Business & Financial Presentation FY

Transcription

1 The Great Eastern Shipping Company Ltd. Business & Financial Presentation FY April 29,

2 Forward Looking Statements Except for historical information, the statements made in this presentation constitute forward looking statements. These include statements regarding the intent, belief or current expectations of GE Shipping and its management regarding the Company s operations, strategic directions, prospects and future results which in turn involve certain risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward looking statements; including changes in freight rates; global economic and business conditions; effects of competition and technological developments; changes in laws and regulations;difficulties in achieving cost savings; currency, fuel price and interest rate fluctuations etc. The Company assumes no responsibility with regard to publicly amending, modifying or revising the statements based on any subsequent developments, information or events that may occur. 2

3 A year of record performance Total income of Rs cr.up by 48% PAT at Rs. 809 cr. up by 72% EPS of Rs (PY Rs.24.29) Highest ever equity dividend payout of Rs crores ( includes tax) Committed capex as on date - USD 399 mn towards 16 vessels 3

4 Financial Comparison Year on Year (in Rs. Cr.) Total Income EBIDTA Interest Depreciation PBT PAT* FY FY * includes prior period adjustments 4

5 Financial Comparison Total Income EBIDTA Interest Depreciation PBT PAT* Quarter on Quarter Q4 FY (in Rs. Cr.) Q4 FY * includes prior period adjustments 5

6 Balance Sheet Comparison Company Owned: Asset (incld. Vessels under Construction) Total Assets Company Owed: Shareholder s Funds Debt Deferred Taxation Debt Equity Ratio Net Debt Equity Ratio FY (in Rs. Cr.) FY

7 Delivering through the years.. 7

8 Rs. per share % BV NAV ROE% - 8

9 Growing bigger. & stronger FY Capital Employed Rs cr. Net worth Rs cr. Net Debt Equity Ratio 0.78 Cash outflows between FY to FY to shareholders spent on Capex FY Rs. 785 cr. Rs cr. Capital Employed Rs cr. Net worth Rs cr. Net Debt Equity Ratio

10 Offshore Oil Field Services 10

11 The Market-CY 2004 Demand for rigs rose : Worldwide by around 6% In India by around 9% Utilisation and day rates improved Rig utilisation by around 5% PSV utilisation by around 4% India, Mexico, Russia, and West African countries initiated plans for oil security Of the 20 blocks offered under NELP V, 8 are offshore ONGC s success in deep-water exploration campaign Sagar Samriddhi 11

12 Global Rig Demand Number of Rigs Source: RS Platou

13 Charter hired Rigs in India* Number of Rigs * Excludes ONGC owned rigs 13

14 Rig Utilisations and day rates on the rise 85% 84% 83% 82% 81% 80% 79% 78% 77% 76% Rig Utilisation (On Total Supply) 84% 79% Day Rates, 300 ft IC Jack Up in US Gulf (USD 1000) Source: RS Platou,

15 Increase in PSV Utilisations and day rates N Sea PSV utilisation 86% 84% 82% 84% 80% 79% 78% 76% N Sea Pool PSV day rates (GBP/ day) Source: Seabroker

16 Overview of the year Enhanced the OSV fleet - deep water capability Ordered new building 2 AHTSVs and 2 PSVs Increased operational presence in North Sea / Middle East with major international operators 3 yr contract for Kedarnath renewed at higher rates commencing October

17 Market Outlook CY 2005 Increased pressure to explore and produce oil World oil estimates 6% increase in offshore drilling activities Budgetary allocations of oil companies reconsidered Thrust on reserve accretion Marine construction market to absorb more vessels Increased activities envisaged in platform maintenance and allied jobs OSVs expected to witness improved utilisations Earnings from Harbour Tugs business to remain satisfactory 17

18 Offshore Wells Drilled Globally Number of wells E 18 Source: World Oil

19 Addressing Business Concerns Restricted marketability of older assets Adapting to clients specific requirements through upgradation Building an OSV fleet through NB orders - 4 New Buildings to join the fleet during the year Increasing competition from foreign flags Diversifying risk by increasing operational presence in global markets Leveraging on domain expertise repeat business 19

20 The Emerging Scenario! International Market High oil & gas prices and reducing large opportunities resulting in increasing pressures on oil companies to explore & produce Major increase in oil co. spending underway. In 2005, initial indications of 8-10% growth Strength in rigs market to continue through 2005 with companies unfurling exploration plans Domestic Market ONGC has committed USD 2 bn in 2005 for its exploration campaign Commitment by Reliance, GSPCL, BGEPIL, Cairn towards increased activities is apparent from their budgetary allocations 20

21 Revenue Visibility: FY Dry Docking 27% Drilling Rs. 87 Cr Open 55% Offshore Support Vessels Covered 45% Rs.125 Cr Covered 73% Open Harbour Tugs Rs. 29 Cr 36% Covered 64% Marine Construction Open Rs. 6 Cr 86% Covered 14% Revenue of Rs 292* cr. covers OPEX by 1.2 by Deep Water Services * Includes Project Income of Rs.45 Cr. 21

22 High Oil Prices Depleting reserves Oil fuels growth leading to higher E&P activities 22

23 Shipping 23

24 : The year of the ship owner Tanker BDTI was up by 26 % Second hand values gained 35% NB price Index up by 32 % Drybulk BHMI was up by 32 % Second hand values gained 45 % NB prices up by 32% Container Earnings were up by 52% 10 yr second hand values 57% NB prices up by 26% 24 Source: Clarkson Research

25 90,000 Tanker earnings (Average for each year) 80,000 70,000 60,000 USD / day 50,000 40,000 30,000 20,000 10,000 0 FY01 FY02 FY03 FY04 FY05 VLLC Suezmax Aframax MR Product 25 Source: Clarkson Research

26 Record Second Hand Asset Values ( for 5 year old tankers) USD mn FY01 FY02 FY03 FY04 FY05 VLCC Suezmax Aframax 45K MR Product 26 Source: Clarkson Research

27 Record New Building Prices USD mn FY01 FY02 FY03 FY04 FY05 VLCC Suezmax Aframax 47K MR Product 27 Source: Clarkson Research

28 Average Dry bulk earnings (Handymax) 30,000 25,000 USD/ day 20,000 15,000 10,000 5,000 0 FY01 FY02 FY03 FY04 FY05 Handymax Av Trip Earnings 28 Source: Clarkson Research

29 40 Record Second Hand Values ( 5 year old 45K Handymax) USD mn FY01 FY02 FY03 FY04 FY05 Handymax 29 Source: Clarkson Research

30 Record New Building Handymax Prices USD mn FY01 FY02 FY03 FY04 FY05 Handymax 30 Source: Clarkson Research

31 VLCC AG_Japan WS rates Jan2002 onwards (Monthly High Lows) Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 31

32 Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Oct-03 Nov-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04 May-04 Jun-04 Jul-04 Aug-04 Sep-04 Oct-04 Nov-04 Dec-04 Jan-05 Feb-05 Mar-05 BHMI Jan 2002 onwards (Monthly High Lows) 32

33 Overview of the year Tonnage crossed 3 Mn dwt mark (growth of 22%) Capex committed / spent USD 291 mn Contracted 3 NB - MR Product tankers and acquired 3 second hand tankers Contracted 3 modern Handymax dry bulk carriers Enhanced inchartering exposure Time Charters renewed at higher rates commencing FY onwards 33

34 Market Outlook CY 2005 Tankers: Oil demand growth above 5 year averages but below last year 4% growth in tonne mile demand expected Expected deliveries - 30 mn dwt; Net fleet growth of 6-7% Quantum of scrapping important Healthy spot rates expected Asset values to remain firm 34

35 Growth Rate in Oil demand 3.5% 3.4% 2.8% 2.1% 5 year average 1.8% 2.4% 2.5% 2.3% 2.1% 1.4% 1.4% 1.1% 0.8% 0.7% E IEA OPEC DoE 35

36 Dry Bulk: Market Outlook CY 2005 China to drive trade 6 % growth in tonne-mile demand expected Expected deliveries - 20 mn dwt; Net fleet growth of 7% Scrapping to remain minimal Healthy spot rates envisaged Asset values to remain firm 36

37 China s share in incremental Iron ore trade 80 (M Tons.) E China 37 World

38 TANKERS RISKS Potential Risks & Upsides Slower than anticipated growth in oil demand Low scrapping UPSIDES Disruption in supply Harsh winter Decline in production in consuming areas DRY BULK RISKS Slowdown in steel sector particularly China UPSIDES China surprises yet again Port congestion builds 38

39 Revenue Visibility: FY Open 53% Crude Tankers Rs.222 cr Open 30% Product Tankers Rs. 387 cr Covered 47% Covered 70% Open 78% Drybulk Carriers Covered 22% Rs. 96 cr Revenue of Rs.705 cr covers OPEX by 1.4x 39

40 Business Philosophy Growth at the right price Lower break evens enabling sustenance through downturns with strong upside potential Managing risks Blend of Spot & Period covers Build capacity through operating leverage 40

41 Timing acquisitions and orders GES Tanker Purchases in last 5 FYs (Basis Commitment in FY) Clarksons Second Hand Tanker Price GES Purchase Points 19% 12% 11% 31% 27% (2) (2) (2) (2) (2) (3) (2) 300 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 41

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