PRESENTATION OF NORDEN Jyske Bank Company Day 27 November 214 CFO Michael Tønnes Jørgensen Presentation of NORDEN 1
AGENDA NORDEN at a glance Group highlights Financials Dry Cargo Tankers 214 expectations Q & A Presentation of NORDEN 2
1871 1874 1877 188 1883 1886 1889 1892 1895 1898 191 194 197 191 1913 1916 1919 1922 1925 1928 1931 1934 1937 194 1943 1946 1949 1952 1955 1958 1961 1964 1967 197 1973 1976 1979 1982 1985 1988 1991 1994 1997 2 23 26 29 211 214 Number of active vessels DEVELOPMENT HIGHLIGHTS 214- New strategy - Capture value in improving markets 3 1871 Mads C. Holm founds NORDEN; first vessel delivered in 1872 25 Norient Product Pool 28 Financial crisis begins 275 25 1875-76 First vessel calls China & Japan 1996-25 Offices in Singapore, Annapolis, Shanghai, Rio de Janeiro and Mumbai 225 2 175 1932 13 of 14 vessels layed up 1998-1999 New growth strategy chartered vessels with purchase options 15 125 1 1884 Mads C. Holm co-founds Danish Ship Association 194-1945 4 vessels sunk 4 vessels layed up 1973 First of 5 standard bulk carriers delivered from Mitsui 199 Tanker Department is established 75 5 25 Presentation of NORDEN 3
A LEADING GLOBAL TRAMP OPERATOR Dry Cargo Capesize Post-Panamax Panamax Supramax Handysize 25 2 15 1 5 Dry cargo NORDEN vessels Tankers Pool vessels Tankers MR Handysize Modern fleet Global network of offices and port captains Pools in Dry cargo (Handysize & Post-Panamax) and Tankers (MR & Handysize) Presentation of NORDEN 4
ASSET LIGHT BUSINESS MODEL Active fleet can quickly be adjusted to demand and market conditions Fleet employment based on portfolio view Significant asset upside through purchase options Flexible fleet Coverage and customer focus Capacity Employment Sale and purchase Technical competencies in-house Owned (46) Contracts of affreightment Customer relations Logistical efficiencies Option-based flexibility 5-7 year firm periods Chartered w. POP (54) TC out FFA market 2-1 year firm periods Quick and easy cover Flexibility and scale Arbitrage Single-trip charters Other chartered (141) Spot market Leverage of scale Operator profit People Brand Systems * Active fleet per 3 June 211 * Active fleet per 3 September 214 Presentation of NORDEN 5
Why we succeed ENABLING VALUE CREATION BASED ON THE CYCLE AND THROUGHOUT THE CYCLE Exploiting the cycle Creating value throughout the cycle Taking a view on the fundamental market and adjusting our exposure Levers: Owned vessels Long-term T/C in Creating value above industry level irrespective of market conditions Levers: Commercial operations: - Optimisation around cargo contracts (Dry Cargo) - Short-term T/C in/out - Optimisation of trade composition and positioning - Exploitation of seasonality and volatility - Vessel selection Long-term coverage Voyage execution incl. fuel optimisation Financial gearing Cost efficiency Fast and consistent decision making Skilled and experienced staff Relationships with tonnage providers Close customer relationships Long-term player Economies of scale Financial strength Optimised systems and processes Execution skills Strong brand Presentation of NORDEN 6
LAST 5 YEARS PERFORMANCE Earnings per share (USD) Return on equity 5,2 5,8 12,4% 12,9% 2,1 4,4% -1,2-2,9% -6,8 29 21 211 212 213-15,1% 29 21 211 212 213 Cash flows, operations and investments (USDm) Dividend yield 4,% 16-8 298 12 122-9 7-13 3,3% 3,% 1,8% 1,8% -38-355 29 21 211 212 213 Cash from operations Net cash from investments 29 21 211 212 213 Presentation of NORDEN 7
USD million Q3 HIGHLIGTS EBITDA Key messages 2 15 19 EBITDA USD -11 million in continued weak markets 1 5-5 Results are not satisfactory, but in line with the most recently announced expectations -1-8 -8-7 -11-15 Q3 213 Q4 213 Q1 214 Q2 214 Q3 214 Baltic Dry Index 2.5 2. 1.5 Continued weakness in dry cargo market, but T/C earnings above market performance Improvement in earnings in Tankers and above market performance 1. 5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Market value of fleet USD 24 million above book value, however, weakness in charter markets impacting asset values negatively 213 214 Presentation of NORDEN 8
USD million Million USD FINANCIALS POOR MARKET BUT STRONG PERFORMANCE IN BOTH DRY CARGO AND PRODUCT TANKERS Group EBITDA of USD -11 million Dry Cargo EBITDA of USD -16 million Tanker EBITDA of USD 8 million EBITDA 15 1 5-5 1 Dry Cargo 14 12 1 8 6 11 Tankers 9 1 8-1 -6 4 Dry Cargo 7% higher than the 1-year T/C 55% higher than spot rates from Baltic Exchange NORDEN s performance vs. 1-year T/C 16. 14. -15-14 2 1-15 -16-2 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Tankers 6% higher than the 1-year T/C 12. 1. 8. 6. 4. 2. NORDEN 1-yr TC Dry cargo Tankers Presentation of NORDEN 9
FINANCIALS IMPROVEMENT IN CASH FLOW FROM OPERATIONS Cash flow from operations Gearing USD 9 million partly driven by improving working capital Undrawn credit facilities End of quarter: USD 295 million After end of quarter: new 5-year credit facility of USD 1 million 1,6 1,4 1,2 1,,8,6,4,2-29 21 211 212 213 214 Net gearing Gross gearing Presentation of NORDEN 1
USD million USD million FINANCIALS MARKET VALUE OF FLEET STILL ABOVE BOOK VALUES Market value of NORDEN s fleet continues to be above book values Asset values have decreased through Q3 Currently limited activity in asset market and values are sliding due to disappointing charter rates 5-year secondhand prices Added value in fleet (incl. joint ventures) 35 3 25 2 15 175 2 1 92 94 15 1 5 5 24-14 Source: Baltic Exchange Panamax MR -5 Q3 213 Q4 213 Q1 214 Q2 214 Q3 214 Presentation of NORDEN 11
$/cgt THE MARKETS ARE STILL IN THE LOWER PART OF THE CYCLE Newbuilding prices ($/cgt) for Panamax and MR 4 Current levels continue to be below long term trend 35 3 25 2 15 1 5 1976 1981 1986 1991 1996 21 26 211 Dry Cargo Tankers Long Expon. term (Dry trend Cargo) Expon. Long term (Tankers) trend Presentation of NORDEN 12
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec USD/day USD/day Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec USD/day USD/day DRY CARGO CURRENT RATES STILL BELOW 213 LEVELS Due to the poor market conditions in Q2 and Q3, average BDI is on par with same period in 213 Capesize 45. 4. 35. 3. Panamax 18. 16. 14. 12. 25. 1. Growth in Chinese iron ore imports has been stronger than expected, but not enough to fully compensate for: 2. 15. 1. 5. 8. 6. 4. 2. Australia gaining market share in IO export to China leading to fewer tonne-miles The loss of Indonesian nickel/bauxite trade Lower coal trade to both China and Europe Slow start to North American grain season Supramax 18. 16. 14. 12. 1. 8. 6. 4. 2. 213 214 Handysize 18. 16. 14. 12. 1. 8. 6. 4. 2. 213 214 213 214 213 214 Presentation of NORDEN 13 Updated as of 5/11
Million tonnes DRY CARGO MARKET IMPROVEMENT IN Q4 HIGHLY DEPENDENT ON INCREASE IN TRANSPORT OF COAL In spite of recent uptick, market improvement in Q4 is constrained by weak coal volumes to China caused by a political effort to protect own coal mining industry For the rest of 214, China has intentions to lower imports by 4% compared to last year Recently introduced an import tax of 3-6% for coking and steam coal On the positive note, expected fleet growth is low, ordering activity in Q3 continued to be slow China coal import (incl. lignite) Dry Cargo supply 4 35 3 25 2 15 1 5 1 8 6 4 2 - -2-4 211 212 213 214e 215e 2% 18% 16% 14% 12% 1% 8% 6% 4% 2% % -2% -4% -6% -8% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 212 213 214 Realised deliveries Realised scrapping Net fleet growth (RHS) Expected deliveries Expected scrapping Source: GTT Source: Clarksons and NORDEN Presentation of NORDEN 14
PRODUCT TANKERS IMPROVED MARKET IN Q3 AND CURRENT STRONG SPIKE Rates for MRs improved as US refineries returned from maintenance Increased exports of refined products out of Middle East Significant spike in current rates across all product tanker segments West CPP 25. 2. 15. 1. 5. Jan Mar May Jul Sep Nov 212 213 214 East CPP 25. 2. 15. 1. 5. Jan Mar May Jul Sep Nov 212 213 214 DPP 45. 4. 35. 3. 25. 2. 15. 1. 5. Jan Mar May Jul Sep Nov 212 213 214 Source: ACM Presentation of NORDEN 15 *Dirty markets include transport of fuel oil and crude
Millions dwt. PRODUCT TANKERS INCREASING EXPORTS FOR MIDDLE EAST WILL CONTINUE TO SUPPORT MARKET Positive near-term outlook as we enter winter season New export refineries in Middle East continue to ramp up Improved crude markets could provide upside for product tankers Supply growth will increase in 215 US export of refined products (1, bpd) Tanker supply 35 12 12% 3 1 1% 25 8 6 8% 6% 2 4 4% 15 1 2-2 2% % -2% 5-4 211 212 213 214e 215e -4% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 212 213 214 Realised deliveries Realised scrapping Net fleet growth (RHS) Expected deliveries Expected scrapping Source: EIA Source: Clarksons and NORDEN Presentation of NORDEN 16
214 FULL YEAR GUIDANCE Outlook USDm Dry Cargo Tankers Total EBITDA -6 to -3 15 to 45-6 to Profit from vessel sales CAPEX 1-12 Comments Guidance based on current capacity and coverage Only known and confirmed vessel sales are included in guidance Guidance on CAPEX is lowered to USD 1-12 million (USD 13-15 million), primarily due to sale of a product tanker Presentation of NORDEN 17
This presentation contains certain forward-looking statements reflecting the management s present judgment of future events and financial results. Statements relating to the remainder of 214 and subsequent years are subject to uncertainty, and NORDEN s actual results may therefore differ from the projections. Factors that may cause such variance include, but are not limited to, changes in macro-economic and political conditions, particularly in the Company s principal markets; changes to the Company s rate assumptions and operating costs; volatility in rates and tonnage prices; regulatory changes; any disruptions to traffic and operations as a result of external events, etc. FORWARD LOOKING STATEMENTS Presentation of NORDEN 18
Thank you for your attention Get mobile version of NORDEN s website. Scan and add to home screen. Or go to m.ds-norden.com Dampskibsselskabet NORDEN A/S 52, Strandvejen DK-29 Hellerup Denmark Phone: +45 3315 451 www.ds-norden.com Presentation of NORDEN 19
BACK UP Presentation of NORDEN 2
OVERALL RESULTS USDm Q3 213 Q2 214 Q3 214 EBITDA - Dry Cargo 1-6 -16 EBITDA - Tankers 11 1 8 Unallocated -2-3 -3 EBITDA - Group 19-7 -11 Depreciation -21-16 -19 EBIT Group -1-27 -28 Net profit 1-42 -46 Cash from operations 4-29 9 Net Cash flow 29-11 -31 Cash and securities 529 323 279 Presentation of NORDEN 21
Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 USD/day USD/day Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 USD/day USD/day DRY CARGO 12 MONTH ROLLING AVERAGE Capesize Panamax 5. 3. 45. 4. 25. 35. 3. 2. 25. 15. 2. 15. 1. 1. 5. 5. - - Supramax Handysize 25. 2. 18. 16. 14. 15. 12. 1. 1. 8. 6. 5. 4. 2. - - Presentation of NORDEN 22 Updated as of 5/11
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov USD/day USD/day USD/day USD 1,/day USD 1,/day USD 1,/day DRY CARGO REGIONAL RATES Handysize Supramax Panamax 7 16 15 6 14 5 4 3 2 1-1 12 1 8 6 4 2-2 1 5-5 -2-4 -3 Jan FebMar Apr May Jun Jul Aug Sep Oct Nov Dec -6 Jan FebMar Apr May Jun Jul Aug Sep Oct Nov Dec -1 Jan FebMar Apr May Jun Jul Aug Sep Oct NovDec 211 212 213 214 211 212 213 214 211 212 213 214 16. 14. 25. 2. 12. 1. 8. 2. 15. 15. 1. 6. 4. 2. 1. 5. 5. -2. -4. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov -5. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov -5. -1. Spread Atlantic Actual Pacific actual Spread Atlantic Actual Pacific actual Spread Atlantic Actual Pacific Actual Presentation of NORDEN 23 Updated as of 5/11
FINANCIAL STRENGTH Strong capital structure Strong focus on cash flow generation Cash in low-risk deposit accounts and securities Equity ratio at 79.7% Net gearing of.92 at 3 September 214 Outstanding yard payments incl. joint ventures 214: USD 3 million 215: USD 163 million 216: USD 59 million 217: USD 124 million 218: USD 51 million Total: USD 427 million Presentation of NORDEN 24 Net committed cash USDm Q3 214 Q2 214 Adjusted net interest bearing assets* Gearing 3 48 T/C obligations** -1,579-1,67 Newbuilding instalments less proceeds from vessel sales** -397-424 Revenue from coverage** 65 669 Net commitments -1,369-1,377 * Adjusted for prepayments on vessel sales and currency swaps. ** Present values 1,6 1,4 1,2 1,,8,6,4,2-29 21 211 212 213 214 Net gearing Gross gearing
FLEET VALUES Presentation of NORDEN 25
DRY CARGO FLEET OVERVIEW Presentation of NORDEN 26
PRODUCT TANKER FLEET OVERVIEW Presentation of NORDEN 27
DRY CARGO Presentation of NORDEN 28
PRODUCT TANKERS Presentation of NORDEN 29
THE SHARE (DNORD) Master data Shareholder capital DKK 42,2, Number of shares and denomination 42,2, shares of DKK 1 Composition of shareholders 16,172 registered shareholders owning 9.9% Approx. 4% international ownership Classes of shares 1 Voting and ownership restrictions None Stock exchange Ticker symbol NASDAQ OMX Copenhagen DNORD 26,6% 9,1% 28,1% A/S Motortramp, Stensved RASMUSSENGRUPPEN AS, Kristiansand NORDEN (treasury shares) ISIN code Bloomberg code DK68321 DNORD.DC 2,5% 4,1% 11,5% Other top 2 shareholders Other registered Non-registered Reuters code DNORD.CO Presentation of NORDEN 3