Supply and demand balance improving Orderbook at end of 2017 (Thousand CEU) Average fleet growth, F % % 6% 4% 2% 0% -2% Average Fleet Growth % 0-4% -6% % -10% Orderbook 2017 Start Q1 Q2 Q3 Q4 Orderbook 2017 End F 2019F 2020F 2021F -12% Deliveries Cancellation New order Estimated Deliveries Deliveries Recycling Average Fleet Change Source: Clarksons Platou 36

37 Summary & Outlook 37

38 Summary and outlook SUMMARY FOR Q Strong underlying results with adjusted EBITDA at USD 182 million OUTLOOK Continued pressure on rates; some contracts have been secured with reduced rates Strong volume growth, but less favourable trade and cargo mix Reduction in contracted HMG volumes from 50% to 40% as from Jan 2018 Acquisition of Keen Transport Inc for USD 64 million on a cash and debt free basis Positive volume development combined with recovery in the high & heavy markets Synergy target increased to USD 120 million of which USD 75 million has been confirmed Increased realization of synergies will positively impact the results 38

39 Thank you! 39