First Quarter 2014 Results Bergen 8 May 2014 Agenda Highlights - - PowerPoint PPT Presentation

First Quarter 2014 Results

Bergen – 8 May 2014

Agenda

• Highlights
• Financials
• Operational review
• Market update and prospects

Highlights

• Time-charter results in line with last

quarter

• Chemical Tankers EBITDA of USD

17 million

• A major reorganisation, efficiency

drive and cost - cutting process has been kicked off

• The process at Odfjell Terminals

(Rotterdam) of re-organisation to improve its cost base continues. This includes a reduction of more than 100 positions

Highlights

20 40 60 80 100 120 140 160 180 08 09 10 11 12 13 14

Index 1990=100

ODFIX

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• 50

100 150 200 250 300 350 04 05 06 07 08 09 10 11 12 13 14

USD mill

Annualized EBITDA¹

Chemical tankers Tank terminals

¹ Proportional consolidation method according to actual historical ownership share

Change of accounting principle

Equity method versus proportional consolidation method

Financials

• Effective from 1 January 2014, Odfjell has adopted IFRS 11. All joint ventures

previously accounted for by applying the “proportionate consolidation method” are now accounted for by applying the “equity method”

• Odfjell’s share of net result and net investment is therefore now reported in one

single line in the income statement and statement of financial position, previously this was accounted for line-by-line

• The change in accounting principles does not have any impact on the Group’s

equity

• Comparative figures have been adjusted
• The effect on the income statement and statement of financial position is

further described in note 8 of the financial accounts

Income statement¹ - First quarter 2014

USD mill

1Q14 4Q13 Gross revenue 266 256 Voyage expenses (130) (126) TC expenses (52) (44) Operating expenses (43) (46) Share of net result from associates and JV (7) (77) General and administrative expenses (25) (23) Operating result before depr. (EBITDA) 9 (60) Depreciation (23) (20) Capital gain/loss on fixed assets (0) (5) Operating result (EBIT) (14) (86) Net finance (8) (16) Taxes (1) 1 Net result (23) (102)

Financials

¹ Equity method

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Quarterly figures¹

USD mill

50 100 150 200 250 300 350 2012 2013 2014

USD mill

Gross Revenue

5 10 15 20 25 30 35 40 45 2012 2013 2014

USD mill

EBITDA

• EBITDA 1Q unchanged on flat market development from last quarter
• Bunker remained high during the quarter on political conflicts
• EBITDA 1Q unchanged on flat market development from last quarter
• Bunker remained high during the quarter on political conflicts

Financials

¹ Proportional consolidation method

Quarterly figures

USD mill

11 ‐6 ‐15 ‐5 8 ‐25 23 ‐23 ‐99

• 120
• 100
• 80
• 60
• 40
• 20

20 40 2012 2013 2014

USD mill

Operating Result (EBIT)¹

• EBIT in line with previous quarter, which included

impairment of net USD 81 million

• Chemical tanker contracts mostly renewed at

higher rates, volumes show positive development

• Net interest remain stable
• EBIT in line with previous quarter, which included

impairment of net USD 81 million

• Chemical tanker contracts mostly renewed at

higher rates, volumes show positive development

• Net interest remain stable

‐8 ‐9 ‐9 ‐9 ‐9 ‐7 ‐7 ‐9 ‐9 ‐9 ‐3 ‐7 7 ‐1 ‐15 ‐6 1

• 25
• 20
• 15
• 10
• 5

5 10

USD mill

Net Finance²

Net interest Other financial/currency

2012 2013 2014

Financials

¹ Proportional consolidation method ² Equity method

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• ‐4

‐13 ‐23 ‐28 ‐2 ‐39 9 ‐40 ‐102

• 120
• 100
• 80
• 60
• 40
• 20

20 2012 2013 2014

USD mill

Net Result

Balance sheet¹ – 31.03.2014

USD mill - Assets Ships and newbuilding contracts 1 305 Other non-current assets/receivables 79 Investment in associates and JV’s 374 Total non-current assets 1 757 Available-for-sale investments and cash 80 Other current assets 169. Total current assets 249 Total assets 2 006 Equity and liabilities Total equity 729 Non-current liabilities and derivatives 37 Non-current interest bearing debt 991 Total non-current liabilities 1 029 Current portion of interest bearing debt 131 Other current liabilities and derivatives 117 Total current liabilities 248 Total equity and liabilities 2 006

• Cash balance of USD 80 million
• Net investment in tank terminals JV’s USD 364 million
• 9.8% of own shares held as treasury shares
• Equity ratio 36.3%
• Cash balance of USD 80 million
• Net investment in tank terminals JV’s USD 364 million
• 9.8% of own shares held as treasury shares
• Equity ratio 36.3%

Financials

¹ Equity method

Debt development1

• Exploring various financial arrangements for our gas newbuildings
• Evaluating refinancing of maturing vessel mortgage loans

200 400 600 800 1,000 1,200 1,400 2014 2015 2016 2017 2018

USD mill

Debt Portfolio

Ending balance Repayment

Financials

50 100 150 200 250 300 350 400 2014 2015 2016 2017 2018

USD mill

Planned Debt Repayments

Secured loans Balloon Leasing NOK bond 12/15 NOK bond 12/17 NOK Bond 12/18

¹ Proportional consolidation method

Capital expenditure programme – Odfjell’s share

In USD mill

2014 2015 2016 2017 2018 Hyundai Mipo, 4 x 46,000 DWT 55 Sinopacific, 4 x 17,000 cbm 18 81 63 Docking 18 24 24 24 24 Terminals1 93 51 16 6 4 Total 184 156 103 30 28

1 Planned not commited

Financials From the naming ceremony of Bow Trident in Korea

Income statement¹ – 1Q14 chemical tankers and LPG/Ethylene

USD mill

1Q14 4Q13 Gross revenue 268 260 Voyage expenses (130) (127) TC expenses (52) (45) Operating expenses (44) (46) General and administrative expenses 2 (25) (24) Operating result before depr. (EBITDA) 17 18 Depreciation (23) (21) Capital gain/loss on fixed assets (5) Operating result (EBIT) (7) (8)

Financials

¹ Proportional consolidation method

2 Including corporate

Income statement¹ – 1Q14 tank terminals

USD mill

1Q14 4Q13 Gross revenue 23 25 Operating expenses (17) (17) General and administrative expenses (6) (9) Operating result before depr. (EBITDA) (0) (0) Depreciation (8) (10) Impairment

• (81)

Capital gain/(loss)

• Operating result (EBIT)

(8) (91)

Financials

¹ Proportional consolidation method

Results per segment¹

1Q14 4Q13

USD mill Chemical tankers/LPG Tank terminals Chemical tankers/LPG Tank terminals

Gross revenue 268 23 260 25 EBITDA 17 18 (0) EBIT (7) (8) (8) (91)

0 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 100 % Gross revenue EBITDA Assets

1Q14

Chemical tankers Tank terminals

Financials

50 100 150 200 250 300 350 04 05 06 07 08 09 10 11 12 13 14

USD mill

Annualized EBITDA – actual ow nership

Chemical tankers Tank terminals ¹ Proportional consolidation method

Tank terminals EBITDA – by geographical segment

‐9 3 3 2

• 10
• 8
• 6
• 4
• 2

2 4 Europe North America Asia Middle East

USD mill

EBITDA YTD 2014

EBITDA Tank Terminals by geographical segment 1Q14 4Q13 Europe (9) (8) North America 3 3 Asia 3 3 Middle East 2 2 Total EBITDA (0)

• Negative EBITDA 1Q of USD 8.8 million at OTR,

including USD 1.2 million in non-recurring items

• Divested the non-strategic terminal in Ningbo,
• China. A capital gain of USD 3.2 million will be

booked in second quarter

• Mostly stable on all other terminals
• Negative EBITDA 1Q of USD 8.8 million at OTR,

including USD 1.2 million in non-recurring items

• Divested the non-strategic terminal in Ningbo,
• China. A capital gain of USD 3.2 million will be

booked in second quarter

• Mostly stable on all other terminals

Financials

* Revenue and profit from the terminals included in the Lindsay Goldberg transaction in 2013 are recognized according to the new ownership percentages from 1 September 2013.

Vessel operating expenses - chemical tankers

2,000 4,000 6,000 8,000 10,000 12,000 05 06 07 08 09 10 11 12 13 14 USD

USD / day, total USD/day, crew Operational review

Bunker development

69.4 68.6 70.1 71.1 72.3 (7.1) (4.8) (3.1) (4.8) (4.2) (2.0) (1.0) (1.8) (1.1) (0.4) 60.2 62.7 65.2 65.2 67.7

(30) (20) (10)

• 10

20 30 40 50 60 70 80 1Q13 2Q13 3Q13 4Q13 1Q14

USD mill

Net Bunker Cost

Bunker purchase Bunker clauses Bunker hedging Net bunker cost 100 200 300 400 500 600 700 800 09 10 11 12 13 14

USD/mt

Platts 3.5% FOB Rotterdam

Operational review

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• Net bunker cost per tonne in 1Q was USD 565
• About 20% of the 2014 exposure is hedged
• Bunker clauses in CoAs cover about

53% of the exposure

• Net bunker cost per tonne in 1Q was USD 565
• About 20% of the 2014 exposure is hedged
• Bunker clauses in CoAs cover about

53% of the exposure

Fleet development - last 12 months h

Operational review

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• Fleet additions

DWT Built Tanks Transaction April 2014 Bow Trajectory 46 000 2014 Coated Bareboat April 2014 Bow Harmony 33 619 2008 Stainless Purchase March 2014 SG Friendship 19 773 2003 Stainless Medium-term TC Februay 2014 Berlian Ekuator 35 000 cbm 2004 LPG Short-term TC January 2014 Celsius Mumbai 19 993 2005 Stainless Medium-term TC December 2013 RT Star 26 199 2011 Stainless Medium-termTC December 2013 Celsius Miami 19 991 2005 Stainless Medium-termTC November 2013 Celsius Manhatten 19 807 2006 Stainless Medium-termTC November 2013 Bow Condor 16 121 2000 Stainless Purchase J/V October 2013 Bow Eagle 24 700 1988 Stainless Short-termTC August 2013 Southern Koala 21 290 2010 Stainless Medium-termTC August 2013 Golden Top 12 705 2004 Stainless Medium-termTC July 2013 Celsius Mayfair 20 000 2007 Stainless Medium-termTC June 2013 Bow Pioneer 75 000 2013 Coated New delivery May 2013 Bow Engineer 30 086 2006 Stainless Purchase

Short-term: Up to one year Medium-term: 1-3 years Long-term: More than three years

Fleet development – last 12 months

Fleet disposals, owned DWT Built Tanks Transaction December 2013 Bow Mate 6 001 1999 Stainless Sale October 2013 Bow Eagle 24 700 1988 Stainless Sale May 2013 Bow Cheetah 40 257 1988 Coated Recycling

Operational review

Odfjell Gas Carriers – current status

 Revenues and gross result improved compared to last quarter, positive outlook for the second quarter  Current fleet consist of 2 x 9,000 cbm owned vessels and one on a 1 year time charter  Fixed order of four 17,000 cbm gas carriers  Options for four additional gas carriers of 17,000 cbm or 22,000 cbm for delivery in 2016-2017  We are in process of evaluating partnerships to further grow our LPG/Ethylene business

Operational review USD mill

1Q14 4Q13 Gross revenue 5 2 EBITDA (1) EBIT (1) (2)

Terminal projects and expansions

Operational review

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• The expansion at the Antwerp terminal has been concluded, adding 50,000 cbm of

tank capacity

• Expansion project adding 30,000 cbm at the terminal in Houston is estimated to be

completed by 3Q 2014

• The new terminal project in Tianjin is in good progress and planned completed

around year end 2014

The terminal in Charleston, USA is now fully operational The expansion at the Antwerp terminal concluded

Tank terminal capacity

200 400 600 800 1,000 1,200 1,400 1,600 1,800 Cubic Metres`000 Mineral oil storage Chemical storage Ongoing expansions Current capacity 5,448,602 Ongoing expansions 576,520 Current capacity 5,448,602 Ongoing expansions 576,520 Total capacity in CBM (incl. related parties): Operational review

* Odfjell’s ownership share in the respective tank terminals is shown in percentage

Odfjell Terminals (Rotterdam) – current status

Operational review

• The process of re-organisation to improve the costbase to market level continues
• Dialogue with the Unions has started
• Level of activity at the terminal is reduced significantly
• Commercial focus is on improving utilisation and seeking customers for the

available tank capacity

Reducing cost and improving efficiency

• A major reorganisation, efficiency drive and cost - cutting process have been

kicked off

• Review all aspects of our business model, including ownership models and
• rganisational structures
• Identify areas of improvements
• Strengthen the focus on operational efficiency:
• Fuel consumption
• Turnaround time in port
• Ship maintenance
• Docking operation

Market update and prospects

Supervisory Authority of Norway (Finanstilsynet)

Operational review

• Completed review of certain aspects of the Odfjell Group’s financial reporting

for 2012

• The review did not have any impact on the approved consolidated financial

statements for 2012 or 2013

• This letter can be reviewed in full at the homepage for Finanstilsynet

Market update – chemical tankers

• Time charter results in line with previous quarter
• Activity in the first quarter continued on a slow and disappointing pace
• Volume and rates out of US remained strong, earnings weak on delays due to bad

weather

• Rates under pressure as tonnage was abundant
• Most CoA renewals at higher rates

Market update and prospects

Core Chemical Deep-sea Fleet 2003-2017 - Orderbook and

estimated demolition per May 5th, 2014

Source: Odfjell FLEETBASE

Market update and prospects Average annual net growth: 2003-2012: 8.2% 2013-2017: 3.3%

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* Outphasing 30 years (Europe built) and 25 years (Asian built)

Prospects

• Pace of the US economic growth is poised to snap back
• The unrest in Ukraine is the biggest risk to an optimistic economic growth for the

Euro zone

• Disappointing economic indicators in China and debt default risk is rising
• Second quarter expected to be better than first quarter for the chemical tanker

and LPG/Ethylene segments

• For our tank terminals, with the exception of OTR, we expect continued stable

results

Market update and prospects

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 Jan A. Hammer – CEO, Odfjell SE Email: Jan.Hammer@odfjell.com Phone: +47 908 39 719

Thank you

For more information please visit our webpage at www.odfjell.com