Fourth Quarter / Preliminary 2015 Results › 1521018506 › ...Results per segment¹ 4Q15 3Q15 USD mill Chemical tankers Tank terminals LPG/ Ethylene Chemical tankers Tank terminals
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Fourth Quarter / Preliminary 2015 Results10 February 2016
2
Agenda
• Highlights
• Financials
• Operational review
• Project Felix
• Market update and prospects
• Q&A
3
Highlights – Full year 2015
• Significant improvement in underlying performance. Net result of negative USD 36 mill, including negative effect from bunker derivatives of USD 64 mill, compared with net result of negative USD 75 mill in 2014
• Improved full year EBITDA to USD 190 mill from USD 96 mill last year• OPEX reduced by USD 53 mill compared with 2014• Project Felix (cost-cutting and efficiency programme) successfully completed, ahead of target of
more than USD 100 mill in annual savings • Fuel efficiency initiatives continue to be implemented. Average fuel savings for converted ships
is above 20%
Highlights
¹ Proportional consolidation method according to actual historical ownership share
-50
0
50
100
150
200
250
300
350
06 07 08 09 10 11 12 13 14 15
US
D m
ill
EBITDA¹
Chemical tankers Tank terminals LPG/Ethylene
80
100
120
140
160
180
200
06 07 08 09 10 11 12 13 14 15
Ind
ex
19
90
=1
00
ODFIX
Quarterly average 2006-2015
4
Highlights – 4Q 2015
• Stable underlying operational performance in fourth quarter, but softer markets towards the end of quarter
• Quarterly net result of negative USD 18 mill on one-offs and negative results from bunker hedging
• Chemical Tankers EBITDA in fourth quarter was USD 33 mill compared with USD 46 mill in third quarter. EBITDA includes negative effects from bunker derivatives of USD 20.5 mill
• Odfjell chemical freight index (ODFIX) down 4.4% compared with previous quarter• Stable results from Odfjell Terminals in fourth quarter, but USD 2.5 mill write-off of
greenfield project in China • Odfjell Terminals (Rotterdam) has commitments for new contracts that will ramp up during
the first half of 2016 and utilise the majority of the distillation (PID) capacity for 2016
Highlights
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Income statement¹ - Fourth quarter 2015 Odfjell Group
Financials
¹ Proportional consolidation method
USD mill 4Q15 3Q15Gross revenue 253 276
Voyage expenses (95) (106)
TC expenses (40) (42)
Operating expenses (47) (48)
General and administrative expenses (25) (23)
Operating result before depr. (EBITDA) 45 57
Depreciation (32) (30)
Impairment (13) (0)
Operating result (EBIT) (0) 26
Net finance (15) (18)
Taxes (2) (1)
Net result (17) 7
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Income statement¹ - Preliminary full year 2015 Odfjell Group
USD mill 2015 2014Gross revenue 1 068 1 160
Voyage expenses (409) (501)
TC expenses (167) (192)
Operating expenses (200) (253)
General and administrative expenses (102) (118)
Operating result before depr. (EBITDA) 190 96
Depreciation (124) (124)
Impairment (24) 0
Capital gain/loss on fixed assets (0) 7
Operating result (EBIT) 43 (20)
Net finance (74) (71)
Taxes (4) 16
Net result (36) (75)
Financials
¹ Proportional consolidation method
7
56,7
(22,8)
10,82,0 1,1
(2,5)45,3
0
10
20
30
40
50
60USD mill.
Financials
EBITDA variance¹ - Odfjell Group
4Q15 vs 4Q14:
EBITDA increased by 35%
OPEX down 18%
* Net income of USD 5.8 mill in
4Q14 related to Project Felix
4Q15 vs 4Q14:
EBITDA increased by 35%
OPEX down 18%
* Net income of USD 5.8 mill in
4Q14 related to Project Felix
4Q15 vs 3Q15:
EBITDA decreased by 20%
OPEX down 2%
4Q15 vs 3Q15:
EBITDA decreased by 20%
OPEX down 2%
33,5
(22,6)
23,62,1
10,5
(1,7)45,3
0
10
20
30
40
50
60USD mill.
¹ Proportional consolidation method
*
8
Quarterly figures¹ - Odfjell Group
0
50
100
150
200
250
300
350
2013 2014 2015
US
D m
ill
Gross Revenue
0
10
20
30
40
50
60
2013 2014 2015
USD
mill
EBITDA
• Reduced revenue due to bunker surcharge clauses
• Strong increase in 2015 EBITDA despite negative effect from bunker derivatives
• Reduced revenue due to bunker surcharge clauses
• Strong increase in 2015 EBITDA despite negative effect from bunker derivatives
Financials
¹ Proportional consolidation method
9
Quarterly figures – Odfjell Group
-6-15
58
-15
1223
5
26
-99
5 0
-120
-100
-80
-60
-40
-20
0
20
40
2013 2014 2015
USD
mill
Operating Result (EBIT)¹
• EBIT 4Q includes negative effect of bunkers hedging USD 20.5 mill and impairment of USD 13 mill
• EBIT 4Q includes negative effect of bunkers hedging USD 20.5 mill and impairment of USD 13 mill
-9 -7 -7 -9 -9 -9 -9 -11 -10 -12-7
-12
7
-15-6
1
-5
0
-10-20
9
-7
1
-30-25-20-15-10-505
1015
USD
mill
Net Finance²
Net interest Other financial/currency
2013 2014 2015
Financials
¹ Proportional consolidation method² Equity method
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-13-22
-32
-2
-26
79
-9
7
-102
-17 -17
-110
-90
-70
-50
-30
-10
10
30
2013 2014 2015
US
D m
ill
Net Result
10
Results per segment¹
4Q15 3Q15
USD millChemical tankers
Tank terminals
LPG/Ethylene
Chemical tankers
Tank terminals
LPG/Ethylene
Gross revenue 219 29 5 244 28 4EBITDA 33 11 1 46 10 1EBIT 0 (1) 1 24 2 0
0 %10 %20 %30 %40 %50 %60 %70 %80 %90 %
100 %
Gross revenue EBITDA Assets
4Q15
Chemical tankers Tank terminals LPG/Ethylene
Financials
¹ Proportional consolidation method
-50
0
50
100
150
200
250
300
350
06 07 08 09 10 11 12 13 14 15
USD
mill
EBITDA¹
Chemical tankers Tank terminals LPG/Ethylene
11
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Income statement¹ – 4Q15 chemical tankersUSD mill 4Q15 3Q15
Gross revenue 219 244
Voyage expenses (93) (104)
TC expenses (39) (41)
Operating expenses (33) (34)
General and administrative expenses 2 (21) (19)
Operating result before depr. (EBITDA) 33 46
Depreciation (23) (22)
Impairment (11) (0)
Operating result (EBIT) (0) 24
Financials
• Bunker adjustment clauses impacted the gross revenue negatively USD 12.5 mill
(USD 9.9 mill in 3Q)
• EBITDA includes negative effects from bunker hedging derivatives USD 20.5 mill
(USD 17.0 mill in 3Q)
• G&A includes USD 1.9 mill in one off items related to bonus awarded for Project Felix results
• Bunker adjustment clauses impacted the gross revenue negatively USD 12.5 mill
(USD 9.9 mill in 3Q)
• EBITDA includes negative effects from bunker hedging derivatives USD 20.5 mill
(USD 17.0 mill in 3Q)
• G&A includes USD 1.9 mill in one off items related to bonus awarded for Project Felix results
¹ Proportional consolidation method 2 Including corporate functions
12
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Quarterly figures - Chemical tankers EBITDAadjusted for non-recurring items
Financials
-20-10
01020304050607080
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15
USD mill
EBITDA Bunker derivatives Provisions
• In total USD 64.3 mill booked as voyage cost related to bunker derivatives in 2015, compared
to USD 15.2 mill in 2014
• EBITDA includes BACs with an effect of negative USD 39.2 mill in 2015 and USD 8.6 mill in 2014
• Total provisions/one-offs of USD 5.5 mill in 2015
• In total USD 64.3 mill booked as voyage cost related to bunker derivatives in 2015, compared
to USD 15.2 mill in 2014
• EBITDA includes BACs with an effect of negative USD 39.2 mill in 2015 and USD 8.6 mill in 2014
• Total provisions/one-offs of USD 5.5 mill in 2015
Operational EBITDA (adjusted for provisions and derivatives)
13
46,0
(2,6)
(22,1)(3,5)
14,6 2,0 1,4
(2,7)
33,1
0
10
20
30
40
50USD mill.
Financials
EBITDA variance – Chemical tankers
4Q15 vs 4Q14:
EBITDA increased by 9%
OPEX down 18%
4Q15 vs 4Q14:
EBITDA increased by 9%
OPEX down 18%
4Q15 vs 3Q15:
EBITDA decreased by 28%
OPEX down 4%
4Q15 vs 3Q15:
EBITDA decreased by 28%
OPEX down 4%
30,4
(9,8)
(17,9)(3,9)
27,92,0
7,4
(3,0)33,1
-10
0
10
20
30
40
50USD mill.
14
Vessel operating expenses – Chemical tankers
0
2 000
4 000
6 000
8 000
10 000
12 000
06 07 08 09 10 11 12 13 14 YTD15
Development USD / day per year
Total Crew
Financials
0
2 000
4 000
6 000
8 000
10 000
12 000
1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15
Quarterly USD / day
Total Crew
• Project Felix initiatives give significant positive results
• OPEX (USD / day) reduced by 19% in 2015 compared to 2014
• Expect OPEX at stable levels going forward
• Project Felix initiatives give significant positive results
• OPEX (USD / day) reduced by 19% in 2015 compared to 2014
• Expect OPEX at stable levels going forward
15
Bunker development
52,3 39,90 38,94 36,8326,44
2,7
9,96 6,85 9,89
12,49
16,6
14.6812,06
17,0220,53
71,664,5
57,9 63,759,5
(20)
(10)
-
10
20
30
40
50
60
70
80
4Q14 1Q15 2Q15 3Q15 4Q15
US
D m
illNet Bunker Cost
Bunker purchase Bunker clauses Bunker hedging Net bunker cost
0100200300400500600700800
11 12 13 14 15 16
USD
/mt
Platts 3.5% FOB Rotterdam
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• Net bunker cost in 4Q USD 371 per tonne before hedging vs. USD 445 in 3Q
• Bunker clauses in CoAs cover about 50% of the exposure
• 7% of 2016 exposure is hedged at average USD 255 per tonne
• Net bunker cost in 4Q USD 371 per tonne before hedging vs. USD 445 in 3Q
• Bunker clauses in CoAs cover about 50% of the exposure
• 7% of 2016 exposure is hedged at average USD 255 per tonne
Financials
16
Income statement¹ – 4Q15 tank terminals
USD mill 4Q15 3Q15
Gross revenue 29 28
Operating expenses (14) (13)
General and administrative expenses (4) (5)
Operating result before depr. (EBITDA) 11 10
Depreciation (9) (8)
Impairment (3) -
Operating result (EBIT) (1) 2
Financials
¹ Proportional consolidation method
• Slight increase in tank terminal results
• The occupancy rate at 94%
• Impairment of green field project in China of USD 2.5 mill
• EBITDA 2015 USD 39.6 mill compared to negative USD 4.0 mill in 2014
• Slight increase in tank terminal results
• The occupancy rate at 94%
• Impairment of green field project in China of USD 2.5 mill
• EBITDA 2015 USD 39.6 mill compared to negative USD 4.0 mill in 2014
17
Tank terminals EBITDA – By geographical segment
‐3
20
15
8
-5
0
5
10
15
20
25
Europe NorthAmerica
Asia Middle East
US
D m
illFY 2015
EBITDA Tank Terminals by geographical segment 4Q15 3Q15
Europe 1 (0)North America 5 5Asia 3 3Middle East 2 2Total EBITDA 11 10
• Stable results in all areas
• Slightly positive EBITDA at OTR in 4Q
• Expect substantially increase in Odfjell
Terminlas Rotterdam EBITDA in 2016
• Stable results in all areas
• Slightly positive EBITDA at OTR in 4Q
• Expect substantially increase in Odfjell
Terminlas Rotterdam EBITDA in 2016
Financials
18
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Balance sheet¹ – 31.12.2015
USD mill - AssetsShips and newbuilding contracts 1 259
Other non-current assets/receivables 47
Investment in associates and JV’s 373
Total non-current assets 1 679
Cash and cash equivalent 127
Other current assets 117.
Total current assets 243
Assets held for sale 21
Total assets 1 943
Equity and liabilitiesTotal equity 645
Non-current liabilities and derivatives 47
Non-current interest bearing debt 1 048
Total non-current liabilities 1 095
Current portion of interest bearing debt 103
Current interest bearing debt 17
Other current liabilities and derivatives 83
Total current liabilities 203
Liabilities held for sale -
Total equity and liabilities 1 943
• Cash balance of USD 127 mill - excluding JV’s cash
• Net investment in tank terminals JV’s USD 306 mill
• Equity ratio 33.2% (31.7% end September)
• Asset held for sale consits of planned vessel and office building sales
• Cash balance of USD 127 mill - excluding JV’s cash
• Net investment in tank terminals JV’s USD 306 mill
• Equity ratio 33.2% (31.7% end September)
• Asset held for sale consits of planned vessel and office building sales
Financials
¹ Equity method
19
Debt development – 31.12.2015
• USD 100 mill NOK bond matured in December 2015. Redeemed with cash
• New short term bridge loan facility of NOK 147 mill (USD 16.7 mill) related to sale
of office building
• Scheduled 2016 debt refinancing limited to an USD 10 mill facility• The total return swap entered into December 2014 was redeemed at maturity in
January 2016
0
200
400
600
800
1 000
1 200
2015 2016 2017 2018 2019 2020
USD
mill
Debt Portfolio
Ending balance Repayment
Financials
0
50
100
150
200
250
300
350
2016 2017 2018 2019 2020
US
D m
ill
Debt Repayments
Secured loans Balloon LeasingNOK bond 12/15 NOK bond 12/17 NOK Bond 12/18
20
Capital expenditure programme
In USD mill – per 31.12.2015 2016 2017 2018 2019 2020
Chemical Tankers
Docking 14 14 14 14 14
Other investments (vessel retrofitting) 8 7
Odfjell Gas, 100%1)
Sinopacific, 4 x 17,000 cbm 140
Sinopacific, 4 x 22,000 cbm 30 139
Tank Terminals, 100%
Planned capex 71 46 40 9 8
Financials
1) Odfjell SE (50% owner) is committed to inject up to USD 45 mill in equity in 2016 - 2017. Due to delays at the yard the capital injections will most likely be pushed to later than originally scheduled
21
Terminal projects and expansionsOperational review
• Our new terminal in Tianjin is ready for operation, but the explosion in the Tianjin old
harbour in 2015 is continuing to further delay the process of obtaining the necessary
operational permits
• Expansions in Rotterdam are on track
• A one-off charge of USD 2.5 million related to the valuation of the greenfield project at
Odfjell Terminal Quanzhou (Fujian)
22
Tank terminal capacity and commercial occupancy
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800C
ubic
Met
res`
000
Mineral oil storage Chemical storage Ongoing expansions
Current capacity 5,504,966 cbm
Ongoing expansions 391,650 cbm
Available capacity in Rotterdam at 60% of gross capacity
Current capacity 5,504,966 cbm
Ongoing expansions 391,650 cbm
Available capacity in Rotterdam at 60% of gross capacity
* Odfjell’s ownership share in the respective tank terminals is shown in percentage
Operational review
97% 96% 94%89%
84% 86% 86%91% 91% 92% 94% 94%
50 %55 %60 %65 %70 %75 %80 %85 %90 %95 %
100 %
1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15
The occupancy rate was at 94% in
4Q15.
The occupancy rate was at 94% in
4Q15.
23
Odfjell Terminals (Rotterdam) – Current status
• EBITDA USD 0.3 mill in 4Q15 (Odfjell
share), compared to negative USD 0.8
mill last quarter
• The terminal has delivered a slightly
positive EBITDA in four consecutive
months‐80 000
‐60 000
‐40 000
‐20 000
0
20 000
40 000
60 000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
EBITDA OTR (100%)EUR 1,000
• Total commercial capacity end December 964,000 cbm, compared to 939,000
cbm end September, commercial capacity (96.9%) fully utilised
• OTR has in 2015 expanded its PID distillation capacity from 700,000 tonnes to
1,500,000 tonnes per year
• The terminal has commitments for new contracts that will ramp up during the first
half of 2016 and utilise the majority of the distillation (PID) capacity for 2016. This
will contribute positively for the financials
Operational review
24
Odfjell Gas Carriers
In general more activity in most markets
Expectations for the first quarter are that the present scenario will continue with a shortage of Ethylene in the Far East
The construction of 4 x 17,000 cbm and 4 x 22,000 cbm is significantly delayed, and we are still in discussions with the yard on how to resolve this
According to the latest production schedule from the yard, the first of the four 17,000 cbm vessels is expected to be delivered in September 2016 compared to original expected deliveries October 2015 – May 2016
USD mill 4Q15 3Q15Gross revenue 5 4
EBITDA 1 1
EBIT 1 0
Operational review
25
Fleet development - Last 12 months
Fleet additions DWT Built Tanks Transaction
February 2016 Southern Owl 26 057 2016 Stainless Long-term TC
May 2015 Horin Trader 19 856 2015 Stainless Medium-term TC
April 2015 Marex Noa 12 478 2015 Stainless Long-term TC
March 2015 Gion Trader 19 883 2015 Stainless Medium-term TC
January 2015 Bow Triumph 49 600 2015 Coated Owned
Short-term: Up to one yearMedium-term: 1-3 years
Fleet disposals, owned DWT Built Tanks Transaction
November 2015 Bow Victor 33 000 1986 Stainless Recycling
August 2015 Bow Bracaria 5 846 1997 Stainless Sale
July 2015 Bow Brasilia 5 800 1997 Stainless Sale
July 2015 Bow Balearia 5 846 1998 Stainless Sale
Operational review
26
“Run-rate” per month 2015Figures in USD million
Project Felix, status update
60
100
110
80
50
20
70
90
10
30
40
0ADec
’14J AM NMJ SF DOJ
94
81
10193
48
67
98
59
48
8478
20
91
• Our ambition to save minimum USD 100 million was
reached in 2015
• Measurable effect in 4Q15 at approx. USD 20 million
• Full financial impact in 2016, one year ahead of schedule
• Odfjell has a continuous focus on improving operations
• We have launched new initiatives targeting our
operational performance that will improve our strategic
position and results
• Odfjell will stop reporting on Project Felix, remaining
initiatives to be completed by line management
• USD 1.9 mill related to bonus awarded for Project Felix
results
Project Felix
Project FelixWe successfully reached our USD 100 million ambition by end of December 2015
27
Market update – Chemical tankers
• Relatively weaker chemicals spot market in the fourth quarter
• CPP market softening
• Port congestion continues to be a challenge
• No material disruption to the operation of our vessels during the period
Market update and prospects
50
75
100
125
150
175
200
05 06 07 08 09 10 11 12 13 14 15
Odfix Index (1Q 1990 = 100
Odfix Quarterly Average 2005-2015
Chemical tanker spot earnings index (midcycle = 100)Source: Clarkson Platou
28
Chemical tanker market Chemical tanker year-on-year net fleet growth
0
3
6
9
12
15
18
21
05 06 07 08 09 10 11 12 13 14 15 16 17 18
Odfjell Core FleetInge SteenslandClarksonsSwedbank
Y-o-y growth (%)
Forecasts
• Differences between sources due to different fleet definitions– Odfjell: IMO 2 tonnage 13,000 dwt, predominantly trading in chemicals. Assuming current orderbook and
outphasing at 30 years (Europe built) or 25 years (Asia built).
• Stricter definition and thus, more limited fleet basis
Market update and prospects
Annual compound growth rate 2015-18:Odfjell core fleet: 3.7%Average other sources, full fleet: 4.1%
29
Prospects
• The 2016 global growth prospect is uncertain
• Increased benefit from lower bunker prices, as our expensive bunker hedging
expired in December 2015, but we continue to have some negative effect from
bunker adjustment clauses in our COA’s
• Increased benefit from Project Felix as all initiatives crystalize
• For the next quarter we expect the market to be in line with second half of 2015
for Chemical Tankers
• Despite a somewhat uncertain market outlook, we expect 2016 results for
Chemical Tankers to improve based on a more competitive cost structure and
expiry of loss-making bunker hedges
• We expect Odfjell Terminals 2016 results to be improved on strong PID distillation
activity and better storage results at Odfjell Terminals (Rotterdam) and stable
result for the other terminals
Market update and prospects
30
Executive Management - Priorities during 1st half 2016
• Key focus continue to be on “building strength”
– Focus on initiatives that improve cash and balance sheet
– Strong focus on operational improvements, and quality of service
• Top line improvement initiatives ongoing
• Solve the future of Odfjell Gas
• Fleet renewal programme for the advanced chemical tankers
Market update and prospects
31
Capital market day
Odfjell SE will host a capital market day 10 May 2016 to present the financial
position of the Odfjell Group.
The presentation will be held at the terminal in Rotterdam.
Market update and prospects
32
Company representatives
Terje Iversen – CFO, Odfjell SE
Email: Terje.Iversen@odfjell.com
Phone: +47 932 40 359
IR – contact:
Tom A. Haugen – VP Finance, Odfjell SE
Email: Tom.Haugen@odfjell.com
Phone: +47 905 96 944
Kristian V. Mørch – CEO, Odfjell SE
Email: Kristian.Morch@odfjell.com
Phone: +47 55 27 00 00
Thank you
For more information please visit our webpage at www.odfjell.com
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