PRESENTATION OF NORDEN EVP Martin Badsted SEB Nordic Seminar 8 January 2014 Copenhagen SEB Nordic Seminar 8 January 2014 1
A LEADING GLOBAL TRAMP OPERATOR Dry cargo Capesize Post-Panamax Panamax Handymax Handysize 27 236 31 44 Dry Cargo NORDEN vessels Tankers Pool vessels Tanker MR Handysize Long history of strong performance World class fuel efficient fleet Significant upside through timecharter fleet and options SEB Nordic Seminar 8 January 2014 2
ASSET LIGHT BUSINESS MODEL Active fleet can quickly be adjusted to demand and market conditions Fleet employment based on portfolio view Operator profit on top of asset exposure Flexible fleet Coverage and customer focus Capacity Employment Sale and purchase Technical competencies in-house Owned (45) Contracts of affreightment Customer relations Logistical efficiencies Option-based flexibility 5-7 year firm periods Chartered w. POP (49) TC out FFA market 2-10 year firm periods Quick and easy cover Flexibility and scale Arbitrage Single-trip charters Other chartered (187) Spot market Leverage of scale Operator profit People Brand Systems * Active fleet per 30 June 2011 SEB Nordic Seminar 8 January 2014 3
PURSUING GROWTH AND ASSET UPSIDE Newbuilding prices viewed as attractive NORDEN has contracted 22 vessels since initiating current investment focus in late 2012 None of these can be replicated today All are fuel efficient designs from top yards Further investments being pursued Panamax Newbuilding price* (USDm) 60 50 40 30 20 10 0 Source: Clarksons * Prices are for European spec. and first class yards SEB Nordic Seminar 8 January 2014 4
DRY CARGO 2013 MARKET Improving market in 2013 Baltic Dry Index up 31% in 2013 driven by 2 nd half of 2013 up 74% Y/Y China s dry cargo imports up 14.3% YTD (Nov.) Record Chinese iron ore import in November (77.8 mt) Record Chinese minor bulk import up 24.5% YTD (Nov.) Dry bulk demand drivers from China continues to be strong Steel- and electricity production up 9% YTD (November) 10% increase Y/Y in industrial production in November Baltic Dry Index 2,500 2,000 1,500 1,000 500 - Source: Baltic Exchange China dry cargo import (million tonnes) 400 350 300 250 200 150 100 50 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2009 2010 2011 2012 2013 Iron ore Coal Other Source: Chinese Customs General Administration SEB Nordic Seminar 8 January 2014 5
DRY CARGO DEMAND OUTLOOK INCREASED IRON ORE EXPORT CAPACITY The biggest 5 iron ore miners expect to bring 412 mtpa iron ore to the market by 2012-16 capacity growth of 14% p.a. 200 mtpa of new capacity is expected within 6-9 months and already progressing now Planned iron ore capacity expansions (mt) 250 200 150 Vale has scheduled an expansion of 90 mtpa. in H2 2016, which are not included here 100 50 0-50 -100 2012 2013E 2014E 2015E 2016E Vale Rio Tinto BHP Billiton Fortescue Anglo American Aust. Juniors India Other Source: Barclays SEB Nordic Seminar 8 January 2014 6
DRY CARGO DEMAND OUTLOOK CHINESE IMPORT SUBSTITUTION The cost curve favours import since China is the marginal producer More than 30% of Chinese domestic iron ore producers are estimated to produce at costs above USD 100 per ton Chinese mines are the marginal producers, who will be crowded out by new seaborne supply Global iron ore cash cost by company, CIF China (USD/t) Source: Barclays SEB Nordic Seminar 8 January 2014 7
DRY CARGO - SUPPLY OUTLOOK Decreasing fleet growth as expected Continued moderate orderbook despite increased ordering activity Dry Cargo fleet development (million dwt.) 120 15% 100 80 10% 60 40 5% 20-0% -20-40 2011 2012 2013e 2014e -5% Realised additions Expected addtions Realised removals Expected removals Net fleet growth (RHS) Source: Clarksons, NORDEN forecast SEB Nordic Seminar 8 January 2014 8
TANKERS - A LONG HISTORY OF STRONG PERFORMANCE NORDEN and the 1-year T/C (USD per day) 35,000 30,000 Avg. outperformance: +10% 25,000 20,000 15,000 10,000 5,000-2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013-9M Source: Clarksons NORDEN MR 1-year T/C SEB Nordic Seminar 8 January 2014 9
TANKERS - DEMAND Continued improvement in market balance in 2013 US emerging as major export hub driven by shale oil boom Significant refinery capacity expansions in Middle East will create strong growth in coming years US product export (mb/d) 5 Middle East product export (mt) 120 4 100 3 2 1 - Source: EIA 80 60 40 20 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: WoodMackenzie SEB Nordic Seminar 8 January 2014 10
TANKERS SUPPLY Low net fleet growth in 2012 and 2013 High level of new contracting, but still manageable overall fleet growth in 2014 Total product fleet development (million dwt.) 8 6.0% 6 4.5% 4 3.0% 2 1.5% 0 0.0% -2 2011 2012 2013e 2014e -1.5% Source: SSY Realised additions Expected addtions Realised removals Expected removals Net fleet growth (RHS) SEB Nordic Seminar 8 January 2014 11
SUMMARY Dry Cargo Continued strong demand for seaborne raw materials Mining supply expansion is positive for volume growth Supply growth slowing NORDEN positioning for upside High operational leverage through timecharter fleet and options Investments in fuel efficient new-buildings Tanker Structural demand drivers remain strong US exports Refining expansions in Middle East and India Supply growth slightly increasing, but still at moderate level NORDEN well-positioned to benefit from higher rates and asset values Owned fleet doubled during the last 3 years Low coverage Economies of scale and proven track record in Norient Product Pool SEB Nordic Seminar 8 January 2014 12
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 2013 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 SEB Nordic Seminar 8 January 2014 13
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-2900 Hellerup Denmark Phone: +45 3315 0451 www.ds-norden.com SEB Nordic Seminar 8 January 2014 14
BACK UP FORWARD LOOKING STATEMENTS SEB Nordic Seminar 8 January 2014 15
LAST 5 YEARS PERFORMANCE Earnings per share (USD) Return on equity 16.7 47.0% 5.2 5.8 2.1 12.4% 12.9% 4.4% -6.8 2008 2009 2010 2011 2012-15.1% 2008 2009 2010 2011 2012 Cash flows, operations and investments Dividend yield 541 160-57 -80 298 7 120 122-380 -355 7.1% 3.3% Excel. share buy back of 2% 4.0% 3.0% 1.8% 2008 2009 2010 2011 2012 Net cash from investments Cash from operations 2008 2009 2010 2011 2012 SEB Nordic Seminar 8 January 2014 16
FINANCIAL HIGHLIGHTS EBITDA (USDm) 44 23 19 10 4 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Added value excl. joint ventures (USDm) Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013-19 -97-122 -138-149 Key messages EBITDA of USD 19m Continued investment focus in expectation of improved markets in the coming years Vessel values up by 5% in the quarter Spike in dry cargo market indicate a more balanced market than previously assumed Best third quarter spot earnings in product tanker market in recent years Full year EBITDA guidance: USD 25-45m SEB Nordic Seminar 8 January 2014 17
Q3 FINANCIALS Comments Tanker earnings significantly better than last year - T/C earnings 8% above the average 1-year T/C rates Best quarter in Dry Cargo this year - T/C earnings 21% above the average 1-year T/C rates Positive net profit Cash and securities of USD 529m USDm Q3 2012 Q2 2013 Q3 2013 Y/Y % Q/Q % CM II Group 34 16 31-10% 93% O/A Group -12-12 -12 7% 2% EBITDA Group EBITDA Dry Cargo EBITDA Tanker 23 4 19-18% 375% 26-2 10-62% N.A. -1 8 11 N.A. 34% Vessel sales -1 0 0-122% N.A Depreciation -21-19 -21-4% 6% EBIT Group before impairment EBIT Group -1-16 -1 25% -95% -1-16 -1 25% -95% Net profit 16-22 1-96% -103% SEB Nordic Seminar 8 January 2014 18
FINANCIAL STRENGTH = FUTURE GROWTH Strong capital structure Strong focus on cash flow generation Cash in low-risk deposit accounts and securities Newbuilding order book fully covered by available cash USD 218m bank debt Equity ratio at 80% Low gearing of book equity - gearing 0.58 Net committed cash USDm Q3 2013 Q2 2013 Adjusted Net Interest Bearing Assets* * Adjusted for prepayments on vessel sales and currency swaps. ** Present values Gearing 237 278 T/C obligations** -1,749-1,665 Newbuilding installments less proceeds from vessel sales** -293-292 Revenue from coverage** 869 846 Net commitments -936-832 1.4 1.2 1.0 0.8 0.6 0.4 0.2-2009 2010 2011 2012 2013 Net gearing Gross gearing SEB Nordic Seminar 8 January 2014 19
DRY CARGO FLEET OVERVIEW SEB Nordic Seminar 8 January 2014 20
TANKER FLEET OVERVIEW SEB Nordic Seminar 8 January 2014 21
FLEET VALUES AND NAV SEB Nordic Seminar 8 January 2014 22
COVERAGE AND CAPACITY DRY CARGO SEB Nordic Seminar 8 January 2014 23
COVERAGE AND CAPACITY TANKER SEB Nordic Seminar 8 January 2014 24
THE SHARE (DNORD) Master data Shareholder capital DKK 43,000,000 Number of shares and denomination 43,000,000 shares of DKK 1 Composition of shareholders end-q3 2013 14,048 registered shareholders owning 91.8% Approx. 50% international ownership Classes of shares 1 Voting and ownership restrictions None A/S Motortramp, Stensved Stock exchange Ticker symbol NASDAQ OMX Copenhagen DNORD 27.7% 8.2% 27.6% RASMUSSENGRUPP EN A/S, Kristiansand NORDEN (treasury shares) ISIN code DK0060083210 11.3% Other top 20 shareholders Bloomberg code DNORD.DC 20.2% 5.1% Other registered Non-registered Reuters code DNORD.CO SEB Nordic Seminar 8 January 2014 25