Full-Year Results 26 and 27 outlook Carsten Mortensen, CEO Jens Fehrn-Christensen, CFO Copenhagen, ch 27, 27 1
TODAY S AGENDA 26 in highlights Dry Cargo Tanker Guidance for 27 Q&A Session THE PREFERRED PARTNER IN GLOBAL TRAMP SHIPPING UNIQUE PEOPLE. OPEN MINDED TEAM SPIRIT. NUMBER ONE. This presentation can be found on www.ds-norden.com 2
26 IN HIGHLIGHTS 3rd best result in the history of the Company EBITDA development EBITDA split, 26 Development in vessel days Mio. USD 4 3 2 Tank USD 48 mill. 5. 4. 3. 2. 1 23 24 25 26 27E Bulk USD 126 mill. 1. 22 23 24 25 26 Integrated global operator and owner within dry cargo and tanker Gross fleet of 22 units 153 active vessels 67 on order Strong growth in both earnings and capacity since 2 Outlook for 27 Dry cargo markets ended the year very strongly NORDEN positioned to benefit EBITDA USDm 29-32 Net result USDm 38-41 3
OVERVIEW Operating model retain upside, sell downside Flexible fleet Coverage & customer focus Total capacity* Coverage Asset play Technical competences in-house Owned (14) Contracts of Affreightment Customer relations Logistical efficiencies Option based flexibility 5-7 year firm periods Flexibility Adds scale Arbitrage opportunities Chartered w. POP (29) Other chartered (11) TC out FFA market Spot market 2-5 year firm periods Quick and easy cover People Brand Systems *Note: Figures indicate fleet as of end 26. POP= Purchase option 4
OVERVIEW Customer Focused Organisation Copenhagen Annapolis Shanghai Mumbai Singapore Rio de eiro Core Values: Reliability, Flexibility, Empathy and Ambition 5
26 IN HIGHLIGHTS Strong Q4 as expected Key Figures (USDm) 26 25 Group Vessel days 47,425 44,738 6% Quarterly EBITDA - Group Freight income (revenues) 1,234 1,296-5% EBITDA 166 Profits from sales of vessels, etc. Profit from operations (EBIT) Fair value adjustment of certain hedging instruments (IAS 39) -27 Profit for the period 177 Net profit down due to 55 23 216 12 328 26 336-23% -54% -38% -24% -48% USDm 8 7 6 5 4 3 2 1 Q1 5 Q2 5 Q3 5 Q4 5 Q1 6 Q2 6 Q3 6 Q4 6 EBITDA down 23% Dry Cargo: -4 mio/-24% Tank: -9 mio./-16% Fewer vessel sales Fair value adjustments 6
26 IN HIGHLIGHTS Theoretical NAV at all-time-high Total theoretical NAV DKK 6,98 per share 6% of the purchase options are declarable within 5 years 7. Value per share (DKK) 6. 5. 4. 3. 2. No. 35 3 25 2 15 1 Average strike price on the right axis 35 3 25 2 15 1 USD mio. 1. 5 5 22 23 24 25 26 27 28 29 21 211 212+ TCs with POPs Net Asset Value per share Share price (year end) Current share price Declarable Options (No.) Avg. Strike price (USDm) 7
26 IN HIGHLIGHTS Business development strengthened Long term core fleet expansion 8 owned vessels delivered and 4 vessels sold High contracting activity 9 own new-buildings 19 new long-term charter 22 additions to core fleet in 27 Adjustments to segments Handysize activity Post-Panamax ordering Operator activity in Aframax Strengthened organisation FFA Desk Project section Fleet 26 25 Active fleet: Owned vessels 14 1 Chartered vessels with POP 1 29 Chartered vessels (3+ years) 2 1 Total active core fleet 63 4 Other chartered vessels 9 84 Total active fleet 153 124 Vessel to be delivered: New-buildings (own) 14 2 9 Chartered vessels with POP 42 36 Chartered vessels (3+ years) 11 5 Total deliveries to core fleet 67 5 Gross fleet 22 174 1 POP = Purchase option 2 Of which 5 units 5% owned 2 % Change +58% +34% +26% 8
DRY CARGO DRY CARGO DEPARTMENT Dry Cargo vessel days in 26 (1%=41,724) Handysize 3% Panamax 34% Handymax 59% Capesize 4% 9
DRY CARGO Dry cargo market soared in second half of 26 6. 5. 4. 3. 2. 1. BDI up by 83% during year 25 avg. BDI average down by 6% 26 avg. Supramax T/C rates USD per day and expectations are very strong 5. 4. 3. 2. 1. Asset value on the right axis 1 year T/C rate 3 year T/C rate 5 4 3 2 1 HMX, 3 years, 52K DWT, 2nd hand value USDm May Jul Nov May Jul Nov 25-26 - 27 May Jul Nov May Jul Nov 25-26 - 27 1
DRY CARGO Dry cargo - A China story China trades, index ch 22=1 China - Net Coal Export, mill tonnes per month 9 7 8 Cement export: 6 7 6 36 mill tonnes in 26 Up 63% Y-Y 5 4 5 3 4 3 2 1 Iron ore imports: 326 mill tonnes in 26 Up 19% Y-Y 2 1-1 May Jul Nov May Jul Nov Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 22 23 24-25 - 26 Cement export Iron Ore imports -2 25-26 - 27 Source: Bloomberg Strong demand in H2 China becoming the World s no. 1 cement supplier meaning growing tonnes-mile Iron ore imports still strong Source: Bloomberg Changing coal trading in Asia China: Net importer for the first time in uary Chinese cabotage 11
DRY CARGO ket trends in 27 Demand stays strong and fleet supply to slow down 8% Continued strong demand at 5-6% growth 7% 6% 6,8% 6,1% 5,3% 5,4% Increasing transportation distances 5% 4% IO from Brazil to China 3% Cement from China to US 2% Increasing coal demand from energyhungry nations e.g. China and India Port Congestion swing factor Currently 147 ships in Australian coal ports Outlook for 27 Average rates above 26 but sliding from the present heights 1% % Source: R.S. Platou 26 27 28 29 Scrapping potential is constantly increasing Tonnage supply set to slow down from 26-peak Very active bulk new-building activity for 21 and onwards 12
DRY CARGO Ongoing expansion of core fleet NORDEN active core fleet +57% 5 own new-buildings delivered and 4 own vessels sold A record of 9 own new-buildings and 15 T/C with POP were contracted Ambitious entry to new segment Handysize: 15 units for delivery to core fleet in 27-211 Post-Panamax: 4 units for delivery to core fleet in 21-212 Dry Cargo Fleet 26 25 Active fleet: Owned vessels 8 7 Chartered vessels with POP 1 26 Chartered vessels (3+ years) 1 4 Total active core fleet 44 28 Other chartered vessels 89 82 Total active fleet 133 11 Vessel to be delivered: New-buildings (own) 11 2 3 Chartered vessels with POP 32 3 Chartered vessels (3+ years) 6 2 Total deliveries to core fleet 49 35 Gross fleet 182 145 1 POP = Purchase option 2 Of which 5 units 5% owned 17 +57% +4% +26% 13
DRY CARGO EBITDA on upward quarterly trend EBITDA (USDm) 7 6 5 4 3 2 1 +73% Attractive EBITDA margin at 11% EBIT down 29% fewer vessel sales poor market conditions in H1-26 12. 1. 8. 6. 4. 2. Q1 5 Q2 5 Q3 5 Q4 5 Q1 6 Q2 6 Q3 6 Q4 6 EBITDA Vessel days Vessel days USDm 26 25 Change in % 5-6 Vessel days 41,724 39,18 6% Revenue 1,12 EBITDA margin 1,172 Costs 976 1,7 EBITDA 126 165 Depreciations 11 6 Profit from sales of vessels 55 EBIT 17 EBIT margin 15% 8 239-6% -3% -24% 93% -31% -29% 11% 14% -3pp 2% -5pp 14
TANKER TANKER DEPARTMENT Tanker vessel days in 26 (1%=5,71 days) Aframax 21% Handysize 46% MR 33% 15
TANKER Volatile and tightly balanced market 2. 1.8 1.6 1.4 1.2 1. 8 6 4 2 BCTI 16% lower during in 26 25 avg. May Jul 26 avg. Nov Average product rates on high level BCTI average down by 16% 25-26 - 27 May Jul Nov Handysize T/C rates USD per day but firm T/C rates and S/H prices reflect strong expectations 5. 4. 3. 2. 1. Asset value on the right axis May Jul Nov 1 year T/C rate 3 year T/C rate 25-26 - 27 May Jul Nov 5 4 3 2 1 Handysize, 5 years, 4K DWT, 2nd hand value USDm Weak Q4 due to absence of anticipated hurricane season and mild winter Asset values have remained at high levels 16
TANKER ket trends in 27 Global Oil Demand (mb/d) 88 87 86 85 84 83 82 81 Strong underlying demand potential 8 Q1 Q2 Q3 Q4 Q1 Q2 Q3 5 5 5 5 6 6 6 Source: Oil ket Report, IEA, Feb 27 Short term 27: Expects marginally lower rates on average China and USA continue as main consumers and a thirsty China increase tonnes-mile Low global crude inventories indicate demand pick-up Long term New refinery capacity constructed in Asia and Middle-East Strategic reserve built-up in both USA and China IMO phase-outs from 21 Q4 6 Q1 7 Q2 7 Q3 7 Q4 7 High order book will eventually be counterbalanced by IMO phase outs 8% 7% 6% 5% 4% 3% 2% 1% % 36% 2% 3-4. 16% 46% 4-5. 27% 67% 5-8. 2% 36% 31% Single hull Order book Source: Clarkson Oil & Tanker Trades Outlook, Feb 27 38% 27% 38% Aframax VLCC Total tanker 17
TANKER Ongoing expansion of core fleet NORDEN active core fleet +58% Delivery of 3 own new-buildings 8 product tankers to be delivered in 27 Shift to operator activity in Aframax Norient Product Pool Active fleet doubled during the year - now 35 vessels Partners have order book of 33 vessels; 11 to be delivered in 27 The Pool has 23 ice-class tankers Tanker Fleet 26 25 Active fleet: Owned vessels 6 3 Chartered vessels with POP 1 3 Chartered vessels (3+ years) 1 6 Total active core fleet 19 12 Other chartered vessels 1 2 Total active fleet 2 14 Vessel to be delivered: New-buildings (own) 3 6 Chartered vessels with POP 1 6 Chartered vessels (3+ years) 5 3 Total deliveries to core fleet 18 15 Gross fleet 38 29 1 POP = Purchase option 3 +58% +2% +31% 18
TANKER Weak Q4 due to mild winter EBITDA (USDm) 18 16 14 12 1 8 6 4 2 Q1 5 Q2 5 Q3 5 Q4 5 Q1 6 Q2 6 Q3 6 Q4 6 EBITDA Vessel days 2. 1.8 1.6 1.4 1.2 1. 8 6 4 2 Vessel days USDm 26 25 Change in % 5-6 Vessel days 5,71 5,558 3% Revenue 132 125 Costs 84 67 EBITDA 48 57 Depreciations 8 9 Profit from sales of vessels EBIT 41 48* 97 6% 25% -16% -1% -1% -57% Lower EBITDA due to higher cost from T/C vessels Still attractive EBITDA-margin at 36% EBITDA margin EBIT margin 31% * Of which 8 in J/V 36% 46% -1pp 78% -47pp 19
GUIDANCE FOR 27 Very competitive cost base going forward Dry cargo: Avg. cost per day Tanker: : Avg. cost per day 22.5 22.5 2. 2. Avg. T/C equivalents USD per day 17.5 15. 12.5 1. 7.5 5. Avg. T/C equivalents USD per day 17.5 15. 12.5 1. 7.5 5. 2.5 2.5 27 28 29 21+ 27 28 29 21+ Capesize Panamax Handymax Handysize Aframax MR Handysize Vessel days 28,676 22,241 2,46 173,494 Vessel days 7,15 8,629 7,679 69,5 2
GUIDANCE FOR 27 NET PROFIT OF USD 38-41m USDm Dry cargo Tanker Group 26A EBITDA 25-27 4-5 29-32 166 Vessel sales* 42 53 95 55 EBIT 28-3 9-1 385-45 23 IAS 39 2-27 Net result 38-41 177 *Any additional vessel sales will change the guidance 5 4 3 2 1 23 24 25 26 27E Dry cargo EBITDA expected to double Coverage for 27 now at 86% Tanker EBITDA on same level as 26 Coverage for 27 now at 38% EBITDA Net result 21
FORWARD-LOOKING STATEMENTS This presentation contains certain forward-looking statements reflecting the management s present judgment of future events and financial results. Statements relating to 27 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. The presentation should not be interpreted as a recommendation to trade shares in Dampskibsselskabet NORDEN A/S. 22
Questions and answers This presentation can be found on www.ds-norden.com 23